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Course: This course will provide a comprehensive readable introduction to
management theory and practice in English. The course will integrate a classical and modern concepts so
students can interact in a real word organization.
Objectives:Students will be able to learn and grasp: Management key concepts
and terms/ Management theory and history/ Management process.
Content: Nature of Management Evolution of Management thought The changing environment of Management Primary Management function Primary Management function
Business Management BUS 103
Principles Of Management M.Govidarajan / S.Natarjan Prentice_Hall Of Fndia/2005
Prepared by:
DR.Ghada Nemetallah King Abdulaziz Univ Faculty of business Administration
Book :
Q: What is business? A: Business is buying and selling. Q: What? A: Goods (cars or books) and services (changes currency) Q: By whom? A: By labour (workers) Q: For whom? A: For customers, clients, people. Q:Why? A: For profit (money) Q: Where? A: In the market (world).
So business is buy and selling goods and services, by labour to the consumers for profit in the market.
Definition Of Business:
Means of business exchange of goods and services. Aim of business wealth, profit, wealth
Risks of business -changing technology (If new machines or new theories appears, rest is history) -changes in consumer preferences (People change every day and their ideas and likes too. People go after
fashion) -competitive threats (If people make the same product but less in price, this will affect business) -government policies (taxes, no deals with certain countries etc.)
Business for profit buying & selling
In the by labour for consumers goods & servicesmarket
Economic
1-return on investment (ROI)
2-growth of business
(merger/diversification) 3-product innovation
4-ensure productivity (strong market
position)
Objectives of business
Social
1-prevention of environmental pollution and ecological imbalance
2-development of locality of a business 3-development of backward areas
4-promotion of small industry Scale business
1-Well-defined objectives (what do you want to do)
2-Up-to-date and proper planning (reliable plan) 3-Proper location (minimize costs & maximize profits) 4-Flexibe Management (responds to changes) 5-Good organization structure (good manager & effective employees 6-Customer-focused marketing system (aim is the satisfaction of buyer) 7-Sound personal policies (laws for employees)
Essentials of good business :
Management
Art of getting done through people in formally organized groups.
Art of directing human activities and physical resources to reach a goal.
As a term used in business world government.
Difference between management and administration
Administration
-Activity of regulating daily to day operation in an organization.
-Getting policy decisions done.
-Term used in circles.
1-Planning -Develop plan & future plans to counter threats(make plans for the organization & be prepared for any competition). 2-Organizing -Assign duties (give work) establishing -Establish authorities (say who is the boss) -Allocate resources (make business) 3-Staffing -Recruitment (hire employees) 4-Directing Leading, influencing, motivating human resources 5-Controlling -monitor performance to reach the goal (supervising all basic function of management for success of company)
Five basic Functions of management
Q: Who is the manager? A: He is the one who acquires the five basic
functions of management. He plans, organizes, leads and controls for goal.
Modern Manager
Q: Who is the modern manager? A: He is not an owner-manager, but a salaried one. He does not own the company or the organization,
but he is an employee hired from outside and takes a salary.
Manager
1-Encourages employees to use technology. (we live in an information age and technology changes and develops every day). 2-Encourages employees of an organization to develop team work spirit. (every employee joins forces with his colleague, shares ideas and effort). 3-Makes an atmosphere of empowerment (he lets the workers make decisions and increase productivity). 4-Applies scientific methods to the development of knowledge (use science in work, ideas, experiments, concepts etc). 5-He applies management theory, understands, communicates and learns)
Characteristics Of Modern Manager
1-Efficient use of resources(no waste of time & energy) 2-Customer satisfaction (as the customer is the good & for more development & profit) 3-Return on capital (profit from invested money) 4-satisfied work force (as the workers are the assets of the company, thy should be satisfied) 5-Impoved work conditions (wages, good salaries, security) 6-Supplier relationship (good relations with supplier is a must for raw material) 7-Contribution to national goal (a good company is useful to it’s country)
Objectives of modern manager:
To be success full at work, managers assume or have many roles.
1-Interpersonal provide information (he should feed his employees with info) and be a good person with them. 2-Informational process information (check if understood and applied) 3-Decisional use information (be powerful and take good decisions on time) initiates change.
Managerial Roles
The manager should acquire three skills: 1-Technical use the techniques of specialized people e.g. engineers, surgeons, accountants. 2-Human Understand and be able to work with other people
3-Conceptual Coordinate and integrate goals with activities (decide what is the aim and go for it and determine to achieve it)
Managerial skills
This means that there are different levels in any company and various managerial position.
1-Top-level management executives (those responsible for overall management) make plans + put instruction + prepare budgets etc). 2-Upper middle management heads of divisions (responsible for effective performance of departments). 3-Middle management employees directing the work and activities. 4-lower level or first line supervisors, foremen (guide
and Train works)
Four Management levels
Is the kind of management that depends on observation and experiment.
The Manager should not stick to old ways but observe new trends, think of new theories, try them if they are successful and could bring profit to the organization.
Scientific Management
There are many scientists who contributed to the field of management. They developed theories in the area.
Babbage -specialization of labour (all workers and employees should be specialized and have experience in their fields). Taylor -science for each job. -select skillful workers. -incentives (prizes or bonus) for good results -divide responsibilities. Gilbreth -rest pauses in 8hr work. (workers take rest after working eight hours). Gantt -work quota systems (number of working hours differs from one employee the other). -bonus (work more and there is a new system giving you a prize)
History of Management
Fayol all management tasks are classified under categories ( Technical , Financial,
Accounting) (he cares about the function of categories in the departments)
Barnard organizational communication
system(success comes where employees accept authority of others). Simon he believes that the manager is an administration man not an economic man. (he should lead, select, choose, decide and
not count profit and loss only)
History of Management
Owen he was the first to speak about (HR) (He cares about people and not machines) Munsterberg he was the father of industrial psychology. (he studied the application of psychology in
work) Mayo he studied factors of satisfaction and dissatisfaction to the workers (he is important for the study of behavior at work) Follet he believes in group work and self control. employees share same power and beliefs. Maslow he believes tat the man need could be placed in “hierarchy of needs”
McGregor he cares about employee work relationship. He is interested in humane view.
History of Management
Just as Human beings get affected by the environment, so do the business. These environments can be classified into four groups:
1-Economic -Capital (money) -Labour (employees “good” + worker “bad”) -Price levels (changes could create problems) -Government tax policies -Customers (business is based on customers) -Technology (new products, tools, machine) 2-Social -Desires, expectations and attitudes of
people could be high or low, change and effect business causing loss or gain. 3-Political -leaders make new laws or new restrictions could effect business 4-Legal -laws and regulations could make any
business successful or failure.
Business environment
This chapter deals with the definition of planning, nature and types of plan. The limitation of planning are considered obstacles in the development or success of any project planning premises and forecasting methods are studied to promote business.
Objective
By the end of this chapter, students are acquainted with the definition, nature, kinds, types and limitations of planning.
Thy would be introduced to the system of forecasting, it’s methods and types importance of planning is stressed.
Introduction
Definition of Planning Planning is Decide in advance: What When To do Who How
It means what is the business you are going to do, how (money, people), when (now or in the future) and where (place, country). What is your idea, doing business alone or with partner, in your country or outside etc.
Is your business good or bad? If good, why? And if bad, what are the reasons or aspects.
This is the nature of planning. Did you make a good or a bad plan?
There some aspects (features) to follow for judging the nature of planning aspects.
1)Contribution to purpose and objectives facilitate the accomplishment of the enterprise objectives (make sure that your plan leads to success).
2)Primacy of planning precedes the executions of all managerial functions (plan before you execute “do”).
3)Pervasiveness of planning varies with authority and nature of supervisors plans (it is a must to plan as it is the function of all managers).
4)Efficiency of plans measured by contribution to objectives (if it’s a good, it will lead to the goal)
Nature of Planning
Types of planning
Standing Plans(Used over a long
period of time)
Single-use plans(used for only specific
periods)
Good plan
Based on facts Well Balanced Up dating
By following rules (guide for action), methods (step of procedure) and projects (type of plan), the plan is devised and executed.(follow the rules and the plan will be good).
Steps in planning
It is impossible to fix steps in planning for all organizations, however, there are major steps.1. Perception of opportunities opportunities (chances)
exist for it’s performance.• It is a preceding process of actual planning. • (there has to be an opportunity first and then plan for a
project).2. Establishing objectives set your goal.3. Establish planning premises check all factors e.g.
political, ethical etc. 4. Determine alternative plan proper plan A×B.5. Select best course choose most suitable plan.
Planning is important and any factor limiting it’s success should be abolished (deleted).
Limitation means factors or difficulties in planning. 1)lack of accurate information (incomplete information
cause bad result). 2)Problems of change (technology or customer taste might
affect your plan) 3)Failure of people (not qualified to formulate or implement
a plan, they do not value planning) 4)Internal inflexibilities (such as human psychology, you
con not plan when the workers suddenly change or be exposed to any problem).
Limitations of planning
5)External inflexibilities theses factors may be social, technological, legal or geographical. (if workers live away from work, how can managers plan in the future?).
6)Rigidity in planning stuffiness or inflexible plans delay work performance and reduce employee stimulation or enthusiasm.
7)Time and cost factors time is important, as time is money. Do not take too much time in planning as costs will increase and quality of work will not be very good or effective.
Limitations of planning
It is the frame work in which plans operate. It is environment where plans work. It is include Forecasting or Assumption. Forecasting probe (expect) the future by inference
(predication) from known facts. Assumption believe in something or pretend. If you want to plan right, you have to forecast (like the
weather). You have to be assume what kind of problems you will face in the future in order to be ready to solve them and not be surprised.
Planning Premises
1-Helps in effective planning by providing scientific and reliable basis.
2-Reducing area of uncertainty (reduce the unknown, conquer your fear of the darkness).
3-Managers have plenty of time to think ahead (for the future) as they have plan A and plan B because of the forecasting process).
4-Managerial control, as areas of lack of control will be closed because of forecasting.
Importance of forecasting
Forecasting Methods
Qualitative Techniques
It includes methods such as polls output, brainstorming.
Quantitative Techniques
It comprises input
and output analysis, curve fitting
These techniques are used to apply to the long term time scale and for future demand.
You can control for or face any problem that might face you in the future by forecasting techniques either by quality or quantity.
It is a process of determining the major objectives of an organization and its policies and strategies.
Manager must have vision, mission and purpose.
Vision: picture of the future, what accompany wants to be.
Mission: strategic planning, it flows from the vision.
Purpose: realize the goals le the decisions speak.
corporate planning
Kinds of plans
Strategy Operational
Process of deciding objective,resources and policies.Time Horizon: -Several years - One yearScope: - wide range of activities - narrow Degree of detail: -simplistic generic - finer details
corporate planning
To be good manager, you have to plan. Definition of planning, kinds, type, methods, steps and limitations should be known. In order to be ready for any problem in the future, forecasting method should be adopted. Make plan A and plan B for yourself to overcome any difficulties that might hinder the process and development of your company.
Summary
To give definition of organizing as one of the five basic functions of management.
To refer to the principles of management. To be acquainted with types and mistakes of organization.
By the end of this chapter the students will
Study the hierarchy of objectives to organize their companies.
Definition, types and mistakes of of organization are studied.
Centralization and decentralization will bw defined an known.
Objective of chapter 3
Organizing refers to the formal grouping of people and activities to achieve the firm's objectives (employee and activities have to conform to the goal).
Theory of organization
Is the study of structure, functioning and performance of organizations and behavior of groups (every company has to have a theory to organize the structure and the behavior).
There is hierarchy of objectives indicating the relationship of objectives and organizational level.
Definition of Organizing
Hierarchy of Objectives
Socio
Mission
Overall objective of the organization long-range
More specific overall objectives
Division objectives
Department and unit objectives
Individual objectives Performance personal development objectives
The success of any organization depends on it’s principles. Basic principles should be observed.
1. Unity of objective if the aim is one to all employees and managers, success will follow.2. Efficiency doing maximum work at minimum cost is efficiency. 3. Span of management managers have long time to
direct a number of executives. 4. Division of work proper departmentalization (each department has it’s own function and job)5. Functional definition when duties of every one is
defined
Principles of Organizing
6.Scalar Principle the chain of command or line of authority must be clarified, every subordinate should know his superior. 7.Unity of command and one superior and no confusion.unity of direction 8.Authority and Responsibility they should co-exist, found together. 9.Balance and flexibility balance between centralization (authority in the hand of one
manager) and decentralization (the opposite).10. Continuity and Flexibility manager should continue working
and be flexible to give effective lead.
Principles of Organizing
There are different patterns to organize the personal (employees)
1-Military or Line authority flows from top to lower vertically
manager Manager Manager 1 1 Subordinate Subordinate 2 2 2-Functional separate departments but interrelated (connected) (some work in every
department but different names of department. 3- matrix system an employee has a number of superiors and a project manager.
Types of Organization
Project manager
Superior Superior Superior
One employee
4-Hybrid Design use functional and divisional system, either workers perform similar task or according to function.
Types of Organization
Decentralization Centralization
authority is pushed Authority is in the hand
To lower management level
downward of top management
Not in one hand..Act quickly, innovative and motivated.
This is effective, easily achieved, clear control and no conflicting decisions.
If the principle of organization are missing or not followed, in this case they are considered mistakes.
1-Poor plan. 2-No precise authority. 3-Lack of responsibility. 4-Responsibility without authority. 5-Multiple managers. 6-Failure to delegate authority (the manager con not tell
the employee what is this authority).
Mistakes in Organization
Organizing is a basic part in the function of any organization. It has principles and have to be applied. There are many types of organizing personnel.
Finally, mistakes of organizing should be avoided. Organizing makes any company a success or a failure.
Summary
It refers to effective recruitment, selection on and placement to occupy proper roles in the organization structure, (to choose good employee that fit in the position in the company and put them in the right place).
(right people in the right place)
What does staffing need?
1- goals and objectives: to decide what is required. 2- job designing: the determination of the employees work
responsibilities. 3- grouping of job: departmentation job content (to fit in the work
of the department). Recruitment and selection
Select employees choosing best employees
Definition
1)Job Description Describes the work and the requirements for the job e.g. job titles, job responsibilities, working conditions, job knowledge. 2)Application Forms This is a universal system where
the applicant fills a form to be could
for an interview. 3)Employment Tests Tests are considers essential part
in the e.g. intelligence recruitment program. Tests personality the test
measures. Tests interest capacity for learning, tests achievement ability to
reason, tests dexterity and some physical abilities.
There are different procedural steps
4)Interviewing it is a conversation between the applicant and the interviewer to decide if the employee fits in the position or
no.
5)Physical Examination it is a medical check up for the (new) freshly recruited employee (to check
that there are no diseases and that the applicant meets the job requirements).6)Orientation it is concerned with the process of welcoming the new employees or orienting them to the rules and procedures of work.
The function of the organization is to create a sense of belongingness and loyalty to the organization.
There are different procedural steps
It is a way to help the employees in a planned and continuous way. Goals: improve the capabilities of employees as individuals and their relationship to one another their supervisors together with
their future roles. Process: every superior has the role and responsibility to insure the development of his subordinates.
Subsystems: HRD include various subsystems.1. Performance appraisal: superior understands the problems of the
subordinate and tries to solve them, use their talents and encourage their
capabilities. 2. Performance Coaching: know your strength to be effective, choose
situations when strengths are required and avoid situations in which weaknesses could create problems.
HRD system is responsible for discovering your strengths and weaknesses and guide you for improvement.
The Concept Of Human Resources Development HRD
3. Career planning: this is the philosophy of HRD, to formulate career strategy. People perform better when they feel trusted and see meaning in what they are doing. 4. Training: this is the outcome (result) of performance a appraisal and career planning.
There are in house (inside work) training courses and periodic assessments. The training is useful for employees.
5. Organizational Development OD: This function includes periodic
surveys for employees to make sure of their psychological health.
It includes solve problems such as low production or conflicts at work.
The Concept Of Human Resources Development HRD
In any place, there is grievance which is a feeling of discontent of dissatisfaction.
It could lead to conflicts and hence, at that moment, there should be grievance handling procedure (ways to resolve conflicts) conflicts arise from frustration, tension, etc.
Types of conflicts 1. Individual : it happens or it is found when more motives
block each ether. It means when you have more them one problem.
2. Role Conflict: when an individual performs a number of roles and wants to be perfect in all and be can not. (e.g. being a good person, a good father or mother, a good employee, all at the some time an you con not fulfill).
Organizational Conflicts
3.Interpersonal: Vertical (between superior and subordinate) or horizontal (between employee and his equal).
4.Intra group Conflict: it happens when people come from different socio-economic backgrounds and have different views.
5.Intergroup Conflict: problem among different
groups in the some organization.
Types of conflicts
Regarding wage (salaries). Regarding working conditions (comfortable or
not). Regarding supervision (good or bad). Regarding attitude of management (flexible or
rigid).
Areas of Conflict
1-Problem solving method: find a common interest between employees.
2-Avoidance: another way to overcome a conflict is it a void it, do not confront.
3-Smoothing: playing down differences and emphasizing common interest, is say what is good and bad in both parties.
4-Compromise: no one is loser or a winner all is solved by
negotiation.
5-Confrontation: apply strength against each other, face the problem.
Resolution Actions
Staffing is one of the main function of management. To recruit and select the proper employee and place him in the right place is difficult task. HRD plays an important role in the staff and solving the conflicts in different areas.
Summary
1. Give the full meaning of the following abbreviations: A. HRD……………. B. OD……………… 2. Give two examples of resolution action? A. ………………….. B. ……………………
Answer key 1). A. HRD: human resources development. B. OD: organization development 2). A. smoothing. B. confrontation.
Suggested question
This chapter deals with directing as one of the main pillars of management leadership traits, managerial grid, communication process and motivation are all related to directing and will be discussed.
Objectives By the end of this chapter, the students will be able
to: 1. grasp the notion of directing and leadership. 2. study different managerial grid. 3. study motivation needs and communication tools
and hierarchy.
Introduction
Directing id leadership which means the activity of influencing people to work for group activities.
Direction is manager. Hi’s role is to achieve the goal in a given time.
Leadership Supervision Influence group Close and general activities to supervision to be achieve goals. sure that worker do their jobs effectively.
Definition
Leadership consist of
Power Authority
It is the ability to achieve expected outcomes(results)
Get the subordinates to do .
it is right of directing workers to do something.
Tells the subordinate Gets the what to do
Any leader has to be armored with several traits. (any leader has to possess certain qualities in his character), such as:
1- competent in handling new situations (know how to face a new problem).
2- self confident and stable. 3- identify himself with goals (know his objective
and tries to achieve it efficiently). 4- intelligent and sympathetic with his workers. 5- he should be a listening supervisor, as
listening is an active and not a passive activity.
Leadership Traits
Any employee in any company or organization could be evaluated. His superior checks if he works well or not.
What about the superior himself? Is the manager evaluated. The answer is yes.
Managerial grid is the tool to assess (evaluate) the It is a tool to assess the leadership style (the style of the
superior or the manager). The grid was developed be Blake and Mouton to pint out
two major aspects of supervisor job. The two aspects are job and employee with different styles.
Managerial Grid
Brief summaries of the five possible leadership styles will follow:
Style (1,1) this style place low concern for employees and job (the owner does not care that much). Style (1,9) this style gives high concern for employees and low for job (he cares about employees more so the relationship is good). Style (9,1) high for the job and low for employees (bad atmosphere). Style (9,9) high for employees and high for job (best atmospheres). Style (5,5) middle some concern for job and some for employees
Managerial Grid
Another scientist invented another way or tool to assess leaders. Red din concentrated on 3 axes
Task (TO) Orientation Relationship (RO) Orientation Effectiveness
Manager Directs Manager has Extent to which athe subordinated personal relationship. manager is successful to achieve the goal. in his position.E.g. job done or not. E.g. employees like E.g. the subordinate him or not. Wants him at work or not
Tri-Dimensional Grid
It is the very important in the manager job. Understanding is the target in communication. It is a human transaction and understand people. Successful Communication is the result of
competent management (listening and understanding manager).
A good manager is a good communicator. Effective work is the result of good
communication.
Communication
Types of communication
Oral or written Downward (from top to low)or upward (from
employee to manager)
formal, informal
e.g. words or messages .
e.g. from supervisor to subordinate or vice versa
e.g. by command or by agreement
PurposeCommunication has purposes such as:1. Gain communication. When the superior communicates with the subordinate, he is committed to do the job. 2. provide data for information. When the employee know all the date, he can easily decide what could be done in the job. 3. Clarify tasks and responsibilities (communication leads to clarity, the employee knows exactly their job).
It is who? (some of message) says what? (message) in which channel (what information in that way) to whom (receiver of message) with what effect? (response).
E.g. An employee wants a raise talks to his superior in the meeting supervisor refuses or agree.
1. Who? 2. Says what? 3. In which channel? 4. To whom? 5. With what effect?
Process
The model include the basic elements of communication.
Communicator message medium Encoder (transmission)
Noise feedback decoder receiver
E.g. Message from superior (who sends the message) through the e-mail to the subordinate (who receives) and takes the answer (feedback).
Model
How is the person be activated, directed and willing to work is motivation.
When the employee enjoys his job. He finds it challenging and satisfactory, he be comes motivated.
Motivation is inner force is extent of drive To produce optimal out
put
To reach the best result
There is an approach to motivation
Carrot Stick Money, profit award Physical, financial and
social punishment. The idea of carrot and stick comes from the reward and
punishment theory, work here and you will be more rewarded or else.
Motivation
Maslow's Need HierarchyMaslow realized that any employee has needs and he formed a five basic human needs.
NFSEsteem Needs
Affiliation or Acceptance needs
Security and safety needs
Physiological Needs
Figure Maslow need hierarchy model
Level 1 (physiological needs) refers food, air, sleep, waterLevel 2 (security) clothing shelter.Level 3 (affiliation) develop meaningful relationship in work.Level 4 (esteem) self respect, sense of achievement and recognition from
others.Level 5 (NFS) fulfil ones need to become successful.
Maslow's Need Hierarchy
Herzberg’s developed Maslow’s hierarchy and divided the needs or categorized them into tow groups:
Herzberg's Motivation hygiene theory
Hygiene Factors (dissatisfies)• It is mean if they are not
founded in a job, the employee will be dissatististfied.
• Examples of hygiene factors are : money, personal life, Work conditions and relationship etc
Motivation Factors (satisfiers)
They satisfy the employee and motivate him to work more.
They includes challenge, dance for personal growth performance feedback etc.
He added three motives: Need for achievement Need for affiliation Need for power Employees work more and efficiently if they have
achievement, good relations and power at work.
Mcclelland's Three needs Model
Controlling is the fourth function of management. It has steps, types and process. It also includes management and it utilizes balance sheet.
Objectives
By the end of this chapter the students will be able to: 1-define controlling. 2-differentiate between controlling and planning. 3-study the steps, types and areas of overall controlling. 4-study balance sheet and management audit.
Introduction
Definition Controlling is determine what is being accomplished. To evaluate performance To apply corrective measures(check if the employees are following the rules, monitor their
performance and if there is any fault, correct it)
Controlling
ControllingEnsures that
commitments are carried.
(make sure the plans are carried out).
Planning Identifies commitment to action(the performance of the
employee should lead to the organization objective)
Planning has a close relationship to controlling
Types of controlcontrol includes three types
Preliminary(unify understanding policy and procedures)(if the worker understands the rules and policies of the work, he will follow the procedures, is steps E.g. no salesman must change any price the company makes it insteadof
Concurrent Check the right quantity right quality at the right time e.g. at the airline, the luggage should reach the passengers at the right time, and the same bags.
Feedback Is the data gathered for better results(information for correction e.g. electronic funds transfer, money moves quickly from one country to anotherSlow manual system, due to the feedback.
There are major guidelines for effective controlling such as management audit. It has developed to evaluate the efficiency of various system in an organization. Audit can be performed either.
Management audit
ExternalDirected to evaluate other firms (companies) for possible merger (join companies together) or find strengths and weaknesses for competition
Internal Used to improve internal control systems. It is in the form of periodic assessment for evaluating present past and future performance.
This areas are checked to minimize losses in sales, material, time, profit, capital and facilities.
They include: Market standing of the enterprise (what is the position of
the company in the market, strong or weak). Innovation (what did the company make new). Profitability (how much is the profit). Materials acquisition and use (the use is good normal or
excessive). Employee performance development (is the worker
developing or not?). Capital (money is increase or not). Productivity. Physical resources (e.g. raw material, machines, cars etc). Public responsibility
Areas For overall controlling
Financial statements are helpful in controlling. Balance sheet is an important accountant document showing
the financial picture of the company at a given moment (what is the financial position of the company in a certain month or part of the year).
Balance sheet
Assets Liabilities Share holder’s equity
Items owned Amounts owed Amounts to by the company to various creditors owners or those(things belong corporation’s (outside with shares the company) the company)
Balance sheet
Controlling is a fundamental process in the filed of management. It is applied by loss and profit. The higher the quality of the manager, the less will be the need for control. Controlling has balance sheet. It has many steps and areas for overall controlling.
Summary
This chapter is known from it’s title. It deals with the decision making process, techniques and
classification of decisions.
Objectives By the end of this chapter the students will be able to: 1-Define decision making. 2-Identify decision making process. 3-Know the techniques and classification. 4-Study the limiting factor. 5-Evaluate the decision. 6-Spot difficulties in decision making.
Introduction
Definition: Decision making is the process of selecting a course of
action from among alternatives. Decision involves a choice to reach a goal.
(If you have many ways, alternatives, choose the best for the goal).
Decision Maker Problem
Outcome Objectives Environment (Final choice)
Decision-Making
faces in
hasreaches
The process is easy. If the manager faces a problem in a certain situation or a particular environment, he think of an objective and reaches the outcome.
This will be his final choice and final decision.
1-Define the problem. 2-Classify Objectives. 3-Identify evaluation criteria (cost, risk). 4-Model Building (make computer example
simulation). 5-Evaluating results (after taking the decision). 6-Taking Final decision. 7-Feedback (to see your results).
Decision Making Process
1-Scientific Management (cost control). 2-Human Relation (depend on problem of
motivation and leadership). 3-Empirical(use experiences of successful
managers). 4-Financial (accounting methods) 5-Mathematical (one plus one equals two). 6-Decision theory (rely on quantitative and
qualitative aspects). 7-Decision support (focus on understanding and
improving).
Techniques of Decision-Making
There are many types of decision and managers may select:
1-Organizational and Personal the first is taken by a superior and the second is taken by the executive about himself.
2-Routine (follow established rules). 3-Programmed and non programmed (rely on established
structure). 4-Policy and operative (taken by top-level). 5-Individual and group. 6-Major and Minor (small or big). 7-Long-Term (period is more and risk too).
Classification of decisions
To evaluate your decision, take care of several factors. One of them is limiting factor.
Limiting factor means strategic. For example If a machine does not work and the reason is
the screw, it is called a limiting factor. (any small item is important in taking the decision, even if
it is only a screw in a big machine, still it will delay the work).
Evaluating the decision Managers com evaluate their decisions by many factors.
They evaluate according to: 1-size (big project or small). 2-flexibility of plans (could be changed). 3- certainty of good (objectives is fixed). 4-human impact (payroll or computer).
Principle of limiting factor
There are difficulties discovered by managers when they take a decision such as:
1-Incomplete info (data is not enough). 2-Un supporting environment (if he wants to be a
pioneer in a field and faces opposition). 3-Ineffective communication (no understanding). 4-Incorrect timing (not the right time). 5-Non-acceptance by subordinates.
Difficulties in decision-making
Managers can take decision if they first define the problem and use decision making process.
Summary
This chapter summarizes and adds new management concepts. Market changes and competition makes companies be flexible. The need for better quality and profit has been born new tools in management and will be known and studied in the final chapter.
Introduction
By the end of this chapter students are acquainted with management concepts such as:
Business Plan Benchmarking Business Process Reengineering Change Management Customer Relationship Management Employee Empowerment Enterprise Resource Planning Globalization International business management Management by objectives Outsourcing Quality circle Supply Chain Management Elements of TQM
Objectives
In the plan managers discuss how the business will be established, what is the purpose of the business, description of the product and financial details.
Benchmarking A- It is a systematic and continuous measurement for the
development in a company. It has three types
Internal Competitive Functional
Check between who is the competitors keep an eye
department in the and measure the on the best
company. company With them. Company every
where.
Business Plan
It is task of any manager to ensure that all processes are adding value or else be deleted. This is the philosophy of (BPR).
It is a process of rethinking and restructuring like the engineer, for better value.
(BPR) is means for total customer satisfaction and best results.
Business Process Reengineering
Every organization makes changes to face changes in the environment.
Management changes to increase ability of company and learn from changes.
When does management change? Reactive change when there are external forces. Proactive change when the need comes from
inside the company to increase it’s effectiveness.
Change Management
It involves the following Unfreezing It involves the need for change. People must accept the change. Changing Change brings new ideas. Refreezing New change or new pattern is put in the new place.
Process of change
(CRM) Provides customer- oriental services such as internet, mobile devices etc.
(CRM) helps companies to satisfy customers better than their competitors.
(CRM) measures, predicts and optimizes (make the best) customer relationship.
E.g. when there is sale, the company contacts the customer by phone, mobiles or e-mails to reach customer satisfaction and make more profit.
Customer- relationship management (CRM)
Empowerment means encouragement. It means to allow the employees to take responsibility and decision. They should have confidence that they can make a difference and achieve success to the organization.
The first example to employee empowerment Is (TQM) Total Quality Management
It is an employee driven process that gives the employee power to create and decide.
Employee Empowerment
1- increases peace of change in the company (make change faster)
2- decentralize the system (give the chance to all levels to share in decisions).
3- employees develop their talents and change.
Significance (function) of employee empowerment
Definition It means that there are no more country
strategies but subordination to global framework (no more rules in my country but businessmen and foreign products)
Reasons 1-For internal efficiency to become global, you gain more volume. 2-complete in markets the cost is low and the company become competitive.
Globalization
Definition It refers to transactions across national
boundaries including transfer of goods, services, knowledge and capital to other countries:
Examples: 1-exportation of goods and services. 2-forming a joint-venture 3-multinationals companies opening
branches in host country. (MNC’s) 4-international firms.
International Business Management
MBO is a process where by the superior and the subordinate identify their goals in their organization. MBO is a comprehensive management planning and
control technique to affect the structure and style of the organization. MBO the important benefit of MBO is that the judgmental role of the supervisor vanishes (is deleted) as every individual is evaluated according to standard and
not personally, due to the objectives put by all
employees.
MBO causes improvement improves communication stimulates subordinates motivation.
Management by objectives
Is the strategic use of outside parties to perform activities handled by internal staff and sources (as the work is too much, the company uses outside people to help).
Reasons for outsourcing Increasing competition and rapid changes in business world
made companies.
Benefits 1-companies concentrate on important strategic issues and
use outside hands to help in miner tasks (less important work).
2-best in practice processes are used (companies use best things every where).
3-use late technology as companies benefit from others.
Outsourcing
Is a small group of employees doing similar work, share area of responsibility meet regularly to identify, analyze and solve product – quality problems.
the group of employees is led by a supervisor- organized as work units.
Quality circle is important to develop, improve, stimulate, motivate achieve and recognize are all organizational issues.
The result is improvement on all levels, methods, products, working condition etc.
Quality Circle
It includes the organization and process of acquisition, storage and sale of new materials etc.
It encompasses (includes) customer- supplier partnerships.
Supply Chain Management
There are elements of total quality management. They refer to meeting the requirements of customers consistently, (all the time) to improve the quality of work of all employees.
The elements are modified or changed to meet the requirements of customers.
For example the ISO, 9000 series standards change every five years.
Elements of TQM
Meeting customer requirement (satisfy the clients).
Continuous improvement (for better quality). Empowerment of employees. TQM is the philosophy that calls for development
and should be the concern of all organization.
The Elements are
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