Unit 1: Evolution of management thought

Introduction

Management is the process of planning, organizing, leading and controlling.

Everything can be achieved from the process of management. management can be appliedeverywhere.

Modern managers use many of the practices, principal, and techniques developed from earlierconcepts and experience.

In 1975, Raymond E. Miles wrote Theories of Management: Implications for organizationalbehavior and development. In it, he evaluated management includes classical, human relations,and human resources management.

Meaning of thoughts

The schools of management thought are theoretical frameworks for the study of management.Each of the schools of management thought are based on somewhat different assumptions abouthuman beings and the organizations for which they work.

Meaning of principles

Principle is the tested guide lines for a certain course of action .In another way a principle can bedefined as a fundamental statement of truth providing a guide to thought and action. We can alsosay that it is a statement which reflects the fundamental truth about some phenomenon. Afundamental statement tells us what results are expected when the principle is applied.

Nature of management principle

1. Flexibility

2. Universal application

3. Principal are relative not absolute

4. Based on situation

5. General statement.

The development of management thought has been evaluated in nature under the following fourparts:

Classification Sub ClassificationPre-Scientific Management Era(before 1880)

family unit was the basic production organizationin ancient and medieval period

1776, Adam Smith (1723 – 1790) Robert Owen (1771 –1858)

Classical management Era(1880-1930)

Scientific Management School; F. W. Taylor (1856– 1915)

Administration Management; Henri Fayol (1841 -1925)

Bureaucracy Management; Max Weber (1864-1920)

Neo-classical Management Era(1930-1950)

Human relation school; 1930s' Hawthorne studies Behavioral Management School; 1950

Modern Management era(1950-on ward)

Social system school (March and Simon's 1958 ) Decision theory school Quantitative Management school System Management school Contingency Management school.

Pre-Scientific Management Era (before 1880)

In the Middles Ages (and even until recently in many countries) the family unit was the basicproduction organization. A skilled craftsman taught his sons a trade, and the family was knownby its particular trade and skill. Modern surnames as Carpenter, Goldsmith, Butcher, Farmer, andTaylor are evidence of this development. Problems of administration were of interest to studentsof government even in ancient Greek and Biblical times. Formally, In 1776, Adam Smith wrote‘The Wealth of Nations’ in which he developed important economic concepts. He emphasizedthe importance of division of labor with its three chief advantages: (1) an increase in thedexterity of every workman; (2) the saving of time lost in passing from one type of work to thenext; and (3) the better of new machines. The development of the factory system resulted in anincreased interest in the economics of production and the entrepreneur.

The inventions of the eighteenth century initiated a change which Toynbee later called theIndustrial Revolution. Production moved from the home to a separate installation – the factory –where machinery was concentrated and labor employed. In the early stages of the IndustrialRevolution, owners of factories directed production but generally did not distinguish betweentheir ownership functions and their management duties.

In the early nineteenth century, the need for larger aggregations of capital to support factoryoperations resulted in increased applications of a special legal form of organizing a business. Thecorporation, as a separate legal entity, could sell shares of stock to many individuals and thusraise large sums of capital. Stockholders then became so numerous that all could not activelymanage a business. By the middle of the nineteenth century, general incorporation acts made itpossible for many businesses to use this legal form of organization at a time in whichtechnological developments were forcing an increase in the size of the manufacturing unit. If the

family fortune was insufficient for the family owners to expand, the corporation provided ameans by which capital could be secured from owners who were not managers. The distinctionbetween the function of owners and the function of managers became clear.

The social evils of the Industrial Revolution received wide attention in the early nineteenthcentury. In England, social reformers sought legal regulation of employment practices in theFactory of 1802, 1819, and 1831. One reformer also became a pioneer in management. RobertOwen, as manager of a large textile firm in New Lanark, Scotland, concentrated on theimprovement of working conditions and on the development of a model community. The socialimpact of modern productive methods became an important interest of such men in operatingmanagement.

Classical management Era (1880-1930)

Classical Management includes

1. Scientific Management School

2. Administration Management school

3. Bureaucracy Management.

1. Scientific Management

Frederick Taylor, known as the father of Scientific Management, Published Principals ofScientific Management , in which he proposed work methods designed to increase workerproductivity.

Scientific Management focuses on worker and machine relationships.

Organizational productivity can be increased by increasing the efficiency of productionprocesses. The efficiency perspective is concerned with creating job that economizes on time,human energy, and other productive resources. Job are designed so that each worker has aspecified, well controlled task that can be performed as instructed.

Principles of scientific management

1. Replacement of old rule of thumb method.

2. Scientific selecting and training.

3. Labor management co-operation.

4. Maximizes output.

5. Equal division of responsibility.

Perspective of scientific Management

There are four scientific management systems:

1. Develop a science for each element of the job to replace old rule of thumb method.

2. Scientifically select employees and then train them to do the job as described in step 1.

3. Supervise employees to make sure they follow the prescribed method for performingtheir job.

4. Continue to plan the work but use worker to actually get the work done.

2. Administrative Management

Administrative Management emphasizes the manager and the functions of management. Henrifayol known as the father of modern Management.

He wrote General and Industrial Management. His five function of managers were plan,organize, command, co-ordinate, and control.

Principal of administrative management

1. Division of labor

2. Authority & responsibility,

3. Discipline,

4. Unity of command,

5. Unity of direction,

6. Subordination of individual interests to general interest,

7. Remuneration of personnel,

8. Centralization,

9. Scalar chain,

10. Order,

11. Equity,

12. Stability of tenure,

13. Initiative and

14. Esprit de crops (union of strength).

Mary parker Follett’s concepts included in the administration management that is

The universal goal,

The universal principal,

Law of the situation: Emphasizes that there is no one best way to do anything, but that itall depends on the situation.

3. Bureaucracy

Max Weber known as father of modern Sociology analyzed bureaucracy as the most logical &structure for large organization.

Features of Bureaucracy

Rational authority: This is based on law, procedures, rules, and so on.

Positional authority: Positional authority of superior over a subordinate stems from legalauthority.

Charismatic authority: Charismatic authority stems from the personal qualities of anindividual.

Principles of Bureaucracy

1. Clearly defined and specialized functions.

2. Use of legal authority;

3. Hierarchical form;

4. Written rules and procedures;

5. Technically trained bureaucrats;

6. Appointment to positions based on technical expertise;

7. Promotions based on competence;

8. Clearly defined career paths.

Neo- classical Management

It includes

1. Human relation school

2. Behavioral Management School

1. Human relation school

Behavioral or human relations management emerged in the 1920s and dealt with the humanaspects of organizations. It has been referred to as the neo-classical school because it wasinitially a reaction to the shortcoming of the classical approaches to management. The humanrelations movement began with the Hawthorne studies.

The Hawthorne studies are significant because they demonstrated the important influence ofhuman factors on worker productivity.

There are four major phases to the Hawthorne studies:

1. The illumination experiment: Tried to determine whether better lighting would lead toincreased productivity.

2. The real assembly group experiments

3. The interviewing program and

4. The bank wiring group studies.

2. Chester Barnard

Record his insights about Management in his book function of Executive.

It outlined the legitimacy of the supervisors directive and the extend of the subordinatesacceptance.

Barnard taught that the three top functions of the executive were to –1. establish and maintain an effective communication system,

2. Hire and retain effective personnel

3. Motivate those personnel.

His Acceptance Theory of authority state that managers only have as much authority asemployees. The acceptance of authority depends on four conditions.

1. Employees must understand what the manager wants them to do.

2. Employees must be able to comply with the directive.

3. Employees must think that the directive is in keeping with organizational objectives.

4. Employees must think that the directives are not contrary to their personal goal.

3. Behavioral Management school

The behavioral approach did not always increase productivity. Thus, motivates and leadershiptechniques became a topic of great interest. The human resources school understands thatemployees are very creative and competent, and that much of their talent is largely untapped bytheir employers. Employee want meaningful work; they want to contribute; they want toparticipate in decision making and leadership functions.

Modern Management concept

1. The Social System School

The members of the social system school of management theory view management as a socialsystem. March and Simon's 1958 book Organizations published by Wiley is used as an example,but Koontz indicates that Chester Barnard is the spiritual father of this school of management.The social system school identifies the nature of the cultural relationships of various socialgroups and how they are related and integrated. Barnard's work includes a theory of cooperationwhich underlies the contributions of many others in this school. Herbert Simon, and othersexpanded the concept of social systems to include any cooperative and purposeful groupinterrelationship or behavior.

2. Decision theory school

Herbert Simon, Glurk and lyndall urwick the major contributors to this school of thought.

The main features of this theory are as follow:--

1. Decision is central to the study of organization.

2. The organization effectiveness depends on the quality of decision.

3. All factors affecting decision making are the subject matter of the study of Management.

4. The member of the organization is decision makers and problem solvers.

3. Quantitative Management school

The mathematical school of management views management as a system of mathematicalmodels and processes. This includes the operations researchers and management scientists.But Koontz points out that in his view mathematics is a tool, not a school.

4. System theory

A system is a collection of part unified to accomplish an overall goal.

Inputs would include resources such as raw materials, money, technologies and people. Theseinputs go through a process where they’re planned, organized, motivated and controlled,ultimately to meet the organization’s goals. Outputs would be products or services to a market.Outcomes would be, e.g., enhanced quality of life or productivity for customers/clients,productivity. Feedback would be information from human resources carrying out the process,customers/clients using the products, etc. Feedback also comes from the larger environment ofthe organization, e.g., influences from government, society, economics, and technologies. Thisoverall system framework applies to any system, including subsystems (departments, programs,etc.) in the overall organization.

5. Contingency Management school / Situational approach

The latest approach to management which interact the various approaches to management isknown as the contingency approach or open and adaptive systems approach. The work of JoanWoodward in the 1950s marked the beginning of this approach in management.

Contingency school states that management is situational & the study of management lies inidentifying the important variables in the situation.

It recognizes that all the subsystem of the environment are interconnected and interrelated. Bystudying their interrelationship, the management can find solution to specific situation.

Emerging Management position

New management viewpoints are emerging. Quality management emphasizes achievingcustomer satisfaction by providing high quality goods & services.

Reengineering the organization redesigns the processes that are crucial to customer satisfaction.

Unit 2: Entrepreneurship Development

Entrepreneurship development: Meaning of entrepreneurship, role of entrepreneurs in economicsdevelopment, factors affecting entrepreneurship development, creativity and innovations,preparation of business plan

Meaning of entrepreneurship

Entrepreneur (Oxford Dictionary) – Person who undertakes an enterprise with chances of profitor loss. (As I have understood, Entrepreneur is a person who undertakes a business activity ofwhich he has no background and faces considerable risks in the process. If either of the twoelements, i.e., “no background” or “considerable risk” is missing in the venture, it is noentrepreneurship).

Standard (New) Definition

Entrepreneurship is the process of creating something differentwith value by devoting thenecessary time and effort, assuming the accompanying financial, psychic, social risks andreceiving the resulting rewards of monetary and personal satisfaction and independence. Word“Entrepreneur” stems from French Verb Entreprendre – means between; taker or go between

New Definition involves four aspects –(a) The creation process

(b) Devotion of time and efforts

(c) Assumption of risks

(d) Rewards of independence, satisfaction, money.

Entrepreneurship model

Role of entrepreneurs in economics development

To an Individual

(a) Provides Self Employment for the entrepreneur

(b) Entrepreneur can provide employment for near & dearone as well

(c) Entrepreneurship often provides an employment and livelihood for next

generations as well.

(d) Freedom to use own ideas – Innovation and creativity

(e) Unlimited income / higher retained income – Bill Gates has risen to become

richest in the world in a single life time through entrepreneurship

(f) Independence

(g) Satisfaction

To the nation

(a) Provides larger employment – Entrepreneurs provide employment for self as well asother people and is source of employment creation.

(b) Results in wider distribution of wealth – This is a logical sequel of above issue.Higher the employment, greater the distribution of wealth

(c) Mobilizes local resources, skills and savings

(d) Accelerates the pace of economic development – Entrepreneurship is the govt’sone of the most trusted vehicles for economic development

(e) Stimulates innovation & efficiency

Role of entrepreneurship in economic development

Entrepreneurial spirit of people is greatly responsible for economic development ofany country. There is no resource including diamond mines as valuable as humanresource.

South Africa and a few other African countries despite their fertile gold and diamondmines have remained poor/relatively poor, where as Japan with literally no naturalresources and

having suffered devastation during WW–II became a developed country in justthree decades. Therefore, if a country allows its human resources to beunutilized/underutilized (unemployment/disguised unemployment), its economicdevelopment would be severely hampered.

Failure of communism worldwide and our own harrowing experience withsocialism has shown that “Govt. has no business to be in Business”. Govt shouldonly govern. Business activity should be left to people. And this is where entrepreneursenter the picture.

(a) Entrepreneurs set up enterprises which provide employment not only tothemselves but to many others directly and indirectly and thereby put into utilizationhuman resource of the country.

(b) Entrepreneurs combine resources, put their time and efforts and produce goods orservices. The Value Addition that they do to the resources brings prosperity to thecountry.

(c) What they contribute – productivity, output, value addition, income and employment

(d) Entrepreneurship is a “Low Cost Strategy”. An entrepreneur works withmaximum financial efficiency in order to maximize his profits.

Entrepreneurs rarely indulge themselves in luxury of Business Class travel

and 5 Star Hotel comforts which the managers avail without fail. Thus, many suchcosts are either avoided or kept in check. Entrepreneurs perform the crucial rolethemselves.

(e) The spirit of Entrepreneurship – Drive, achieving higher goals, creativity, innovativeattitude.

(f) A dynamic society emerges and the spirit spreads like a chain reaction – Manyentrepreneurs have proved to be catalyst for growth of a bevy of smallerentrepreneurs. Jamshedpur was a small town before Tata Steel Plant was set up. Once theplant came up in the place, many people set up their small enterprises to cater to theneeds of the growing population.

Factors Favoring Entrepreneurship

1. Developed Infrastructure Facilities– Availability of infrastructure reduces the cost &efforts and improves viability of projects through higher profit margins.

2. Financial Assistance – Easy availability of cheap funds is vital for promotingentrepreneurship.

3. Protective and Promotional Policies– Most of the entrepreneurship projects start verysmall and have no resilience. They are extremely vulnerable to competitors, market,money markets, etc., for considerable time. Favorable Gov. Policies shelter them fromsuch vagaries.

4. Growth of Education – Science, Technology & Management – Growth of educationis believed to be promoting entrepreneurship. However, there are enough examples tosuggest otherwise. A very large proportion of first generation entrepreneurs are loweducated. Take the case of Microsoft Chairman Mr Bill Gates or Reliance Founder MrDhirubhai Ambani. (We also have Mr Narayan Murthy and Mr Ajim Premji to balancethis scale). On a wider spectrum, Kerala, the most literate state and West Bengal,another state high on literacy front, are least entrepreneurial states where asPunjab, with 5 rank from bottom was top on entrepreneurial charts.

5. Risk Taking Abilities– Risk taking ability is one of the pillars of entrepreneurialspirits.

6. Hunger for Success (Capitalistic View)– Fire in the belly and dreams of riches is whatdrives most entrepreneurs on this risky path. Any person content with what he has wouldtake the easier route of salaries job.

7. Environment/Culture Impact– Entrepreneurship is contagious. Communities likePunjabis and Marwaries are historically entrepreneurial. They are known for seekingand exploiting business opportunities in most remote areas. A culture propels them.

8. Social Security– Social security acts as a safety net against failure of enterprise. Socialsecurity guarantees basic ‘roti, kapada aur makan’ in case of failure. Entrepreneurialspirit of United States is born partly out of this security.

9. Technical/Industrial Training Facilities – Industrial Training facilities on onehand generate skilled manpower so vitally required for setting up enterprises while onthe other hand they are also nursery for future entrepreneurs. Among the educatedentrepreneurs, a majority is product of technical institutes from IIT to ITI (Tier I to TierIII institutes).

10. Globalization– Globalization has provided another avenue for business. Many daredevils have taken a head– along plunge into this uncharted water and have written newsuccess stories.

Creativity and innovation in an entrepreneurial organization

Growth and development cannot be sustained without additional innovations (usually in theproduct or services or in its marketing) with additional innovations, firms become “glamorous”Introducing new products is usually seen as part of the process of innovation, which is itselfseen as the engine driving continued growth and development.

The “winning performance” of the entrepreneur and the organization focuses on.

Competing on quality not prices:

Domination of a market niche;

Competing in an area of strength

Having tight financial, and operating controls:

Frequent product or service innovation (particularly important inmanufacturing).

Creativity

Creativity is marked by the ability to create, bring into existence, to invent into a new form, toproduce through imaginative skill, to make to bring into existence something new. Creativity isnot ability to create out of nothing (only God can do that), but the ability to generate new ideasby combining, changing, or reapplying existing ideas. Some creative ideas are astonishing andbrilliant, while others are just simple, good practical ideas that no one seems to have thought, ofyet. (Harris, 1998).

Everyone has substantial creative ability including you the reader. So you should count yourselfand believe it that you are a creative genius. All you need is to be reawakened and be highly

committed to creativity. I want you to start thinking now, in the process something new willflow. Explore that something new today and you will be a different personality tomorrow.

Creativity is also an attitude, the ability to accept change and newness, a willingness to playwith ideas and possibilities, a flexibility of outlook, the habit of enjoying the good, while lookingfor ways to improve it, we are socialized into accepting only a small number of permissible ornormal things, like chocolate-covered strawberries for example. The creative person realizes thatthere are other possibilities like peanut butter and banana sandwiches, or chocolate-coveredprunes. Harris (1998). Creativity is also a process. Creative person work hard and continually toimprove ideas and solutions, by making gradual alterations and refinements to their works.Contrary to the mythology surrounding creativity, very few of creative excellence are producedwith a single stroke of brilliance or in a frenzy of rapid activity. Much closer to the real truth arethe stories of companies which had to take the invention away from the inventor in order tomarket it because the inventor would have kept on tweaking it and fiddling with it,, always tryingto make it a little better, (Harris, 1998).

A product is creative when it is “novel” and “appropriate”. A novel product is original, notpredicable. The bigger the concept, and the more the product stimulates further work ideals, themore the product is creative (Stermbering and Lubart). Creativity requires passion andcommitment. Out of the creative is born symbols and myths. It brings to our awareness whatwas previously hidden and points to new life. The experience is one of heightenedconsciousness-ecstasy”- Rollow May.

Innovation

Innovation is the process of bringing the best ideas into reality, which triggers a creative idea,which generates a series of innovative events. Innovation is the creation of new value.Innovation is the process that transforms new ideas into new value- turning an idea into value.You cannot innovate without creativity. Innovation is the process that combines ideas andknowledge into new value. Without innovation an enterprise and what it provides quicklybecome obsolete.

The dictionary defines innovation as the introduction of something new or different.Innovation is the implementation of creative inspiration. The National Innovation Initiative(NII) defines innovation as “the inter-section of invention and insight, leading to the creativeof social and economic value” Innovation is “value” – the creation of value adding value tocustomer’s satisfaction- “delighting the customers”.Innovation is the basis of all competition advantages, the means of anticipating and meetingcustomer’s needs and the method of utilization of technology.

Innovation is fostered by information gathered from new connections; from insights gainedby journeys into other disciplines or places; from active, collegial networks and fluid openboundaries. Innovation arises from organizing circles of exchange, where information is notjust accumulated or stored, but created. Knowledge is generated a new from connections thatwere not there before. Wheatley (1994).

Innovation requires a fresh way of looking at things, an understanding of people, and anentrepreneurial willingness to take risks and to work hard. An idea does not become aninnovation until it is widely adopted and incorporated into people’s daily lives. Most peopleresist change, so a key part of innovating is convincing other people that your idea is a good one

– by enlisting their help, and, in doing so, by helping them see the usefulness of the idea- ArtFry.

Enterprises throughout the world are experiencing what can be legitimately described as arevolution: rising energy and material costs, fierce international competition, newtechnologies, increasing use of automation and computers. All these are major challenges, whichdemand a positive response from the entrepreneur and management if the enterprise is to surviveand prosper. At a time when finance is expensive, the firm’s liquidity is bordering on crisis,the need for creativity, and innovation is more pressing than ever and as competitors fall bythe way side, the rewards for successful products and process are greater.

The instigation of new development is the responsibility of the enterprises themselves,which, through experience, are aware of the difficulties created when undertakinginnovative investments in a period of great uncertainty. Innovation calls for specialentrepreneurial and management skills, the cooperation of a committed workforce, financeand a climate which will create the optimum overall conditions to encourage success.

Joseph Schumpeter (1934) believes that the concept of innovation, described as the use of aninvention to create a new commercial product or service, is the key force in creating new demandand thus new wealth. Innovation creates new demand and entrepreneurs bring the innovationsto the market. This destroys the existing markets and creates new ones, which will in turn bedestroyed by even newer products or services. Schumpeter calls this process “creativedestructions.

Business plan

A business plan is a formal statement of a set of business goals, the reasons they are believedattainable, and the plan for reaching those goals. It may also contain background informationabout the organization or team attempting to reach those goals.

Business plans may also target changes in perception and branding by the customer, client,taxpayer, or larger community. When the existing business is to assume a major change or whenplanning a new venture, a 3 to 5 year business plan is required, since investors will look for theirannual return in that timeframe.

Outline of a business s plan

1. Introductory page

(a) Name and address of the venture

(b) Names and addresses of the principals

(c) Nature of business

(d) Statement of financing needed

(e) Statement of confidentiality of the report

2. Executive Summary

3. Industry Analysis

(a) Future outlook and trends

(b) Analysis of competitors

(c) Market segmentation

(d) Industry forecasts

4. Description of Venture

(a) Product(s)/Service(s)

(b) Size of business

(c) Office equipment and personnel

(d) Background of entrepreneurs

5. Production Plan or Operations Plan

(a) Manufacturing process (amount subcontracted)

(b) Physical plant

(c) Machinery and equipment

(d) Names of suppliers of raw materials

6. Marketing Plan

(a) Pricing

(b) Distribution

(c) Promotion

(d) Product forecasts

(e) Controls

(f) e– initiatives

7. Organizational Plan

(a) Form of ownership

(b) Identification of partners or principal shareholders

(c) Authority of principals

(d) Management– team background

(e) Roles and responsibilities of members of organization

8. Assessment of Risk

(a) Evaluation of weaknesses of business

(b) New technologies

(c) Contingencies plans

9. Financial Plan

(a) Pro forma income plan

(b) Cash flow projections

(c) Pro forma balance sheet

(d) Break– even analysis

(e) Sources and applications of funds

10. Appendices (contains backup material)

(a) Resumes of principals

(b) Letters

(c) Market research data and survey results

(d) Leases or contracts

(e) Price lists from suppliers

(f) Facility layout

(g) Draft marketing brochure with or without pricing

(h) Structure of e– marketing thrusts, if any

Unit 3: Strategic planning and management

What is Strategic Planning?

Strategic planning is an organizational management activity that is used to set priorities, focusenergy and resources, strengthen operations, ensure that employees and other stakeholders areworking toward common goals, establish agreement around intended outcomes/results, andassess and adjust the organization's direction in response to a changing environment. It is adisciplined effort that produces fundamental decisions and actions that shape and guide what anorganization is, who it serves, what it does, and why it does it, with a focus on the future.Effective strategic planning articulates not only where an organization is going and the actionsneeded to make progress, but also how it will know if it is successful.

What is a Strategic Plan?

A strategic plan is a document used to communicate with the organization the organizationsgoals, the actions needed to achieve those goals and all of the other critical elements developedduring the planning exercise.

What is Strategic Management?

Strategic management is the comprehensive collection of ongoing activities and processes thatorganizations use to systematically coordinate and align resources and actions with mission,vision and strategy throughout an organization. Strategic management activities transformthe static plan into a system that provides strategic performance feedback to decision making andenables the plan to evolve and grow as requirements and other circumstances change.

What Are the Steps in Strategic Planning & Management?

There are many different frameworks and methodologies for strategic planning andmanagement. While there is no absolute rules regarding the right framework, most follow asimilar pattern and have common attributes. Many frameworks cycle through some variationon some very basic phases: 1) analysis or assessment, where an understanding of the currentinternal and external environments is developed, 2) strategy formulation, where high levelstrategy is developed and a basic organization level strategic plan is documented 3) strategyexecution, where the high level plan is translated into more operational planning and actionitems, and 4) evaluation or sustainment / management phase, where ongoing refinement andevaluation of performance, culture, communications, data reporting, and other strategicmanagement issues occurs.

Steps of strategic management are:

1. Develop vision and mission2. External environment analysis3. Internal environment analysis4. Establish long-term objectives5. Generate, evaluate and choose strategies6. Implement strategies7. Measure and evaluate performance

David’s Model of the Strategic Management’s Process

What Are the Attributes of a Good Planning Framework?

The Association for Strategic Planning (ASP), a U.S.-based, non-profit professional associationdedicated to advancing thought and practice in strategy development and deployment, hasdeveloped a Lead-Think-Plan-Act rubric and accompanying Body of Knowledge to capture anddisseminate best practice in the field of strategic planning and management. ASP has alsodeveloped criteria for assessing strategic planning and management frameworks against theBody of Knowledge.

These criteria are used for three primary purposes:

Ensure that the ASP Body of Knowledge is continuously updated to include frameworksthat meet these criteria.

Maintain a list of qualifying commercial and academic frameworks recommended forstudy and training, to prepare participants to sit for the three ASP certificationexaminations.

Provide a resource and “check list” for practitioners as they refine and improve theirorganization’s systems and for consultants as they improve their product and serviceofferings.

The criteria developed by the ASP are:

1. Uses a Systems Approach that starts with the end in mind.

2. Incorporate Change Management and Leadership Development to effectively transforman organization to high performance.

3. Provide Actionable Performance Information to better inform decision making.

4. Incorporate Assessment-Based Inputs of the external and internal environment, and anunderstanding of customers and stakeholder needs and expectations.

5. Include Strategic Initiatives to focus attention on the most important performanceimprovement projects.

6. Offer a Supporting Toolkit, including terminology, concepts, steps, tools, and techniquesthat are flexible and scalable.

7. Align Strategy and Culture, with a focus on results and the drivers of results.

8. Integrate Existing Organization Systems and Align the Organization Around Strategy.

9. Be Simple to Administer, Clear to Understand and Direct, and Deliver Practical BenefitsOver the Long-Term.

10. Incorporate Learning and Feedback, to Promote Continuous Long-term Improvement.

Dimension of Strategic Decisions

Michael E. Porter (1996) opines that the core general management is strategy and elaborates strategyas “developing and communicating the company’s unique position, making trade-offs, and forging fitamong activities”.

Dimension of strategic decisions (Pearce and Robinson)

1. Strategic Issues require top management decision2. Involves the allocation of large amount of company resources3. Likely to have significant impact on the long term prosperity of the firm.4. future oriented5. Have major multifunctional or multi-business consequences6. Necessitates considering factors in the firm's external environment

Level of strategy

Three Levels of Strategy are

1. Corporate level strategy2. Business level strategy3. Functional level strategy

Level Characteristics of Strategic Management Decisions

Corporate level strategy

(Chief Executives, Board of

Greater risk, cost, and profit potential Greater need for flexibility Longer time horizons

Directors)

Business level strategy(Business Heads of MultipleBusiness Units)

Bridge decisions at corporate and functional levels Are less costly, risky, and potentially profitable than

corporate-level decisions Are more costly, risky, and potentially profitable than

functional-level decisions

Functional levelstrategy(Functionalmanagers, like, HRM,Finance Managers, etc)

Functional- level decisions Involve action-oriented operational issues Are relatively short range and low risk Incur only modest costs

Unit 4: Principles of Marketing Management

Marketing is the activity of developing connection between product/service and customers. Themanagement process through which goods and services move from concept to the customer. Itincludes the coordination of four elements called the 4 P's of marketing:

(1) Identification, selection and development of a product,

(2) Determination of its price,

(3) Selection of a distribution channel to reach the customer's place, and

(4) Development and implementation of a promotional strategy.

Market Analysis

o Market analysis includes taking a look at a company's past, present and futureactivities. With the majority of the focus being on future activities, marketingmanagers explore information such as competitive, economic, social, political andlegal environments. Marketing managers use S.W.O.T. analysis to determinestrengths and weaknesses, as well as opportunities and threats within the market.They also evaluate trends, growth, market size, distribution channels and evencosts. All of these aspects affect how, when, why and what people buy, so it'simportant to take them into consideration.

Market Planning

o After analyzing the market, marketing managers are able to come up with amarketing plan, which details how they will reach a company's target market.They also come up with measurable marketing objectives based on the goals ofthe company. This aspect of marketing management takes details such as product,placement, pricing, packaging, positioning, people and promotion into account.

Market Implementation

o When marketing managers put their research and market planning into action, it'sreferred to as the market implementation aspect of market management.Marketing managers pay special attention to the timing of each activity and makeadjustments where necessary. Examples of marketing activities include websitelaunches, coupon promotions, distributing direct mail pieces, radioadvertisements, commercials and even email marketing.

Market Control

o After implementation, marketing managers review the results of each marketingactivity to figure out successes and failures. The only true way to know if acampaign was a success is to put measures in place to evaluate the marketsituation after a plan is implemented. Market control can include surveyingcustomers, evaluating sales and feedback and tracking repeat purchases.

Marketing Manager

o Marketing managers play an integral role in following the marketing managementprinciples from start to finish. According to the "Occupational OutlookHandbook," marketing managers work more than 40 hours a week. It's hard topinpoint their salaries, because they vary depending on experience, location,workload, education and even company size. Most often, they hold a bachelor's ormaster's degree in business administration.

Whether you are thinking of setting up, starting or expanding your business or selling anyproduct or service, these four elements should be top-of-mind all the time:

1. The product: Exactly what product or service are you going to sell to this market?Define it in terms of what it does for your customer. How does it help your customer toachieve, avoid or preserve something? You must be clear about the benefit you offer andhow the customer’s life or work will be improved if he or she buys what you sell.

2. The price: Exactly how much are you going to charge for your product or service, and onwhat basis? How are you going to price it to sell at retail? How are you going to price itat wholesale? How are you going to charge for volume discounts? Is your price correctbased on your costs and the prices of your competitors?

3. The place: Where are you going to sell this product at this price? Are you going to selldirectly from your own company or through wholesalers, retailers, direct mail, catalogsor the Internet?

4. The promotion: Promotion includes every aspect of advertising, brochures, packaging,salespeople and sales methodology. How are you going to promote, advertise and sell thisproduct at this price at this location? What will be the process from the first contact witha prospect through to the completed sale?

In recent years, there have been attempts to develop a package (mix) that will not only satisfy theneeds of the customer, but simultaneously maximize the performance of the organization. Thismodel suggests the expansion of the marketing mix to 5Ps to include People or Personnel.However, this mix does nothing to address the “uncontrollable” factors affecting your marketing.Controllable factors vs. uncontrollable facts can be defined as:

Controllable - The 4Ps representing the elements of marketing we can control internally. Theydepend upon such “givens” as your budget, personnel, creativity, etc.Uncontrollable - The current economic environment including such elements as consumerconfidence, degree of unemployment, new technologies, the threat of displacement, competitors,government regulations or changing consumer preferences.

Many marketing specialists are now seeing the 4Ps as too product-oriented and have adopted the4Cs marketing mix. This model looks at the marketing from the customer’s point of view.

1. Place becomes Convenience

2. Price becomes Cost to the user

3. Promotion becomes Communication

4. Product becomes Customer needs and wants

Issues on 4 PS

Product/Service What does the customer want from the product/service?What needs does it satisfy?

What features does it have to meet these needs?

Are there any features you've missed out?

Are you including costly features that the customerwon't actually use?

How and where will the customer use it?

What does it look like? How will customers experience it?

What size(s), color(s), and so on, should it be?

What is it to be called?

How is it branded?

How is it differentiated versus your competitors?

What is the most it can cost to provide, and still be soldsufficiently profitably? (See also Price, below).

Place Where do buyers look for your product or service?

If they look in a store, what kind? A specialist boutique or ina supermarket, or both? Or online? Or direct, via acatalogue?

How can you access the right distribution channels?

Do you need to use a sales force? Or attend trade fairs? Ormake online submissions? Or send samples to cataloguecompanies?

What do you competitors do, and how can you learn from

that and/or differentiate?

Price What is the value of the product or service to the buyer?

Are there established price points for products or services inthis area?

Is the customer price sensitive? Will a small decrease inprice gain you extra market share? Or will a small increasebe indiscernible, and so gain you extra profit margin?

What discounts should be offered to trade customers, or toother specific segments of your market?

How will your price compare with your competitors?

Promotion Where and when can you get across your marketingmessages to your target market?

Will you reach your audience by advertising in the press, oron TV, or radio, or on billboards? By using direct marketingmailshot? Through PR? On the Internet?

When is the best time to promote? Is there seasonality in themarket? Are there any wider environmental issues thatsuggest or dictate the timing of your market launch, or thetiming of subsequent promotions?

How do your competitors do their promotions? And howdoes that influence your choice of promotional activity?

The concept of 7 ps in marketing

The seven Ps of marketing mix are price, product, place, promotion, physical presence, provisionof service, and processes. This refers to the requirements of successfully marketing a product. Italso serves as a means to encourage brand loyalty in consumers. Customers make judgmentsabout service provision and delivery based on the people representing your organization. Allservices need to be underpinned by clearly defined and efficient processes. Physical evidence isabout where the service is being delivered. It is particularly relevant to retailers operating out ofshops. This element of the marketing mix will distinguish a company from its competitors

Extended marketing mixes are given in the figure

Unit 5: Principles and practices of human resource management

Definition

HRM is a distinctive approach to employment management which seeks to achieve competitiveadvantage through the strategic deployment of a highly committed and capable workforce, usingan array of cultural, structural and personnel techniques.” Storey (1995: 5).

“HRM is a managerial perspective which argues the need to establish an integrated series ofpersonnel policies to support organizational strategy.” Buchanan and Huczynski (2004: 679).Human Resource Management- Functions and Objectives

HRM and its importance started to be considered as an integral function of the organization andas a specialized field of study with the realization of the fact that employees, independently orjointly, play a pivotal role in the achievement of the overall organizational goals and objectives.Today, HR is an exclusive department in almost all organizations and has a number of importantfunctions to perform. These are as follows:Functions

1. Employee Career Goals:

2. Organizational Goals:

3. Training and Development:

4. Recruitment:

5. Staffing:

6. Ensuring employee health and safety by abiding to the employee safety and healthregulations.7. Managing grievances

8. Ensuring provisions for adequate and promised compensation with fixed and variablebenefits to keep them motivated.

9. Making strategies for reducing the employee turnover rate.

10. To ensure a positive work environment in the organization.

11. To continuously stimulate a sense of belonging, responsibility and accountability inemployees.12. Ensuring effective communication between employees and minimizing conflicts.13. To ensure latest appraisal methods, fair and unbiased salary hikes for keeping theemployees motivated.14. To keep a record of the employee profiles and database so that it can be readilyavailable at the time of recruitment and staffing and also ensuring its confidentiality.15. To keep a bird eye view on each employees performance and regularly providingfeedbacks on the same.

Objectives

There are also some objectives for which HRM performs its aforesaid functions in anorganization. Some of the objectives are as follows:

1. To achieve the organizational goals and objectives.

2. To ensure employee satisfaction at every level.3. To instill team spirit in employees.4. To explore employees capabilities for performing a given job.5. To ensure maintaining the quality of work life.6. To respect the employees as individuals and also respect their individual careergoals.7. To equip the employees with proper resources.8. To keep the employees motivated.9. To encourage the feeling of organizational loyalty in employees.10. To ensure a positive environment of mutual trust and understanding in theorganization.

Principles

Human resources management is guided by very important aspects. These aspects are essentialfor any business to succeed. Principles of Human Resources Management have been wellsummarized in 10C’s.

Comprehensiveness This involves the proper management of all aspects of the peopleyou are working with bearing in mind that human resources is themost valuable resource your firm has. This means that the financial,health, transportation, tools and anything employees need to workshould be well taken care of.

Cost-effectiveness Companies should ensure that they remunerate their employeesaccordingly. The employees reward system should be able tosustain the organization.

Control. Firms should be able to take charge of their employees and ensurethat productivity and quality is achieved and maintained. Controlshould be exercised carefully so that it does not seem like tyranny

Coherence. All the steps taken by a firm in the management of human resourcesmust be in line with the mission and vision of the firm. HumanResources managers should direct their focus on what the companyneeds and employee abilities.

Communication Communication is very important in every organization. Throughcommunication, firms can ensure there is flow of information that isnecessary for efficiency.

Creativity Creativity is key if a firm is to be efficient in human resourcesmanagement. Firms should adopt new ways of human resourcesmanagement as long as it fits their companies.

Competence. It is an organizations responsibility to ensure that their employeesare skilled to do their duties. Because the competence of a firmdepends on that of its employees, firms should do everything toincrease employee capabilities for example, by training them.

Credibility. Firms must ensure that they remain the best brand to most of theirclients by maintaining their credibility. They should put in placestrategies that ensure all employees have a clear sense of directionto a common goal.

Change Change is inevitable for businesses. The fastest business to embracechange in management of their human resources is better placed toproduce better results.

Commitments Commitment. Every organization has objectives which they intendto meet both for themselves and for their clients. To meet thesegoals, firms need committed staff therefore it is the firmsresponsibility to keep their employees motivated so as to ensurethey are committed to the organizations course.

HRM framework

Practices of HRM

In one another study, Redman and Matthews (1998) identify an ‘HRM bundle’ of key practices,which support service organizations quality strategies, these being.

1. Careful recruitment and selection, for example, ‘total quality recruitment’, ‘zerodefects recruitment’, ‘right first time recruitment’.2. Extensive remuneration systems, for example, bonuses available for staff willing to bemulti-skilled.

3. Team working and flexible job design, for example, encouraging a sense ofcohesiveness and designing empowered jobs.

4. Training and learning, for example, front line staff having enhanced interpersonal andsocial skills.

5. Employee involvement, for example, keeping employees informed of key changes inthe organization.

6. Performance appraisals with links to contingent reward systems, for example,gathering customer feedback to recognize the work by employees over and above theirexpected duties, which in turn is likely to lead to a bonus for staff.

Challenges of human resource management

1. Workplace diversity. This may consist of issues involving age, education, ethnicity, gender,income, marital status, physical limitations, religion, sexual orientation, or any number of otherthings. Understanding the challenges that may be faced by the interaction of any of these diversegroups, as well as the required openness of the company toward such groups, will help HRpersonnel provide assistance in training employees to work with those they may consider“different,” accept that such workers may be present in the business, and agree to treat each otherrespectfully, even if they never come to agree with each other over various issues.

2. Change management. This is another challenge that more and more HR departments arefacing. Being able to deal with their own changing roles in corporate society, in addition to thechanges to other jobs, the overlapping responsibilities, and more. Understanding that change isrequired is the first step toward accepting the change.

3. Compensation and benefits. With a slow economy and tightening corporate purse-strings,the issue of compensation and employee benefits is one that almost every business must dealwith. The key is to present mandatory changes in such a way that employees can accept, if notnecessarily agree with them while providing non-monetary morale boosting incentives wheneverpossible to make the changes less traumatic.

4. Recruiting skilled employees. In an era of rising unemployment, it would seem that findingqualified workers would be easier than ever. But that’s seldom the case. Many industries arefacing dire needs for employees with acceptable skills and the required training or degree. Thisapplies not only to health care, but also to technology and other fields as well, causing manyemployers to search outside their local marketplace for workers who can do the jobs they needfilled.

5. Training and development. This is another challenge that HR managers and personnel mustdeal with more frequently. With the need to cut training costs, training itself often suffers. Yetthe skills an employee needs must still be taught. Many companies are meeting this challenge byproviding eLearning opportunities that allow employees to receive the training they need without

the expenses associated with travel, on-site trainers, hours away from their jobs and high-pricedmaterials.

These are only a few of the many challenges an HR department must be prepared to deal with.Knowing in advance what type situation might arise will help you to be better equipped in theevent that it does. After all, it’s always best to hope for the best, but to be prepared for the worst.Just in case.

Unit 6: International business environment

Definition

1) IB field is concerned with the issues facing international companies and governments indealing with all types of crossborder transactions.

2) IB involves all business transactions that involve two or more countries.

3) IB consists of transactions that are devised and carried out across borders to satisfy theobjectives of individuals and organizations.

4) IB consists of those activities private and public enterprises that involve the movement acrossnational boundaries of goods and services, resources, knowledge or skills.

Reasons for Going International

- There are two primary reasons for going international and a third less common reason.

1. to expand sales by accessing new markets,

2. to reduce costs, and/or

3. to reduce risk.

Meaning international business environment

The international business environment can be defined as the environment in differentsovereign countries, with factors exogenous to the home environment of the organization,influencing decision-making on resource use and capabilities.

The political environment in a country influences the legislation and government rules andregulations under which a foreign firm operates.

The technological environment comprises factors related to the materials and machines usedin manufacturing goods and services.

Economic factors exert huge impacts on firms working in an international businessenvironment. The economic environment relates to all the factors that contribute to acountry's attractiveness for foreign businesses, such as monetary systems, inflation, andinterest rates.

Factors of international environment

The international business environment includes social, political, economic, regulatory, tax,cultural, legal, and technological aspects.

The political environment in a country influences the legislation and government rules andregulations under which a foreign firm operates. Every country in the world follows its ownsystem of law and a foreign company operating within it has to abide by these laws for aslong as it continues to operate there.

The technological environment comprises factors related to the materials and machines usedin manufacturing goods and services. The organization's receptivity and willingness to adopt

to new technology, as well as the willingness of its consumers to do likewize, influencesdecisions made in an organization.

Economic factors exert huge impacts on firms working in an international business environment.The economic environment relates to all the factors that contribute to a country's attractivenessfor foreign businesses.

Businesses rely on a predictable and stable mechanism. A monetary system thatacknowledges countries’ and economies’ interdependence and that fosters growth,stability and fairness at a global level is important for prosperity, and the operation andgrowth of companies.

Inflation, interest rates, and the borrowing costs of companies also contribute to acountry's attractiveness. If a country has a high rate of inflation, its central banks willraise the interest rate, which increases the cost of borrowing for firms. High inflation alsomakes the value of the revenue in domestic currency fall, and this exposes firms toforeign exchange risks. It is even worse if firms produce in countries of high inflation andthen sell products to countries of low inflation, since the input costs are on the rise whilethe revenue stays stable.

Absolute purchasing power parity posits that the exchange rate between two countrieswill be identical to the ratio of the price levels for those two countries. This concept isderived from a basic idea known as the law of one price, which states that the real priceof a good must be the same across all countries. As the currency of a country depreciates,its competitiveness is improved since its goods are cheaper than other countries', helpingcompanies export more.

Relative purchasing power parity (PPP) is an economic theory used to determine therelative value of currencies, estimating the amount of adjustment needed on the exchangerate between countries in order for the exchange to be equivalent to (or on par with) eachcurrency's purchasing power. It asks how much money would be needed to purchase thesame goods and services in two countries, and uses that to calculate an implicit foreignexchange rate. PPP rates facilitate international comparisons of income, as marketexchange rates are often volatile; affected by political and financial factors that do notlead to immediate changes in income, and that tend to systematically understate thestandard of living in poor countries. Another interpretation is that the difference in therate of change in prices at home and abroad—the difference in the inflation rates—isequal to the percentage depreciation or appreciation of the exchange rate so that thecompetitiveness of one country could be maintained.

Changing Nature of International Business

US share of world output has dramatically Declined Sources and destinations of FDI has also changed dramatically in the past 30 years and the developing countries becoming more important New MNCs from developing countries Fall of communism and rise of free enterprise system

Why Intl. Business is different?

Operate in different countries with different cultures, political systems, economicsystems, and are at different levels of economic development

Interact with different governments, – conflict between nation-state and MNC Work within the limits of international trade and investment systems Complexity of managing intl. businesses Deal with foreign exchange changes

Managing in the Global Marketplace

An International Business is any firm that engages in international trade or investment.

Managing an international business is different than managing a domestic business:

1. Countries are different.

2. Problems are more complex.

3. Must work within government regulations.

4. Currency conversion presents unique problems

Unit 7: Organizational change and development

Definition

Company or organization going through a transformation. Organization change occurs whenbusiness strategies or major sections of an organization are altered. Also known asreorganization, restructuring and turnaround.

Organizational change is about reviewing and modifying management structures and businessprocesses. Small businesses must adapt to survive against bigger competitors and grow.However, success should not lead to complacency. To stay a step ahead of the competition,companies need to look for ways to do things more efficiently and cost effectively. There is noneed to fear change. Instead, small businesses should embrace change as a way to lay thefoundations for enduring success.

According to Middlemist and Hitt (1988, p. 493), organizational development is: A systematicmeans for planned change that involves the entire organization and is intended to increaseorganizational effectiveness.

Cummings and Huse (1988, p. 1) define OD in broader terms: A system wide application ofbehavioral science knowledge to the planned development and reinforcement of organizationalstrategies, structure, and processes for improving an organization’s effectiveness.

Drivers

A company's change drivers include the competitive environment, new technologies, consumerdemand, economic conditions and government policy actions. Information technologies have changedhow businesses operate and interact with one another. New business models, such as outsourcing andvirtual collaboration, would not be possible without high-speed communications and the Internet.Government regulations also force businesses to adapt, as do changing consumer preferences.Recessions usually lead to layoffs, which may require restructuring, and mergers and acquisitions lead tochanges in organizational culture.Benefits of change

Why change?

Companies that refuse to embrace change may disappear. However, change is difficult because itinvolves modifying people's behavior. Resistance may come from employees who are generallyskeptical of change initiatives, especially if they have lived through botched implementations inthe past. Successful organizational change requires top management leadership and a clearexplanation of how the contemplated changes can help employees do their jobs more efficiently.

Stages of change

Organizational change typically consists of three stages:

1. establishing the need, implementation and monitoring. To establish a need for change,senior management could articulate where the company wants to be in five to 10 yearsand what it needs to do to get there. For example, a saturated local market may force acompany to consider international expansion.

2. The second stage involves changing structures and processes, such as reducing thenumber of management layers, combining business units, reassigning management,reducing employee headcount and giving division managers more decision-makingflexibility.

3. The final stage involves monitoring the results from the organizational changes andmaking appropriate adjustments.

Issues

Change efforts fail for different reasons, including lack of focus and inadequate communication.Change initiatives that try to do too much tend to fail. It is better to succeed with small changeprojects, such as improving the response time in customer service centers, and then building onthis success to implement complicated changes. Leadership should talk to employees in one-on-one and group settings to answer questions, exchange ideas and generally alleviate concerns.

Types of change

Structural: Organizations often find it necessary to redesign the structure of thecompany due to influences from the external environment. Structural changes involve thehierarchy of authority, goals, structural characteristics, administrative procedures, andmanagement systems. Almost all change in how an organization is managed falls underthe category of structural change. A structural change may be as simple as implementinga no‐smoking policy, or as involved as restructuring the company to meet the customerneeds more effectively.

Process‐oriented: Organizations may need to reengineer processes to achieve optimumworkflow and productivity. Process‐oriented change is often related to an organization'sproduction process or how the organization assembles products or delivers services. Theadoption of robotics in a manufacturing plant or of laser‐scanning checkout systems atsupermarkets are examples of process‐oriented changes.

People‐centered: This type of change alters the attitudes, behaviors, skills, orperformance of employees in the company. Changing people‐centered processes involvescommunicating, motivating, leading, and interacting within groups. This focus may entailchanging how problems are solved, the way employees learn new skills, and even thevery nature of how employees perceive themselves, their jobs, and the organization.

Some people‐centered changes may involve only incremental changes or small improvements ina process. For example, many organizations undergo leadership training that teaches managershow to communicate more openly with employees. Other programs may concentrate on team

processes by teaching both managers and employees to work together more effectively to solveproblems.

Remember that strategic, structural, process‐oriented, and people‐centered changes occurcontinuously in dynamic businesses. Often, changes in one of these areas impact changes in theother areas.

Many employees believe that a change is often reactive and nothing more than a quick fix; thenthey brace themselves for more changes in the future. Management needs to realize that seriousunderlying problems in organizations must be addressed with long‐term consequences in mind.Thus, when management implements changes, careful thought must be given to ensure that thenew processes are for the long‐term good of the company.

Change management model

Kotter's 8-Step Change Model Implementing Change Powerfully and Successfully

Step 1: Create Urgency

For change to happen, it helps if the whole company really wants it. Develop a sense of urgencyaround the need for change. This may help you spark the initial motivation to get things moving.

This isn't simply a matter of showing people poor sales statistics or talking about increasedcompetition. Open an honest and convincing dialogue about what's happening in the marketplace

and with your competition. If many people start talking about the change you propose, theurgency can build and feed on itself.

What you can do:

Identify potential threats , and develop scenarios showing what could happen in the future. Examine opportunities that should be, or could be, exploited. Start honest discussions, and give dynamic and convincing reasons to get people talking and

thinking. Request support from customers, outside stakeholders and industry people to strengthen your

argument.

Kotter suggests that for change to be successful, 75 percent of a company's management needs to"buy into" the change. In other words, you have to work really hard on Step 1, and spendsignificant time and energy building urgency, before moving onto the next steps. Don't panic andjump in too fast because you don't want to risk further short-term losses – if you act withoutproper preparation, you could be in for a very bumpy ride.

Step 2: Form a Powerful Coalition

Convince people that change is necessary. This often takes strong leadership and visible supportfrom key people within your organization. Managing change isn't enough – you have to lead it.

You can find effective change leaders throughout your organization – they don't necessarilyfollow the traditional company hierarchy. To lead change, you need to bring together a coalition,or team, of influential people whose power comes from a variety of sources, including job title,status, expertise, and political importance.

Once formed, your "change coalition" needs to work as a team, continuing to build urgency andmomentum around the need for change.

What you can do:

Identify the true leaders in your organization, as well as your key stakeholders . Ask for an emotional commitment from these key people. Work on team building within your change coalition. Check your team for weak areas, and ensure that you have a good mix of people from different

departments and different levels within your company.

Step 3: Create a Vision for Change

When you first start thinking about change, there will probably be many great ideas and solutionsfloating around. Link these concepts to an overall vision that people can grasp easily andremember.

A clear vision can help everyone understand why you're asking them to do something. Whenpeople see for themselves what you're trying to achieve, then the directives they're given tend tomake more sense.

What you can do:

Determine the values that are central to the change. Develop a short summary (one or two sentences) that captures what you "see" as the future of

your organization. Create a strategy to execute that vision. Ensure that your change coalition can describe the vision in five minutes or less. Practice your "vision speech" often.

Step 4: Communicate the Vision

What you do with your vision after you create it will determine your success. Your message willprobably have strong competition from other day-to-day communications within the company, soyou need to communicate it frequently and powerfully, and embed it within everything that youdo.

Don't just call special meetings to communicate your vision. Instead, talk about it every chanceyou get. Use the vision daily to make decisions and solve problems. When you keep it fresh oneveryone's minds, they'll remember it and respond to it.

It's also important to "walk the talk." What you do is far more important – and believable – thanwhat you say. Demonstrate the kind of behavior that you want from others.

What you can do:

Talk often about your change vision. Address peoples' concerns and anxieties, openly and honestly. Apply your vision to all aspects of operations – from training to performance reviews. Tie

everything back to the vision. Lead by example .

Step 5: Remove Obstacles

If you follow these steps and reach this point in the change process, you've been talking aboutyour vision and building buy-in from all levels of the organization. Hopefully, your staff wantsto get busy and achieve the benefits that you've been promoting.

But is anyone resisting the change? And are there processes or structures that are getting in itsway?

Put in place the structure for change, and continually check for barriers to it. Removing obstaclescan empower the people you need to execute your vision, and it can help the change moveforward.

What you can do:

Identify, or hire, change leaders whose main roles are to deliver the change. Look at your organizational structure, job descriptions, and performance and compensation

systems to ensure they're in line with your vision. Recognize and reward people for making change happen. Identify people who are resisting the change, and help them see what's needed. Take action to quickly remove barriers (human or otherwise).

Step 6: Create Short-Term Wins

Nothing motivates more than success. Give your company a taste of victory early in the changeprocess. Within a short time frame (this could be a month or a year, depending on the type ofchange), you'll want to have some "quick wins " that your staff can see. Without this, critics andnegative thinkers might hurt your progress.

Create short-term targets – not just one long-term goal. You want each smaller target to beachievable, with little room for failure. Your change team may have to work very hard to comeup with these targets, but each "win" that you produce can further motivate the entire staff.

What you can do:

Look for sure-fire projects that you can implement without help from any strong critics of thechange.

Don't choose early targets that are expensive. You want to be able to justify the investment ineach project.

Thoroughly analyze the potential pros and cons of your targets. If you don't succeed with anearly goal, it can hurt your entire change initiative.

Reward the people who help you meet the targets.

Step 7: Build on the Change

Kotter argues that many change projects fail because victory is declared too early. Real changeruns deep. Quick wins are only the beginning of what needs to be done to achieve long-termchange.

Launching one new product using a new system is great. But if you can launch 10 products, thatmeans the new system is working. To reach that 10th success, you need to keep looking forimprovements.

Each success provides an opportunity to build on what went right and identify what you canimprove.

What you can do:

After every win, analyze what went right, and what needs improving. Set goals to continue building on the momentum you've achieved. Learn about kaizen , the idea of continuous improvement. Keep ideas fresh by bringing in new change agents and leaders for your change coalition.

Step 8: Anchor the Changes in Corporate Culture

Finally, to make any change stick, it should become part of the core of your organization. Yourcorporate culture often determines what gets done, so the values behind your vision must show inday-to-day work.

Make continuous efforts to ensure that the change is seen in every aspect of your organization.This will help give that change a solid place in your organization's culture.

It's also important that your company's leaders continue to support the change. This includesexisting staff and new leaders who are brought in. If you lose the support of these people, youmight end up back where you started.

What you can do:

Talk about progress every chance you get. Tell success stories about the change process, andrepeat other stories that you hear.

Include the change ideals and values when hiring and training new staff. Publicly recognize key members of your original change coalition, and make sure the rest of the

staff – new and old – remembers their contributions. Create plans to replace key leaders of change as they move on. This will help ensure that their

legacy is not lost or forgotten.

Lewin’s model of change

This is three steps model designed by Kurt lewin

Unfreeze 1. Determine what needs to change. Survey the organization to understand the current state. Understand why change has to take place.

2. Ensure there is strong support from upper management. Use Stakeholder Analysis and Stakeholder Management to identify and

win the support of key people within the organization. Frame the issue as one of organization-wide importance.

3. Create the need for change. Create a compelling message as to why change has to occur. Use your vision and strategy as supporting evidence. Communicate the vision in terms of the change required. Emphasize the "why".

4. Manage and understand the doubts and concerns. Remain open to employee concerns and address in terms of the need to

change.

Change 1. Communicate often. Do so throughout the planning and implementation of the changes. Describe the benefits. Explain exactly the how the changes will effect everyone. Prepare everyone for what is coming.

2. Dispel rumors. Answer questions openly and honestly. Deal with problems immediately. Relate the need for change back to operational necessities.

3. Empower action. Provide lots of opportunity for employee involvement. Have line managers provide day-to-day direction.

4. Involve people in the process. Generate short-term wins to reinforce the change. Negotiate with external stakeholders as necessary (such as employee

organizations).Refreeze 1. Anchor the changes into the culture.

Identity what supports the change. Identify barriers to sustaining change.

2. Develop ways to sustain the change. Ensure leadership support. Create a reward system. Establish feedback systems. Adapt the organizational structure as necessary.

3. Provide support and training. Keep everyone informed and supported.

4. Celebrate success!

MODEL OF ORGANIZATIONAL DEVELOPMENT

Recognition of need for change Diagnosis of cause(s) Development of change alternatives Implementation of change Reinforcement of change Evaluation of change Further change action taken, if required Feedback

[Middlemist and Hitt (1988), p.493]

Unit 8: Economic and economic development; principles and concern

Definition

Progress in an economy, or the qualitative measure of this. Economic development usually refersto the adoption of new technologies, transition from agriculture-based to industry-basedeconomy, and general improvement in living standards.

Economic development is the development of economic wealth of countries, regions orcommunities for the well-being of their inhabitants. From a policy perspective, economicdevelopment can be defined as efforts that seek to improve the economic well-being and qualityof life for a community by creating and/or retaining jobs and supporting or growing incomes andthe tax base.

Charles Jenkinson defines it as ‘Economic development is the development of the wealth ofcountries or regions for the well-being of their inhabitants. From a policy perspective, economicdevelopment can be defined as efforts that seek to improve the economic well-being and qualityof life for a community by creating and/or retaining jobs’.Differences between economic growth and development

There are significant differences between economic growth and economic development. Theterm "economic growth" refers to the increase (or growth) of a specific measure such as realnational income, gross domestic product, or per capita income. National income or product iscommonly expressed in terms of a measure of the aggregate value-added output of the domesticeconomy called gross domestic product (GDP). When the GDP of a nation rises economists referto it as economic growth.

The term "economic development," on the other hand, implies much more. It typically refers toimprovements in a variety of indicators such as literacy rates, life expectancy, and poverty rates.GDP is a specific measure of economic welfare that does not take into account important aspectssuch as leisure time, environmental quality, freedom, or social justice. Economic growth of anyspecific measure is not a sufficient definition of economic development.

In its broadest sense, economic development encompasses three major areas:

1) Policies that governments undertake to meet broad economic objectives such as price stability,high employment, expanded tax base, and sustainable growth. Such efforts include monetary andfiscal policies, regulation of financial institutions, trade, and tax policies.

2) Policies and programs to provide infrastructure and services such as highways, parks,affordable housing, crime prevention, and educational programs and projects.

3) Policies and programs explicitly directed at job creation and retention through specific effortsin business finance, marketing, neighborhood development, small business start-up anddevelopment, business retention and expansion, technology transfer, workforce training and realestate development. This third category is a primary focus of economic developmentprofessionals.

Difference between Developed and Developing Countries

Developing countries usually have low levels of affluence and high unemployment rates whiledeveloped countries have developed economies, which translate to high GDP per capita. Anotherdifference is that developed countries are normally associated with advanced technology, goodinfrastructure and a steady government, whereas the developing countries usually suffer fromdiseases, natural disasters and war.

Generalized characteristics of developedcountries:

Generalized characteristics of developingcountries:

Post-industrial economies

High level of industrial development

High level of affluent citizens

Low levels of unemployment

Higher education rates

Technological advantages

Better roads

Stable governments

Good health care

Human and natural resources are fullyutilized

High level of per capita income

High Human Development Index(HDI)

Increased life expectancy

Low birth rates

Low death rates

Good housing conditions

Safe water supplies

Abundant food supplies

Easy to access advanced medicalservices

In the process of industrialization

Low level of affluent citizens

Higher levels of unemployment

Lower education rates

Often contain undeveloped ruralvillages

Unstable governments

High level of birth rates

High level of death rates

High infant mortality rate

Dirty, unreliable water supplies

Poor housing conditions

Poor nutrition

Diets that are short in calories and/orprotein

Poor access to medical services

Endemic disease in some countries

Low to medium standard of living

Limited technological capacity

Unequal distribution of income

Factors of production are not fullyutilized

Key guiding principles for development

1. Pass and enforce laws protecting property rights and business contracts2. Eliminate corruption3. Ensure population is healthy and educated4. Cultivate the culture that values honesty and hard work

Nepal’s development scenario

Its efforts at finding political stability and a new constitution have remained elusive, butNepal hopes to improve its rank among nations of the world in the next nine years.

The National Development Council approved the country’s 13th development plan,which aims at turning Nepal from a least developed country to a developing one by 2022.

The plan is to achieve an annual growth rate of 6% and bring down the percentage ofpopulation living below the poverty line from the existing 23% to just 18% within thatperiod.

The government is hopeful that the target can be reached by focusing on hydropower,education, healthcare, tourism, agriculture, industry, trade, infrastructure and goodgovernance.

Annual growth rate of 4.5% in agriculture and 3.2% in employment, reduction ofmaternal mortality and increase in life expectancy to 71 years are also part of theambitious plan which will be in force till 2016.

Considering the present state of affairs in Nepal it might seem a difficult if not impossiblegoal. And experts have already started voicing doubts over the plan formulated by theinterim non-political government.

Nepal’s economy is in tatters due to the country’s political instability. Failure to exploithydropower potential has affected all manufacturing industries. The country’sinfrastructure also needs a big boost.

If it hadn’t been for the billions of rupees sent as remittance by millions of Nepalisworking abroad due to lack of adequate opportunities at home, the country’s conditionwould have been far worse.

The Human Development Report 2013 released by UN in March this year ranks Nepal157th among 187 countries surveyed. Only Afghanistan at 175 ranks below among allSouth Asian countries.

At a time when both its bigger neighbors—China and India—are witnessing rapiddevelopment, Nepal has lagged behind due to a decade long conflict and failure toconsolidate after peace was achieved.

Even countries like Bangladesh which were known for their backwardness are takingrapid strides towards development based on human development indicators and abooming manufacturing industry.

But all is not lost. The HDR 2013 mentions that multidimensional poverty in Nepal hascome down to 44.2% from 64.7% since 2010. The report also says that the wealth gap inthe country has come down by nearly 15% during the same period.

The Oxford Poverty and Human Development Index released earlier this year showedthat the percentage of poor people has come down sharply from 2006 and if this decreasecontinues at this rate Nepal could eradicate absolute poverty in another twenty years.

The study also showed positive figures in infant and child mortality rates, maternalmortality, nutritional level and enrollment in schools. Nepal is progressing very well onmeeting most of the millennium development goals (MDGs) set by UN.

According to latest Nepal Rastra Bank figures the country recorded a balance of paymentsurplus of NRs 38.60 billion during the first 10 months of the 2012/13 fiscal year.Foreign exchange reserves also increased by 10% to NRs 483 billion during the sameperiod.

Nepalis have heard numerous slogans over past decades on how the country can betransformed. It remains to be seen whether this latest one remains just that or is able toachieve the stated goal.