02 management notes for mba

Principle Of ManagementFull Notes Of Management For Student of MBA

9/23/2014

The Muslim Education System Abbottabad

By Awais Qasim Student Of The Jawad Ahmad Zeb

By Awais Qasim

MANAGEMENT

Introduction

“Management”

From Old French ménagement “the art of conducting, directing”

From Latin manu agere “to lead by the hand”

Characterizes the process of leading and directing all or part of an

organization, often a business, through the deployment and manipulation

of resources (human, financial, material, intellectual or intangible).

Management focuses on:

Entire organization from both a short and a long-term perspective.

Management is the managerial process of forming a strategic vision

Setting objectives

Crafting a strategy

Then implementing and executing the strategy.

The key emphasis is on issues related to environmental scanning and

industry analysis.

Appraisal (Assessment) of current and future competitors

Assessment of core competencies.

Strategic control and the effective allocation of organizational resources.

Definition:

Management is the organizational process that includes:

Strategic planning,

Setting objectives,

Managing resources,

Deploying the human and financial assets needed to achieve objectives

And measuring results.

OR

The process of planning, leading, organizing and controlling people within a

group in order to achieve goals.

2 By Awais Qasim Student Of Jawad Ahmad Zeb

OR

Management is the process of designing and maintaining an environment in

which individuals working together in groups efficiently accomplish selected aims.

OR

Management in all business areas and organizational activities are the acts of

getting people together to accomplish desired goals and objectives efficiently and

effectively.

OR

Effective utilization and coordination of resources such as capital, plant, materials

and labour to achieve defined objectives with maximum efficiency.

OR

The process of getting activities completed efficiently with and through other people;

OR

The process of setting and achieving goals through the execution of five basic

management functions:

Planning,

Organizing,

Staffing,

Directing,

Controlling;

That utilizes human, financial, and material resources.

MANAGEMENT PROCESS/FUNCTIONS

Management is creative problem solving. This creative problem solving is

accomplished through four functions of management:

1. Planning2. Organizing3. Staffing4. Leading5. Controlling6. Coordination1. Planning: -

Planning is a pre-requisite of doing any thing.

Planning is continuous and never ending activity.


It leads to more effective and faster achievements in any organization

Enhance the ability of the organization to adapt to future eventualities.

We can say that it is nothing but a decision making in advance at all

levels.

Planning is an indispensable function of management.

It determines the objectives to be achieved and the course of action to be

followed to achieve them.

No real plan exists until a decision about commitment of human or

material resources has been made.

Planning includes:-

a. Determination of objectives

b. Forecasting

c. Search of alternate course of action and their evaluation

d. Drawing policies and procedures

e. Budgeting (Make Financial Plans/Arrangements)

2. Organizing: -

Organizing is the process of dividing the work into the convenient tasks

Duties of delegating authority to each so that work is carried out as

planned.

Organizing involves identification and grouping activities to be performed

and dividing them among the individuals and responsibility relationships

among them.

Organizing contributes to the efficiency of the organization.

The process of organizing involves the following steps:-

(i) Determination of objectives.

(ii) Division of activities.

(iii) Fitting individual to specific jobs.

(iv) Developing relationship in terms of authorities and responsibilities.

(v) Coordinating the activity throughout the organization as planned.

3. Staffing: -

The managerial function of staffing involves manning the organizational

structures through:


(i) Proper recruitment and selection of people.

(ii) Fixing remuneration.

(iii) Training and developing selected people to discharge

organizational function.

(iv) The appraisal (Assessment) of personnel.

4. Leading: -

Leading is influencing people so that they will contribute to

organization and group goals.

It is the part of management process which actuates

organization members to work efficiently and effectively for the attainment

of organization objectives.

Planning, organizing and staffing are merely preparation for

doing work and the work actually starts when managers start performing

the leading function

Leading is the interpersonal aspect of management which deals

directly with

i. Influencing,

ii. Guiding,

iii. Supervising

iv. And motivating the subordinates for the accomplishment

of the pre-determined objectives.

Leading consist of following:-

Communication: - o It is the process of passing information and understanding from one

person to another.

o A manager in order to be successful should develop an effective

system of communication so that he may issue instruction, receive

the reactions of the sub-ordinates and motivate them.

Leadership: - o It is the process by which a manager guides and influences the

work of his subordinates.

Motivation: - o Motivation means inspiring the subordinates with a zeal to do work

for the accomplishment of organization objectives.

Supervision: -


o Manager has to personally

Watch, direct and control the performance of subordinates.

In doing this, they have to plan the work of their

subordinates,

Give them direction and instructions, guide them and

exercise leadership.

5. Controlling:-

Controlling is visualizing that actual performance is

guided towards expected performance.

It is the measurement and correction of the

performance of activities of subordinates in order to make sure that

enterprise objective and the plans devised to attain them are being

accomplished.

Controlling involves followings: -

(i) Fixing appropriate standards.

(ii) Measurement of actual performance

(iii) Comparing actual and planned performance

(iv) Finding variances between the two and reason for the variances.

(v) Taking corrective actions.

Control keeps a check on other functions for successful functioning of

management.

The most notable feature of control is that it is forward looking.

A manager cannot control the past but can avoid mistakes in future by

taking in the light of past experiences.

MANAGERIAL LEVELS:

The term “Levels of Management’ refers to a line of demarcation (Separation)

between various managerial positions in an organization.

The number of levels in management increases when the size of the business

and work force increases and vice versa.

The level of management determines a chain of command, the amount of

authority & status enjoyed by any managerial position.

The levels of management can be classified in three broad categories:

LEVELS OF MANAGEMENT

1. Top-Level Managers/Administrative level


2. Middle-Level Managers/Middle Management

3. First-line managers/Low level/Supervisory/Operative

ROLE & SKILLS OF MANAGERS:

1. TOP-LEVEL MANAGERS

Top-level managers, or top managers, are also called senior management or executives.

These individuals are at the top one or two levels in an organization,

Top-level managers make decisions affecting the entirety of the firm.

Top managers do not direct the day-to-day activities of the firm; rather,

they set goals for the organization and direct the company to achieve

them.

It devotes more time on planning and coordinating functions

Top managers are ultimately responsible for the performance of the

organization, and often, these managers have very visible jobs.

They hold titles such as:

o Board of directors

o Chief executive or managing director

o Chief Executive Officer (CEO), Chief Financial Officer (CFO)

o Chief Operational Officer (COO)

o Chief Information Officer (CIO)

o Chairperson of the Board

o President

o Vice president

o Corporate head.

Role of Top Management:

The role of the top management can be summarized as follows –

Top management lays down the objectives and broad policies of the

enterprise.

It issues necessary instructions for preparation of department budgets,

procedures, schedules etc.

It prepares strategic plans & policies for the enterprise.

It appoints the executive for middle level i.e. departmental managers.


It controls & coordinates the activities of all the departments.

It is also responsible for maintaining a contact with the outside world.

It provides guidance and direction.

The top management is also responsible towards the shareholders for the

performance of the enterprise.

2. MIDDLE-LEVEL MANAGERS:

Middle-level managers, or middle managers, are those in the levels

below top managers.

Middle-level managers are responsible for carrying out the goals set by

top management.

They do so by setting goals for their departments and other business units.

Middle managers can motivate and assist first-line managers to

achieve business objectives.

Middle managers may also communicate upward, by offering

suggestions and feedback to top managers.

Because middle managers are more involved in the day-to-day

workings of a company, they may provide valuable information to top

managers to help improve the organization's bottom line

Middle managers' job titles include:

o General manager

o Plant manager

o Regional manager and

o Divisional manager

ROLE OF MIDDLE MANAGERS/MIDDLE MANAGEMENT:

Their role can be emphasized as –

They execute the plans of the organization in accordance with the

policies and directives of the top management.

They make plans for the sub-units of the organization.

They participate in employment & training of lower level management.

They interpret and explain policies from top level management to lower level.


They are responsible for coordinating the activities within the division

or department.

It also sends important reports and other important data to top level

management.

They evaluate performance of junior managers.

They are also responsible for inspiring lower level managers towards

better performance.

3. FIRST-LINE MANAGERS

First-level managers are also called first-line managers or supervisors.

First-line managers are responsible for the daily management of line

workers—the employees who actually produce the product or offer the

service.

There are first-line managers in every work unit in the organization.

Although first-level managers typically do not set goals for the

organization, they have a very strong influence on the company.

These are the managers that most employees interact with on a daily

basis, and if the managers perform poorly, employees may also

perform poorly, may lack motivation, or may leave the company.

These managers have job titles such as:

o Office manager

o Shift supervisor

o Department manager

o Foreperson

o Crew leader

o Store manager

ROLE OF FIRST LINE MANAGERS/LOWER MANAGEMENT

Their role includes:

Assigning of jobs and tasks to various workers.

They guide and instruct workers for day to day activities.

They are responsible for the quality as well as quantity of production.

They are also entrusted with the responsibility of maintaining good

relation in the organization.


They communicate workers problems, suggestions, and

recommendatory appeals etc to the higher level and higher level goals

and objectives to the workers.

They help to solve the grievances of the workers.

They supervise & guide the sub-ordinates.

They are responsible for providing training to the workers.

They arrange necessary materials, machines, tools etc for getting the

things done.

They prepare periodical reports about the performance of the workers.

They ensure discipline in the enterprise.

They motivate workers.

They are the image builders of the enterprise because they are in

direct contact with the workers.


Management Concept

Management Concepts promotes organizational achievement by providing

The specific knowledge,

Skills,

And resources needed by your most valuable asset - people.

The Concept of Management

The concept of management is not fixed. It has been changing according to time

and circumstances. The concept of management has been used in integration

and authority etc.

The main concepts of management are as follows:

Functional Concept:

According to this concept

'Management is what a manager does'.

"Management is principally the task of planning, coordinating, motivating and controlling the effort of others towards a specific objective.

Management is what management does. It is the task of planning,

executing and controlling."

"Management is a distinct process consisting of

o Planning,

o Organizing,

o Activating and

o Controlling performed to determine and accomplish the objective by

the use of human beings and other resources."

"Management is defined as the process by which the elements of a group

are integrated, coordinated and/or utilized so as to effectively and

efficiently achieve organizational objectives."

"To manage is to forecast, and plan, to organize, to command, to

coordinate and to control."

'Getting Things Done Through Others' Concept:

'Management is the art of getting things done through others'.

It is very narrow and traditional concept of management.


Under this concept, the workers are treated as a factor of production only.

The work of the manager is confined to taking work from the workers.

He need not do any work himself.

Modern management experts do not agree with this concept of

management. Some of these authors have explained this concept in the

following words:

o Harold Koontz, "Management is the art of getting things done

through and with people in formally organized groups.

It is the art of creating an environment in which people can perform as

individuals and yet cooperate towards attaining of group goals.

"Management is the art of directing and inspiring people."

Leadership and Decision-making Concept:

According to this concept,

"Management is an art and science of decision-making and leadership.

“Most of the time of managers is consumed in taking decisions.

Achievement of objectives depends on the quality of decisions.

Similarly, production and productivity both can be increased by efficient

leadership only.

Leadership provides efficiency, coordination and continuity in an

organization.

Productivity Concept:


"Management is an art of increasing productivity."

Economists treat management as an important factor of production.

According to them, "Management is also a factor of production like land,

labor, capital and enterprise

"Management may be defined as the art of securing maximum prosperity

with a minimum of effort so as to secure maximum prosperity and

happiness for both employer and employee and give the public the best

possible service."

Universality Concept:



"Management is universal".

Management is universal in the sense that it is applicable anywhere

o whether social,

o religious or

o Business and industrial.

"Management is a universal activity which is equally applicable in all types

of organization whether social, religious or business and industrial".


Management’s Ethical Responsibility

Ethics can be defined as a process of evaluating actions according to

moral principal and values (A. Alhemoud).

Those issues concern

o fairness, justice, rightness or wrongness;

o As a result it can only be resolved according to ethical standards.

Ethical Issues in Management

Ethical conflict and ethical issues are relevant in many aspects of

management but particularly important in the aspect of work assignments.

Managers face an ethic issue of work assignment conflict, which is the

byproduct of a diverse society at the workforce.

The decisions that correct such an issue require the correct ethical tools of

thought.

Some ethic issues in management stem from the basis of:

o Race, religion, and national origin.

o Managers have an ethical responsibility to practice relative moral

standards that set high-quality examples for employees to emulate

o The correct ethical choice in management is crucial to the success

of a manager and the company he works for.

o The relationship between social issues and ethically responsible

management practices play a relative role in resolving workplace

dilemmas.

o An unethical decision in management is a poor choice, which may

lead to extreme litigation for the company and possible termination

of the manager at fault.

o Managers face ethical issues at the workforce through interaction

with employees who have diverse ideologies based on their cultural

beliefs.

o The concept of diversity encompasses acceptance, respect, and

understanding.


o Ethics issues arise from diversity and are relative to an individual

misconstrue thought of race, gender, social class, physical

disability, and age of another individual or group.

o Managers face the common ethical dilemma of bias and such

matters treated incorrectly can generate inequality and bias among

workers.

o Members of a diverse workforce may show bias that favor ethnic

culture among groups.

o A group of individual members made up of a common culture may

feel more inclined to respect and work with individuals who share

similar or the same culture.

o The same group may not think as inclined to respect and work with

individuals who do not share similar culture attributes....

Social Responsibilities of Management

The term social responsibilities can be defined as:

o The obligation (Commitment) of management towards

The society and others concerned.

Reason for Social Responsibilities:

Business enterprises are creatures of society and should respond to the

demands of society.

If the management does not react to changes in social demands, the society will

either force them to do so through laws or will not permit the enterprise to

survive.

Therefore the long term interests of business are best served when management

assume social responsibilities.

The image of business organization liked with the quality of its products and

customer service and the extent to which it fulfills the expectations of

o Owners,

o Employees,

o Consumers,

o Government and

o The community at large.

For long term success it matters a great deal if the firm has a favourable image in

the public mind.

Every business enterprise is an organ of society and its activities have impact on

the social scene.


Therefore, it is important for management to consider whether their policies and

actions are likely to promote the public good, advances the basic values of

society, and constitute to its stability, strength and harmony.

These interested groups are directly or indirectly affected by the pursuit of

business activities and they are the stake-holders of the business enterprise.

Responsibility towards owners:

The primary responsibility of management is to assure a fair and reasonable rate

of return on capital.

With the growth of business the shareholders can also expect appreciation in the

value of their capital.

Responsibility towards employees:

Management responsibility towards employees relate to the

o Fair wages and salaries,

o Satisfactory work environment,

o Labour management relations and employee welfare.

Fair wages should be fixed in the light of labor productivity, the prevailing wage

rates in the same or neighbouring areas and relative importance of jobs.

Managers’ salaries and allowances are expected to be linked with their

responsibility, initiative and skill.

But the spread between minimum wages and highest salaries should be

reasonable.

Another aspect of responsibility towards employees is the provision of welfare

amenities like:

o Safety and security of working conditions,

o medical facilities,

o housing,

o canteen,

o Leave and retirement benefits.

Employees are expected to build up and maintain harmonious relationships

between superior and subordinates.

Responsibility towards consumers:

In a competitive market, serving consumers is supposed to be a prime concern of

management.

Management should anticipate developments, satisfy consumer needs and

protect consumer interests.

Goods must be of appropriate standard and quality and be available in adequate

quantities at reasonable prices.

Management should avoid resorting to hoarding or creating artificial scarcity as

well as false and misleading advertisements.

Responsibility towards the Governments:

As a part of their social responsibility,

o Management must conduct business affair in lawful manner,


o Honestly pay all the taxes and dues,

o And should not corrupt public officials for selfish ends.

Business activities must also confirm to the economic and social policies of the

government.

Responsibility towards the community and society:

The socially responsible role of management in relation to the community are

expected to be revealed by its policies with respect to the:

o Employment of handicapped persons, and weaker sections of the

community, (Minorities).

o Environmental protection, pollution control, setting up industries in

backward areas,

o And providing relief to the victims of natural calamities etc.

MBO:

The concept of ‘Management by Objectives’ (MBO) was first given by Peter Drucker in

1954.

Definition:

Management by objectives (MBO) is a systematic and organized approach that allows

management to focus on achievable goals and to attain the best possible results from

available resources.

It aims to increase organizational performance by aligning goals and subordinate

objectives throughout the organization.

Ideally, employees get strong input to identify their objectives, time lines for completion,

etc. MBO includes ongoing tracking and feedback in the process to reach objectives.

Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his

book 'The Practice of Management'. In the 90s, Peter Drucker himself decreased the

significance of this organization management method, when he said: "It's just another

tool. It is not the great cure for management inefficiency.

Steps In Management By Objectives Planning:-

Goal setting: The first phase in the MBO process is to define the organizational

objectives. These are determined by the top management and usually in consultation

with other managers. Once these goals are established, they should be made known to

all the members. In setting objectives, it is necessary to identify "Key-Result Areas'

(KRA).

Manager-Subordinate involvement: After the organizational goals are defined, the

subordinates work with the managers to determine their individual goals. In this way,

everyone gets involved in the goal setting.


Matching goals and resources: Management must ensure that the subordinates are

provided with necessary tools and materials to achieve these goals. Allocation of

resources should also be done in consultation with the subordinates.

Implementation of plan: After objectives are established and resources are allocated,

the subordinates can implement the plan. If any guidance or clarification is required, they

can contact their superiors.

Review and appraisal of performance: This step involves periodic review of progress

between manager and the subordinates. Such reviews would determine if the progress

is satisfactory or the subordinate is facing some problems. Performance appraisal at

these reviews should be conducted, based on fair and measurable standards.

THE MBO PROCESS

Features of MBO:

1. Management by Objectives is a philosophy or a system, and not merely technique.

2. It emphasizes participative goal setting.

3. It clearly defines each individual responsibility in terms of results.

4. If focuses attention on what must be accomplished (goals rather than on how it is to

be accomplished.

5. It converts objective needs into personal goals at every level in the organization.

6. It establishes standards or yardsticks (goals) as operation guides and also as basis

of performance evaluation.


7. It is a system intentionally directed toward effective and efficient attainment of

organizational and personal goals.

8. MBO process (or management by Objective cycle or key elements of management

by Objectives or minimum requirements of management by objectives.

The essence of MBO is participative goal setting, choosing course of actions and

decision making. An important part of the MBO is the measurement and the comparison

of the employee’s actual performance with the standards set. Ideally, when employees

themselves have been involved with the goal setting and the choosing the course of

action to be followed by them, they are more likely to fulfill their responsibilities.


GOAL:

The goal is where we want to be.

OBJECTIVE:

The objectives are the steps needed to get there."

1. Define your goals.

Goals are your desired outcomes.

They may include the desire to expand into a bigger office, give your staff

a raise or increase profits by a specific date.

Your goals are your dreams and visions.

Write your goals down. Brainstorm about them with your management

team, accountant and partners.

2. Define your objectives.

Generally speaking, objectives are smaller goals--the means by which

your ultimate goals are met.

For example, if your ultimate goal is to increase sales revenue in the

upcoming month by $2,000, your objectives are the steps that must be

taken in order for the goal to be realized.

To find acceptable and realistic objectives, take notes and jot down all

activities you may need to accomplish to reach your overall goal.

Weed out unrealistic objectives. This information will help you break down

your goals and objectives and insert them into a project plan.

3. Create a project plan.

Once you have defined your goals and objectives, you must have a plan

to put them into action.

To begin, list your goal on the top of your page.

List each objective under your goal, creating a basic outline. This will

become the beginning of your project plan.

Setting goals is more than making vague statements like, "I will find a new job" or "I will

increase my business." It means creating a written plan that includes reasonable and

measurable long-term and short-term objectives. It means setting SMART goals.

S.M.A.R.T. refers to goals that are:

Specific,

Measurable,

Achievable,

Realistic and

Time Framed.

Specific:


Goals need to be something specific. Often we set goals that are so loose, it's

nearly impossible to judge whether we hit them or not. For example, a statement

like "I will lose weight" is too vague. How will you know if and when you've

reached your goal? Saying, "I will lose five pounds this month" is more specific.

At the end of the month it will be a simple matter of weights and measures: take

your measurements and get on the scale.

Measurable:

Goals need to be measurable. For example, many of us want to increase our

number of contacts. But, "making new contacts" is an ambiguous statement. A

clearer objective is "I will attend four networking events each month and try to

connect with one person at each." It's a simple, concrete goal. This makes it easy

to see if you hit your target.

Achievable:

Goals need to be reasonable and achievable. Nearly everyone has tried to drop

a few pounds at one time or another. Often their success or failure depends on

setting practical goals. Losing 15 pounds in 30 days is unrealistic (unless you're

planning a medical procedure). Losing six to eight pounds in 30 days is

reasonable. Don't set yourself up for failure by setting goals that are out of reach.

Realistic:

Goals need to be realistic. When we're kids we think we can do anything. As

adults we learn that while we can have a lot, we can't have it all at the same time.

It's important to honestly evaluate yourself. Do you have the ability and

commitment to make your dream come true? Or does it need a little adjustment?

For example, you may love to play tennis, but do you have the time, talent and

commitment to become a pro? Be honest.

Time Framed:

Goals need to have a time frame. Having a set amount of time will give your

goals structure. For example, many of us want to find a new job or start their own

business. Some people spend a lot of time talking about what they want to do,

someday. But, without an end date there is no sense of urgency, no reason to

take any action today. Having a specific time frame gives you the impetus

(Movement) to get started. It also helps you monitor your progress.

The acronym SMART has a number of slightly different variations, which can be used to

provide a more comprehensive definition for goal setting:

S - Specific, significant, stretching

M - Measurable, meaningful, motivational

A - Agreed upon, attainable, achievable, acceptable, action-oriented

R - Realistic, relevant, reasonable, rewarding, results-oriented

T - time-based, timely, tangible, trackable


"Many people fail in life, not for lack of ability or brains or even courage, but simply

because they have never organized their energies around a goal."

SMART Goals

Specific

Well defined

Clear to anyone that has a basic knowledge of the project

Measurable

Know if the goal is obtainable and how far away completion is

Know when it has been achieved

Agreed Upon

Agreement with all the stakeholders what the goals should be

Realistic

Within the availability of resources, knowledge and time

Time Based

Enough time to achieve the goal

Not too much time, which can affect project performance

Effective Goal Setting:

1. Make Your Goals Your Own.

To really put in the effort required to reach your goals the objective must truly be your

own.

No one will do the work for you so be sure your ambition is what you really want not just

the expectation of others.

You happiness is what needs fulfilling, so you must seek personal ambitions and make

sure your goal setting plans have you as the main beneficiary. Define what YOU want

and go after it.

2. Write Down Your Goals - NOW.

To help with focus and to stop straying of the path of success, the need to clearly target

your aim is a must.

Distractions are everywhere in the modern world, but having your end goal written down

serves to have a mark in the sand to gravitate towards and also to make a contract with

ourselves.

Start your goal setting lesson plans and stop procrastinating.

3. Make Them Positive.


Positivity begets more positive responses. When you are goal setting and have a goal

that says "I want to achieve wealth to create a fantastic lifestyle for my family" you have

a instant mindset that says if I do this with the right attitude I can succeed.

Make your goal setting list energetic and positive to match the energy you need to

achieve.

If on the other hand your goal is "I hate being poor, it makes me miserable and I just

want to get out of debt", you have created an instant negative mindset which will make

you and your actions negative.

It is very difficult to achieve positive results with a misery mindset.

4. Be Through Be Specific.

Have a clear and specific target in mind for your efforts because many people make their

aim to broad and lose focus or have too many variables to contend with, so be specific

and you will have an easier time planning for accomplishment.

This is an important goal setting exercise because you need to be clear, as there is no

room for ambiguity. Know what you want and go after it.

5. Find A Helpful Resource.

Well you are here now and have taken the first steps, so why not use your new found

goal setting training or you could get some professional success coaching or just enlist

the help of a friend or a family member, the key is to have as much support, information

and encouragement as you can get.

6. Have Some Varied Goals.

People are more than capable of multiple achievements so don't be hesitant in setting

more than one goal.

By having goals of varying difficulty we can accomplish small achievements and use that

momentum to encourage us towards bigger and better success.

When goal setting plans have both long and short term goals written down and you will

have more success along the way.

7. What Do You Bring The Party?

Know your best attributes because they are the qualities that will help you succeed.

By making a broad list of all of your best and most useful traits you not only boost your

self confidence, but you take a step towards realizing the possibilities that are available.

It's important when setting professional goals or corporate goal setting, to understand

why you can achieve you goals and be clear as to why you can accomplish your

dreams.


By understanding your best qualities, you'll get ahead of the curve and be able to self

promote with more subtlety and conviction.

8. Show Diligence.

Anything of value takes perseverance and effort to get the results we want, so we must

be diligent and make consistent effort to achieve our desired outcome.

There is no short term pay out for many things and showing diligence will develop one's

self in to a better more disciplined character.

9. Adjust As Is Necessary.

Rigid, inflexible goals can often become out of reach during times of adversity and

change, but by being prepared to adjust to suit our situation as necessary gives us not

only leeway but a safer base from which to attack our goals with confidence.

Times will change and unexpected things will happen.

10. Challenge Fear.

If fear will stop you now it will stop you again and again. Success is almost impossible

with a fearful mindset.

If you spend your life saying "what if I do" instead of "what if I don't" then many

opportunities will sail by you and on to someone else who had the courage to face their

fears with a brave mindset.

We don't want you to think there is a magic formula for bravery - There isn't, it must

come purely from your desire to say "Yes, I must take risks to succeed" and when you

do that you strengthen your attitude and create an environment of belief.

If you want to achieve a goal then be prepared for ups and downs but have the courage

to know that if and when you succeed it is your ability to take on what others wouldn't

that helped you there.

11. Believe.

Self belief is one of the key factors in maintaining the path to an accomplished goal.

Doubt and disbelief distracts focus and attack much needed persistence and that can

sabotage even your best efforts.

Without the belief in ourselves that we absolutely can be an achiever, it becomes almost

impossible to give 100% of our attention to our goals.

Build your confidence and self-esteem, know your best attributes and believe in your

abilities.

12. Have Some Big Goals.

Don't fall victim of setting the bar too low - this can lower your expectation of yourself.


Realistic goals are a must for self development, but you must have a big goal, something

that will take a long time and much hard work to reign in.

By having a large goal we have long term productive satisfaction and studies show high

levels of happiness in those who strive to achieve a large accomplishment.

The solution is, when goal setting choose a big goal to work towards as well as the

smaller ones.

13. Progress Is Success

Too many people get caught in the "are we there yet" trap and don't see the "look how

far we have come" picture.

The progress you make no matter how minor is an achievement in it's own right and the

knowledge of this is a key to building the momentum required to haul in those larger,

long term goals.

Be patient and realize ever dollar you earn or every ounce of weight you lose is a mini

success and will build to form a much larger accomplishment in time.

14. Plan and Plan Well.

It is not enough to plan, a plan must be thorough, complete, in depth and well

constructed.

While goal setting realize that your plan of action is the map you will take on your

journey to victory, so it must be the best one you can build.

Make research the backbone of your plan, investigate the possibilities and set in place a

path that will give you the best possible chance of success.

15. Every Road Has A Bump Or Two.

Don't worry it happens, everything seems to be going great then bam something you

didn't see coming shakes your foundations.

You can help mitigate the unexpected with a well constructed plan and a flexible base to

work from.

Even then the unforeseen will still occur, but your resilience and intestinal fortitude can

see you through bumps in the road if you have a little courage and display due diligence.

16. Control Your Focus.

Don't let hype distract you from discipline. Laser like focus is a necessity for achieving

goals however the sharper the focus the less time we have it.

In other words if you put far too much short term emphasis on something then the

chances are you will burn out and give up.


The solution is to put heavy focus into the task at hand but when finished your efforts for

the day you must remove your focus and have a rest, break or what ever it takes to

alleviate your mind.

Hype only gives you a push it doesn't last, only persistence can do that, so focus hard

and then change subjects to help maintain a healthy intensity.

17. Strike A Balance.

If you don't then life will do it for you. Don't neglect important areas of your life to gain

more time for a goal, as this approach may create problems in other areas of your life

that you haven't prepared for.

The solution is to Balance your life to include family time, relaxation, rest and activity -

Then you are in control and won't have to deal with family resentment or burn out.

18. Prioritize.

Know the most important details from the least important, don't miscue your actions or it

may have dire consequences.

In goal setting you must learn to prioritize those things that are of seeming importance

from those that are genuine.

If something seems harder and you put it off you only cheat yourself, your actions will

lack control and you will subconsciously feel like you are failing.

Don't procrastinate and don't misinterpret your priorities if you control the facets of your

plan of action properly success will happen faster.

19. Get Inspired.

People everywhere are achieving great things and so can you if you have the right tools

for setting goals and accomplishing them. Inspiration can help motivate us to work

harder, think bigger and to believe that our goals are indeed possible.

Use the victories of ordinary everyday people to make the realization that if you want to

succeed then you absolutely, positively can.

Use the knowledge that ordinary people achieve more than the extraordinary as goal

setting help

20. Be Patient.

It really is a virtue worth having. Patience almost begets consistency and is a key factor

in overcoming the day to day obstacles to achieving our goals.

Rome was built with patience and most fortunes, weight loss, sports championships and

worthy accomplishments were also the product of patient, prudent planning.

Impatience begets anger, distraction and failure, so pay attention to the patient

successes of the past by seeking to emulate them in the future.


Goal setting plans require an advanced patience mixed with controlled enthusiasm, but

not the kind that burns out after hype.


Definition:

Planning involves selecting missions and objectives as well as the actions to achieve

them. It requires decision making that is, choosing future courses of action from among

alternatives.

The process of:

Setting goals,

Developing strategies, and

Outlining tasks and schedules to accomplish the goals.

An act of formulating a program for a definite course of action.

Nature and Purpose of Planning:

THE NATURE AND PURPOSE OF PLANNING:

PLANNING is a process for accomplishing purpose. It is a blue print of business growth and a road map of development.

The conscious, systematic process of making decisions about goals and

activities to be pursued in the future.

It helps in deciding objectives both in quantitative and qualitative terms.

It is setting of goals on the basis of objectives and keeping in view the resources.

It predicts what the future should look like.

Formal procedures used in such an endeavor, such as the creation of

documents, diagrams, or meetings to discuss the important issues to be

addressed, the objectives to be met, and the strategy to be followed.

PLANNING is also a management process, concerned with defining goals for future

organizational performance and deciding on the tasks and resources to be used in order

to attain those goals. To meet the goals, managers may develop plans such as a

business plan or a marketing plan.

Planning always has a purpose. The purpose may be achievement of certain goals or

targets.

The planning helps to achieve these goals or target by using the available time and

resources.

To minimize the timing and resources also require proper planning.

The concept of planning is to identify what the organization wants to do by using the four

questions which are:

Where are we today in terms of our business or strategy planning?

Where are we going?

Where do we want to go?

How are we going to get there?

WHAT SHOULD A PLAN BE?

A plan should be a realistic view of the expectations.


One of the most common sets of activities in the management is planning. Very simply

put, planning is setting the direction for something -- some system -- and then working to

ensure the system follows that direction. Systems have inputs, processes, outputs and

outcomes. To explain, inputs to the system include resources such as raw materials,

money, technologies and people. These inputs go through a process where they're

aligned, moved along and carefully coordinated, ultimately to achieve the goals set for

the system. Outputs are tangible results produced by processes in the system, such as

products or services for consumers. Another kind of result is outcomes, or benefits for

consumers, e.g., jobs for workers, enhanced quality of life for customers, etc. Systems

can be the entire organization, or its departments, groups, processes, etc.

Whether the system is an organization, department, business, project, etc., the process

of planning includes planners working backwards through the system. They start from

the results (outcomes and outputs) they prefer and work backwards through the system

to identify the processes needed to produce the results. Then they identify what inputs

(or resources) are needed to carry out the processes.

Goals

Goals are specific accomplishments that must be accomplished in total, or in some

combination, in order to achieve some larger, overall result preferred from the system,

for example, the mission of an organization. (Going back to our reference to systems,

goals are outputs from the system.)

Strategies or Activities

These are the methods or processes required in total, or in some combination, to

achieve the goals. (Going back to our reference to systems, strategies are processes in

the system.)

Objectives

Objectives are specific accomplishments that must be accomplished in total, or in some

combination, to achieve the goals in the plan. Objectives are usually "milestones" along

the way when implementing the strategies.

Tasks

Particularly in small organizations, people are assigned various tasks required to

implement the plan. If the scope of the plan is very small, tasks and activities are often

essentially the same.

Resources (and Budgets)

Resources include the people, materials, technologies, money, etc., required to

implement the strategies or processes. The costs of these resources are often depicted

in the form of a budget. (Going back to our reference to systems, resources are input to

the system.)

The Planning Cycle brings together all aspects of planning into a coherent, unified

process.


The stages in this planning process are explained below:

Stage 1: Analysis of Opportunities

In light of:

The Market

Competition

What Customers Want

Our Strengths.

Our Weaknesses

Stage 2: Identifying the Aim of Your Plan

What do I want the future to be?

What benefit do I want to give to my customers?

What returns do I seek?

What standards am I aiming at?

What values do I and my organization believe in?

You can present this aim as a 'Vision Statement' or 'Mission Statement'.

Vision Statements express the benefit that an organization will provide to its

customers.


Mission statements give concrete expression to the Vision statement, explaining

how it is to be achieved.

Stage 3: Exploring Options

By this stage you should know where you are and what you want to do.

The next thing to do is to work out how to do it.

At this stage it is best to spend a little time generating as many options as

possible, even though it is tempting just to grasp the first idea that comes to

mind.

By taking a little time to generate as many ideas as possible you may come up

with less obvious but better solutions. Just as likely, you may improve your best

ideas with parts of other ideas.

Stage 4: Selecting the Best Option

Once you have explored the options available to you, it is time to decide which

one to use.

If you have the time and resources available, then you might decide to evaluate

all options, carrying out detailed planning, costing, risk assessment, etc. for each.

Normally you will not have this luxury.

Stage 5: Detailed Planning

By the time you start detailed planning, you should have a good picture of where

you are, what you want to achieve and the range of options available to you. You

may well have selected one of the options as the most likely to yield the best

results.

Detailed planning is the process of working out the most efficient and effective

ways of achieving the aim that you have defined.

It is the process of determining who will do what, when, where, how and why,

and at what cost.

A good plan will:

State the current situation.

Have a clear aim.

Use the resources available.

Detail the tasks to be carried out, whose responsibility they are, and their

priorities and deadlines.

Detail control mechanisms that will alert you to difficulties in achieving the plan.

Identify risks, and plan for contingencies. This allows you to make a rapid and

effective response to crises, perhaps at a time when you are at low ebb or are

confused following a setback.

Consider transitional arrangements – how will you keep things going while you

implement the plan?

Stage 6: Evaluation of the Plan and its Impact

Once you have worked out the details of your plan, the next stage is to review it

to decide whether it is worth implementing. Here you must be objective –


however much work you have carried out to reach this stage, the plan may still

not be worth implementing.

This is frustrating after the hard work of detailed planning. It is, however, much

better to find this out now than when you have invested time, resources and

personal standing in the success of the plan. Evaluating the plan now gives you

the opportunity to either investigate other options that might be more successful,

or to accept that no plan is needed or should be carried out.

Stage 7: Implementing Change

Once you have completed your plan and decided that it will work satisfactorily, it

is time to implement it. Your plan will explain how! It should also detail the

controls that you will use to monitor the execution of the plan.

Stage 8: Closing the Plan

Once you have achieved a plan, you can close the project. At this point is often

worth carrying out an evaluation of the project to see whether there are any

lessons that you can learn. This should include an evaluation of your project

planning to see if this could be improved.

Hierarchy:

Definition

A series of ordered groupings of people or things within a system;

The organization of people at different ranks in an administrative body

A hierarchy is an arrangement of units into related levels of different

weights or ranks, meaning that levels are considered "higher" or "lower"

than one another.

A body of authoritative officials organized in nested ranks.

Any group of objects ranked so that every one but the topmost is

subordinate to a specified one above it.

A hierarchical organization is an organizational structure where every

entity in the organization, except one, is subordinates to a single other

entity. This arrangement is a form of a hierarchy.

In an organization, the hierarchy usually consists of a singular/group of

power at the top with subsequent levels of power beneath them. This is

the dominant mode of organization among large organizations; most

corporations, governments, and organized religions are hierarchical

organizations with different levels of management, power or authority.

A hierarchy is typically visualized as a pyramid, where the height of the

ranking or person depicts their power status and the width of that level

represents how many people or business divisions are at that level relative

to the whole—the highest-ranking people are at the apex, and there are


very few of them; the base may include thousands of people who have no

subordinates).

These hierarchies are typically depicted with a tree or triangle diagram,

creating an organizational chart or organigram. Those nearest the top

have more power than those nearest the bottom, and there being fewer

people at the top then at the bottom. As a result, superiors in a hierarchy

generally have higher status and command greater rewards than their

subordinates.

Organizational structure refers to the way that an organization arranges

people and jobs so that its work can be performed and its goals can be

met. When a work group is very small and face-to-face communication is

frequent, formal structure may be unnecessary, but in a larger

organization decisions have to be made about the delegation of various

tasks. Thus, procedures are established that assign responsibilities for

various functions. It is these decisions that determine the organizational

structure.

In an organization of any size or complexity, employees' responsibilities

typically are defined by what they do, who they report to, and for

managers, who reports to them. Over time these definitions are assigned

to positions in the organization rather than to specific individuals. The

relationships among these positions are illustrated graphically in an

organizational chart. The best organizational structure for any organization

depends on many factors including the work it does; its size in terms of

employees, revenue, and the geographic dispersion of its facilities; and

the range of its businesses (the degree to which it is diversified across

markets).


Definition

SWOT analysis is a general technique which can be applied across diverse functions

and activities. Performing SWOT analysis involves generating and recording the:

Strengths,

Weaknesses,

Opportunities, and

Threats

Relating to a given task.

It is customary for the analysis to take account of internal resources and capabilities

(strengths and weaknesses) and factors external to the organization (opportunities and

threats).

Benefits

SWOT analysis can provide:

A framework for identifying and analyzing strengths, weaknesses, opportunities

and threats

The impetus to analyze a situation and develop suitable strategies and tactics

A basis for assessing core capabilities and competences

The evidence for, and cultural key to, change

A stimulus to participation in a group experience.

In SWOT, strengths and weaknesses are internal factors.

For example:

Strengths could be:

Your specialist marketing expertise.

A new, innovative product or service.

Location of your business.

Quality processes and procedures.

Any other aspect of your business that adds value to your product or service.

Weaknesses could be:

Lack of marketing expertise.

Undifferentiated products or services (i.e. in relation to your competitors).

Location of your business.

Poor quality goods or services.

Damaged reputation.

In SWOT, opportunities and threats are external factors.

Opportunities could be:

A developing market such as the Internet.

Mergers, joint ventures or strategic alliances.

Moving into new market segments that offer improved profits.

A new international market.

A market vacated by an ineffective competitor.


Threats could be:

A new competitor in your home market.

Price wars with competitors.

A competitor has a new, innovative product or service.

Competitors have superior access to channels of distribution.

Taxation is introduced on your product or service.


Effective Planning:

Planning:

Planning involves selecting missions and objectives as well as the actions to

achieve them. It requires decision making that is, choosing future courses of

action from among alternatives.

The process of:

Setting goals,

Developing strategies, and

Outlining tasks and schedules to accomplish the goals.

An act of formulating a program for a definite course of action.

Steps in the Effective Planning Process:

1. Define the overall purpose or goal

2. Determine the major components or objectives of the plan

3. Make sure that your objectives support the overall purpose

4. Collect and evaluate the data you will need to determine what it will take to

complete each component of the plan

5. Make sure that the data you collected and evaluated supports the overall

purpose

6. Develop a forecast plan

7. Make sure that your forecast plan supports the overall purpose

8. Determine action steps

9. Make sure that your action steps support the overall purpose

10.Develop contingency plans

11.Make sure that your contingency plans support the overall purpose

12. Implement your plan

13.Make sure that your implementation supports the overall purpose

14.Check the progress of your plan frequently

15.Make sure as your plan is implemented that the overall purpose remains

in focus.


Types of Plans in an Organization

There are three major types of plans which can help managers achieve their

organization's goals:

1. Strategic

2. Tactical

3. Operational

4. Contingency

Strategic plans

A strategic plan is an outline of steps designed with the goals:

o Of the entire organization as a whole in mind, rather than with the

goals of specific divisions or departments.

o Strategic planning begins with an organization's mission.

Strategic plans look ahead over the next two, three, five, or even more

years to move the organization from where it currently is to where it wants

to be.

Requiring multilevel involvement, these plans demand harmony among all

levels of management within the organization.

Top-level management develops the directional objectives for the entire

organization,

While lower levels of management develop compatible objectives and

plans to achieve them.

Top management's strategic plan for the entire organization becomes the

framework and sets dimensions for the lower level planning.

Tactical plans

Tactics are the means needed to activate a strategy and make it work.

A tactical plan is concerned with:

o What the lower level units within each division must do,

o How they must do it, and

o Who is in charge at each level?


Tactical plans are concerned with shorter time frames and narrower

scopes.

These plans usually span one year or less because they are considered

short-term goals.

Operational plans

The specific results expected from:

o Departments,

o Work groups, and

o Individuals are the operational goals.

These goals are precise and measurable. “Process 150 sales applications

each week” or “Publish 20 books this quarter” are examples of operational

goals.

An operational plan is one that a manager uses to accomplish his or her

job responsibilities.

o Supervisors,

o team leaders, and

o Facilitators develop operational plans to support tactical plans.

Operational plans can be a single-use plan or an ongoing plan.

Single-use plans apply to activities that do not recur or repeat. A one-time

occurrence, such as a special sales program, is a single-use plan because

it deals with the:

Who, what, where, how, and how much of an activity.

A budget is also a single-use plan because it predicts sources and

amounts of income and how much they are used for a specific project.

Operational plans lead to the achievement of tactical plans, which in turn

lead to the attainment of strategic plans.

Contingency plans

In addition to these three types of plans, managers should also develop a

contingency plan in case their original plans fail.

Intelligent and successful management depends upon a constant pursuit

of adaptation, flexibility, and mastery of changing conditions.


Strong management requires a “keeping all options open” approach at all

times — that's where contingency planning comes in.

Contingency planning involves:

o Identifying alternative courses of action that can be implemented if

and when the original plan proves inadequate because of changing

circumstances.

Keep in mind that events beyond a manager's control may cause even the

most carefully prepared alternative future scenarios to go awry.

Unexpected problems and events frequently occur.

When they do, managers may need to change their plans.

Anticipating change during the planning process is best in case things

don't go as expected.

Management can then develop alternatives to the existing plan and ready

them for use when and if circumstances make these alternatives

appropriate.


Environment Analysis:

Market environment consist of all factors that in one way or another affect the

organization decisions.

There are external and internal factors.

Internal factor, these involve (6M's)

1. Men

2. Money

3. Material

4. Management

5. Machine

6. Methods

Organization comprises of:

Person: More than 2 persons

Interacting: The person should be interacting together for example

having conversation, communication, sharing ideas

Management structure, Structure, Relation, Purposes or Objectives

Place, Process, Division of Work or Specialization

Authority and Responsibility

System of Communication and System of Coordination

Effective Management, Organization objectives.

Thus, for support the component of organization above, the organization should

have the following characteristics:

Hierarchical order

Policy and Controlling

Formal Communication

Delegation of Work

Qualified human resources with professional skill

External factors, these include

Macro factor and micro factors:

Macro factors are the one that affect the organization indirectly, these are (PESTLE)

1. Political


2. Environment

3. Socio-cultural

4. Technological and

5. Ecological

6. Legal

While micro factors are those which affect the organization directly it involve

1. Customers

2. Competitors

3. Suppliers and

4. Public

The external environment is typically made up of things, situations, and events

that occur outside of an organization, (usually beyond the organizations control),

and affects the organization in either a positive or negative way. Some of these

external things, situations, and events that affect the organization in a positive or

negative way may include the following:

1. Demographics

2. Economy

3. Government interference

4. Political issues

5. Social issues

6. Competition

7. Environment issues


Organization’s External Environment

The external organization comprises of all the entities that exist outside its

boundary, but have significant influence on its growth and survival. An

organization has little or no control over its environment but needs to constantly

monitor and adapt to these external changes, a proactive or reactive response

leads to significantly different outcome.

The Environmental Domain

The domain consists of all the entities of the environment that interacts with the

organization. Although the domain can be large, it is important to focus on the

ones that have the highest significance. The common external factors that

influence the organization are discussed below.

Competition:

It comprises of the related industries with:

Similar products or services,

Their geographic locations and markets.

Related Industries:

It is important to know all the competitors,

Their organizational size and skills pool,

Their competitive advantages,

Their marketing strategies,

Offshore development etc.

Global context:

Due to increasingly broad world economy,

It is important to watch the competition across the oceans,

Competitive products launched from abroad,

Changing socio-political situations, and home grown entrepreneurs.

Customers:

They are the end-users of the product and services,


The most critical aspect of the environment.

Preference changes:

Customer likes and dislikes changes rapidly,

People live in a tight social system that create and encourage trends.

It is important to anticipate changes in user’s product requirements,

Emerging technologies that can change how the products are used etc.

Demographical changes:

These include the social, economical and cultural changes like

o Population age, ethnicity, education level and economic class.

o Such changes affect the customer preference and the mass market

trends.

Resources:

An organization depends upon availability of certain external resources for

its operations and productivity.

Skilled Workers:

These include undergraduate students, related university courses, training

schools and labor market.

The availability of adequately skilled employees at various levels in the

organization can change dramatically over the period of time.

Once the demand for certain skill drops, so does the supply, in a long run

it adversely affect the organization since it becomes hard to obtain highly

skilled new workers.

Similarly, as the competition grows, they compete for the same skill set in

the market creating a high temporary demand.

Raw Materials:

Every organization uses certain raw materials to manufacture its product

or service,

Any disruption in its supply, changes in cost of materials etc can have an

adverse effect.


The raw material definition includes sub parts that are contracted to be

manufactured by others, projects that are send overseas for production,

the leased space the organization uses or the transportation of its goods.

Finance:

It provides operational support;

It includes savings or available cash,

Credit lines to fund new ventures, venture capitals, the stock markets and

investors.

It is particularly noteworthy in the organizations that operate on thin

margins or new startups since they have little support to raise capitals.

Technology:

It includes the science and technology required for the production,

The technical tools that are used in the manufacturing or the technology of

the product itself in case of high-tech industry. Internet, social network,

advances in semiconductors and communication technologies have

revolutionized how organizations operate in current era.

Laws and Regulations:

All organizations have to abide by the legal system, new laws and

regulations are constantly added due to the political or social changes.

Compliance can result in additional cost, developing new technology,

additional taxes or legal fees; one such example is lowered carbon

emission requirements.

Environmental Uncertainty

The rate at which the external domain can possibly change defines the

environmental uncertainty; put differently, it’s a measure of how many factors

change during a single planning period. Not all factors impact the day to day

operations and thus needs to be weighed differently. Higher level of uncertainty

entails that organizational leaders have a complex environment to deal with, it

test their visionary and decision making capability in absence of clear data.

A framework of environmental uncertainty can be formulated by determining the

complexity and stability of the environment.

Complexity of Environment:


It’s a measure of number of domain elements that influence the

organization’s operation.

Not all domain factors might have considerable impact, one company

might have very few competitors with little market share while another

might be threatened by new players.

Stability of Environment:

It is the frequency at which the domain elements change and how

predictable are the changes.

Domain is considered to be stable if only few elements change in a

predicable fashion. It is considered unstable if the domain elements are

dynamic and shift abruptly, and it is hard to anticipate the changes.

Competitors marketing strategies or alliances, price wars, sudden change

in political climate are some unpredictable factors that add to the domain’s

instability.

Environmental Intelligence

Environmental intelligence gathering is a process of constantly scanning

the environmental domain for changes.

Its purpose is to detect the changes, gather vital information, perform

methodical analysis and present its reports to the top executives in the

organization.

There are two channels of obtaining environmental domain changes that

are mentioned below.

External Linkage:

Organizations are an open system and are tightly bounded to its external

environment.

Almost every functional unit has either direct or indirect linkage with the

environment and it receives tips and information about the related

changes.

Sales & marketing can provide information about the competition’s new

product, road-map and pricing, R&D about the emerging technologies, HR

about skilled resources, laws and regulations.

Similarly procurement dept can detect changes in suppliers and finance

about availability of credit, economic outlook etc. Some organizations

create an additional functional unit that acts as a bridge between other 45 By Awais Qasim Student Of Jawad Ahmad Zeb

units, it systemically collects and compiles the competitive information that

is used by top executives in strategic planning and decision making.

External Consultants:

Organizations can also use specialized external services in field of

competitive intelligence and strategic planning.

These services utilize various tools like survey & questionnaires, systemic

scanning of public information and the web and use various statistical

techniques to analyze the collected data.

These consultants work with the internal functional units as well the

external environment to obtain their information, thus can potentially

provide unbiased recommendations which are sometimes hard to obtain

internally.

Adapting to External Environment

In order to survive and prosper, the organization has to adapt itself to the

ecological system that surrounds itself.

It is important to utilize the environmental intelligence to determine the

uncertainty and take appropriate actions for the well being of the

organization.

Forecasting and Planning:

Environmental uncertainty should be used to predict the future course of

the environment and plan appropriately to reduce its adverse impact.

A planned organization is better prepared against the unstable

environment and can respond quickly and coherently.


Corporate Strategy:

Strategy:

"Strategy is the direction and scope of an organization over the long-term: which achieves

advantage for the organization through its configuration of resources within a challenging

environment, to meet the needs of markets and to fulfill stakeholder expectations".

In other words, strategy is about:

Where is the business trying to get to in the long-term (direction)

Which markets should a business compete in and what kinds of activities are involved in

such markets? (Markets; scope)

How can the business perform better than the competition in those markets?

(Advantage)?

What resources (skills, assets, finance, relationships, technical competence, and

facilities) are required in order to be able to compete? (Resources)?

What external, environmental factors affect the businesses' ability to compete? (Environment)?

What are the values and expectations of those who have power in and around the

business? (Stakeholders)

Corporate Strategy

Issues include:

o Scope of Business-----What Business you are in??

o Resource deployment----How you are going to use your resources??

o Competitive advantage----What are your competitive advantages??

o Coordination of Production, Marketing, Personnel etc.


Definition:

Corporate Strategy - is concerned with the overall purpose and scope of the business to

meet stakeholders’ expectations.

Corporate strategy is concerned wit:

o The firm’s choice of business,

o Markets and activities’, and thus

o It defines the overall scope and direction of the business.

OR

CORPORATE STRATEGY is the direction an organization takes with the objective of

achieving business success in the long term. The development of a corporate strategy

involves:

o Establishing the purpose and scope of the organization's activities and

o The nature of the business it is in,

o Taking the environment in which it operates,

o Its position in the marketplace, and

o The competition it faces into consideration; most times analyzed through a

SWOT analysis.

Business Strategy

The definition of business strategy is:

o A long term plan of action designed to achieve a particular goal or set of goals or

objectives.

Creating a business strategy is a core management function.

A business strategy is what is used when an opportunity or a crisis occurs. A business

strategy brings together the resources available (talent, capital, and time) to maximize

the opportunity or minimize the crisis.

Unlike a business plan which is done on an annual basis, the business strategy plan is

done when an event occurs.

Since the event usually occurs infrequently most CEOs and business owners have little

experience or no background in creating the best business strategy plan to deal with the

event.

A business strategy typically is a document that clearly articulates the direction a

business will pursue and the steps it will take to achieve its goals.


In a standard business plan, the business strategy results from goals established to

support the stated mission of the business.

o A typical business strategy is developed in three steps:

1. Analysis,

2. Integration and

3. Implementation.

1. Analysis Step:

In the analysis step of business strategy development, one of several methods is used to

analyze a firm’s market, resources, obstacles to success and specific advantages.

The goal of strategic analysis is to identify what a business wants to accomplish, the

strengths it can bring to bear on accomplishing the goal and weaknesses that need to be

addressed prior to integration and implementation.

Strategic assessment methodologies can include evaluating the business environment,

gaming various competitive scenarios, determining what market forces are at work and

rating competitors, among others.

2. Integration:

Integrating a business strategy usually is one of many steps in a larger business planning

process.

A business plan begins with an overall vision.

From the vision, a mission statement for the business is constructed, usually the shorter

and more precise the better.

A mission leads to specific goals the business will achieve to accomplish its mission and

that in turn leads to strategy to achieve goals.

Specific tactics are usually then developed to support the business strategy.

This process usually begins with senior managers who then communicate the strategy to

respective teams.

Each team is made to understand how the strategy will affect its daily activities.

Taking the business strategy to the lowest level of the company possible helps integrate

the strategy throughout the firm.

Business strategy can be applied to small businesses, too.

3. Implementation:

Implementation of the business strategy typically follows assessment and integration.


Individual teams in the company, which understand respective roles in bringing the

strategy to pass, implement the specific tactics developed to support the strategy.

At the implementation stage, individual business units or teams often have a subsection

of the business strategy on which they focus.

Business strategies usually include a measurement component as well.

The measurement component of the business strategy is derived from the overall goals

established to accomplish the business mission.

Goals are broken down, usually by both business unit and time estimated to accomplish

them.

The business strategy includes a component to periodically compare current progress

against goals.

Based on how well the business strategy has led to goal achievement, the strategic

analysis process is repeated to adjust the strategy as necessary.

Functional Strategy:

What, then, do we mean by "functional strategy?" While a business strategy's scope is

the business as a whole,

o A functional strategy’s scope is each of the functional units of the business: IT,

finance, marketing, engineering, manufacturing, etc.

o A functional strategy describes how that business function will deliver on its

responsibilities within the business strategy. Included are:

What must the function be able to do?

How will it do that, especially in light of what the other functions of the

business are doing?

Or of what the same functions in competitive businesses are doing?


Management

Strategy can be formulated on three different levels:

1. Corporate level

2. Business unit level

3. Functional or departmental level.

1. Corporate Level Strategy:

Corporate Strategy - is concerned with the overall purpose and scope of the business to

meet stakeholders’ expectations.

Corporate strategy is concerned wit:

o The firm’s choice of business,

o Markets and activities’, and thus

o It defines the overall scope and direction of the business.

OR

CORPORATE STRATEGY is the direction an organization takes with the objective of

achieving business success in the long term. The development of a corporate strategy

involves:

o Establishing the purpose and scope of the organization's activities and

o The nature of the business it is in,

o Taking the environment in which it operates,

o Its position in the marketplace, and

o The competition it faces into consideration; most times analyzed through a

SWOT analysis.

Corporate level strategy is concerned with:

1. Reach:

Defining the issues that are corporate responsibilities;

These might include:

o Identifying the overall goals of the corporation,

o The types of businesses in which the corporation should be involved, and

o The way in which businesses will be integrated and managed.


2. Competitive Contact:

Defining where in the corporation competition is to be localized.

3. Managing Activities and Business Interrelationships:

Corporate strategy seeks to develop synergies by sharing and coordinating staff and

other resources across business units, investing financial resources across business

units, and using business units to complement other corporate business activities.

4. Management Practices:

Corporations decide how business units are to be governed:

o Through direct corporate intervention (centralization) or

o Through more or less autonomous government (decentralization) that relies on

persuasion and rewards.

2. Business Unit Level Strategy:

A strategic business unit may be a division, product line, or other profit center that can

be planned independently from the other business units of the firm.

At the business unit level, the strategic issues are less about the coordination of

operating units and more about developing and sustaining a competitive advantage for

the goods and services that are produced.

At the business level, the strategy formulation phase deals with:

o Positioning the business against rivals

o Anticipating changes in demand and technologies and adjusting the strategy to

accommodate them

o Influencing the nature of competition through strategic actions such as vertical

integration and through political actions such as lobbying.

o Michael Porter identified three generic strategies (cost leadership,

differentiation, and focus) that can be implemented at the business unit level to

create a competitive advantage and defend against the adverse effects of the

five forces.

3. Functional Level Strategy:

o The functional level of the organization is the level of the operating divisions and

departments.

o The strategic issues at the functional level are related to business processes and the

value chain.


o Functional level strategies in marketing, finance, operations, human resources, and R&D

involve the development and coordination of resources through which business unit

level strategies can be executed efficiently and effectively.

o Functional units of an organization are involved in higher level strategies by providing

input into the business unit level and corporate level strategy, such as providing

information on resources and capabilities on which the higher level strategies can be

based.

o Once the higher-level strategy is developed, the functional units translate it into discrete

action-plans that each department or division must accomplish for the strategy to

succeed.


Strategic Planning:

Definition:

Strategic planning is the process of formulating, implementing and evaluating strategies to

support the cross functional decision of the company.

Competition, Innovation, polices, environment, technology and human resource are some major

concerns of the company.

Companies following the traditional ad-hoc, forecasting methods to compete in the market will

not work for long term.

Strategic planning is now become mandatory process to clearly define:

Company objectives,

Goals,

Internal resources,

External factors and

To evaluate overall cycle for eliminating bottlenecks. (Blockage).

Strategic planning process compromise of following phases:

1. Company vision & mission

2. Internal audit

3. External audit

4. Formulation of strategy

5. Implementation of strategy

6. Evaluation of strategy

The figure below shows the strategic planning process and the feedback cycle.


1. Company vision & mission

Company defines its vision which is the future roadmap and

Mission to determine the company objectives, products, business, employees etc.

In short mission statement communicates the reason of existence of the company both

internally and externally.

This phase help out company to determine financial and strategic objective for the

company.

Financial objective consists of budget, revenues.

Strategic objectives comprises of market share, customer base and sales.

2. Internal audit

The internal audit assists the company to find out their internal resources.

Internal audit clearly identify the internal strengths and weakness of the company.

Internal strengths are the valuable resources of the company to exploit new

opportunities.

Internal weaknesses are overcome with time, and company will look forward to convert

these to strengths to avoid risk for the future.

3. External audit

Company deals with two environments

One is internal as discussed above and other is external.

Internal environment can be controlled by the company but external environment is not

within control of the company.

The external environment is made of (PEST) political, legal, social and technological

issues,

Change in any one of these environment will impact the company.

It’s not necessary change always harm the company objectives sometimes it is also in

favor of company.

4. Formulation of strategy

Strategy is the road map to achieve goal and objectives of the company.

The result of internal and external audit will allow the company to develop strategies by

looking at their:

o Strengths,


o Weakness,

o Opportunities and threats.

To attain better profitability company develop core competencies over its rivals.

5. Implementation of strategy

It’s not necessary best strategy always produce better result.

Strategy that company adopts will work as company thought is totally dependent upon

this stage.

The people implementing the strategy are important for the success of the strategy,

they must know the objectives of the company,

People who are involved in strategy development should become the part of the

implementation team.

All the team performing activities should have the full understanding of the strategy

otherwise without knowledge they can misunderstood and strategy can be

implemented in the wrong direction.

6. Evaluation of Strategy

The implementation of strategy is monitored and if any discrepancy and bottleneck are

found it should be removed during that time to avoid future loss.

This phase can revert back to any other phase of strategic management cycle for

correction/improvement of the strategy.


Rational Decision Making Model

A rational decision making model provides a structured and sequenced approach

to decision making.

Using such an approach can help to ensure discipline and consistency is built

into your decision making process.

As the word rational suggests, this approach brings logic and order to decision

making.

Rational decision making model consists of:

o A series of steps, beginning with problem/opportunity identification, and

ending with actions to be taken on decisions made.

Why? Well one reason that emerged from his research is that:

"Too often, managers make bad tactical selections ..... Because they believe that

following recommended decision-making practices would take too much time and

demand excessive cash outlays."

A General Rational Decision Making Model:

Rational decision making processes consist of a sequence of steps designed to

rationally develop a desired solution.

Typically these steps involve:


1. Identifying a problem or opportunity The first step is to recognize a problem or to see opportunities that may

be worthwhile.

A rational decision making model is best employed where relatively

complex decisions have to be made.

The first decision making lesson should be to ask yourself if you really

have a problem to solve or a decision to make.

2. Gathering information What is relevant and what is not relevant to the decision?

What do you need to know before you can make a decision, or that will

help you make the right one?

3. Analyzing the situation What alternative courses of action may be available to you?

What different interpretations of the data may be possible?

4. Developing options Generate several possible options.

Be creative and positive.

5. Evaluating alternatives What criteria should you use to evaluate?

Evaluate for feasibility, acceptability and desirability.

Which alternative will best achieve your objectives?

6. Selecting a preferred alternative Explore the provisional preferred alternative for future possible adverse

consequences.

What problems might it create?

What are the risks of making this decision?

7. Acting on the decision Put a plan in place to implement the decision.

Have you allocated resources to implement?

Is the decision accepted and supported by colleagues?

Are they committed to making the decision work?

Limitations of the rational decision-making model:

It requires a great deal of time.

It requires a great deal of information.

It assumes rational, measurable criteria are available and agreed upon.

It assumes accurate, stable, and complete knowledge of alternatives, preferences, goals,

and consequences.

It assumes a rational, reasonable, non-political world.


Different Types of Decision Making

The following are the most common types of decision making styles that a manager in a

business or even a common man might have to follow.

1. Irreversible:

These decisions are permanent.

Once taken, they can't be undone.

The effects of these decisions can be felt for a long time to come.

Such decisions are taken when there is no other option.

2. Reversible:

Reversible decisions are not final and binding.

In fact, they can be changed entirely at any point of time.

It allows one to acknowledge mistakes and fresh decisions can be taken depending upon

the new circumstances.

3. Delayed:

Such decisions are put on hold until the decision maker thinks that the right time has

come.

The wait might make one miss the right opportunity that can cause some loss, especially

in the case of businesses.

However, such decisions give one enough time to collect all information required and to

organize all the factors in the correct way.

4. Quick Decisions:

These decisions enable one to make maximum of the opportunity available at hand.

However, only a good decision maker can take decisions that are instantaneous as well

as correct.

In order to be able to take the right decision within a short span of time, one should also

take the long-term results into consideration.

5. Experimental:

One of the different types of decision making is the experimental type in which the final

decision cannot be taken until the preliminary results appear and are positive.

This approach is used when one is sure of the final destination but is not convinced of

the course to be taken.


6. Trial and Error:

This approach involves trying out a certain course of action.

If the result is positive it is followed further, if not, then a fresh course is adopted.

Such a trail and error method is continued until the decision maker finally arrives at a

course of action that convinces him of success.

This allows a manager to change and adjust his plans until the final commitment is

made.

7. Conditional:

Conditional decisions allow an individual to keep all his options open.

He sticks to one decision so long as the circumstances remain the same.

Once the competitor makes a new move, conditional decisions allow a person to take up

a different course of action.

Types of Decision Making for Leaders

A leader gives direction to people to follow. He is responsible for ensuring that his

decision provides the right direction to the organization.

Be it in a business or in other organizations, decision making is an important component

of leadership skills.

The different types of decision making that a leader typically encounters are:

1. Authoritative:

In authoritative type of decision making the leader is the sole decision maker which

subordinates follow.

The leader has all the information and expertise required to make a quick decision.

It is important that the leader is a good decision maker as it is he who has to own up to

the consequences of his decision.

Though effective, in case the leader is an experienced individual, it can harm the

organization if the leader insists on an authoritative type of decision making even when

there is expertise available within the team.

2. Facilitative:

In facilitative type of decision making, both the leader and his subordinates work

together to arrive at a decision.

The subordinates should have the expertise as well as access to the information

required to make decisions.


Such an approach could be useful when the risk of wrong decision is very low.

It is also a great way of involving and encouraging subordinates in the working of the

organization.

3. Consultative:

As the name suggests, consultative decisions are made in consultation with the

subordinates.

However, the fact remains that unlike in the facilitative decision making style, in

consultative decision making it is the leader who holds the decision making power.

A wise leader tends to consult his subordinates when he thinks that they have valuable

expertise on the situation at hand.

4. Delegative:

As per the term, the leader passes on the responsibility of making decisions to one or

more of his subordinates.

This type of decision making is usually adopted by the leader when he is confident of the

capabilities of his subordinates.

It would have been so good had there been a universal model for decision making. However,

due to the dynamic nature of conditions, be it our workplace or our personal lives, we have to

resort to different types of decision making.


Maslow’s Hierarchy of Needs:

Psychologist Abraham Maslow first introduced his concept of a hierarchy of needs in his

1943 paper "A Theory of Human Motivation"1 and his subsequent book, Motivation and

Personality.2

This hierarchy suggests that people are motivated to fulfill basic needs before moving on

to other needs.

Maslow’s hierarchy of needs is most often displayed as a pyramid.

The lowest levels of the pyramid are made up of the most basic needs, while the more

complex needs are located at the top of the pyramid.

Needs at the bottom of the pyramid are basic physical requirements including the need

for food, water, sleep and warmth.

Once these lower-level needs have been met, people can move on to the next level of

needs, which are for safety and security.

As people progress up the pyramid, needs become increasingly psychological and social.

Soon, the need for love, friendship and intimacy become important. Further up the

pyramid, the need for personal esteem and feelings of accomplishment take priority.


Maslow's Hierarchy of Needs

Self-Actualization

Esteem Needs

Social Needs

Safety Needs

Physiological Needs

Types of Needs

Maslow believed that these needs are similar to instincts and play a major role in

motivating behavior.

Physiological, security, social, and esteem needs are deficiency needs (also known as D-

needs), meaning that these needs arise due to deprivation (Lack).

Satisfying these lower-level needs is important in order to avoid unpleasant feelings or

consequences.

Maslow termed the highest-level of the pyramid as growth needs (also known as being

needs or B-needs).

Growth needs do not stem from a lack of something, but rather from a desire to grow as

a person.

Five Levels of the Hierarchy of Needs

There are five different levels in Maslow’s hierarchy of needs:

1. Physiological Needs:

These include the most basic needs that are vital to survival, such as:

o The need for water,

o Air

o Food and

o Sleep.

Maslow believed that these needs are the most basic and instinctive needs in the

hierarchy because all needs become secondary until these physiological needs are met.

2. Security Needs:

These include needs for safety and security.

Security needs are important for survival, but they are not as demanding as the

physiological needs.

Examples of security needs include:


o A desire for steady employment,

o Health insurance,

o Safe neighborhoods and

o Shelter from the environment.

3. Social Needs

These include needs for belonging, love and affection.

Maslow considered these needs to be less basic than physiological and security needs.

Relationships such as:

o Friendships,

o Romantic attachments and

o Families help fulfill this need for companionship and acceptance,

o As does, involvement in social community or religious groups.

4. Esteem (High Regard/Value Needs:

After the first three needs have been satisfied, esteem needs becomes increasingly

important.

These include the need for things that reflect on:

o Self-esteem

o Personal worth

o Social recognition and

o Accomplishment.

5. Self-actualizing Needs:

This is the highest level of Maslow’s hierarchy of needs. Self-actualizing people are

o Self-aware,

o Concerned with personal growth,

o Less concerned with the opinions of others and

o Interested fulfilling their potential.


Leadership:

Leadership can be defined as a process by which one individual influences others toward

the attainment of group or organizational goals.

Three points about the definition of leadership should be emphasized.

First, leadership is a social influence process. Leadership cannot exist without a leader

and one or more followers.

Second, leadership elicits voluntary action on the part of followers. The voluntary nature

of compliance separates leadership from other types of influence based on formal

authority.

Finally, leadership results in followers' behavior that is purposeful and goal-directed in

some sort of organized setting. Many, although not all, studies of leadership focus on

the nature of leadership in the workplace.

Leadership is probably the most frequently studied topic in the organizational sciences.

Leadership should be distinguished from management.

Management involves planning, organizing, staffing, directing, and controlling, and a

manager is someone who performs these functions.

A manager has formal authority by virtue of his or her position or office.

Leadership, by contrast, primarily deals with influence.

A manager may or may not be an effective leader.

A leader's ability to influence others may be based on a variety of factors other than his/her

formal authority or position.


Path Goal Theory:

• Path Goal theory is about how leaders motivate subordinates to accomplish designated

goals. It was originally proposed by Robert House(1971).

• The stated goal of leadership is to enhance employee performance and employee

satisfaction by focusing on employee motivation

• Emphasizes the relationship between the leader’s style and characteristics of the

subordinates and the work setting

• The leader must use a style that best meets the subordinates motivational needs

Leadership Behaviors:

• Directive leadership :

• Leader gives:

• Instructions, expectations, time lines, and performance standards

• Supportive Leadership :

• Leader is:

• Friendly and approachable, attends to the well being of subordinates, and treats

everyone as equals

• Participative Leadership :

• Leader invites:

• Subordinates to give ideas, share opinions and integrates their suggestions into

the decision making process

• Achievement-Oriented Leadership:

• Leader challenges subordinates to perform at the highest level possible. Leader has

high standards of excellence and seeks continuous improvement.


Subordinate Characteristics

• Need for affiliation- prefer supportive leadership

• Preferences for structure – prefer directive leadership

• Desires of control- prefer participative leadership

• Self-perceived level of task ability- prefer achievement orientated leadership


Pros (In Favour):

• Helps understand how leader behavior effects subordinates satisfaction and work

performance

• Deals directly with motivation – one of the only theories to address this

• Provides a very practical model – make a clear path and follow it

Cons (Against)

• This is a very complex theory that incorporates many aspects of leadership

• Research only partially supports the theory

• Fails to explain adequately the relationship between leader behavior and subordinate

motivation

• Treats leadership as a one way street, places a majority of the responsibility on the

leader.


Motivation:

The definition of motivation is to give reason, incentive, enthusiasm,

or interest that causes a specific action or certain behavior.

Motivation is present in every life function.

Simple acts such as eating are motivated by hunger.

Education is motivated by desire for knowledge. Motivators can be

anything from reward to coercion.

There are two main kinds of motivation:

1. Intrinsic and

2. Extrinsic.

Intrinsic motivation is internal. It occurs when people are compelled

to do something out of pleasure, importance, or desire.

Extrinsic motivation occurs when external factors compel the

person to do something.

However, there are many theories and labels that serve as sub

tittles to the definition of motivation. For example: "I will give you a

candy bar if you clean your room." This is an example of reward

motivation.

A common place that we see the need to apply motivation is in the

work place. In the work force, we can see motivation play a key role

in leadership success.

A person unable to grasp motivation and apply it, will not become

or stay a leader.

Salary, benefits, working conditions, supervision, policy, safety,

security, affiliation, and relationships are all externally motivated

needs.

Another place motivation plays a key role is in education. A teacher

that implements motivational techniques will see an increased

participation, effort, and higher grades.

Part of the teachers’ job is to provide an environment that is

motivationally charged.

This environment accounts for students who lack their own internal

motivation. One of the first places people begin to set goals for


themselves is in school. Ask any adult: "What is the main thing that

motivates you."

Their answer will most likely be goals. Even the simplest things in

life are the result of goal setting.

A person may say, "I want to save 300.00 for a new T.V." Well, that

is a goal.

School is where we are most likely to learn the correlation between

goals, and the definition of motivation. That correlation is what

breeds success.

Motivation is what propels life. It plays a major role in nearly

everything we do. Without motivation, we would simply not care

about outcomes, means, accomplishment, education, success,

failure, employment, etc.

Douglas McGregor - Theory X and Y

Douglas McGregor, an American social psychologist, proposed his

famous X-Y theory in his 1960 book 'The Human Side of Enterprise'.

Theory x and theory y are still referred to commonly in the field of

management and motivation, and whilst more recent studies have

questioned the rigidity of the model, McGregor’s X-Y Theory remains a

valid basic principle from which to develop positive management style and

techniques.

McGregor's XY Theory remains central to organizational development,

and to improving organizational culture.

McGregor's X-Y theory is a salutary (Helpful) and simple reminder of the

natural rules for managing people, which under the pressure of day-to-day

business are all too easily forgotten.

McGregor's ideas suggest that there are two fundamental approaches to

managing people.

Many managers tend towards theory x, and generally get poor results.

Enlightened managers use theory y, which produces better performance

and results, and allows people to grow and develop.

McGregor's ideas significantly relate to modern understanding of the

Psychological Contract, which provides many ways to appreciate the


unhelpful nature of X-Theory leadership, and the useful constructive

beneficial nature of Y-Theory leadership.

Theory X ('authoritarian management' style)

The average person dislikes work and will avoid it he/she can.

Therefore most people must be forced with the threat of punishment to

work towards organizational objectives.

The average person prefers to be directed; to avoid responsibility; is

relatively un-ambitious, and wants security above all else.

Theory X assumes that the average person:

Dislikes work and attempts to avoid it.

Has no ambition, wants no responsibility, and would rather follow than lead.

Is self-centered and therefore does not care about organizational goals.

Resists change.

Is gullible and not particularly intelligent.

Essentially, Theory X assumes that people work only for money and security.

Theory X - The Hard Approach and Soft Approach:

Under Theory X, management approaches can range from:

A hard approach to a soft approach.

The hard approach relies on:

o Coercion (Force),

o Implicit threats,

o Close supervision, and

o Tight controls, essentially an environment of command and control.

The hard approach results in:

o Hostility,

o Purposely low-output, and

o Hard-line union demands.

The soft approach is to be:


o Permissive (Lenient) and

o Seek harmony with the hope that in return employees will

cooperate when asked to do so.

The soft approach results in:

o Ever-increasing requests for more rewards in exchange for ever-

decreasing work output.

o The optimal management approach under Theory X probably would

be somewhere between these extremes. However, McGregor

asserts that neither approach is appropriate because the

assumptions of Theory X are not correct.

Characteristics of the X Theory Manager:

Results-driven and deadline-driven, to the exclusion of everything else

Intolerant

Issues deadlines and ultimatums

Distant and detached

Aloof and arrogant

Elitist (Selective)

Short temper

Shouts

Issues instructions, directions, edicts

Issues threats to make people follow instructions

Demands, never asks

Does not participate

Does not team-build

Unconcerned about staff welfare, or morale

Proud, sometimes to the point of self-destruction

One-way communicator

Poor listener

Fundamentally insecure and possibly neurotic

Anti-social

Vengeful and recriminatory

Does not thank or praise


Withholds rewards, and suppresses pay and remunerations levels

Scrutinizes expenditure to the point of false economy

Seeks culprits for failures or shortfalls

Seeks to apportion blame instead of focusing on learning from the

experience and preventing recurrence

Does not invite or welcome suggestions

Takes criticism badly and likely to retaliate if from below or peer group

Poor at proper delegating - but believes they delegate well

Thinks giving orders is delegating

Holds on to responsibility but shifts accountability to subordinates

Relatively unconcerned with investing in anything to gain future

improvements

Unhappy

Theory Y ('participative management' style)

Effort in work is as natural as work and play.

People will apply self-control and self-direction in the pursuit of

organizational objectives, without external control or the threat of

punishment.

Commitment to objectives is a function of rewards associated with their

achievement.

People usually accept and often seek responsibility.

The capacity to use a high degree of imagination, ingenuity and creativity

in solving organizational problems is widely, not narrowly, distributed in

the population.

In industry the intellectual potential of the average person is only partly

utilized.

Under these assumptions, there is an opportunity to align personal goals

with organizational goals by using the employee's own quest for fulfillment

as the motivator. McGregor stressed that Theory Y management does not

imply a soft approach.

McGregor recognized that some people may not have reached the level of

maturity assumed by Theory Y and therefore may need tighter controls

that can be relaxed as the employee develops.


Theory Y Management implication (Suggestions)

If Theory Y holds, the firm can do many things to harness the motivational

energy of its employees:

Decentralization and Delegation - If firms decentralize control and

reduce the number of levels of management, each manager will have

more subordinates and consequently will be forced to delegate some

responsibility and decision making to them.

Job Enlargement - Broadening the scope of an employee's job adds

variety and opportunities to satisfy ego needs.

Participative Management - Consulting employees in the decision

making process taps their creative capacity and provides them with some

control over their work environment.

Performance Appraisals - Having the employee set objectives and

participate in the process of evaluating how well they were met.

If properly implemented, such an environment would result in a high level of

motivation as employees work to satisfy their higher level personal needs

through their jobs.



Theory X - authoritarian, repressive style. Tight control, no development. Produces limited, depressed culture.

Management

StaffManagement

Staff

Theory Y - liberating and developmental. Control, achievement and continuous improvement

achieved by enabling, empowering and giving responsibility.

‘Theory X’ ‘Theory Y’

Trait Theory of Leadership:

Assumptions

People are born with inherited traits.

Some traits are particularly suited to leadership.

People who make good leaders have the right (or sufficient) combination of traits.

Description:

The trait model of leadership is based on the characteristics of many leaders -

both successful and unsuccessful - and is used to predict leadership

effectiveness. The resulting lists of traits are then compared to those of potential

leaders to assess their likelihood of success or failure.

Scholars taking the trait approach attempted to identify physiological

(appearance, height, and weight), demographic (age, education and

socioeconomic background), personality, self-confidence, and aggressiveness),

intellective (intelligence, decisiveness, judgment, and knowledge), task-related

(achievement drive, initiative, and persistence), and social characteristics

(sociability and cooperativeness) with leader emergence and leader

effectiveness.

Successful leaders definitely have interests, abilities, and personality traits that

are different from those of the less effective leaders. Through many researches

conducted in the last three decades of the 20th century, a set of core traits of

successful leaders have been identified. These traits are not responsible solely to

identify whether a person will be a successful leader or not, but they are

essentially seen as preconditions that endow people with leadership potential.

Among the core traits identified are:

Achievement drive: High level of effort, high levels of ambition, energy and

initiative

Leadership motivation: an intense desire to lead others to reach shared goals

Honesty and integrity: trustworthy, reliable, and open

Self-confidence: Belief in one’s self, ideas, and ability

Cognitive ability: Capable of exercising good judgment, strong analytical

abilities, and conceptually skilled

Knowledge of business: Knowledge of industry and other technical matters


Emotional Maturity: well adjusted, does not suffer from severe psychological

disorders.

Others: charisma, creativity and flexibility


Strengths/Advantages of Trait Theory

It is naturally pleasing theory.

It is valid as lot of research has validated the foundation and basis of the theory.

It serves as a yardstick against which the leadership traits of an individual can be

assessed.

It gives a detailed knowledge and understanding of the leader element in the

leadership process.

Limitations of the Trait Theory:

There is bound to be some subjective judgment in determining who is regarded

as a ‘good’ or ‘successful’ leader

The list of possible traits tends to be very long.

More than 100 different traits of successful leaders in various leadership

positions have been identified.

These descriptions are simply generalities.

There is also a disagreement over which traits are the most important for an

effective leader

The model attempts to relate physical traits such as, height and weight, to

effective leadership.

Most of these factors relate to situational factors.

For example, a minimum weight and height might be necessary to perform the

tasks efficiently in a military leadership position.

In business organizations, these are not the requirements to be an effective

leader.

The theory is very complex

Implications (Suggestions) of Trait Theory:

The trait theory gives constructive information about leadership.

It can be applied by people at all levels in all types of organizations.

Managers can utilize the information from the theory to evaluate their position in

the organization and to assess how their position can be made stronger in the

organization.

They can get an in-depth understanding of their identity and the way they will

affect others in the organization.


This theory makes the manager aware of their strengths and weaknesses and

thus they get an understanding of how they can develop their leadership

qualities.


Conclusion

The traits approach gives rise to questions: whether leaders are born or made;

and whether leadership is an art or science.

However, these are not mutually exclusive alternatives.

Leadership may be something of an art; it still requires the application of special

skills and techniques.

Even if there are certain inborn qualities that make one a good leader, these

natural talents need encouragement and development.

A person is not born with self-confidence. Self-confidence is developed, honesty

and integrity are a matter of personal choice, motivation to lead comes from

within the individual, and the knowledge of business can be acquired.

While cognitive ability has its origin partly in genes, it still needs to be developed.

None of these ingredients are acquired overnight.

Stogdill (1974) identified the following traits and skills as critical to leaders.

Traits:

1. Adaptable to situations

2. Alert to social environment

3. Ambitious and achievement-orientated

4. Assertive

5. Cooperative

6. Decisive

7. Dependable

8. Dominant (desire to influence others)

9. Energetic (high activity level)

10. Persistent

11. Self-confident

12. Tolerant of stress

13. Willing to assume responsibility

Skills:

1. Clever (intelligent)

2. Conceptually skilled


3. Creative

4. Diplomatic and tactful

5. Fluent in speaking

6. Knowledgeable about group task

7. Organized (administrative ability)

8. Persuasive

9. Socially skilled

McCall and Lombardo (1983) researched both success and failure

identified four primary traits by which leaders could succeed or 'derail':

Emotional stability and composure:

Calm, confident and predictable, particularly when under stress.

Admitting error:

Owning up to mistakes, rather than putting energy into covering up.

Good interpersonal skills:

Able to communicate and persuade others without resort to negative or coercive

tactics.

Intellectual breadth:

Able to understand a wide range of areas, rather than having a narrow (and

narrow-minded) area of expertise.


Leadership Styles:

Four of the most basic leadership styles are:

1. Autocratic 2. Bureaucratic 3. Laissez-Faire 4. Democratic

1. Autocratic Leadership Style:

This is often considered the classical approach.

It is one in which the manager retains as much power and decision-making

authority as possible.

The manager does not consult employees, nor are they allowed to give any

input.

Employees are expected to obey orders without receiving any explanations.

The motivation environment is produced by creating a structured set of rewards

and punishments.

This leadership style has been greatly criticized during the past 30 years.

Some studies say that organizations with many autocratic leaders have higher

turnover and absenteeism than other organizations.

Certainly Gen X employees have proven to be highly resistant to this

management style. These studies say that autocratic leaders:

Rely on threats and punishment to influence employees Do not trust employees Do not allow for employee input Yet, autocratic leadership is not all bad. Sometimes it is the most

effective style to use. These situations can include: New, untrained employees who do not know which tasks to perform or

which procedures to follow Effective supervision can be provided only through detailed orders

and instructions Employees do not respond to any other leadership style There are high-volume production needs on a daily basis There is limited time in which to make a decision A manager’s power is challenged by an employee The area was poorly managed Work needs to be coordinated with another department or

organization The autocratic leadership style should not be used when:

Employees become tense, fearful, or resentful Employees expect to have their opinions heard


Employees begin depending on their manager to make all their decisions There is low employee morale, high turnover and absenteeism and work

stoppage


2. Bureaucratic Leadership Style

Bureaucratic leadership is where the manager manages “by the book¨

Everything must be done according to procedure or policy.

If it isn’t covered by the book, the manager refers to the next level above him or

her.

This manager is really more of a police officer than a leader.

He or she enforces the rules.

This style can be effective when:

Employees are performing routine tasks over and over. Employees need to understand certain standards or procedures. Employees are working with dangerous or delicate equipment that requires a

definite set of procedures to operate. Safety or security training is being conducted. Employees are performing tasks that require handling cash.

This style is ineffective when:

Work habits forms that are hard to break, especially if they are no longer useful. Employees lose their interest in their jobs and in their fellow workers. Employees do only what is expected of them and no more.

3. Democratic Leadership Style

The democratic leadership style is also called the participative style as it

encourages employees to be a part of the decision making.

The democratic manager keeps his or her employees informed about everything

that affects their work and shares decision making and problem solving

responsibilities.

This style requires the leader to be a coach who has the final say, but gathers

information from staff members before making a decision.

Democratic leadership can produce high quality and high quantity work for long

periods of time.

Many employees like the trust they receive and respond with cooperation, team

spirit, and high morale.

Typically the democratic leader:

Develops plans to help employees evaluate their own performance Allows employees to establish goals Encourages employees to grow on the job and be promoted Recognizes and encourages achievement.

Like the other styles, the democratic style is not always appropriate.


It is most successful when used with highly skilled or experienced employees or

when implementing operational changes or resolving individual or group

problems.


The democratic leadership style is most effective when:

The leader wants to keep employees informed about matters that affect them. The leader wants employees to share in decision-making and problem-solving

duties. The leader wants to provide opportunities for employees to develop a high sense

of personal growth and job satisfaction. There is a large or complex problem that requires lots of input to solve. Changes must be made or problems solved that affect employees or groups of

employees. You want to encourage team building and participation.

Democratic leadership should not be used when:

There is not enough time to get everyone’s input. It’s easier and more cost-effective for the manager to make the decision. The business can’t afford mistakes. The manager feels threatened by this type of leadership. Employee safety is a critical concern.

4. Laissez-Faire Leadership Style

The laissez-faire leadership style is also known as the “hands-off¨ style.

It is one in which the manager provides little or no direction and gives employees

as much freedom as possible.

All authority or power is given to the employees and they must determine goals,

make decisions, and resolve problems on their own.

This is an effective style to use when:

Employees are highly skilled, experienced, and educated. Employees have pride in their work and the drive to do it successfully on their

own. Outside experts, such as staff specialists or consultants are being used Employees are trustworthy and experienced.

This style should not be used when:

It makes employees feel insecure at the unavailability of a manager. The manager cannot provide regular feedback to let employees know how well

they are doing. Managers are unable to thank employees for their good work. The manager doesn’t understand his or her responsibilities and is hoping the

employees can cover for him or her.


Benefits of Management by Objectives:

Balance stress on objectives. MBO forces managers to set objectives with balanced

stress on key result areas. Thus, crisis conditions are avoided to take place in the

organization.

Better managing:

MBO forces managers to think about planning for results, rather than merely

planning activities or work.

Managers are required to ensure that the targets are realistic and needed

resources are made available to subordinates to achieve the targets.

Clearly set objectives for the subordinates serve as evaluation standards as well

as motivators for them.

Thus. MBO results in improvement in managing.

Better organizing:

The positions in the enterprise can be built around the key result areas.

Managers are required to clarify organizational roles and structures.

Hence better organizing.

Greater employee involvement & commitment:

If MBO program is installed in an organization, people are not just doing work,

following instructions and waiting for guidance and decisions form above and

things are not dictated by the superiors.

They are now individuals with clearly defined goals which have been formalized

through their own participation in the process.

Orderly growth of organization:

MBO provides for the maintenance and orderly growth of organization by means

of predetermined set of objectives for everyone involved.

It also provides for measurement of what is actually achieved.

The progress and even the tenure of management by objectives emphasize the

ability, skill and achievement of managers rather than their personality.

Thus, the orderly growth and development of the organization is ensured.

Development of effective controls:

MBO not only sharpens the planning, but also develops effective controls.


It specifically provides for periodic reviews and annual performance appraisals

serving as the needed feedback for further streamlining the objectives or targets.

It makes possible for a manager to control his own performance, high deg4ree of

self control resulting in stronger motivation.

Generating of an ideal atmosphere:

Douglas McGregor says, the motivation, the potential for development, the

capacity for assuming responsibility, the readiness to Direct behavior toward

organization goals are all present in people.

Management does not put them there.

The essential task of management is to arrange organizational conditions and

methods of operation.

Objective appraisal:

Management by objectives provides a scientific basis for evaluating a

subordinate’s performance because goals (standards) are jointly set by the

superior and the subordinates.

Improvement in Management

MBO results in greatly improved management.

Objectives cannot be set without planning and result-oriented planning is the only

one that makes sense.

MBO therefore forces managers to think about planning for results rather than

merely planning activities or work.

Clarification of Organization

Another benefit of MBO is that it forces managers to clarify organizational roles

and structures even to the extent where positions could be built around the key

results expected areas, of the people occupying them.

Companies that have effectively embarked on the MBO program have

discovered deficiencies in the organization such as lack of delegation of authority

according to results expected, decentralization management, etc.

Here the MBO helps in activating the fulfillment process for these deficiencies.

Encouragement of Personal Commitment


One of the great advantages of MBO is that it encourages the people to commit

themselves to their goals.

No longer people are just doing work, following instructions and waiting for

guidance and decisions; they are now individuals with clearly defined purposes.

They have had a part in actually setting the objectives; they have had an

opportunity to put their ideas in planning programs. They understand their areas

of discretion; their authority and they have got their help from their superiors to

ensure that they can accomplish their goals.

Development of Effective Control

MBO also aids in developing effective controls.

Now, control involves measuring results and taking actions to correct deviations

from plans to ensure goals are reached.

Some other benefits include effective time management, improved planning for

individual jobs, basis for organizational change, increased motivation, and

improved communication between subordinate and managers.

Weaknesses of MBO:

1) Failure to teach the philosophy of MBO:

As management by objectives may seem, managers who would put into practice

must understand and appreciate a good deal about it.

They, in turn, must explain to subordinates what it is, how it work, why it is being

done, what part it will play in appraising performance, and above all, how

participants can benefit.

2) Failure to give guidelines to goal setters:

Management by objectives, like any other kind of planning, cannot work if those

who are expected to set goals are not given needed guidelines.

Managers must know what the corporate goals are and how their own activities

fit in with them.

3) Difficulty of setting goals:

Truly verifiable goals are difficult to set; particularly they are to have the right

degree of stretch and pull, quarter in and quarter out, year in and year out.


Goal setting may not be much more difficult than any other kind of effective

planning, although it will probably take more study and work to establish

verifiable objectives.

4) Emphasis on short –run goals:

In most MBO programs, managers set goals for the short term, seldom for more

than a year and often for a quarter or less.

There is clearly a danger of emphasizing the short run, perhaps at the expense

of the longer range.

Suggestions/Recommendations for improving the effectiveness of MBO:

One of the major reasons for the failure of MBO in many organizations is that

those in charge fail to recognize the potential character of the implement

process.

The fault is not in the system but in its use.

As with any technique, there is a right and a wrong way to implement MBO

programmes.

The following suggestions would help in making use of MBO programmes

properly.

1. Organizational commitment:

The most effective way to implement MBO is to allow the top-level managers to

explain, coordinate and guide the programme.

Without top management support and commitment, MBO cannot be implemented

properly.

MBO presents a challenging task to managers.

They must feel that the programme is important and will bring in results.

The shift from planning for work to planning for accomplishment of specific goals

is not easy.

As rightly pointed out by Hampton, “More often than not, probably, MBO is tried

and sooner or later allowed to slip into disuse. Initial enthusiasm and good faith

wane as difficulties develop”. Joint goal-setting, participation in planning and

decision-making processes, objective performance appraisal sessions pose

several problems to managers who are wedded to old ways of thinking and

action. These problems should not be allowed to kill MBO without ever being


openly confronted. Managers must believe that MBO would work and must

accept it as a way of thinking.

As Knootz pointed out, it is essential that “an effective programme of managing

by objective must be woven into an entire pattern and style of managing. It

cannot work as a separate technique standing alone”. MBO should not be used

as a decorative piece. If it does not have the active support, involvement and

commitment of top managers, it should not be installed at all.

2. Training

MBO is not a superfluous ritual which can be finished off as quickly as possible.

It calls for precise, concrete thinking.

Managers should be given adequate training in MBO philosophy and procedures

before the system is installed.

They must be in a position to integrate the technique with the basic company

philosophy.

Under an authoritarian, threatening, mistrustful climate, MBO proves to be a

fruitless exercise. “A plant must have the right soil and climate if it is to thrive”.

Similarly MBO demands a healthy atmosphere where its philosophy is

understood and the techniques are properly applied. Drawing the curtain

between fuzzy wishes and specific objectives, arranging practice sessions where

performance objectives are evaluated, measuring performance and checking

deviations – all these activities do not come by easily.

The subordinates as well as the superiors must be taught how to set realistic

goals and familiarized with the results for which they are to be held responsible.

3. Adequate time and resources:

A well-conceived MBO programme cannot be installed overnight.

It may take three to five years of operation before the MBO programme is

yielding fruitful results.

Implementing an MBO programme is quite often time consuming and managers

must have the necessary time and resources to utilize it.

They must allocate adequate time and resources to educate each person in the

organization in the nature and philosophy of the system.


It is no use looking to MBO for instant solutions.

4. Take care of the necessary mechanics (Procedures):

One reason why MBO programmes fail is that they are not integrated or

institutionalized into the real planning and control activities.

Setting goals is only part of the story; goals must be supported by control

activities also.

It is important to assign authority and responsibility for initiating and overseeing

the MBO programme.

The persons who administer the programme must be endowed with sufficient

power not only to punish but also reward people promptly.

It is always better to clarify responsibility and authority relationships so that

everyone in the organization understands what is expected in the MBO system.

A guideline manual of procedures may be adopted so as to ensure clarity and

facilitate the goal-setting and performance appraisal activities.

5. Timely feedback:

Monitor MBO as it is put to use.

This process reveals opportunities for feedback, counseling and encouragement

to subordinates at other than regular performance appraisal sessions.

In many cases, as Koontz pointed out, the superior simply sits back and forgets

that periodic review, counsel and control are mandatory to the programmes

success.

The subordinate, lacking in such direction, often, turns in a mediocre

performance.

Congratulations and encouragement from superiors who back up their words with

pay raises and promotions would motivate subordinates to peak performance.

Again, while comparing the actual progress of MBO with the planned progress,

the manager should avoid the tendency to be overly critical with those

subordinates who are lower in ability, lack confidence or are less motivated.

6. Politics:


Be sensitive to the politics of implementing MBO, MBO redistributes power and

not all managers welcome this.

If MBO is seen as a significant change, it will generate hostile reaction in the form

of jokes, infighting and overt conflict. MBO can also alter the status of an

organization, can influence decisions, can affect budgets and can promote

creation of coalitions to fight with it.

MBO, has failed in many organizations because managers quite often ignored

these political considerations in the process of implementation.

Authority:

Definition:

1. The power or right to give orders or make decisions; "he has the authority to

issue warrants";

OR

2. The power to determine, adjudicate, or otherwise settle issues or disputes;

jurisdiction; the right to control, command, or determine.

OR

3. A power or right delegated or given; authorization: Who has the authority to grant

permission?

In government, authority is often used interchangeably with "power". However,

their meanings differ: while "power" is defined as "the ability to influence

somebody to do something that he/she would not have done", "authority" refers

to a claim of legitimacy, the justification and right to exercise that power. For

example, whilst a mob has the power to punish a criminal, for example by

lynching, people who believe in the rule of law consider that only a court of law

has the authority to order punishment.

4. Power over others by sanctioned personnel within an organization. Managers have

the authority to hire and fire personnel in an organization. With authority comes

responsibility for one's actions.

Decision Support Systems:


Definition:

A Decision Support System (DSS) is an umbrella term used to describe any computer

application that enhances the user’s ability to make decisions.

More specifically, the term is usually used to describe a computer-based system

designed to help decision-makers use data, knowledge and communications technology

to identify problems and make decisions to solve those problems.

Types of Decision Support Systems:

Decision Support systems can be separated into seven broad categories, each aiding

decision making by different methods.

1. Communications Driven DSS:

A C-D DSS is a type of DSS that enhances decision-making by enabling communication

and sharing of information between groups of people.

At its most basic level a C-D DSS could be a simple threaded e-mail.

At its most complex, it could be a web-conferencing application or interactive video.

Communication-Driven DSS will exhibit at least one of the following characteristics:

Supports coordination and collaboration between two or more people;

Facilitates information sharing;

Enables communication between groups of people;

Supports group decisions.

2. Data-Driven Decision Support Systems:

Data-driven DSS are a form of support system that focuses on the provision of internal

(and sometimes external) data to aid decision making.

Most often this will come in the form of a data warehouse – a database designed to

store data in such a way as to allow for its querying and analysis by users.


Another example of a data-driven DSS would be a Geographic Information System (GIS),

which can be used to visually represent geographically dependant data using maps.

3. Document-Driven Decision Support Systems:

Document-driven DSS are support systems designed to convert documents into valuable

business data.

While data-driven DSS rely on data that is already in a standardized format that lends it

self to database storage and analysis, document-driven DSS makes use of data that

cannot easily be standardized and stored.

The three primary forms of data used in document driven DSS are:

o Oral (i.e. transcribed conversations);

o Written (i.e. reports, memos, e-mail and other correspondence);

o Video (i.e. TV commercials and news reports).

None of these formats lend themselves easily to standardized database storage and

analysis, so managers require DSS tools to convert them into data that can be valuable

in the decision making process.

Document-driven DSS is the newest field of study in Decision Support Systems.

Examples of document-driven tools can be found in Internet search engines, designed to

sift (Filter) through vast volumes of unsorted data through the use of keyword searches.

4. Knowledge-Driven Decision Support Systems:

Knowledge-driven DSS are systems designed to recommend actions to users.

Typically, knowledge-driven systems are designed to sift through large volumes of data,

identify hidden patterns in that data and present recommendations based on those

patterns.

5. Model-Driven Decision Support Systems:


Model-driven support systems incorporate the ability to manipulate data to generate

statistical and financial reports, as well as simulation models, to aid decision-makers.

Model-based decision support systems can be extremely useful in forecasting the

effects of changes in business processes, as they can use past data to answer complex

‘what-if’ questions for decision makers.

In addition to these basic types of DSS there are also two additional factors:

o Whether the DSS is spreadsheet-based, web-based or

o Something else entirely.

6. Spreadsheet-based Decision Support Systems:

Model- and Data-driven DS systems can be built using spreadsheets.

Spreadsheets offer decision-makers easy to understand representations of large

amounts of data.

Additionally, spreadsheet data is arranged in such a way as to make it easy to convert

the data into visualizations to further aid decision-makers.

7. Web-based Decision Support Systems:

Any type of DSS can be web-based.

The term simply describes any decision support system that is operated through the

interface of a web browser, even if the data used for decision support remains confined

to a legacy system such as a data warehouse.

Scope of Decision Support Systems:

In addition to these basic types of Decision Support System there are also two separate

categories used to define systems.

1. Enterprise-wide Decision Support Systems:


Enterprise-wide DS systems are systems that are linked into large data warehouses, and

offer decision support to managers at all levels of an enterprise.

Enterprise-wide systems will typically be basic, general use systems that can perform a

wide variety of functions.

2. Desktop Decision Support Systems:

Desktop DS systems are much smaller applications designed to be run from a desktop

PC. While these systems may well be linked into a data warehouse or other large

volume of data, they will typically be more limited in scope.

An example of a desktop DSS is Microsoft Excel, the desktop spreadsheet application.

Classification of Organizations

Organizations are basically classified on the basis of relationships.

There are two types of organizations formed on the basis of relationships in an

organization

1. Formal Organization

2. Informal Organization

Formal Organization:

This is one which refers to a structure of well defined jobs each bearing a

measure of authority and responsibility.

It is a conscious determination by which people accomplish goals by adhering to

the norms laid down by the structure.

This kind of organization is a random set up in which each person is responsible

for his performance.

Formal organization has a formal set up to achieve predetermined goals.

Informal Organization:

It refers to a network of personal and social relationships which spontaneously

originates within the formal set up.

Informal organizations develop relationships which are built on likes, dislikes,

feelings and emotions.


Therefore, the network of social groups based on friendships can be called as

informal organizations.

There is no conscious effort made to have informal organization.

It emerges from the formal organization and it is not based on any rules and

regulations as in case of formal organization.

Relationship between formal and informal organizations:

Formal organization originates from the set organizational structure and informal

organization originates from formal organization.

For an efficient organization, both formal and informal organizations are required.

They are the two phase of a same concern.

Formal organization can work independently.

But informal organization depends totally upon the formal organization.

Formal and informal organization helps in bringing efficient working organization

and smoothness in a concern.

Within the formal organization, the members undertake the assigned duties in co-

operation with each other.

They interact and communicate amongst themselves.

Therefore, both formal and informal organizations are important.

When several people work together for achievement of organizational goals,

social tie ups tends to built and therefore informal organization helps to secure

co-operation by which goals can be achieved smooth.

Therefore, we can say that informal organization emerges from formal

organization.

Formal and informal organization:

Formal organization:

A formal organization refers to:

The structure of well defined jobs, each bearing a definite measure of authority, responsibility and accountability.

The formal Organization refers to the formal relationships of authority and subordinates within a company.


Thus, a formal organization is created through the co-ordination of efforts of various individuals.

Every member is responsible for the performance of a specified task assigned to him on the basis of authority responsibility relationship in an organization.

The primary focus of the formal organization is the position of the employee/manager holds.

In formal Organization, each position has rules governing what can be done or what cannot be done. There are rewards and penalties for complying with these rules and performing duties as well.

Informal organization:

Informal organization refers to the relationship between people in an organization based on:

o Personal attitudes, emotion, prejudices (Injustices), likes and dislikes, etc.

o These relations are not developed according to procedures and regulations laid down in the formal organization.

o While in an informal organization, the conduct of individuals within organization is governed by norms that are social rules of behavior.

o In an informal organization power is derived from the membership of the informal groups within the organization.

Benefits of Informal organization:

For Employees:

Sense of belonging: In a formal organization, there is lack of sense of belongingness and personal satisfaction.

Value for emotional problems: In the daily work routine there are many opportunities for tension and frustration.

Aid on the job: In case of accidents or illness, members of an informal group help one another.

Innovation and originality: By enabling members to modify the job situation more to their liking, the informal organization creates the necessary environment for individual innovation and originality. The individual can experiment with his ideas.


Important channel of communication: News travels quickly via informal groups. They are the clandestine transmitters and receivers of information before it is officially released.

Social control: Informal groups provide all its members a set of norms or guides to correct behavior. Members are expected to conform to those norms.

Check on authority: Informal group forces the manager to plan and act more carefully than he would otherwise. Informal organization is a check and balance on unlimited use of authority by a manager.

For Management

Less supervision: Informal group is self-policing. This relieves the management of much of the burden of supervision.

An aid to management: The information gives the manager much feedback about employees and their work experiences thereby increasing his understanding of what he needs to do.

Disadvantages of an Informal organization

Resistance to change: An informal organization is bound by customs, conventions and culture.

Role conflict and sub-optimization: In an informal organization, everyone works towards the same objectives. Members put their own group objectives ahead of organization’s objectives. Hence, the organization suffers.

Rumor: An informal organization sometimes functions as a carrier of rumor.

Group think philosophy: Workers become loyal to their groups.

Organizational Division (Departmentalization)

Departmentalization refers to the process of grouping activities into departments.

Division of labour creates specialists who need coordination.

This coordination is facilitated by grouping specialists together in departments.

Division of labour or specialization is the specialization of cooperative labour in

specific, circumscribed tasks and roles, intended to increase the productivity of

labour.

Coordination is the act of coordinating, making different people or things work

together for a goal or effect.

After reviewing the plans, usually the first step in the organizing process is

departmentalization.


Once jobs have been classified through work specialization, they are grouped so

those common tasks can be coordinated.

Departmentalization is the basis on which work or individuals are grouped into

manageable units.

There are five traditional methods for grouping work activities:

1. Departmentalization by function

2. Departmentalization by product

3. Departmentalization by geographical regions

4. Departmentalization by process

5. Departmentalization by customer

1. Departmentalization by function

Departmentalization by function organizes by the functions to be performed.

The functions reflect the nature of the business.

The advantage of this type of grouping is obtaining efficiencies from

consolidating similar specialties and people with common skills, knowledge and

orientations together in common units.

Also, Functional departmentalization - Grouping activities by functions performed.

Activities can be grouped according to function (work being done) to pursue

economies of scale by placing employees with shared skills and knowledge into

departments for example human resources, IT, accounting, manufacturing,

logistics, marketing, and engineering. Functional departmentalization can be

used in all types of organizations.

Human resources is a term with which many organizations describe the

combination of traditionally administrative personnel functions with performance,

Employee Relations and resource planning. The field draws upon concepts

developed in Industrial/Organizational Psychology. Human resources have at

least two related interpretations depending on context. The original usage

derives from political economy and economics, where it was traditionally called

labor, one of four factors of production. The more common usage within

corporations and businesses refers to the individuals within the firm, and to the

portion of the firm's organization that deals with hiring, firing, training, and other


personnel issues. This article addresses both definitions. The objective of human

resources is to maximize the return on investment from the organization's human

capital and minimize financial risk. It is the responsibility of human resource

managers to conduct these activities in an effective, legal, fair, and consistent

manner.

Information technology has ballooned to encompass many aspects of

computing and technology, and the term has become very recognizable. The

information technology umbrella can be quite large, covering many fields. IT

professionals perform a variety of duties that range from installing applications to

designing complex computer networks and information databases. A few of the

duties that IT professionals perform may include data management, networking,

engineering computer hardware, database and software design, as well as the

management and administration of entire systems.

Accountancy or accounting is the system of recording, verifying, and reporting

of the value of assets, liabilities, income, and expenses in the books of account

(ledger) to which debit and credit entries (recognizing transactions) are

chronologically posted to record changes in value (see bookkeeping). Such

financial information is primarily used by lenders, managers, investors, tax

authorities and other decision makers to make resource allocation decisions

between and within companies, organizations, and public agencies. Accounting

has been defined by the AICPA as "The art of recording, classifying, and

summarizing in a significant manner and in terms of money, transactions and

events which are, in part at least, of financial character, and interpreting the

results thereof."

Manufacturing is the use of machines, tools and labor to make things for use or

sale. The term may refer to a range of human activity, from handicraft to high

tech, but is most commonly applied to industrial production, in which raw

materials are transformed into finished goods on a large scale. Such finished

goods may be used for manufacturing other, more complex products, such as

household appliances or automobiles, or sold to wholesalers, who in turn sell

them to retailers, who then sell them to end users - the "consumers".

Logistics is the management of the flow of goods, information and other

resources, including energy and people, between the point of origin and the point


of consumption in order to meet the requirements of consumers (frequently, and

originally, military organizations). Logistics involve the integration of information,

transportation, inventory, warehousing, material-handling, and packaging.

Logistics is a channel of the supply chain which adds the value of time and place

utility.

Marketing is defined by the American Marketing Association as the activity, set

of institutions, and processes for creating, communicating, delivering, and

exchanging offerings that have value for customers, clients, partners, and society

at large. The term developed from the original meaning which referred literally to

going to market, as in shopping, or going to a market to sell goods or services.

Engineering is the discipline and profession of applying technical and scientific

knowledge and utilizing natural laws and physical resources in order to design

and implement materials, structures, machines, devices, systems, and processes

that safely realize a desired objective and meet specified criteria.

2. Departmentalization by product

Departmentalization by product assembles all functions needed to make and

market a particular product are placed under one executive. For instance, major

department stores are structured around product groups such as home

accessories, appliances, women's clothing, men's clothing, and children's

clothing. Also, Product departmentalization - Grouping activities by product line.

Tasks can also be grouped according to a specific product or service, thus

placing all activities related to the product or the service under one manager.

Each major product area in the corporation is under the authority of a senior

manager who is specialist in, and is responsible for, everything related to the

product line. LA Gear is an example of company that uses product

departmentalization. Its structure is based on its varied product lines which

include women's footwear, children's footwear and men's footwear. In marketing,

a product is anything that can be offered to a market that might satisfy a want or

need. In retailing, products are called merchandise. In manufacturing, products

are purchased as raw materials and sold as finished goods. Commodities are

usually raw materials such as metals and agricultural products, but a commodity

can also be anything widely available in the open market. In general usage,

product may refer to a single item or unit, a group of equivalent products, a


grouping of goods or services, or an industrial classification for the goods or

services.

3. Departmentalization by geographical regions

Departmentalization by geographical regions groups jobs on the basis of

territory or geography. For example, Merck, a major pharmaceutical company,

has its domestic sales departmentalized by regions such as Northeast,

Southeast, Midwest, Southwest, and Northwest. Also, Geographic

departmentalization - Grouping activities on the basis of territory. If an

organization's customers are geographically dispersed, it can group jobs based

on geography. Geography is the study of the Earth and its lands, features,

inhabitants, and phenomena. A literal translation would be "to describe or write

about the Earth". The first person to use the word "geography" was

Eratosthenes. Four historical traditions in geographical research are the spatial

analysis of natural and human phenomena (geography as a study of

distribution), area studies (places and regions), study of man-land relationship,

and research in earth sciences. Nonetheless, modern geography is an all-

encompassing discipline that foremost seeks to understand the Earth and all of

its human and natural complexities-- not merely where objects are, but how

they have changed and come to be. As "the bridge between the human and

physical sciences," geography is divided into two main branches - human

geography and physical geography.

4. Departmentalization by process

Departmentalization by process groups jobs on the basis of product or

customer flow. Each process requires particular skills and offers a basis for

homogeneous categorizing of work activities. A patient preparing for an

operation would first engage in preliminary diagnostic tests, then go through

the admitting process, undergo a procedure in surgery, receive post operative

care, be discharged and perhaps receive out-patient attention. These services

are each administered by different departments.

Also, Process departmentalization - Grouping activities on the basis of product

or service or customer flow. Because each process requires different skills,

process departmentalization allows homogenous activities to be categorized.


For example, the applicants might need to go through several departments

namely validation, licensing and treasury, before receiving the driver's license.

5. Departmentalization by customer

Departmentalization by customer groups jobs on the basis of a common set of

needs or problems of specific customers. For instance, a plumbing firm may

group its work according to whether it is serving private sector, public sector,

government, or not-for-profit organizations. A current departmentalization trend

is to structure work according to customer, using cross-functional teams. This

group is chosen from different functions to work together across various

departments to interdependently create new products or services. For example,

a cross-functional team consisting of managers from accounting, finance, and

marketing is created to prepare a technology plan. Also, Customer

departmentalization - Grouping activities on the basis of common customers or

types of customers. Jobs may be grouped according to the type of customer

served by the organization. The assumption is that customers in each

department have a common set of problems and needs that can best be met

by specialists. The sales activities in an office supply firm can be broken down

into three departments that serve retail, wholesale and government accounts. A

customer, also client, buyer or purchaser is the buyer or user of the paid

products of an individual or organization, mostly called the supplier or seller.

This is typically through purchasing or renting goods or services. The word

derives from "custom," meaning "habit"; a customer was someone who

frequented a particular shop, who made it a habit to purchase goods of the sort

the shop sold there rather than elsewhere, and with whom the shopkeeper had

to maintain a relationship to keep his or her "custom," meaning expected

purchases in the future. The word did not refer to those who purchased things

at a fair or bazaar, or from a street vendor.


Span (Extent, Duration) of Management:

Span of Management also known as Span of Control means the number of subordinates

that can be managed efficiently and effectively by a superior in an organization.

It suggests how the relations are designed between a superior and a subordinate in an

organization.

Span of control is of two types:

Narrow span of control:

Narrow Span of control means a single manager or supervisor oversees few

subordinates.

This gives rise to a tall organizational structure.

Narrow Span (a great number of time spent with subordinates)

Little or no training of subordinates

Inadequate or unclear authority delegation

Unclear plans for non-repetitive operations

Non-verifiable objectives and standards

Fast change in external and internal environments

Use of poor or inappropriate communication techniques, including vague instructions

Ineffective interaction of supervisor and subordinate

Ineffective meetings

Greater number of specialists at lower and middle levels

Incompetent and untrained manager

Complex task

Subordinates’ unwillingness to assume responsibility and reasonable risks


Immature subordinates

Wide span of control:

Wide span of control means a single manager or supervisor oversees a large number of

subordinates. This gives rise to a flat organizational structure.

Wide span of control is best suited when the employees are not widely scattered

geographically, as it is easy for managers to be in touch with the subordinates and to

supervise them.

Wide span (very little time spent with subordinates)

Thorough training of subordinates

Clear delegation and well-defined tasks

Well-defined plans for repetitive operations

Verifiable used as standards

Slow changes in external and internal environments

Use of appropriate techniques, such as proper organization structure and written and

oral communication

Effective interaction between supervisor and subordinate

Greater number of specialists at upper level (top managers concerned with external

environment)

Competent and trained manager

Simple task

Subordinates’ willingness to assume responsibility and reasonable risks.

Mature Subordinates


There is an inverse relation between the span of control and the number of levels in

hierarchy in an organization, i.e. narrower the span, the greater is the number of levels

in an organization.

Effective Span of Control:

An ideal span of control according to modern authors is around 15 to 20 subordinates

per manager, while according to the traditional authors the ideal number is around 6

subordinates per manager. In reality, the ideal span of control depends upon various

factors, such as:

Nature of an organization

Nature of job

Management methods;

Subordinate training;

Personality of members;

Congruence (Similarity) of goals;

Organizational size; and

Skills and competencies of manager

Employees skills and abilities

Self control.

The kind of interaction that takes happens between superiors and subordinates, etc.

Ricky F. Griffin identified the following factors in determining the effective span. The factors are

shown below:

1. Competence of supervisor and subordinates: The greater the competence, the wider the potential span)

2. Physical dispersion of subordinates:

The greater the dispersion, the narrower the potential span)

3. Extent of non-supervisory work in a manager’s job: 109 By Awais Qasim Student Of Jawad Ahmad Zeb

The more non-supervisory work, the narrower the potential span

4. Degree of required interactions:

The less required interaction, the wider the potential span

5. Extent of standardized procedures:

The more procedures, the wider the potential span

6. Similarity of tasks being supervised:

The more similar the tasks, the wider the span

7. Frequency of new problems:

The higher the frequency, the narrower the potential span

8. Preferences of supervisors and subordinates.


Line Organization Structure:

Line Organization (also called Military/Scalar Organization) is the oldest and the

simplest form of internal Organization structure.

It was first developed by the Roman army and later adopted by armies all over

the world. Factory owners also used line Organization structure in its purest form

in the nineteenth century in England.

In the line Organization, the line of authority moves directly from the top level to

the lowest level in a step-by-step manner.

It is straight and vertical. The top-level management takes all major decisions

and issues directions for actual execution.

The general manager, for example, issues order to various departmental

managers. Thereafter, the departmental manager issues instructions to works

manager.

The works manager will issue instructions to foreman. In this manner, the orders

and instructions will be issued to the workers working at the lowest level. Thus

authority moves downward and also step-by-step. The responsibility, on the other

hand, moves in the upward direction.

Line Organization structure is given in the following chart:


Advantages of Line Organization Structure:

Simplicity:

Line Organization structure is easy to understand and follow by superiors and

subordinates. It is simple and clear as regards authority and accountability.

Prompt decisions:

Line Organization facilitates prompt decision-making at all levels as the authority

given is clear and complete.

Discipline:

It brings discipline in the Organization due to unity of command, delegation of

authority and direct accountability.

Economical:

Line Organization is economical as experts are not appointed.

Attraction to talented persons:

Line Organization brings out talented workers and develops in them quality of

leadership. It offers opportunities of self-development to employees.

Quick communication:

High efficiency, flexibility and high employee morale are some more advantages

of line organization structure.

Limitations of Line Organization Structure:

Heavy burden on line executives:

The line executives are given too many duties and responsibilities. Even the

quality of the decisions of executives may suffer due to heavy burden of duties

and responsibilities.

Non-availability of services of experts:

There is absence of skilled experts in line organization. Expert assistance is not

available promptly when needed by line executives.

Favoritism:

There is wide scope for favoritism and nepotism in the line organization.

Leadership of departmental executive is autocratic due to heavy concentration of

powers. He may favour some employees at the cost of others.


Too much dependence on limited executives:

In the line organization, all powers are concentrated in the hands of a few

executives.

Naturally, the success and stability of the entire organization depends on their

personal skill, initiative and interest. Special difficulties arise when one executive

is to be transferred/replaced/promoted.

Rigidity:

There is rigidity in the working of line organization.

Delays in communication:

Limited freedom to employees and unsuitability to modern large business units

are some more demerits of line Organization.

Line and Staff Organization:

In the line and staff Organization, line executives and staff (specialists) are

combined together. The line executives are 'doers' whereas staff refers to

experts and act as 'thinkers'. The following chart shows line and staff

Organization structure:

The line executives are concerned with the execution of plans and Policies. They

do their best to achieve the organizational objectives. The staff concentrates their


attention on research and planning activities. They are experts and conduct

advisory functions.

Staff specialists are regarded as 'thinkers" while execution function is given to

line executives who are "doers". The staff is supportive to line.

The staff specialists offer guidance and cooperation to line executives for

achieving organizational objectives. This reduces the burden of functions on the

line executives and raises overall efficiency of the Organization.

For avoiding the conflicts between line and staff, there should be clear

demarcation between the line and staff functions.

This avoids overlapping of functions and possible conflicts. In short, the line and

staff functions are different but are supportive and can give positive results if

adjusted properly i.e. by avoiding the conflicts. They suggest/recommend but

have no power to command the line executive. However, their advice is normally

accepted because of their status in the Organization.

According to Louis Allen, "Line refers to those positions and elements of the

Organization, which have the responsibility and authority and are accountable for

accomplishment of primary objectives.

Staff elements are those which have responsibility and authority for providing

advice and service to the line in attainment of objectives".

Characteristics of Line and Staff Organization:

Planning and execution:

There are two aspects of administration in this Organization, viz., planning and

execution.

Combining line and staff:

Planning function is entrusted to staff specialists who are 'thinkers' while

execution function is given to line executives who are 'doers'. The staff is

supportive to line.

Role of authority:

The line managers have authority to take decisions as they are concerned with

actual production. The staff officers lack such authority.114 By Awais Qasim Student Of Jawad Ahmad Zeb

Guidance from staff:

The staff provides guidance and advice to line executives when asked for.

Moreover, line executives may or may not act as per the guidance offered.

Exercising control:

The staff manager has authority over subordinates working in his department.

Scope for specialization:

There is wide scope for specialization in this Organization as planning work is

given to staff and execution work is given to line executives.

Possibility of conflicts:

Conflicts between line and staff executives are quite common in this Organization

but can be minimized through special measures.

Suitability:

Line and staff Organization structure is suitable to large-scale business activities.

Merits of Line and Staff Organization:

Fewer burdens on executives:

Line executives get the assistance of staff specialists. This reduces the burden of

tine executives. This raises overall efficiency and facilitates the growth and

expansion of an enterprise.

Services of experts available:

The benefits of services of experts are provided to line managers. Highly

qualified experts are appointed and they offer guidance to line executives.

Sound decision-making:

Line and staff Organization facilitates sound management decisions because of

the services of experts and specialists.

The decisions are also taken in a democratic method i.e. in consultation with the

experts.

Limited tension on line managers:

The pressure of work of line bosses is brought down as they are concerned only

with production management.


Benefits of specialization:

There is division of work and specialization in this Organization.

Naturally, the benefits of division of work and specialization are easily available.

Training opportunities to employees:

Better opportunities of advancement are provided to workers.

The scope for learning and training for promotions are available.

Demerits of Line and Staff Organization:

Delay in decision-making:

The process of decision-making is delayed, as line executives have to consult

staff experts before finalizing the decisions.

The decisions of line managers are likely to be delayed due to this lengthy

procedure.

Buck passing among executives:

The line bosses are concerned with actual execution of work.

However, they depend on staff experts for guidance. If something goes wrong,

the attempt is made to pass on the blame by one party to the other. Thus, there

is shifting of responsibility or buck-passing.

Conflicts between line and staff executives:

In this Organization, quarrels and conflicts between line managers and staff

specialists are quite common.

The line managers are generally not interested in the advice offered by experts.

Secondly, specialists feel that the line bosses lack knowledge of new ideas. Such

conflicts lead to bitterness.

Costly Organization:

Line and staff Organization is a costly Organization as the line executives are

supported by highly paid staff executives who are experts. All this adds to the

overhead expenses and the cost of production increases.

Complicated operation:


This Organization is too complicated in actual operation because of dual

authority, division of functions and too much dependence on staff. The unity of

command principle is violated.

Internal discipline is affected adversely:

The internal discipline is likely to be affected adversely due to decentralization

and division of loyalty of subordinates.


The structure and process of organizing

Organizing

Organizing is the managerial function of making sure that there are available resources

to carry out a plan.

"Organizing involves:

o The assignment of tasks,

o The grouping of tasks into departments, and

o The allocation of resources to departments"

Managers must bring together individuals and tasks to make effective use of people and

resources. Three elements are essential to organizing:

Developing the structure of the organization

Acquiring and training human resources

Establishing communication patterns and networks

Determining the method of grouping these activities and resources is the organizing

process.

Organizing is the managerial function of arranging people and resources to work

towards a goal.

The purpose of organizing include:

o Determining the tasks to be performed in order to achieve objectives,

o Dividing tasks into specific jobs,

o Grouping jobs into departments,

o Specifying reporting and authority relationships, delegating the authority

necessary for task accomplishment,

o And allocating and deploying resources in a coordinated fashion.


Organizing plays a central role in the management process.

Once plans are created the manager's task is to see that they are carried out.

Given a clear mission, core values, objectives, and strategy, the role of organizing is to

begin the process of implementation by clarifying jobs and working relationships.

It identifies who is to do what, who is in charge of whom, and how different people and

parts of the organization relate to and work with one another.

All of this, of course, can be done in different ways. The strategic leadership challenge is

to choose the best organizational form to fit the strategy and other situational demands.

ORGANIZING DECISIONS:

When organizing, managers must make decisions about:

o The division of labor and work specialization,

o Departmentalization,

o Chain of command,

o Span of management,

o Centralization, and

o Formalization.

Collectively, these decisions are often called organizational design.

1. DIVISION OF LABOR OR SPECIALIZATION:

Despite the improvements in productivity made possible by the division of labor,

managers must be aware of the negative aspects of specialization: fatigue, stress,

boredom (Dullness), low quality products, absenteeism, and turnover. Such problems

have led to programs geared toward job enlargement and job enrichment.

2. DEPARTMENTALIZATION:


After the work to be completed is organized into identifiable jobs through a process of

dividing labor,

Jobs are then combined into logical sections or departments.

Doing so allows for effective coordination of effort.

There are many ways to departmentalize, each of which has important advantages and

disadvantages.

One of the most common forms is functional departmentalization, which involves

grouping similar jobs into a common department, such as accounting, sales, human

resources, and engineering.

Another form is product departmentalization, which involves organizing around an

enterprise's various product lines.

Other ways of departmentalizing include organizing by customer and by geographic

territory. In practice, most large companies use a hybrid form of departmentalization,

which means they combine one or more of the above methods to form their

organizational structure.

3. CHAIN OF COMMAND:

The chain of command is a line of authority extending from the top to the bottom of the

organizational structure.

Classic principles of organizing emphasize that one must be aware of the need to define

the extent of managers' responsibility and authority by specifying their place in the

chain of command.

Another principle of organizing related to the chain of command is called the unity of

command, which states that a person should have only one superior to whom he or she

must report.

4. SPAN OF MANAGEMENT:


The span of management, often called the span of control, is the number of individuals

who are directly responsible to a particular manager.

A classic principle of organizing suggests that there are definite limits to the number of

subordinates one manager can supervise effectively.

When organizing, managers must keep these limits in mind.

Wide spans of management lead to flatter organizational structures with fewer layers of

management, and are thus considered more efficient.

However, if spans become too wide managers may not be able to provide adequate

direction to subordinates.

Narrow spans of management lead to tall organizational structures with many layers of

management.

Although narrower spans of management allow for closer supervision of subordinates

they have many drawbacks, including cost, communication problems, and difficulty in

developing the initiative and autonomy of subordinates.

5. DEGREE OF CENTRALIZATION:

Another organizing decision is the degree of centralization in the organizational

structure.

If decision-making authority in an organization is highly centralized, then most major

decisions are made at the upper levels of the structure.

Conversely, if decision-making authority is decentralized, important decisions are often

made at lower levels of the hierarchy.

The degree of centralization that is appropriate for a given organization depends upon

many factors, including the nature of the environmental conditions that face the

enterprise, the characteristics and abilities of lower-level employees, and the size of the

enterprise.


Many organizations are favoring a greater degree of decentralization of their decision-

making authority.

6. FORMALIZATION:

The degree of formalization in an enterprise refers to the degree to which there are

standardized rules and procedures governing the activities of employees.

A company with a high degree of formalization is characterized by detailed job

descriptions and clearly defined policies and procedures covering a wide variety of

employee behaviors.

Conversely, a company with a low level of formalization is characterized by non-

structured jobs and fewer explicit policies and procedures.

As companies grow larger, a certain amount of formalization is inevitable.

Employees require some direction in their job responsibilities and in the procedures

required for consistency within the organization's production schema.

When organizing, however, managers should be aware of the costs of excessive

formalization, which may include stifling employee creativity and innovation as well as

slowing the organization's responsiveness to critical issues and problems.

FACTORS AFFECTING ORGANIZING DECISIONS:

There is no standard formula for the best way to organize an enterprise. Several factors

have been shown to influence organizing decisions.

Among the most important of these factors are strategy, size, environmental conditions,

and technology.

STRATEGY:

Managers organize in order to achieve the objectives of the enterprise for which they

work.

Thus, the strategy of the enterprise affects organizing decisions.


Changes in strategy frequently necessitate changes in the way the enterprise is

organized.

SIZE:

Small enterprises tend to exhibit less formalization, centralization, and complexity in

their organizational structure.

Nevertheless, enterprises of the same size may be organized quite differently because of

differences in strategy, environmental conditions, and technology.

ENVIRONMENTAL CONDITIONS:

The key factor in the external environment that is relevant to organizing is uncertainty.

Some enterprises face competitive environments that change rapidly and are quite

complex, while others face relatively stable conditions.

Generally, turbulent environments call for organizing decisions that lead to less

formalization and centralization in the organizational structure.

TECHNOLOGY:

The processes by which an enterprise transforms inputs into outputs may also affect

organizing decisions.

Some research suggests that organizing decisions that lead to high degrees of

formalization, centralization, and work specialization are more appropriate for routine

technologies and that the converse is true for non-routine technologies.


Matrixed Departments:

When departments and teams are matrixed, individuals report to two masters,

the internal department head and the client-based team. This type of

organization recognizes the need to organize around a client’s needs. But it's not

totally committed to the concept. And there are distinct disadvantages to not

going all the way to purely self-directed teams.

Matrixed teams are stuck in an inefficient, anxiety-producing purgatory – halfway

between function-based departments and the truly client-based teams that are

responsible for every aspect of the work they do for a client.

Example: Marketing communications agencies today are most commonly

organized with a creative department, a media department, an account

management department, a public relations department, a direct marketing

department, etc. The people in these departments officially report to their

department or division manager. Yet they work on specific accounts, so they are

also on those informal client-based teams. The question always arises: "Am I

working for my department manager or the client?"

A Roman proverb states: "If a slave has three masters, he's a free man." This

applies in principle to having two masters as well. Who is prioritizing the tasks

when you have two masters? There's a built-in conflict of interest.

Another adage that applies here is, "Everyone's responsibility is no one's

responsibility." When a job goes through a department, and it's the ultimate

responsibility of the department head, it can't also be the ultimate responsibility of

the specialists working on it. More conflict of interest.


The Organizational Process:

Organizing, like planning, must be a carefully worked out and applied process.

This process involves determining what work is needed to accomplish the goal, assigning

those tasks to individuals, and arranging those individuals in a decision-making

framework (organizational structure).

The end result of the organizing process is an organization — a whole consisting of

unified parts acting in harmony to execute tasks to achieve goals, both effectively and

efficiently.

A properly implemented organizing process should result in a work environment where

all team members are aware of their responsibilities.

If the organizing process is not conducted well, the results may yield confusion,

frustration, loss of efficiency, and limited effectiveness.

In general, the organizational process consists of five steps:

1. Review plans and objectives.

Objectives are the specific activities that must be completed to achieve goals.

Plans shape the activities needed to reach those goals. Managers must examine

plans initially and continue to do so as plans change and new goals are

developed.

2. Determine the work activities necessary to accomplish objectives.


Although this task may seem overwhelming to some managers, it doesn't need to be.

Managers simply list and analyze all the tasks that need to be accomplished in order to

reach organizational goals.

3. Classify and group the necessary work activities into manageable units.

A manager can group activities based on four models of departmentalization: functional,

geographical, product, and customer.

4. Assign activities and delegate authority.

Managers assign the defined work activities to specific individuals. Also, they give each

individual the authority (right) to carry out the assigned tasks.

5. Design a hierarchy of relationships.

A manager should determine the vertical (decision-making) and horizontal

(coordinating) relationships of the organization as a whole. Next, using the

organizational chart, a manager should diagram the relationships.


02 management notes for mba

Leadership & Management