Unit 1: Foundations of management

Management is the process of getting things done through and with people in formally organised groups (Harold Koontz). Henri Fayol defined it as "to forecast and plan, to organise, to command, to coordinate and to control".

Nature of management

• Goal-oriented — exists to achieve objectives.
• Universal — needed in all organisations, profit or non-profit.
• Continuous process — functions are repeated in a cycle.
• Group activity — achieves results through people.
• Intangible — seen only in its results.
• Both art and science — systematic knowledge applied with personal skill; an emerging profession.

Levels of management

Mintzberg's ten managerial roles (1973)

Katz's managerial skills

A fourth skill, design skill (Koontz), is the ability to solve problems in ways that benefit the enterprise.

Classical approach

• Scientific management (F.W. Taylor): science not rule of thumb, harmony not discord, cooperation not individualism, development of each worker to greatest efficiency. Techniques — time, motion and fatigue study, standardisation, functional foremanship, differential piece-rate system.
• Administrative management (Henri Fayol): 14 principles — division of work, authority and responsibility, discipline, unity of command, unity of direction, subordination of individual interest, remuneration, centralisation, scalar chain, order, equity, stability of tenure, initiative, esprit de corps.
• Bureaucracy (Max Weber): hierarchy, rules, impersonality, division of labour, selection on merit.

Neo-classical approach

• Human relations (Elton Mayo — Hawthorne experiments, 1924–32): social and psychological factors (attention, group norms) affect productivity more than physical conditions.
• Behavioural science: Maslow, McGregor (Theory X and Y), Herzberg — motivation, leadership, group dynamics.

Modern approaches

• Quantitative (management science): operations research and mathematical models for decisions.
• Systems approach: organisation as an open system of interrelated parts — inputs, transformation, outputs, feedback.
• Contingency approach: there is no one best way; the right practice depends on the situation (environment, technology, size).

Planning is deciding in advance what to do, how to do it, when to do it and who is to do it (Koontz and O'Donnell).

Nature

• Primary function — precedes all others.
• Goal-oriented, pervasive, continuous, futuristic, involves choice, mental exercise.

Types of plans

• By time: strategic (long term), tactical (medium), operational (short term).

Business forecasting is estimating future business conditions (sales, demand, prices, costs) based on analysis of past and present data. Forecasts form the premises of planning.

• Qualitative techniques: jury of executive opinion, Delphi technique (anonymous rounds of expert opinion), sales force composite, consumer surveys.
• Quantitative techniques: time-series analysis (trend, moving averages), regression and correlation, econometric models, index numbers.
• Limitations: future is uncertain, depends on assumptions, time-consuming and costly.

MBO, popularised by Peter Drucker (The Practice of Management, 1954), is a process in which superiors and subordinates jointly set goals, define each person's area of responsibility in terms of expected results, and use these measures to guide operations and assess contributions.

• Benefits: clarity of goals, better planning, motivation through participation, objective appraisal, improved communication.
• Limitations: time-consuming, difficulty in setting measurable goals, emphasis on short-term goals, more paperwork, resistance.