ESSENTIALS

OF
MANAGEMENT
Chapter 1 to 10

2019

LOYOLA INSTITUTE OF VOCATIONAL EDUCATION

© George Bernard 2019

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ESSENTIALS OF MANAGEMENT

Credits: 3 Total: 45 hrs.

Course Objective: To expose the students to the basic concepts of management in order to aid in
understanding how an organization functions and in understanding the complexity

Unit I

Introduction To Management Concept– Nature, Process and Significance of Management – Managerial

roles and skills – Development of Management through; Classical and Neo-Classical systems –
Contingency Approaches – Robert Owen, Taylor Fayol and Elton Mayo –Competency skill set

Unit II

Planning– Nature – Importance – Forms – Types – Steps in Planning – Objectives – Policies –

Procedures and Methods – Nature and Types of Policies – Decision Making – Process of Decision
Making – Types of Decisions – Problems involved in Decision Making.

Unit III

Organizing Nature and purpose of organizing – Types of Organization (Line and Staff, Committees,
Projects, Matrix) – Organization structure – Formal and informal groups / organization – Line and staff
authority – Departmentation – Span of control.

Unit IV

Authority – Delegation – Decentralization – Difference between authority and power – Uses of Authority
– Distinction between Centralization and Decentralization – Responsibility – Nature, Purpose and scope
of Directing – Controlling – Meaning, importance and Types of Control – Control Process Managing
people

Unit V

Controllingand Control Techniques Process of controlling – Types of control – Budgetary and non-
budgetary control techniques Managing productivity – Cost control – Purchase control – Maintenance
control Process of controlling – Profit and Loss Control – Control through ROI – Balanced Score Card –
Behavioral Organizational Structure.

Reference Books

1. Harold Koontz and Heinz Weihrich, Essentials of management: An International & Leadership
Perspective, 9th edition, Tata McGraw-Hill Education, 2012.
2. GUPTA C.B., “Principles and Practice of Management” – National Publishing House, 2006

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ESSENTIALS OF MANAGEMENT: With International, Innovation, and Leadership Perspectives, 10e

Part 1:-

Chap. 1. Management: Science, Theory and Practice

! Definition of Management: Its Nature and Purpose

! The Evolution of Management Thought
! Patterns of Management Analysis: A Management Theory Jungle
! The Systems Approach to the Management Process
! The Managerial Functions
! Three Management Perspectives: International, Innovation, and Leadership
! The Systems Model of Management and the Organization of This Book

Chap. 2. Management and Society—The External Environment, Social Responsibility, and Ethics

! Operating in a Pluralistic Society

! The Technological and Innovative Environments
! The Ecological Environment
! The Social Responsibility of Managers
! Ethics in Managing: An Integrative Approach
! Institutionalizing Ethics
! Trust as the Basis for Change Management

Chap. 3. Global, Comparative, and Quality Management

! International Management and Multinational Corporations

! Country Alliances and Economics Blocs
! International Management: Cultural and Country Differences
! Porter’s Competitive Advantage of Nations
! Gaining a Global Competitive Advantage Through Quality Management

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Chap. 1. Management: Science, Theory and Practice

• Management is the process of designing and maintaining an environment for efficiently

accomplishing selected aims. Managers carry out the functions of planning, organizing, staffing,
leading, and controlling. Managing is an essential activity at all organizational levels; however,
the managerial skills required vary with organizational level. The goal of all managers is to
create a surplus. Enterprises must take advantage of the 21st century trends in information
technology, globalization, and entrepreneurship. They must also focus on productivity, that is, to
achieve a favorable output—input ratio within a specific time period with due consideration for
quality. Productivity implies effectiveness (achieving of objectives) and efficiency (using the
least amount of resources). Managing as practice is an art; organized knowledge about
management is a science. LO1
• Many writers and practitioners have contributed to the development of management thought. The
major contributors and their works are shown in Table 1.1. many theories about management
have been proposed, and each contributes something to our knowledge of what managers do. The
characteristics and contributions as well as the limitations of the various approaches to
management are summarized in Figure 1.3. LO2
• The management process (or operational) approach draws from other theories of management and
integrates them into a total system of managing. The organization is an open system that operates
within and interacts with the environment. The systems approach to management includes inputs
from the external environment and from claimants, the transformation process, the
communication system, external factors, outputs, and a way to reenergize the system.
LO3 & LO4
• Throughout the book, especially in Chapter 3, international aspects of managing are emphasized.
The systems model of management (Figure 1.6) shows that an enterprise has to be an open
system, interacting with the external environment. The inputs are transformed through the
managerial functions which are discussed in detail and are the framework for this book. LO7

Chap. 2. Management and Society—The External Environment, Social Responsibility, and Ethics

• Managers operate in a complex environment. They are affected by—and to some extent
influence--the environment. Managers operate in a pluralistic society in which many organized
groups represent various interests. LO1
• In their decision-making, must consider the external environment. Technology provides many
benefits but also creates some problems. Increasingly, firms are considering the impact of
managerial actions on the ecological environment. Many business corporations and other
organizations are making serious efforts to establish an environment that is beneficial to
individuals, business, and society. LO1
• Corporate social responsibility requires that organizations consider seriously the impact of their
actions on society. Similarly, social responsiveness is relating corporate operations and policies to
the social environment in ways that are beneficial to both the company and the society.
Determining the appropriate relationship between various types of organizations and society is
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not an easy task, and one can make arguments for and against business involvement in society
activities. However, there is now a general recognition that the responsibility of business goes
beyond profit maximization. LO2
• Ethics deals with what is good and bad as well as with moral duty and obligation, there are three
moral theories in normative ethics: the utilitarian theory, the theory based on rights, and the
theory of justice. LO3
• Some authors have suggested the businesses institutionalize ethics and develop a code of ethics.
There are also other factors that raise ethical standards, including whistle-blowing. LO4
• Managers have to make difficult choices when the standards differ in other societies.
• American firms, by law, must report anything that could be called a payoff or be considered a
bribe. The United States attempts to improve ethical standards abroad. LO5
• Trust is the foundation for human relations and modern management approaches. It is at the
center of communication, collaboration, and the willingness to change. Organizations need to
create a culture of trust that transcends individual leadership. LO6

Chap. 3. Global, Comparative, and Quality Management

• International businesses, which extend their operations across national boundaries, are
particularly affected by the educational, sociocultural-ethical, political-legal, and economic
environments of the host countries. Multinational corporations have developed different
orientations for operating in foreign countries, ranging from ethnocentric (the foreign operation’s
views are based on those of the parent company) to geocentric (the foreign operation’s is viewed
as an interdependent system operating in many countries, that is, it is truly international). LO1
• Countries are forming regional alliances, such as the European Union, NAFTA, ASEAN, and
Mercosur. Hofstede studied the impact of a country’s culture on the behavior of its people. LO2
• Managerial practices differ between countries. In France, for example, government planning
greatly influences the planning and direction of enterprises. In Germany, the use of authority and
the concept of codetermination shape managerial practices. South Korea has developed
managerial practices that are different from those in Japan and United States. Japanese
managerial practices, has been adopted by some U.S. companies. LO3
• International business managers also need to understand the economic situations of other
countries. Porter identified four sets of factors that contribute to the competitive advantage of a
nation. LO4
• Quality is strategic weapon in the global marketplace. The traditional contributors to quality
management are Deming, Juran and Crosby. The Malcolm Baldrige National Quality Award
recognizes U.S. organizations for their excellent performance. The European quest is
exemplified by ISO 9000 and the European Quality Award. LO5

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ESSENTIALS OF MANAGEMENT: With International, Innovation, and Leadership Perspectives, 10e

Part 2:-

Chap. 4. Essentials of Planning and Managing by Objectives

! Managerial Planning and Its Importance

! Types of plans
! Steps in Planning
! Objectives and Its Nature
! How to Set Objectives
! Management by Objectives

Chap. 5. Strategies, Policies, and Planning Premises

! The Nature and Purpose of Strategies and Policies

! The Strategic Planning Process
! The TOWS Matrix: A Modern Tool for Analysis of the Situation
! Blue Ocean Strategy: In Pursuit Of Opportunities In Uncontested Markets
! The Business Portfolio Matrix: A Tool For Allocating Resources
! Major Kinds Of Strategies And Policies
! Hierarchy Of Company Strategies
! Porter’s Industry Analysis And Generic Competitive Strategies
! Premising And Forecasting

Chap. 6. Decision Making

! The Importance And Limitations Of Rational Decision Making

! Development Of Alternatives And The Limiting Factor
! Evaluation Of Alternative: Three Approaches
! Programmed And Non-Programmed Decisions
! Decision Making Under Certainty, Uncertainty, And Risk
! Creativity And Innovation

Part Closing: Major Principles Or Guides For The Managerial Function Of Planning

! Major Principles Or Guides For Planning

! The Purpose And Nature Of Planning
! The Structure Of Plans
! The Process Of Planning

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Chap. 4. Essentials of Planning and Managing by Objectives

• Planning involves selecting the missions and objectives as well as the actions to achieve them. It
requires decision making, which means choosing a future course of action from among
alternatives. Planning and controlling are closely interrelated, although they are discussed
separately in this book. LO1
• There are many types of plans, such as missions or purposes, objectives or goals, strategies,
policies, procedures, rules, programs, and budgets. LO2
• Once an opportunity is recognized, a manager plans rationally by establishing objectives, making
assumptions (premises) about the present and future environment, finding and evaluating
alternative courses of action, and choosing a course to follow. Next, the manager must make
supporting plans and devise a budget. These activities must be carried out with attention to the
total environment. Short-range plans must of course be coordinated with long-range plans. LO3
• Objectives are the end points toward which activities are aimed. Objectives are verifiable if it is
possible, at the end of the period, to determine whether they have been accomplished. Objectives
form a hierarchy, starting from corporate missions or purposes going down to individual
goals. LO4
• Managers can best determine the number of objectives they should realistically set for themselves
by analyzing the nature of the job and how much they can do themselves and how much they can
delegate. In any case, managers should know the relative importance of each of their goals. LO5
• Management by objectives (MBO) has been widely used for performance appraisal and employee
motivation, but it is really a system of managing. Among its benefits, MBO results in better
managing, often forces managers to clarify the structure of their organizations, encourages people
to commit themselves for their goals, and helps develop effective controls. Some of its
weaknesses are that managers sometimes fail to explain the philosophy of MBO (which
emphasizes self-control and self-direction) to subordinates or give them guidelines for their goal
setting. In addition, goals themselves are difficult to set, tend to be short-term, and may become
inflexible despite changes in the environment. People, in their search for verifiability, may
overemphasize quantifiable goals. LO6

Chap. 5. Strategies, Policies, and Planning Premises

• There are different definitions of strategy. A comprehensive one refers to the determination of
the firm’s mission or purpose and its basic long-term objectives, followed by the adoption of
courses of action and allocation of resources necessary to achieve these aims. Policies are general
statements or understandings that guide managers’ thinking in decision-making. Both strategies
and policies give direction to plans. They provide the framework for plans and serve as a basis
for the development of tactics and other managerial activities. LO1
• The strategic planning model shows how the process works. It identifies the critical elements of
the process and indicates how they relate to each other. LO2

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• The TOWS Matrix is a modern tool for analyzing the threats and opportunities in the external
environment and their relationships to the organization’s internal weakness and strengths. Three
TOWS matrices have to be developed for mergers, acquisitions, joint ventures, and alliances. The
blue ocean strategy focuses on the market space with no serious competition. In contrast the red
ocean strategy engages competitors in a bloody fight. LO3
• The portfolio matrix is a tool for allocating resources, linking the business growth rate with the
relative competitive position (measured by market share) of the firm. LO4
• Major kinds of strategies and policies need to be developed in areas such as growth, finance,
organization, personnel, public relations, products or services, and marketing. Strategies form a
hierarchy from the corporate level to the business level and the functional level and the functional
level. LO5
• Porter identified three generic competitive strategies related to overall cost leadership,
differentiation, and focus. LO6
• Planning premises are the anticipated environment. They include assumptions or forecasts of the
future and known conditions. More recently, environmental forecasting has become important.
One approach to forecasting is the Delphi technique developed by the RAND Corporation. LO7

Chap. 6. Decision Making

• Decision making is the selection of a course of action from among alternatives; it is the core of
planning. It involves premising, identifying alternatives, evaluating these alternatives, choosing
the best alternative. LO1
• Managers must make choices on the basis of limited, or bounded, rationality—that is, in light of
everything they can learn about a situation, which may not be everything they should know. LO2
• Satisficing is a term sometimes used to describe picking a course of action that is satisfactory
under the circumstances.
• Because there are almost always alternatives—usually many—to a course of action, managers
need to narrow them down to those few that deal with the limiting factors. These are the factors
that stand in the way of achieving a desired objective. Alternatives are then evaluated in terms of
quantitative and qualitative factors. Other techniques for evaluating alternatives include marginal
analysis and cost-effectiveness analysis. Experience, experimentation, and research and analysis
come into play in selecting an alternative. LO3
• Programmed and nonprogrammed decisions are different. The former are suited for structured or
routine problems. These kinds of decisions are made especially by lower-level managers and
nonmanagers. Nonprogrammed decisions, on the other hand, used for unstructured and
nonroutine problems and are made especially by upper-level managers. LO4
• Virtually all decisions are made in an environment of at least some uncertainty involving the
interaction of a number of important variables, and there are certain risks involved in making
decisions. Managers dealing with uncertainty should know the degree and nature of the risk they
are taking in choosing a course of action. LO5
• Creativity, the ability and power to develop new ideas, is important for effective managing.
Innovation is the use of these ideas. The creative process consists of four overlapping phases:
unconscious scanning, intuition, insight, and logical formulation. A popular technique for

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enhancing creativity is brainstorming. Creative individuals can make a great contribution to the
enterprise. At the same time, they can be disruptive by not following commonly accepted rules of
behavior. LO6

ESSENTIALS OF MANAGEMENT: With International, Innovation, and Leadership Perspectives, 10e

Part 3:-

Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

! Meaning Of Organizing And Organization – The Purpose Of Organization Structure

! Formal And Informal Organization
! Organizational Division – The Department
! Organizational Levels And The Span Of Management
! An Organizational Environment For Enterpreneuring And Intrapreneuring
! Reengineering The Organization
! The Structure Of Process Of Organizing
! Basic Questions To Analyze The Managerial Function Of Effective Organizing

Chap. 8. Organization Structure: Departmentation

! Departmentation By Enterprise Function

! Departmentation By Territory Or Geography
! Departmentation By Customer Group
! Departmentation By Product
! Matrix Organization
! Strategic Business Units
! Organization Structures For The Global Environment
! The Virtual Organization
! The Boundaryless Organization
! Choosing The Pattern Of Departmentation

Chap. 9. Line/Staff Authority, Empowerment, and Decentralization

! Authority And Power

! Empowerment
! Line/Staff Concepts And Functional Authority
! Decentralization And Centralization Of Authority
! Delegation Of Authority
! The Art Of Delegation
! Recentralization Of Authority And Balance As The Key To Decentralization

Chap. 10. Effective Organizing and Organization Culture

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! Avoiding Mistakes In Organizing By Planning
! Avoiding Organizational Inflexibility
! Making Staff Work Effective
! Avoiding Conflict By Clarification
! Ensuring Understanding Of Organizing
! Defining Organization Culture
! Promoting An Appropriate Organization Culture

Part Closing: Major Principles or Guides for the Managerial Function of Organizing

! The Purpose of Organizing

! The Reason of Organizing
! The Structure of Organization: Authority
! The Structure of Organization: Departmentalized Activities
! The Process of Organizing

Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

• The term organization is often used loosely. Organizing can be viewed as consisting of four
steps: (1) the identification and classification of activities, (2) the grouping of those activities,
(3) the assignments of group of activities to a manager with authority, and (4) horizontal and
vertical coordination. LO1
• Formal organization is the intentional structure of roles. Informal organization is a network of
personal and social relations neither established nor required by formal authority but arising
spontaneously. LO2
• The span of management refers to the number of people a manager can effectively supervise. A
wide span of management results in few organizational levels, and a narrow span results in many
levels. There is no definite number of people a manager can always effectively supervise; the
number depends on several underlying factors. These include the degree of training of
subordinates that is required and is possessed, the clarity of authority delegation, the clarity of
plans, the use of objective standards, the rate of change, the effectiveness of communication
techniques, the amount of personal contact needed, and the level in the organization. LO3
• Intrapreneurs and entrepreneurs focus on innovation and creativity. It is the manager’s
responsibility to create an environment that promotes entrepreneurship. LO4
• Reengineering that may require a redesign of business processes has become popular in some
companies. The results of these efforts have shown positive but also some negative results. LO5
• The steps in organizing include formulating objectives and supporting objectives, policies, and
plans to achieve the ends (strictly speaking, this is carried out in planning); identifying and
classifying activities; grouping these activities; delegating authority; and coordinating authority as
well as information relationships. LO6
• At the end of this chapter, questions are raised that are answered in all the chapters for the
managerial function of organizing, that is chapters 7 to 10, as well as the Part 3 closing discussing
the major principles or guides for organizing. LO7

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Chap. 8. Organization Structure: Departmentation

• The grouping of activities and people into departments makes organizational expansion possible.
Departmentation can be done by enterprise function, by territory or geography, and by the kinds
of customers served. LO1
• Other kinds of departmentation are the product organization grouping, matrix or grid
organization, project organization, and the strategic business unit. The matrix organization
normally is a combination of functional and project or product departmentation. This kind of
departmentation may be used, for example, in engineering, research and development, product
marketing, construction, or by management consulting firms. The strategic business units are
distinct businesses setup units within a larger organization to ensure that certain products or
product lines are promoted as though they were an independent business. LO2&LO3
• The organization structure for the global environment may vary greatly, ranging from having an
export department at the headquarters to regional groupings, with many variations in between. In
addition, companies may have also one or more functionally organized groupings within a
region. LO4
• The virtual organization is a loose concept of a group of independent companies or people that
are connected often through computer technology. LO5
• There is no single best way to organize; the most appropriate pattern depends on various factors
in a given situation. These factors include the kind of job to be done, the way the task must be
done, the kinds of people involved, the technology, the people served, and other internal and
external considerations. At any rate, the selection of a specific departmentation pattern should be
done so that organizational and individual objectives can be achieved effectively and efficiently.
Accomplishing this goal often requires mixing forms of departmentation. LO6

Chap. 9. Line/Staff Authority, Empowerment, and Decentralization

• There are a number of different bases of power can be legitimate, expert, referent, reward, or
coercive. Empowerment enables people to make decisions without asking their superiors for
permission. LO1
• Line authority is that relationship in which superior exercises direct supervision over
subordinates. The staff relationship, on the other hand, consists of giving advice and counsel.
Functional authority is the right to control selected processes, practices policies, or other matters
in departments other than a person’s own. It is a small slice of a line manager’s authority and
should be used sparingly. LO2
• Another important concept is decentralization, which is the tendency to disperse decision-making
authority. Centralization, on the other hand, is the concentration of authority. It may refer to
geographic concentration, departmental centralization, or the tendency to restrict delegation of
decision making. LO3
• The process of delegation of authority includes determining the results to be achieved, assigning
tasks, delegating authority for accomplishing the tasks, and holding people responsible for
results. LO4

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• Failures in effective delegation are often due to personal attitudes. Weak delegation can be
overcome by considering the tasks and the goals, maintaining open communication, establishing
proper controls, and motivating through appropriate rewards. Previously decentralized authority
may be recentralized. Balance is the key to proper decentralization. LO5

Chap. 10. Effective Organizing and Organization Culture

• Organizing involves developing an intentional structure of roles for effective performance. Many
mistakes in organizing can be avoided by first planning the ideal organization for goal
achievement and then making modifications for the human or other situational factors.
Organization planning identifiers staffing needs and helps overcome staffing deficiencies. It also
discloses duplication of effort, unclear authority and communication lines, and obsolete ways of
doing things. LO1
• An effective organization remains flexible and adjusts to changes in the environment. To make
staff work effective, it is important to clarify authority relationships, to make line listen to staff,
and to keep staff informed. Furthermore, effectiveness demands that staff prepare complete
recommendations and that the utilization of staff becomes a way of organizational life. LO2
• Organizational conflict can be reduced by the use of organization charts and position descriptions.
Organizing is improved by teaching its nature and by recognizing the informal organization and
the grapevine. LO3
• Moreover, effective enterprises develop and nurture an appropriate organization culture.
Moreover, effective enterprises develop and nurture an appropriate organization culture.
Table 10.1 illustrates how organizational culture may impact the managerial functions of
planning, organizing, staffing, leading and controlling. LO4

ESSENTIALS OF MANAGEMENT: With International, Innovation, and Leadership Perspectives, 10e

Part 4:-

Chap. 11. Human Resource Management and Selection

! Definition Of Staffing
! The Systems Approach To Human Resource Management: An Overview Of The Staffing
Function
! Situational Factors Affecting Staffing
! Selection: Matching The Person With The Job

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