Chapter 01:

Introduction to Management
Management is the process of planning, organizing, leading, and controlling
human and other resources towards the effective achievement of organizational
goals.

An organization is a goal-directed, deliberately-structured group of people

working together to provide specific goods and services.

Fayol’s management functions

 Planning – Deciding on an organization’s goals and strategies, and
identifying the appropriate organizational resources that are required to
achieve them.
 Organizing – ensuring that tasks have been assigned and a structure of
organizational relationships has been created that facilitates meeting
organizational goals.
 Leading – relating with other members in the organizational unit so that
their work efforts contribute to the achievement of organizational goals.
 Controlling – ensuring that the actions of organizational members are
consistent with its values and standards.

Mintzberg’s managerial roles

 Entrepreneur role – proactively and voluntarily initiating, designing, or
encouraging change and innovation.
 Negotiator role – making incremental changes related to plans and
resources.
 Disseminator role – transmitting to members of one’s organizational unit
information that has been gathered from internal or external sources.
  Resource allocator role – distributing all types of resources (e.g, time funds
equipment, human, resources, and so on).
 Liaison role – building and maintaining a good structure of information
contacts beyond the boundaries of a manager’s specific work unit.
 Leader role – communicating with subordinates, including motivation and
coaching.
 Spokesperson role: transmitting decisions and other information up, down,
and across an organization’s hierarchy, and/or to the general public.
 Figurehead role - representing an organizational unit in a symbolic or
ceremonial capacity.
 Monitor role - acquiring internal and external information about issues that
can affect the organization.
 Crisis handler role – taking corrective action when things are not going as
planned.

Financial Bottom Line (FBL) management

 Is characterized by its emphasis on maximizing an organization’s financial
well-being, which is typically achieved by appealing to individual self-
interests.
 FBL management is based on the idea that societal well-being is optimized
when organizations maximize the creation of financial wealth, which occurs
via, managers maximizing organizational wealth under the assumption that
individuals pursue their own financial interests.
o This premise is consistent with the common interpretation of Adam’s
smith’s metaphor of the invisible hand.
 The invisible hand suggests that the good of the community is assured
when every individual is permitted to pursue their own self-interested
goals.
 Smith’s logic is two-fold.
o First, when individuals maximize their own financial well-being then
they will inevitably also maximize society’s financial well-being.
o Second, the invisible hand will work to protect the interests of
everyone; Smith argued that even rich selfish landlords would pay
 their workers well, because the landlords would recognize that they
were dependent on the workers who grow their good and care for
their castle.
 Not only is FBL management effective according to this economic
rationality, it is also deemed effective and good because it is ethical
according to a popularized understanding of a moral-point-of-view called
consequential utilitarianism.
o Consequential utilitarianism focuses on optimizing an action’s
rightness as measured by its effect on the net overall happiness
outcome for everyone involved.
 Overall, FBL is facing increasing criticism because it is associated with
creating negative ecological and social externalities.
o Social externalities refer to positive and negative effects that
organizations have on society but which are not reflected in their
financial statements.

Triple Bottom Line (TBL) management

 TBL management is characterized by its emphasis on enhancing an
organization’s financial well-being while simultaneously reducing its
negative socio-ecological externalities.
 TBL management pursues sustainable development, which means “meeting
the needs of the present generation without compromising the ability of
future generations to meet their needs.”
 The TBL approach draws attention to the business case for sustainable
development.
o A business case is a justification, often documented, that shows how
a proposed new organizational initiative will enhance an
organization’s financial bottom-line.
 Second, the TBL approach is also arguably more ethically effective than the
FBL approach within a moral-point-of-view called enlightened
consequential utilitarianism.
  Enlightened consequential utilitarianism suggests that ethical management
seeks to improve an organization’s financial well-being, especially via,
reducing negative social and ecological externalities.

Social and Ecological Thought (SET) management

 SET management is characterized by its emphasis on enhancing social and
ecological well-being while maintaining financial viability.
 The SET approach realizes that management involves a larger “set” or
collection of factors that go beyond maximizing the financial bottom-line,
and that management is “set” or embedded within larger social and
ecological environments.
 SET management is also more process-oriented than either FBL or TBL; this
is consistent with OLD French idea of “sette” which means “sequence” and
points to processes.
 SET management seeks to address shortcomings associated with the TBL
approach.
 SET management is based on virtue theory.
o Virtue theory focuses on how happiness is achieved by practicing
virtues in community.
Benefits of Learning 3 Management Approaches
 Each of the three approaches to management discussed in this book is
what Max Weber calls and “idea-type.”
 An ideal-type of management refers to a specified constellation of
concepts and theory that collectively identifies what effective management
means and how it is practiced.
 First, doing so increases students’ critical thinking skills.
 Second, research suggests that learning about multiple approaches also
improves skills in ethical thinking, and servers as an ongoing reminder that
managers’ actions and practices are not value-neutral.
 Finally, studying the three different approaches to management improves
ability to adapt to different situations and work with different people. It
can be likened to studying three managerial languages.

Entrepreneurial Management
An entrepreneur is someone who conceives of new or improved goods or services
and exhibits the initiative to develop that idea by making plans and mobilizing the
necessary resources to convert the idea into reality.

Three reasons why people become entrepreneurs

The recipe for entrepreneurial success has two main ingredients:

1. An opportunity for a new product or service that creates value for society,
and
 2. An organizational plan that identifies and facilitates assembling the
necessary resources to pursue the opportunity.
3. (additional) A motivated entrepreneur who acts like a chef in choosing, and
assembling the ingredients.
 First, according to the entrepreneurs in this study, perhaps unexpectedly,
financial gain is only third most important reason for starting a new
business.
 The second-most important reason entrepreneurs identify for starting their
new business is to address challenges and pursue opportunities that are
related to a SET approach.
 Finally, note that the reasons given above are the three main motivations
for entrepreneurs who started traditional businesses. The study does not
include founders of non-profit organizations or other social enterprises.
o Social enterprise are entrepreneurial organizations created
intentionally and specifically to pursue a social or environmental
well-being mission.

Types of Entrepreneurs
In addition to understanding the three main motivations of entrepreneurs, the
literature also points to three important characteristics that are helpful for
distinguishing between different types of entrepreneurs:
1. The scope of their ambition.
2. Their propensity to start multiple new organizations.
3. Their desire to work within existing organizations.

Scope
 Growth-oriented entrepreneurs are distinguished by a strong and clear
intention to grow a new organization into a large and influential force in
their industry.
 Micropreneurs seek to develop successful and viable organizations, but not
large ones; they do not include size in their definitions of success.
  One common approach to becoming a micropreneur is to purchase a
francise.
o Franchising involves a franchisor selling a franchisee a complete
package to set up an organization, including such things as using its
trademark and trade name, its products and services, its ingredients,
its technology and machinery, as well as its management and
standard operating systems.
 Scope or ambition refers to how large the entrepreneur intends for the new
organization to grow; it does not refer to which of the three management
approaches is used.

Multiplicity
Many entrepreneurs are monopreneurs who start a viable organization in order
to manage it for the rest of their career.
Serial entrepreneurs start many organizations. They are typically excited by new
ideas and thrive when facing the challenge of creating a new organization.

Launch point
 The final characteristic that distinguishes entrepreneurs is whether they
create a new organization or work within an existing one.
 A classic entrepreneur starts an entirely new organization to pursue a new
product or service idea.
 Intrapreneurs are person who exhibit entrepreneurship within an existing
organization.
 An ongoing feature in the book is that each chapter provides questions and
guidance for developing an Entrepreneurial Start-Up Plan (ESUP)
o An ESUP identifies an entrepreneurial opportunity and describes a
detailed management plan for acting on that opportunity.