Chapter 1: Manager and Management

1. What is an Organization?

 Definition: An organization is a deliberate arrangement of people

who come together to achieve a specific purpose.

 Characteristics of Organizations:

1. Distinct Purpose: Expressed through specific goals the

organization aims to achieve.

2. People Working Together: The organization consists of

individuals performing necessary tasks to achieve goals.

3. Deliberate Structure: This structure could be rigid (e.g., in

military organizations) or flexible (e.g., project-based teams at
Google).

2. Who is a Manager?

 Definition: Managers are individuals who direct and oversee the

activities of others in the organization.

 Managers vs. Non-Managerial Employees:

o Managers: Have the responsibility to oversee others’ work.

o Non-Managerial Employees: Focus on their own specific tasks

without overseeing others.

3. Levels of Management:

1. Top Managers:

o Set goals and define the direction of the organization.

o Titles: President, CEO, Vice-President.

2. Middle Managers:

o Oversee first-line managers and implement top management’s

plans.

o Titles: Division Manager, District Manager.

3. First-Line Managers:

o Direct non-managerial employees and are closest to the

production process.
 o Titles: Supervisor, Team Leader.

4. What is Management?

 Definition: Management is the process of coordinating and

overseeing the activities of others to achieve organizational goals
efficiently and effectively.

 Efficiency vs. Effectiveness:

o Efficiency: Getting the most output from the least amount of

inputs. Often referred to as “doing things right.”

o Effectiveness: Doing activities that lead to the achievement

of goals. Referred to as “doing the right things.”

 Example: Xiaomi’s logo change was an example of both efficiency

(low cost) and effectiveness (gained more recognition).

5. Four Management Functions:

1. Planning:

o Setting goals and deciding on strategies to achieve them.

o Defining the organization’s direction and developing action plans.

2. Organizing:

o Arranging and structuring work to accomplish goals.

o Determining what tasks are to be done, who will do them, and

how tasks will be grouped.

3. Leading:

o Motivating, directing, and otherwise influencing people to work

hard to achieve the organization’s goals.

o Managers must resolve conflicts, inspire employees, and

communicate effectively.

4. Controlling:

o Monitoring performance, comparing it to goals, and correcting

any deviations.

o Ensures that everything goes according to plan.

6. Managerial Roles (Henry Mintzberg):

Mintzberg identified 10 roles divided into three categories:

1. Interpersonal Roles:

o Figurehead: Represents the organization in ceremonial duties.

o Leader: Motivates and encourages employees.

o Liaison: Networks and coordinates with internal and external

contacts.

2. Informational Roles:

o Monitor: Gathers and analyzes information.

o Disseminator: Transmits relevant information to others.

o Spokesperson: Communicates on behalf of the organization to

outsiders.

3. Decisional Roles:

o Entrepreneur: Initiates changes and innovation.

o Disturbance Handler: Deals with unexpected issues and crises.

o Resource Allocator: Decides how to allocate resources.

o Negotiator: Engages in negotiations with other parties.

7. Essential Managerial Skills:

1. Conceptual Skills:

o Ability to think and conceptualize complex situations.

o Especially important for top managers for strategic decision-

making.

2. Interpersonal Skills:

o Ability to work well with people, communicate, and lead

effectively.

o Equally important for all managerial levels.

3. Technical Skills:

o Job-specific knowledge needed to perform specific tasks.

 o More important for first-line managers who directly oversee
non-managerial employees.

4. Political Skills:

o Ability to build a network and establish connections to gain

power and influence.

8. Different Management Contexts:

 Profit vs. Non-Profit Organizations:

o Management is universal, but the goals and measures of

success differ between profit (financial performance) and non-
profit organizations (mission fulfillment).

 Size of the Organization:

o Small businesses may require managers to focus more on

external roles, such as acting as a spokesperson to establish
the company’s reputation.

 National Borders:

o Managers must consider cultural differences and adapt

management practices in different countries.

9. Why Study Management?

 Management is essential for all organizations, regardless of type or

size.

 Understanding management concepts is valuable because most

people, after graduation, will either become managers or be
managed by someone else.

10. Trends Reshaping Management:

1. Customer Service:

o Organizations must be customer-responsive, and managers

need to ensure employees deliver exceptional service.

2. Social Media:

o Social media plays a key role in connecting with customers and

managing the organization’s reputation.

3. Innovation:
 o Essential for maintaining a competitive edge in a rapidly
changing environment.

4. Sustainability:

o Companies must address economic, environmental, and

social concerns to ensure long-term success.

11. History of Management Approaches:

1. Classical Approaches:

o Focus on efficiency, standardization, and hierarchical structures.

2. Behavioral Approaches:

o Emphasize the importance of human behavior, motivation, and

leadership.

3. Quantitative Approaches:

o Use of data, models, and statistical tools to optimize

decision-making.

4. Contemporary Approaches:

o Combine multiple perspectives, recognizing the complexity of

modern management.

Chapter 1 provides a foundational understanding of what managers do,

where they work, and the skills they need to succeed. It also covers key
management functions, managerial roles, and the changing
environment in which managers operate. Understanding these
fundamentals is crucial for anyone aspiring to work in management or
wanting to understand how organizations are structured and managed.

Chapter 2: Foundations of Decision Making

1. The Decision-Making Process:

The decision-making process is an eight-step approach that helps

managers identify and solve problems effectively. Each step builds on the
previous one to ensure logical and comprehensive decision-making.

1. Identify a Problem
 o A problem is defined as a discrepancy between the existing
condition and the desired condition. Effective problem
identification is crucial and subjective, as managers must
distinguish between the symptoms and the actual problem.

2. Identify Decision Criteria

o Decision criteria are factors that are relevant and important for
resolving the problem. These criteria guide the decision-
making process by setting standards against which potential
solutions will be evaluated.

3. Allocate Weights to the Criteria

o Different criteria may have different levels of importance.

Managers need to assign weights to each criterion to prioritize
them, typically on a scale from 1 to 10.

4. Develop Alternatives

o Managers should list viable alternatives that could solve the

problem. This step involves brainstorming and being creative
to come up with different potential solutions without evaluating
them yet.

5. Analyze Alternatives

o Evaluate each alternative using the criteria established earlier.

Multiply the rating of each alternative by the criteria weights to
calculate a total score for each option.

6. Select an Alternative

o Choose the alternative with the highest total score as the best
solution to the problem.

7. Implement the Alternative

o Put the chosen solution into action. Ensure that the relevant
stakeholders are informed and supportive of the decision to
increase the chances of successful implementation.

8. Evaluate Decision Effectiveness

o Review the outcome to see whether the problem has been

resolved. If not, managers must analyze what went wrong and
possibly redo an earlier step.
2. Models of Decision Making:

1. Rational Model:

o Assumes that managers make decisions in a logical, objective,

and optimal manner.

o Requires a clear problem, known alternatives, and

consistent goals.

o The decision-maker has complete information and will choose

the option that maximizes value.

2. Bounded Rationality:

o Suggests that managers cannot analyze all alternatives and

are constrained by limited information and cognitive
capacity.

o Managers “satisfice” rather than optimize, meaning they

choose an alternative that is “good enough”.

o Influenced by organizational politics, culture, and escalation of

commitment (continuing a failing course of action to avoid
admitting a mistake).

3. Intuitive Decision Making:

o Decisions are made based on experience, feelings, and

judgment.

o Involves “unconscious reasoning” and is useful when quick

decisions are needed.

o Often complements rational decision-making in complex or

ambiguous situations.

3. Types of Problems and Decisions:

1. Structured Problems:

o Straightforward and familiar problems with clear information.

o Handled through programmed decisions (routine approaches

such as procedures, rules, and policies).

2. Unstructured Problems:

o New or unusual problems with incomplete information.

 o Handled through non-programmed decisions that require
custom solutions.

3. Programmed Decisions:

o Repetitive decisions based on established rules and

procedures.

o Often used by lower-level managers dealing with routine

issues.

4. Non-Programmed Decisions:

o Unique decisions requiring creativity and judgment.

o Typically made by upper-level managers when handling

complex, non-recurring issues.

4. Decision-Making Conditions:

 Certainty:

o All information and outcomes are known.

 Risk:

o Outcomes are not certain, but probabilities of different outcomes

can be estimated.

 Uncertainty:

o Outcomes and probabilities are unknown, making it difficult to

predict the results of a decision.

5. Decision-Making Biases and Errors:

Managers can be influenced by various cognitive biases that lead to

suboptimal decisions, such as:

1. Overconfidence Bias:

o Overestimating one’s ability to make accurate predictions.

2. Anchoring Effect:

o Relying too heavily on the first piece of information received.

3. Confirmation Bias:

o Seeking out information that supports existing beliefs.

 4. Escalation of Commitment:

o Increasing commitment to a previous decision despite evidence

of failure.

6. Decision-Making Styles:

Different managers have different decision-making styles, which impact

how they approach problems and make choices:

1. Directive Style:

o Focuses on short-term results and clear-cut solutions.

2. Analytical Style:

o Involves careful analysis and consideration of alternatives.

3. Conceptual Style:

o Takes a broad perspective and looks at multiple options.

4. Behavioral Style:

o Emphasizes people’s impact and involves employees in

decision-making.

7. Organizational Constraints on Decision Making:

Various factors within the organization can influence or limit decision-

making, such as:

 Organizational Culture: Determines acceptable behaviors and

influences choices.

 Internal Politics: Power dynamics and political considerations can

sway decisions.

 Time Constraints: Deadlines can limit thorough analysis.

 Resources: Financial, human, and physical resources can constrain

options.

8. Contemporary Issues in Decision Making:

 Creativity in Decision-Making:

o Encouraging divergent thinking and exploring innovative

ideas can lead to better solutions.
  Design Thinking:

o A human-centered approach that focuses on understanding user

needs and solving problems creatively.

 Big Data and Decision-Making:

o Using large data sets and analytics to make more informed

decisions.

Summary:

Chapter 2 delves into the decision-making process and how managers

navigate structured and unstructured problems using programmed
and non-programmed decisions. It explores rational, bounded
rationality, and intuitive decision-making models and outlines various
biases that impact decisions. Managers must also consider organizational
constraints and leverage creativity and data to make effective decisions.

Chapter 3: The Management Environment

1. The Organizational Environment:

 External Environment:
Refers to the factors, forces, situations, and events outside the
organization that influence its operations and performance. Examples
include economic conditions, demographics, technology, social
trends, political/legal conditions, and global issues.

 Internal Environment:
Refers to the resources, capabilities, and core competencies
within the organization that determine what it can do. The internal
environment influences how the company utilizes its resources to gain
a competitive edge.

2. External Environment Components:

1. Economic Environment:

o Factors such as interest rates, inflation, disposable income,

and economic cycles impact business performance.
 2. Demographic Environment:

o Population characteristics such as age, gender, education

level, income, and family composition affect market demand
and labor supply.

3. Technological Environment:

o Innovations and advancements in technology can shorten

product life cycles, change production methods, and create
new opportunities for value creation.

4. Sociocultural Environment:

o Cultural factors such as values, beliefs, traditions, and

lifestyles influence consumer behavior and preferences.

5. Political/Legal Environment:

o Includes laws, regulations, and political stability that can

create constraints or opportunities for businesses.

6. Global Environment:

o Globalization and the interconnectedness of world economies

impact trade, investment, and competition on a global scale.

3. Industry Environment:

The industry environment refers to the competitive forces that directly

influence a firm’s actions and performance. Porter’s Five Forces model is
used to analyze these factors:

1. Threat of New Entrants:

o New companies entering the market can increase competition,

lowering profitability. Barriers to entry, such as economies of
scale, capital requirements, and government policies, influence
the threat level.

2. Bargaining Power of Suppliers:

o Suppliers with strong power can influence prices and terms,

reducing profitability for companies reliant on their products.

3. Bargaining Power of Buyers:

 o Powerful buyers can negotiate for lower prices or higher quality,
thus reducing profitability.

4. Threat of Substitute Products:

o Substitute products can capture market share, forcing firms to

innovate or lower prices.

5. Intensity of Rivalry Among Competitors:

o High rivalry, due to numerous competitors or slow industry

growth, increases competition and reduces profit margins.

4. Opportunities and Threats:

 Opportunity:
A favorable condition in the external environment that, if exploited, can
help a company achieve strategic competitiveness.

 Threat:
A condition in the external environment that may hinder a company’s
ability to achieve its strategic goals.

5. Internal Environment: Resources, Capabilities, and Core

Competencies:

1. Resources:

o The assets a firm uses to create value, including people,

equipment, financial resources, and brand reputation.

o Tangible Resources: Physical and financial assets (e.g.,

machinery, buildings).

o Intangible Resources: Non-physical assets (e.g., brand equity,

patents, corporate culture).

2. Capabilities:

o The firm’s ability to integrate and utilize resources to achieve

a specific goal.

o Often stem from unique skills and expertise within the

organization.

3. Core Competencies:
 o Unique strengths that distinguish a firm from its competitors and
provide competitive advantage.

o Developed through complex interactions among resources and

capabilities over time.

6. Building Sustainable Competitive Advantage:

A firm can build sustainable competitive advantage by ensuring its resources

and capabilities meet the following four criteria:

1. Valuable:

o The resource or capability provides value by enabling the firm to

exploit opportunities or neutralize threats.

2. Rare:

o The resource is unique or not widely possessed by competitors.

3. Costly to Imitate:

o Competitors cannot easily replicate or acquire the resource or

capability.

4. Non-Substitutable:

o No strategically equivalent substitutes are available.

7. Using Porter’s Five Forces for Industry Analysis:

 Porter’s Five Forces help determine whether an industry is attractive

or unattractive based on its profit potential:

o Unattractive Industry:

 Low entry barriers, strong supplier and buyer power, high

threat of substitutes, and intense rivalry.

o Attractive Industry:

 High entry barriers, weak supplier and buyer power, low

threat of substitutes, and moderate rivalry.

8. Practical Application of the Management Environment:

 Toyota’s Code of Conduct:

Toyota emphasizes core values and ethics to ensure employee
 behavior aligns with the company’s broader mission, creating a
positive internal environment.

 Nike’s Direct Integration:

An example of forward integration, where Nike bypassed its retail
partners and sold directly to consumers, increasing its control and
profit margins.

9. Impact of External Environment on Strategy:

Managers must continuously monitor and adapt to changes in the external

environment to remain competitive. For example, advancements in
technology or shifts in consumer preferences can quickly change the
competitive landscape.

Summary:

Chapter 3 highlights the importance of understanding both the external and

internal environments of an organization. The external environment
includes economic, demographic, technological, sociocultural,
political/legal, and global components, while the internal
environment focuses on resources, capabilities, and core
competencies. Effective management requires aligning internal strengths
with external opportunities while mitigating threats and adapting to industry
changes.

Chapter 5: Organizational Structure and Culture

1. Organizing:

 Definition: The management function that creates the structure of an

organization to achieve its goals.

 Organizational Design: Refers to the process of creating or

modifying an organization’s structure based on strategy (e.g.,
switching from differentiation to cost leadership).

2. Work Specialization:

 Involves dividing tasks into smaller, specialized jobs to increase

productivity.

 Advantage: Increased efficiency and expertise.

  Disadvantage: Can lead to boredom, stress, and reduced productivity
(diseconomies of scale).

3. Departmentalization:

Grouping jobs based on specific criteria to achieve goals more effectively:

 Functional: Grouped by functions (e.g., HR, Marketing).

 Product: Grouped by product lines.

 Customer: Grouped by customer types.

 Geographic: Grouped by regions or territories.

 Process: Grouped by workflow (e.g., manufacturing stages).

4. Authority and Responsibility:

 Authority: The formal right to give orders and expect obedience.

 Responsibility: The obligation to perform assigned duties.

 Types of Authority:

o Line Authority: Direct authority over subordinates.

o Staff Authority: Support and advisory roles.

5. Power and Span of Control:

 Power: The capacity to influence others’ decisions, broader than

authority.

 Span of Control: Number of employees a manager supervises.

o Narrow Span: Small number of subordinates; better for complex

tasks.

o Wide Span: Large number of subordinates; suitable for routine

tasks.

6. Formalization:

 Definition: The extent to which jobs are standardized by rules and

procedures.

o High Formalization: Employees have less autonomy; must

follow set rules.
 o Low Formalization: More flexibility and autonomy in decision-
making.

7. Centralization vs. Decentralization:

 Centralization: Decision-making is concentrated at the top levels.

 Decentralization: Lower-level managers are involved in decision-

making.

8. Organizational Structures:

 Simple Structure: Low departmentalization, wide span of control,

centralized authority.

 Functional Structure: Grouped by function (e.g., marketing, finance).

 Divisional Structure: Divisions based on products, markets, or

geography.

9. Mechanistic vs. Organic Organizations:

 Mechanistic: Rigid, highly specialized, formalized, and centralized.

 Organic: Flexible, low specialization, informal, and decentralized.

10. Technology’s Impact on Structure:

 Different production methods (unit, mass, process) affect the choice of

organizational structure.

11. Organizational Culture:

 Definition: The shared values, traditions, and norms that shape

employees' behavior.

 Strong vs. Weak Cultures: Strong cultures have a greater influence

on behavior and are more consistent.

12. Maintaining Culture:

 ASA Framework: Attraction, Selection, Attrition.

 Socialization: New employees learn and adapt to the culture.

 Leadership and Changes: Culture can be influenced by changes in

leadership and through mergers and acquisitions.
 Chapter 6: Leadership and Trust
1. What Is Leadership?

 Leader: Someone who can influence others and has authority; they
set long-term goals, innovate, and inspire change.

 Manager: Focuses on planning, organizing, leading, and controlling,

maintaining processes and ensuring tasks are completed as expected.

 Leadership: The process of guiding a group to achieve its goals.

2. Trait Theories of Leadership

 Identify characteristics that differentiate leaders from non-leaders

(e.g., trustworthiness, people skills, competency, intelligence).

3. Behavioral Theories of Leadership

 Leadership behaviors define effective and ineffective leaders.

o Autocratic: Centralizes authority, makes decisions unilaterally.

o Democratic: Involves employees in decisions, delegates

authority.

o Laissez-Faire: Offers freedom to employees in decision-making.

4. Managerial Grid

 A model categorizing leadership styles based on concern for people

and productivity:

o Impoverished Management (1,1): Minimal effort.

o Country Club (1,9): High focus on people, low on productivity.

o Task Management (9,1): High productivity, low concern for

people.

o Team Management (9,9): High concern for both people and

tasks.

o Middle of the Road (5,5): Balance between productivity and

people.

5. Situational Leadership Theory (SLT)

  Leadership style depends on followers’ readiness (ability and
willingness).

o R1: Unable and unwilling ➔ Telling style (high task, low

relationship).

o R2: Unable but willing ➔ Selling style (high task, high

relationship).

o R3: Able but unwilling ➔ Participating style (low task, high

relationship).

o R4: Able and willing ➔ Delegating style (low task, low

relationship).

6. Contemporary Leadership Styles

 Transactional Leaders: Focus on routine transactions like rewards

and punishments.

 Transformational Leaders: Inspire followers to achieve exceptional

outcomes through motivation and vision.

7. Charismatic vs. Visionary Leadership

 Charismatic Leaders: Use their personality to influence others.

 Visionary Leaders: Create and communicate a compelling vision of

the future.

8. Empowering Employees

 Empowerment: Granting more decision-making power to lower-level

employees for faster, more effective decisions.

9. Trust in Leadership

 Trust and credibility are crucial for leadership effectiveness. Trust is

built through integrity, competence, and character.

Chapter 7: Motivating and Rewarding Employees - Summary

1. What Is Motivation?

 Motivation is the process by which an individual's efforts are

energized, directed, and sustained towards achieving a goal.
  It has three key elements:

o Energy: Intensity or drive.

o Direction: Effort focused on organizational goals.

o Persistence: Consistent effort towards achieving the goals.

2. Major Motivation Theories

 Maslow’s Hierarchy of Needs:

o Describes a hierarchy of five needs:

1. Physiological: Basic survival needs (food, water, shelter).

2. Safety: Security and stability.

3. Social: Relationships and belonging.

4. Esteem: Self-respect and recognition.

5. Self-Actualization: Personal growth and fulfillment.

 McGregor’s Theory X and Theory Y:

o Theory X: Assumes employees dislike work and must be

controlled.

o Theory Y: Assumes employees are creative and seek

responsibility.

 Herzberg’s Two-Factor Theory:

o Proposes two types of factors:

 Hygiene Factors (extrinsic): Eliminate dissatisfaction

but don’t motivate.

 Motivators (intrinsic): Increase job satisfaction and

motivation.

 Equity Theory:

o Employees compare their input-output ratio to others to assess

fairness.

o Focuses on Distributive Justice (fairness of reward distribution)

and Procedural Justice (fairness of processes).

 Goal-Setting Theory:
 o Specific and challenging goals lead to higher performance.

o Includes Self-Efficacy: Belief in one’s capability to perform

tasks.

 Expectancy Theory:

o Motivation depends on:

1. Expectancy: Effort will lead to good performance.

2. Instrumentality: Performance will lead to rewards.

3. Valence: Attractiveness of rewards.

3. Job Design and Motivation

 Job Design: Combining tasks to create meaningful jobs.

 Job Characteristics Model (JCM): Identifies five core job dimensions:

1. Skill Variety: Use of various skills.

2. Task Identity: Completing a whole piece of work.

3. Task Significance: Impact on others.

4. Autonomy: Freedom in performing tasks.

5. Feedback: Information on performance.

4. Motivating a Diverse Workforce

 Approaches for today’s workforce include:

o Compressed Workweek: Longer hours per day, fewer days.

o Flexible Work Hours (Flextime): Employees control their

schedules.

o Job Sharing: Two or more employees share a single full-time

job.

o Telecommuting: Working remotely using technology.

5. Designing Effective Reward Programs

 Open-Book Management: Sharing financial statements with

employees.
  Employee Recognition Programs: Personalized recognition for
achievements.

 Pay-for-Performance Programs: Linking pay to performance.

6. Motivation Techniques

 Use a combination of “Carrot” (rewards) and “Stick”

(punishments) methods depending on the context.

 Ensure the methods used are flexible and tailored to meet diverse
employee needs.

7. Practical Applications

 Companies implement motivation methods based on different

employee needs, offering a variety of rewards and recognition to
maintain motivation and high performance.

Chapter 7: Motivating and Rewarding Employees

1. What Is Motivation?

 Motivation is the process by which an individual's efforts are

energized, directed, and sustained towards achieving a goal.

 It has three key elements:

o Energy: Intensity or drive.

o Direction: Effort focused on organizational goals.

o Persistence: Consistent effort towards achieving the goals.

2. Major Motivation Theories

 Maslow’s Hierarchy of Needs:

o Describes a hierarchy of five needs:

1. Physiological: Basic survival needs (food, water, shelter).

2. Safety: Security and stability.

3. Social: Relationships and belonging.

4. Esteem: Self-respect and recognition.

 5. Self-Actualization: Personal growth and fulfillment.

 McGregor’s Theory X and Theory Y:

o Theory X: Assumes employees dislike work and must be

controlled.

o Theory Y: Assumes employees are creative and seek

responsibility.

 Herzberg’s Two-Factor Theory:

o Proposes two types of factors:

 Hygiene Factors (extrinsic): Eliminate dissatisfaction

but don’t motivate.

 Motivators (intrinsic): Increase job satisfaction and

motivation.

 Equity Theory:

o Employees compare their input-output ratio to others to assess

fairness.

o Focuses on Distributive Justice (fairness of reward distribution)

and Procedural Justice (fairness of processes).

 Goal-Setting Theory:

o Specific and challenging goals lead to higher performance.

o Includes Self-Efficacy: Belief in one’s capability to perform

tasks.

 Expectancy Theory:

o Motivation depends on:

1. Expectancy: Effort will lead to good performance.

2. Instrumentality: Performance will lead to rewards.

3. Valence: Attractiveness of rewards.

3. Job Design and Motivation

 Job Design: Combining tasks to create meaningful jobs.

 Job Characteristics Model (JCM): Identifies five core job dimensions:

 1. Skill Variety: Use of various skills.

2. Task Identity: Completing a whole piece of work.

3. Task Significance: Impact on others.

4. Autonomy: Freedom in performing tasks.

5. Feedback: Information on performance.

4. Motivating a Diverse Workforce

 Approaches for today’s workforce include:

o Compressed Workweek: Longer hours per day, fewer days.

o Flexible Work Hours (Flextime): Employees control their

schedules.

o Job Sharing: Two or more employees share a single full-time

job.

o Telecommuting: Working remotely using technology.

5. Designing Effective Reward Programs

 Open-Book Management: Sharing financial statements with

employees.

 Employee Recognition Programs: Personalized recognition for

achievements.

 Pay-for-Performance Programs: Linking pay to performance.

6. Motivation Techniques

 Use a combination of “Carrot” (rewards) and “Stick”

(punishments) methods depending on the context.

 Ensure the methods used are flexible and tailored to meet diverse
employee needs.

7. Practical Applications

 Companies implement motivation methods based on different

employee needs, offering a variety of rewards and recognition to
maintain motivation and high performance.
 Chapter 8: Foundations of Control
Definition of Control:
Control is a management function involving monitoring activities to ensure
they align with the plan and making corrections if necessary.

Control Process:

A three-step process:

1. Measuring actual performance.

2. Comparing performance against a standard.

3. Taking corrective action to address deviations.

How Managers Measure:

Four common sources of performance information:

 Personal observation

 Statistical reports

 Oral reports

 Written reports

Management by Walking Around (MBWA) is a practice where managers

interact directly with employees to gain insights beyond formal reports.

Comparing Performance to Planned Goals:

 Range of Variation: Acceptable limits of performance deviation.

Deviations outside this range need attention.

Managerial Actions:

 Do nothing (if performance is within the acceptable range).

 Correct the actual performance (immediate or basic correction).

 Revise the standards.

Types of Control:

1. Feedforward Control:
Takes place before an activity begins, preventing problems (e.g.,
training suppliers in advance).
 2. Concurrent Control:
Occurs during the activity, correcting issues in real time.

3. Feedback Control:
Takes place after an activity is completed, addressing outcomes and
ensuring future improvements.

Financial Controls:

Key financial tools include:

 Liquidity Ratios: Assess the ability to meet current debt.

 Leverage Ratios: Evaluate the use of debt to finance assets.

 Activity Ratios: Measure asset efficiency.

 Profitability Ratios: Determine profit generation efficiency.

By using these controls, managers can monitor, evaluate, and adjust

organizational activities to stay aligned with strategic goals.