Unit 1(P18): Environmental context: Ethics and Social Responsibiltiy

Ethics:

• Ethics is an individual personal belief about a behavior, action or decision is right or wrong.
• Ethical behavior differs form person to person.
• Ethical behavior conforms to generally accepted social norms.
• Unethical behavior does not conform to generally accepted social norms.
• Ethics is also different from legally responsible because a behavior might not be defined as illegal, yet be unethical.

Managerial ethics: 

Standard of behavior that guide individual mangers in evaluating and knowing "right from wrong" in a specific situation. There are two broad areas associated with the concept of managerial ethics: 

• Managerial mischief: includes "illegal, unethical, or questionable practices of individual managers or organizations, as well as the causes of such behaviors and remedies to eradicate them, and 
• Moral mazes: the "moral mazes of management" include the numerous ethical problems that managers must deal with on a daily basis, such as potential conflicts of interest, wrongful use of resources, mismanagement of contracts and agreements, and misuse of power and influence.

 Three areas of concern for managers under managerial ethics are:

• How an organization Treats its Employees
• How Employees treat the organization
• How employees and the organization treat other Economic Agents

Social Responsibility: 

• Social responsibility of business look towards their stakeholders, towards the natural environment, and toward general social welfare
• Social responsibility of business refers to all such duties and obligations of business directed towards the welfare of society.  
• These duties can be a part of the routine functions of carrying on business activity or they may be an additional function of carrying out welfare activity. 
• Social responsibility implies that a businessman should not do anything harmful to the society in course of his business activities.
• Thus, the concept of social responsibility discourages businessmen from adopting unfair means like black-marketing, hoarding, adulteration, tax evasion and cheating customers etc. to earn profit. 
• Instead, it encourages them to earn profit through judicious management of the business, by providing better working and living conditions to its employees, providing better products, after sales-service, etc. to its customers and simultaneously to control pollution and conserve natural resources.

Approaches to social Responsibility:

• Obstructionist: Are business that believes no responsibility towards society and may violate prevailing laws, they behave unethically and illegally. The firms do not do any thing to address social or environmental problems.
• Defensive: stay and abide with in law and commitment to ethical behavior, but makes no attempt to exercise social responsibility beyond what the law dictates. Looking forward for benefit outweighing the cost.
• Accommodative: organizational members behave legally and ethically (by balancing their interest). Makes attempt to support social responsibility and decision that seems reasonable for the society. Voluntary participate in social programs, if the program are worthy of its support.
• Proactive: Being both legal and responsible, Business should abide all legal matters and also take proactive action and support social causes .they believe in protecting and improving environment in which it survives viewing itself as a citizen of the very society.

Areas of social Responsibility:

Social responsibility of business look towards their stakeholders (Creditors, customers, local community, suppliers, employees, interest group, trade association, owners/ investors, courts, colleges and universities, foreign government, local government), towards the natural environment, and toward general social welfare

Organizational Stakeholders:

• Consumers: reasonable price, quality product, truthful advertising, fair treatment, healthy and safety of customer, fair prices, honor warranties, meet delivery commitments,
• Shareholders/ investors: dividends, disclosure of information, respect, follow proper accounting procedure, interest,
• Employees: fair wage, right to union, good working condition, different schemes and benefits packages,  respect their dignity and make available of basic human needs, empowering employees, creating teams, carrier development, training opportunities
• Government and society: taxes, following laws, respect human rights, protect environment, help in reducing social and economic problem like unemployment, poverty, increase export, 
• The natural environment: develop alternative methods of handling sewage, hazardous wastes, and ordinary garbage; contribute towards global warming, acid rain and depletion of ozone layer, recycling, reusing, Eco  friendly environment, alternative transportation to and for work, energy saving environment.
• General social welfare: contribution:  to charities, philanthropic organization, and non profit foundations and association, supporting: public radios, television, taking initiative in improving public health and education, and reducing: political, economic and social inequalities.

Managing Social Responsibility:

Formal organizational Dimensions

• Legal Compliance: the extent to which an organization complies with local, state, federal and international laws.
• Ethical compliance: the extent to which an organization and its members follow basic ethical standards of behavior.
• Philanthropic Giving: Awarding funds or gifts to charities or other worthy causes.

Informal Organizational Dimensions:

• Organizational Leadership and culture: Leadership practices and organization culture can go a long way to ward defining the social responsibility stance  an organization and its members will adopt.
• Whistle Blowing: the disclosing by an employee of illegal or unethical conduct on the part of others within the organization.

Unit 1(P17): Environmental Context: External Environment

External environment: 

• External driving forces are those things, situations, events that occur outside of the organization and affect it in either a positive or negative way. 
• This occurs outside the organization and by-and-large out  or beyond  the control of the organization. External environment is analyzed under Task Environment and General Environment.

Task or micro or operating environment:

• The micro environment is also known as the task environment and operating environment because the micro environmental forces have a direct bearing on the operations of the firm. 
• The organization gets affected by these environments and can also affect this environment. 
• They are: Customers, Suppliers, Distributors, Unions, Creditors, Competitors, Regulatory Agency, Strategic allies.
•  Competitors: A competitor is another business that operates in the same market.  Every move of the competitors affects the business. Business has to adjust itself according to the strategies of the Competitors.
• Suppliers:  An important force in the micro environment of a company is the suppliers, i.e., those who supply the inputs like raw materials and components to the company. The importance of reliable source/sources of supply to the smooth functioning of the business is obvious. They must be reliable and business must have multiple suppliers i.e. they should not depend upon only one supplier.
• Customers: The major task of a business is to create and sustain customers. A business exists only because of its customers. The choice of customer segments should be made by considering a number of factors including the relative profitability, dependability, and stability of demand, growth prospects and the extent of competition. Types of Customers are Wholesalers, Retailers, Industries, Government, and Other Institutions Foreigners
• Pressure Groups/ unions: Employees are part of the internal environment, but it is very likely that a percentage of the employees will belong to a union.  A union is a formal group that acts to represent the views of employees.  The union will often be used when there is a disagreement with the managers, or during the process of negotiating the wages and conditions of the firm.  This type of pressure group retains a fairly direct association with the large scale organization; there are other pressure groups that may operate with a less direct influence. 
• Creditors: Large scale organizations require large amounts of money.  This means using the financial services that are offered by banks.  When a bank provides access to a loan, it is normal for certain conditions to be attached.  In this way the bank (which is external to the business) can affect the operations of the large scale organization.  At a simple level, a loan must be repaid, which will require the commitment of future cash flow to make this possible. 
• Regulatory Bodies: While the broader impact of government policy decisions should be considered as part of the macro environment, there are often specific government bodies that will have a more direct impact on the actions of a large scale business.  The regulatory bodies make regulation in consultation with the industry professionals.

Macro Environment

• Macro environment is also known as General environment and remote environment. 
• Macro factors are generally more uncontrollable than micro environment factors. 
• When the macro factors become uncontrollable, the success of company depends upon its adaptability to the environment. 
• The successful businessman visualizes the external factors affecting the business; anticipating   prospective market situations and makes suitable to get the maximum with minimize cost. Macro environment factors are discussed below:

• Economic Environment: Economic factors which have their affect on the working of the business are known as economic environment. It includes system, policies and nature of an economy, trade cycles, economic resources, level of income, distribution of income and wealth etc.  Government frames economic policies. Economic Policies affects the different business units in different ways. It may or may not have favorable effect on a business unit. The Government may grant subsidies to one business or decrease the rates of excise or custom duty or the government may increase the rates of custom duty and excise duty, tax rates for another business. All the business enterprises frame their policies keeping in view the prevailing economic policies. Important economic policies of a country are as follows:-Monetary Policy, Fiscal Policy, Foreign Trade Policy, Foreign Investment Policy, Industrial Policy, etc
• Social Environment: The social dimension or environment of a nation determines the value system of the society which, in turn affects the functioning of the business. Sociological factors such as material culture, language, aesthetics, education, religion, attitudes and values and social organization, etc. have far-reaching impact on the business. These factors determine the work culture and mobility of labour, work groups etc. 
• Political Environment: A political system is composed of the members of a social organization (group) who are in power. The political environment of a country is influenced by the political organizations such as philosophy of political parties, ideology of government or party in power, nature and extent of bureaucracy influence of primary groups etc.  The political environment of the country influences the business to a great extent. Political Environment: constitution, political parties, government, government – business relationship, political risk factor, International political events.
• Legal Environment: Legal system refers to the rules, or regulations that regulate the behavior Legal systems vary from country to country. The legal environment is derived partly from the political climate in a country and has three distinct dimensions to it:
• The domestic laws of your home country
• The domestic laws of each of your foreign markets
• International law in general
• Legal environment includes flexibility and adaptability of law and other legal rules governing the business. It may include the exact rulings and decision of the courts. These affect the business and its managers to a great extent. Laws like; competition law, employment law, health and safety law, product safety etc are important once affecting the business.
• Technical Environment: A systematic application of scientific knowledge to practical task is known as technology. Technological environment include the methods, techniques and approaches adopted for production of goods and services and its distribution. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organizations providing the products.  New technologies create new products and new processes Technological environment influences the business in terms of investment in technology, consistent application of technology and the effects of technology on markets
• Environmental factors:  The natural environment includes geographical and ecological factors that influence the business operations. These factors include the availability of natural resources, weather and climatic condition, location aspect, topographical factors, etc. Changes in environment can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environment friendly products and processes is affecting demand patterns and creating business opportunities. 

Unit 1(P16): the Environmental Context : Internal Environment

Internal environment:  

• The internal environment is the environment that has a direct impact on the business.  
• The internal forces are things that occur within the organization and are by-and-large under the control of the organization. These effects the way the organization operates in either a positive or negative way. 
• It is the conditions, entities, events, and factors within an organization that influence its activities, choices, and particularly the behavior of the employees. 
• The internal environment encompasses everything that is “inside” the business.  
• These are the variables over which the business has the highest degree of control, and therefore these are the things about which the most direct decisions can be made. 
• The internal business environmental factors are best viewed as the extent to which resources, and the ability to deploy them, will generate and sustain competitive advantage.

Here there are some internal factors which are: Owners/ shareholder, Board of directors, Employees/ unions, corporate culture, Structure, Rules and regulations.

1. Employees/ Human Resources: The human resource is the important factor for any organization as it contributes to the strength and weakness. The human resource in an organization must have characteristics like skills, quality, high morale, commitment towards the work, attitude, etc. There are many different types of employees who work with a discrete set of skills, and they will also have expectations about what the organization should do for them, and the manner in which the organization should “behave”.  This can create significant pressure, and will ultimately help to shape the direction that the organization must take. The involvement and initiative of the people in an organization at different levels may vary from organization to organization. The organizational culture and overall environment have bearing on them.
2. Shareholders: The shareholders are the people who own a publicly listed, large scale organization.  These people will hope that the organization can assist in maximizing their wealth.  This could be through dividends (the distribution of the company’s profits), or by capital gain (an increase in the value of the shares due to the strong performance of the company).  A company can only set the price of its shares during the initial public offering, after that it is up to free market forces to determine the price.  On the other hand, the managers of the business will have very strong input into the dividend that is paid to shareholders.  The final figure must be approved by the people who own the shares (after all, they do own the business!), but standard practice is for the meeting of shareholders to ratify the amount that is suggested by the board of directors. The shareholders have right to choose some members for BOD too.
3. The Board of Directors: the board is the management level who works in the best interest of the shareholders. So, business is influence greatly by their decision. The BOD is a part of the internal environment of the business.  This is significant because it suggests that appropriate governance procedures must be put in place by BOD to ensure that the people who manage the business remain accountable to the other stakeholders that are involved.  
4. The Organizational Structure: It is the hierarchical arrangement of various positions which have check and balance system. It establishes the relationship among various position through delegation of responsibility, authority and accountability. The structure of the organization also influences the business decisions. The organizational structure like the composition of board of directors influences the decisions of business as they are internal factors. The structure and style of the organization may delay a decision making or some other helps in making quick decisions. The choice of structure will affect the performance of the business, and as such it is a significant internal variable that can be controlled.
5. The Corporate Culture: The culture of an organization is typically described as the values and beliefs that are shared by the internal stakeholders.  These things will help to shape the decisions that are made.  For example, if a business places a high value on its environmental impact, then decisions will be made to ensure that this is minimized.  This will filter down through all levels of the organization.  The culture of a large scale organization can be changed, although this can take an extremely long time.  Despite this it should still be considered a variable in the internal environment; if the business will benefit through a change to the corporate culture, then the change should be pursued.
6. Internal power relationships: The relationship among the three levels of the organization also influences on the business. The mutual co-ordination among those three is an important need for a business. The relationship among the people working in the three levels of the organization should be cordial.
7. Company image and brand equity: The image of the company in the outside market has the impact on the internal environment of the company. It helps in raising the finance, making joint ventures , other alliances, expansions and acquisitions , entering sale and purchase contracts , launching new products, etc. Brand equity also helps the company in same way
8. Labor union: A trade union is an organization of workers who have banded together to achieve common goals such as protecting the integrity of its trade, achieving higher pay, increasing the number of employees an employer hires, and better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labor contracts (collective bargaining) with employers. The most common purpose of these associations or unions is "maintaining or improving the conditions of their employment".

Unit 1(P15): The Environmental Context: Introduction

Environment?

• Environment refers to the forces that create conditions and influences on the capacity of an organization to make adjustment in the current system and compete in the market.
• The condition that affect or influence the behavior and development of something.
• 'The set of forces surrounding an organization that have the potential to affect the way it operates and its access to scarce resources'. Gareth
• An environment refers to institutions or forces that are outside the organization and potentially affect the organization’s performance.
• Business organization is an open system which, regularly interacts between the business system and its environment.

Characteristic:

1. Environment is complex:
• The environment is not made of any one simple constituent but consists of a number of factors, events, conditions and influences, arising from different sources.
• It is difficult to guess the factors that constitute a given environment. Hence, environment is at the same time complex and somewhat easy to understand in parts, but difficult in totality. 
2. Environment is dynamic:
• The environment does not remain constant but keeps on changing, For instance, the environment changes with the competitor's products and strategies, government policies, customers' preferences, etc.
• Hence, in order to survive and grow, it becomes very important for every organization to understand its impact and adapt itself with such changes. 
3. Environment is multi-faceted:
• Same element or influence of environment affects different firms in different ways.
• This is frequently seen when the same development, say liberalization, is welcomed as an opportunity by one company while another company perceives it as a threat.
4. Environment has a far reaching impact:
• The environment has a long term and lasting impact on organizations. The growth and profitability of an organization depend critically on the environment in which it exists.

Importance

1. Identification of Strength: The analysis of the internal environment helps to identify strength of the firm. For instance, if the company has good personal policies in respect of promotion, transfer, training, etc than it can indicates strength of the firm in respect of personal policies. This strength can be identified through the job satisfaction and performance of the employees. After identifying the strengths the firm must try to consolidate its strengths by further improvement in its existing plans & policies.
2. Identification of Weakness: The analysis of the internal environment indicates not only strengths but also the weakness of the firm. A firm may be strong in certain areas; where as it may be weak in some other areas. The firm should identify sue weakness so as to correct them as early as possible.
3.  Identification of Opportunities: An analysis of the external environment helps the business firm to identify the opportunities in the market. The business firm should make every possible effort to grab the opportunities as and when they come.
4. Identification of Threats: Business may be subject to threats from competitors and others. Therefore environmental analysis helps to identify threats from the environment identification of threats at an earlier date is always beneficial to the firm as it helps to defuse the same.
5. Exploitation of Business Opportunities: Environment opens new opportunities for the expansion of business activities. Study of environment is necessary in order to discover and exploit such opportunities fully.
6. Keeping Business Enterprise Alert: Environment study is needed as it keeps the business unit alert in its approach and activities. In the absence of environmental changes, the business activities will be dull and lifeless. The problems & prospects of business can be understood properly through the study of business environment. This enables an enterprise to face the problems with confidence and secure the maximum benefits of business opportunities available.
7. Keeping Business Flexible and Dynamic: Study of business environment is needed for keeping business flexible and dynamic as per the changes in the environmental forces. This will enable the development of business organization.
8. Understanding Future Problems and Prospects: The study of business environment enables to understand future problems and prospects of business in advance. This enables business organizations to face the problems boldly and also take the benefit of favorable situation.
9. Making Business Socially Acceptable: Environment study enables businessmen to expand the business and also make it acceptable to different social groups. Business organizations can make positive contribution for maintaining ecological balance by studying social environment.
10. Ensures Optimum Utilization of Resources: The study of business environment is needed as it ensures optimum use of resources available. For this, the study of economic and technological environment is useful. Such study enables organization to take full benefit of government policies, concessions provided, and technological developments and so on.
11. Ensures Survival and Growth: Business environment inform about suitable changes to be affected in business policies. This helps the business organizations to grow & prosper.
12. Maintaining adaptability to changes: Business environment guides the business organization about socio-economic changes & the organization must accordingly adapt these change. This enables the business organization to survive for a longer period. 

Unit 1(P14): Management Theories: Contemporary perspectives

Contemporary perspective on management.

Theory Z model

• It was first described by William Ouchi in his book "Theory Z- How an American Business Can Meet the Japanese Challenge".
• Ouchi contrasted American types of organizations (Type A) that were rooted in the United States' tradition of individualism with Japanese organizations (Type J) that drew upon the Japanese heritage of collectivism. 
• Theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job. 
• According to Ouchi, Theory Z management tends to promote stable employment, high productivity, and high employee morale and satisfaction
• The secret to Japanese success, according to Ouchi, is not technology, but a special way of managing people. "This is a managing style that focuses on a strong company philosophy, a distinct corporate culture, long-range staff development, and consensus decision-making"(Ouchi, 1981). 

The major parts of theory Z are:

1. Length of employment: Long-term employment and job security. Traditional U.S. organizations are plagued with short-term commitments by employees, but employers using more traditional management perspective may inadvertently encourage this by treating employees simply as replaceable cogs in the profit-making machinery. In the United States, employment at will, which essentially means the employer or the employee can terminate the employment relationship at any time, has been among the dominant forms of employment relationships. Conversely, Type J organizations generally make life-long commitments to their employees and expect loyalty in return, but Type J organizations set the conditions to encourage this. This promotes stability in the organization and job security among employees.
2. Mode of decisions making: Collective decision-making. The Type Z organization emphasizes communication, collaboration, and consensus in decision making. This marks a contrast from the traditional Type A organization that emphasizes individual decision-making.
3. Individual responsibility: Collective responsibility. Type A organizations emphasize individual accountability and performance appraisal. Traditionally, performance measures in Type J companies have been oriented to the group. Thus, Type Z organizations retain the emphasis on individual contributions that are characteristic of most American firms by recognizing individual achievements, albeit within the context of the wider group.
4. Seed of evaluation and promotion: Slow evaluation and promotion. The Type A organization has generally been characterized by short-term evaluations of performance and rapid promotion of high achievers. The Type J organization, conversely, adopts the Japanese model of slow evaluation and promotion.
5. Mechanisms of control: Implicit, informal control with explicit, formalized measures. The Type Z organization relies on informal methods of control, but does measure performance through formal mechanisms. This is an attempt to combine elements of both the Type A and Type J organizations.
6. Specialization of career path: Moderately specialized careers. Type A organizations have generally had quite specialized career paths, with employees avoiding jumps from functional area to another. Conversely, the Type J organization has generally had quite non-specialized career paths. The Type Z organization adopts a middle-of-the-road posture, with career paths that are less specialized than the traditional U.S. model but more specialized than the traditional Japanese model.
7. Nature of concern of the employee: Concern for a total person, including their family. The Type Z organization is characterized by concern for employees that goes beyond the workplace. This philosophy is more consistent with the Japanese model than the U.S. model.

Seven habits of highly effective people: Stephen Covey

• The book first introduces the concept of Paradigm Shift and prepares the reader for a change in mindset. It helps the reader understand that there exists a different perspective, a viewpoint that may be different from his own and asserts that two people can see the same thing and yet differ with each other. Once the reader is prepared for this, it introduces the seven habits, in a proper order.
• Each chapter is dedicated to one of the habits,which are represented by the following imperatives:
• Independence or Self-Mastery: The First Three Habits surround moving from dependence to independence (i.e., self-mastery):
• Habit 1: Be Proactive: Take initiative in life by realizing that your decisions (and how they align with life's principles) are the primary determining factor for effectiveness in your life. Take responsibility for your choices and the consequences that follow.
• Habit 2: Begin with the End in Mind: Self-discover and clarify your deeply important character values and life goals. Envision the ideal characteristics for each of your various roles and relationships in life. Create a mission statement.
• Habit 3: Put First Things First: Prioritize, plan, and execute your week's tasks based on importance rather than urgency. Evaluate whether your efforts exemplify your desired character values, propel you toward goals, and enrich the roles and relationships that were elaborated in Habit 2.
• Interdependence: The next three have to do with Interdependence (i.e., working with others):
• Habit 4: Think Win-Win: Genuinely strive for mutually beneficial solutions or agreements in your relationships. Value and respect people by understanding a "win" for all is ultimately a better long-term resolution than if only one person in the situation had gotten his way.
• Habit 5: Seek First to Understand, Then to be Understood: Use empathic listening to be genuinely influenced by a person, which compels them to reciprocate the listening and take an open mind to being influenced by you. This creates an atmosphere of caring, and positive problem solving.
• Habit 6: Synergize: Combine the strengths of people through positive teamwork, so as to achieve goals no one person could have done alone.
• Self Renewal: The Last habit relates to self-rejuvenation:
• Habit 7: Sharpen the Saw: Balance and renew your resources, energy, and health to create a sustainable, long-term, effective lifestyle. It primarily emphasizes exercise for physical renewal, prayer (meditation, yoga, etc.) and good reading for mental renewal. It also mentions service to society for spiritual renewal.

Thomas J. Peters and Robert M. Waterman “In Search of Excellence”

There are eight basic principles of how to run a successful business and stay ahead of the competition. These are:

1. A bias for action, active decision making - 'getting on with it'. Facilitate quick decision making & problem solving tends to avoid bureaucratic control
2. Close to the customer - learning from the people served by the business.
3. Autonomy and entrepreneurship - fostering innovation and nurturing 'champions'.
4. Productivity through people- treating rank and file employees as a source of quality.
5. Hands-on, value-driven – participation, practical experience and management philosophy that guides everyday practice - management showing its commitment.
6. Stick to the knitting - stay with the business that you know, business diversity almost never works
7. Simple form, lean staff - have a simple structure and outsource a lot. Some of the best companies have minimal HQ staff. 
8. Simultaneous loose-tight properties - autonomy in shop-floor activities plus centralized values. A combination of centralized and decentralized gives the best blend

Contemporary Management Challenges

1. Labor Shortage:Advancement in technology, Demand for technology-related employees (salaries), Effect on Lower-skills jobs
2. Management of Diversified Workforce: Differences among people, Internationalization factorDifficulty in management
3. Values, Goals and Beliefs of the New Generation Workforce: Less devoted to long-term career prospects, Less to Conformity and uniformity, How to attract and motivate,
4. Management of Change: Rapid and constant environment change, Change is an opportunity
5. New Technology: Internet, e-business, e-government, Information technology, Investment in technology, Employee-privacy, Decision-making quality, Physical or virtual offices
6. Organization Structure:Weber’s bureaucratic structure to more flat structure
7. Globalization: Role of government in business, Behavioral processes vary widely, Values and beliefs of employee
8. Ethics and Social Responsibility: Business scandals, Increased contributions to social issues
9. Quality: Used as a base for competition, Quality and productivity
10. Service Economy: Challenge to provide good experience to all stakeholders.

Unit 1(P13): Management Theories: System, Contingency and Integrating Perspective

System Perspective

• Developed by Ludwig von Bertalanffy, Kenneth Boulding, Norbert Weinus, Herbert Simon, Shester Bernard. (1901-1972.
• System is an interrelated set of element functioning as a whole
• It studies management by putting all interrelated parts of an organization to accomplish a goal and recognition of environmental influences the system.
• The system approach identifies four basic elements: input, transformation process, outputs, and feedback.
• The various parts of a system have functional as well as structural relationships between each other. The parts that make up a system show degrees of integration – “compatible”
• Every part of a system is affected by every other part. Usually there are several points of intervention and types of intervention than can help client systems to change.
• A system can be defined as an aggregate of interrelated and interconnected elements and activities that form an identifiable, organized, and functioning whole.
• All systems have boundaries. The boundary of a social system distinguishes between those who belong and those who do not.

The important elements or concepts of system are:

1. Goal oriented: Every system have certain purpose of existence. It is means to produce the desired end.
2. Sub- system: Is a single, predefined operating environment through which the system coordinates the work flow and resource use. A system within another system. A system consists of numerous parts called sub-systems.
3. Open and Closed system:  An organizational system that interacts with its environment is called open system and which does not interacts with the environment is called closed system.
4. Synergy: the whole is greater than sum of its parts. Two or more subsystem working together to produce more than the total of what they might produce working alone.
5. System boundary: Boundary which separates it from its environment.
6. Flow of information: system continuously utilizes the processed information into action and opportunity. 
7. Feedback: Important element which gives information to control deviation in system parts.
8. Entropy: a normal process leading to system decline, when organization does not monitor feedback from its environment and make appropriate adjustments. The tendency of systems to become disorganized, to disintegrate, or to run down and die. The primary objective of management is to re-energize to avoid entropy. 

Contingency theory:

• The classical, behavioral, and quantitative approaches are considered universal perspectives because they try to identify the “One best way” to mange organization.
• Developed by Tom Burns, G.M. Stalker, P. Lawrence, J. Lorsch. “ Particularistic  approach to management”
• “There is no one best way to organize”, the concepts, tools, and techniques which are highly effective in one situation, are not at all effective in another situation.
• Thus managerial behavior in a given situation depends on, or is contingent on, a wide variety of elements.
• Each organization and situation is unique, thus no single principle or theory can not be applicable in all situations.
• Thus it focuses to recognition of the situational nature of management and response to particular characteristics of situation.

Integrating perspectives for mangers:

• The classical, behavioral and quantitative approaches to management are complement to each others.
• A complete understanding of management requires an appreciation of all three perspectives.
• The systems and contingency perspectives help to integrate the earlier approaches and enlarge our understanding of all three.

Unit 1(P12): Management Theories: Quantitative Management Perspective

Management Science school (Quantitative Management Perspective):

• Developed during World War II, mathematicians, physicists, and other scientists from England and USA joined together to solve military problems, to help them to deploy its resources more efficiently and effectively.
• The approach uses mathematical and quantitative models to solve complex business problems
• The model is used to study, analyze, and predict the future events and recommends strategy to be used by organization.
• The quantitative approach to management involves the use of quantitative techniques, such as statistics, information models, and computer simulations, to improve decision making, operation, resource allocation and economic effectiveness. 

This school consists of three main branches:

1. Quantitative management: It focuses on development of mathematical techniques or models to management. It is the simplified representation of a system, process, or relationship in relation to models, equations and similar representation of reality.., e.g., SPSS, modeling, queuing theory etc.
2. Operations management: Provides manager with set of techniques which they can utilize in an organization’s production system to increase efficiency. e,g  inventory management, linear programming, queuing theory, breakeven analysis, and simulation.
3. Management information system: Helps management to design information system that provides information about events occurring within and outside an organization.

Unit 1(P11): Management Theories: Behavioural perspective

The Behavioral perspective:

• Focused on the human side of an organization.
• Emphasizes individual attitude and behavior and group processes and recognized the importance of behavioral process in the workplace.
• This school of management studied different factors associated with workers efficiency, happiness, and productivity. (It was observed that employees were not happy and satisfied with economic incentive alone).
• There are two findings in this perspective:

1. Behavioral science approach: Interpersonal relations and behavioral patterns of workers.
2. Human relations approach: attention to the importance of the individuals within the organization.

Human Relation approach:

Hugo Munsterberg(German psychologist (1863-1916):

• Contribution made in employee selection and motivation.
• He argued that psychologists could help industry in three major areas: 

1. Finding ways to identify individuals best suited to particular jobs. 
2. Identifying the psychological (the scientific study of mental functions and behaviors.) conditions for optimum efficiency. 
3. Finding ways to influence individual behavior to be congruent with management’s objectives

Elton Mayo: the Hawthorne studies

• The Hawthorne studies were carried out by the Western Electric company at their Hawthorne plant in the 1927-1932. 
• The Hawthorne studies were series of early experiments that focused on behavior in the workplace. In one experiment involving this group of workers, for example, researcher monitored how productivity changes as a result of changes in working conditions. The Hawthorne studies and subsequent experiments lead scientists to the conclusion that the human element is very important in the work place. 

The Relay Assembly Test Room.

• Initially, the study focused on lighting or manipulating illumination for one group of workers and comparing their subsequent productivity with the productivity of another group whose illumination was not changed. When illumination was increased for the experimental group, productivity went up in both groups. Productivity continued to increase in both group, even when the lighting for the experimental group was decreased. Not until the lighting was reduced to the level of moon light did productivity begin to decline. 
• Workers were motivated not with the degree of illumination but rather by their feelings of importance.
• Work hours, wage, incentives did not have independent effect on employee efficiency.
• Change in attitude of employee had significant effects on productivity than working condition.
• Team feeling led to increase in productivity. 

The interviewing Program

• Social groups were formed informally at workplace.
• The groups have strong control over the behavior of their individual members.

Bank wiring Observation Room

• Another experiment established a piece work incentive pay plan for a group. (scientific management)
• They observe the influence of the informal groups on employees’ performance.
• Over a period of time the informal groups develop their codes of behavior, hierarchy of members, and acceptable standard of output. As they approached this acceptable level of output workers slacked off to avoid overproducing.
• All members were following group standards and norms. Social system was found to be emerging in workplace.

Behavioral science approach

Abraham Maslow:

• Develop a theory of motivation that was based on three assumptions about human nature.
• Assumption:
• Human beings have needs that are never completely satisfied. 
• Human behavior is aimed at satisfying the needs that are yet unsatisfied at a given point of time. 
• Needs fit into a somewhat predictable hierarchy ranging from basic, lower level needs to higher level needs: 
• Physiological ,Safety ,Belongingness or social ,Esteem ,Self- actualization 

The Maslow's Pyramid of Human Needs is explained below:-

1. Physiological Needs: Physiological needs are the basic needs for sustaining human life. These needs include food, shelter, clothing, rest, air, water, sleep and sexual satisfaction. These basic human needs (also called biological needs) lie at the lowest level in the hierarchy of needs as they have priority over all other needs. These needs cannot be postponed for long. Unless and until these basic physiological needs are satisfied to the required extent, other needs do not motivate an employee. A hungry person, for example, is just not in a position to think of anything else except his hunger or food. According to Maslow, 'man lives by bread alone,' when there is no bread. The management attempts to meet such physiological needs through fair wages.
2. Security / Safety Needs: These are the needs connected with the psychological fear of loss of job, property, natural calamities or hazards, etc. An employee wants protection from such types of fear. He prefers adequate safety or security in this regard i.e. protection from physical danger, security of job, pension for old age, insurance cover for life, etc. The safety needs come after meeting the physiological needs. Such physiological needs lose their motivational potential when they are satisfied. As a result, safety needs replace them. They begin to manifest themselves and dominate human behavior. Safety needs act as motivational forces only if they are unsatisfied.
3. Social Needs: An employee is a human being is rightly treated as a social animal. He desires to stay in group. He feels that he should belong to one or the other group and the member of the group should accept him with love and affection. Every person desires to be affiliated to such groups. This is treated as basic social need of an individual. He also feels that he should be loved by the other members. He needs friends and interaction with his friends and superiors of the group such as fellow employees or superiors. Social needs occupy third position in the hierarchy of needs.
4. Esteem Needs: This category of needs include the need to be respected by others, need to be appreciated by others, need to have power and finally prestigious position. Once the previous needs are satisfied, a person feels to be held in esteem both by him and also by others. Thus, esteem needs are two fold in nature. Self esteem needs include those for self confidence, self-respect, competence, etc. The second groups of esteem needs are those related to one's status, reputation, recognition and appreciation by others. This is a type of personal ego which needs to be satisfied. The Organization can satisfy this need (ego) by giving recognition to the good work of employees. Esteem needs do not assume the motivational properties unless the previous needs are satisfied.
5. Self-actualization Needs: This is the highest among the needs in the hierarchy of needs advocated by Maslow. Self actualization is the desire to become what one is capable of becoming. It is a 'growth' need. A worker must work efficiently if he is to be ultimately happy. Here, a person feels that he should accomplish something in his fife. He want to utilize his potentials to the maximum extent and desires to become what one is capable of becoming. A person desires to have challenges and achieves something special in his life or in the area of his specialization. Though everyone is capable of self-actualization, many do not reach this stage. This need is rarely fully satisfied.

Criticism of Maslow’s theory:

• Five levels of need are not always present.
• There is no order of five needs which we satisfy one by one as Maslow said.
• What is a deficiency for one is not necessarily a deficiency for another. 

Dauglas McGregor: 

Developed the Theory X and Theory Y dichotomy about the assumptions managers make about workers attitudes and how these assumptions affect behavior.

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 unambitious, and wants security above all else

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.

Frederick Herzberg: 

It (also known as Herzberg's motivation-hygiene theory and Dual-Factor Theory) states that there are certain factors in the workplace that cause job satisfaction, while a separate set of factors cause dissatisfaction. He discovered two kinds of factors:

• The hygiene factor: 
• e.g. status, job security, salary, fringe benefits, work conditions) that do not give positive satisfaction, though dissatisfaction results from their absence. These are extrinsic to the work itself, and include aspects such as company policies, supervisory practices, or wages/salary)
• The motivator factor: 
• e.g., challenging work, recognition, responsibility) that give positive satisfaction, arising from intrinsic conditions of the job itself, such as recognition, achievement, or personal growth.

Unit 1(P10): Management theories: The classical perspectives on Management

School of management: 

• It is based on different assumption on human beings and the organization.

• The schools of management thoughts are divided into six categories. Scientific, administrative, behavioral, management (Quantitative), systems Contingency

The classical perspective:

• Focused on increasing efficiency of the production process or productivity though one best way. (job and task focused)

• Divided into two parts:

1. Administrative management focused on the problems of top management faced in managing the entire organization, and 
2. Scientific Management focused on the main factory work place or shop floor management and efficiency of production.

Scientific Management:

• Scientific management concentrated on the problems of shop-floor management and efficiency of production.

• Concerned with improving the performance of individual workers
• Propounded by F.W Taylor
• Addition made by Gilberths and Henry Gantt.
• Productivity and efficiency are the foundation of scientific management theory.
• States’ productivity can be improved endlessly, inefficiency should not be allowed.

F.W.Taylor:

• Midvale Steel company Philadelphia(1878), observed “soldering”
• Design the most efficient way of doing each work ( by timing each element of the job).
• Simonds Rolling Machine Company (redesigned job, introduced rest periods, put piece work pay system).
• Piece work pay system (more pay to employee who met and exceeded the target level).
• Bethlehem steel. (efficient way of loading and unloading rail cars)
• The main principles of Taylors scientific management are
• Standardization
• Time and task study
• Systematic selection and training.
• Pay incentives
• Management and labor harmony.
• Steps in scientific Management to improve the efficiency of the workers.
• Develop a science for each element of the job to replace old rule of thumb methods (Standardization
• Scientifically select employees and then train them to do the job as described.
• Supervise employees to make sure they follow the prescribed methods for performing their jobs.
• Continue to plan the work, but use workers to actually get the work done.
• Labor argued that scientific management was just a device to get more work from each employee and to reduce the total number of workers needed by the firm.

Frank and Lillian Gilbreth : (Husband and wife team of industrial engineering)

• Analyzed and studied craft of bricklaying. (focused on doing the job more efficiently)
• Focus “ Economy of movements”
• Use of technique and methods to help workers in developing to their full potential through training, tools, environment, and standardized work method.
• Contribution:
• Work simplification through motion studies.
• Used ‘flow chart’ to record process and work flow.
• Study of worker fatigue affecting health and productivity.

Henry Gantt; (1861-1919)

• Associate  of Taylor.
• Redefined production control and cost control technique. 
• Develop other technique for improving worker output with Gantt chart.
• Gantt chart is essentially a means of scheduling work and can be generated for each worker or for a complex project as a whole.
• Redefine Taylors ideas about piece work pay system.
• A Gantt chart is a type of bar chart, developed by Henry Gantt, which illustrates a project schedule. Gantt charts illustrate the start and finish dates of the terminal elements and summary elements of a project.

 There are four types of dependencies:

• Start-to-Start, where a task cannot start until the linked task has started
• Start-to-Finish, where a task cannot start until the linked task has finished. This is the most common type of dependency
• Finish-to-Start, where a task cannot finish until the linked task has started.
• Finish-to-Finish, where a task cannot finish until the linked task has finished

Harrington Emersion (1853-1931)

• Twelve Principles of Efficiency.
• He discussed efficiency design of organization through 12 principles:

1. Clearly defined ideals.
2. Common sense
3. Competent counsel
4. Discipline
5. The fair deal
6. Reliable, immediate and adequate records
7. Despatching
8. Standards and schedules
9. Standardized conditions
10. Standardized operations
11. Written standard-practice instructions
12. Efficiency-reward 

• Advocated job specialization in both managerial and operating jobs.

Limitation of Scientific Management:

• Concerned with shop level only
• Assumption that organization remains stable and simple
• Failed to take into account the psychological and sociological context of work
• Did not favor groups.
• Workers were view as economic being.

Administrative management and bureaucracy:

Focus on managing the total organization. 

Heneri Fayol (French Industralist):( 1841-1925)

• He attempt to systematize the practice of management to provide guidance and direction to other manager.
• He was the first to Focus on management as function as: planning, organizing, leading, and controlling. And believed as the core management process.
• Develop 14 principles of management.
• Management Principles developed by Henri Fayol: 

DIVISION OF WORK, AUTHORITY, DISCIPLINE, UNITY OF COMMAND, UNITY OF DIRECTION, SUBORDINATION OF INDIVIDUAL INTERESTS TO THE GENERAL INTERESTS, REMUNERATION, CENTRALIZATION, SCALAR CHAIN, ORDER, EQUITY, STABILITY OF TENURE OF PERSONNEL, INITIATIVE, ESPIRIT DE CORPS

Max Weber: (German sociologist)*(1864-1920)

• Develop ‘principles of bureaucracy” or a theory of Authority Structure and Relations formal systems of organization and administration design to increase efficiency and effectiveness.
• The system is characterized by division of labor, clearly defined hierarchy, rules and regulations and impersonal relationship.
• Its features were:
• Job specialization: Division of labor
• Authority hierarchy: clearly defined hierarchy and chain of command must be established.
• Formal Selection and promotions: An employee should be chosen, placed, and promoted within an organization based on his/ her level of experience and competency to perform the job.
• Formal rules and regulations: set of standards operating procedures that facilitate consistency in both organization and management practices.
• Impersonality: must be there to promote fair and equal treatment to all employees, so that unbiased decision can be made.
• Career oriented: employee anticipates life long career. It states that employee should be made aware of their career growth and security of tenure protecting form arbitrary dismissal.

Chester Bernard: (1886-1961)

• Argues that people join organization to satisfy their personnel objective
• Looked into social aspect of organization.
• He suggested theory on acceptance of authority.
• The theory suggests that subordinates weigh the legitimacy of supervisors' directives, and then decide whether to accept them. An order is accepted if the subordinate understands it, is able of comply with it and views it as appropriate.
• He outlined the role of the senior executive in three major parts:
• Formulating the purpose and objectives of the organization
• Hiring, motivating and retaining key individuals
• Maintaining organizational communication.

Unit 1(P9):Management Theories: Introduction

Objective of the chapter:
• As present and future information are important for decision making, information from the past also plays an important role in planning and decision making.
• Today managers have recognized that the lessons of the past are important ingredients of future success.

Theories ?
• It is a conceptual framework for organizing knowledge and providing a blueprint for action.
• A coherent group of tested general propositions, commonly regarded as correct, that can be used as principles of explanation and prediction for a class of phenomena.
• Theories are described in such a way that any scientist in the field is in a position to understand and either provide empirical support ("verify") or empirically contradict ("falsify")

History?
• It provides managers a sense of heritage (something inherited form past) and can help managers avoid the mistakes of others.
• "History is a record of human progress, a record of the struggle of the advancement of the human mind, of the human spirit, toward some known or unknown objectives". Jawaharlal Nehru.

Historical context of management?
• Thoughts has been shaped over a periods by three major sets of environmental forces. They are social, economical and political.
• Social forces are norms and values that characterize a culture.
• Economic forces are associated with economic systems and general economic conditions and trends.
• Political forces are governing institutions and general governmental policies and attitude toward business.

Precursors  (one that precedes and indicates the approach of another) to management theory?
• Management in Antiquity
o Sumerians: used written rules and regulations for governance.
o Egyptians: pyramids
o Alexander : war
o Babylonians: extensive set of laws and policies for governance.
o Romans: used organization structure for communication and control.
o Greeks: used different governing systems for cities and states.
o Chinese: Great Wall of China
o Socrates: management practice and concepts 400 B.C.
o Plato: job specialization  350 B.C
o Alfarabi: Leadership Traits A.D. 900

Early management pioneers:
o Robert Owen: Focused to human aspect, employee welfare, and minimum working age for children, meals for employees, and reduced work hours. ( 1771-1858)
o Charles Babbage: focused on profit sharing plan, division of labor, efficiencies of production.. ( 1792-1871)

Unit 1(P8): Introduction to Management: Emerging Issues and Challenges for Mgmt

Emerging issues and  challenges for management? 

Challenge for management comes from the environment factors, which are dynamic in nature. They are:

1) Changing Organizational Perspective

          Traditional Organization                                              New Organization                       

• Stable (closed system)                                                  Dynamic( Open system)

• Inflexible(rigid Structure and process)                            Flexible

• Individual Oriented                                                       Team Oriented (Employee +Manager)

• Permanent jobs                                                            Temporary jobs

• Command Oriented                                                      Involvement Oriented

• Rule Oriented                                                               Customer Oriented

• Homogeneous workforce                                              Diverse workforce

• Hierarchical relationships                                               Lateral and network relationships

• Working in Office                                                         Working any time any where 

• Job focused                                                              Skill focused

• Autocratic decision making                                          Participative decision making.

2) Corporate Governance: Importance grew with the deregulation of markets and the liberalization in international trade and investment. In focus to implement values of fairness, accountability, responsibility, and transparency into organization, adopting best practices and being accountable to all stake holders. (Ethics and social Responsibility

3) Work force diversity: Work force diversity requires more sensitive to the difference that each individual or group bring to the work setting. Employer must deal with different values, needs, interest, and expectations of employees and must avoid any practices or action that can be interpreted as being sexist, racist, of offensive to any particular group and of course must not legally discriminate against any employee.

4) Empowerment: Employee empowerment is a strategy and philosophy that enables employees to make decisions about their jobs. Employee empowerment helps employees own their work and take responsibility for their results.

5) Technology and information:Technological environment include the methods, techniques and approaches adopted for production of goods and services and its distribution. Technology can reduce costs, improve quality and lead to innovation. (large, fast information and manager has to process it in much lesser time.)

6) Relationship Management: It focus on working together to achieve common goal. In order to achieve this, every individual need to address and respect the unique competencies of other or all stakeholders. 

7) Workplace spirituality: Spirituality in the Workplace is about individuals and organizations seeing work as a spiritual path, as an opportunity to grow and to contribute to society in a meaningful way. It is about care, compassion and support of others; about integrity and people being true to themselves and others. It means individuals and organizations attempting to live their values more fully in the work they do.

8) Knowledge management: KM is the process through which organizations generate value from their intellectual and knowledge-based assets. Most often, generating value from such assets involves codifying what employees, partners and customers know, and sharing that information among employees, departments and even with other companies in an effort to devise best practices.

9) Globalization: Operating business in a borderless and global economy and how to compete for resource and markets, understand cultures, etc.

10) Change Management (giving priority to Innovation and Change):“Change is an alteration occurring the work environment that affect the ways in which employees must act. (Newstrom and Davis). OC is modification in relationship and behavior patterns of individuals and groups in organization, and organizational level for adaptation to dynamic environment.

11) Quality Assurance and productivity: Increasing the quality of product and productivity which are the basis for competition act as the major challenge the manger faces today.

12) Ethical and social responsibility: Ethics is an individual personal belief about a behavior, action or decision is right or wrong. Social responsibility of business refers to all such duties and obligations of business directed towards the welfare of society.