MANAGEMENT

Author: Richard L. Daft

Instructor: Luong Thu Ha
PART 1

INTRODUCTION TO MANAGEMENT
Learning Outcomes
• Describe the four management functions and associated
activities.
• Describe management skills and their relevance for
managers.
• Describe management types.
• Define ten roles that managers perform in organizations.
• Understand the management thinkings.
• Address in today’s turbulent worldmanagement
challenges
• Managing Small Business Start-Up
THE INNOVATIVE MANAGEMENT
Are Your Ready to Be a Manager?

• Today’s environment is diverse, dynamic and ever-

changing
• Organizations need managers who can build
networks and pull people together
• Managers must motivate and coordinate others
• Managers are dependent upon subordinates
– They are evaluated on the work of others
Defining Management

• Managers are the executive function of the organization

• Building and coordinating and entire system
• Create systems and conditions that enable others to
perform those tasks
• Create the right systems and environment, managers
ensure that the department or organization will survive
and thrive
• Recognize the key role of people
Defining Management

• The art of getting things done through people” –

Mary Parker Follett
• “Give direction to their organization, provide
leadership, and decide how to use organizational
resources to accomplish goals” -Peter Drucker
• Management is the attainment of organizational
goals in an effective and efficient manner through
planning, organizing, leading, and controlling
organizational resources.
The Four Management Functions

• Planning. Identifying goals and resources or future

organizational performance.
• Organizing. Assigning tasks, delegating authority and
allocating resources.
• Leading. The use of influence to motivate employees
to achieve goals.
• Controlling. Monitoring activities and taking
corrective action when needed.
The Process of Management
Management Skills

• Conceptual Skills – cognitive

ability to see the organization as
a whole system
• Human Skills – the ability to
work with and through other
people Skills in
Management

• Technical Skills – the

understanding and proficiency in
the performance of specific tasks
Relationship of Skills to Management
FIRST-LINE Managers MIDDLE Managers TOP Managers

Conceptual Skills

Human Skills

Technical Skills
When Skills Fail

• Management skills are tested most during turbulent

times
– Many managers fail to comprehend and adapt to the
rapid pace of change in the world
• Common failures include:
✓ Poor Communication
✓ Failure to Listen
✓ Poor Interpersonal Skills
✓ Treating employees as instruments
✓ Failure to clarify direction and performance expectations
Management Types

• Vertical Differences
– Top Managers
– Middle Managers
– First-Line Managers
• Horizontal Differences
– Functional departments like advertising,
manufacturing, sales
– Include both line and staff functions
Management Levels in the Organizational
Hierarchy
What is it Like to Be a Manager?

• The manager’s job is diverse

• Managerial tasks can be characterized into
characteristics and roles
• Most managers enjoy activities such as leading
others, networking and leading innovation
• Managers dislike controlling subordinates, handling
paperwork and managing time pressure
Individual Performer to Manager
Manager Roles
Managing Small Businesses and Nonprofit
Organizations
• Small businesses are growing in importance
• Many small businesses are threatened by inadequate
management skills
• Small business managers wear a variety of hats
• The functions of management apply to nonprofit
organization
• Nonprofit organizations focus on social impact but
they struggle with effectiveness
Management and the New Workplace
The Transition to a New Workplace

Today’s best managers give up their command-and-

control mind-set to focus on coaching and providing
guidance, creating organizations that are fast, flexible,
innovative, and relationship-oriented.
 THE EVOLUTION OF
MANAGEMENT THINKING
Forces Influenced on Organization and Practice
of Management
• Social forces: aspect of culture (need, value, standard
or behavior…) – unwritten, common rules and
perception
• Political forces: the influence of political and legal
institutions on people and organizations (role of
government in business, desirability of self-
government, property rights, contract rights…)
• Economic forces: availability, production,and
distribution of resources in a society
Management Perspectives over Time
Classical Perspective

• Emerged during the 19th and early 20th centuries

• New problems:
– Tooling the plants
– Organizing managerial structure,
– Training employees
– Complex manufacturing operations
– Increased labor dissatisfaction
• The development of large, complex organizations
• Three subfields: scientific management, bureaucratic
organizations, and administrative principles
Classical Perspective
- Scientific management
• Frederick Winslow Taylor (1856–1915)
• F.W Taylor: proposed that workers “could be retooled like
machines, their physical and mental gears recalibrated
for better productivity.”
• Henry Gantt: Gantt chart—a bar graph that measures
planned and completed work along each stage of
production by time elapsed.
• Frank B. Gilbreth: reducing the time patients spent on
the operating table
• Lillian M. Gilbreth: was more interested in the human
aspect of work
Characteristics of Scientific Management
Classical Perspective
- Administrative Principles
• Henri Fayol (1841–1925)
• Focused on the total organization
• Discussed 14 general principles of management,
could be applied in any organizational setting
• Five basic functions or elements of management:
planning, organizing, commanding, coordinating, and
controlling
Humanistic Perspective

• Emphasized the importance of understanding human

behaviors, needs, and attitudes in the workplace as
well as social interactions and group processes
• Mary Parker Follett: contrast to scientific
management, stressed the importance of people
rather than engineering techniques.
• Chester Barnard:
– Informal organization
– Acceptance theory of authority
Humanistic Perspective
• Human Relations Movement: the factor that best
explained increased output was human relations
• Human Resources Perspective:
– Combines prescriptions for design of job tasks with
theories of motivation
– Abraham Maslow: Hierarchy of needs (physiological needs
and progressed to safety, belongingness, esteem, and, self-
actualization needs)
– Douglas McGregor: formulated his Theory X (classical
perspective) and Theory Y (organizations can take
advantage of the imagination and intellect of all their
employees).
MASLOW’S HIERARCHY OF
NEEDS
Humanistic Perspective

• Behavioral Sciences Approach:

– Draws from psychology, sociology, and other social
sciences to develop theories about human behavior and
interaction in an organizational setting.
– Influenced the majority of tools, techniques, and
approaches that managers have applied to organizations
since the 1970s.
– Many current management ideas and practices can be
traced to the behavioral sciences approach.
Quantitative Perspective

• Suggested the application of mathematics, statistics,

and other quantitative techniques to management
decision making and problem solving.
• Enhanced with the development of the computer
• Three subsets:
– Operations research
– Operations management
– Information technology
Recent Historical Trends

• Systems Thinking: ability to see both the distinct

elements of a system or situation and the complex
and changing interaction among those elements
– A system is a set of interrelated parts that function as a
whole to achieve a common purpose.
– Subsystems: are parts of a system, such as an organization,
that depend on one another.
– Changes in one part of the system (the organization) affect
other parts.
Systems Thinking and Circles of Causality
Recent Historical Trends

• Contingency View: What works in one setting might

not work in another, one thing depends on others
• Managers can identify important contingencies that
help guide their decisions regarding the organization.
Recent Historical Trends
• Total Quality Management: The quality movement is
associated with Japanese companies,
• W. Edwards Deming is known as the “father of the quality
movement.”
• Total quality managementfocuses on managing the total
organization to deliver quality to customers.
• Four significant elements of quality management:
– Employee involvement
– Focus on the customer
– Benchmarking
– Continuous improvement (often referred to as kaizen)
Innovative Management Thinking for a
Changing World
• Contemporary Management Tools
Innovative Management Thinking for a
Changing World
• Managing the Technology-Driven Workplace
• Three popular recent trends:
– Customer relationship management: to keep in close touch
with, collect and manage customer data and provide
superior customer value.
– Outsourcing: contracting out selected functions or
activities to other organizations that can do the work more
efficiently.
– Supply chain management: managing the sequence of
suppliers and purchasers.
 MANAGING
SMALL BUSINESS START-UP
What Is Entrepreneurship?

• Entrepreneurship is the process of initiating a business,

organizing the necessary resources, and assuming the
associated risks and rewards.
• An entrepreneur recognizes a viable idea for a business
product or service combines the necessary resources to carry
it out by finding and assembling the necessary resources.
• Small business owners classification:
What Is Entrepreneurship?

• Small business: “one that is independently owned

and operated, is organized for profit, and is not
dominant in its field of operation.” – The US SBA.
• Impact of Entrepreneurial Companies:
– Job Creation
– Innovation
– Others ?????
Social Entrepreneurship

• A social entrepreneur:
– An entrepreneurial leader who is committed to both good
business and changing the world for the better.
– Creating new business models that meet critical human
needs and resolve important problems unsolved by
current economic and social institutions.

• Social entrepreneurship combines the creativity,

business smarts, passion, and work of the traditional
entrepreneur with a social mission.
Entrepreneurs
• The heroes of American business—Henry Ford, Sam
Walton, Bill Gates, Oprah Winfrey, Mark Zuckerberg
— are almost always entrepreneurs.
• Entrepreneurs:
– Have certain backgrounds and demographic characteristics
– Likely to be the first-born
– Their parents are more likely to have been entrepreneurs
– Immigrants are more likely than are native-born Americans
– Disadvatage of women-owned businesses: try to do
everything themselves, stark imbalance of the sexes in
high-tech fields…
The personality characteristics of Entrepreneurs
- Differ from successful Managers
Launching an Entrepreneurial Start-Up

• Starting with an idea

• Writing the business plan
• Choosing a legal structure
• Arranging financing
• Tactics for Becoming a Business Owner
• Starting an Online Business
Starting with an idea

• 37 percent of business: idea from an in-depth

understanding of the industry, primarily because of
past job experience.
• 36 percent: niche market that wasn’t being filled.
Writing the business plan

• Introductory page

• Executive Summary • Marketing Plan

• Industry Analysis • Organizational Plan
• Description of Venture • Assessment of Risk
• Production Plan • Financial Plan
• Operation Plan • Appendix
Choosing a legal structure
• A sole proprietorshipis defined as an unincorporated
business owned by an individual for profit.
– Easy to start, few legal requirements, total ownership and
control of the company, unlimited liability for the business,
harder to obtain finance…
• A partnership is an unincorporated business owned by
two or more people.
– Relatively easy to start, unlimited liability of the partners, often
dissolve within five years
• A corporation is an artificial entity created by the state
and existing apart from its owners.
– Legal independence, continuity, owners’ liability, expensive and
complex to do the paperwork,
Arranging financing

• Debt Financing: borrowing money

– Common source: family and friends, bank loan
– Finance company, wealthy individuals, or potential
customers …
• Equity Financing: invested in exchange for ownership
– Owners
– People who purchase stock
– Venture capitals
– …
Tactics for Start-up

• Start a New Business

• Buy an Existing Firm

• Buy a Franchise

• Participate in a Business Incubator

Starting an Online Business

• Find a niche market

• Create a professional Website

• Choose a domain name

• Build online relationships

Managing a Growing Business
MANAGEMENT
Author: Richard L. Daft
Instructor: Luong Thu Ha
PART 2

PLANNING
Learning Outcomes
• Mission and it’s influences goal setting and planning
• Describe the types and characteristics of goals an
organization
• Describe the four essential steps in the MBO process.
• Planning in a fast-changing environment
• Define the components of strategic management and
discuss the levels of strategy.
• Describe the strategic management process and SWOT
analysis.
• Discuss new trends in strategy, including strategic
flexibility and strategic partnerships.
MANAGERIAL PLANNING AND
GOAL SETTING
Overview of the Goal-Setting and Planning
Process

• A goal is a desired future state that the organization

attempts to realize.

• A plan is a blueprint for goal achievement and

specifies the necessary resource allocations,
schedules, tasks, and other actions.
Levels of Goals and Plans – Goal Hierarchy
The Organizational Planning Process
Goal setting in an organization

• Organizational mission:
– The organization’s reason for existence
– Describes the organization’s values, aspirations,
and reason for being
– Basis for development
– A broadly stated definition of purpose that
distinguishes the organization from others of a
similar type
Goals and Plans
GOALS PLANS
Strategic Describing where the Define the action steps by
organization wants to be in which the company intends
the future. to attain strategic goals.
Tactical Results that major divisions Are designed to help execute
and departments within the the major strategic plans and
organization intend to to accomplish a specific part
achieve. of the company’s strategy.
Operational The results expected from Are developed at the lower
departments, work groups, levels of the organization to
and individuals. specify action steps toward
achieving operational goals
and to support tactical plans.
Aligning Goals with Strategy Maps
Balanced-Score Cards
Operational Planning

• Management by Objectives:
– Peter Drucker, “The Practice of Management”, 1954.
– A system whereby managers and employees define
goals for every department, project, and person and
use them to monitor subsequent performance.
– Four major activities.
– Types of operational planning include management by
objectives, single use plans, and standing plans.
Model of the MBO Process
Single-Use and Standing Plans
Planning for a Turbulent Environment

• Contingency Planning: define company responses to be

taken in the case of emergencies, setbacks, or
unexpected conditions.
• Building Scenarios: involves looking at current trends
and discontinuities and visualizing future possibilities.
• Crisis Planning: the use of contingency and scenario
planning surged after the September 11, 2001
– Crisis Prevention
– Crisis Preparation
STRATEGY FORMULATION AND
EXECUTION
What is Strategy? Strategic Management?

• Strategy: is the plan of action that describes

resource allocation and activities for dealing with the
environment, achieving a competitive advantage,
and attaining goals.

• Strategy comes from the Greek Strategos

• Strategos = Stratos (the army) + ago (to lead)
• Business strategy: since 1960s

17
Strategy

• “Without a strategy the organization is like a ship

without a rudder, going around in circles.”

- Joel Ross and Michael Kami -

18
Strategic management

• “Strategic management can be defined as the art

and science of formulating, implementing and
evaluating cross-funtional decisions that enable an
organization to achieve its objectives.”

– Fred R. David –

19
Key terms in strategic management

• Strategists
Various job titles, most responsible for success / failure of an organization

• Vision and mission statement

Vission: Where are we going? / What do we want to become?
Mission: Distinguish one business from other similar firms
Who we are? / What we do?
• Opportunities and threats
Results of external environment scanning, to take advantage / to avoid

• Strengths and weaknesses

Results of internal environment scanning, compared to competitors
20
Key terms in strategic management
• Competitive advantage
Anything that a firm does especially well compared to rival firms
• Long-term objectives
More than 1 year, SMART objectives
• Annual objectives
Steps to reach long-term objectives, basis for allocating resources
• Strategies
Means to achieve long-term objectives
• Policies
Means to achieve annual objectives

21
Three Levels of Strategy in Organizations

• Some Corporate: Operational-Level Strategy

The Strategic Management Process

23
SWOT Analysis
Five Forces Model – Michael Porter
Threat of New Entrants (and Entry Barriers)
• Absolute cost advantages
• Proprietary learning curve
• Access to inputs
• Government policy
• Economies of scale Industry value chain –
• Capital requirements from raw materials
• Brand identity and other inputs, to
• Switching costs
• Access to distribution channel, to end
• Expected retaliation consumer
• Proprietary products

Buyer Power (Channel and End Consumer)

Supplier Power
• Supplier concentration Degree of Rivalry
• Importance of volume to supplier • Exit barriers • Buyer concentration
• Differentiation of inputs • Industry concentration • Importance of volume to customers
• Impact of inputs on cost or differentiation • Fixed costs/value added • Differentiation of inputs
• Switching costs of firms in the industry • Industry growth • Impact of outputs on cost of differentiation
• Presence of substitute inputs • Intermittent overcapacity • Switching costs of customers
• Threat of forward integration • Product differences
• Switching costs
• Presence of substitute products
• Cost relative to total purchases in industry • Threat of backward integration
• Brand identity
• Diversity of rivals • Costs relative to total purchases in industry

Threat of Substitutes
• Switching costs Source: Adapted from M.E. Porter, Competitive Strategy:
• Buyer inclination to substitute Techniques for Analyzing Industries and Competitors ,
• Price-performance tradeoff of substitutes (New York: Free Press, 1980)
• Varity of substitutes
• Necessity of product or service
Internal Analysis Checklist
 CORPORATE STRATEGY

Growth Strategy Defense Strategy

Intensive Intergration
Integration Retrenchment
Strategy
Strategy Strategy
Strategy
Divestiture
Diversification
Diversification Cooperative
Strategy
Strategy Strategy Liquitdation
Liquidation

Market Penetration Forward Intergration

Market Development Backward Intergration

Product Development Horizontal Intergration

Constrained Related
Joint Venture
Diversification
Linked Related Equity
Diversification Strategic Alliance
Unrelated Nonequity Fred R. David
Diversification Strategic Alliance Hitt-Hoskission-Ireland
Porter’s Competitive Strategies
3.5. Functional level strategy

• Operational strategy • Finacial strategy

• Marketing strategy • R&D

strategy
• Human resource strategy
• MIS
• … strategy

• … 29
MANAGEMENT
Author: Richard L. Daft
Instructor: Luong Thu Ha
PART 3

ORGANIZING
DESIGNING ADAPTIVE
ORGANIZATIONS
Learning Outcomes

• Discuss the fundamental characteristics of organizing

• Describe approaches to structure.
• Explain why organizations need coordination across
departments and hierarchical levels, and describe
mechanisms for achieving coordination.
• Identify how structure can be used to achieve an
organization’s strategic goals.
DESIGNING ORGANIZATIONS
• Organizing is the deployment of organizational
resources to achieve strategic goals.
• The deployment of resources is reflected in the:
– Organization’s division of labor into specific departments
and jobs,
– Formal lines of authority,
– Mechanisms for coordinating diverse organization tasks.
• Organizing: Follows from strategy? Follows by strategy?
ORGANIZING VERTICAL STRUCTURE

• Organization structure: Defines how tasks are divided

and resources deployed.
• Organization structure is defined as:
– (1) the set of formal tasks assigned to individuals
and departments;
– (2) formal reporting relationships, including lines
of authority, decision responsibility, number of
hierarchical levels, and span of managers’ control;
– (3) the design of systems to ensure effective
coordination of employees across departments.
Organization Chart for a Water Bottling Plant
Chain of command

• is an unbroken line of authority that links all

employees in an organization and shows who reports
to whom:
– Unity of command
– Scalar principle
Authority structure
• Authority is the formal and legitimate right of a
manager to make decisions, issue orders, and allocate
resources to achieve organizationally desired outcomes
• Responsibility is the duty to perform the task or activity
as assigned
• Accountability means that the people with authority
and responsibility are subject to reporting and justifying
task outcomes to those above them in the chain of
command
• Delegation is the process managers use to transfer
authority and responsibility to positions below them in
the hierarchy.
Span of Control / Management

• Span of Management / Span of Control

• Is the number of employees reporting to a supervisor
• View of Span of Maanagement:
– Traditional: About 7 to 10 subordinates per
manager
– Nowadays: 30, 40, and even higher
– Trend: less supervisor involvement and thus larger
spans of control
Contrasting Spans of Control

E X H I B I T 16-3
© 2015 Prentice-Hall Inc. All
16-11
rights reserved.
Tall Structure and Flat Structure
Centralization and Decentralization

• Centralization: Decision authority is located near the

top of the organization.

• Decentralization: Decision authority is pushed

downward to lower organization levels.

• Centralization / Decentralization: Characteristics of

an certain industry?
Centralization Versus Decentralization

• Greater change and uncertainty in the environment

are usually associated with decentralization.

• The amount of centralization or decentralization

should fit the firm’s strategy.

• In times of crisis or risk of company failure, authority

may be centralized at the top.
DEPARTMENTALIZATION

• The basis for grouping positions into departments and

departments into the total organization.
• Five approaches to structural design reflect different uses
of the chain of command in departmentalization
• Five approaches:
– Vertical Functional Approach
– Divisional Approach
– Matrix Approach
– Team Approach
– Virtual Networks Approach
Vertical Functional Approach
Divisional Approach
(Product-Based)
Divisional Approach
(Geographic-Based / Customer-Based)
Matrix Approach
Team Approach
Virtual Network Approach
Structural Advantages and Disadvantages
ORGANIZING FOR HORIZONTAL COORDINATION

• Limits of traditional vertical organization structures in

a fast-shifting environment
• The trend: breaking down barriers between
departments
• Mechanisms for horizontal integration and
coordination:
– Task forces: solve short-term problem
– Teams
– Project managers: increase coordination among
functional departments
Project management
FACTORS SHAPING STRUCTURE
Relationship of Structural Approach to Strategy
and the Environment
Relationship between Manufacturing
Technology and Organization Structure
MANAGING HUMAN RESOURCES
Learning Outcomes

• Explain the strategic role of human resource

management.
• Show how organizations determine their future
staffing needs through human resource planning.
• Describe the tools managers use to recruit and select
employees.
• Describe how organizations develop an effective
workforce through training and performance
appraisal; through the administration of wages and
salaries, benefits.
HUMAN RESOURCE MANAGEMENT

• Human resource management (HRM) refers to the design and

application of formal systems to ensure the effective and
efficient use of human talent to accomplish organizational goals.
• HRM includes activities undertaken to:
– Attract
– Select
– Develop
– Maintain an effective workforce
• Human capital refers to the economic value of the combined
knowledge, experience, skills, and capabilities of employees.
The Role and Value of Human Capital Investments
Human Resource Planning

• What new technologies are emerging, and how will

these affect the work system?

• What is the volume of the business likely to be in the

next five to ten years?

• What is the turnover rate, and how much, if any, is

avoidable?
Recruiting
• Recruiting: Activities or practices that define the
characteristics of applicants to whom selection procedures
are ultimately applied.
• Assessing Jobs:
– Job analysisis the systematic process of gathering and
interpreting information about the essential duties, tasks,
and responsibilities of a job.
– Job description is prepared for each open position, which
is a concise summary of the specific tasks and
responsibilities of that job.
– Job specification outlines the knowledge, skills, education,
physical abilities, and other characteristics needed to
adequately perform a specific job.
Sara Lee’s Required Skills for Finance Executives
Selecting
• Assess applicants’ characteristics in an attempt to determine the
“fit” between the job and applicant characteristics.

• Selection devices:
– Application form: collect information about the applicant’s
education, previous job experience, and other background
characteristics.
– Interview: to get a more reliable picture of a candidate’s
suitability for the job.
– Employment tests: may include cognitive ability tests, physical
ability tests, personality inventories, and other assessments
– Assessment centers: present a series of managerial situations to
groups of applicants over a two- or three-day period
MANAGING TALENT

• Training and development programs represent a

planned effort by an organization to facilitate
employees’ learning of job-related skills and
behaviors (present / future).

• Type of tranning:
– On-the-Job Training / Mentoring and Coaching
– Corporate Universities
– Promotion from within
Performance Appraisal

• Performance Appraisal: Comprises the steps of observing and

assessing employee performance, recording the assessment,
and providing feedback to the employee.
MAINTAINING AN EFFECTIVE WORKFORCE
• Compensation refers to: (1) all monetary payments and
(2) all goods or commodities used in lieu of money to
reward employees.
– Wage and Salary Systems
– Compensation Equity
– Pay-for-Performance
• Benefits: An effective compensation package requires m
ore than money
– Required by law: unemployment compensation, and
workers’ compensation
– Health insurance, vacations, and things such as on-site
daycare or educational reimbursements