FOR EVOLUTION OF MANAGEMENT- SYSTEM AND HUMAN RELATIONS APPROACH

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human-relations-and-behavioral/

 Management can be defined as a process of getting the work or the task done that is
required for achieving the goals of an organisation in an efficient and effective manner.

 The primary goal of management is to create an environment that empowers employees to

work efficiently and productively

 Role of Managers

 Strategic Direction- Managers set the vision and goals for an organization, guiding its path to
success.

 Resource Allocation- Managers allocate resources effectively, ensuring that the right people
and tools are in place for optimal performance.

 Leadership and Motivation- Managers inspire and motivate their teams, creating a positive
and productive work environment.

 Problem Solving- Managers identify and address problems, finding solutions to maintain
efficiency and achieve goals

 Who is a manager?

A manager is someone who coordinates and oversees the work of other people so that
organizational goals can be accomplished.

 Formal Authority- Managers are appointed by an organization and have the authority to
make decisions, delegate tasks, and hold employees accountable.

 Responsibilities- They are responsible for achieving organizational goals and ensuring that
their team operates effectively.

 Leadership Skills- Managers possess leadership skills, motivating, inspiring, and guiding their
teams towards shared objectives

 At the lowest level of management, first-line managers manage the work of nonmanagerial
employees who typically are involved with producing the organization’s products or servicing
the organization’s customers. First-line managers may be called supervisors or even shift
managers, district managers, department managers, or office managers.

 Middle managers manage the work of first-line managers and can be found between the
lowest and top levels of the organization. They may have titles such as regional manager,
project leader, store manager, or division manager.

 At the upper levels of the organization are the top managers, who are responsible for making
organization-wide decisions and establishing the plans and goals that affect the entire
organization. These individuals typically have titles such as executive vice president,
president, managing director, chief operating officer, or chief executive officer.
  Efficiency and Effectiveness

 Efficiency refers to doing things right; focuses on optimizing the resources and process
and aims to minimize wastage of resources and maximize output.

 Doing Things Right- It focuses on minimizing waste and maximizing output with the least
possible resources. It's about optimizing processes, streamlining workflows, and ensuring
tasks are completed accurately and quickly.

 Focus on Resources- It centers on resource utilization, such as time, manpower, and

materials. By optimizing these resources, businesses can achieve higher productivity,
lower costs, and enhanced profitability.

 Measurable Outcomes- It is often quantifiable. Metrics such as output per unit of time,
reduced defect rates, and streamlined processes are used to assess efficiency levels.

 Examples- implementing automated systems, reducing unnecessary steps in a process,

and optimizing team collaboration.

 Effectiveness refers to doing the right things; focuses on achieving organizational goals
and ensuring that actions contribute to the desired result or outcome.

 Achieving Goals- It focuses on achieving desired outcomes and reaching specific goals.
It's about identifying the right objectives, aligning actions toward those goals, and
ultimately, achieving success.

 Focus on Results- It prioritizes the achievement of strategic objectives and the desired
impact on the business. It's about aligning actions with organizational goals and
producing tangible results.

 Qualitative Assessment- Assessing it often involves qualitative measures, such as

customer satisfaction, market share, and overall business impact. These measures
provide a comprehensive view of the effectiveness of strategies and initiatives.

Examples

HEALTHCARE-

Efficiency: Minimizing The time and resources required to treat patients.

Effectiveness: Ensuring patients receive the best possible care and achieve positive health outcomes.

MANUFACTURING-

Efficiency: Streamlining production processes to reduce waste, time, and costs.

Effectiveness: Producing high quality products that meet customer needs and specifications

 Management Functions
  Planning- Setting goals, developing strategies, and creating action plans to achieve desired
outcomes.

 Organizing- Structuring tasks, assigning responsibilities, and coordinating resources to ensure

efficient operations.

 Leading- Motivating, inspiring, and guiding employees towards shared objectives, fostering
teamwork and collaboration.

 Controlling- Monitoring progress, evaluating performance, and taking corrective actions to

ensure that plans are executed effectively and efficiently.

 Mintzberg's Managerial Roles

The term managerial roles refer to specific actions or behaviours expected of and exhibited by a
manager.

Understanding the Complexities of Management In 1973, Henry Mintzberg, a renowned

management scholar, revolutionized our understanding of of management by outlining ten distinct
managerial roles.

Interpersonal Roles: Connecting with Individuals and Groups

 Figurehead- As figureheads, managers serve as symbolic representatives of their

organizations. They perform ceremonial duties, greet visitors, and represent the
organization at public events. This role emphasizes the symbolic aspect of leadership,
acting as an ambassador for the for the company's values and image. Eg-A senior partner
or head of a law firm acts as a figurehead during official ceremonies, client meetings, and
public events, representing the firm’s values and image.

 Leader- In the leader role, managers motivate and inspire their teams. They create a
vision for the future, delegate tasks, and provide guidance and support to their
employees. This role focuses on fostering teamwork, communication, and shared goals
within the organization. Eg- A managing partner leads the team by setting performance
goals, providing mentorship, and ensuring effective communication within the firm.

 Liaison- Managers act as liaisons, building and maintaining relationships with individuals
and groups outside their immediate team. This includes networking with other
departments, collaborating with external partners, and fostering strong connections
within the broader organization. Eg- Lawyers often liaise with clients, other law firms,
industry experts, and regulatory bodies to gather pertinent information and build
professional relationships.

Informational Roles: Processing and Disseminating Information

  Monitor- Managers gather and receive information from both internal and external
sources. They scan the environment, identify trends, and seek out data to stay informed
about their industry, competitors, and the broader business landscape. Eg- Lawyers
continuously monitor changes in laws, regulations, and industry trends to stay informed
and provide accurate advice to clients.

 Disseminator- Managers share information with their team, providing insights, updates,
and relevant knowledge that helps them make informed decisions and execute their
tasks effectively. This role emphasizes the importance of clear and timely
communication. Eg- A senior attorney disseminates critical updates and legal insights to
the junior attorneys and support staff to ensure everyone is aligned and informed.

 Spokesperson- Managers represent their department or organization to external

stakeholders, communicating information about the organization's performance, plans,
and objectives. This role involves public relations, investor relations, and media
interactions. Eg- A spokesperson for a law firm may communicate with the media,
clients, and the public regarding the firm’s legal positions, case outcomes, and corporate
policies.

Decisional Roles: Making Choices and Taking Action

 Entrepreneur- Managers initiate and oversee projects, identify opportunities for

improvement, and seek out new ideas and solutions. This role encourages innovation,
creativity, and strategic thinking within the organization. Eg- A partner in a law firm may
spearhead the development of a new practice area or implement innovative
technologies to improve service delivery.

 Disturbance Handler- Managers respond to unexpected problems and crises, taking

quick and decisive action to resolve issues and minimize disruption to the organization.
This role requires agility, resourcefulness, and the ability to make tough. Eg- Handling
conflicts between team members, managing a legal crisis, or addressing a client’s urgent
legal issues are part of this role.

 Resource Allocator- Managers allocate resources – including finances, personnel, time,

and equipment – to different projects and initiatives. They make informed decisions
about how to best utilize available resources to achieve organizational. Eg- Allocating
budget, assigning cases to attorneys, and managing the firm’s resources to maximize
efficiency and effectiveness fall under this role.

 Negotiator- Managers participate in negotiations with internal and external parties. They
work to achieve mutually beneficial agreements, resolve conflicts, and secure favourable
outcomes for the organization. Eg- Engaging in settlement discussions, negotiating
contracts, and representing clients in arbitration or mediation sessions exemplify this
role.
  The Importance of Mintzberg's Framework

 Understanding Managerial Complexity- Mintzberg's framework goes beyond the traditional,

simplified view of management. It provides a richer and more comprehensive understanding
of the multifaceted roles and responsibilities managers face daily.

 Effective Management Skills Development- By recognizing the various roles, managers can
better understand the skills they need to excel. This framework provides a foundation for
developing leadership, communication, problem-solving, and decision-making capabilities.

 Adaptability and Flexibility- Mintzberg's framework emphasizes the need for adaptability and
flexibility in management. Managers must be able to shift seamlessly between roles
depending on the situation and the needs of the organization.

 Strategic Decision Making- This framework highlights the importance of strategic thinking
and decision-making for managers. By understanding their diverse roles, managers can make
informed decisions that align with the organization's overall goals and objectives.

Applying Mintzberg's Roles in Practice

 Self-Assessment- Managers can use Mintzberg's framework to perform a self-assessment.

Identify your strengths and weaknesses in each role, and develop strategies for improving
your skills.

 Team Development- Teams can benefit from understanding Mintzberg's roles. Discuss how
each member contributes to the team's success and identify opportunities for collaboration
and support.

 Performance Management- Use Mintzberg's roles as a framework for performance reviews.

Evaluate individual and team performance based on the different roles and responsibilities
within the organization.

 Organizational Structure- Design organizational structures that align with Mintzberg's roles.
Ensure that the structure supports effective collaboration, information flow, and decision-
making.

 Management Skills

 Technical Skills- Expertise in specific tasks, procedures, and techniques relevant to their field.
Engaging in settlement discussions, negotiating contracts, and representing clients in
arbitration or mediation sessions exemplify this role

 Interpersonal Skills- Ability to communicate effectively, build relationships, and work

collaboratively with others. which involve the ability to work well with other people both
 individually and in a group. Because all managers deal with people, these skills are equally
important to all levels of management. Managers with good human skills get the best out of
their people. They know how to communicate, motivate, lead, and inspire enthusiasm and
trust

 Conceptual Skills- Ability to think strategically, analyze complex situations, and make sound
decision. are the skills managers use to think and to conceptualize about abstract and
complex situations. Using these skills, managers see the organization as a whole, understand
the relationships among various subunits, and visualize how the organization fits into its
broader environment. These skills are most important to top managers.

INDIAN ETHOS AND VALUES IN MODERN MANAGEMENT

Cambridge Advanced Learner’s Dictionary defines Ethos as “the set of beliefs, ideas, etc. about social
behaviour and relationship of a person or group” while Oxford Advanced Learner’s Dictionary defines
it as “the moral ideas and attitudes that belong to a particular group or society”. Formally, the body
of knowledge which derives its solutions from the rich and huge Indian system of ethics (moral
philosophy) is known as Indian Ethos in Management (IEM). The ideas in IEM given by our scriptures
are:

1. Atmano Mokshartham, Jagat hitaya cha: All work is an opportunity for doing good to the world
and thus gaining materially and spiritually in our lives

2. Archet dana manabhyam: Worship people not only with material things but also by showing
respect to their enterprising divinity within.

3. Atmana Vindyate Viryam: Strength and inspiration for excelling in work comes from the Divine,
God within, through prayer, spiritual readings and unselfish work.

4. Yogah karmashu Kaushalam, Samatvam yoga uchyate: He who works with calm and even mind
achieves the most.

5. Yadishi bhavana yasya siddhi bhavati tadrishi: As we think, so we succeed, so we become.

Attention to means ensures the end.

6. Parasparam bhavayantah shreyah param bhavapsyathah: By mutual cooperation, respect and

fellow feeling, all of us enjoy the highest good both material and spiritual.

7. Tesham sukhm tesham shanti shaswati: Infinite happiness and infinite peace come to them who
see the Divine in all beings.

8. Paraspar Devo Bhav: Regard the other person as a divine being. All of us have the same
consciousness though our packages and containers are different.

Karma Yoga (selfless work) offers double benefits, private benefit in the form of self purification and
public benefit.
Yogah Karmasu Kaushalam - Excellence at work through self-motivation and self-development with
devotion and without attachment

PLANNING
 Planning is the systematic process of envisioning a desired future, establishing goals and
objectives, and developing strategies to achieve them.
 It is a fundamental function of management that guides all other functions like organizing,
leading, and controlling.
 Planning involves decision making, which is crucial for setting a clear direction for the
organization.
 Planning sets the foundation for achieving organizational goals.
 It requires understanding the environment, setting realistic objectives, and determining the
best course of action

 Nature of Planning

Futuristic • Planning is required at all levels of management and across all functions.

Pervasive • Planning is an ongoing process, involving constant review and adjustment.

Continuous • Every plan is directed towards achieving specific organizational objectives

 Purpose of Planning

To Provide Direction • Planning provides a roadmap for action, ensuring that all efforts are aligned
with the organization’s goals.

To Reduce Uncertainty • By anticipating future events, planning helps mitigate risks and prepare for
contingencies

To Facilitate Decision-Making • Planning involves choosing the best course of action from various
alternatives, aiding informed decision-making.

To Establish Standards for Control Process of Planning• Planning sets benchmarks that serve as a
basis for monitoring and controlling organizational activities

 Process of Planning

Setting Objectives

Developing Planning Premises

Identifying Alternative Courses of Action

Evaluating Alternative Courses

Selecting Alternative
Implementing Plan

Follow up Action

 Planning: The Strategy Pyramid

Strategic Plans

Values- What we stand for ethics/beliefs

Vision- why we exist/ what we do

Mission- what we want to be

Values- what we believe in

Goals- what we must achieve to get there

Action Plans

Objectives- specific outcomes

Strategy- actions taken to achieve the objectives

Action Plan- planned actions that constitute strategy

Performance Measures- indicators of success

 Types of Goals

A single goal can’t adequately define an organization’s success. And if managers emphasize only one
goal, other goals essential for long-term success are ignored. Using a single goal such as profit may
result in unethical behaviours because managers and employees will ignore other aspects of their
jobs in order to look good on that one measure. In reality, all organizations have multiple goals.

Strategic Goals- goals that apply to the entire organisation

Financial Goals- financial performance of the organization

Stated Goals- official statements of what an organization says, and what it wants its stakeholders to
believe, its goals are. Such statements are vague and probably better represent management’s public
relations skills than being meaningful guides to what the organization is actually trying to accomplish.
It shouldn’t be surprising then to find that an organization’s stated goals are often irrelevant to what
actually goes on.

Real Goals- those goals an organization actually pursues, observe what organizational members are
doing

 Types of Plans

Breadth
Strategic plans- Strategic plans are long-term, overarching plans that outline the overall direction and
goals of an organization. These plans are usually formulated by top management and focus on broad
objectives that align with the organization’s mission and vision. Strategic plans are designed to
provide a framework for decision-making and resource allocation over an extended period, often
three to five years or more.

Tactical plans- they are shorter-term plans that break down the broader strategic goals into specific,
actionable steps. These plans are often developed by middle management and are designed to
support the achievement of strategic objectives. Tactical plans typically focus on a particular
department or function within the organization and are more detailed than strategic plans.

Operational plans- they are the most detailed and specific type of plans, focusing on the day-to-day
activities required to achieve tactical goals. These plans are typically developed by lower-level
managers or supervisors and are concerned with the routine operations of the organization.
Operational plans ensure that the organization’s daily functions align with its tactical and strategic
objectives

Contingency plans- they are prepared to address potential unexpected events or emergencies that
could disrupt normal operations. These plans provide a predefined course of action that the
organization can take to mitigate the impact of unforeseen circumstances. Contingency planning is
essential for risk management and helps ensure organizational resilience in the face of crises.

Time frame

Long term plans- plans with a time frame beyond 3 years

Short term plans- plans covering one year or less

Specificity

Specific Plans- plans that are clearly defined and leave no room for interpretation

Directional Plans- plans that are flexible and set out general guidelines

Frequency of use

Standing Plans

Single use plans

 Importance of Goals:

• Provide direction for management decisions and actions.

• Serve as criteria for measuring actual accomplishments.

• All organizational efforts should align with achieving these goals

 Traditional Goal Setting

• Goals set by top management flow down through the organization.

• These goals become subgoals for each organizational area.

• Top managers understand the "big picture" and know what's best for the organization.

• Higher-level goals are translated into specific objectives for lower levels.

• Each level's goals align with and support the goals of the level above.

 Challenges in Traditional Goal Setting

•Difficulty in Implementation: Translating broad strategic goals into actionable departmental, team,
and individual goals can be complex. The process may not always work as intended, leading to
frustration and inefficiency.

•Ambiguity in Broad Goals: Top managers often set broad, ambiguous goals (e.g., "sufficient profits,"
"market leadership"). These goals require further specification as they flow down the organization.

•Loss of Clarity: As goals are passed down, managers at each level interpret and modify them. This
can lead to a loss of clarity and consistency in the goals

 Management by Objective (MBO)

Instead of using traditional goal setting, many organizations use management by objectives (MBO), a
process of setting mutually agreed-upon goals and using those goals to evaluate employee
performance.

Management by objectives (MBO), also known as management by planning (MBP), was first
popularized by Peter Drucker in his 1954 book The Practice of Management.

• In the book, Drucker described MBO as a management philosophy, rather than a specific
technique, and defined goals as being determined by the situation, not by a formula. Drucker's
student, George Odiorne, later developed the concept further. MBO was popular in the 1960s and
1970s

• A strategic approach to enhance the performance of an organization. It is a process where the goals
of the organization are defined and conveyed by the management to the members of the
organization with the intention to achieve each objective.

• An important step in the MBO approach is the monitoring and evaluation of the performance and
progress of each employee against the established objectives. Ideally, if the employees themselves
are involved in setting goals and deciding their course of action, they are more likely to fulfill their
obligations.

 Steps in MBO

The organization’s overall objectives and strategies are formulated.

Major objectives are allocated among divisional and departmental units.

Unit managers collaboratively set specific objectives for their units with their managers.

Specific objectives are collaboratively set with all department members.

Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers
and employees.

The action plans are implemented.

Progress toward objectives is periodically reviewed, and feedback is provided.

Successful achievement of objectives is reinforced by performance-based rewards.

 Advantages of MBO
1. Management by objectives helps employees appreciate their on-the-job roles and
responsibilities.
2. The Key Result Areas (KRAs) planned are specific to each employee, depending on their
interest, educational qualification, and specialization.
3. The MBO approach usually results in better teamwork and communication.
4. It provides the employees with a clear understanding of what is expected of them. The
supervisors set goals for every member of the team, and every employee is provided with a
list of unique tasks.
5. Every employee is assigned unique goals. Hence, each employee feels indispensable to the
organization and eventually develops a sense of loyalty to the organization.
6. Managers help ensure that subordinates’ goals are related to the objectives of the
organization

 Limitations of MBO
1. Focus on short term objectives
2. Time consuming
3. Emphasis on quantifiable objectives
4. Potential for goal displacement
5. Overemphasis on individual performance
6. Resistance to change

Characteristics of well written goals

1. Written in terms of outcomes rather than actions

2. Measurable and quantifiable
3. Clear as to a time frame
4. Challenging yet attainable
5. Written down
6. Communicated to all necessary organizational members

Steps in goal setting

Review the organisation’s mission

Evaluate available resources

Determine the goals individually with input from others

Write down the goals and communicate them

Review the goals and adjust goals as needed

Contingency features in planning

The process of developing plans is influenced by three contingency factors and by the planning
approach followed:

Organizational level

Degree of environmental uncertainty

Length of future commitments

 Organizational level

Different levels of management require different types of plans.

Top Management: Focus on strategic plans.

Middle Management: Develop tactical plans.

Lower Management: Handle operational plans.

Example: In responding to a disaster, top managers might set overall objectives, while field managers
develop specific action plans for implementation.

 Degree of environmental uncertainty

The level of uncertainty in the environment impacts planning.

High Uncertainty: Requires more flexible and adaptive plans.

Low Uncertainty: Allows for more stable and predictable plans.

Example: In a disaster scenario, uncertainty might include unpredictable weather or logistical

challenges, affecting how plans are developed and adjusted.

 Length of Future Commitments

The duration of commitment influences planning strategies.

Short-Term Commitments: Focus on immediate, actionable plans.

Long-Term Commitments: Develop more comprehensive, strategic plans.

Example: Immediate relief efforts require short-term, focused plans, while rebuilding efforts may
involve long-term strategic planning
Planning vis-à-vis Strategy

Planning is like a map for guidance while strategy is the path which takes you to your destination.
Strategy leads to planning and planning leads to programs.

Planning is future oriented, whereas Strategy is action oriented.

Planning takes assumptions, but Strategy is based on practical experiences.

Strategy is about understanding your environment and making choices about what to do, while
planning is about making choices about how to use resources to achieve those choices. In strategic
planning, strategy formulation is an essential part of planning that connects a company's vision and
mission to its goals and objectives

BUSINESS ENVIRONMENT

Micro Environment

The micro environment is the immediate environment in which a business operates. It includes the
includes the internal factors that a business can control, such as its employees, resources, and and
processes.

Employees

Employees are the backbone of any organization. Their skills, motivation, and commitment are
crucial for a business's success.

Suppliers

Reliable suppliers are essential for ensuring the smooth flow of materials and services that a business
needs to operate.

Customers

Understanding customer needs and preferences is essential for businesses to businesses to develop
and market products and services that meet their requirements.

Competitors

Understanding the competitive landscape is important for businesses to develop strategies to gain
market share and maintain their position in the industry.

Components of Micro Environment

The micro environment includes factors like customers, employees, suppliers, competitors, and the
company's own internal resources and processes.

Internal Resources

These include the financial resources, technology, and infrastructure that a business has access to.
These resources can be can be used to achieve the business's goals and objectives.
Culture

The culture of a business refers to its values, beliefs, and norms. A norms. A strong company culture
can help to create a positive and positive and productive work environment.

Processes

These are the steps that a business takes to create and deliver its products or services. Efficient
processes are critical for ensuring that a business can operate effectively and efficiently.

Structure

The structure of a business refers to how it is organized and managed. A well-designed structure can
help to improve communication and coordination within the company.

Meso Environment

The meso environment refers to the industry in which a business operates. This includes factors that
are external to the company but within its industry, such as competitors, customers, suppliers, and
regulatory bodies.

Industry Competitors

Understanding the competitive landscape is important for businesses to businesses to develop

strategies to gain market share and maintain their position in the industry.

1. Direct Competitors 2. Indirect Competitors

Industry Associations

Industry associations can provide businesses with valuable information, networking opportunities,
and advocacy for the industry as a whole.

1. Trade Associations 2. Professional Organizations

Distribution Channels

The channels that a business uses to reach its customers can have a significant impact on its success.
Businesses need to select the right channels for their target market and products or services.

1. Retail 2. Wholesale 3. Online

Components of Meso Environment

The meso environment encompasses the industry forces that influence a business's operations.
These forces can be direct or indirect, but they all have an impact on a business's success.

Industry Growth

A growing industry provides more opportunities for businesses to expand and increase their market
their market share. Businesses need to be aware of industry trends and adjust their strategies
strategies accordingly.

Technological Advancements
Technological advancements can disrupt industries and create new opportunities for businesses.
Businesses need to stay abreast of technological developments and adapt their strategies to leverage
new technologies.

Regulatory Environment

Regulations can impact the costs of doing business and the way that businesses operate. Businesses
need to be aware of relevant regulations and comply with them

Macro Environment

The macro environment includes the broad external factors that affect all businesses in a particular
country or region. These factors are beyond the control of individual businesses and can have a
significant impact on their operations and success

Components of Macro Environment

The macro environment includes factors like economic conditions, social trends, political climate,
technological advancements, legal frameworks, and environmental concerns.

Economic Conditions

Economic conditions, such as interest rates, inflation, and unemployment, can affect a business's
ability to grow and prosper.

Social Trends

Social trends, such as changing demographics, consumer preferences, and ethical concerns, can
influence the demand for a business's products or services.

Political Climate

The political climate, including government policies, regulations, and stability, can have a significant
impact on a business's operations and profitability.

Technological Advancements

Technological advancements can create new opportunities for businesses, but they can also disrupt
existing industries and create challenges for businesses that fail to adapt.

 Business environmental scanning is the process of gathering and analyzing information about
the external and internal factors that affect a business. It helps organizations understand the
forces that may influence their future and make informed decisions

 Importance of Environmental Scanning

Environmental scanning helps organizations identify opportunities and threats. It helps companies
stay ahead of competitors by providing insights into market trends, customer preferences, and
technological advancements. Organizations can adapt their strategies to thrive in a dynamic
environment.
Strategic Planning

It helps businesses make informed decisions about their long-term goals and strategies, ensuring
alignment with the external environment.

Competitive Advantage

It helps companies anticipate changes in the market, gain a competitive edge, and exploit emerging
opportunities.

Risk Mitigation

It helps organizations identify potential threats and develop strategies to minimize their impact.

Innovation

It encourages organizations to be innovative and adapt to new technologies and market trends to
maintain their relevance.

Internal Environment Analysis

Internal analysis focuses on the internal resources, capabilities, and weaknesses of a company. It
assesses the organization's financial health, production processes, human resources, technology, and
leadership. It helps identify strengths to leverage and weaknesses to address.

Strengths

Internal factors that give the company a competitive advantage, advantage, such as strong brand
reputation, skilled workforce, or workforce, or efficient operations.

Weaknesses

Internal factors that hinder the company's performance, such as such as outdated technology,
limited financial resources, or inefficient processes

External Environment Analysis

External analysis focuses on the factors outside the company's control that can affect its
performance. It examines the political, economic, social, technological, environmental, and legal
forces that shape the business environment

 PESTEL Analysis

A PESTLE Analysis is a Marketing Tool used to analyze the outside influences on a potential product,
project or service prior to launching it. PESTLE is an acronym, an extension of a PEST Analysis, which
stands for Political, Economic, Social, Technological, Legal and Environmental factors. When
completed, it gives an overall picture of the environment in which a new product or service will be
introduced in order to help with planning and decision-making.

Political- Government policies, regulations, and political stability

Economic- Economic conditions, such as interest rates, inflation, and unemployment

Social- Social trends, such as demographics, consumer preferences, and cultural values
Technological- Technological advancements, such as new technologies and innovations
Environmental- Environmental concerns, such as climate change and sustainability

Political Factors

 Government Policies

Political factors include government government policies, such as tax laws, laws, trade agreements,
and environmental regulations.

 Political Stability

Political stability is another factor that that can affect businesses. Political instability can lead to
uncertainty and and instability in the business environment.

 Political Climate

The political climate can also impact impact businesses. For example, a government's stance on
certain industries can affect the profitability of profitability of those businesses.

Economic Factors

 Economic Growth

Economic growth can have a positive impact on businesses, businesses, leading to increased
increased demand for goods and and services.

 Inflation

Inflation can impact businesses businesses by increasing the cost cost of raw materials and labor,
labor, reducing profits.

 Interest Rates

Interest rates can affect businesses by making it more more expensive to borrow money or by
reducing the value value of investments.

 Currency Exchange Rates

Currency exchange rates can affect businesses by making it it more expensive or less expensive to
export or import import goods

Social Factors

 Demographics

Social factors include demographics such as population growth, age distribution, and income levels.

 Cultural Trends

Cultural trends can influence consumer behavior and impact the demand for certain products and
services
  Lifestyle Changes

Lifestyle changes, such as an increasing focus on health and wellness, can also affect businesses.

 Consumer Attitudes

Consumer attitudes towards products and services can also impact businesses.

Technological Factors

 Technological Innovation

Technological innovation can lead to lead to new products and services, as services, as well as
changes in how how businesses operate.

 Automation

Automation can lead to increased increased efficiency and productivity, productivity, but also job
displacement.

 Digitalization

The increasing use of digital technologies is transforming the way businesses operate and interact
with customers.

 Data Analytics

Data analytics can help businesses businesses make better decisions and decisions and improve their
performance.

Environmental Factors

 Climate Change

Climate change is a major environmental factor that can affect businesses by impacting supply
chains, resources, and regulations.

 Resource Depletion

Resource depletion can lead to higher costs and shortages, impacting impacting businesses' ability to
operate sustainably.

 Pollution

Pollution can impact businesses by damaging the environment and environment and harming human
health, leading to stricter regulations and negative public perception

Legal Factors

 Competition Law
Competition law aims to prevent monopolies and promote fair competition, which can impact
business strategies and strategies and pricing.

 Consumer Protection Law

Consumer protection laws set standards for product safety and marketing practices, impacting how
businesses interact with customers.

 Labor Law

Labor law covers working conditions, wages, and employee rights, impacting businesses' costs and
staffing strategies.

Porter's Five Forces

Porter's Five Forces is a framework for analyzing the competitive landscape of a business. It helps
companies understand the understand the factors that influence their profitability.

The Five Forces

The Five Forces are: the threat of new entrants, the bargaining power of suppliers, the bargaining
power of buyers, the threat of substitute products, and the intensity of competitive rivalry.

Threat of New Entrants

New entrants can pose a threat to established companies by increasing competition. This is
especially true if there are low barriers to entry.

 Barriers to Entry

Government regulations, high start-up costs, and strong brand loyalty can make it difficult for new
companies to enter.

 Economies of Scale

Existing companies can benefit from economies of scale, which makes it difficult for new entrants to
compete on price.

 Switching Costs

Customers may be reluctant to switch to new products or services if they face high switching costs.

Bargaining Power of Suppliers

Suppliers can have a significant impact on a company's profitability by influencing the cost of raw
materials or components.

 Supplier Concentration

When there are few suppliers, they can command higher prices.
  Forward Integration

Suppliers may be able to forward integrate into the buyer's industry, giving them more control.

 Availability of Substitutes

If there are few substitutes, suppliers have more bargaining power.

 Importance of Supplier to Buyer

If a supplier is critical to a buyer's success, they have more bargaining power.

Bargaining Power of Buyers

Buyers can also influence profitability by negotiating lower prices or demanding better quality.

 Buyer Concentration

Availability of Substitutes When there are few buyers, they can exert more pressure on pressure on
suppliers.

 Importance of Buyer to Supplier

If there are many substitutes available, buyers have more more bargaining power. If a buyer is a
major customer, they can exert more pressure.

 Backward Integration

Buyers may be able to backward integrate into the supplier's industry

Threat of Substitute Products

Substitute products can also threaten profitability by offering similar benefits at a lower price or with
improved features. Coffee- Tea, soft drinks, energy drinks, and other beverages can be substitutes for
coffee

 Intensity of Competitive Rivalry

The intensity of rivalry is a measure of the competition between existing companies in the market.

 Number of Competitors

A large number of competitors can lead to intense rivalry.

 Industry Growth Rate

Slow growth can lead to intense rivalry as companies fight for market share.

 Exit Barriers

High exit barriers can lead to intense rivalry as companies are reluctant to leave the market.

 Fixed Costs

High fixed costs can lead to intense rivalry as companies try to fill their capacity
SWOT Analysis

SWOT analysis is a strategic planning tool used to evaluate an organization's Strengths, Weaknesses,
Opportunities, and Threats. It helps identify key internal and external factors that impact an
organization's success

Strengths

 Strong Brand Reputation

A positive brand image can attract customers and increase sales. It's a powerful asset that builds
trust and loyalty.

 Strong Financial Position

A healthy financial situation provides stability and flexibility. It allows for strategic strategic
investments and weathering economic challenges.

 Talented Workforce

A skilled and motivated workforce can drive innovation innovation and productivity. Invest in training
and development to nurture talent. talent.

 Effective Leadership

Strong leadership inspires teams, sets clear direction, and and drives organizational success. It fosters
a positive work environment

Weaknesses

 Limited Resources

Insufficient resources, such as funding, funding, technology, or personnel, can can hinder growth and
innovation. Consider strategic partnerships or outsourcing.

 Lack of Innovation

Falling behind industry trends can lead to market share loss. Encourage experimentation and invest
in research and development to stay ahead.

 Inefficient Processes

Outdated or inefficient processes can negatively impact productivity and profitability. Streamline
workflows and implement process improvements

Opportunities

 Expanding Market Share

Identify untapped markets and develop develop targeted strategies to increase increase your
customer base and reach new audiences.
  Strategic Partnerships

Collaborate with other organizations to organizations to expand your reach, leverage complementary
strengths, and and access new markets and resources. resources.

 Emerging Technologies

Leverage emerging technologies to enhance operations, improve customer customer experience,

and stay competitive. Explore AI, automation, and automation, and data analytics.

 Favorable Economic Conditions

Capitalize on positive economic trends by trends by expanding operations, investing investing in

growth initiatives, and increasing market penetration.

Threats

 Economic Downturn

Recessions or economic instability can negatively impact consumer spending and and business
operations. Prepare contingency contingency plans.

 Increased Competition

New entrants or aggressive competitors can can erode market share. Differentiate your your
offerings and build strong customer relationships.

 Changing Customer Preferences

Evolving customer needs and preferences can preferences can make products or services services
obsolete. Stay agile and adapt to market trends.

 Regulatory Changes

New regulations or policy shifts can impact impact operations and profitability. Stay informed and
adapt your strategies accordingly

Analyzing the SWOT Matrix

Strengths and Opportunities

Identify opportunities that can be leveraged by your strengths to achieve strategic goals. Example:
Leverage strong brand reputation to enter new markets.

Strengths and Threats

Develop strategies to mitigate threats by using your strengths. Example: Use strong financial position
to weather economic downturns.

Weaknesses and Opportunities

Focus on addressing weaknesses to capitalize on opportunities. Example: Improve inefficient

processes to increase productivity and seize market opportunities.
Weaknesses and Threats

Prioritize addressing weaknesses to avoid exacerbating threats. Example: Develop innovative

innovative products to counter competitive pressure

SWOT Analysis Strategies

In the process of adaptability analysis, enterprise top management should be based on the
determination of internal and external variables, using leverage, inhibitory, vulnerability, and
problematic four basic concepts to analyze this model.

Leverage (S + O).

Leverage effects arise when internal and external opportunities are consistent and adaptive to one
another. In this situation, companies can use their internal strengths to pick up external
opportunities and fully integrate opportunities and strengths. However, opportunities are often
fleeting, so companies must sharply capture opportunities and seize the opportunity to seek greater
development.

Inhibitory (W + O).

Inhibiting means impeding, preventing, influencing and controlling. When the opportunities provided
by the environment are not suited to the internal resource advantages of the company, or cannot be
overlapped with each other, the strengths of the enterprise will no longer be realized. In this
situation, companies need to provide and add certain resources to promote the transformation of
internal resources and weaknesses into strengths to cater to or adapt to external opportunities.

Vulnerability (S + T).

Vulnerability means the decrease or decrease in the degree or intensity of strengths. When
environmental conditions pose a threat to the company’s strengths, the strengths cannot be fully
exerted and ending up with a fragile situation. In this situation, companies must overcome the
threats to take advantage of them.

Problematic (W + T).

When the company’s internal weaknesses and corporate external threats meet, companies face
severe challenges. If they are not properly handled, they may directly threaten the survival of the
company.

Developing Strategies

Offensive Strategies

Exploit strengths to capitalize capitalize on opportunities. Examples: Market expansion, expansion,

new product development, strategic alliances.

Defensive Strategies

Minimize weaknesses to avoid avoid threats. Examples: Cost Cost reduction, process improvement,
risk management.
Adaptive Strategies

Adjust to changing market conditions. Examples: Product Product diversification, market market
segmentation, customer relationship management.

Collaborative Strategies

Strategies Leverage partnerships to gain gain competitive advantage. advantage. Examples: Joint
ventures, strategic alliances, alliances, outsourcing

Implementing SWOT Findings

Prioritization

Prioritize strategies based on their potential impact, feasibility, and alignment with organizational
goals.

Resource Allocation

Allocate resources effectively to support the chosen strategies. Ensure adequate funding, funding,
personnel, and other resources.

Performance Monitoring

Monitor the implementation and effectiveness of strategies. Track key performance indicators and
indicators and make adjustments as needed.

Continuous Improvement

Continuously evaluate and refine your strategies based on performance data and changing market
changing market conditions. Adapt and evolve to remain competitive

ORGANIZING
Organizing is the process of arranging and structuring work to achieve organizational goals
effectively. This step is crucial for managers as they design the organization’s structure, which is a
formal arrangement of jobs within the entity. The organizational structure provides a clear
framework that defines how tasks are divided, grouped, and coordinated across various roles.

The structure is often represented visually through an organizational chart, which outlines the
relationships, responsibilities, and authority within the organization. Beyond visual representation,
the structure serves several purposes, including clarifying reporting lines, establishing
communication channels, and ensuring efficient task completion

When managers design or modify the organizational structure, they engage in a process known as
organizational design. This involves making decisions about six fundamental elements:

 Work Specialization
Dividing tasks into smaller, specialized jobs to increase efficiency.

Increases Productivity: Focus on specific tasks improves speed and quality.

Skill Utilization: Maximizes the diverse skills of workers by assigning tasks based on required skill
levels.

Cost Efficiency: Workers are paid according to the complexity of their tasks, preventing overpayment
for lower-skill tasks.

 Departmentalization

The process of grouping work activities to ensure tasks are completed in a coordinated and
integrated way.

Functional: Grouped by functions (HR, IT).

Product: Based on product lines (e.g., divisions of a car company).

Geographical: By region (e.g., regional offices).

Process: By workflow (e.g., manufacturing stages).

Customer: By customer types (e.g., retail vs. wholesale).

 Chain of Command

Establishing clear lines of authority and determining who reports to whom.

Authority: The inherent rights in managerial positions to give orders and expect compliance.
Authority is related to the formal organizational position, not personal traits.

Responsibility: Employees' obligation to perform tasks assigned by their authority figure.

Unity of Command: Principle that each employee should report to only one manager to avoid
confusion.

 Span of Control

Deciding how many employees a manager can effectively supervise.

 Centralization and Decentralization

Balancing decision-making authority between higher and lower levels of management.

 Formalization

Determining the extent to which rules and procedures are standardized and explicitly followed within
the organization.
Rational Decision-Making Model

• Definition: The rational decision-making model is a logical, step-by-step approach to making

decisions, focused on choosing the best possible outcome by systematically evaluating all
alternatives.

• Key Steps:

1. Problem Identification: Clearly define the issue or decision to be made. Example: A company
identifies that its market share is declining.

2. Criteria Setting: Establish criteria for judging potential solutions (e.g., cost, time, resources,
impact). Example: Criteria for addressing the issue could include minimizing costs, improving
customer satisfaction, and increasing revenue.

3. Generating Alternatives: Brainstorm different possible solutions. Example: Alternatives might

include launching a new marketing campaign, developing a new product, or improving customer
service.

4. Evaluating Alternatives: Assess each alternative against the criteria set earlier. Example: Evaluate
the feasibility, cost, and potential impact of each option.

5. Choosing the Optimal Solution: Select the alternative that best meets the criteria. Example:
Choosing to focus on improving customer service based on cost and potential ROI.

6. Implementing the Decision: Execute the chosen solution. Example: Implement new customer
service training for staff.

7. Monitoring and Reviewing: After implementation, assess the decision’s effectiveness. Example:
Measure customer satisfaction and retention rates post-implementation.

Advantages

• Structured Process: Provides a clear, logical approach.

• Reduces Uncertainty: Systematic analysis helps mitigate risks.

• Optimal Solution: Maximizes the likelihood of a successful outcome by

choosing the best option based on data.

Disadvantages:

• Time-Consuming: Evaluating all alternatives and criteria can be lengthy.

• Requires Complete Information: Assumes that the decision-maker has

access to all relevant data, which may not always be the case.

• Doesn’t Account for Emotions: Ignores emotional and psychological

factors that can influence decisions.

Bounded Rationality Model

• Definition: This model, developed by Herbert Simon, acknowledges that individuals and
organizations do not have unlimited resources or perfect information. Decision-makers are

“bounded” by constraints such as time, information, and cognitive limitations, which lead them to

make satisficing (rather than optimal) decisions.

• Key Points:

• Satisficing: Decision-makers often settle for a solution that is “good enough” rather than the best,

due to limited time and information. Example: Instead of searching for the best vendor, a company
selects the first supplier that meets their basic requirements.

• Information Overload: In complex environments, decision-makers cannot possibly gather and

analyze all the available information. Example: A manager may only review a subset of relevant data
when making a hiring decision due to time constraints.

• Limited Cognitive Capacity: Decision-makers have limited ability to process information and
consider all alternatives. Example: A company may choose a marketing strategy without thoroughly
analyzing all possible customer segments.

Advantages:

• Realistic: Reflects how decisions are made in the real world, where time and information are
limited.

• Efficiency: Saves time and resources by focusing on satisficing rather than optimizing.

Disadvantages:

• Suboptimal Decisions: The chosen solution may not be the best one, but rather the first satisfactory
option.

• Biases: Bounded rationality may lead to shortcuts and reliance on cognitive biases.

Intuitive Decision-Making Model

Definition: This model relies on gut feelings, instincts, and past experience rather than a structured,
logical process. Intuition often plays a key role in situations where time is limited or the
decisionmaker has significant expertise in the subject matter.

• Key Points:

• Experience and Expertise: Intuition is often based on deep experience and familiarity with the
subject. Example: A seasoned doctor diagnosing a patient based on symptoms without extensive
tests, relying on years of experience.

• Heuristics: Decision-makers use mental shortcuts or “rules of thumb” to make quick decisions.
Example: A salesperson deciding to target specific customer segments based on past successes
without conducting a full market analysis.

• Fast Decisions: Intuitive decisions are typically made quickly, without a detailed analysis of
alternatives. Example: An entrepreneur decides to pivot their business model based on a gut feeling
about changing market conditions.
Advantages

• Speed: Allows for rapid decision-making in time-sensitive situations.

• Practical: Useful in complex or ambiguous situations where data is incomplete or unavailable.

• Based on Experience: Leverages the decision-maker’s expertise and past experiences.

Disadvantages:

• Risk of Bias: Intuition can be influenced by personal biases, emotions, or past failures.

• Lack of Transparency: Intuitive decisions may be hard to justify or explain to others.

• Unreliable: Can lead to poor outcomes if the decision-maker lacks sufficient experience or
misinterprets the situation.

Cognitive Biases in Decision-Making

1. Anchoring Bias:

•Definition: Anchoring bias occurs when individuals rely too heavily on the first piece of information
(the "anchor") they receive, even if it's irrelevant or incomplete.

Confirmation Bias

• Definition: Confirmation bias occurs when people favor information that confirms their preexisting
beliefs or values and ignore evidence that contradicts them.

Overconfidence Bias

Overconfidence bias is when individuals overestimate their knowledge, skills, or the accuracy of their
predictions.

Max Weber’s Bureaucratic Form – 6 Major Principles

Max Weber listed six major principles of the bureaucratic form as follows:

 Task specialisation
 Formal hierarchy
 Formal selection
 Rules and regulations
 Impersonal relationship
 Advancement based on achievements

1. A formal hierarchical structure – In a bureaucratic organization, each level controls the level
below it. Also, the level above it controls it. A formal hierarchy is the basis of central planning
and centralized decision-making.

2. Rules-based Management – The organization uses rules to exert control. Therefore, the
lower levels seamlessly execute the decisions made at higher levels.

3. Functional Specialty organization – Specialists do the work. Also, the organization divides
employees into units based on the type of work they do or the skills they possess.
 4. Up-focused or In-focused Mission – If the mission of the organization is to serve the
stockholders, board, or any other agency that empowered it, then it is up-focused. On the
other hand, if the mission is to serve the organization itself and those within it (like
generating profits, etc.), then it is in-focused.

5. Impersonal – Bureaucratic organizations treat all employees equally. They also treat all
customers equally and do not allow individual differences to influence them.

6. Employment-based on Technical Qualifications – Selection as well as the promotion of

employees is based on technical qualifications and skills.

14 Principles of Henry Fayol

 Division of Work- Specialization increases output by making employees more efficient.

 Authority- Managers must be able to give orders, and authority gives them this right.

 Discipline- Employees must obey and respect the rules that govern the organization.

 Unity of command- Every employee should receive orders from only one superior.

 Unity of direction- The organization should have a single plan of action to guide managers
and workers.

 Subordination of individual interests to the general interest- The interests of any one
employee or group of employees should not take precedence over the interests of the
organization as a whole.

 Remuneration- Workers must be paid a fair wage for their services.

 Centralization- This term refers to the degree to which subordinates are involved in decision
making.

 Scalar chain- The line of authority from top management to the lowest ranks is the scalar
chain.

 Order- People and materials should be in the right place at the right time.

 Equity- Managers should be kind and fair to their subordinates.

 Stability of tenure of personnel- Management should provide orderly personnel planning and
ensure that replacements are available to fill vacancies.

 Initiative- Employees who are allowed to originate and carry out plans will exert high levels
of effort.

 Esprit de corps- Promoting team spirit will build harmony and unity within the organization.

DELEGATION AND DECENTRALISATION

Delegation is the assignment of authority to another person (normally from the manager to
subordinate). To carry out specific activities. It is the process of distributing and entrusting work to
another person. Delegation is one of the core concepts of management leadership. The process
involves managers deciding which work they do themselves and which work should be delegated to
others for completion.

Delegation of authority is an important part of the organisation process. Its need arises due to
excessive work load when a superior is not able to perform all jobs independently. As a result, divides
his work among the subordinates. To make successful division of work, authority is given to the
subordinates so, that they may take work related decisions. Only authority can be delegated and not
the accountability. Accountability means the answerability of the subordinate to his superior for his
work performance.

Process of delegation

Delegation is the process by which a manger assigns a part of his workload to his subordinate. This
includes the following steps:

1. Assignment of Responsibility: – The process of delegation of authority started with assignment of

responsibility. Due to excessive work load it is not possible for a superior to perform all the activities
on his own. So, he keeps the important work himself and the rest assigned to his subordinates
according to their skills and capabilities.

2. Granting of Authority: – In the delegation process it is necessary to grant authority to the

subordinates for successful work performance. There is no meaning of assigning responsibility
without authority to the subordinates. So, all the required authority should be delegated to the
subordinates for fulfillment of responsibility.

3. Fixing the Accountability: –In this step of delegation process the accountability of the subordinates
are fixed for their work performance. Every subordinate is accountable to his superior who delegates
authority for the fulfillment of job responsibility. Accountability means justification for the work
performance and the person who delegates the work will be accountable to his superior for the work
performance.

Importance of delegation

1. Helpful in Management: – Delegation of authority helps in reducing the workload of the superiors.
Managers who delegate the authority are able to give much more time to the planning and decision-
making process. Thus, delegation of authority helps in the achievement of the objectives.

2. Development of Employees: – The delegation process provides an opportunity to take decisions

and it helps in mental development and personal growth of the subordinates. The superiors delegate
the work of their own level to the subordinates motivates to their subordinates. This practice adds
on to their knowledge and experience. As a result, they become more able to take extra
responsibility.

3. Motivation of Employees: – In the process of delegation of authority, both authority and

responsibility are delegated to subordinates. This situation provides managers the authority to take
decisions on part of the subordinates.

4. Facilitation of Growth: – Delegation of authority does not only develop only one person or division
but facilitates the development of organisation as a whole. It makes better utilisation of resources
through division of work. As a result, profits are increased and managers as well as subordinates feel
motivated.

5. Better Coordination: – Delegation of authority is a process to establish relation among

responsibility, authority and accountability. Though this employees get clarification with regard to
their powers, duties and accountability for work performance.

6.Quick and Better Decisions: – Decisions by delegation are taken not only at the top hierarchy but at
all levels of management and it leads to quick decisions.

7.Continuity in Organisation: – Delegation of authority provides knowledge and experience about the
job of superior to the subordinates and if any superior leaves the organisation then his subordinate
can easily be appointed in his place. Thus, continuity in the organisation is maintained and the work
performance is not impeded.

Decentralisation is referred to as a form of an organisational structure where there is the delegation

of authority by the top management to the middle and lower levels of management in an
organisation. In this type of organisation structure, the duty of daily operations and minor decision-
making capabilities are transferred to the middle and lower levels which allow top-level management
to focus more on major decisions like business expansion, diversification etc. In simple words, when
delegation is expanded on an organisational level, it is called decentralisation. Example: Each store of
TESCO has a store manager who can make certain decisions concerning their store. The store
manager is responsible to a regional manager.

Advantages of decentralisation

Reduces the Burden at Top Level: – Decentralisation helps in reducing the burden of top level
managers while performing various functions. In centralization most of the authorities and
responsibilities lies on the shoulders of top level managers and they are not able to concentrate on
important functions. So, the only way to lessen their burden is to decentralise the decision-making
power to the subordinates.

2. Facilitates Diversification: –A centralised enterprise finds it difficult to diversify its activities and
start the additional lines of manufacture or distribution. On the other hand, under decentralization
the diversification of products, activities and markets is facilitated.

3. Executive Development: –When the authority is decentralised, middle level and lower level
managers will get the opportunity to develop their talents by taking initiative which will also make
them ready for higher managerial positions. The growth of the business greatly depends on the
talented executives.

4. It Promotes Motivation: – Decentralisation helps in the formation of small organised groups. Since
local managers are given a large degree of authority and autonomy, they tend to joint their people in
small organised and integrated groups. This improves the morale of employees as they get involved
in decision-making process.

5. Better Control and Supervision: –Decentralisation ensures better control and supervision as the
subordinates at the lowest levels will have the authority to make independent decisions. As a result
they have thorough knowledge of each and every activity under their control and are in a position to
make amendments and take corrective action.

6. Quick Decision-Making:- Decentralisation makes decision making process easier and near to the
action. This leads to quicker decision-making of lower level since decisions do not have to be referred
up through the hierarchy.

Disadvantages of decentralisation

Ability of Subordinates: – Under decentralisation, the success of the organisation depends entirely on
ability of subordinates. Subordinates have the authority to take some important decisions along with
the authority to take decisions on work of daily routine. If they are incapable the organisation may
have to pay a heavy price of it.

2. Problem of Co-Ordination: –Decentralisation of authority creates problems of co-ordination as

authority lies dispersed widely throughout the organisation. It also becomes a hurdle if there is no
coordination between different levels of workers and managers in decision making.

3. More Financial Burden: –Decentralisation requires the employment of trained personnel to accept
authority, it involves more financial burden and a small enterprise cannot afford to appoint experts in
various fields.

4. Require Qualified Personnel: – Decentralisation becomes useless when there are no qualified and
competent personnel in the organisation and they must have a same kind of exposure, experience
and ability to make the decisions.

5. Conflict: –Decentralisation puts more pressure on divisional heads to realize profits at any cost.
Often in meeting their new profit plans, bring conflicts among managers and conflicts arise which
may become the reason of delay in decision making and implementation of various plans on time.

Decentralisation is nothing but an extension of delegation. While delegation refers to transfer of

authority by a superior to the subordinate, decentralisation involves distribution of authority
throughout the organisation. •In delegation, authority is multiplied by two as authority is shared
between superior and subordinate. •However, in decentralisation, authority is multiplied by many as
authority is shared between different superiors and subordinates at all levels of management.

A group is defined as two or more interacting and interdependent individuals who come together to
achieve specific goals. Formal groups are work groups that are defined by the organization’s structure
and have designated work assignments and specific tasks directed at accomplishing organizational
goals.

Research shows that groups develop through five stages.

The forming stage has two phases. The first occurs as people join the group. In a formal group,
people join because of some work assignment.

Once they’ve joined, the second phase begins: defining the group’s purpose, structure, and
leadership. This phase involves a great deal of uncertainty as members “test the waters” to
determine what types of behavior are acceptable. This stage is complete when members begin to
think of themselves as part of a group.

The storming stage is appropriately named because of the intragroup conflict. There’s conflict over
who will control the group and what the group needs to be doing. During this stage, a relatively clear
hierarchy of leadership and agreement on the group’s direction emerge. The norming stage is one in
which close relationships develop and the group becomes cohesive. There’s now a strong sense of
group identity and camaraderie. This stage is complete when the group structure solidifies, and the
group has assimilated a common set of expectations (or norms) regarding member behavior.

The fourth stage is the performing stage. The group structure is in place and accepted by group
members. Their energies have moved from getting to know and understand each other to working
on the group’s task.

This is the last stage of development for permanent work groups. However, for temporary groups—
project teams, task forces, or similar groups that have a limited task to do—the final stage is
adjourning. In this stage, the group prepares to disband. The group focuses its attention on wrapping
up activities instead of task performance. Group members react in different ways. Some are upbeat,
thrilled about the group’s accomplishments. Others may be sad over the loss of camaraderie and
friendships.

GROUP COHESIVENESS

Cohesiveness is important because it has been found to be related to a group’s productivity. Groups
in which there’s a lot of internal disagreement and lack of cooperation are less effective in
completing their tasks than are groups in which members generally agree, cooperate, and like each
other. Research in this area has focused on group cohesiveness, or the degree to which members are
attracted to a group and share the group’s goals. Research has generally shown that highly cohesive
groups are more effective than are less cohesive ones. However, the relationship between
cohesiveness and effective ness is complex. A key moderating variable is the degree to which the
group’s attitude aligns with its goals or with the goals of the organization. The more cohesive the
group, the more its members will follow its goals. If the goals are desirable (for instance, high output,
quality work, cooperation with individuals outside the group), a cohesive group is more productive
than a less cohesive group. But if cohesiveness is high and attitudes are unfavourable, productivity
decreases. If cohesiveness is low but goals are supported, productivity increases but not as much as
when both cohesiveness and support are high. When cohesiveness is low and goals are not
supported, productivity is not significantly affected.

CONFLICT MANAGEMENT

Another important group process is how a group manages conflict. As a group performs its assigned
tasks, disagreements inevitably arise. Conflict is perceived incompatible differences resulting in some
form of interference or opposition. Whether the differences are real is irrelevant. If people in a group
perceive that differences exist, then there is conflict. Three different views have evolved regarding
conflict. The traditional view of conflict argues that conflict must be avoided—that it indicates a
problem within the group. Another view, the human relations view of conflict, argues that conflict is
a natural and inevitable outcome in any group and need not be negative, but has potential to be a
positive force in contributing to a group’s performance. The third and most recent view, the
interactionist view of conflict, proposes that not only can conflict be a positive force in a group but
that some conflict is absolutely necessary for a group to perform effectively. The interactionist view
doesn’t suggest that all conflicts are good. Some conflicts— functional conflicts—are constructive
and support the goals of the work group and improve its performance. Other conflicts—
dysfunctional conflicts—are destructive and prevent a group from achieving its goals. When is
conflict functional and when is it dysfunctional? Research indicates that you need to look at the type
of conflict. Task conflict relates to the content and goals of the work. Relationship conflict focuses on
interpersonal relationships. Process conflict refers to how the work gets done. Research shows that
relationship conflicts are almost always dysfunctional because the interpersonal hostilities increase
personality clashes and decrease mutual understanding and the tasks don’t get done. On the other
hand, low levels of process conflict and low-to-moderate levels of task conflict are functional. For
process conflict to be productive, it must be minimal.

Cognitive dissonance theory

Cognitive dissonance theory sought to explain the relationship between attitudes and behavior.
Cognitive dissonance is any incompatibility or inconsistency between attitudes or between behavior
and attitudes. The theory argued that inconsistency is uncomfortable and that individuals will try to
reduce the discomfort and thus, the dissonance. The theory proposed that how hard we’ll try to
reduce dissonance is determined by three things: (1) the importance of the factors creating the
dissonance, (2) the degree of influence the individual believes he or she has over those factors, and
(3) the rewards that may be involved in dissonance. If the factors creating the dissonance are
relatively unimportant, the pressure to correct the inconsistency will be low. However, if those
factors are important, individuals may change their behavior, conclude that the dissonant behavior
isn’t so important, change their attitude, or identify compatible factors that outweigh the dissonant
ones. How much influence individuals believe they have over the factors also affects their reaction to
the dissonance. If they perceive the dissonance is something about which they have no choice,
they’re won’t be receptive to attitude change or feel a need to do so. If, for example, the dissonance-
producing behavior was required as a result of a manager’s order, the pressure to reduce dissonance
would be less than if the behavior had been performed voluntarily. Although dissonance exists, it can
be rationalized and justified by the need to follow the manager’s orders—that is, the person had no
choice or control. Finally, rewards also influence the degree to which individuals are motivated to
reduce dissonance. Coupling high dissonance with high rewards tends to reduce the discomfort by
motivating the individual to believe that there is consistency.

MOTIVATION

Motivation refers to the process by which a person’s efforts are energized, directed, and sustained
toward attaining a goal. This definition has three key elements: energy, direction, and persistence.

We begin by looking at four early motivation theories: Maslow’s hierarchy of needs, McGregor’s
theories X and Y, Herzberg’s two-factor theory, and McClelland’s three needs theory.

The best-known theory of motivation is probably Abraham Maslow’s hierarchy of needs theory.
Maslow was a psychologist who proposed that within every person is a hierarchy of five needs:

1. Physiological needs: A person’s needs for food, drink, shelter, sex, and other physical
requirements.
2. Safety needs: A person’s needs for security and protection from physical and emotional harm, as
well as assurance that physical needs will continue to be met.

3. Social needs: A person’s needs for affection, belongingness, acceptance, and friendship.

4. Esteem needs: A person’s needs for internal esteem factors such as self-respect, autonomy, and
achievement and external esteem factors such as status, recognition, and attention.

5. Self-actualization needs: A person’s needs for growth, achieving one’s potential, and self-
fulfillment; the drive to become what one is capable of becoming

Maslow argued that each level in the needs hierarchy must be substantially satisfied before the next
need becomes dominant. An individual moves up the needs hierarchy from one level to the next. In
addition, Maslow separated the five needs into higher and lower levels. Physiological and safety
needs were considered lower-order needs; social, esteem, and self-actualization needs were
considered higher-order needs. Lower-order needs are predominantly satisfied externally while
higher-order needs are satisfied internally.

Douglas McGregor is best known for proposing two assumptions about human nature: Theory X and
Theory Y. Very simply, Theory X is a negative view of people that assumes workers have little
ambition, dislike work, want to avoid responsibility, and need to be closely controlled to work
effectively. Theory Y is a positive view that assumes employees enjoy work, seek out and accept
responsibility, and exercise self-direction. McGregor believed that Theory Y assumptions should
guide management practice and proposed that participation in decision making, responsible and
challenging jobs, and good group relations would maximize employee motivation. Unfortunately, no
evidence confirms that either set of assumptions is valid or that being a Theory Y manager is the only
way to motivate employees.

Frederick Herzberg’s two-factor theory (also called motivation-hygiene theory) proposes that
intrinsic factors are related to job satisfaction, while extrinsic factors are associated with job
dissatisfaction. Herzberg wanted to know when people felt exceptionally good (satisfied) or bad
(dissatisfied) about their jobs. He concluded that the replies people gave when they felt good about
their jobs were significantly different from the replies they gave when they felt badly. Certain
characteristics were consistently related to job satisfaction and others to job dissatisfaction. When
people felt good about their work, they tended to cite intrinsic factors arising from the job itself such
as achievement, recognition, and responsibility. On the other hand, when they were dissatisfied,
they tended to cite extrinsic factors arising from the job context such as company policy and
administration, supervision, interpersonal relationships, and working conditions. In addition,
Herzberg believed that the data suggested that the opposite of satisfaction was not dissatisfaction, as
traditionally had been believed. Removing dissatisfying characteristics from a job would not
necessarily make that job more satisfying (or motivating). Herzberg proposed that a dual continuum
existed: The opposite of “satisfaction” is “no satisfaction,” and the opposite of “dissatisfaction” is “no
dissatisfaction.” Again, Herzberg believed that the factors that led to job satisfaction were separate
and distinct from those that led to job dissatisfaction. Therefore, managers who sought to eliminate
factors that created job dissatisfaction could keep people from being dissatisfied but not necessarily
motivate them. The extrinsic factors that create job dissatisfaction were called hygiene factors. When
these factors are adequate, people won’t be dissatisfied, but they won’t be satisfied (or motivated)
either. To motivate people, Herzberg suggested emphasizing motivators, the intrinsic factors having
to do with the job itself.

David McClelland and his associates proposed the three-needs theory, which says there are three
acquired (not innate) needs that are major motives in work. These three needs include the need for
achievement (nAch), which is the drive to succeed and excel in relation to a set of standards; the
need for power (nPow), which is the need to make others behave in a way that they would not have
behaved otherwise; and the need for affiliation (nAff), which is the desire for friendly and close
interpersonal relationships. Of these three needs, the need for achievement has been researched the
most. People with a high need for achievement are striving for personal achievement rather than for
the trappings and rewards of success. They have a desire to do something better or more efficiently
than it’s been done before. The other two needs in this theory haven’t been researched as
extensively as the need for achievement. However, we do know that the best managers tend to be
high in the need for power and low in the need for affiliation

Clayton alderfer’s ERG theory

Extension of maslow’s theory

CONTEMPRORY THEORIES OF MOTIVATION

Goal-Setting Theory

goal-setting theory, which says that specific goals increase performance and that difficult goals, when
accepted, result in higher performance than do easy goals. First, working toward a goal is a major
source of job motivation. Studies on goal setting have demonstrated that specific and challenging
goals are superior motivating forces. Such goals produce a higher output than does the generalized
goal of “do your best.” The specificity of the goal itself acts as an internal stimulus. For instance,
when a sales rep commits to making eight sales calls daily, this intention gives him a specific goal to
try to attain. It’s not a contradiction that goal-setting theory says that motivation is maximized by
difficult goals, whereas achievement motivation (from three-needs theory) is stimulated by
moderately challenging goals. Three other contingencies besides feedback influence the goal-
performance relationship: goal commitment, adequate self-efficacy, and national culture. First, goal-
setting theory assumes that an individual is committed to the goal. Commitment is most likely when
goals are made public, when the individual has an internal locus of control, and when the goals are
self-set rather than assigned. self-efficacy refers to an individual’s belief that he or she is capable of
performing a task.

Reinforcement Theory

Reinforcement theory says that behavior is a function of its consequences. Those consequences that
immediately follow a behavior and increase the probability that the behavior will be repeated are
called reinforcers. Reinforcement theory ignores factors such as goals, expectations, and needs.
Instead, it focuses solely on what happens to a person when he or she does something. Using
reinforcement theory, managers can influence employees’ behavior by using positive reinforcers for
actions that help the organization achieve its goals. And managers should ignore, not punish,
undesirable behavior. Although punishment eliminates undesired behavior faster than
nonreinforcement does, its effect is often temporary and may have unpleasant side effects including
dysfunctional behavior such as workplace conflicts, absenteeism, and turnover. Although
reinforcement is an important influence on work behavior, it isn’t the only explanation for differences
in employee motivation.

Job enlargement and Job enrichment

LEADERSHIP THEORIES

The autocratic style described a leader who dictated work methods, made unilateral decisions, and
limited employee participation. The democratic style described a leader who involved employees in
decision making, delegated authority, and used feedback as an opportunity for coaching employees.
Finally, the laissez-faire style leader let the group make decisions and complete the work in whatever
way it saw fit.

Trait theory

Behavioural theory

Transformational- transactional leadership

Many early leadership theories viewed leaders as transactional leaders; that is, leaders that lead
primarily by using social exchanges (or transactions). Transactional leaders guide or motivate
followers to work toward established goals by exchanging rewards for their productivity. But another
type of leader—a transformational leader—stimulates and inspires (transforms) followers to achieve
extraordinary outcomes. Transactional and transformational leadership shouldn’t be viewed as
opposing approaches to getting things done. Transformational leadership develops from
transactional leadership. Transformational leadership produces levels of employee effort and
performance that go beyond what would occur with a transactional approach alone. Moreover,
transformational leadership is more than charisma, because the transformational leader attempts to
instill in followers the ability to question not only established views but those views held by the
leader. The evidence supporting the superiority of transformational leadership over transactional
leadership is overwhelmingly impressive. For instance, studies that looked at managers in different
settings, including the military and business, found that transformational leaders were evaluated as
more effective, higher performers, more promotable than their transactional counterparts, and more
interpersonally sensitive. In addition, evidence indicates that trans formational leadership is strongly
correlated with lower turnover rates and higher levels of productivity, employee satisfaction,
creativity, goal attainment, follower well-being, and corporate entrepreneurship, especially in start-
up firms.

Charismatic-Visionary Leadership
Charismatic leadership revolves around the leader’s exceptional ability to inspire and motivate others
through a magnetic personality, emotional connection, and compelling vision. It draws followers with
its captivating appeal and motivates them to work toward shared goals. The term "charismatic"
derives from the Greek word "kharisma," meaning a divine gift or talent. Charisma combines
inspiration, attraction, and influence, and while it often feels innate, it can be nurtured through
training and experience. Although the term vision is often linked with charismatic leadership,
visionary leadership is different; it’s the ability to create and articulate a realistic, credible, and
attractive vision of the future that improves upon the present situation. This vision, if properly
selected and implemented, is so energizing that it “in effect jump-starts the future by calling forth
the skills, talents, and resources to make it happen.” An organization’s vision should offer clear and
compelling imagery that taps into people’s emotions and inspires enthusiasm to pursue the
organization’s goals. It should be able to generate possibilities that are inspirational and unique and
offer new ways of doing things that are clearly better for the organization and its members. Visions
that are clearly articulated and have powerful imagery are easily grasped and accepted.

Contingency theory

Contingency theory in management suggests that there is no single best way to manage an
organization; instead, the effectiveness of management practices depends on the specific
circumstances or context. Various models under this theory explore how different variables interact
to influence organizational effectiveness. Here are some prominent models under the contingency
theory of management:

1. Fiedler's Contingency Model

 Focus: Leadership effectiveness.

 Key Idea: Leadership style (task-oriented or relationship-oriented) is effective depending on

the situation.

 Situational Factors:

o Leader-member relations (trust and respect between leader and team).

o Task structure (clarity of tasks).

o Position power (leader’s authority to reward/punish).

 Implication: Match leadership style to the situation or alter the situation to fit the leader’s
style.

2. Hersey and Blanchard's Situational Leadership Model

 Focus: Adapting leadership style based on the maturity of followers.

 Key Idea: Leadership style should evolve as followers’ competence and commitment change.

 Leadership Styles:

o Directing (high directive, low supportive).

 o Coaching (high directive, high supportive).

o Supporting (low directive, high supportive).

o Delegating (low directive, low supportive).

 Implication: Leaders need to assess the development level of their followers and adjust their
behavior accordingly.

3. Path-Goal Theory (Robert House)

 Focus: Leader’s role in helping followers achieve goals.

 Key Idea: Leaders should clarify the path to goals and remove obstacles.

 Leadership Styles:

o Directive (clear guidance and rules).

o Supportive (focus on well-being and needs of employees).

o Participative (involve employees in decision-making).

o Achievement-oriented (set challenging goals).

 Implication: Leadership style depends on employee characteristics and work environment.

The Johari Window is a model for understanding and improving self-awareness, interpersonal
communication, and mutual understanding in relationships. It was developed by Joseph Luft and
Harrington Ingham in 1955.

Structure of the Johari Window

The model is represented as a 4-quadrant grid:

Known to Self Unknown to Self

Known to Others Open Area (Arena) Blind Spot

Unknown to Others Hidden Area (Façade) Unknown Area

Four Quadrants

1. Open Area (Arena)

o Definition: Information known to both oneself and others.

o Examples: Skills, attitudes, shared experiences, visible behaviors.

o Goal: To expand this area through open communication and feedback.

o Benefit: Builds trust and improves relationships.

 2. Blind Spot

o Definition: Information others perceive about you, but you are unaware of.

o Examples: Habits, tone of speech, unrecognized strengths/weaknesses.

o Goal: Reduce the blind spot through feedback from others.

o Benefit: Enhances self-awareness and personal development.

3. Hidden Area (Façade)

o Definition: Information you know about yourself but choose not to share.

o Examples: Personal fears, insecurities, private ambitions.

o Goal: Reduce this area by sharing relevant information to build trust.

o Benefit: Promotes deeper relationships and collaboration.

4. Unknown Area

o Definition: Information unknown to both oneself and others.

o Examples: Latent talents, unconscious behaviors, repressed memories.

o Goal: Discover and explore the unknown through new experiences, self-reflection, or
external guidance.

o Benefit: Unlocks potential and encourages personal growth.

Key Processes in the Johari Window

1. Self-Disclosure

o Sharing information about yourself with others.

o Expands the Open Area and reduces the Hidden Area.

2. Feedback

o Receiving constructive insights from others.

o Reduces the Blind Spot and enhances self-awareness.

3. Exploration

o Engaging in new activities, self-reflection, or professional development.

o Reduces the Unknown Area by revealing untapped potential.

Applications of the Johari Window

1. Workplace Communication

o Encourages collaboration and transparency among team members.

 o Useful for team-building exercises and performance reviews.

2. Leadership Development

o Helps leaders become more aware of their impact on others.

o Encourages openness and receptiveness to feedback.

3. Personal Relationships

o Strengthens trust and intimacy through open communication.

4. Conflict Resolution

o Identifies misunderstandings and reduces miscommunication.

5. Personal Growth

o Enhances self-awareness and helps individuals discover hidden potential.

Advantages of the Johari Window

 Encourages openness and trust in relationships.

 Improves interpersonal communication.

 Promotes self-awareness and emotional intelligence.

 Helps uncover hidden talents and address weaknesses.

Limitations of the Johari Window

 Requires willingness to share and accept feedback.

 Cultural differences can influence self-disclosure and feedback styles.

 May not work well in environments lacking trust or psychological safety.

CONTROLLING

It’s the process of monitoring, comparing, and correcting work performance. All managers should
control even if their units are performing as planned because they can’t really know that unless
they’ve evaluated what activities have been done and compared actual performance against the
desired standard. Effective controls ensure that activities are completed in ways that lead to the
attainment of goals. Whether controls are effective, then, is determined by how well they help
employees and managers achieve their goals

Controlling is the process of measuring performance, comparing it with desired outcomes, and
implementing corrective measures to ensure that organizational goals are met.
Features of Controlling

1. Goal-Oriented: Focused on achieving organizational objectives.

2. Pervasive: Applicable at all organizational levels and functions.

3. Continuous: Ongoing process throughout the management cycle.

4. Dynamic: Adjusts to changes in plans and the external environment.

5. Backward and Forward Looking: Evaluates past performance and guides future actions.

Steps in the Controlling Process

1. Setting Performance Standards

o Define benchmarks or targets for performance.

o Standards can be quantitative (e.g., sales targets, production output) or qualitative

(e.g., customer satisfaction).

2. Measuring Actual Performance

o Collect data on actual performance using reports, observation, or technology.

o Timely and accurate measurement is essential for effective control.

3. Comparing Actual Performance with Standards

o Identify deviations by comparing actual results with set benchmarks.

o Deviations can be positive (better performance) or negative (underperformance).

4. Analyzing Deviations

o Determine the reasons for significant deviations.

o Tools like variance analysis and root cause analysis may be used.

5. Taking Corrective Actions

o Implement necessary changes to align performance with standards.

o Actions may include process improvement, training, resource reallocation, or

disciplinary measures.

6. Feedback and Follow-Up

o Ensure that corrective measures are effective.

o Use feedback to refine standards and improve the control process.

Types of Control

1. Feedforward Control (Preventive)

 o Focus: Anticipating problems and taking preemptive action.

o Example: Quality checks during the production planning phase.

2. Concurrent Control (Real-Time)

o Focus: Monitoring activities as they occur.

o Example: Supervisors tracking employee performance during tasks.

3. Feedback Control (Post-Action)

o Focus: Evaluating outcomes after tasks are completed.

o Example: Reviewing quarterly financial performance.

Importance of Controlling

1. Ensures Goal Achievement

o Aligns activities with organizational objectives.

2. Improves Efficiency

o Identifies and eliminates inefficiencies.

3. Facilitates Coordination

o Ensures alignment across departments and functions.

4. Enables Decision-Making

o Provides data-driven insights for future planning and strategies.

5. Reduces Risks

o Detects and addresses deviations early.

6. Enhances Employee Motivation

o Clear standards and feedback systems encourage accountability.

Limitations of Controlling

1. Costs of Control

o Monitoring and corrective measures can be expensive.

2. Resistance from Employees

o Excessive control may demotivate employees or lead to resentment.

3. External Factors

o Economic, social, or political changes can affect control effectiveness.

4. Inherent Limitations of Standards

 o Unrealistic or rigid benchmarks may hinder creativity or adaptability.

Techniques of Controlling

1. Traditional Techniques

o Budgetary Control.

o Statistical Reports.

o Break-even Analysis.

2. Modern Techniques

o Key Performance Indicators (KPIs).

o Balanced Scorecard.

o Management Information Systems (MIS).

Factors Reshaping and Redesigning Management Purpose

1. Internationalization

o Global competition has pushed firms to operate across borders.

o Cultural adaptability, global supply chains, and cross-border collaborations are

critical.

o Focus: Indian companies like Tata’s international acquisitions (e.g., Jaguar Land
Rover).

2. Digitalization

o Technology integration into all business processes, e.g., AI, IoT, blockchain.

o Enhances efficiency, customer experience, and decision-making.

o Example: Infosys’ digital services for global clients.

3. Entrepreneurship & Innovation

o Encouraging risk-taking and creativity within organizations.

o Startups influencing traditional corporate practices.

o Example: Tata’s innovation strategy for creating frugal solutions like the Nano car.

4. Values & Ethics

o Corporate governance, ethical leadership, and CSR initiatives.

o Indian ethos of Dharma (duty) and Santosh (contentment) guide decision-making.

o Example: Tata Group’s ethical framework and philanthropy.

Case Studies on Indian Corporates (e.g., Tata)

 Tata Group's emphasis on sustainability and community well-being.

 Acquisition strategies for global competitiveness.

 Employee-first policies and innovation culture.

Workplace Diversity

 Importance of inclusive hiring and retaining talent from diverse backgrounds.

 Gender equity, cultural diversity, and representation.

 Indian corporates like Wipro and Tata focus on diverse leadership.

Democracy and Sociocracy

1. Democracy in Management

o Transparent decision-making processes, engaging employees in strategies.

o Example: Infosys’ participative culture.

2. Sociocracy

o Focus on decentralized governance.

o Promotes shared power, equality, and efficiency in teams.

Indian Perspectives on Sustainability, Creativity, and Interpersonal Skills

1. Sustainability

o Emphasis on environmental, social, and governance (ESG) factors.

o Indian companies’ initiatives like Tata Steel’s sustainability goals.

2. Creativity

o Frugal innovation ("Jugaad") as a cultural strength.

o Developing affordable and scalable solutions.

3. Interpersonal Skills

o Strong emphasis on relationship building and emotional intelligence.

o Leadership styles rooted in humility and empathy.