Management Theory,

Decision Making
and Global Management

Industrial Engineering Department

College of Engineering
Adamson University
Why study Management Theories?

o Understanding theoretical
perspectives of management
o helps us understand the present
o provides a guide to action
o provides a source of new ideas
o gives clues to the meaning of
managers’ ideas
o gives clues to the meaning of outside
events
Evolution of Management:
Two Major Perspectives

Two perspectives of management are:

 the historical which includes three

views—classical, behavioral, and
quantitative

 the contemporary which includes

three views—systems, contingency,
and quality-management
The Historical Perspective
Classical Viewpoint

The classical view of management

emphasizes finding ways to manage
work more efficiently using two
approaches:
 scientific - emphasizes the scientific
study of work methods to improve
productivity
 administrative - concerned with
managing the total organization
Classical Viewpoint: Scientific
Management Theory

Principles of Scientific Management

1. Scientifically study each part of the
task
2. Carefully select workers with the right
abilities
3. Give workers the training and
incentives to do the task
4. Use scientific principles to plan the
work methods
Classical Viewpoint: Scientific
Management Theory

 A management approach,
formulated by Frederick W Taylor and
others between 1890 and 1930, sought
to determine scientifically the best
methods for performing any task, and
for selecting, training, and motivating
workers.
 The theory said that the only way to
expand productivity was to raise
efficiency of workers through
redesigning the work process.
Classical Viewpoint: Scientific
Management Theory

 Frank and Lillian Gilbreth and

Frederick W. Taylor pioneered
scientific management (emphasized
the study or work methods to improve
the productivity of individual workers)
 Frank & Lillian Gilbreth focused on
improving efficiency, and popularized
their ideas in the book (and later, the
movie), ‘Cheaper by the Dozen’
 Classical Viewpoint: Administrative
Management Theory

 Administrative management was

pioneered by Henri Fayol and Max
Weber, and is concerned with managing
the total organization
 Fayol identified the major functions of
management: planning, organizing,
leading, controlling, and coordinating
 Weber believed that an organization
should have: a well-defined hierarchy of
authority, formal rules and procedures,
a clear division of labor, impersonality,
and careers based on merit
Behavioral Viewpoint

 The behavioral viewpoint of

management emphasized the
importance of understanding human
behavior and of motivating employees
toward achievement
 This perspective was developed over
three phases: early behaviorism, the
human relations movement, and
behavioral science
 Behavioral theory was pioneered by
Hugo Munsterberg, Mary Parker
Follett, and Elton Mayo
 Behavioral Viewpoint: Munsterberg

Munsterberg believed that psychologists

could contribute to industry by:
 studying jobs and identifying
people suited to them
 identifying the psychological
conditions under which employees do
their best work
 devising management strategies to
encourage employees to follow
management’s interests
 Behavioral Viewpoint: Follett

Follett believed that:

 organizations should operate as
communities with managers and
employees working cooperatively
 organizations should resolve
conflicts through integration where
managers and workers talked over
differences
 managers should be facilitators,
and workers should control the work
process
Behavioral Viewpoint: Mayo

 Mayo developed a theory known as the

Hawthorne Effect which suggested
that employees worked harder if they
felt that managers cared about their
welfare and paid attention to them
 Behavioral Viewpoint: Abraham
Maslow and Douglas McGregor

 Maslow argued that people are motivated

by a hierarchy of human needs:
physiological, safety, social, esteem, and
self-actualization (Maslow’s Hierarchy of
Needs)
 McGregor theorized that a manager’s
attitudes toward employees could either be
Theory X (pessimistic, negative), or Theory
Y (optimistic, positive)
Maslow’s Hierarchy of Needs
 McGregor’s Theory X and Y

Theory X
• represents a pessimistic, negative view
of workers
• workers are irresponsible, resistant to
change, lack ambition, hate work, and
want to be led
Theory Y
• represents an optimistic, positive view of
workers
• Workers are considered capable of
accepting responsibility, self-direction,
self control and being creative
 Quantitative Viewpoint

 Quantitative management
Application to management of quantitative
techniques, such as statistics and computer
simulations.
Two branches of quantitative management
are management science and operations
management
 Quantitative Viewpoint

Management science focuses on using

mathematics to aid in problem solving and
decision making

Operations management focuses on

managing the production and delivery of an
organization’s products or services more
effectively
The Contemporary Perspective
Contingency Viewpoint

 Emphasizes that a manager’s

approach should vary according to
the individual and the environmental
situation
 Most practical because
it addresses problems
on a case-by-case basis
Quality Management Viewpoint

The quality-management viewpoint of the

contemporary perspective includes quality control,
quality assurance, and total quality management
Quality is the total ability of a product or service to
meet customer needs, and is one of the best ways
to add value to a product and differentiate it from
others
o Quality control is the strategy for minimizing
errors by managing each stage of production
o Quality assurance focuses on the performance
of workers, and emphasizes a goal of zero
defects
Quality Management Viewpoint

 Total Quality Management (TQ, QM or TQM)

and Six Sigma (6) are sweeping “culture
change” efforts to position a company for
greater customer satisfaction, profitability and
competitiveness. TQ may be defined as
managing the entire organization so that it
excels on all dimensions of products and
services that are important to the customer.
 Quality Management Viewpoint: W.
Edwards Deming’s Concepts

 Understanding (and appreciation) of Systems

- optimizing sub-systems sub-optimizes the total system
- the majority of defects come from systems, the responsibility of
management (e.g., machines not in good order, defective material, etc.
 Knowledge of Statistics (variation, capability, uncertainty in data, etc.)
- to identify where problems are, and point managers and workers toward solutions
 Knowledge of Psychology (Motivation)
- people are afraid of failing and not being recognized so they fear how data will be used
against them
 Theory of Knowledge
- understanding that management in any form is a prediction, and is based on
assumptions
Decision Making Process

 Decision making is the mental process of

choosing from a set of alternatives. Every
decision-making process produces an
outcome that might be an action, a
recommendation, or an opinion.
 Decisions are commonly focused on a
problem or challenge. Decision makers must
gather and consider data before making a
choice. 
Decision Making Process

Guided by the management theories explored

throughout this module, the general decision
making process is enumerated below:
 Establishing objectives
 Classifying and prioritizing objectives
 Developing selection criteria
 Identifying alternatives
 Evaluating alternatives against the selection
criteria
 Choosing the alternative that best satisfies the
selection criteria
 Implementing the decision
Globalization

 Globalization is the trend of the world

economy toward becoming a more
interdependent system
 Today, we are witnessing a shrinking of
time and space as air travel and the
electronic media have made it easier for
people around the world to communicate
with each other. We call this the global
village
International/Global Management

You need to learn about international

management because you may find
yourself in any of the following situations:
dealing with customers or partners from
different cultures
buying components, raw materials, or
services from foreign suppliers
working for a superior from a foreign
country
working in a foreign subsidiary or for a
foreign firm located in another country
 International/Global Management

There are three primary attitudes among

international managers:
 Managers who believe that their native country,
culture, language, and behavior are superior to all
others are ethnocentric managers
 Managers who believe native managers in
foreign offices best understand native personnel
and practices, and so the home office should
leave them alone are polycentric managers
 Geocentric managers accept that there are
differences and similarities between home and
foreign personnel and practices, and that they
should use whatever techniques are most
effective
International/Global Management

WHY DO COMPANIES EXPAND

INTERNATIONALLY?

Firms expand internationally to take

advantage of:
1. Availability of supplies
2. New markets
3. Lower labor costs
4. Access to finance capital
5. Avoidance of tariffs & import quotas
International/Global Management

HOW DO COMPANIES EXPAND

INTERNATIONALLY?
There are five ways to expand
internationally:
1. Global outsourcing
2. Importing, exporting, and countertrading
3. Licensing and franchising
4. Joint ventures
5. Wholly-owned subsidiaries