MANAGEMENT OF ENTERPRISE 1. Concept and principles of management 2. Functions and methods of management of enterprise 3. Organizational structures of management.

1-2 Learning Objectives 1.Describe what management is, why management is important, what managers do, and how managers utilize organizational resources efficiently and effectively to achieve organizational goals 2.Distinguish among planning, organizing, leading, and controlling (the four principal managerial tasks), and explain how managers’ ability to handle each one affects organizational performance

1-3 Learning Objectives 3.Differentiate among three levels of management, and understand the tasks and responsibilities of managers at different levels in the organizational hierarchy 4.Distinguish between three kinds of managerial skill, and explain why managers are divided into different departments to perform their tasks more efficiently and effectively.

1-4 Learning Objectives 5.Discuss some major changes in management practices today that have occurred as a result of globalization and the use of advanced information technology (IT). 6.Discuss the principal challenges managers face in today’s increasingly competitive global environment

What is Management? All managers work in organizations Organizations – collections of people who work together and coordinate their actions to achieve a wide variety of goals

1-6 Managers Managers – –The people responsible for supervising the use of an organization’s resources to meet its goals

1-7 Concept and principles of management Management of the enterprise – the art of getting things done through people

1. Concept and principles of management  Management is an art of getting things done through and with the people in formally organized groups. 8

There are such conceptions of management of enterprise: 1. Rationalistic conception (an enterprise is examined as the closed system) 2. Informal conception (an enterprise is examined as an open system)

Principles of management  Management principles are the statements of fundamental truth based on logic which provides guidelines for managerial decision making and actions. 10

There are 14 Principles of Management described by Henri Fayol  These principles are derived: - 1.On the basis of observation and analysis i.e. practical experience of managers. 2.By conducting experimental studies. 11

1. Division of Labor  Work of all kinds must be divided & subdivided and allotted to various persons according to their expertise in a particular area. 12

2. Authority & Responsibility  Authority refers to the right of superiors to get exactness from their sub-ordinates.  Responsibility means obligation for the performance of the job assigned. 13

3. Unity of Command  A sub-ordinate should receive orders and be accountable to one and only one boss at a time.  He should not receive instructions from more than one person 14

4. Unity of Direction  People engaged in the same kind of business or same kind of activities must have the same objectives in a single plan.  Without unity of direction, unity of action cannot be achieved. 15

5. Equity  Equity means combination of fairness, kindness & justice.  The employees should be treated with kindness & equity if devotion is expected of them. 16

6. Order  This principle is concerned with proper & systematic arrangement of things and people.  Arrangement of things is called material order and placement of people is called social order. 17

7. Discipline  Discipline means sincerity, obedience, respect of authority & observance of rules and regulations of the enterprise.  Subordinate should respect their superiors and obey their order. 18

8. Initiative  Initiative means eagerness to initiate actions without being asked to do so.  Management should provide opportunity to its employees to suggest ideas, experiences& new method of work. 19

9. Remuneration  Remuneration to be paid to the workers should be fair, reasonable, satisfactory & rewarding of the efforts.  It should accord satisfaction to both employer and the employees. 20

10. Stability of Tenure  Employees should not be moved frequently from one job position to another i.e. the period of service in a job should be fixed. 21

11. Scalar Chain  Scalar chain is the chain of superiors ranging from the ultimate authority to the lowest.  Every orders, instructions etc. has to pass through Scalar chain. 22

12. Sub-Ordination of Individual Interest to common goal  An organization is much bigger than the individual it constitutes therefore interest of the undertaking should prevail in all circumstances. 23

13. Espirit De’ Corps  It refers to team spirit i.e. harmony in the work groups and mutual understanding among the members.  Espirit De’ Corps inspires workers to work harder. 24

14. Centralization  Centralization means concentration of authority at the top level.  In other words, centralization is a situation in which top management retains most of the decision making authority. 25

Functions and methods of management of enterprise Management Efficiency –A measure of how well or how productively resources are used to achieve a goal Management Effectiveness –A measure of the appropriateness of the goals an organization is pursuing and the degree to which they are achieved.

1-27 Why study management? 1.The more efficient and effective use of scarce resources that organizations make of those resources, the greater the relative well-being and prosperity of people in that society

1-28 Why study management? 2.Helps people deal with their bosses and coworkers 3.Opens a path to a well-paying job and a satisfying career

1-29 Managerial Tasks Managers at all levels in all organizations perform each of the four essential managerial tasks of planning, organizing, leading, and controlling

1-30 Four Functions of Management Figure 1.2

1-31 Planning Process of identifying and selecting appropriate organizational goals and courses of action

1-32 Steps in the Planning Process Deciding which goals the organization will pursue Deciding what courses of action to adopt to attain those goals Deciding how to allocate organizational resources

1-33 Planning Complex, difficult activity Strategy to adopt is not always immediately clear Done under uncertainty

1-34 Organizing Task managers perform to create a structure of working relationships that allow organizational members to interact and cooperate to achieve organizational goals

1-35 Organizing Involves grouping people into departments according to the kinds of job-specific tasks they perform Managers lay out lines of authority and responsibility Decide how to coordinate organizational resources

1-36 Leading Articulating a clear organizational vision for its members to accomplish, and energize and enable employees so that everyone understands the part they play in achieving organizational goals

1-37 Leading Leadership involves using power, personality, and influence, persuasion, and communication skills Outcome of leadership is highly motivated and committed workforce

1-38 Controlling Task of managers is to evaluate how well an organization has achieved its goals and to take any corrective actions needed to maintain or improve performance –The outcome of the control process is the ability to measure performance accurately and regulate organizational efficiency and effectiveness

1-39 Decisional Roles Roles associated with methods managers use in planning strategy and utilizing resources. –Entrepreneur—deciding which new projects or programs to initiate and to invest resources in. –Disturbance handler—managing an unexpected event or crisis. –Resource allocator—assigning resources between functions and divisions, setting the budgets of lower managers. –Negotiator—reaching agreements between other managers, unions, customers, or shareholders.

1-40 Interpersonal Roles Roles that managers assume to provide direction and supervision to both employees and the organization as a whole. –Figurehead—symbolizing the organization’s mission and what it is seeking to achieve. –Leader—training, counseling, and mentoring high employee performance. –Liaison—linking and coordinating the activities of people and groups both inside and outside the organization.

1-41 Informational Roles Roles associated with the tasks needed to obtain and transmit information in the process of managing the organization. –Monitor—analyzing information from both the internal and external environment. –Disseminator—transmitting information to influence the attitudes and behavior of employees. –Spokesperson—using information to positively influence the way people in and out of the organization respond to it.

Methods of management of enterprise 1. Economical - methods which realize financial interests of personnel participation in production processes by the use of money reward and economic instruments. 1. Economical - methods which realize financial interests of personnel participation in production processes by the use of money reward and economic instruments.

2. Socially-psychological methods — realize the reasons of social conduct of personnel 3. Organizational methods are based on reasons of the forced influence on people. (careful and regulation) 2. Socially-psychological methods — realize the reasons of social conduct of personnel 3. Organizational methods are based on reasons of the forced influence on people. (careful and regulation)

Organizational structures of management A formal system of task and reporting relationships that coordinates and motivates members so that they work together to achieve organizational goals

Organizational structures of management of enterprise. Organizational structure of management— form of the management system, which determines composition, cooperation and subordination of its elements with the use of linear, functional and inter-functional connections in the process of intercourse.

Linear ties arise up between subsections and leaders of different levels of management, where one leader submits to other. Inter-functional ties take place between subsections of identical level of management.

Functional ties characterize cooperation of leaders which execute certain functions on the different levels of management, and between them there is no administrative submission.

Organizational structures of management 1. Linear (Planning of works and control of their implementation is carried out for vertical lines from the leader to production subsections which execute administrative functions) Р Leader surveying and attendant production 2 – processing 3 –sales collective

2. Functional (Planning of works and control of their implementation is carried out by functional subsections (A, B, C, etc). Works are executed by production subsections (1,2,3) on each function) Р А B C A – plan-production department B - technical department C - financial department

3. Linear-functional (Planning of works is carried out by functional subsections (A, B, C), works are executed by production subsections (1,2,3). All subsections submit a leader) Р А B C

4. Matrix (staff) (To linear-functional we add general designers (I, II,III) which are responsible for the competitiveness of objects. The intersections of lines show the openness of any connections for vertical lines and horizontal lines.) Р А B C І ІІ ІІІ

5. Teem (complex brigades are formed on enterprises for implementation of separate types of works) Р А B C І ІІ ІІІ

6. Division (an association of the centralized coordination with decentralizing management ) Р Production I II III АBC12 3 АLАL BL CL AD - deputy general director by marketing BD - deputy general director by NIOKR CD - deputy general director by technologies

Levels of Management Figure 1.3

1-55 Levels of Management First line managers - Responsible for daily supervision of the non-managerial employees who perform many of the specific activities necessary to produce goods and services Middle managers - Supervise first-line managers. Responsible for finding the best way to organize human and other resources to achieve organizational goals

1-56 Levels of Management Top managers – Responsible for the performance of all departments and have cross-departmental responsibility. Establish organizational goals and monitor middle managers Decide how different departments should interact Ultimately responsible for the success or failure of an organization

1-57 Managerial Skills Conceptual skills –The ability to analyze and diagnose a situation and distinguish between cause and effect. Human skills –The ability to understand, alter, lead, and control the behavior of other individuals and groups. Technical skills –Job-specific skills required to perform a particular type of work or occupation at a high level.

1-58 Core Competency Specific set of departmental skills, abilities, knowledge and experience that allows one organization to outperform its competitors

1-59 Restructuring Involves simplifying, shrinking, or downsizing an organization’s operations to lower operating costs –Can reduce the morale of remaining employees

1-60 Outsourcing Contracting with another company, usually in a low cost country abroad, to perform a work activity the company previously performed itself Increases efficiency by lowering operating costs, freeing up money and resources that can now be used in more effective ways

1-61 Empowerment Involves giving employees more authority and responsibility over the way they perform their work activities

1-62 Self-managed teams Groups of employees who assume collective responsibility for organizing, controlling, and supervising their own work activities

1-63 Challenges for Management in a Global Environment Rise of Global Organizations. Building a Competitive Advantage Maintaining Ethical Standards Managing a Diverse Workforce Utilizing Information Technology and Technologies Global Crisis Management

1-64 Building Competitive Advantage Competitive Advantage – ability of one organization to outperform other organizations because it produces desired goods or services more efficiently and effectively than its competitors

1-65 Building Competitive Advantage Increasing efficiency –Reduce the quantity of resources used to produce goods or services Increasing Quality –Improve the skills and abilities of the workforce –Introduce total quality management

1-66 Building Competitive Advantage Increasing speed, flexibility, and innovation –How fast a firm can bring new products to market –How easily a firm can change or alter the way they perform their activities

1-67 Building Competitive Advantage Innovation –Process of creating new or improved goods and services that customers want –Developing better ways to produce or provide goods and services

1-68 Turnaround Management Difficult and complex management task Done under conditions of great uncertainty Risk of failure is greater for a troubled company More radical restructuring necessary

1-69 Maintaining Ethical and Socially Responsible Standards Managers are under considerable pressure to make the best use of resources Too much pressure may induce managers to behave unethically, and even illegally

1-70 Managing a Diverse Workforce To create a highly trained and motivated workforce managers must establish HRM procedures that are legal, fair and do not discriminate against organizational members

1-71 Global Crisis Management May be the result of: Natural causes Manmade causes International terrorism Geopolitical conflicts

1-72 Discussion Question What is the biggest challenge for management in a Global Environment? A.Building a Competitive Advantage B.Maintaining Ethical Standards C.Managing a Diverse Workforce D.Global Crisis Management

1-73 Question? What skill is the ability to understand, alter, lead, and control the behavior of other individuals and groups ? A.Conceptual B.Human C.Technical D.Managerial

1-74 Question? What is a person responsible for supervising the use of an organization’s resources to meet its goals? A.Team leader B.Manager C.President D.Resource allocator