ORGANIZATION AND

MANAGEMENT
Course Code: PA 4

SY 2020-2021

BACHELOR OF PUBLIC ADMINISTRATION

 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

BRIEF OVERVIEW

This Learning Material includes the major theories and practices of organization
and management and their relevance to the Philippines. This course deals with the
fundamental concepts, principles, structures, practices and issues on the organization and
management of public and private organizations or entities. It is intended to develop the
students ability to apply the content of the course in explaining, analyzing, and criticizing
the existing practice of government, business, and NGO’s about their operations in the
context of a changing environment.

This Self-Learning Material is designed for use as guide for self-learning by the
student outside of the usual classroom setting. The student is therefore expected to achieve
the learning outcomes by him/herself, away from school and with minimal intervention by
the teacher.

Each student will be provided with a digital folder containing all the documents
pertinent to the course. The student is strictly prohibited to share any of such documents to
anybody. Doing so will be treated as a disciplinary case and the perpetrator will have to
face sanctions.

DISCLAIMER: This learning material is used in compliance with the flexible

teaching-learning approach espoused by CHED in response to the pandemic that has
globally affected educational institutions. Authors and publishers of the contents are well
acknowledged. As such the college and its faculty do not claim ownership of all sourced
information. This learning material will solely be used for instructional purposes not for
commercialization.

Rommel R. Regala, Ph.D.

CatSU College of Arts and Sciences

GUIDELINES IN STUDYING WITH THE LEARNING MATERIAL

1. Start by taking note of the objectives. Then at the end of each lesson, check if you
have fulfilled all of the objectives.

2. Be sure to read first the required reading/s for each lesson before proceeding to the
summary provided in the “Content” part of the learning material. Remember, what
is in the lesson is only a summary which is not enough to gain adequate
understanding of the topic/s covered in the lesson. Also, it will be most
advantageous for the student to read more materials over and above what is
required here. You can search for them in the internet and at the CSU Library.

3. Have a separate notebook. Make your own notes as you read through the reading
materials and summary provided for here. Transferring the ideas, organizing and
rendering them in your own words and understanding, help you to absorb and
internalize the content.
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Virac, Catanduanes

4. Have a dictionary or thesaurus handy to be able to check out the meaning of words
that are not very familiar to you.
5. Do the self-assessment activity to end your work for each particular lesson.
6. Answers to your self-assessment questions must be written in digital word
document by clusters and submitted either by email or in printed hard copies to
your teacher. Clustering and deadlines will be posted on Google Classroom.

7. Be sure to write your name on your submission. Submit on or before deadline. Late
submission will not be accepted.

8. Compose your answers to the self-assessment questions in your own words. Do not
copy any portion/s of the learning materials from any source (book or the internet).
DO NOT COPY FROM YOUR CLASSMATE, in part or in full.
Both the original and the copied
papers will be given “0” mark.

It is advised therefore that a student should not show his/her self-assessment

activity paper to any classmate so as to prevent copying.

9. The rubrics below will be used in assessing your answers in the self-assessment
questions that you will be submitted.
EXCELLENT – 10 Points (1.0)
 Concise and direct to the point
 Precise explanation of concepts and exact illustrations

VERY SATISFACTORY – 8 Points (1.5-1.1)

 Concise and direct to the point
 Explanation and illustrations are quite adequate

SATISFACTORY – 6 Points (2.0-1.6)

 Moderately concise
 Explanation and illustrations are moderately adequate

LESS SATISFACTORY – 4 Points (2.5-2.1)

 Fairly concise
 Explanation and illustrations are fairly adequate

POOR – 2 Points (3.0-2.6)

 Vague but intelligible
 Explanation and illustrations are minimally adequate

VERY POOR – 0 Point (5.0)

 Answers is thoroughly out of range, or no answer at all

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Virac, Catanduanes

10. There will be written midterm and final examinations. You have to come to school
for the examinations. Examination will be on the following schedules:

Midterm Examination - _________________________________

Final Examination - _________________________________

11. We will create a group chat on Messenger. This will be used only for clarifications
regarding lessons/topics in the course. No submissions will be accepted on group
chat/messenger. Socializing and raising unrelated issues should be minimized.

LEARNING OUTCOMES

At the end of this handout, you should be able to:

1. Understood the theory and principles of Organization Management and the

resulting ability to practice effective and pragmatic management.
2. Perceived the issues from an overall strategic organization management
perspective.
3. Analyzed the developments in an organization’s macro environment in the order to
enable the organization to take advantages of changing opportunities.
4. Understood the organization problem and harness resources to achieve the
objectives of the organization and its members.
5. Developed into a performance-oriented change agent.

COURSE CONTENT

Desired Learning Course Content/

Outcomes Subject Matter

A. At the end of the unit, the A. Introduction to Management and Organization

students must have:
1. Classifications of Managers
1. Learned who managers are 2. Definitions of management
and about the nature of their 3. Management Functions
4. Management Roles
work; be acquainted with the
5. Management Skills
dimensions of the planning- 6. The Universality of Management
organizing-leading-controlling 7. Rewards and Challenges of Being a Manager
(P-O-L-C) framework;
described the management
roles and skills; and
understood the reality of work.

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Desired Learning Course Content/

Outcomes Subject Matter

B. At the end of the unit, the B. Management Yesterday and Today

students must have:
1. Scientific Management
1. Described the six major 2. General Administrative Theorists
approaches to management. 3. Quantitative Approach to Management
4. Organizational Behavior
2. Understood the current 5. The Systems Approach
concepts and practices that 6. The Contingency Approach
7. Current Trends and Issues
are changing the way
managers do their jobs today.

C. At the end of the unit, the C. Organization Culture and Environment: The
students must have: Constraints

1. Understood how the forces of 1. Two Perspectives Concerning the Role that
an organization’s internal and Managers Play in an Organization’s Success of
external environment Failure
influence, and sometimes 2. The Organization’s Culture
constrain, its productivity; and 3. Strong versus Weak Culture
realized that organizational 4. The Organization’s Environment
culture and environment have
important implications for the
way an organization is
managed.

D. At the end of the unit, the D. Managing in a Global Environment

students must have:
1. Manager’s Attitude Toward International
1. Described the changes and Business
considered the particular 2. Regional Trading Alliances
characteristics of the 3. The World Trade Organization (WTO)
Manager’s own location as 4. Different Types of Global Organizations
they plan, organize, lead, and 5. Stages of Internationalization
control in this dynamic 6. Management Challenges in a Global
environment. Environment
7. Framework for Understanding Differences
Between National Cultures

E. At the end of the unit, the E. Social Responsibility and Managerial Ethics
students must have:
1. Two Opposing Views of Social Responsibility
1. Discussed the issues involving 2. The Greening of Management
social responsibility and 3. Values-Based Management

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Desired Learning Course Content/

Outcomes Subject Matter

managerial ethics and their 4. Managerial Ethics

effect on managerial decision 5. Factors That Affect Employee Ethics
making. 6. Improving Ethical Behavior
7. Social Entrepreneurship
8. Social Impact Management

F. At the end of the unit, the F. Decision Making: The Essence of the
students must have: Manager’s Job

1. Understood how everyone in 1. The Decision-Making Process

an organization makes 2. Basis of manager’s Decisions
decisions as decision making 3. Types of problems and Decisions
is particularly important in a 4. Decision-Making Conditions
manager’s job. 5. Decision-Making Styles
6. Decision-Making Biases and errors

G. At the end of the unit, the G. Foundations of Planning

students must have:
1. Purposes of Planning
1. Articulated the issues on 2. Planning and Performance
planning that involve defining 3. The Role of Goals and Plans in Planning
the organization’s goal, 4. Types of Goals
establishing an overall 5. Types of Plans
strategy for achieving these 6. Approaches to Establishing Goals
goals, and developing plans
7. Characteristics of Well-Designed Goals
for organizational work
activities.
8. Steps in Goal Setting
9. Developing Plans
10. Approaches to Planning
11. Criticisms of Planning

H. At the end of the unit, the H. Strategic Management

students must have:
1. The Strategic Management Process
1. Described the strategic 2. Types of Organizational Strategies
management process as it a. Corporate Strategy
relates to the planning b. Business Strategy
function. c. Functional Strategy

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Lesson 1

Introduction to Management and Organizations

The 21st century has brought with it a new workplace, one in which everyone
must adapt to a rapidly hanging society with constantly shifting demands and
opportunities. The economy has become global and is driven by innovations and
technology and organizations have to transform themselves to serve new customer
expectations. Today’s economy presents challenging opportunities as well as dramatic
uncertainty. The new economy has become knowledge based and is performance
driven. The themes in the present context area ‘respect’, participation, empowerment,
teamwork and self management. In the light of the above challenges a new kind of
leader is needed to guide business through turbulence. Managers in organizations do this
task.

A manager is someone who coordinates and oversees the work of other people so
that organizational goals can be accomplished. It is not about personal achievement
but helping others do their job. Managers may also have additional work duties not
related to coordinating the work of others.

Managers can be classified by their level in the organization, particularly in

traditionally structured organizations—those shaped like a pyramid

1) First-line managers (often called supervisors) are located on the lowest level
of management.
2) Middle managers include all levels of management between the first-line level
and the top level of the organization.
3) Top managers include managers at or near the top of the organization who are
responsible for making organization-wide decisions and establishing plans and
goals that affect the entire organization.

The changing nature of organizations and work often requires employees in

formerly nonmanagerial jobs to perform managerial activities. Non managerial jobs
are those where one works directly on a job and had no one reporting to him.

Mary Parker Follet defines management as, “The art of getting things done
through people”

Management involves coordinating and overseeing the work activities of others

so that their activities are completed efficiently and effectively.

1) Coordinating and overseeing the work of others is what distinguishes a

managerial position from a nonmanagerial one.
2) Efficiency is getting the most output from the least amount of inputs in order to
minimize resource costs. Efficiency is often referred to as “doing things right”
Effectiveness is completing activities so that organizational goals are attained
and is often described as “doing the right things”
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No two managers’ jobs are exactly alike. All managers perform certain function,
enact certain roles and display a set of skills in their jobs.

Management Functions

According to the functions approach managers perform certain activities to

efficiently and effectively coordinate the work of others. They can be classified as

1) Planning involves defining goals, establishing strategies for achieving those

goals, and developing plans to integrate and coordinate activities.
2) Organizing involves arranging and structuring work to accomplish the
organization’s goals.
3) Leading involves working with and through people to accomplish
organizational goals.
4) Controlling involves monitoring, comparing, and correcting work performance.

Since these four management functions are integrated into the activities of
managers throughout the workday, they should be viewed as an ongoing process and
they need not the done in the above sequence.

Management Roles

In the late 1960s, Henry Mintzberg conducted a precise study of managers at

work. He concluded that managers perform 10 different roles, which are highly
interrelated.

Management roles refer to specific categories of managerial behavior. Overall

there are ten specific roles performed by managers which are included in the following
three categories.

1) Interpersonal roles include figurehead, leadership, and liaison activities.

2) Informational roles include monitoring, disseminating, and spokesperson
activities.
3) Decisional roles include entrepreneur, disturbance handler, resource allocator,
and negotiator.

Although the functions approach represents the most useful way to describe the
manager’s job, Mintzberg’s roles give additional insight into managers’ work. Some of
the ten roles do not fall clearly into one of the four functions, since all managers do
some work that is not purely managerial.

Management Skills

Managers need certain skills to perform the challenging duties and activities
associated with being a manager. Robert L. Katz found through his research in the early
1970s that managers need three essential skills

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 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

1) Technical skills are job-specific knowledge and techniques needed to

proficiently perform specific tasks.
2) Human skills are the ability to work well with other people individually and in
a group.
3) Conceptual skills are the ability to think and to conceptualize about abstract and
complex situations.

These skills reflect a broad cross-section of the important managerial activities that
are elements of the four management functions

Significant changes in the internal and external environments have a measurable

impact on management. Security threats, corporate ethics scandals, global economic
and political uncertainties, and technological advancements have had a great impact on
the manager’s job.
Two significant changes facing today’s managers are importance of customers to the
manager’s job and Importance of innovation to the manager’s job

Organizations need managers. An organization is a deliberate arrangement of

people to accomplish some specific purpose. Organizations share three common
characteristics: (1) Each has a distinct purpose (2) Each is composed of people (3) Each
develops some deliberate structure so members can do their work. Although these three
characteristics are important in defining what an organization is, the concept of an
organization is changing. The characteristic of new organizations of today include:
flexible work arrangements, employee work teams, open communication systems, and
supplier alliances. Organizations are becoming more open, flexible, and responsive to
changes. Organizations are changing because the world around them has changed
and is continuing to change. These societal, economic, global, and technological
changes have created an environment in which successful organizations must embrace
new ways of getting their work done.

The importance of studying management in today’s dynamic global environment

can be explained by looking at the universality of management, the reality of work, and
the rewards and challenges of being a manager.

The Universality of Management: Management is needed in all types and sizes

of organizations, at all organizational levels, and in all organizational work areas
throughout the world.

The Reality of Work: All employees of an organization either manage or are managed.
Rewards and Challenges of Being a Manager
Challenges
a) Managers may have difficulty in effectively blending the knowledge, skills,
ambitions, and experiences of a diverse group of employees.
b) A manager’s success typically is dependent on others’ work performance.

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Rewards

a) Managers have an opportunity to create a work environment in which

organizational members can do their work to the best of their ability and help the
organization achieve its goals.
b) Managers often receive recognition and status in the organization and in the
larger community; influence organizational outcomes; and receive appropriate
compensation.
c) Knowing that their efforts, skills, and abilities are needed by the organization
gives many managers great satisfaction.

The manager of today must integrate management skills with new approaches that
emphasize the human touch, enhance flexibility, and involve employees.

REFERENCES

Enriquez, E. 2016. Organization and Management. Manila: JFS Publishing Services

Principles of Management. discovery.bits-

pilani.ac.in/dlpd/.../principles_of_management_notes.pdf. Retrieved from:
http://discovery.bits-
pilani.ac.in/dlpd/courses/coursecontent/courseMaterial/mgtszc211/principles_of_m
anagement_notes.pdf

Principles of Management. Saylor Academy: Washington DC. Retrieved from:

www.saylor.org/site/textbooks/Principles%20of%20Management.pdf

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 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

SELF-ASSESSMENT QUESTIONS

1. Classify Managers in terms of their level in the Organization.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. Differentiate Efficiency and Effectiveness.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. Explain each classification of Management Functions.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

4. Categorize Management Roles.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

5. What skills are required for Managers to perform challenging duties and activities?
Explain each.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

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Lesson 2

Management Yesterday and Today

Organizations and managers have existed for thousands of years. The Egyptian
pyramids and the Great Wall of China were projects of tremendous scope and
magnitude, and required good management. Regardless of the titles given to managers
throughout history, someone has always had to plan what needs to be accomplished,
organize people and materials, lead and direct workers, and impose controls to ensure
that goals were attained as planned.

Two historical events significant to the study of management are work of Adam Smith,
in his book,’ The Wealth of Nations’, in which he argued brilliantly for the economic
advantages of division of labor (the breakdown of jobs into narrow, repetitive tasks).
The Industrial Revolution is second important pre-twentieth-century influence on
management. The introduction of machine powers combined with the division of labor
made large, efficient factories possible. Planning, organizing, leading, and controlling
became necessary activities.

There are six major approaches to management. They are explained as follows

1) SCIENTIFIC MANAGEMENT

Scientific management is defined as the use of the scientific method to

determine the “one best way” for a job to be done. The most important
contributor in this field was Frederick W. Taylor who is known as the “father”
of scientific management. Using his principles of scientific management,
Taylor was able to define the “one best way” for doing each job.

Frank and Lillian Gilbreth were inspired by Taylor’s work and proceeded to
study and develop their own methods of scientific management. They devised a
classification scheme to label 17 basic hand motions called therbligs in order to
eliminate wasteful motions

Guidelines devised by Taylor and others to improve production efficiency are

still used in today’s organizations. However, current management practice is not
restricted to scientific management practices alone. Elements of scientific
management still used include:

1. Using time and motion studies

2. Hiring best qualified workers
3. Designing incentive systems based on output

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2) GENERAL ADMINISTRATIVE THEORISTS

This group of writers, who focused on the entire organization, developed more
general theories of what managers do and what constitutes good management
practice.

Henri Fayol and Max Weber were the two most prominent proponents of the general
administrative approach. Fayol focused on activities common to all managers. He
described the practice of management as distinct from other typical business functions.

He stated 14 principles of management which are as follows:

1. Division of Work
2. Authority
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of individual interest to group interest
7. Remuneration
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability
13. Initiative
14. Espirit de corps

Max Weber was a German sociologist who developed a theory of authority structures
and described organizational activity based on authority relations. He described the
ideal form of organization as a bureaucracy marked by division of labor, a
clearly defined hierarchy, detailed rules and regulations, and impersonal
relationships

Some current management concepts and theories can be traced to the work of the
general administrative theorists. The functional view of a manager’s job relates to
Henri Fayol’s concept of management. Weber’s bureaucratic characteristics are
evident in many of today’s large organizations—even in highly flexible
organizations that employ talented professionals. Some bureaucratic
mechanisms are necessary in highly innovative organizations to ensure that
resources are used efficiently and effectively.

3) QUANTITATIVE APPROACH TO MANAGEMENT

The quantitative approach to management, sometimes known as operations

research or management science, uses quantitative techniques to improve
decision making. This approach includes applications of statistics, optimization
models, information models, and computer simulations. The quantitative

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approach originated during World War II as mathematical and statistical

solutions to military problems were developed for wartime use.

The relevance of quantitative approach today is that it has contributed most

directly to managerial decision making, particularly in planning and controlling.
The availability of sophisticated computer software programs has made the use
of quantitative techniques more feasible for managers.

4) ORGANIZATIONAL BEHAVIOR

The field of study concerned with the actions (behaviors) of people at work is
organizational behavior. Organizational behavior (OB) research has
contributed much of what we know about human resources management and
contemporary views of motivation, leadership, trust, teamwork, and conflict
management.

The early advocates of OB approach were Robert Owen, Hugo Munsterberg,

Mary Parker Follett, and Chester Barnard. Their ideas served as the foundation
for employee selection procedures, motivation programs, work teams, and
organization-environment management techniques. The Hawthorne Studies
were the most important contribution to the development of organizational
behavior.

This series of experiments conducted from 1924 to the early 1930s at Western
Electric Company’s Hawthorne Works in Cicero, Illinois, were initially devised
as a scientific management experiment to assess the impact of changes in
various physical environment variables on employee productivity.

After Harvard professor Elton Mayo and his associates joined the study as
consultants, other experiments were included to look at redesigning jobs, make
changes in workday and workweek length, introduce rest periods, and introduce
individual versus group wage plans.

The researchers concluded that social norms or group standards were key
determinants of individual work behavior.

Although not without criticism (concerning procedures, analyses of findings,

and the conclusions), the Hawthorne Studies stimulated interest in human
behavior in organizational settings.

In the present day context behavioral approach assists managers in designing

jobs that motivate workers, in working with employee teams, and in facilitating
the flow of communication within organizations. The behavioral approach
provides the foundation for current theories of motivation, leadership, and group
behavior and development.

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5) THE SYSTEMS APPROACH

During the 1960s researchers began to analyze organizations from a systems

perspective based on the physical sciences. A system is a set of interrelated and
interdependent parts arranged in a manner that produces a unified whole. The
two basic types of systems are open and closed. A closed system is not
influenced by and does not interact with its environment. An open system
interacts with its environment.

Using the systems approach, managers envision an organization as a body with

many interdependent parts, each of which is important to the well-being of the
organization as a whole. Managers coordinate the work activities of the various
parts of the organization, realizing that decisions and actions taken in one
organizational area will affect other areas.

The systems approach recognizes that organizations are not self-contained; they
rely on and are affected by factors in their external environment.

6) THE CONTINGENCY APPROACH

The contingency approach recognizes that different organizations require

different ways of managing. The contingency approach to management is a view
that the organization recognizes and responds to situational variables as they
arise.

CURRENT TRENDS AND ISSUES

The following are the current concepts and practices are changing the way managers do
their jobs today.

Globalization: Organizational operations are no longer limited by national borders.

Managers throughout the world must deal with new opportunities and challenges
inherent in the globalization of business.

Ethics: Cases of corporate lying, misrepresentations, and financial manipulations have

been widespread in recent years. Managers of firms such as Enron, ImClone, Global
Crossing, and Tyco International have placed their own self-interest ahead of other
stakeholders’ welfare. While most managers continue to behave in a highly ethical
manner, abuses suggest a need to “upgrade” ethical standards. Ethics education is
increasingly emphasized in college curricula today. Organizations are taking a more
active role in creating and using codes of ethics, ethics training programs, and ethical
hiring procedures.

Workforce diversity: It refers to a workforce that is heterogeneous in terms of gender,

race, ethnicity, age, and other characteristics that reflect differences. Accommodating
diverse groups of people by addressing different lifestyles, family needs, and work
styles is a major challenge for today’s managers.

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.
Entrepreneurship: It is the process whereby an individual or group of individuals use
organized efforts to pursue opportunities to create value and grow by fulfilling wants
and needs through innovation and uniqueness, no matter what resources the
entrepreneur currently has.

Three important themes stand out in this definition:

a. The pursuit of opportunities

b. Innovation
c. Growth

Entrepreneurship will continue to be important to societies around the world.

.
Managing in an E-Business World: E-business (electronic business) is a
comprehensive term describing the way an organization does its work by using
electronic (Internet-based) linkages with its key constituencies in order to efficiently
and effectively achieve its goals.

Knowledge Management and Learning Organizations: Change is occurring at an

unprecedented rate. To be successful, today’s organization must become a learning
organization—one that has developed the capacity to continuously learn, adapt, and
change. Knowledge management involves cultivating a learning culture where
organizational members systematically gather knowledge and share it with others in the
organization so as to achieve better performance.

Quality Management: Quality management is a philosophy of management that is driven

by continual improvement and response to customer needs and expectations. The
objective of quality management is to create an organization committed to continuous
improvement in work

REFERENCES

Enriquez, E. 2016. Organization and Management. Manila: JFS Publishing Services

Principles of Management. discovery.bits-

pilani.ac.in/dlpd/.../principles_of_management_notes.pdf. Retrieved from:
http://discovery.bits-
pilani.ac.in/dlpd/courses/coursecontent/courseMaterial/mgtszc211/principles_of_m
anagement_notes.pdf

Principles of Management. Saylor Academy: Washington DC. Retrieved from:

www.saylor.org/site/textbooks/Principles%20of%20Management.pdf

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SELF-ASSESSMENT QUESTIONS

1. Explain the six major approaches to management.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. Identify and describe the elements of scientific management that is being still used
today.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. Explain the 14 Principles of Management.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

4. Discuss the Hawthorne Experiment.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

5. Distinguish between a closed and open system approaches of management.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

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Lesson 3

Organization Culture and Environment: The Constraints

The components of an organization’s culture are as complex as the different aspects of
an individual’s personality. Today’s managers must understand how the forces of an
organization’s internal and external environment influence, and sometimes constrain, its
productivity. Managers must realize that organizational culture and organizational
environment have important implications for the way an organization is managed.

Two perspectives concerning the role that managers play in an organization’s success or
failure have been proposed.

The omnipotent view of management maintains that managers are directly responsible
for the success or failure of an organization. This view of managers as being omnipotent
is consistent with the stereotypical picture of the “take-charge” executive who can
overcome any obstacle in carrying out the organization’s objectives. When
organizations perform poorly, someone must be held accountable and according to the
omnipotent view, that “someone” is management.

The symbolic view of management upholds the view that much of an organization’s
success or failure is due to external forces outside managers’ control. The influence that
managers do have is seen mainly as a symbolic outcome. Organizational results are
influenced by factors outside of the control of managers, including the economy, market
changes, governmental policies, competitors’ actions, the state of the particular
industry, the control of proprietary technology, and decisions made by previous
managers in the organization. The manager’s role is to create meaning out of
randomness, confusion, and ambiguity. According to the symbolic view, the actual part
that management plays in the success or failure of an organization is minimal.

Reality suggests a synthesis; managers are neither helpless nor all powerful. Instead, the
more logical approach is to see the manager as operating within constraints imposed by
the organization’s culture and environment

THE ORGANIZATION’S CULTURE

Just as individuals have a personality, so, too, do organizations. We refer to an

organization’s personality as its culture.

Organizational culture is the shared values, principles, traditions, and ways of doing
things that influence the way organizational members act. This definition implies:

Individuals perceive organizational culture based on what they see, hear, or

experience within the organization.

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Virac, Catanduanes

Organizational culture is shared by individuals within the organization.

Organizational culture is a descriptive term. It describes, rather than evaluates.

Seven dimensions of an organization’s culture have been proposed

a. Innovation and risk taking (the degree to which employees are encouraged to be
innovative and take risks)
b. Attention to detail (the degree to which employees are expected to exhibit
precision, analysis, and attention to detail)
c. Outcome orientation (the degree to which managers focus on results or
outcomes rather than on the techniques and processes used to achieve those
outcomes)
d. People orientation (the degree to which management decisions take into
consideration the effect on people within the organization)
e. Team orientation (the degree to which work activities are organized around
teams rather than individuals)
f. Aggressiveness (the degree to which people are aggressive and competitive
rather than easygoing and cooperative)
g. Stability (the degree to which organizational activities emphasize maintaining
the status quo in contrast to growth)

Strong versus Weak Cultures

Strong cultures are found in organizations where key values are intensely held and
widely shared. Whether a company’s culture is strong, weak, or somewhere in between
depends on organizational factors such as size, age, employee turnover rate, and
intensity of original culture. A culture has increasing impact on what managers do as
the culture becomes stronger.

Most organizations have moderate-to-strong cultures. In these organizations, high

agreement exists about what is important and what defines “good” employee behavior.
.
Culture is transmitted and learned by employees principally through stories, rituals,
material symbols, and language.

An innovative culture should have these characteristics:

• Challenge and involvement
• Freedom
• Trust and openness
• Idea time
• Playfulness/humor
• Conflict resolution
• Debates
• Risk taking

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Virac, Catanduanes

The Organization’s Environment

The general environment includes these broad external conditions that may affect the
organization: economic, political/legal, sociocultural, demographic, technological, and
global conditions.

• Economic conditions include interest rates, inflation rates, changes in

disposable income, stock market fluctuations, and the general business cycle.
• Political/legal conditions include the general political stability of countries in
which an organization does business and the specific attitudes that elected
officials have toward business.
• Sociocultural conditions include the changing expectations of society.
Societal values, customs, and tastes can change, and managers must be
aware of these changes.
• Demographic conditions, including physical characteristics of a population
(e.g., gender, age, level of education, geographic location, income,
composition of family) can change, and managers must adapt to these
changes.
• Technological conditions, which have changed more rapidly than any other
element of the general environment.
• Global factors include global competitors and global consumer markets.

Environments differ in their amount of environmental uncertainty, which relates to

(1) the degree of change in an organization’s environment and (2) the degree of
complexity in that environment

Degree of change is characterized as being dynamic or stable. In a dynamic environment,

components of the environment change frequently. If change is minimal, the environment is
called a stable environment.

The degree of environmental complexity is the number of components in an organiza-

tion’s environment and the extent of an organization’s knowledge about those
components. If the number of components and the need for sophisticated knowledge is
minimal, the environment is classified as simple. If a number of dissimilar components
and a high need for sophisticated knowledge exist, the environment is complex.

As uncertainty is a threat to organizational effectiveness, managers try to minimize

environmental uncertainty.

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Virac, Catanduanes

REFERENCES

Enriquez, E. 2016. Organization and Management. Manila: JFS Publishing Services

Principles of Management. discovery.bits-

pilani.ac.in/dlpd/.../principles_of_management_notes.pdf. Retrieved from:
http://discovery.bits-
pilani.ac.in/dlpd/courses/coursecontent/courseMaterial/mgtszc211/principles_of_m
anagement_notes.pdf

Principles of Management. Saylor Academy: Washington DC. Retrieved from:

www.saylor.org/site/textbooks/Principles%20of%20Management.pdf

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 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

SELF-ASSESSMENT QUESTIONS

1. Explain the Two perspectives concerning the role that managers play in an
organization’s success.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. Identify and describe seven dimensions of an organization’s culture.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. Explain the 14 Principles of Management.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

4. Distinguish between Strong versus Weak Cultures.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

5. Describe the Organization’s Environment.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

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Virac, Catanduanes

Lesson 4

Managing in a Global Environment

Managers in all types and sizes of organizations must constantly monitor changes and
consider the particular characteristics of their own location as they plan, organize, lead,
and control in this dynamic environment.

Managers might have one of three perspectives or attitudes toward international

business

1. An ethnocentric attitude is the parochialistic belief that the best work ap-
proaches and practices are those of the home country (the country in which
the company’s headquarters are located).
2. A polycentric attitude is the view that the managers in the host country
(the foreign country where the organization is doing business) know the
best work approaches and practices for running their business.
3. A geocentric attitude is a world-oriented view that focuses on using the best
approaches and people from around the globe. To be a successful global manager,
an individual needs to be sensitive to differences in national customs and practices

Several significant forces are reshaping today’s global environment. Important features
of the global environment include regional trading alliances and different types of
global organizations.

A. Regional Trading Alliances

Regional trading alliances are reshaping global competition. Competition is no

longer limited to country versus country, but region versus region.

1. The European Union (EU) is a union of 25 European nations created as

a unified economic and trade entity
a. The primary motivation for the creation of the EU in February
1992 was to allow member nations to reassert their position
against the industrial strength of the United States and Japan.
b. All member states of the EU participate in the EMU (Economic
and Monetary Union). The EMU consists of three stages for
coordinating economic policy. Twelve member states of the
European Union have entered the third stage of the EMU, in
which participating countries share a single currency, the euro.
c. In 2004 the EU added 10 new members (Cyprus, Malta, the
Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland,
Slovakia, and Slovenia. Two additional counties may join the EU
by the year 2007.

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Virac, Catanduanes

2. The North American Free Trade Agreement (NAFTA) is an

agreement among the Mexican, Canadian, and U.S. governments in
which barriers to trade have been eliminated.
a. NAFTA went into effect on January 1, 1994.
b. The signing of NAFTA was both criticized and supported.
c. Eliminating barriers to free trade (tariffs, import licensing require-
ments, customs user fees) has resulted in a strengthening of the
economic power of all three countries.
d. Colombia, Mexico, and Venezuela signed an economic pact
eliminating import duties and tariffs in 1994.
e. Thirty-four countries in the Western Hemisphere continue to
negotiate a Free Trade Area of the Americas (FTAA) agreement.
FTAA was to have been in effect no later than 2005, but has not yet
become operational; its future is still undetermined.

3. The Association of Southeast Asian Nations (ASEAN) is a trading al-

liance of 10 Asian nations
a. In the future, the Southeast Asian region promises to be
one of the fastest-growing and increasingly influential
economic regions of the world.
b. The future economic impact of the Southeast Asian region
could rival that of both NAFTA and the EU.
4. Other Trade Alliances
The 53-nation African Union came into existence in July 2002.
Members plan to achieve greater economic development and
unity among Africa’s nations.

B. The World Trade Organization (WTO)

Formed in 1995 and evolving from GATT, the WTO is the only global
organization dealing with the rules of trade among nations.
1. Membership consists of 149 countries and 32 observer governments as
of January 2006.
2. The WTO appears to play an important role even though critics are vocal
and highly visible.

Different Types of Global Organizations

Business has been conducted internationally for many years Multinational corporations
did not become popular until the mid-1960s. Global organizations can be classified in
the following categories:
1. The term multinational corporation (MNC) is a broad term that refers
to any and all types of international companies that maintain operations
in multiple countries.
2. A transnational corporation (TNC), sometimes called a borderless
organization, is a type of international company in which artificial
geographical barriers are eliminated.

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Virac, Catanduanes

Stages of Internationalization

An organization that goes international typically progresses through three stages.

Companies that go international may begin by using global sourcing (also called global
outsourcing). In this stage of going international, companies purchase materials or
labor from around the world, wherever the materials or labor are least expensive.
Beyond the stage of global sourcing, each successive stage to become more
international involves more investment and risk.

In the next stage, companies may go international by exporting (making products

domestically and selling them abroad) or importing (acquiring products made abroad
and selling the products domestically). Both exporting and importing require minimal
investment and risk.

In the early stages of going international, managers may also use licensing (giving
another organization the right to make or sell its products using its technology or
product specifications) or franchising (giving another organization the right to use its
name and operating methods

After an organization has done international business for a period of time, managers
may decide to make more of a direct investment in international markets by forming a
strategic alliance, which is a partnership between an organization and a foreign
company partner(s). In a strategic alliance, partners share resources and knowledge in
developing new products or building production facilities.

A joint venture (a specific type of strategic alliance) may be undertaken to allow

partners to form a separate, independent organization for some business purpose.

Managers may decide to make a direct investment in a foreign country by establishing a

foreign subsidiary, in which a company sets up a separate and independent production
facility or office. Establishing a foreign subsidiary involves the greatest commitment of
resources and the greatest risk of all of the stages in going international.

Managing in a global environment entails the following challenges.

The Legal-Political Environment: The legal-political environment does not have to be

unstable or revolutionary to be a challenge to managers. The fact that a country’s
political system differs from that of the United States is important to recognize.

The Economic Environment: The economic environment also presents many

challenges to foreign-based managers, including fluctuations in currency rates, inflation,
and diverse tax policies. In a market economy, resources are primarily owned by the
private sector. In a command economy, all economic decisions are planned by a central
government.

The Cultural Environment: Countries have different cultures, just as organizations do.

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National culture is the values and attitudes shared by individuals from a specific
country that shape their behavior and their beliefs about what is important.

A framework developed by Geert Hofstede serves as a valuable framework for

understanding differences between national cultures.

1. Hofstede studied individualism versus collectivism. Individualism is the

degree to which people in a country prefer to act as individuals rather
than as members of groups. Collectivism is characterized by a social
framework in which people prefer to act as members of groups and
expect others in groups of which they are a part (such as a family or an
organization) to look after them and to protect them.
2. Another cultural dimension is power distance, which describes the extent
to which a society accepts the fact that power in institutions and
organizations is distributed unequally.
3. Uncertainty avoidance describes a cultural measure of the degree to
which people tolerate risk and unconventional behavior.
4. Hofstede identified the dimension of achievement versus nurturing.
Achievement is the degree to which values such as assertiveness, the
acquisition of money and material goods, and competition prevail.
Nurturing emphasizes sensitivity in relationships and concern for the
welfare of others.
5. Long-term and short-term orientation. People in countries having
long-term orientation cultures look to the future and value thrift and
persistence. Short-term orientation values the past and present and
emphasizes a respect for tradition and social obligations.
6. Countries have different rankings on Hofstede’s cultural dimensions, and
managers should be aware of the cultural differences present in countries
in which they do business

The Global Leadership and Organizational Behavior Effectiveness (GLOBE) research

program is an assessment that updates Hofstede’s studies. GLOBE began in 1993 and
identified nine dimensions on which national cultures differ: Assertiveness, future
orientation, gender differentiation, uncertainty avoidance, power distance, individualism
/ collectivism, in-group collectivism, performance orientation, and humane orientation.

In today’s world the openness that is necessary to conduct business successfully in a

global environment poses great challenges. The increased threat of terrorism, economic
interdependence of trading countries, and significant cultural create a complicated
environment in which to manage. Successful global managers need to have great
sensitivity and understanding. Managers must adjust leadership styles and management
approaches to accommodate culturally diverse views.

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 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

REFERENCES

Enriquez, E. 2016. Organization and Management. Manila: JFS Publishing Services

Principles of Management. discovery.bits-

pilani.ac.in/dlpd/.../principles_of_management_notes.pdf. Retrieved from:
http://discovery.bits-
pilani.ac.in/dlpd/courses/coursecontent/courseMaterial/mgtszc211/principles_of_m
anagement_notes.pdf

Principles of Management. Saylor Academy: Washington DC. Retrieved from:

www.saylor.org/site/textbooks/Principles%20of%20Management.pdf

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 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

SELF-ASSESSMENT QUESTIONS

1. Explain the three perspectives or attitudes of managers toward international

business.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. Describe the role of the European Union and how it reshape today’s global
environment.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. What are the different types of Global Organizations? Explain each.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

4. Identify the Stages of Internationalization.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

5. Describe the challenges of managing in a global environment.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

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 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

Lesson 5

Social Responsibility and Managerial Ethics

This chapter discusses issues involving social responsibility and managerial ethics and
their effect on managerial decision making. Both social responsibility and ethics are
responses to a changing environment and are influenced by organizational culture

Managers regularly face decisions that have dimensions of social responsibility.

Examples include employee relations, philanthropy, pricing, resource conservation,
product quality, and doing business in countries that violate human rights

SOCIAL RESPONSIBILITY

Two opposing views of social responsibility are presented:

The classical view is the view that management’s only social responsibility is to
maximize profits. The socioeconomic view is the view that management’s social
responsibility goes beyond the making of profits to include protecting and improving
society’s welfare.

A four stage model shows how social responsibility progresses in organizations Social
responsibility may progress from the stance of obeying all laws and regulations while
caring for stockholders’ interests (Stage 1) to the point of demonstrating responsibility
to society as a whole (Stage 4), which characterizes the highest socioeconomic
commitment.

Social Obligations to Responsiveness to Responsibility: Social obligation occurs when

a firm engages in social actions because of its obligation to meet certain economic and
legal responsibilities. Social responsiveness is seen when a firm engages in social
actions in response to some popular social need. Social responsibility is a business’s
intention, beyond its legal and economic obligations, to do the right things and act in
ways that are good for society

The Greening of Management

A number of highly visible ecological problems and environmental disasters (e.g.,
Exxon Valdez oil spill, mercury poisoning in Japan, Three Mile Island, Chernobyl)
brought about a new spirit of environmentalism. Recognizing the close link between an
organization’s decisions and activities and its impact on the natural environment is
called the greening of management.

Values-based management is an approach to managing in which managers are guided

by the organization’s shared values in their management practices. Purposes of Shared
Values are:

1) They act as guideposts for managerial decisions and actions.

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2) Shared values serve to shape employee behavior and to communicate what the
organization expects of its members.
3) Shared corporate values can influence an organization’s marketing efforts.
4) Shared values are a way to build team spirit in organizations.

MANAGERIAL ETHICS
The term ethics refers to principles, values, and beliefs that define what is right and
wrong behavior.

Factors That Affect Employee Ethics

1. Stages of Moral Development. Research confirms three levels of moral

development. Each level has two stages.
a) The first level is called preconventional. At this level, the individual’s choice
between right or wrong is based on personal consequences involved.
b) At the second stage, which is labeled conventional, moral values reside in
maintaining expected standards and living up to the expectations of others.
c) The third level—the principled level—the individual makes a clear effort to
define moral principles apart from the authority of the groups to which the
person belongs.
d) Research on the stages of moral development indicates that people proceed
sequentially through the six stages of these three levels, with no guarantee of
continued development at any stage. The majority of adults are at Stage 4. The
higher the stage an employee reaches, the more likelihood that he or she will
behave ethically.

2. Individual Characteristics: A person joins an organization with a relatively

entrenched set of values.
a. Values are basic convictions about what is right and wrong. Values are broad
and cover a wide variety of issues.
b. Ego strength is a personality measure of the strength of a person’s convictions.
Individuals who score high on ego strength are likely to resist impulses to act
unethically and are likely do what they think is right.
c. Locus of control is a personality attribute that measures the degree to which
people believe they control their own fate. Individuals with an internal locus of
control think that they control their destiny, while persons with an external locus
of control are less likely to take personal responsibility for the consequences of
their behavior and are more likely to rely on external forces. Externals believe
that what happens to them is due to luck or chance.

3. A third factor influencing managerial ethics is structural variables. The existence

of structural variables such as formal rules and regulations, job descriptions, written
codes of ethics, performance appraisal systems, and reward systems can strongly
influence ethical behavior.

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Virac, Catanduanes

4. The content and strength of an organization’s culture influences ethical behavior.

a. An organizational culture most likely to encourage high ethical standards is one
that is high in risk tolerance, control, and conflict tolerance.
b. A strong culture exerts more influence on managers than does a weak one.
c. However, in organizations with weak cultures, work groups and departmental
standards strongly influence ethical behavior.

5. Finally, the intensity of an issue can affect ethical decisions. Six characteristics
determine issue intensity
a. Greatness of harm
b. Consensus of wrong
c. Probability of harm
d. Immediacy of consequences
e. Proximity to victim
f. Concentration of effect

Improving Ethical Behavior

Organizations can take a number of actions to cultivate ethical behavior among

members. Some of those are”

1) The selection process for bringing new employees into organizations should be
viewed as an opportunity to learn about an individual’s level of moral
development, personal values, ego strength, and locus of control.
2) A code of ethics is a formal statement of an organization’s primary values and
the ethical rules it expects employees to follow. In addition, decision rules can
be developed to guide managers in handling ethical dilemmas in decision
making.
3) Top management’s leadership and commitment to ethical behavior is extremely
important since the cultural tone for an organization is established by its top
managers
4) Employees’ job goals should be tangible and realistic, because clear and
realistic goals reduce ambiguity and motivate rather than punish. Job goals are
usually a key issue in the performance appraisal process.
5) If an organization wants employees to uphold high ethical standards, this
dimension must be included in the appraisal process. Performance appraisals
should include this dimension, rather than focusing solely on economic
outcomes.
6) Ethics training should be used to help teach ethical problem solving and to
present simulations of ethical situations that could arise. At the least, ethics
training should increase awareness of ethical issues.
7) Independent social audits evaluate decisions and management practices in terms
of the organization’s code of ethics and can be used to deter unethical behavior.
8) Organizations can provide formal protective mechanisms so that employees
with ethical dilemmas can do what is right without fear of reprisal.

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Virac, Catanduanes

Social Entrepreneurship: A social entrepreneur is an individual or organization who

seeks out opportunities to improve society by using practical, innovative, and
sustainable approaches.

Social impact management: Managers are increasingly expected to act responsibly in

the way they conduct business. Managers using a social impact management approach
examine the social impacts of their decisions and actions. When they consider how
their actions in planning, organizing, leading and controlling will work in light of the
social context within which business operates, managers become more aware of
whether they are leading in a responsible manner.

REFERENCES

Enriquez, E. 2016. Organization and Management. Manila: JFS Publishing Services

Principles of Management. discovery.bits-

pilani.ac.in/dlpd/.../principles_of_management_notes.pdf. Retrieved from:
http://discovery.bits-
pilani.ac.in/dlpd/courses/coursecontent/courseMaterial/mgtszc211/principles_of_m
anagement_notes.pdf

Principles of Management. Saylor Academy: Washington DC. Retrieved from:

www.saylor.org/site/textbooks/Principles%20of%20Management.pdf

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 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

SELF-ASSESSMENT QUESTIONS

1. Explain the two opposing views of social responsibility.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. What do you mean “The Greening of Management”? Explain your answer.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. What are the factors that affect employee ethics? Explain each.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

4. How is the organizations can take a number of actions to cultivate ethical

behavior among members?
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

5. Explain Social Entrepreneurship.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

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Virac, Catanduanes

Lesson 6

Decision Making: The Essence of the Manager’s Job

Everyone in an organization makes decisions, but decision making is particularly
important in a manager’s job. Decision making is such an important part of all four
managerial functions that decision making is said to be synonymous with managing.

The Decision-Making Process

A decision is a choice made from two or more alternatives. The decision-making
process is a set of eight steps that include the following:

Identifying a problem: A problem is a discrepancy between an existing state

and a desired state of affairs. In order to identify a problem, a manager should
be able to differentiate the problem from its symptom; he should be under
pressure to taken action and must have the authority and resources to take
action.

Identifying decision criteria: Decision criteria are criteria that define what is
relevant in a decision.

Allocating weights to the criteria: The criteria identified in the previous step
of the decision-making process may not have equal importance. So he decision
maker must assign a weight to each of the items in order to give each item
accurate priority in the decision.

Developing alternatives: The decision maker should then identify viable

alternatives that could resolve the problem.

Analyzing alternatives: Each of the alternatives are then critically analyzed by

evaluating it against the criteria established in Steps 2 and 3.

Selecting an alternative: The next step is to select the best alternative from
among those identified and assessed. If criteria weights have been used, the
decision maker would select the alternative that received the highest score in
Step 5.

Implementing the alternative: The selected alternative is implemented by

effectively communicating the decision to the individuals who would be
affected by it and their commitment to the decision is acquired.

Evaluating decision effectiveness: The last step in the decision-making process

is to assess the result of the decision in order to determine whether or not the
problem has been resolved.

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Managers can make decisions on the basis of rationality, bounded rationality, or

intuition.
1. Rational decision making. Managerial decision making is assumed to be
rational—that is, making choices that are consistent and value-maximizing
within specified constraints. A rational manager would be completely logical
and objective. Rational decision making assumes that the manager is making
decisions in the best interests of the organization, not in his/her own interests.
The assumptions of rationality can be met if the manager is faced with a
simple problem in which (1) goals are clear and alternatives limited, (2) time
pressures are minimal and the cost of finding and evaluating alternatives is
low, (3) the organizational culture supports innovation and risk taking, and
(4) outcomes are concrete and measurable.

2. Bounded rationality. As the perfectly rational model of decision making

isn’t realistic, managers tend to operate under assumptions of bounded
rationality, which is decision-making behavior that is rational, but limited
(bounded) by an individual’s ability to process information.
Under bounded rationality, managers make satisficing decisions, in which they
accept solutions that are “good enough.” Managers’ decision making may be
strongly influenced by the organization’s culture, internal politics, power
considerations, and by a phenomenon called escalation of commitment—
an increased commitment to a previous decision despite evidence that it may
have been wrong.

3. Intuitive decision making. Managers also regularly use their intuition.

Intuitive decision making is a subconscious process of making decisions on
the basis of experience and accumulated judgment. Although intuitive
decision making will not replace the rational decision-making process, it
does play an important role in managerial decision making.

Types of Problems and Decisions

Managers encounter different types of problems and use different types of

decisions to resolve them. Problems can be structured problems or unstructured
problems and decisions can be programmed decisions or nonprogrammed
decisions.

Structured problems are straightforward, familiar, and easily defined. In

dealing with structured problems, a manager may use a programmed decision,
which is a repetitive decision that can be handled by a routine approach.
Managers rely on three types of programmed decisions:
a. A procedure is a series of interrelated sequential steps that can be used to
respond to a structured problem.
b. A rule is an explicit statement that tells managers what they can or cannot
do.
c. A policy is a guideline for making decisions.

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Unstructured problems are problems that are new or unusual and for which
information is ambiguous or incomplete. These problems are best handled by a
nonprogrammed decision that is a unique decision that requires a custom-
made solution.

At higher levels in the organizational hierarchy, managers deal more often with
difficult, unstructured problems and make nonprogrammed decisions in
attempting to resolve these problems and challenges. Lower-level managers
handle routine decisions, using programmed decisions.

Decision-Making Conditions

Decision can be made under conditions of certainty, uncertainty and risk.

Certainty is a situation in which a manager can make accurate decisions
because all outcomes are known. Few managerial decisions are made under the
condition of certainty.

More common is the situation of risk, in which the decision maker is able to
estimate the likelihood of certain outcomes.

Uncertainty is a situation in which the decision maker is not certain and cannot
even make reasonable probability estimates concerning outcomes of
alternatives. In such a situation, the choice of alternative is influenced by the
limited amount of information available to the decision maker. It’s also
influenced by the psychological orientation of the decision maker.

1) An optimistic manager will follow a maximax choice, maximizing the

maximum possible payoff.
2) A pessimistic manager will pursue a maximin choice, maximizing the
minimum possible payoff.
3) The manager who desires to minimize the maximum regret will opt for a
minimax choice.

Decision-Making Styles: Managers have different styles in making decisions

and solving problems. One perspective proposes that people differ along two
dimensions in the way they approach decision making. One dimension is an
individual’s way of thinking—rational or intuitive. The other is the individual’s
tolerance for ambiguity—low or high. Diagramming these two dimensions lead
to a matrix showing four different decision-making styles.

a. The directive style is characterized by low tolerance for ambiguity and a

rational way of thinking.
b. The analytic style is one characterized by a high tolerance for ambiguity
and a rational way of thinking.

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c. The conceptual style is characterized by a high tolerance for ambiguity

and an intuitive way of thinking.
d. The behavioral style is characterized by a low tolerance for ambiguity
and an intuitive way of thinking.

In reality, most managers have both a dominant style and alternate styles, with
some managers relying almost exclusively on their dominant style and others
being more flexible, depending on the particular situation.

Decision-Making Biases and Errors: Managers use different styles and “rules
of thumb” (heuristics) to simply their decision making. Some of decision
making biases and errors are:

1. Overconfidence bias occurs when decision makers tend to think that they
know more than they do or hold unrealistically positive views of
themselves and their performance.
2. Immediate gratification bias describes decision makers who tend to want
immediate rewards and avoid immediate costs.
3. The anchoring effect describes when decision makers fixate on initial
information as a starting point and then, once set, fail to adequately adjust
for subsequent information.
4. Selective perception bias occurs when decision makers selectively
organize and interpret events based on their biased perceptions.
5. Confirmation bias occurs when decision makers seek out information that
reaffirms their past choices and discount information that contradicts their
past judgments.
6. Framing bias occurs when decision makers select and highlight certain
aspects of a situation while excluding others.
7. Availability bias is seen when decision makers tend to remember events
that are the most recent and vivid in their memory.
8. Decision makers who show representation bias assess the likelihood of an
event based on how closely it resembles other events or sets of events.
9. Randomness bias describes the effect when decision makers try to create
meaning out of random events.
10. The sunk costs error is when a decision maker forgets that current choices
cannot correct the past. Instead of ignoring sunk costs, the decision maker
cannot forget them. In assessing choices, the individual fixates on past
expenditures rather than on future consequences.
11. Self-serving bias is exhibited by decision makers who are quick to take
credit for their successes and blame failure on outside factors.
12. Hindsight bias is the tendency for decision makers to falsely believe, once
the outcome is known, that they would have accurately predicted the
outcome.

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REFERENCES

Enriquez, E. 2016. Organization and Management. Manila: JFS Publishing Services

Principles of Management. discovery.bits-

pilani.ac.in/dlpd/.../principles_of_management_notes.pdf. Retrieved from:
http://discovery.bits-
pilani.ac.in/dlpd/courses/coursecontent/courseMaterial/mgtszc211/principles_of_m
anagement_notes.pdf

Principles of Management. Saylor Academy: Washington DC. Retrieved from:

www.saylor.org/site/textbooks/Principles%20of%20Management.pdf

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 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

SELF-ASSESSMENT QUESTIONS

1. What are the steps of the decision making process? Describe each.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. What are the basis of Manager’s decision? Explain your answer.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. Identify the different types of problem encountered by managers? Explain each.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

4. What are the decision-making conditions? Explain each.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

5. Describe decision-making biases and errors.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

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Virac, Catanduanes

Lesson 7

Foundations of Planning
Planning is one of the four functions of management. Planning involves defining the
organization’s goals, establishing an overall strategy for achieving these goals, and
developing plans for organizational work activities. The term planning as used in this
chapter refers to formal planning.

Purposes of Planning

Planning serves a number of significant purposes.

1. Planning gives direction to managers and nonmanagers of an organization.
2. Planning reduces uncertainty.
3. Planning minimizes waste and uncertainty.
4. Planning establishes goals or standards used in controlling.

Planning and Performance

Although organizations that use formal planning do not always outperform those that
do not plan, most studies show positive relationships between planning and
performance. Effective planning and implementation play a greater part in high
performance than does the amount of planning done. Studies have shown that when
formal planning has not led to higher performance, the external environment is often
the reason.

The Role of Goals and Plans in Planning

Planning is often called the primary management function because it establishes the
basis for all other functions. Planning involves two important elements: goals and
plans.

Goals (often called objectives) are desired outcomes for individuals, groups, or entire
organizations.

Types of goals

a. Financial goals versus strategic goals

Financial goals related to the financial performance of the organization while
strategic goals are related to other areas of an organizations performance.

b. Stated goals versus real goals

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Stated goals are official statements of what an organization says and what it
wants its various stakeholders to believe its goals are. Real goals are those that an
organization actually pursues, as defined by the actions of its members.

Types of Plans
Plans can be described by their breadth, time frame, specificity, and frequency of use

o On the basis of Breadth plans can be Strategic or operational plans. Strategic

plans (long-term plans) are plans that apply to the entire organization, establish the
organization’s overall goals, and seek to position the organization in terms of its
environment. Operational plans (short-term plans) are plans that specify the details
of how the overall goals are to be achieved.

o On the basis of Time frame plans can be Short-term or long-term plans. Short-
term plans are plans that cover one year or less. Long-term plans are plans with a
time frame beyond three years.

o On the basis of Specificity plans can be Specific or directional plans. Specific

plans are plans that are clearly defined and leave no room for interpretation.
Directional plans are flexible plans that set out general guidelines.

o On the basis of Frequency of use plans can be Single-use or standing plans. A

single-use plan is a one-time plan specifically designed to meet the needs of a
unique situation. Standing plans are ongoing plans that provide guidance for
activities performed repeatedly.

Approaches to Establishing Goals

Goals can be established through the process of traditional goal setting or through MBO
(management by objectives).

Traditional goal setting is an approach to setting goals in which goals are set at the top
level of the organization and then broken into subgoals for each level of the
organization.
Traditional goal setting assumes that top managers know what is best because of their
ability to see the “big picture.” Employees are to work to meet the goals for their
particular area of responsibility.

This traditional approach requires that goals must be made more specific as they flow
down to lower levels in the organization. In striving to achieve specificity, however,
objectives sometimes lose clarity and unity with goals set at a higher level in the When
the hierarchy of organizational goals is clearly defined, it forms an integrated means-
end chain—an integrated network of goals in which the accomplishment of goals at
one level serves as the means for achieving the goals, or ends, at the next level.

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Management by objectives (MBO) is a process of setting mutually agreed-upon goals and

using those goals to evaluate employee performance. Studies of actual MBO programs
confirm that MBO can increase employee performance and organizational productivity.
However, top management commitment and involvement are important contributions to
the success of an MBO program. The following steps are involved in a typical MBO
program:

The organizations 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 employee
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

Whether an organization uses a more traditional approach to establishing objectives,

uses some form of MBO, or has its own approach, managers must define objectives
before they can effectively and efficiently complete other planning activities.

Characteristics of Well-Designed Goals

1 Written in terms of outcomes

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

Five Steps in Goals Setting

1. Review the organization’s mission (the purpose of the organization).
2. Evaluate available resources.
3. Determine the goals individually or with input from others
4. Write down the goals and communicate them to all who need to know.
5. Review results and whether goals are being met. Make changes as needed.

Developing Plans

The process of developing plans is influenced by three contingency factors and by the
particular planning approach used by the organization.

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Three Contingency Factors in Planning are

Manager’s level in the organization: Operational planning usually dominates
the planning activities of lower-level managers. As managers move up through
the levels of the organization, their planning becomes more strategy oriented.
Degree of environmental uncertainty: The greater the environmental uncertainty,
the more directional plans should be, with emphasis placed on the short term.
When uncertainty is high, plans should be specific, but flexible. Managers must
be prepared to rework and amend plans, or even to abandon their plans if
necessary.
Length of future commitments: According to the commitment concept, plans
should extend far enough to meet those commitments made today. Planning for
too long or for too short a time period is inefficient and ineffective.

Approaches to Planning
In the traditional approach, planning was done entirely by top-level managers who were
often assisted by a formal planning department.
Another approach to planning is to involve more members of the organization in the
planning process. In this approach, plans are not handed down from one level to the
next, but are developed by organizational members at various levels to meet their
specific needs.

Criticisms of Planning
Although planning is an important managerial function with widespread use, five major
arguments have been directed against planning:

Planning may create rigidity.

Plans can’t be developed for a dynamic environment.
Formal plans can’t replace intuition and creativity.
Planning focuses managers’ attention on today’s competition, not on
tomorrow’s survival.
Formal planning reinforces success, which may lead to failure.

The external environment is constantly changing. Therefore managers should develop

plans that are specific, but flexible. Managers must also recognize that planning is an
ongoing process, and they should be willing to change directions if environmental
conditions warrant. Flexibility is particularly important. Managers must remain alert to
environmental changes that could impact the effective implementation of plans, and
they must be prepared to make changes as needed.

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Virac, Catanduanes

REFERENCES

Enriquez, E. 2016. Organization and Management. Manila: JFS Publishing Services

Principles of Management. discovery.bits-

pilani.ac.in/dlpd/.../principles_of_management_notes.pdf. Retrieved from:
http://discovery.bits-
pilani.ac.in/dlpd/courses/coursecontent/courseMaterial/mgtszc211/principles_of_m
anagement_notes.pdf

Principles of Management. Saylor Academy: Washington DC. Retrieved from:

www.saylor.org/site/textbooks/Principles%20of%20Management.pdf

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 CATANDUANES STATE UNIVERSITY
Virac, Catanduanes

SELF-ASSESSMENT QUESTIONS

1. What are the purposes of Planning?

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. Identify and describe the types of goals.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. How can you described plans in terms of their breadth, time frame, specificity, and
frequency of use?
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

4. Explain Management by Objectives.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

5. Describe the three contingency factors in planning.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

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Virac, Catanduanes

Lesson 8

Strategic Management
The present day news is filled with examples of changing organizational strategies like
Mergers, Strategic alliances, Downsizing, Spin-offs and Global expansion. This chapter
examines the strategic management process as it relates to the planning function.

Managers must carefully consider their organization’s internal and external

environments as they develop strategic plans. They should have a systematic means of
analyzing the environment, assessing their organization’s strengths and weaknesses,
identifying opportunities that would give the organization a competitive advantage, and
incorporating these findings into their planning. The value of thinking strategically has
an important impact on organization performance.

Strategic management is what managers do to develop the organization’s strategies.

Strategic management involves all four of the basic management functions—planning,
organizing, leading, and controlling.

Strategic management has a is important for organizations as it has a significant impact

on how well an organization performs. In today’s business world, organizations of all
types and sizes must manage constantly changing situations. Today’s companies are
composed of diverse divisions, units, functions, and work activities that must be
coordinated. Strategic management is involved in many of the decisions that managers
make.
The strategic management process is a six-step process that encompasses strategic
planning, implementation, and evaluation.

Identifying the Organization’s Current Mission, Objectives, and Strategies:

Every organization needs a mission, which is a statement of the purpose of an
organization. The mission statement addresses the question: What is the
organization’s reason for being in business? The organization must identify its
current objectives and strategies, as well.

External Analysis: Managers in every organization need to conduct an external

analysis. Influential factors such as competition, pending legislation, and labor
supply are included in the external environment. After analyzing the external
environment, managers must assess what they have learned in terms of
opportunities and threats. Opportunities are positive trends in external
environmental factors; threats are negative trends in environmental factors.
Because of different resources and capabilities, the same external environment can
present opportunities to one organization and pose threats to another

Internal Analysis: Internal analysis should lead to a clear assessment of the

organization’s resources and capabilities. Any activities the organization does well
or any unique resources that it has are called strengths. Weaknesses are activities

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the organization does not do well or resources it needs but does not possess. The
organization’s major value-creating skills and capabilities that determine its
competitive weapons are the organization’s core competencies. Organizational
culture is important in internal analysis; the company’s culture can promote or
hinder its strategic actions. SWOT analysis is an analysis of the organization’s
strengths, weaknesses, opportunities, and threats.

Formulating Strategies: After the SWOT, managers develop and evaluate

strategic alternatives and select strategies that are appropriate. Strategies need to be
established for corporate, business, and functional levels.

Implementing Strategies

Evaluating Results to know how effective the strategies have been and if any
adjustments are necessary.

Types of Organizational Strategies

Strategic planning takes place on three different and distinct levels: corporate,
business, and functional

Corporate strategy
It is an organizational strategy that determines what businesses a company is in, should
be in, or wants to be in, and what it wants to do with those businesses. There are three
main types of corporate strategies:
a. A growth strategy is a corporate strategy that is used when an organization
wants to grow and does so by expanding the number of products offered or
markets served, either through its current business) or through new businesses.
b. A stability strategy is a corporate strategy characterized by an absence of
significant change in what the organization is currently doing.
c. A renewal strategy is a corporate strategy designed to address organizational
weaknesses that are leading to performance declines. Two such strategies are
retrenchment strategy and turnaround strategy.

Corporate Portfolio Analysis is used when an organization’s corporate strategy

involves a number of businesses. Managers can manage this portfolio of businesses
using a corporate portfolio matrix, such as the BCG matrix. The BCG matrix is a
strategy tool that guides resource allocation decisions on the basis of market share and
growth rate of Strategic Business Units (SBUs).

Business (Competitive) Strategy

A business strategy (also known as a competitive strategy) is an organizational
strategy focused on how the organization will compete in each of its businesses.
Competitive advantage plays an important role in formulating the business strategy. A
competitive advantage is what sets an organization apart, that is, its distinctive edge.
An organization’s competitive advantage can come from its core competencies.

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If implemented properly, quality can be one way for an organization to create a

sustainable competitive advantage. An organization must be able to sustain its
competitive advantage; it must keep its edge despite competitors’ action and regardless
of major changes in the organization’s industry.

Michael Porter’s work explains how managers can create and sustain a competitive
advantage that will give a company above-average profitability. Industry analysis is
an important step in Porter’s framework. He says there are five competitive forces at
work in an industry; together, these five forces determine industry attractiveness and
profitability. Porter proposes that the following five factors can be used to assess an
industry’s attractiveness:

i. Threat of new entrants. How likely it is that new competitors will come into the
industry? Managers should assess barriers to entry, which are factors that
determine how easy or difficult it would be for new competitors to enter the
industry.
ii. Threat of substitutes. How likely is it that products of other industries could be
substituted for a company’s products?
iii. Bargaining power of buyers. How much bargaining power do buyers
(customers) have?
iv. Bargaining power of suppliers. How much bargaining power do a company’s
suppliers have?
v. Current rivalry. How intense is the competition among firms that are currently
in the industry?

According to Porter, managers must choose a strategy that will give their organization a
competitive advantage. Porter identifies three generic competitive strategies. Which
strategy managers select depends on the organization’s strengths and core competencies
and the particular weaknesses of its competitor(s). Based on the above analysis, only
three types of generic strategies are available to organizations to choose from. They
are:

a. A cost leadership strategy is a business or competitive strategy in which the

organization competes on the basis of having the lowest costs in its industry.

b. A differentiation strategy is a business or competitive strategy in which a

company offers unique products that are widely valued by customers.

c. A focus strategy is a business or competitive strategy in which a company

pursues a cost or differentiation advantage in a narrow industry segment.

An organization that has been not been able to develop either a low cost or a
differentiation competitive advantage is said to be “stuck in the middle.”

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Functional Strategy

These are strategies used by an organization’s various functional departments to

support the business or competitive strategy

New Directions in Organizational Strategies

E-Business Strategies. Using the Internet, companies have created knowledge
bases that employees can tap into anytime, anywhere. E-business as a strategy
can be used to develop a sustainable competitive advantage; it can also be used
to establish a basis for differentiation or focus.

Customer Service Strategies. These strategies give customers what they want,
communicate effectively with them, and provide employees with customer
service training.

Innovation Strategies. These strategies focus on breakthrough products and

can include the application of existing technology to new uses.

REFERENCES

Enriquez, E. 2016. Organization and Management. Manila: JFS Publishing Services

Principles of Management. discovery.bits-

pilani.ac.in/dlpd/.../principles_of_management_notes.pdf. Retrieved from:
http://discovery.bits-
pilani.ac.in/dlpd/courses/coursecontent/courseMaterial/mgtszc211/principles_of_m
anagement_notes.pdf

Principles of Management. Saylor Academy: Washington DC. Retrieved from:

www.saylor.org/site/textbooks/Principles%20of%20Management.pdf

----------------

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SELF-ASSESSMENT QUESTIONS

1. Define Strategic Management.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

2. What are the six steps of strategic management process? Explain each.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

3. Describe the types of organizational strategies.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

4. How managers chooses a strategy according to Porter?

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

5. What are the new directions in organizational strategies? Explain each.

___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________

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