Definition and Functions of Management

Management is a process of planning, organizing, leading and controlling

resources to

achieve specific objectives. It focuses on 3 aspects, namely process, resources,

and objectives.

Planning is the process of identifying the objectives of a task, assignment

or cause and

the corresponding activities to achieve those objectives (Schermerhorn 2011)

Organizing is gathering the resources required to carry out the activities

and allocating the

effective and efficient use of those resources. (Schermerhorn 2011)

Leading is a process that influence other people to perform, direct people to

achieve desired

objectives, coordinates proper implementation of activities, communicate

effectively across

various groups, and motivates individual to perform their best.

Controlling is the monitoring and evaluating of activities undertaken in

relation to the

stated objectives (Schermerhorn 2011)

Evolution of Management Theories

The lesson for today will help you understand and explain the different
management

theories to guide you in choosing the applicable and effective management

strategies in solving

problem and operating of any business organization and be an efficient manager in

the future.

The driving force behind the evolution of management theory is the search
for better

ways to utilize organizational resources.

Management Theories become an organized body of knowledge only around 19th

century.

Early management movement has been started for thousands of years ago.

The pyramids of Egypt are tangible proof of the ancient world’s ability to manage.
This outstanding

accomplishment shows that during those times people are already practicing
management.

Management Theories are group into three management approaches, namely:

classical
management approach, behavioral management approach, and modern management
approach.
 Classical Management Theories

Scientific Administrative Principles

Bureaucratic
Management
Organization

Frederick Taylor Henri Fayol Max

Weber

A) Classical Management Approach looks at management mainly from “rational”

perspective

that assumes there is “one best way” to do things. This sought to enhance
organizational

efficiency to increase production.

a. Scientific Management gives emphasis on workers’ performance of their job,

training, and fair compensation.

b. Administrative Principles of Management was defined by Henri Fayol and

came up

with 14 principles of management: division of work, authority,

discipline, unity of

command, unity of direction, subordination of individual interest to the

general

interest, remuneration, centralization, scalar chain, order, equity,

stability and tenure

of personnel, initiative, and esprit de corps.

 c. Bureaucratic Management is the ideal structure; characterize by
division of labor,

clear authority of hierarchy, formal selection of procedures, detailed

rules and

regulations, and impersonal relationships.

Behavioral Management

Behavioral Movement Cooperative System Theory X and Y

Hierarchy of Needs

Chester Douglas

Abraham Maslow
Barnard McGregor
Elton Mayo

B) Behavioral Management Theories is ushered in the human relations. The aim of

these

theories is to satisfy social relations and personal fulfillment to motivate

employees to seek

their best performance.

a. Behavioral Movement refers to the productivity of workers is directly

related to

group pressure and acceptance.

b. Cooperative Systems, people’s needs must be met, and managers

must
facilitate communication and encourage workers to perform their best.

c. Theory X assumes that workers are lazy and hate work, such that
autocratic

management is adopted, while

d. Theory Y assumes that workers will do best in their work, such that
participative

management is adopted.
 e. Hierarchy of Needs

f. Theory of Adult Personality, considerations on the needs and capabilities

of mature

adults.

C. Modern Management Theories involves several several views and techniques:

1. Quality Movement focuses on quality principles
2. Modern Management is knowledge management
3. Learning Organization means continuous learning and improvement of
organizational

members

4. Evidence-Based-Management, decisions are based on facts of what really works

5. Competitive Strategy, techniques for analyzing competitors

Functions, Roles, and Skills of a manager

In every organization either private or public, there are always persons who
are

designated as managers. Let us identify the different functions, roles and skills
of a manager and

how they use it effectively and efficiently.

Managerial functions pertain to the specific tasks and responsibilities

assigned to

managers. A manager is expected to lead, direct, supervise, monitor, evaluate and

control the

performance and output of his or her group. There are managerial functions that
vary depending

on the level of managerial position. These levels are as follows:

 • First-level supervisors – The first level managers manage the work of the
members who

are directly involved in the production of products and delivery of services in the
organization.

Examples of these are team leaders or supervisors who supervises rank and file
employees. They

make sure that the objectives of the organization are achieved.

• Middle managers – The middle level managers manage the work of the
supervisors or

other members of the organization. They are the division heads or department head,
depending

on the size and nature of the organization. They also make sure that the objectives
set by the Top

managers are cascaded well to the first-level supervisors.

• Top managers – The managers at the top level of the organization manage the
middle

managers. They have larger responsibilities and accountabilities. Example of top

managers are

positioned as the organization’s president, (chief executive officer or CEO) or the

board of

directors.

Roles of a Manager
A manager is expected to fulfill three types of roles: interpersonal,
informational and

decisional roles.

• Interpersonal roles – A manager, as a figurehead, is a role model for the

members of the

organization. As a leader, he or she provides direction to the activities and

outputs of his or her

subordinates. As a liaison, he or she coordinates the activities of his or her

members with the

activities of other groups within the organization.

• Informational roles – A manager also serves the role of a monitor who is

responsible for

gathering relevant information and tracking what is happening inside and outside
the

organization. Alongside being a monitor, the manager also acts as disseminator who
shares with

the members relevant information that he or she gathers for the improvement of the
organization.

He or she is also a spokesperson who acts as the official communicator for the
organization.
 • Decisional roles – A manager is an entrepreneur who develops new opportunities
for the

business. At the same time, he or she is also a disturbance handler who resolves
conflicts

among members; a resource allocator who allocates funds and distributes resources
for effective

use; and a negotiator who makes effective agreements with various parties.

Skills of a Manager
Skill is the ability to perform a specific task to achieve the desired
results. For example,

anyone can sing and dance but not all can sing and dance effectively. There must be
a skill to

deliver a wonderful performance. A manager has to have three sets of skills:

technical skills,

human skills and conceptual skills.

• Technical skills – This pertains to the abilities or expertise to do the job

required. For

example, a marketing officer must know how to analyze the buying behavior of the
customers

and to look for the current trends in the market.

• Human skills – This pertains to the interpersonal skills or the ability to

work well with

other people. This skill is essential in handling and addressing individual

differences and

challenging tasks required among members.

• Conceptual skills – This pertains to the ability to think critically and

analytically.

Conceptual skills are characterized with the ability to see the big picture of
things, understand

their interrelationships, and analyze the causes and implications of actions or

situations.
INTRODUCTION

Organization is defined as a social setting composed of several groups of

people who

bond and work together to achieve a common purpose (Schermerhorn, 2011).

Organizations are established by people with common interest.

Forms of Business Organizations

• CORPORATION – is a business organization where ownership is through
shares

of stock. In a corporation, the business has a legal identity that is separate

from the legal

identity of the owners. As such, in a case of a financial loss, the liability is

limited to the

amount invested by the owners. A board of directors serves as the policy-making

body of a

corporation. It is also registered with the Securities and Exchange Commission

(SEC). Under

this form, shareholders are not liable for unpaid debts of the corporation. It
can continue to

exist even if shareholders change, withdraw, or die. However, it is very costly

and difficult to

organize. It is subject to more stringent government supervision and is taxed at

a flat rate.

• SOLE PROPRIETORSHIP – is a form of business owned by one person

only.

Unlike in corporations where the owners have limited liability, the sole
proprietor or owner has

full liability of the business in case of financial loss. This means that the
owner is required to

pay the claimants or creditors from his or her own assets.

• PARTNERSHIP – is another form of business owned by two or more

persons.

Similar to sole proprietor, the business partners have full liability in case of
financial loss.

• LIMITED PARTNERSHIP – is a form of business also owned by two or more

persons, but with limited liabilities during a financial loss. The financial
liability of each party is

limited to the shares that the party contributed to form the business entity.
 • COOPERATIVE – is a form of business organization where the
ownership is

equally shared among members. It is a group enterprise similar to a corporation

in having a

board of directors and officers who manage the cooperative. A cooperative must be
duly

registered with the Cooperative Development Authority (CDA) to operate and be

legally

recognized.

Forces in the Firm’s Environment

Various forces in the macro environment that affect a firm may be classified
mainly into

political, economic, sociocultural and technological (called as PEST analysis).

Also added to the

PEST analysis is the presence of natural risks in the environment due to the
vulnerability of the

Philippines to natural disasters such as typhoons, floods, earthquakes, and

volcanic eruptions.

• Political Forces – it is related to government affairs and laws or

regulations. It

includes factors such as form of government, industry regulations, passage of

laws, and

politics.

• Economic Forces – it pertains to economic conditions relevant to

the business.

These economic factors include employment rates, income levels, inflation rates,
savings and

investment rates, insurance rates and monetary policies.

• Sociocultural forces – it is related to societal characteristics.

It includes

demographics and values of people in the society.

• Technological Forces – it is related to new tools, ideas, and

approaches used to

produce goods and services. It includes new procedures and equipment.

• Natural Risks - these risks could affect the firm’s environment.

Business

establishments need to assess their exposure to natural risks. Firms must adopt
disaster
 preparedness and resiliency measures to ensure business survival and resiliency
necessary for

their long-term growth. Application of PEST Analysis

Sample scenario:
Shall I Expand my Business?
Mr. Reyes is the sole proprietor of a small computer shop located at the
corner of West

Avenue and EDSA in Quezon City. From a current capacity of 30 computer desktops, he
is

thinking of expanding his business by doubling the number of his computer desktops.

Presently, he is maintaining five employees, which include three trained

computer

assistants, an administrative assistant who also works as accountant, and a utility

person who

makes sure the office is always kept clean and orderly. The business operates from
8am to 10pm.

A security personnel whom he has a contracted from an agency safeguards the

computer shop.

Question: If you were Mr. Reyes, would you expand your business? Why did you
say so?

P E S T
(Political Factors) (Economic (Sociocultural (Technological
Natural Risks
Factors) Factors) Factors)
• Mr. Reyes must • Mr. Reyes must • Young people are • There is an
•The area
comply to laws monitor any more adept in use increasing
surrounding
on business change in the of computers. use of
the computer
permit within prescribed Thus, it is computers for
store of Mr.
the city or minimum wage in strategic for Mr. academic
Reyes is not
municipality. the region that Reyes to target learning.
prone to
• Mr. Reyes must will affect the more the youth as • New
floods during
comply to compensation of his market. software are
the rainy
copyright law workers if he is • More people visit developed for
season.
thinking of hiring computer shops
Thus, Mr.
regarding the educational
additional staff to during evenings.
Reyes will not
use of licensed expand his purposes.
Thus, it is
be bothered
computer computer shop.
advisable that Mr.
by floods if
software.
 Reyes open his
he decides to
computer store up
expand his
to 10:00 pm.
computer

business.
Environmental Scanning and SWOT Analysis
To formulate strategies for the firm, a manager needs to conduct environmental
scanning.

Environmental scanning is the process of assessing the internal and external

operating

environment of a firm to analyze its strengths, weaknesses, opportunities and

threats (SWOT

Analysis). The elements of environmental scanning pertain to the external analysis

and internal

analysis of the firm. In doing SWOT analysis, always bear in mind that
Opportunities and

Threats belong to the external analysis. It also includes analysis of the

competitive forces in

specific industry where the firm belongs, such as competitors, buyers (customers),
suppliers, and

substitutes for the firm’s product or service. While on the other hand, internal
analysis examines

the strengths and weaknesses of the conditions inside the firm, such as skills and
competencies of

employees, capacities of resources, organizational culture, and team spirit.

The Local and International Business Environment of the Firm

Managers continually face the challenge of gaining competitive advantage in
today’s business

environment to boost company performance. Manager must know how to analyze the
scope and

strength of competition prevailing in business environment of the company.

• Competitive advantage – it pertains to distinguishing features or

characteristics of a

business organization that enable it to perform better than rival

organizations.

• Environmental uncertainty – pertains to lack of complete information about

the current

and future environment of the firm.

• Environmental complexity – the presence of numerous factors prevailing in

the

environment that change over time.

• Local business environment – it pertains to the specific industry to which

the company
 belongs and directly deals with. It comprises the customers, suppliers,
competitors,

regulators, and employees.

 • International business environment – it pertains to the business activities
performed by

companies operating in foreign locations.

Industry Analysis
A manager must gauge the status of business environment is to analyze the

competition in the local business environment.

Porter’s Five Forces Model

• Industry competitor – This focuses on the rivalry among existing firms. The
greater

number of rival companies existing in the area, the more intense the
competition will

become.

• Supplier/Producers – This focuses on the bargaining power of suppliers or

producers. If

there are more products of a particular product as compared to the number of

buyers or

customers for that product, then the producers would have more control in
influencing the

selling price for that product, such that this creates competition between
the suppliers and

the buyers.

• Buyers/Consumers – This focuses on the bargaining power of buyers or

consumers. If

there are more buyers of the product as compared to the number of sellers
for that

product, then the buyers or consumers would have a better control in

influencing the price

that they are willing to pay for that product.

• Potential new entrants – This focuses on the threats of new entrants. The
presence of

new rival companies will increase the total number of competitors in the
area, which

further intensifies the level of competition among them.

• Substitutes – This focuses on the threat of substitute products or services.

The presence

of substitute products will serve as competitors to existing products, and

this further
 intensifies the level of competition among the companies who produce similar
products.
The Role of Business in Economy and the Different Phases of Economic
Business plays an important role of driving the economic growth and
development of a country. Business enterprises create new jobs and provide
employment for

people. Here are the different roles of business in economic growth and development

• Providing our needs and wants

• Providing people with job opportunities that lead to increased household
incomes

• Providing housing, health, and education services to people

Corporate Social Responsibility – is the obligation of a manager to operate the
business in

ways that are both beneficial to the company and the society. There are numerous
ways by which

companies practice CSR.

Different Phases of Economic Development

A better understanding of how economies are developed helps to guide
managers on

the type of strategy to adopt for their businesses. These factors

include the country’s

history, political structures, economic structure,

sociocultural conditions,

infrastructures, the presence of natural resources, and other external

event, such as

global financial crisis and plummeting of oil prices.

• Developing Economies Phase: Reliance on Agriculture as the Primary Sector –

the

agricultural sector typically plays a dominant role in the economy, compared

to other

sectors such as the industry (manufacturing) and the service sectors.

• Industrialization Phase: Decline in Agriculture and Shift to the Industry

Sector –

Industry is broadly defined to include the manufacturing, mining,

construction,

electricity, gas, and water sectors. The modern economy develops with the

growth of industrialization. The transition from traditional to modern economy is

characterized

by the following factors: increased consumer demand, increased incomes, growth in

the labor

force, accumulation of capital and introduction of new technologies.

INTRODUCTION
A manager performs his functions to accomplish organizational objectives by

working with and through people and other organizational resources.

He/She does

this amidst an environment characterized by constant change. With an

increasingly

uncertain future, a manager anticipates the environment by planning.

Planning plays an important role in the success of every organization. It

helps the manager

to see the whole picture of the operation of the business.

What is Planning?

• Planning is a discovery of alternative paths. It also requires decision-

making.
• Planning is essentially having a roadmap where you can mark your goal or
destination,

and then selecting the best route to get there.

Benefits of Planning

• It sharpens focus.
• It provides flexibility.
• It improves coordination.
• It tightens control.

Types of Plans
• Long-range plans – In terms of time horizon or intended duration, these plans
are

traditionally those that look at three or more years into the future. These
are usually

backed up by research studies.

• Short-term plans – are usually those that cover a period of one year or
less. Examples

are monthly plans, quarterly plans, midyear plans and annual plans.

• Standing plans – are used for situations that occur repeatedly. They are in
the form of

policies, rules, and standard operating procedures (SOP). They usually

pertain to matters

such as hiring, discipline, and dismissal.

 • Single-use plans – also called “stand-alone plans”. They are used for
planning a unique

or specific project or program. These are also used once because the
situation is not likely

to happen again in the future.

Policy – is a general or broad guide for the actions or behavior of people in the

workplace.

Rule – is a more specific guide to actions or behavior in the workplace.

Planning at Different Levels of the Firm

• Strategic plans – are developed by the top management of the company. It
covers the

entire company and provide the direction it will take for the coming years.
It starts with

clarifying the long-term vison and mission of the company. Top managers
carefully craft

the vision- mission of the company because they reflect the “heart and
soul” of the firm.

• Vision – is “goal-oriented” as it sets a clear direction of where the

company
wants to go or wants to achieve in the future.
• Mission – pertains to the guiding purpose of the company. It concisely
describes what the

company does in manner that differentiates it from other companies.

• Functional Plans – they are developed at the middle and supervisory levels.
These are

the plans that are cascaded down through the different management levels in
the

organization. Functional plans are also called tactical plans since they
are tactics

prepared by the managers occupying the different functional different

departments.

Planning Techniques and Tools

Planning techniques and tools pertains to the different methods for determining,
analyzing, and

predicting situations that will likely to occur. The long-term success of an

organization depends

on how well managers are able to use and apply their knowledge, skills, and talent
for planning.

Here are different planning techniques and tools.

 • Forecasting – pertains to the use of specific techniques to predict the
likelihood of

certain events or factors to happen in the future.

• Quantitative Forecasting – uses statistical tools and analyses to predict

the future.
• Qualitative Forecasting – it makes use of opinions or perceptions from
experts for

prediction purposes. It can be applied for non-quantifiable data and when

historical data

are not applicable or available.

• Contingency Planning – is the process of identifying alternative courses of

action in the

event that unforeseen or uncontrollable events take place. Business

contingency plans are

prepared by managers in relation to financial risks, and natural disaster

risks.

• Scenario Planning – involves predicting potential alternative events that

might happen.

It entails preparing resources and actions to prevent or mitigate the

“shocks” from negative events. It is more detailed and extensive in

visualizing the

alternative events that may take place.

• Benchmarking – is finding out what other organizations are doing well and
then

incorporating those “best practices” into the operations of one’s

organization to improve

its cost and effectiveness.

Steps in Decision-making Techniques

1. Identify and define the problem
2. Generate and evaluate alternative courses of action
3. Choose the most appropriate course of action
4. Implement the chosen course of action
5. Evaluate the results

• Time Management in Decision-making – Time management is a vital skill that a

manager must learn along with decision-making skills. For managers, below
are some

tips in time management:

1. Identify the “time wasters” and avoid them. Better still, get rid
of them.
 2. Follow priorities by working first on what is most important and
urgent.
 3. Do not get too preoccupied with details to the point that you
miss the big

picture of picture things.

4. Avoid individuals who tend to monopolize your time

unnecessarily.
5. Be the master of your calendar by not letting others control
your time.
6. Break complex tasks into smaller chunks that can be done
gradually.
7. Stay calm even under time pressure. A relaxed mind avoids
mistakes.

INTRODUCTION
A manager designs and maintains a system of roles within which people in the
organization can

work together to implement the strategic plan.

The success of an organization is dependent on how effective the design of its

organizational structure

is.

Nature of Organizing

Organizing – is the process by which managers establishes the structure of working

relationships

among employees for the efficient and effective achievement of organizational

goals.

Organizations – also known as an enterprise. It is a workplace for people working

together to

achieve a common purpose.

Types of Organization

Formal Organization – is when the relationship is based on a structure of

roles that aims

to achieve organizational goals consciously and deliberately.

Informal Organization – They are not officially created but are freely
formed by

members who have a need for them. It does not appear on the organization chart
because they are

relationships based on joint personal activities among people.

Organizational Structure – is a system of tasks and reporting relationships that
ensure effective

coordination of tasks among individuals and departments in an organization.

Types of Organizational Structures

Functional Structure, in this structure, members with similar skills are
grouped

together into functional departments, such as production, marketing, finance, and

human

resources.

Divisional Structure, in this structure members of the organization are

grouped together

work on the same product, services, or serve similar customers. Different types of
divisional

structures are the following:

• Product Structure, grouping of members and jobs is by

product or service.

• Geographical Structure, grouping of members and job is by

location of activity.

• Customer Structure, grouping of members and job is by

customer served.

• Process Structure, groupings of members and jobs is by

related work

process.

Matrix Structure/Matrix Organization combines the functional and divisional

structure. Specialist from specific functional departments are assigned to work on

one or more

interdisciplinary teams. Thus, worker belongs to at least two groups at the same
time, such as

being a member of both the functional department and the product team.

Team Structure is created to complete special projects, to solve, or to

accomplish daily

task.

Network Structure is formed by having a core of full-time employees working

together

with outside partners who provide support or supply services.

 Virtual Structure eliminates the boundaries among units that compose the
organization

by using information technology (IT) and the internet to communicate with members
and

accomplish specific objectives.

Organization Theories
• Contingency Theory - emphasizes flexibility in management given the dynamic
changes in

the environment.

• Resource-based Theory – underscores the important role or proper management

of people

for organization to succeed. It emphasizes the need for business

organizations to craft

appropriate training programs that will develop the skills, talents,

attitudes and

competencies of their employees.

• Stakeholder Theory – is about socially responsible to the needs of different

stakeholders, or

about Corporate Social Responsibility.

Delegation
Delegation - is defined as the process by which a manager assigns and transfers
duties,

authority, and responsibility to his or her subordinates.

• Centralization – When few tasks and little authority have been delegated by
managers to

subordinates.

• Decentralization – When many task and authority have been delegated by

managers to

subordinates.