Taken from the UNISA Study Guide and the Prescribed Textbook

GENERAL MANAGEMENT MNG201 2009

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Taken from the UNISA study guide and the prescribed textbook. Smit, PJ et al. Management principles. 4th edition 2007 MANAGEMENT

STUDY UNIT 1 CHAPTER 1 THE NATURE OF GENERAL MANGEMENT

Introduction to general management

 Managers have to deploy the basic resources of an organization, to help it achieve its goals  Managers must activate and guide the organization.

The nature of Management

 Managers combine, allocate, co-ordinate and deploy resources / inputs in such a way that the organisation’s goals are achieved as productively as possible.  All managers engage in certain interrelated activities to achieve their desired goals. This entails 4 fundamental management functions

- Planning - Organising - Leading - Controlling

 Knowledge resources: human, financial, physical & information.

See table 1.1 for examples. Planning (Part II)

Managers determine the organisation’s vision, mission, and goals and decide on a strategy to achieve them

Controlling (Part V) Organising (PartIII)

Managers monitor Managers group progress and take activities together, corrective steps to reach establish authority, the mission and goals allocate resources and delegate

Leading (Part IV)

Managers direct and motivate members of the organization to achieve the mission and goals

Figure 1.3: The interactive nature of the management process. Identify activities

Definition of Management

 The process of planning, organizing, leading & controlling the resources of the organization to be predetermined stated organizational goals as productively as possible.  Planning: Management function that determines the organizations vision, mission and goals.  Organising involves developing a framework / organizational structure to indicate how & where people and other resources should be deployed to achieve the goals.  Leading – directing the human resources of the organization & motivating them in such a way that their actions are aligned with predetermined goals & plans.  Control – monitor performance & action, ensuring they conform to plans.  Organisational design – the process whereby managers match the organizations structure to its strategies.

Management levels

 Managers are classified into 2 categories: (1) according to their level in the organization, (2) function / specialist area of management for which they are responsible. TOP MANAGEMENT

 Lead the organization  Final authority & responsibility  Responsible for organization as a whole  Determines the vision, mission, goals & overall strategies  Long term planning  Designing organizations broad structure  Leading & controlling  Influences corporate structure

MIDDLE MANAGEMENT

 Responsible for specific departments  Implements policies, plans & strategies  Medium & short term planning, organizing, leading & controlling  Monitor environmental influences

LOWER / FIRST LINE MANAGEMENT

 Short term planning  Implement plans of middle management  Apply policies, procedures and rules to productivity  Provide technical assistance  Motivate subordinates  Day to day goals

Areas of Management

 Managers can be categorized in terms of the activity they manage  General management  Marketing  Financing  Production / operations  Human resources  Public relations

Management Roles (Henry Mintzberg)

Interpersonal role  Figurehead, leader, relationship builder

Informational role  Involves monitoring / gathering info to improve communication Decision making role  Entrepreneur  Deal with and solve problems  Resource allocator  Negotiator Interpersonal role

Figurehead Leader Relationship builder

Decision-making role Information role

Entrepreneur Monitor Problem solver Analyser Allocator of resources Spokesperson Negotiator

The overlapping role distribution of managers (according to Mintzberg)

Management Skills

 Managers at different levels need different skills to perform effectively

Conceptual skills: the mental ability to view the operation of the organization & its parts holistically. Thinking & planning abilities.

Interpersonal skills: ability to work with people.

Technical skills: ability to use knowledge / techniques of a specific discipline to attain goals.

Management Charter Initiative (MCI)  Sets generic standards for management

In S.A. the National Qualifications Framework (NQF), through the work of standards generating bodies (SGB’s) defines management competence in terms of 8 levels. Each level specifies what a manager must know, what skills they must have, and what value orientation the manager must have.

Acquiring Management Skills

 Formal management education  Continuous education  Job experience  Variety of assignments Management and Organisational Performance

 Fundamental Economic Principle - achieve the highest possible satisfaction of needs with scarce resources.

The Scope of Management

Large Businesses

 Compete globally & use small businesses as subcontractors  Management training & development imperative

Small Businesses

 Provide jobs  Need to play a greater role in the community

Non profit seeking Organisations

 Employ sound management principles to survive & achieve their goals.

MANAGEMENT

STUDY UNIT 2 CHAPTER 2 THE EVOLUTION OF MANAGEMENT THEORY

 The evolution of management reflects society and its constantly changing needs.  It explains the dominant culture of time and is a reflection of the political, economic, social, technological, international and ecological issues of time.

Entrepreneurial capitalism

 Entrepreneurs were capitalists who risked their own money in organizations.  Bore the risk alone and took all the profits Managerial capitalism

 A team effort to achieve success and have an overall financial gain.

Why study management theory?

A theory is built in stages:  Gathering data (e.g. what managers do)  Organizing it into categories (POLC)  Highlighting similarities & differences  Explaining what causes what and under what circumstances

Understanding the different management theories

 A management theory is a group of assumptions advanced in order to elucidate the productivity issue  Environmental forces such as social, economic, technological, political, international and ecological forces are responsible for the evolution of management theory.

Significant developments that have an effect on managers and organizations

 Advances in info technology  Globalization of the marketplace  Increasing predominance of entrepreneurial firms  The growing importance of intellectual capital

Theories of Management NB! KNOW WELL

CLASSICAL APPROACHES

Management School / Key ideas Researchers approach 1. Scientific  Analyse specific tasks Frederick. W. Taylor management of workers  Time and motion study  Money motivated workers  Piecework system  Ways to improve the performance of workers

 Work simplification Frank & Lillian Gilbreth  Productivity at shop- floor level  Chart showing relation between work planned Henry. L. Gantt & completed & time elapsed

Principles of efficiency 2. Process / Admin  Managing complex Henry Fayol Approach organizations  Fayol: interested in admin side of operations  5 basic functions of admin: planning, organizing, commanding, co- ordinating, controlling  management is a skill something we can learn when principles are understood  14 principles of management pg 33  Disadvantages – formal authority postulated 3. Bureaucratic  How organizations are Max Weber Approach structured  Stressed the need for a strictly defined hierarchy, governed by clearly defined regulations and authority  Legal authority  Disadvantages – limited flexibility, slow decision making  Classical vs contemporary – mind map 4. Human relations  Importance of paying Elton Mayo movement attention to people to Hawthorne Studies improve their productivity  Hawthorne studies relate between lighting and productivity  Hawthorne effect – management’s concern for their workers well being  Employees are motivated by social needs than economic needs  Behavioural scientists: - Maslow – hierarchy of needs Maslow - McGregor – Theory X and Y McGregor

- Needs of the worker

X managers – coax workers to put effort in their jobs

Y managers – assume people enjoy work & want to improve skills

Quantitive Management  Mathematical models, Theory statistics – use in decision making “Crunching the  Decisions based on numbers” quantifiable info  Quantitative perspective: - management science - operations research (OR)

Management Science - development of math’s models to assist decision making

OR - applied form of management science, helps managers to develop techniques to produce prods & services efficiently

 Tools & techniques used today: linear programming, PERT/CPM, regression analysis (Planning & Control) CONTEMPORARY APPROACHES

Management Key ideas Researcher approach Systems  Organization viewed as a group Luab Bertalanffy Approach of interrelated parts with a single purpose: to remain in equilibrium  View organization as a whole  Action of one part influences another  Open system perspective – 4 elements - input (resources) - transformation processes - output (prods / services)  - feedback (reaction from environment)  Equifinality – more than 1 way to reach the same goal Contingency  Based on systems approach approach  Using right approach for situation in which managers find themselves

 Everything about an organization is unique  Char of situation called contingencies  Ext environment (rate of change & degree of complexity)  Organizations own capabilities (strengths & weaknesses)  Managers & worker (values, goals, skills, attitudes)  Technology used

TQM  Total – quality involves and W Edwards Demming people & activities  Quality – meeting customer agreed required at lowest cost, first time every time  Management – quality must be managed  Create an organization committed to continuous improvement  Philosophy of management driven by competition & customer needs & expectations  Customer – employees, suppliers, consumers  Intrinsic motivation for learning  Used as a strategic weapon – to build competitive advantage S.A.  Deals with performance CSIR, Eskom, Std Excellence excellence in organizations Bank, Daimler Model  Holistic approach Chrysler

2. Policy and 7. Impact on strategy society

3. Customer 8. Customer 1 and market 6. satisfaction 11. focus Processes Leadership Business results 4. People 9. People management satisfaction

5. Resources 10. Supplier and and partnership performance information management

The above model is based on the following assumptions:

Business results are improved through sound leadership. Leadership should drive:

 Policy and strategy;  Customer and market focus;  People management;  Resources and information management

Processes must be identified, managed, reviewed and improved to ensure:  A positive impact on society (eg improved quality of life);  Customer satisfaction;  People satisfaction;  Supplier and partnership performance.

The model provides criteria for all 11 elements to enable organizations to assess themselves against the criteria of performance excellence. The self- assessment process allows an organization to identify its:  Strengths  Areas in which improvements can be made

This model culminates in planned improvement actions.

Six Sigma  Quality initiative, focuses on Motorola defects per million. Introduced  Potential quality – known max possible value added per unit of input  Actual quality – current value added per unit of input  Diff between 2 – waste  Focuses on: - defect prevention - cycle time reduction - cost savings

 Defined at 3 different levels: - as metric (DPMO) - methodology (DMAIC model) - as a management system

Methodology focuses an organization on:  Understanding & managing customers requirement  Aligning key business processes to achieve those requirements  Utilizing rigorous data analysis to minimize variation  Driving rapid & sustainable improvement

Define the goals of the improvement activity. For example, at the operations level, a goal might be to increase the throughput of a DMAIC model production department. Measure the existing system. Establish valid and reliable metrics to help monitor progress towards the goal(s) defined at the previous step.

Analyse the system to identify ways to eliminate the gap between the current performance of the system or process and the desired goal. Statistical tools should be used.

Improve the system. Be creative in finding new ways to do things better, more cheaply, or faster. Use statistical methods to validate the improvement.

Control the new system. Institutionalize the improved system by modifying compensation and incentive systems, policies, procedures, budgets, and so on. Ensure that the documentation is correct.

Management System

 High performance system for implementing bs strategy  Aligns business strategy to critical improvement efforts  Mobilize teams to attack high impact projects  Improves business results  Ensure improvements sustained The learning  Based on systems approach Peter Senge organisation  Organizational learning enables an organization to adapt to change & move forward by acquiring new knowledge, skills / behaviours, and thereby transform itself.  Industry learning continuous  Knowledge – shared

Re-  Entails a fundamental Homer & Champy engineering reappraisal of the way organisations operate Quantum leap  Reinventing existing organizations & not merely Assumes changing them in incremental current steps process  Focus on current technology irrelevant  Rethinking & redesigning  Speed, quality of service, It doesn’t overhead costs work, its  Integrates 4 key drivers broken, forget - people it, start over!! - processes - technology - infrastructure

Current and near future management realities

In the 2000’s, the competitive advantages of the past have little meaning. The new source of sustainable, competitive advantage available to organisations has people at its centre – their knowledge, creativity and talent. Competitors can emulate both capital and technological advantage and the human asset is intangible and very difficult to imitate. Managers should understand how the current and near future environments differ from previous ones; how today’s organizations differ from previous ones; and the impact of both of the above on management.

 Current & near future environmental revolutionary (unpredictable) (discontinuous change)  Outsourcing – flexible  Knowledge managed  Interim management – best manager manages specific projects  Corporate governance. MANAGEMENT

STUDY UNIT 3 CHAPTER 3 CONCEPTS OF SYSTEMS APPROACH IN MANAGEMENT

(1) The organisation as a sub-system of its environment

Definition: System: a set of interrelated elements functioning as a whole.

Transformation or Inputs from the processing of inputs Outputs to the environment environment Manufacturing and Human (labour) operational systems Products Financial (capital) Technology Services Physical (raw Expertise Job opportunities materials) Information and others Information (knowledge & Management process expertise) Planning Organising Leading Controlling

Figure 3.1 A systems perspective of an organisation

The transformation process is carried out by the organisation as a specific sub-system of its environment.

(2) The systems approach in management

 Closed system – self supporting, exists independently of an environment  Open system – dependent on the environment in which it operates - the environment is dependent on the system - specific interaction between system & environment  Sub system – system within a system  System approach implies the is an open system  Synergy – whole is greater than the sum of its parts. (if various functions in the co-operate as sub-systems, they will be more productive than if they operated individually.)  Entropy (process of systems disintegration) opposite to synergy.  The effect of the interrelationship between environment variables is that a change in one variable may cause a change in other variables.

The composition of the management environment  The management environment is all those factors both inside and outside the that may influence the continued and successful existence of the.  The numerous environment variables that influence the environment are classified into sub environment.

THE INTERNAL OR MICRO ENVIRONMENT

The micro environment consists of the organisation itself. Management has almost complete control over this environment that consists of the following variables:

(1) the mission, goals and objectives and strategies of the ; (2) the organisation and its management; (3) the resources of the organisation; and (4) the al culture.

THE MARKET OR TASK ENVIRONMENT

The market environment surrounds the and comprises:

(1) consumers, their needs, purchasing power and behaviour; (2) suppliers of materials, capital and labour; (3) intermediaries such as wholesalers and retailers, commercial agents and brokers, and financial intermediaries such as banks; (4) competitors including new entrants, existing competitors, availability of substitute products or services, and the bargaining power of clients, consumers, suppliers (5) Labour unions which deal with the supply of labour.

THE MACRO ENVIRONMENT

The macro environment exists outside the and comprises six sub environment (mega trends):

(1) a technological environment, responsible for accelerating change and innovation and creating opportunities and threats in the environment (2) the economic environment, which is also responsible for change in the environment because of changes in the economic growth rate, levels of employment, consumer income, the rate of inflation and the exchange rate; (3) the sociocultural environment which comprises people such as employees and consumers who are influenced by economic and technological variable and culture; (4) the ecological / physical environment which involves the natural resources from which the obtains its raw materials and the environment into which the discharges its waste; (5) the politico governmental environment which consists of eh government and its influence on the such as political risk, laws and government expenditure; and lastly (6) the international environment comprising the unique environment factors of the countries with which the has business relations.

*Managements primary task is to identify, evaluate and utilize opportunities in the market, and to develop its strategy to deal with competition.

Main characteristics of the management environment

 Interrelatedness of environment factors  Increasing instability  Environment uncertainty  The complexity of the environment  Environment is becoming unpredictable

The market or task environment

1. The market – People who have needs to be satisfied and the financial means to satisfy them.

Buying power – represented by the personal disposable income of consumers

2. Suppliers – provision of labour (trade unions)

3. Intermediate – wholesalers, retailers, commercial agents and brokers

4. Competition – a situation in the market environment in which different ’s with more/less the same prod/service compete for the business patronage of the same consumers

 Keeps excessive profits under control  Provides incentive for productivity  Encourages technological innovation

The nature and intensity of the competition ie. particular market environment are determined by 5 forces: (NB Porter) 1. possibility of new entrants / departures 2. bargaining power of clients & consumers 3. bargaining power of suppliers 4. availability / lack of substitute products or services 5. Number of existing competitors

The weaker 5 forces are, the better the chances of good performance (Michael Porter)

Management uses environment scanning and information management to observe strengths and weaknesses

Interfaces between the and the environment

1. Environment change  influences the organisation’s strategies, structure and systems are in equilibrium with the environment.  Change disrupts the equilibrium and management must make changes in the ’s structure, systems or strategy to adjust to change.  Change means changing the status quo – changing stability to instability moving from predictable to unpredictable known to unknown  Unmeasurable & causes uncertainty  Rate of change has a more profound effect on the environment than the actual direction of change  change is therefore a process of continual innovation

2. Uncertainty in the environment is determined by the following:

 the extent of change and  the level of complexity

The extent of change refers to the degree of stability or instability in the environment while the level of complexity refers to the relative number of variables in the environment.

 Stable + simple environment  little uncertainty (bakeries)  Simple but dynamic environment  moderate uncertainty (clothing manufacturer)  Complex + stable environment  moderate uncertainty (Toyota)  Complex + dynamic environment  high level uncertainty

STABLE extent of exchange UNSTABLE

3. Crises in the environment can happen at any time and can influences. Political upheavals, the plunging of a country’s currency or an environment disaster are examples of this. Ways in which management can prepare for environment changes

 The response to environment change revolves mainly around environment scanning and information management.

1. Information management

An ’s information management system should make provision for environment scanning, which is the measuring, projection and evaluation of change in the environment.

Importance of environment scanning:

 Environment constantly changing – managers must keep up with change  Determines whether there are ay threats to the current mission, goals strategy  Determines opportunities for attaining goals  Orgs that scan the environment – more successful than those that don’t

Extent of environment scanning determined by following factors:

 Nature of environment in which an organisation operates & the demands the environment makes on it  Basic relationship has with environment  Source & extent of change

2. Strategic responses

 Adapting an existing strategy / developing a new one  Mergers, takeovers, joint ventures

3. Structural change

 Organisational structure is redesigned / adapted.