BASIC MANAGEMENT - Course

 Recommended Text Book:

– Management A Functional Approach by Joseph M. Putti, McGraw
Hill Book Company

 Chapters:
– The Environment of Business
– The Nature and Meaning of Management
– The Planning Function
– The Organizing Function
– The Controlling Function
– The Staffing Function
– Motivating Employees
– Participation in Organizations
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 Marks Distribution
Metric Marks
 Assignments/Project  10
 Quizzes  10
 Class Participation & Attendance  5
 Mid-Term Exam  25
 Final Exam  50

Final Evaluation 100

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The Environment of
Business
 Introduction to “Management” &
“Organization”

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 What is “Management”?
- Formal Definitions:

 “The attainment of organizational goals in an effective and

efficient manner through planning, organizing, leading and
controlling organizational resources” (Daft & Marcic)
 “the process of coordinating work activities so that they are
completed efficiently and effectively with and through other
people” (Robbins)
 “A set of activities directed at an organization’s resources with
the aim of achieving organizational goals in an efficient and
effective manner” (Griffin)

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 What is an Organization?
- Formal Definitions:

 “A social entity that is goal directed and deliberately

structured” (Daft & Marcic)
 “A deliberate arrangement of people to accomplish some
specific purpose” (Robbins)
 “A group of people working together in a structured and
coordinated fashion to achieve a set of goals” (Griffin)

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 What is a Business Environment?
Business environment encompasses all those factors that affect a
company's operations; including customers, competitors, suppliers,
distributors, industry trends, substitutes, regulations, government
activities, the economy, demographics, social and cultural factors,
innovations, and technological developments. It may also be referred
to as Operating environment.

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 What is a System?
A system is one which has interrelated parts and functions as a whole.
There are several departments or units in a business organization which
are all interrelated and the organization functions as one system.

SYSTEMS MODEL OF
ORGANIZATION

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 Types of System
 Open System
• An open system is one that interacts with its environment and thus
exchanges information, material, or energy with the environment,
including random and undefined inputs. Open systems are adaptive
in nature as they tend to react with the environment in such a way
organizing', in the sense that they change their continued existence.
Such systems are ‘self organizing’, because they change their
organization in response to changing conditions.
 Closed System
• A closed system is one, which doesn’t interact with its environment.
Such systems, in business world, are rare. Thus the systems that are
relatively isolated from the environment but not completely closed
are termed closed systems.
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 EMERY & TRIST’s Classification of
Environments
They offer a model that identifies four kinds of environments that
organizations might confront:

1. Placid-randomized: resources unchanging, random distribution

2. Placid-clustered: resources unchanging, but location becomes
important for survival
3. Disturbed-reactive: org. strategy is to get resources important for
survival)
4. Turbulent-field: all actors are interconnected, and overall field
becomes an important force

Placid-randomized is least complex, turbulent-field is

the most complex.
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 PLACID-RANDOMIZED ENVIRONMENTS
This environment is relatively unchanging. Therefore, environmental
uncertainty is low. Environmental demands are distributed randomly, and
change slowly.

Managerial decision making does not give much attention to the

environment.

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 PLACID-CLUSTERED ENVIRONMENT
Environment changes slowly, but threats are clustered, not random. The
forces in the environment are linked, and pose a higher threat than
randomized changes.

These organizations use long-range planning and forecasting to learn as

much as possible about their environments. Structures will tend to be
centralized.

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 DISTURBED-REACTIVE ENVIRONMENTS
A more complex environment than either placid one. Many similar
organizations seeking similar ends. One or more may be large and have
ability to influence the environment. Two or three large companies can
dominate an industry.

Organizations in this type of environment used planned tactical initiatives,

calculate reactions by other, and develop counteractions. This requires
flexibility and a structure with some decentralization.

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 TURBULENT-FIELD ENVIRONMENTS
The most dynamic of the environments and has the highest level of
uncertainty associated with it. Environmental elements are increasingly
organized and interrelated.

Major, dynamic shifts can occur in the environment as one, or a small

group of large companies “change the rules” of competition. Thus,
planning is not as useful here.

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 Nature of Environment
 Stable Environment
 In-between Environment
 Dynamic Environment

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 UNCERTAINTY IN THE ENVIRONMENT

Small number of Small number of

Simple external elements. external elements.
Elements remain the Elements are in
same or change continuous change
DEGREE OF slowly
HOMOGENEITY Large number of Large number of
external elements. external elements.
Complex Element remain the Elements are in
same or change continuous change.
slowly
Stable Dynamic
16 DEGREE OF CHANGE
 UNCERTAINTY IN THE ENVIRONMENT

Simple LEAST MODERATE

UNCERTAINTY UNCERTAINTY
DEGREE OF
HOMOGENEITY

Complex MODERATE MOST

UNCERTAINTY UNCERTAINTY

Stable Dynamic
17 DEGREE OF CHANGE
 UNCERTAINTY IN THE ENVIRONMENT

Soft drink bottlers, Personal computers,

beer distributors, fashion clothing,
Simple music industry, toy
container manuf.,
local utilities manufacturers
DEGREE OF
HOMOGENEITY Universities, American Airlines,
hospitals, oil companies,
Complex Insurance companies electronic firms,
aerospace firms

Stable Dynamic
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 BURNS & STALKER
Used interviews with managers and their own observations to evaluate
the impact of environment on organizational structure and management
practice.

The type of structure that existed in rapidly changing and dynamic

environments was different from that in organizations with stable
environments.

B & S labeled the two types organic and mechanistic, respectively

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 ORGANIC ORGANIZATION
Organic organizations are relatively flexible and adaptable. They rely on
lateral communication rather than vertical communication. Influence is
based upon expertise and knowledge rather than on authority of position.
Responsibilities are defined loosely rather than rigid job definitions.
Emphasis is on exchanging information rather than on giving direction.

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 MECHANISTIC ORGANIZATION
Mechanistic structures are characterized by high complexity, formalization
and centralization. They perform routine tasks, rely heavily on
programmed behaviors, and are relatively slow in responding to
the unexpected.

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 BURNS & STALKER
CHARACTERISTIC MECHANISTIC ORGANIC
Task Definition Rigid Flexible
Communication Vertical Lateral
Formalization High Low
Control Centralized Diverse
Influence Authority Expertise

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 Environmental Forces
 Supplier – supply materials, machine, service and information used to
produce its products and services
 Financial institution – the capital resources that available for the firm
 Customers – targets for the firm to market its products and services
 Competitor - all of the entities that compete with the firm in
marketplace
 Stockholders/owners – persons who are invest money in the firm and
represent the high level of management
 labor union – organization of skilled and unskilled workers
 The community – people in the area where the firm perform its
operation
 Government – federal, state and local level government that provides
not only constraints in the form of law, regulation, and taxes taking but
also provides assistance in form of purchases, information and funds.
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 Environmental Management
Environmental management – how to manage the environmental
elements by executing strategies that alter uncertainly environment to
a certain extent

Environmental Management Strategy:

 Independent Strategy – carry out its own resources to make better its
environment
 Cooperative Strategy – involve working with other environmental
element for the same purpose
 Strategic Maneuvering – try to alter its environment

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Environmental Management
Basic Strategy Specific Strategy Example
Independent Competitive Product differentiation
Strategy aggression Aggressive Pricing and
Legal Action Advertising Suits brought
Political Action against competitors
Lobbying
Cooperative Co-optation Consumer representatives
Strategy Coalition Industry Association
Strategic Domain Selection Entry in specific market
Maneuvering Diversification Wide product mix
Merger and Merger with competitors
Acquisition

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 Social Responsibility
Social Responsibility – the awareness that business activities have an
impact on its environment so it should try to balance its commitment in
its environment

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 Social Responsibility
 Responsibility to consumers, such as:
• the right to safety,
• the right to be informed
• the right to choose,
• the right to be heard
 Responsibility to employees, such as:
• The right to safety
• The right to equality in the workplace,
• The right to improve its capability

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 Social Responsibility
 Responsibility to investors, such as:
• The right to be proper management of funds
• The right to access information
 Responsibility to the environment, such as
• Preventing to water and air pollution,
• Safe to the land and Forest
• natural resources
 Social responsibility, such as
• Community support
• Social audit

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 Business Challenges/Environmental
Variables
 Challenges in the Economic Environment
 Challenges in the Competitive Environment
 Challenges in the Social and Culture Environment
 Challenges in the Political-Legal Environment
 Challenges in the Technological Environment

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 Challenges in the Economic
Environment
 Macroeconomics
 Microeconomics
 The Forces of Supply and Demand
 The Business Cycle
 State Budget
 International Trade

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 Challenges in the Competitive
Environment
 Types of Market Structure
 Global Competition
 Dealing with Competitors

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 Challenges in the Social and Culture
Environment
 Changing Population
 Cultural Values
 Social Responsibility
 Consumerism and Ecology
 Business Ethics

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 Challenges in the Political-Legal
Environment
 Government Role
 Business and Politics
 Law enforcement

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 Challenges in the Technological
Environment
 Technology Development
 Applying Technology
 Technology Transfer

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 Thanks… Qs. If any?

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