The Foundation of Management Theory - Essay Example

Business Question 1 Foundations of Management Theory Four components of management process The four components of management process are planning, organizing, directing and controlling. 1) Planning: Planning can be defined as the main function of management and the key component of management process. It determines the course of action which is needed for the achievement of the expected outcomes. It is the initial point of the process. The other functions of the management are connected to the planning process. Planning is done for the stability, prosperity and success of any business. It also helps in solving problems in the business units. It assists the management to predict the future problems and even provide them with ways of avoiding the existing issues (Morden, 2004). Examples a) The leading consumer good company, Procter and Gamble (P&G), has recently planned to take few more weeks to pay back its suppliers. The amount is $ 2 billion and thus, the company has planned to arrange the cash by taking up wise cash management practices. b) Glaxo Smith Kline’s (GSK) management has planned to put an end to the frenetic expansion of the brand, Horlicks and focus on launching new varieties in the biscuits segment. 2) Organizing Organizing is the next step which follows planning. Organization of the resources means bringing them together and employing them in the right place, thereby achieving the goals of the company. It is a process as well as a structure. It deals with arranging the ways for executing the plans of the business for attaining its goals. It gives an appropriate structure to the administration of the organization and works hard for its future improvement. It involves different aspects like, span of control, segregation of departments, foundation of superior-subordinate relationships, delegation of authority and provision for coordinating a range of business activities. Examples a) Organization of the necessary resources is needed for executing a successful plan. In the case of P&G, it is important to collect all the financial data of the company and make the decision of extending the credit period for the suppliers. Thus, organization of the proper resources is required in this case. b) The extensive market survey of GSK regarding the expansion of Horlicks has made them aware of the fact that the process of extension is becoming chaotic. Thus, the information is organized properly in order to take the decision for ceasing the extension of the brand. ` 3) Staffing Staffing can be referred as the requirement of manpower for executing certain business plans. Staffing being a part of the managerial function consists of selection, recruitment, training and development, performance appraisal and determination of salaries and wages. The requirement of this process arises at the initial stage and there is a regular need for time to time replacement of the staffs along with diversification and expansion of the business activities (Morden, 2004). The basic need of every business is the stable, efficient and cooperative staff for management of the business activities. Thus, it can be deducted that manpower is a significant asset for the business unit. In most of the organizations, the development and planning activities of manpower are delegated to the human resource department managers and the personnel manager (Griffin, 2006). “Right man for the right job” is the main principle for the staffing process, as successful operation of the organization is dependent on the skillful labor (Griffin, 2006). Examples 4) Controlling Controlling is referred to as the most vital function of the management. It is highly necessary in the case of individuals and departments so as to avoid wrong actions and activities. Controlling includes three broad aspects namely, setting up benchmarks of performance, evaluating work-in-progress and inferring results achieved and lastly, taking remedial actions when required. Managers have to exercise effective control in order to bring success to a business plan because these plans do not automatically provide positive results. Control is closely linked with other managerial functions. It is rightly treated as the soul of management process. It is true that without control, there will be nothing to control. It is equally true that without proper control, planning will only be an academic exercise. Controlling is a continuous activity of a supervisory nature. Question 2 Decision Making The importance of managerial decision making is required for the improvement in organizational learning, development and functioning. The heuristic approach helps in the accurate decision making which acts as catalyst in framing problem, analyzing difficulties, evaluation of alternative selection of strategy, implementation of strategy and also, evaluating the success of the strategy (Sundar, 2008). In the heuristic approach, the decision maker identifies cognitive approaches, processes along with conscious and unconsciousness, which help in rational managerial decision making defined by logical models (Sundar, 2008). It ignores certain parts of the rational information with the main objective of the pursuing the goals and also, helps in smoothening the complex procedure. This approach helps in making accurate judgments and reducing the efforts needed for the accomplishment of the collective goals and objectives. The commercial retailers often refer to this theory for the purchase of raw material from other retailers (Sundar, 2008). The commercial retailers use this theory to distinguish between active and non-active customers. These retailers have large database constituting of amount, date and each previous purchase of every customer. Based on the data, the commercial retailers can distinguish between the profitable customers and also, can predict the futuristic pattern of the customer purchase (Sundar, 2008).The commercial retailers use various tools of heuristic approaches like, adaptive toolbox, ecological rationality and effort accuracy trade off theory. The adaptive toolbox theory will utilize the cognitive building block approach for searching, formulating and implementing decisions for cognitive core capacity development and the exploitation of resources for the optimal benefit (Sundar, 2008). The ecological rationality model helps in the detection of the environment and the formulation of other strategies related to accomplishment of objectives. The accuracy trade off theory helps in finding out defects in the current manufacturing systems. Unlike the commercial retailers, the school administrators do not have adequate information for cognitive capacity and to analyze information (Sundar, 2008). The school administrators have to use this theory for judgmental decision making for the betterment of school students. In schools, the goals are complex, conflicting and constantly changing. The school teachers have to decide and rank from various goals for their prioritization purposes and also, enumerate possible options that can predict all the consequences for each and every alternative. The complexity can be removed by enhancing the human cognitive processing so that the process becomes more functional. The judgments are based on the uncertainty rule and intuitive decision making and helps in designing the pattern based on experience. The skillful ignoring of the dysfunctional process could have led to the removal of irregularities within the systems. The school administrators would be able to smooth the process of interactions and also, render the entire functioning process as authentic. The effective decision making of the school administrators is totally dependent on their reflective thinking and also, the recognition according to varying situations. The school administrators use this theory to design the syllabus, guide the students, and also, incorporate flexibility while formulating the teaching methods. The consistency heuristic approach helps the teachers to make consistent and highly constant decisions for the betterment of the entire school. Question 3 Ethics Business ethics differs from one organization to another and its application to various managerial situations helps in reducing various complexities in the organizations. It also helps in the handling of managerial crisis effectively for the improvement in the organizational climate. Business ethics applicability varies from one organization to another and the opinion formulated may differ from one manager to another (Walker and Seppälä, 2000). For example, in the case of the Hyatt scandal, the employers had dismissed several old employees and replaced them with new ones, which signified that the management was lacking the guidance of business ethics. The management of Hyatt was not successful in developing a congenial atmosphere and most of the employees had complained about the extreme work pressure which had caused physical pain and fatigue among the workers. Most of their housekeeping and administration staff was working in the company for a decade or so. The reason behind this drastic step was the reduction of administrative and non-administrative costs related to recession. This event had angered the common people, management, employees of the organization and even certain government bodies. The conflicts and controversies had angered even the stakeholders. The reputation of the company was hanging by a thread. From a financial management & accounting perspective, the stakeholders could determine the company’s reputation from the ability of its managers to adapt with the changing marketing dynamics. In this context, there are various ethical approaches like, Normative principles, which refer to the values of an individual that define their behavior. Descriptive Ethics emphasize on the “What If” behavior of the company and an individual (Pollock, 2011). Egoism approach states that an individual should focus on the benefits that he would derive by performing an action. There are mainly four kinds of approaches which are as follows: 1) Psychological egoism: This approach states that human beings are naturally egoistic and it would be unnatural for them to be not egoistic (Walker, 2000). 2) Enlightened egoism: This approach states that an individual should treat another individual in the same way in which he or she wants to be treated. This enhances cooperative relations between two individuals. 3) Metaethics: This theory includes components of normative and descriptive theories. The only difference is that this particular theory studies the logic behind the moral principles and values (George, 2011). 4) Consequentialism: This theory revolves around the moral judgment of an action. The right and wrong aspect of an action is determined through this. Thus, it is observed through various ethical approaches that the management of Hyatt and their employees were thinking on different spectrums. This difference in thoughts had caused an outburst among the employees, thereby leading them to form a mass movement, which was almost synonymous with the utilitarianism theory along with the normative and descriptive theory of ethics. It is also observed that different ethical approaches can lead to different kinds of outcome and approaches. Business ethics was deeply inspired by various other cultural factors and elements which act as a catalyst in shaping the organizational culture and climate. These cultural elements also help in distinguishing between acceptable and non-acceptable activities. Corporate ethical system has been instrumental in smoothing the various managerial functions of the organization (George, 2011).Suspension and removal of employees on the basis of weak, illogical grounds was irrational from the managerial perspective. An incident like this can reduce the morale of other employees even from the other departments. Reference List George, R. T.D., 2011. Business ethics.7th ed. New Delhi: Pearson Education India. Griffin, R., 2006. Student achievement series: Principles of management. London: Cengage Learning. Morden, T., 2004. Principles of management. New Delhi: Ashgate Publishing. Pollock, J.M., 2011. Ethical dilemmas and decisions in criminal justice.7th ed. Connecticut: Cengage Learning. Sundar, S.S., 2008. The MAIN Model: A Heuristic Approach to Understanding Technology Effects on Credibility [pdf] Massachusetts Institute of Technology. Available at: < http://mitpress2.mit.edu/books/chapters/0262294230chap4.pdf > [Accessed 15 November 2013]. Walker, J.R. and Seppälä, S., 2000. Against Hybrid Theories of Concepts [pdf] Available at: [Accessed 15 November 2013]. Walker, J.R., 2000. Introduction to hospitality management.2nd ed. New Delhi: Pearson Education India. Read More