Chapter 1

NATURE AND
CONCEPT OF
MANAGEMENT
 Lesson 1: DEFINITION AND FUNCTIONS OF
MANAGEMENT
Management is the process of coordinating and overseeing the work performance
of individuals working together in organizations, so that they could efficiently and
effectively accomplish their chosen aims or goals.
MANAGEMENT FUNCTIONS INCLUDE THE FOLLOWING:
Planning. Involves determining the organization’s goals or performance objectives,
defining strategic actions that must be done to accomplish them, and developing
coordination and integration activities.
Organization. Demands assigning tasks, setting aside funds, and bringing
harmonious relations among the individuals and work groups or teams in the
organization
 MANAGEMENT FUNCTIONS

Staffing. Indicates filling in the different job positions in the organization’s

structure; the factors that influence this function include: size of the
organization, types of jobs, number of individuals or work groups or teams in
the organization.
Leading. Entails influencing or motivating subordinates to do their best so
that they would be able to help the organization’s endeavor to attain their set
goals.
Controlling. Involves evaluating and, if necessary, correcting the performance
of the individuals or work groups or teams to ensure that they are all working
toward the previously set goals and plans of the organization.
 INTRINSIC NATURE OF MANAGEMENT

Coordination. Ensures that all individuals, groups, or teams are

harmoniously working together and moving toward the
accomplishment of the organization’s vision, mission, goals, and
objectives.
Efficiency. Refers to the optimal use of scarce resources – human,
financial, physical, and mechanical – in order to bring maximum
productivity.
Effectiveness. It means doing things correctly when engaged in
activities that will help the organization attain its aims.
 LESSON 2: EVOLUTION OF MANAGEMENT
THEORIES
Evolution. Is usually defined as slow stages of growth and development, starting
from simple forms to more complex forms.
MANAGEMENT THEORIES:
Scientific Management Theory. It makes use of the step by step, scientific methods
for finding the single best way for doing a job.
Frederick W. Taylor. Father of scientific management theory.
Taylor’s Scientific Management Principles:
1. Develop a science for each element of an individual’s work to replace the old rule
of thumb method.
 EVOLUTION OF MANAGEMENT
THEORIES

Taylor’s Scientific Management Principles:

2. Scientifically select and then train, teach, and develop the worker.
3. Heartily cooperate with the workers so as to ensure that all work is
done in accordance with the principles of the science that has been
developed.
4. Divide work and responsibility almost equally between management
and workers.
 EVOLUTION OF MANAGEMENT
THEORIES

General Administrative Theory. It concentrates on the manager’s

functions and what makes up good management practice or
implementation.
Personalities Behind The General Administrative Theory:
Henri Fayol. His writings were concerned with managerial activities
which he based his actual managerial experience.
Max Weber. Ideal organizations must have authority structures and
coordination with others based on what he referred to as bureaucracy.
 EVOLUTION OF MANAGEMENT
THEORIES
Total Quality Management (TQM). Focuses on the satisfaction of customer, their
needs, and expectations.
W. Edwards Deming and Joseph M. Juran. Introduced this customer-oriented
idea in the 1950’s.
Organizational Behavior (OB) Approach. It involves the study of the conduct,
demeanor, or action of people at work
Early Supporters of OB Approach:
Robert Owen, Mary Parker Follett, Hugo Munsterberg, and Chester Barnard
 Munsterberg proposed the administering of psychological tests for the selction of
would-be employees in companies.
 Barnard suggested that cooperation is required in the organizations.
 LESSON 3: FUNCTIONS, ROLES, AND
SKILS OF A MANAGER
Manager. Is an individual engaged in management activities. He or she
supervises, sustains, upholds, and assumes responsibility for the work of
others in work group, team, department, or the organization.
MANAGEMENT ROLES AND FUNCTIONS:
Top-level Managers. These are the general or strategic managers who focus on
long-term organizational concerns and emphasize the organization’s stability,
development, progress, and overall efficiency and effectiveness. They are
concerned with the inter-relationships with their environment and have
authority over all other human resources of their organization. They set the
company’s general directions through strategies and control of various
resources.
 FUNCTIONS, ROLES, AND SKILS OF A
MANAGER
MANAGEMENT ROLES AND FUNCTIONS:
Top-level Management is typically composed of the organization’s chairman or chairwoman,
chief executive officer, president, managing director, and other high-ranking company
executives.
Middle-level Managers. They are the tactical managers in charge of the organization’s middle
levels or departments.
 They formulate specific objectives and activities based on the strategic or general goals
and objectives developed by top-level managers.
 Act as go-between higher and lower levels of the organization.
 More aware of the company’s problem
 Must be creative to provide sound ideas regarding operational skills as well as a problem-
solving skills that will help keep the organization afloat
 FUNCTIONS, ROLES, AND SKILS OF A
MANAGER
MANAGEMENT ROLES AND FUNCTIONS:
Frontline or lower-level Managers. Also known as operational managers
 Responsible for supervising the organization’s day-to-day activities
 Bridges between management and non-management employees
 Traditionally controlled and instructed by top- and middle-level
managers to follow their orders in support of the organization’s major
strategy.
 They are encouraged to be more creative and intuitive in the exercise
of their functions
 FUNCTIONS, ROLES, AND SKILS OF A
MANAGER
MANAGERIAL ROLES ACCORDING TO MINTZBERG
• leader
INTERPERSONAL • liaison
• figurehead
• spokesperson
INFORMATIONAL • monitor
• disseminator
• disturbance handler
• resource allocator
DECISIONAL OR DECISION-MAKING • negotiator
• entrepreneur
 FUNCTIONS, ROLES, AND SKILS OF A
MANAGER
3 CLASSIFICATIONS OF MANAGERIAL SKILLS:
1. Conceptual Skills. It enable managers to think of possible solutions to complex
problems. Through their ability to visualize abstract situations, they develop a
holistic view of their organization and its relation to the wider external
environment.
2. Human Skills. Enable managers in all levels to relate well with people through
communicating, leading, inspiring, and motivating.
3. Technical Skills. Technical skills are also important for managers to perform
their tasks with proficiency with the use of their expertise specially lower-level
managers who are directly involve in the non-management workers employing
varied techniques and tools to yield quality products and services.
LESSON 1: ENVIRONMENTAL FORCES
AND ENVIRONMENTAL
SCANNING
Environmental Scanning – seeking for and sorting through data about the environment.
Internal Business Environment – refers to the factor/elements within the organization
which may affect, either positively or negatively, the performance of the organization.
External Business Environment – refers to the factors/elements outside the organization
which may affect, either positively or negatively, the performance of the organization.
Components of the External Business Environment: General and Specific
General Business Environment:
1. Economic Situations. Inflation rate, interest rate, changing options in stock markets, and
people’s spending habits . Example, companies may postpone expansion plan if bank loan
interest is high.
LESSON 1: ENVIRONMENTAL FORCES
AND ENVIRONMENTAL
SCANNING
General Business Environment:
2. Sociocultural Situations. This include the customers’ changing values and preferences;
customs could also affect management practices in companies. Example, Filipinos are
conscious in avoiding fatty foods, so companies are offering cholesterol-free products.
3. Politicolegal Situations. It refer to national or local laws, international laws, rules and
regulations that influence organizational management. Example, labor laws should be
considered by companies.
4. Demographic Situations. Gender, age, educational level, income, number of family
members, geographic origin, etc., may also influence some managerial decisions in
organizations. Example, decision regarding hiring of employees showing prejudice to
married females who are in child-bearing age.
LESSON 1: ENVIRONMENTAL FORCES
AND ENVIRONMENTAL
SCANNING
General Business Environment:
3. Technological Situations. Companies use varied types of electronic gadgets and
advanced technology such as computers, robotics, microprocessors, and others that have
revolutionized business management; e-commerce, teleconferencing, and sophisticated
information systems have rapidly changed the ways that business is conducted in the 21st
century.
4. World and Ecological Situations. These are related to the increasing number of global
competitors and markets, as well as the nature and conditions of the changing natural
environment. Products produced by the companies must cater to the changing needs of
people in the global community while considering their impact on the natural
environment.
LESSON 1: ENVIRONMENTAL FORCES
AND ENVIRONMENTAL
SCANNING
Specific Business Environment:
1. Stakeholders. It refer to parties likely to be affected by the activities of the organization ,
while customers are those who patronize the organization’s products and services.
2. Suppliers. Those who ensure the organization’s continuous flow of needed and
reasonably priced inputs or materials required for producing their goods and rendering
their services. Inputs include financial and labor supply.
3. Pressure Groups. Special-interest groups that try to exert influence on the organization’s
decisions or actions. Example, pressure from the Food and Drug Authority (FDA) to stop
companies from producing, selling, importing, products containing lead or mercury
LESSON 1: ENVIRONMENTAL FORCES
AND ENVIRONMENTAL
SCANNING
Specific Business Environment:
4. Investors or Owners. They provide the company with the financial support it needs.
Branching out, offering new products and services, and applying for needed loans are all
affected by the investors’ or owners’ way of thinking.
 ENVIRONMENTAL FORCES AND
ENVIRONMENTAL SCANNING
COMPONENTS OF THE INTERNAL BUSINESS ENVIRONMENT:
1. Resources. Financial, physical, mechanical, technological, and human resources.
2. Research and Development. Ways and process of enhancing or developing new
products and services through innovation.
3. Production. The process of producing the products and services ready for marketing.
4. Procurement of Supplies. Acquiring of (inputs, materials, and finance) needed for
production.
5. Products and Services. The output produced.
 ENVIRONMENTAL FORCES AND
ENVIRONMENTAL SCANNING
COMPONENTS OF ENVIRONMENT SCANNING:
1. Developing a Competitive Mindset. Knowing the present-day competitors, the possible
number of barriers to entering your chosen business industry, the existence or
nonexistence of substitutes to your planned product or service, and possible
dependence on powerful suppliers and customers.
2. Considering Future Business Scenarios. Realistic consideration of both worst-case
scenario or unfavorable future conditions and best-case scenario or favorable future
conditions, as well as middle-ground possible conditions.
3. Business Predictions. Also known as business forecasting, is a method of predicting how
variables in the environment will alter the future business.
4. Benchmarking. Gauging the performance of the organization in relation to those of
others.
LESSON 2: THE LOCAL AND INTERNATIONAL
BUSINESS ENVIRONMENT OF THE FIRM

Cultural Intelligence is an individual’s ability to favorably receive and adjust to an

unfamiliar way of doing things. This will enable managers to develop their ability to
accept and adapt to different cultures, both local and international, that may affect the
organization to which they belong.
Monochronic cultures refer to cultures wherein people tend to do one thing at a time
and emphasizing punctuality and sticking to a set of rules.
Polychronic cultures are more flexible as regards time and accomplishing different
things at once .
 THE LOCAL AND INTERNATIONAL BUSINESS
ENVIRONMENT OF THE FIRM

GEERT HOFSTEDE CULTURAL DIMENSIONS:

Power Distance. The degree to which a society accepts or rejects the unequal distribution of
power among people in organizations and the institutions in society. Example, Filipinos
have high regards in their superior by calling them sir or madam.
Uncertainty Avoidance. The degree to which society is uncomfortable with risk, change,
and situational uncertainty. Ex., US managers are risk takers as compared to Japan in
introducing new products.
Individualism-Collectivism. The degree to which a society emphasizes individual
accomplishments versus collective accomplishment. Ex., US and Australia are
characterized by “I” and “me” cultures where employees prefer to work alone without help
while Mexico, Thais, .and Filipinos exhibit collectivism work preference.
 THE LOCAL AND INTERNATIONAL BUSINESS
ENVIRONMENT OF THE FIRM

GEERT HOFSTEDE CULTURAL DIMENSIONS:

Macsulinity-Femininity. The degree to which a society values assertiveness and feelings of
material success versus concern for relationships. Ex., the Japanese and Mexicans do not
hesitate to push or express what they want, unmindful of hurting other’s feelings thus,
showing masculinity. Filipinos, Thais, Swedes would rather keep quiet and accept defeat if
what they want is not acceptable to others; therefore exhibit femininity.
Time Orientation. The degree to which a society emphasizes short-term thinking versus
greater concern for the future or long-term thinking. Example, Americans are risk-takers,
prefer short-term thinking while Filipinos and Japanese are long-term thinkers.
 THE LOCAL AND INTERNATIONAL BUSINESS
ENVIRONMENT OF THE FIRM

Managing in a Worldwide Environment: Cultural, Politicolegal, and Economic

Environment
The Culture of different countries are rooted in their history, religion, traditions, beliefs,
and deep-seated values, and because of these, managing globally can be very complicated.
The Politicolegal Environment refers to the laws and political climate of different countries.
Some countries have stable laws and good political climate while others have the opposite.
Economic Environment. Awareness of the economic issues of countries where
organizations intend to establish business is also very important such as free market or
planned economy.
 LESSON 3: PHASES OF ECONOMIC
DEVELOPMENT

Economic Development is a total process which includes not only economic growth or the
increase in the given amount of goods and services produced by the country’s economy
but also considers the social, political, cultural, and spiritual aspects of the country’s
growth.
Economic Development Phases are the distinct stages involved in the total process of
economic development in a particular country; these include economic growth,
improvement of Human Development Index, availability of benefits provided by science
and technology, and the societal improvement of the opportunities and general welfare of
its members.
Sustainable Economic Development ensures that the present needs of a particular
generation are met in full without endangering the ability of future generations to also fully
meet their own needs.
 PHASES OF ECONOMIC
DEVELOPMENT

Millennium Development Goals (MDGs). According to UN, are “the world’s time-bound and quantified
targets for addressing extreme poverty in its many dimensions – income, poverty, hunger, disease, lack of
adequate shelter, and exclusion – while promoting gender equality, education, and environmental stability”.
Adam Smith was the first development economist. His book “The Wealth of Nations” was the scientific
study of the processes and problems of society in Asia and Africa.
Human Development Index (HDI) is an index measuring a country’s socioeconomic development based
on data regarding life expectancy at birth, educational attainment, literary and adjusted real income per
capita.
Inclusive Growth first of all, growth that is rapid enough to matter, given the country’s large population,
geographical differences, and social complexity. It’s sustained growth that creates jobs, draws the majority
into the economic and social mainstream, and continuously reduces mass proverty.
 LESSON 4: FORMS OF BUSINESS
ORGANIZATION

Organization. A collection of people working together to achieve a common purpose.

Business Organization. A collection of people working together to achieve a common
purpose in relation to their organization’s mission, vision, goals, and objectives,
sharing a common organizational culture.
Organizational Culture. The set of beliefs and values shared by organization members
which guide them as they work together to achieve their common purpose.
Change is constant and organizations continue to undergo various changes in form to
ensure effectiveness, efficiency, and relevance in the world of business.
 FORMS OF BUSINESS
ORGANIZATION

CHANGING FORMS OF BUSINESS ORGANIZATIONS:

Simple Business Organizations. Business organizations with few departments, centralized
authority, with a wide span of control, and with few formal rules and regulations.
Functional Business Organizations. Business organizations that group together those with
similar or related specialized duties that introduce the concept of delegation of authority to
functional managers like the personnel manager, sales manager, or financial manager but
CEOs to retain authority for strategic decisions.
Divisional Business Organizations. Organizations made up of separate business units that are
semi-autonomous or semi-independent, with a division head responsible for his or her unit
performance.
 CHANGING FORMS OF BUSINESS
ORGANIZATIONS

TRADITIONAL BUSINESS ORGANIZATIONS:

Profit Business Organizations. Business organizations designed for the purpose of achieving
their organizations’ mission, vision, goals, and objectives and maintaining their organizational
stability through income generation and profit-making activities.
Functional Business Organizations. Business organizations that group together those with
similar or related specialized duties that introduce the concept of delegation of authority to
functional managers like the personnel manager, sales manager, or financial manager but
CEOs to retain authority for strategic decisions.
Nonprofit Organizations. Business organizations designed for the purpose of achieving their
organizations’ mission, vision, goals, and objectives providing service to clients without
expecting monetary gains or financial benefits for their endeavors.
 FORMS OF BUSINESS
ORGANIZATION

OPEN/FLEXIBLE BUSINESS ORGANIZATIONS:

Open/Flexible Business Organizations. Formed to meet today’s changing work environment.
1. Team Structure. Where the organization as a whole is made up of teams (small but
focused) that work together to achieve organizations purpose; popular in collective culture.
2. Matrix Business Organizations. Those which assign experts or specialists belonging to
different functional departments to work together one or more projects; exhibit dual
reporting relationships in which managers report to two superiors – the functional manager
and the divisional manager.
 FORMS OF BUSINESS
ORGANIZATION

OPEN/FLEXIBLE BUSINESS ORGANIZATIONS:

3. Project Business Structure. A business organizational form with a flexible design, where the
employees continuously work on projects assigned to them; project may be short-term and
members disband when the project is completed.
4. Boundaryless Business Organization. A business organization whose design eliminates
vertical, horizontal, or external boundaries, and is described o be flexible and unstructured;
there are no barriers to information flow and, therefore, completion of work is fast.
5. Virtual Business Organization. Made up of a small group of full-time workers and outside
experts who are hired on a temporary basis to work on assigned projects; members are
physically dispersed and usually communicate electronically.