Management and their parts in Business Studies

Management and their parts in Business Studies

Understanding Management

What is the Management?

Management (or managing) is the administration of an organization, whether it be a business, a not-for-profit organization, or government body. Management includes the activities of setting the strategy of an organization and coordinating the efforts of its employees (or of volunteers) to accomplish its objectives through the application of available resources, such as financial, natural, technological, and human resources.

The Manager: Omnipotent or Symbolic?

Manager is a person who holds a management position inside an organization and requires to think strategically and conceptually in order to achieve organizational goals.

How much difference does a manager make in how an organization performs? The dominant view in the theory and society in general is that managers are directly responsible for an organization’s success or failure. We call this perspective the omnipotent view in managment. In contrast, others have argued that much of an organization’s success or failure is due to external forces outside managers’ control. We call this perspective the symbolic view in managment. Let’s look at each perspective to try and clarify just how much credit or blame managers should get for their organization’s performance.

The Omnipotent View

The traditional view of managers is that they have virtually unlimited control over the organization and its purpose, functions and operations and therefore they alone are responsible for all its success and failures.


This view of managers as omnipotent is consistent with the stereotypical picture of the take-charge business executive who overcomes any obstacle in seeing that the organization achieves its goals.

The Symbolic View

The Symbolic view says that a manager’s ability to affect performance outcomes is influenced and constrained by external factors. It is unreasonable to expect managers to significantly affect an organization’s performance. Instead, factors influenced the performance over which managers have little control such as the economy, customers, governmental policies, competitors’ actions, industry conditions, and decisions.

Omnipotent and Symbolic Views of Management


The External Environment: Constraints and Challenges

Despite the fact that appliance sales are expected to climb for the first time in four years, Whirlpool Corporation, which already shut down 10 percent of its production capacity, continues to cut costs and scale down capacity even more. And it’s not alone in its protective, defensive actions. The decade from 2000 to 2009 was a challenging one for organizations.  Anyone who doubts the impact the external environment has on managing just needs to look at what’s happened during the last decade.


External environment refers to factors and forces outside the organization that affect its performance. It includes several different components. The economic component encompasses factors such as interest rates, inflation, stock market fluctuations, and business cycle stages. The demographic component is concerned with trends in population characteristics such as age, race, gender, education level, geographic location, income, and family composition. The political/legal component looks at federal, state, and local laws, as well as global laws and laws of other countries. It also includes a country’s political conditions and stability.

The sociocultural component is concerned with societal and cultural factors such as values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behavior. The technological component is concerned with scientific or industrial innovations. And the global component encompasses those issues associated with globalization and a world economy. Although all these components pose potential constraints on managers’ decisions and actions, we’re going to take a closer look at two of them—the economic and demographic aspects.


The Economic Environment

You know the economic context has changed when a blue-ribbon company like General Motors declares bankruptcy; the Organization for Economic Cooperation and Development predicts some 25 million unemployed individuals globally; 8.4 million jobs in the United States vanish; and the economic vocabulary includes terminology such as toxic assets, collateralized debt obligations, TARP, bailouts, economic stabilization, wraparound mortgages, and stress tests.9 To understand what this economic environment is like, we need to look at the changes that have taken place and the impact of those changes on the way organizations are managed.

Great Recession

Great Recession is the economic crisis began with turmoil in home mortgage markets in the United States when many homeowners found themselves unable to make their payments. The problems soon affected businesses as credit markets collapsed. All of a sudden, credit was no longer readily available to fund business activities.

What are the massive problems?

  • Experts cite a long list of factors that include excessively low interest rates for a long period of time, fundamental flaws in the U.S. housing market, and massive global liquidity.
  • Businesses and consumers became highly leveraged. However, as liquidity dried up, the worldwide economic system sputtered and very nearly collapsed.


Demographic age are important to our study of management because, the large numbers of people at certain stages in the life cycle can constrain decisions and actions taken by all organizations. But demographics doesn’t only look at current statistics, it also looks to the future. For instance, recent analysis of birth rates shows that more than 80 percent of babies being born worldwide are from Africa and Asia. And here’s an interesting fact: India has one of the world’s youngest populations with more males under the age of 5 than the entire population of France.


How the External Environment Affects Managers

Knowing what the various components of the external environment are and examining certain aspects of that environment are important to managers. However, understanding how the environment affects managers is equally as important. We’re going to look at three ways the environment constrains and challenges managers—first, through its impact on jobs and employment; next, through the environmental uncertainty that is present; and finally, through the various stakeholder relationships that exist between an organization and its external constituencies.



As any or all external environmental conditions (economic, demographic, technological, globalization, etc.) change, one of the most powerful constraints managers face is the impact of such changes on jobs and employment—both in poor conditions and in good conditions.  Other countries face the same issues.

For instance, many employers use flexible work arrangements to meet work output demand. For instance, freelancers done their tasks on an as-needed basis and share the jobs. Keep in mind that such responses have come about because of the constraints from the external environment. As a manager, you’ll need to recognize how these work arrangements affect the way you plan, organize, lead, and control.



Another constraint  is the amount of uncertainty found in that environment, which can affect organizational outcomes. Environmental uncertainty refers to the degree of change and complexity in an organization’s environment.


The first dimension of uncertainty is the degree of change. If the components in an organization’s environment change frequently, it’s a dynamic environment. If change is minimal, it’s a stable one. A stable environment might be one with no new competitors, few technological breakthroughs by current competitors, little activity by pressure groups to influence the organization, and so forth.


The main external concern for the company is probably the declining numbers of tobacco smokers, although the company’s lighters have other uses and global markets remain attractive. In contrast, the recorded music industry faces a dynamic (highly uncertain and unpredictable) environment. Digital formats and music-downloading sites turned the industry upside down and brought high levels of uncertainty.


If change is predictable, is that considered dynamic? No. Think of department stores that typically make one-quarter to one-third of their sales in November and December. The drop-off from December to January is significant. But because the change is predictable, the environment isn’t considered dynamic. When we talk about degree of change, we mean change that’s unpredictable. If change can be accurately anticipated, it’s not an uncertainty for managers.

The other dimension of uncertainty describes the degree of environmental complexity, which looks at the number of components in an organization’s environment and the extent of the knowledge that the organization has about those components. An organization with fewer competitors, customers, suppliers, government agencies, and so forth faces a less complex and uncertain environment. Organizations deal with environmental complexity in various ways. For example, Hasbro Toy Company simplified its environment by acquiring many of its competitors.


Complexity is also measured in terms of the knowledge an organization needs about its environment. For instance, managers at E*Trade must know a great deal about their Internet service provider’s operations if they want to ensure that their Web site is available, reliable, and secure for their customers. On the other hand, managers of college bookstores have a minimal need for sophisticated knowledge about their suppliers.


How does the concept of environmental uncertainty influence managers? Not surprisingly, managers have the greatest influence on organizational outcomes in cell 1 and the least in cell 4. Because uncertainty poses a threat to an organization’s effectiveness, managers try to minimize it. Given a choice, managers would prefer to operate in the least uncertain environments. However, they rarely control that choice. In addition, the nature of the external environment today is that most industries today are facing more dynamic change, making their environments more uncertain.



What makes MTV a popular cable channel for young adults year after year? One factor is its success in building relationships with its various stakeholders: viewers, music celebrities, advertisers, affiliate TV stations, public service groups, and others. The nature of stakeholder relationships is another way in which the environment influences managers. The more obvious and secure these relationships, the more influence managers will have over organizational outcomes.


Stakeholders are any constituencies in the organization’s environment that are affected by an organization’s decisions and actions.

Why? Because both can affect what an organization does and how it operates. Why should managers even care about managing stakeholder relationships? For one thing, it can lead to desirable organizational outcomes such as improved predictability of environmental changes, more successful innovations, greater degree of trust among stakeholders, and greater organizational flexibility to reduce the impact of change.

Another reason for managing external stakeholder relationships is that it’s the “right” thing to do. Because an organization depends on the resources and goods and services, managers need to consider their interests as they make decisions.


What Is Organizational Culture?

Associates (employees) at Gore are committed to four basic principles:

(1) fairness to one another and everyone you come in contact with;

(2) freedom to encourage, help, and allow other associates to grow in knowledge, skill, and scope of responsibility;

(3) the ability to make your own commitments and keep them; and

(4) consulting other associates before taking actions that could affect the company’s reputation.

After a visit to the company, one analyst reported that an associate told him, “If you tell anybody what to do here, they’ll never work for you again.”


Organizational culture is described as the shared values, principles, traditions, and ways of doing things that influence the way organizational members act. In most organizations, these shared values and practices have evolved over time and determine, to a large extent, how “things are done around here.” Our definition of culture implies three things.

  • First, culture is a perception. It’s not something that can be physically touched or seen, but employees perceive it on the basis of what they experience within the organization.
  • Second, organizational culture is descriptive. It’s concerned with how members perceive the culture and describe it, not with whether they like it.
  • Finally, even though individuals may have different backgrounds or work at different organizational levels, they tend to describe the organization’s culture in similar terms.


Strong Cultures

Strong cultures—those in which the key values are deeply held and widely shared—have a greater influence on employees than do weaker cultures. The more employees accept the organization’s key values and the greater their commitment to those values, the stronger the culture is. Most organizations have moderate to strong cultures; that is, there is relatively high agreement on what’s important, what defines “good” employee behavior, what it takes to get ahead, and so forth.


Why is having a strong culture important? For one thing, in organizations with strong cultures, employees are more loyal than are employees in organizations with weak cultures. After all, if values are clear and widely accepted, employees know what they’re supposed to do and what’s expected of them, so they can act quickly to take care of problems. However, the drawback is that a strong culture also might prevent employees from trying new approaches especially when conditions are changing rapidly.

The original source of the culture usually reflects the vision of the founders. For instance, as we described earlier, W. L. Gore’s culture reflects the values of founder Bill Gore.


Once the culture is in place, however, certain organizational practices help maintain it. For instance, during the employee selection process, managers typically judge job candidates on the job requirements. At the same time, job candidates find out information about the organization and determine whether they are comfortable with what they see.


For instance, at Best Buy, the company’s chief marketing officer would take groups of employees for “regular tours of what the company called its retail hospital.” Wearing white lab coats, employees would walk into a room with a row of real hospital beds and patient charts describing the ills affecting each of the company’s major competitors.


Socialization is the a process that helps new employees learn the organization’s way of doing things. For instance, new employees at Starbucks stores go through 24 hours of intensive training that helps turn them into brewing consultants. They learn company philosophy, company jargon, and even how to assist customers with decisions about beans, grind, and espresso machines. One benefit of socialization is that employees understand the culture and are enthusiastic and knowledgeable with customers. Another benefit is that it minimizes the chance that new employees who are unfamiliar with the organization’s culture might disrupt current beliefs and customs.


How Employees Learn Culture

Employees “learn” an organization’s culture in a number of ways. The most common are stories, rituals, material symbols, and language. There’s the story about the 3M scientist who spilled chemicals on her tennis shoe and came up with Scotchgard.  These stories reflect what made 3M great and what it will take to continue that success.

To help employees learn the culture, organizational stories anchor the present in the past, provide explanations and legitimacy for current practices, and provide compelling pictures of an organization’s goals.


How Culture Affects Managers

Potential hires are judged on how much initiative they’ve shown in getting projects done at other companies. And company employees are handsomely rewarded if they meet profit and production goals. For instance, you won’t find the following values written down, but each comes from a real organization.

_ Look busy even if you’re not.

_ If you take risks and fail around here, you’ll pay dearly for it.

_ Before you make a decision, run it by your boss so that he or she is never surprised.

_ We make our product only as good as the competition forces us to.

_ What made us successful in the past will make us successful in the future.

_ If you want to get to the top here, you have to be a team player.


Components of Management:

Management tells the others what to do. Before any of you decide that you think you can do your boss’s job, let’s take a look into more of what a manager does.

The major functions that a manager completes can be categorized into four different functions known as planning, organizing, leading, and controlling.

The four main components of Management: Planning, Organizing, Leading, and Controlling



  • The plans should contain the degree of risks
  • Individuals or Teams should develop plans
  • The degree of environmental scanning in which management will engage


  • How much autonomy should be designed into employees’ jobs
  • Individuals or Teams should complete the tasks
  • The degree to which department managers interact with each other


  • The degree to which managers are concerned with increasing employee job satisfaction
  • What leadership styles are appropriate
  • Whether all disagreements—even constructive ones must eliminated


  • Whether to impose external controls or to allow employees to control their own actions
  • What criteria should be emphasized in employee performance evaluations
  • What repercussions will occur from exceeding one’s budget

Current Issues in Organizational Culture

Nike’s innovations in athletic shoe and apparel technology are legendary. How have these organizations achieved such reputations? Their organizational cultures have played a crucial role. Let’s look at three current cultural issues: creating an innovative culture, creating a customer responsive culture, and nurturing workplace spirituality.

Spirituality and Organizational Culture

What is workplace spirituality in management? It’s a culture in which organizational values promote a sense of purpose through meaningful work taking place in the context of community.

Workplace spirituality seems to be important now for a number of reasons. Employees are looking for ways to cope with the stresses and pressures in the pace of life. We crave involvement and connection. Research shows that spiritual organizations tend to have five cultural characteristics.


  1. Strong sense of purpose. Organizations build their cultures around a meaningful purpose. While profits are important, they’re not the primary values of the organization.
  2. Focus on individual development. Spiritual organizations recognize the worth and value of individuals.
  3. Trust and openness. Mutual trust, honesty, and openness characterizes the organizations. Managers aren’t afraid to admit mistakes. And they tend to be extremely upfront with employees, customers, and suppliers.
  4. Employee empowerment. Managers trust employees to make thoughtful and important decisions.
  5. Toleration of employee expression. The final characteristic is that they don’t react employee emotions. They allow people to be themselves—to express their moods and feelings without guilt or fear of reprimand.



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