BACHELOR OF BUSINESS ADMINISTRATION (YEAR 1) MODULE 1 BUSINESS MANAGEMENT 1A Study Guide

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1 BACHELOR OF BUSINESS ADMINISTRATION (YEAR 1) MODULE 1 BUSINESS MANAGEMENT 1A Study Guide Copyright 2013 MANAGEMENT COLLEGE OF SOUTHERN AFRICA All rights reserved, no part of this book may be reproduced in any form or by any means, including photocopying machines, without the written permission of the publisher REF: BMG1A

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3 MODULE INDEX - BUSINESS MANAGEMENT 1A Section Title of Section Page 1 Introduction to Management Evolution of Management Theory The Management Environment The Management Process Bibliography MANCOSA - BBA Year 1 1

4 AIMS OF THIS MODULE The broad aims of this module are to: Introduce the student to fundamental management principles and practices. Develop the student s understanding of the evolution of management theory. Develop the student s understanding of the management environment and its application. Develop the student s understanding of the management process and its application. Develop the student s understanding of contemporary management issues and their application. MANCOSA - BBA Year 1 2

5 Introduction This module, Businesss Management, forms an integral part of the MANCOSA qualification and serves to introduce the student to the fundamentals of management. In so doing, the module explores the evolution of management theory, the management environment, the management process, as well as contemporary issues in management. Contents and Structure Section 1: Introduction to Management This first section introduces the student to the concept of management. In this section the nature and definition of management are examined, as are the various levels of management, areas of management and managerial skills. The relationship between management and organizational performance is studied and the scope of and current challenges for management are explored. Section 2: Evolution of Management Theory Section 2 explores the evolution of management theory. Here, the importance of theory is established, and various management theories are examined. Section 3: Management Environment This third section examines the dynamics of the management environment. In so doing the characteristics of the macro-environment, market environment and micro-environment are studied. The interface between the organisation and the environment is also examined. Section 4: The Management Process Section 4 explores the nature of the management process. In this section the four fundamental management functions of Planning, Organising, Leading and Controlling (POLC) are examined. The various areas of management are also studied. Section 5: Contemporary Management Issues This section examines certain contemporary management issues and explores the implications which these have for the current day manager. Motivation, decision making, communication and groups and teams are the four issues which are dealt with. MANCOSA - BBA Year 1 3

6 How to use the Manual Don t try to complete the manual in a few long sessions. You will study more effectively if you divide your study into two-hour sessions. If you want to take a break it would be a good idea to stop at the end of a section. As you work through the manual you will come across Activities and Self-Assessment Exercises. These are designed to help you study and prepare for the examinations. ACTIVITY Activities ask you to carry out specific tasks. In most cases there are no right or wrong answers to the Activities. The aim of the Activities is to give you an opportunity to apply what you have learned. SELF CHECK QUESTION Occasionally you will be required to assess your grasp of concepts by applying concepts to specific situations. Suggested answers to these activities are provided at the end of the specific unit. MANCOSA - BBA Year 1 4

7 READING This manual has been designed to be read in conjunction with the following textbook: Prescribed Reading: Du Toit, Erasmus and Strydom (2013) Introduction to Business Management, 8 th Edition, Oxford University Press: Southern Africa Recommended Reading: Books Jones, G.R., George, J.M. & Hill, C.W.L (1998) Contemporary Management Issues. Massachusetts: McGraw Hill. pp Mondy, R.W., Sharplin, A. & Premeaux, S.R. (1991) Management Concepts, Practices and Skills. Massachusetts: Allyn & Bacon. pp Robbins, S.P. (1997) Managing Today. London: Prentice Hall. pp Smit, P.J. & Cronjé, D.J. (2002) Management Principles, 3 rd Edition Cape Town: Juta & Co. pp Journals Hofmeyer, K. (1998) South African Managers Need To Be More Positive People Dynamics October, 16(10), pp Mintzberg, H. (1990) The Manager s Job: Folklore and Fact Harvard Business Review, Mar Apr, pp Moss Kanter, R. (1989) The New Managerial Work Harvard Business Review Nov - Dec, pp Taylor, G (2000) An Empty Beds Policy to Manage Aids? People Dynamics May, 18 (5), pp MANCOSA - BBA Year 1 5

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9 SECTION ONE INTRODUCTION TO MANAGEMENT CONTENTS SECTION 1 - INTRODUCTION TO MANAGEMENT Learning Outcomes Reading 1.1 Introduction 1.2 Nature of Management 1.3 Definition of Management 1.4 Levels of Management 1.5 Management and the Organisation 1.6 Old and New Organisations 1.7 Management and Organisational Performance 1.8 Scope and Challenges of Management 1.9 Summary 1.10 Answers to Self Check Questions MANCOSA - BBA Year 1 7

10 LEARNING OUTCOMES The overall outcome for this section is that, on its completion, the student should be able to demonstrate an understanding of fundamental management issues. This overall outcome will be achieved through the student s mastery of the following specific outcomes, in that the student will be able to: 1. Explain the relationship between the organisation and management. 2. Discuss the management process and explain the relationship between the management process and its environments. 3. Formulate a workable definition of management. 4. Identify the levels of management and critically discuss the activities which are performed at each level. 5. Identify and critically discuss the areas of management, manager role distribution and managerial skills. 6. Identify and critically discuss the concepts of, and key differences between, the old organisation and the new organisation. 7. Identify and critically discuss the measures of managerial and organisational performance. 8. Identify and critically discuss contemporary management challenges. MANCOSA - BBA Year 1 8

11 READING Prescribed Reading: Du Toit, Erasmus and Strydom (2013) Introduction to Business Management, 8 th Edition, Oxford University Press: Southern Africa Recommended Reading: Books Jones, G.R., George, J.M. & Hill, C.W.L (1998) Contemporary Management Issues. Massachusetts: McGraw Hill. pp Mondy, R.W., Sharplin, A. & Premeaux, S.R. (1991) Management Concepts, Practices and Skills. Massachusetts: Allyn & Bacon. pp Robbins, S.P. (1997) Managing Today. London: Prentice Hall. pp Smit, P.J. & Cronjé, D.J. (2002) Management Principles, 3 rd Edition Cape Town: Juta & Co. Journals Hofmeyer, K. (1998) South African Managers Need To Be More Positive People Dynamics October, 16(10), pp Mintzberg, (1990) The Manager s Job: Folklore and Fact HarvardBusiness Review, Mar Apr, pp Moss Kanter, R. (1989) The New Managerial Work Harvard BusinessReview Nov - Dec, pp Taylor, G (2000) An Empty Beds Policy to Manage Aids? PeopleDynamics May, 18(5), pp MANCOSA - BBA Year 1 9

12 1.1 Introduction This section, the first section of the BusinessManagement Module, serves to introduce the student to the concept of management. In so doing the following issues are examined: Nature of management; Definition of management; Levels of management; Management and the organisation; Old and new organisations; Management and organisational performance; and The scope and challenges of management.? THINK POINT The concept of management is inextricably intertwined with the purpose of the business organisation. In your experience. why do organisations exist; and how does the role of management support the purpose of organisations? Comment on Think Point Robbins (1997:38) identifies organisations to be characterized by a distinct purpose, multiple members and a systematic structure. Organisations have emerged and exist primarily because they are more efficient than individuals operating individually and therefore can produce items and/or provide services which an individual could not produce/provide alone. In so doing the organisation is able to meet the needs and demands of current day society through: bringing together resources to produce and provide the products and services which the society needs; and creating and providing career opportunities for members of the society MANCOSA - BBA Year 1 10

13 In order to meet the needs and demands of current day society, organisations establish goals which need to be operationalised for the purpose of the organisation to be achieved (Smit & Cronjé, 2002). Management serves to ensure that such goals are established and operationalised, and in so doing supports the purpose of the organisation. 1.2 The Nature of Management Management s task is argued to be to examine factors, methods and principles that enable a business organisation to maximise its profits and achieve its objectives, (Cronje:2002:8). The achievement of this task is reliant on the management process, which comprises the functions of planning, organising, leading and controlling, as depicted in Figure 1.1 below. MANAGEMENT SCHOOLS OF THOUGHT THE ENVIRONMENT THE ORGANISATION RESOURCES ORGANISING PERFORMANCE Human Financial Physical Info. PLANNING LEADING Achieve goals Products Services Productivity Profit CONTROLLING Figure 1.1: The Nature of Management (adapted from Smit & Cronjé, 2002:9) MANCOSA - BBA Year 1 11

14 A study of Figure 1.1 reveals that the management process requires interaction with a number of variables within different environments : the organisation; the macro-environment; and management schools of thought. The Organisation Within the organisation, management achieves the goals of the enterprise through acting on its human, financial, physical and informational resources by executing the four central management functions of Planning, Organising, Leading and Controlling (abbreviated to POLC). These four functions comprise the core management process: o Planning involves determining which goals and courses of action the organisation and the various departments should pursue; o Organising involves the structuring and arranging of work, resources, departments and the overall organisation in a manner which will facilitate the achievement of organisational goals; o Leading involves influencing the organisation s employees so as to ensure that they are motivated to perform actions which are aligned with the organisation s overall goals; o Control means narrowing the gap between what was planned and the actual achievement of management, and ensuring that all activities are carried out as they should be. (Du Toit et al, 2013) The four management functions will be further discussed in Section 4 of this Module Guide. The Environment The organisation operates within a market environment, comprising consumers, suppliers and competitors, as well as the macro-environment, which includes the technological, economic, social, political and international environments. These two environments impact on the organisation and therefore affect the nature of the organisation s management. The organisation s environment will be discussed further in Section 3 of this Module Guide. MANCOSA - BBA Year 1 12

15 Management Schools of Thought Management Schools of Thought (also known as Management Theories) present frameworks which provide the manager and management student with fundamental principles to guide effective management decisions and actions. Management Theories will be addressed further in Section 2 of this Module Guide. 1.3 Definition of Management With regards to a definition of management, on the whole, a considerable degree of consensus exists within the literature. Definitions include: the process of planning, organising, leading and controlling the resources of the organisation to achieve stated organisational goals as productively as possible ( Cronjé,et al 2004:10). the process of getting things done through the efforts of other people (Mondy, Sharplin & Premeaux, 1991: 3). the process of planning, organizing, leading, and controlling the work of organisation members and of using all available organisational resources to reach stated organisational goals. (Jones, George & Hill, 1998:5). An analysis of the above definitions point to the essential components which should be included in a definition of management: Management. o involves a process in which the management functions of planning, organising, leading and controlling are executed; organisational resources are utilized; and work is achieved through the efforts of other employees, o so as to provide for the effective and efficient achievement of the organisation s goals. MANCOSA - BBA Year 1 13

16 1.4 Levels of Management Three levels of management within an organisation may be identified: Top Management Middle Management Lower / First-Line / Supervisory Management ACTIVITY Take note of the top, middle and lower management positions within your organisation. From your experience, what are the distinguishing characteristics of each level of management? Top Management: Middle Management: Lower Management: MANCOSA - BBA Year 1 14

17 Comment on Activity The three levels of management may be distinguished according to level of responsibility, main functions, time orientation and positions held, as indicated in Table 1.1 below. TOP MANAGEMENT MIDDLE MANAGEMENT LOWER MANAGEMENT RESPONSIBILITY Overall responsibility for the organisation Responsible for specific departments Responsible for departmental sections / subsections MAIN FUNCTION Strategic management Implementation of policies, plans & strategies Application of rules & procedures to achieve high levels of productivity TIME ORIENTATION Long Term Medium Term Short Term POSITIONS HELD Board of Directors, Managing Director, CEO, Management Committees Departmental heads, e.g. Marketing Manager, HR Manager Section/subsection heads, e.g. Product, Sales & Promotion Managers within the Marketing Department Table 1.1: Three Levels of Management ACTIVITY From your experience as a lower / middle / top level manager, what percentage of time would you estimate you spend on planning, organising, leading and controlling at your particular management level (lower, middle or top)? MANCOSA - BBA Year 1 15

18 Comment on Activity Evidence shows that managers at all levels spend time on all management functions. However, as Daft (1995) points out, the amount of time spent on each particular function differs between each level of management (see Table 1.2 below). PLANNING ORGANISING LEADING CONTROLLING TOP MANAGERS 28 % 36 % 22 % 14 % MIDDLE MANAGERS 18 % 33 % 36 % 13 % FIRST-LINE MANAGERS 15 % 24 % 51 % 10 % Table 1.2: Percentage of Time Spent on Management Functions by Management Level (Daft, 1995: 17). It is evident from table 1.2 that: Top managers spend much time organising, and a substantial amount of time planning; Middle managers spend time mostly on organising and leading; and Lower managers spend just over half of their time leading. 1.5 Management and the Organisation It has already been identified, in the Introduction (subsection 1.1) to this section, that the relationship between the organisation and management is critical in that management serves to support the establishment of goals, implementation of actions and utilization of resources, so as to enable the achievement of the organisation s purpose. This subsection serves to further highlight management s relation to the organisation by discussing the areas of management, role distribution of managers as well the managerial skills required at various managerial levels. MANCOSA - BBA Year 1 16

19 1.5.1 Areas of Management A business also has different types of managers, each responsible for the management of a more or less specialised group of activities. Six functional areas of management may be identified (Cronjé, et al,2004:125): Marketing Management Financial Management Operations Management Purchasing Management Human Resource Management Public Relations Management These functional areas of management will be examined further in Section 4 of this Module Guide. In addition to the six functional areas of management identified above, a seventh area may be identified: that of General Management (Cronjé, 2004). This area of management involves the execution of the four generic management functions of Planning, Organising, Leading and Controlling (POLC), already identified in subsection 1.2, and which are to be discussed further in Section 4 of this Module Guide. General Management is not only performed within each of the six areas of management identified above, but at all levels of management as well The Role Distribution of Managers The manager s relation to the organisation can be further explored from a role distribution perspective. MANCOSA - BBA Year 1 17

20 READING Read the following article and then answer the questions which follow: Mintzberg, H. (1990) The Manager s Job: Folklore and Fact Harvard Business Review, Mar Apr, pp How does Mintzberg (1990) view the manager s job in relation to the organisation? 2. How does Mintzberg s view differ from the Areas of Management approach examined in paragraph above? 3. From your experience, which approach is more applicable to your position as manager? Comment on Activity As identified in paragraph above, the area of General Management identifies the four management functions of Planning, Organising, Leading and Controlling (POLC) as characterising the manager s work. However, Mintzberg (1990) argues that not only do these widely accepted management functions provide an inadequate explanation of what managers do, they fail to provide a practical approach to understanding and developing managerial competence as well. It is argued that the traditional POLC approach oversimplifies the complexity of the manager s job, which is in effect, enormously complicated and difficult (Mintzberg, 1990: 167) and is characterised by brevity, fragmentation and an overburden of tasks. Thus Mintzberg (1990) maintains that it is more useful to view the manager s relation to the organisation in terms of their roles. MANCOSA - BBA Year 1 18

21 Decision-making role Entrepreneur Troubleshooter Allocator of resources negotiator Interpersonal role Representative figure Leader relationship Information role Monitors Analyses spokesman Figure 1.2: The overlapping roles of managers (Du Toit, et al:2007:137) Figure 1.2 presents the three categories of managerial roles in a sequential manner. The sequence begins with status emerging from the formal authority vested in the manager s position. This status allows for the formation of interpersonal relationships and the execution of Interpersonal Roles. The interpersonal relationships in turn provide the manager with access to information and the consequent carrying out of Informational Roles. This information consequently enables the manager s decision making, and his execution of Decisional Roles. It needs to be noted that Mintzberg (1990) emphasizes that although he breaks down the manager s work into ten different roles, his focus is on the gestalt (whole) and he argues that the roles are not separable. In so doing the complex nature of managerial work is acknowledged. Mintzberg (1990) argues that the managerial role approach contributes to more effective management in that, unlike the traditional POLC approach, it provides managers with insight into the pressures and complexities of their work. MANCOSA - BBA Year 1 19

22 SELF CHECK QUESTION 1 Discuss the ten manager roles which Mintzberg identifies. Provide an example of each. The answer to this self-check question may be found at the end of this section. MANCOSA - BBA Year 1 20

23 1.5.3 Managerial Skills In order for the manager to effectively perform in his/her position, certain managerial skills are required.? THINK POINT In studying towards this management qualification, what specific management skills are you expecting to acquire? Why are these particular skills important to the position which you hold (or are to hold) as a manager? Comment on Think Point Cronjé et al (2004) identify three categories of skills which managers at all levels of the organisation are identified to possess: Conceptual Skills: which refer to the manager s ability to view the operation of the organisation and its parts holistically. Interpersonal Skills: which refer to the manager s ability to communicate and work effectively with others. Technical Skills: which refer to the ability to use discipline specific skills to complete a particular task. Obviously managers at different hierarchical levels within the organisation will employ these skills to varying degrees. For example, the nature of the work which top management performs requires a greater reliance on, and employment of, conceptual skills. MANCOSA - BBA Year 1 21

24 READING ACTIVITY Read the section entitled The Educator s Job on page 175 of Mintzberg, H. (1990) The Manager s Job: Folklore and Fact Harvard Business Review, Mar Apr, pp Also read: Cronjé, (2004) Introduction to Business Management, 6th Edition : Cape Town: Juta & Co. pp Compare and contrast Mintzberg s (1990) view of managerial skills to that of Smit & Cronjé (2002). Comment on Reading Activity Mintzberg (1990) identifies the following skills to be important to managerial work: o o o o o o o o o Development of peer relationships Motivation of subordinates Conflict resolution skills Negotiation skills Establishment of information networks Dissemination of information Allocation of resources Decision making in conditions of extreme ambiguity Introspective skills which provide for learning of the job MANCOSA - BBA Year 1 22

25 The key difference between the managerial skills identified by Mintzberg (1990) and those identified by Cronjé, et,al (2004) is that while the latter s focus is on skill categories, the former emphasizes important skills necessary to cope with the complex nature of managerial work. Indeed, it may be argued that the majority of skills identified by Mintzberg (1990) fall within S Cronjé s, et,al (2004) Conceptual and Interpersonal Skill categories. SELF CHECK QUESTION 2 What mechanisms exist for the development of managerial skills and how effective are they? The answer to this self-check question may be found at the end of this section. This subsection, entitled Management and the Organisation, has served to further explore the fundamental principles underlying the relationship between the organisation and the work of the manager. In so doing, the Areas of Management, Managerial Roles and the Managerial Skills were examined. MANCOSA - BBA Year 1 23

26 1.6 Old and New Organisations The management environment has been undergoing change which has resulted in change in organisations and managerial work. This has resulted in the emergence of the new organisation which provides the flexibility necessary to respond adequately to the changing environment (Robbins, 1997). ACTIVITY From your experience, what changes have you observed within organisations and managerial work over the past ten years? MANCOSA - BBA Year 1 24

27 Comment on Activity Organisations are changing in a number of ways. Table 1.3 below identifies some of the key changes, as identified by Robbins (1997). OLD ORGANISATION Permanent jobs Control organisation s own destiny through independence Relatively homogenous workforce 9-to-5 workdays Large corporations provide job security If it ain t broke, don t fix it Work is organized around individuals NEW ORGANISATION Temporary jobs Externalize risk (e.g. through outsourcing) Diverse workforce Workdays with no time boundaries Large corporations are cutting overall staff Reengineer all processes Work is organized around teams Table 1.3: Key Changes Within Organisations (Robbins, 1997: 11) READING ACTIVITY Read the following journal article and then answer the question which follows: Moss Kanter, R. (1989) The New Managerial Work Harvard Business Review Nov-Dec, pages How does Moss Kanter s post-entrepreneurial management differ from the more traditional managerial approach which you have encountered thus far in this section? MANCOSA - BBA Year 1 25

28 Comment on Reading Activity Moss Kanter (1989) argues that as a result of competitive pressures within the management environment, organisations are adopting more flexible strategies and structures. The move to flexibility requires that managers learn to perform new ways of managing, deal with change, implement new ways of motivating people and accept changes in their own bases of power. Moss Kanter (1989) argues that the post-entrepreneurial organisation presents the traditional manager with the following changes: o An increased number and variety of channels (horizontal, vertical, cross-functional) exist for exerting influence and taking action within the new organisation; o Within the new organisation, relationships of influence are emerging within horizontal peer networks, and thus are not limited to the vertical chain of command; o The division between managers and non-managers is blurring, particularly in terms of information accessibility, access to relationships outside of the organisation and control over assignments; o External relationships are becoming important in providing for internal power and influence, as well as career development; o As a result of the above four factors, stable and predictable paths of career development for managers are difficult to pre-determine and to guarantee. The above five factors demonstrate how the post-entrepreneurial manager is distinct from the traditional manager in that his/her managerial power and success is not derived from his/her hierarchical position. Indeed, it is asserted that managers.must learn to operate without the crutch of hierarchy. Position, title, and authority are no longer adequate tools, not in a world where subordinates are encouraged to think for themselves and where managers have to work synergistically with other departments and even other companies (Moss Kanter, 1989: 16). Thus Moss Kanter s (1989) approach essentially differs from the traditional management approach in that while the traditional approach is grounded in the concept of hierarchy (as shown in subsections 1.4 and 1.5), the post-entrepreneurial approach s focus is on relationship networks. MANCOSA - BBA Year 1 26

29 1.7 Management and Organisational Performance It was indicated in the Introduction (subsection 1.1) that to meet the needs and demands of current day society, organisations establish goals which must be operationalised for the purpose of the organisation to be achieved (Cronjé, 2004). Management serves to ensure that such goals are established and operationalised, and in so doing supports the purpose of the organisation. Thus it follows that organisational performance has a strong relation to managerial performance.? THINK POINT What criteria do you think would be appropriate for the measuring of organisational and managerial performance? Comment on Think Point The assessment of managerial and organisational performance is one characterized by much debate (Stoner & Freeman, 1992). However, the criteria on which there is much agreement are those of efficiency and effectiveness: Efficiency ( doing things right ) focuses on input and output. An efficient manager is regarded to be one who is able to achieve outputs which measure up to the inputs (time, materials, labour) used to achieve the outputs. Effectiveness ( doing the right thing ) focuses on choosing the most appropriate goals and plans of action (Stoner & Freeman, 1992: 6). Cronjé (2004) argue that the efficiency-effectiveness approach tends to be simplistic. Rather, the economic principle, where the organisation (and its management) should seek to achieve the highest possible output with the lowest possible input, should be used as the measure of managerial and organisational performance (Cronjé, 2004). MANCOSA - BBA Year 1 27

30 1.8 Scope and Challenges of Management A number of challenges exist for management not only within the Southern African region, but globally as well. READING ACTIVITY Read the following texts and then answer the question which follows: Du Toit, Erasmus and Strydom (2013) Introduction to Business Management, 8 th Edition, Oxford University Press: Southern Africa. Chapter 1 and 2 Hofmeyer, K. (1998) South African Managers Need To Be More Positive, People Dynamics, October, 16(10), pp Smit, P.J. & Cronjé, D.J. (2002) Management Principles, 3 rd Edition. Cape Town: Juta & Co, pp Taylor, G (2000) An Empty Beds Policy to Manage Aids? People Dynamics, May, 18 (5), pp From your reading of the above three texts, what challenges currently face management within the Southern African region? MANCOSA - BBA Year 1 28

31 Comment on Activity Cronjé et al (2007) identify the following challenges to management within the Southern African region: Management Training for Large and Small Business Organisations: As both large and small businesses play an important role in the South African economy, one of the challenges is to ensure that organisations of all sizes have skilled management who are able to ensure effective organisational performance. Such management competence should be acquired through appropriate management training. International Management: Globalisation has resulted in South African organizations having to compete with global players. The challenge for management exists in improving the performance of South African organisations to achieve sustainable competitive advantage within this highly competitive market (Cronjé, et al 2004). Non-profit Seeking Organisations: Non-profit organisations within South Africa, such as the government, place a significant demand on scarce resources. Management s challenge within these organisations is to ensure efficient and effective use of these resources. Managerial and Economic Empowerment: The initiatives of the South African apartheid government resulted in considerable inequalities and consequently a vast number of disadvantaged individuals. The challenge for management therefore is to ensure the managerial and economic empowerment of the previously disadvantaged individuals through, for example, management training and mentorship (Cronjé,et al 2004). Cultural Diversity: The South African organisation is characterized by diversity in terms of race, ethnicity, religion, gender and sexual orientation. The challenge therefore is for management to not only appropriately manage, but also harness the potential of a diverse workforce. Taylor (2000) identifies HIV and AIDS to be a management challenge. Indeed, it is expected that in % of the South African workforce will be HIV positive, while 3% will have AIDS. It is argued that in order to deal with the HIV/AIDS epidemic, South African management need to start planning and devising inventive solutions. MANCOSA - BBA Year 1 29

32 The effective addressing of the management challenges identified by Cronjé et al(2004) and Taylor (2000) may be argued to be dependent on management which is dedicated and enthusiastic. However, research undertaken by Hofmeyer (1998) during 1997 shows that South African management attitudes have become more negative since 1994, particularly in the areas of management relations, productivity, management development and leadership. This thus presents a further challenge: given South African management s less positive attitudes, is it possible for management to be sufficiently committed and motivated for the challenges identified by Cronjé (2004) and Taylor (2000) to be effectively addressed? 1.9 Summary This section served to introduce the student to the fundamentals of management. The nature of management was examined and a definition of management was formulated. Further, the levels of management, the areas of management, management roles as well as management skills were examined. The implications which the new organisation has for management were also explored, as were measures of management and organisational performance. This introduction to management was concluded with an examination of the current and future management challenges. The next section of this Study Guide, Section 2, will examine the evolution of management theory. MANCOSA - BBA Year 1 30

33 1.10 Answers to Self-Check Questions The answers to the Self-Check Questions contained within this section are provided below. Self-Check Question 1 Discuss the ten managerial roles which Mintzberg identifies. Provide an example of each. Model Answer Mintzberg s (1990) ten managerial roles include: Interpersonal Roles o Figurehead Role: the manager is involved in the performance of ceremonial duties, such as officiating at a long-service award evening. o Leader Role: the manager works with and through his/her subordinates in order to achieve the work of his/her department. For example the manager appoints, trains, motivates and promotes his/her subordinates. o Liaison Role: the manager makes contacts outside of the vertical chain of command to maintain good relationships within and without the organisation, such as the forming of a sound relationship with a supplier or distributor. Information Roles o Monitor Role: the manager is involved in constantly seeking pertinent information through, for example, scanning the environment and receiving information from his network of contacts. o Disseminator Role: the manager passes on information that he has received to individuals within the organisation who would benefit from it, such as subordinates and colleagues. o Spokesperson Role: the manager communicates information to people outside the organisation, for example, the Marketing Director may ensure that the press is kept informed about the organisation s social responsibility initiatives. MANCOSA - BBA Year 1 31

34 Decision-Making Roles o Entrepreneur Role: the manager seeks to maintain and extend the unit s/ organisation s sustainability through adapting it to changes within the environment. o For example, the CEO and the management team may decide to change strategy and reengineer the organisation as a result of influential changes within the organisation s environment. o Disturbance Handler Role: the manager is involved in involuntarily responding to pressures and solving problems. For example, the HR Director may be required to address an unexpected situation within the company which may lead to strike action. o Resource Allocator Role: the manager decides what quantities of resources such as people, equipment and money each part of the department / organisation should receive. For example, during the company s budgeting period, the CEO approves a budget for the Information Technology department which is considerably larger than the other departments budgets. o Negotiator Role: due to his/her authority to allocate resources and his/her access to information, the manager is involved in negotiations within the company. For example, a supervisor may negotiate changes to job specifications with his/her subordinates. In closing, it needs to be noted that although Mintzberg (1990) distinguishes ten managerial roles, he argues that all ten of these roles form a integrated whole and cannot be easily separated. Self-Check Question 2 What mechanisms exist for the development of managerial skills and how effective are they? Model Answer Managerial skills may be developed from both education and experience, as depicted in Figure 1.3 on the following page. Management education, which can take the form of formal or continuous education, provides the manager or potential manager with the opportunity to develop management skills within an educational setting, for example, at colleges, technikons, universities and/or company in-house training facilities (Cronjé, 2004). MANCOSA - BBA Year 1 32

35 EDUCATION Formal Education Continuous Education EXPERIENCE Job Experience Variety of Assignments SUCCESSFUL ACQUISITION & UTILISATION OF MANAGEMENT SKILLS Figure 1.3: Mechanisms for the Development of Management Skills (from Smit & Cronjé, 2002:20) In contrast to management education, practical experience provides the manager and potential manager with the opportunity to develop management skills while performing his/her job. With regards to the effectiveness of the two different approaches it is important to note Mintzberg s (1990) assertion that the development of management competence cannot be achieved from a theoretical approach to education alone. Indeed, it has been recognized that for management development programs to be effective, the cognitive learning which results from education should be married with the practical learning which results from experience. MANCOSA - BBA Year 1 33

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37 SECTION TWO EVOLUTION OF MANAGEMENT THEORY CONTENTS Learning Outcomes Reading 2.1 Introduction 2.2 Why Study Management Theory? 2.3 Understanding Management Theory 2.4 The Theories of Management Classical Approach Behavioural & Human Relations Approach Quantitative Approach Contemporary Approach 2.5 Management Theory or Management Fad? 2.6 Summary 2.7 Answers to Self-Check Questions MANCOSA - BBA Year 1 35

38 LEARNING OUTCOMES The overall outcome for this section is that, on its completion, the student should be able to demonstrate a holistic understanding of the evolution of management theory. This overall outcome will be achieved through the student s mastery of the following specific outcomes: 1. Discuss the importance and relevance of studying management theory. 2. Discuss the concept of theory and identify the factors which influence the development of management theory. 3. Critically discuss and apply the principles of the Classical Management School of thought. 4. Critically discuss and apply the principles of the Behavioural & Human Relations Management School of Thought. 5. Critically discuss and apply the principles of the Quantitative Management School of thought. 6. Critically discuss and apply the principles of the Contemporary Management School of thought. 7. Critically discuss and identify the concept of a management fad. MANCOSA - BBA Year 1 36

39 READING Prescribed Reading: Du Toit, Erasmus and Strydom (2013) Introduction to Business Management, 8 th Edition, Oxford University Press: Southern Africa Recommended Reading: Books Jones, G.R., George, J.M. & Hill, C.W.L (1998) Contemporary Management Issues. Massachusetts: McGraw Hill. pp Micklethwait, J. & Wooldridge, A. (1996) The Witch Doctors. London: Random House. Mondy, R.W., Sharplin, A. & Premeaux, S.R. (1991) Management Concepts, Practices and Skills. Massachusetts: Allyn & Bacon. pp Robbins, S.P. (1997) Managing Today. London: Prentice Hall. pp Senge, P.M. (1990) The Fifth Discipline: The Art and Practice of the Learning Organisation. New York: Doubleday. Smit, P.J. & Cronjé, D.J. (2002) Management Principles, 3 rd Edition Cape Town: Juta & Co Journals Donaldson, L. & Hilmer, F.G. (1998) The Case Against Fads that Harm Management Organizational Dynamics Spring, pp Galagan, A. (1991) The Learning Organization Made Plain Training & Development October. Hammer, M. (1990) Reengineering Work: Don t Automate, Obliterate Harvard Business Review July- August pp Nadler, D.A. & Tushman, M.L. (1980) A Model for Diagnosing Organizational Behaviour Organizational Dynamics Autumn, pp Tetenbaum, T. (1998) Shifting Paradigms: From Newton to Chaos Organizational Dynamics Spring pp MANCOSA - BBA Year 1 37

40 2.1 Introduction While Section 1 introduced the student to the fundamentals of management, this section examines the Evolution of Management Theory. Management theory is argued by some to have originated with Nicocolé Michiavelli, while others argue that the Egyptians were the first management thinkers (Micklethwait & Wooldridge, 1996). However, while Michiavelli and the Egyptians may well have been management thinkers, it is only during the last century that management has undergone systematic investigation and has been established as a formal discipline. This section of the Study Guide examines the body of management knowledge which has emerged since the early 1900s. In so doing, the following will be studied: Why study management theory? Understanding management theory The theories of management o Classical Approach Scientific management theory Administrative management theory o Behavioural & Human Relations Approach o Quantitative Approach o Contemporary Approaches Systems theory Contingency theory Chaos theory Other contemporary theories 2.2 Why Study Management Theory? The management student may wonder why the study of management theory is necessary. However, as will be shown, the study of management theory is critical in developing not only a holistic understanding of the discipline, but professional competence as well. MANCOSA - BBA Year 1 38

41 ? THINK POINT Think about your experience in your current organization and/or organizations for which you have worked in the past: Identify two managers, with whom you have dealt, who have demonstrated vastly different management styles (for example, an absolute autocrat vs a democratic manager). Identify the one manager as Manager A and the other manager Manager B. From your experience and observations, what principles do you think underlie Manager A s view of, and approach to management? From your experience and observations, what principles do you think underlie Manager B s view of, and approach to management? Comment on Think Point Each individual manager has a particular view about what management is, and how he/she should approach it. This management framework, which guides the manager in his/her task, is based on a number of principles which the manager has internalized as a result of his/her education and experiences within, and interactions with, organizations and the world itself. In essence, therefore, each individual manager s actions are guided by his/her own unique, internalized management theory. It therefore follows that, in exposing the manager or potential manager to the range of management theories which exist, an opportunity will be provided to perhaps challenge and/or extend the manager s current view of management, and thus enhance his/her professional competence. Indeed, Stoner & Freeman (1992) point out that the study of management theory is important in that the theories serve to: Guide management decisions; Shape the manager s view of organizations; Make the manager aware of the business environment; Provide the manager with a source of new ideas. MANCOSA - BBA Year 1 39

42 2.3 Understanding Management Theory In studying management theory it is important that the management student has an understanding of the concept of theory, as well as the factors which influence the development of theory. ACTIVITY Define the concept theory. What factors do you think influence the development of a theory? Comment on Activity Definition of Theory Stoner & Freeman (1992) define a theory as a coherent group of assumptions put forth to explain the relationship between two or more observable facts and to provide a sound basis for predicting future events. Another definition of the word theory is a supposition or system of ideas explaining something (Thompson, 1995: 1446). In essence, therefore, a theory is a framework of principles. From the management perspective, it may be argued that each management theory provides a framework of principles which serve to guide not only the manager s understanding of management issues, but his/her management-related actions as well. MANCOSA - BBA Year 1 40

43 Factors Influencing the Development of Theory It needs to be noted that management theories do not develop in a vacuum but develop within, and as a result of, the dynamic environment. The environmental forces which impact on the development of management theory are depicted in Figure 2.1 below: POLITICAL ECONOMIC EVOLUTION MANAGEMENT INTERNATION AL OF SOCIAL ECOLOGICAL Figure 2.1: Environmental forces that shape management thought (from Smit & Cronjé, 2002: 37)? THINK POINT Examine Figure 2.2 (under sub-section 2.4) which provides an indication of the periods during which the various schools of management emerged. Are you aware of any of the environmental forces which were influential during the periods in which these management schools of thought emerged? MANCOSA - BBA Year 1 41

44 Comment on Think Point A study of the evolution of management schools of thought reveals that theories tended to emerge in tandem with, or just after, notable environmental changes: The Classical Management School emerged during the early 1900s and was influenced by the economic, technical and cultural changes which were brought about as a result of the industrial revolution and the introduction of steam power (Cronjé, et al 2004); Jones, George & Hill, 1998) The Behavioural Management School emerged during the 1920s and 1930s and was influenced by the Great Depression and decline in prosperity (Cronjé,et al 2004) as well as failure of the Classical Management School to provide for workplace harmony (Stoner & Freeman, 1992). The Quantitative Management Approach emerged during the 1940s and was influenced by World War II during which both the British and the Americans utilized mathematical approaches and technology to solving war-related problems (Cronjé,et al 2004). The Contemporary Management Theories began to emerge during the 1950s and were influenced by the rapid and ongoing change which characterised the business environment after World War II (Cronjé,et al 2004) In summary, this sub-section has provided the management student with an understanding of the nature of theory, as well as the environmental factors impacting on the development of management theory. MANCOSA - BBA Year 1 42

45 2.4 Theories of Management The schools of management which will be studied in this subsection include: Classical Approach Behavioural & Human Relations Approach Quantitative Approach Contemporary Approach These schools emerged in a chronological sequence, which is depicted in Figure 2.2 below. CONTEMPORARY SCHOOL QUANTITATIVE SCHOOL BEHAVIOURAL SCHOOL CLASSICAL SCHOOL Figure 2.2: Key Management Theories (adapted from Freeman & Stoner, 1992: 29) It must be noted however, that although the schools developed chronologically, later management theories did not (and do not) serve to replace the earlier theories. Rather, each new theory which emerges tends to complement or exist alongside those theories which have been established for some time. MANCOSA - BBA Year 1 43

46 2.4.1 The Classical Approach The two major theories which comprise the Classical Management Approach are Scientific Management Theory and Administrative Management Theory. CLASSICAL MANAGEMENT SCHOOL SCIENTIFIC MANAGEMENT THEORY ADMINISTRATIVE MANAGEMENT THEORY Figure 2.3: The Classical Management School The emergence of the Classical Approach was influenced by the steam-engine which was a product of the Industrial Revolution. Steam power provided for efficient production which in turn led to a shift from farm work to factory work where the principle of mass production was upheld. This shift from the agrarian mode to the factory system brought about a number of organisational problems, such as poor motivation of workers (Cronjé,et,al 2004). The classical theories emerged to address these problems. MANCOSA - BBA Year 1 44

47 READING ACTIVITY Read the following texts and then answer the questions which follow: Du Toit, Erasmus and Strydom (2013) Introduction to Business Management, 8 th Edition, Oxford University Press: Southern Africa. Cronjé,. (2004) Introduction to Management Principles ;6th Edition Cape Town: Juta & Co. pp Smit, P.J. & Cronjé, D.J. (2002) Management Principles, 3 rd Edition Cape Town: Juta & Co Jones, G.R., George, J.M. & Hill, C.W.L (1998) Contemporary Management Issues. Massachusetts: McGraw Hill. pp Identify the key characteristics of Scientific Management Theory. 2. Identify the key characteristics of Administrative Management Theory. MANCOSA - BBA Year 1 45

48 Comment on Reading Activity Scientific Management Theory Scientific Management Theory arose partly due to the need to increase productivity. Fredrick Taylor, Henry Gantt and Frank and Lillian Gilbreth are best known for their contributions to the field of Scientific Management. Frederick Taylor was a manufacturing manager (originally a mechanical engineer) who sought to increase the productivity of the individual worker through increasing specialization and job division of labour. He developed four principles to increase efficiency in the work place: o Examine the way in which workers perform their tasks and experiment with ways of improving the way in which the task is performed; o Record the new methods of performing the task as rules and standard operating procedures; o Ensure that workers skills and abilities match the needs of the task, and train them to perform the task according to the written rules and standard operating procedures; o Determine an acceptable level of performance for each task and develop a remuneration system which rewards performance which exceeds the acceptable level (Cronjé, et al, 2004). Frank & Lillian Gilbreth built on the work of Taylor and focused on work simplification. Their approach included: o Analysing each individual action required to perform a task; o Identifying better ways of performing each action; o Increasing the efficient performance of the whole task through reorganizing the individual actions (Jones, et al, 1998). Henry Gantt redesigned the incentive system developed by Taylor by providing not only for the payment of a bonus to the worker who exceeded the daily standard, but to the worker s supervisor as well. He also devised a chart for production scheduling, the Gantt Chart, which is still in use today (Stoner & Freeman, 1992). The Scientific Management Approach succeeded in its endeavour to increase productivity. However the approach, in focusing on work and productivity, neglected to address the human element, which ultimately resulted in worker dissatisfaction and distrust of management. MANCOSA - BBA Year 1 46

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