Management and entrepreneurship - introduction

Introduction
Management and
Entrepreneurship

MANAGEMENT
The knowledge of management science is very much
essential for an engineer
management science helps to brings together the
technological problem-solving savvy of engineering
the organizational, administrative, and planning abilities
of management in order to oversee complex enterprises
from conception to completion
engineer plays a key role in utilization of resources to
produce useful products for the use of mankind.
In general everyone is involved in management
processes everyday while planning day to day activities,
even without the knowledge of management sciences.

MANAGEMENT
 Management in business and organizations is the
function that coordinates the efforts of people to
accomplish goals and objectives .
using available resources efficiently and effectively
Management comprises planning, organizing, staffing,
leading or directing, and controlling an organization to
accomplish the goal.
Management is also an academic discipline, a social
science whose objective is to study social organizations.
According to the management guru Peter Drucker (1909-
2005), the basic task of management includes both
marketing and innovation.

1. Continuous and never ending process
Management is a Process. It includes four main
functions, viz., Planning, Organising, Directing and
Controlling.
The manager has to Plan and Organise all the
activities. He has to give proper Directions to his
subordinates. He also has to Control all the activities.
The manager has to perform these functions
continuously. Therefore, management is a
continuous and never ending process.

2. Getting things done through people
The managers do not do the work themselves. They
get the work done through the workers.
The workers should not be treated like slaves.
They should not be tricked, threatened or forced to
do the work.
A favorable work environment should be created and
maintained.

3. Result oriented science and art
Management is result oriented because it gives a lot
of importance to "Results".
 Examples of Results like, increase in market share,
increase in profits, etc.
 Management always wants to get the best results at
all times.

4. Multidisciplinary in nature
Management has to get the work done through people.
It has to manage people.
 This is a very difficult job because different people have
different emotions, feelings, aspirations, etc.
 Similarly, the same person may have different emotions
at different times.
So, management is a very complex job.
 Therefore, management uses knowledge from many
different subjects such as Economics, Information
Technology, Psychology, Sociology, etc.
Therefore, it is multidisciplinary in nature.

5. A group and not an individual activity
Management is not an individual activity.
It is a group activity. It uses group (employees) efforts to
achieve group (owners) objectives.
It tries to achieve/satisfy the needs and wants of a group
(consumers).
Nowadays, importance is given to the team (group) and not to
individuals.
6. Follows established principles or rules
Management follows established principles, such as division
of work, discipline, unity of command, etc.
 These principles help to prevent and solve the problems in
the organisation.

7. Aided but not replaced by computers
Now-a-days, all managers use computers.
 Computers help the managers to take accurate
decisions.
However, computers can only help management.
Computers cannot replace management.
This is because management takes the final
responsibility.
Thus Management is aided (helped) but not replaced
by computers.

8. Situational in nature
Management makes plans, policies and decisions
according to the situation.
It changes its style according to the situation.
 It uses different plans, policies, decisions and styles for
different situations.
The manager first studies the full present situation.
 Then he draws conclusions about the situation.
Then he makes plans, decisions, etc., which are best for
the present situation.
 This is called Situational Management.

9. Need not be an ownership
In small organisations, management and ownership are
one and the same.
 However, in large organisations, management is
separate from ownership.
 The managers are highly qualified professionals who are
hired from outside.
The owners are the shareholders of the company.
10. Both an art and science
Management is result-oriented. Therefore, it is an Art.
Management conducts continuous research. Thus, it is
also a Science.

11. Management is all pervasive
Management is necessary for running a business.
 It is also essential for running business, educational,
charitable and religious institutions.
Management is a must for all activities, and therefore, it is all
pervasive.
12. Management is intangible
Management is intangible, i.e. it cannot be seen and touched,
but it can be felt and realised by its results.
The success or failure of management can be judged only by
its results.
If there is good discipline, good productivity, good profits,
etc., then the management is successful and vice-versa.

13. Uses a professional approach in work
Managers use a professional approach for getting the
work done from their subordinates.
 They delegate (i.e. give) authority to their subordinates.
They ask their subordinates to give suggestions for
improving their work.
They also encourage subordinates to take the initiative.
Initiative means to do the right thing at the right time
without being guided or helped by the superior.

14. Dynamic in nature
Management is dynamic in nature.
 That is, management is creative and innovative.
 An organisation will survive and succeed only if it is
dynamic.
It must continuously bring in new and creative ideas, new
products, new product features, new ads, new marketing
techniques, etc.

Management
Management is concerned with resources, tasks and goals.
It’s the process of planning, organizing, staffing, directing
and controlling to accomplish the organizational
objectives/goals.
By coordinated use of human resources and material
resources.
Henry Fayol “Management is to forecast and to plan, to
organize, to command, to co-ordinate and to control.
F.W.Taylor “Management is knowing exactly what your
men want to do and then seeing that its done in the best
and cheapest ways.

Importance of management in construction
industry

industry
Management in construction industry is essential to
have proper co-ordination between different
agencies engaged in various activities of
construction.
Management in construction industry is very
important to check the following activities-
To maintain the economy in overall construction
cost.
To manage to adopt new techniques.
To improve the quality and speed of work by
adopting modern/latest equipment and machinery.

industry
To have proper supervision.
To adopt methodologies so as to reduce the wastage
of materials and labor.
To complete the work in minimum possible
duration.
To have a good co-ordination between different
agencies and different persons engaged in the works.
Basically the aim of management in construction
industry is to effect maximum possible economy in
terms of cost and time duration of the construction.

Functions of management
The following are the five essential functions of
management.
1. Planning
2.Organizing
3.Staffing
4.Directing
5.Controlling

Planning
It is the basic function of management.
 It deals with chalking out a future course of action &
deciding in advance the most appropriate course of
actions for achievement of pre-determined goals.
According to KOONTZ, “Planning is deciding in
advance - what to do, when to do & how to do.
It bridges the gap from where we are & where we
want to be”.
Planning is necessary to ensure proper utilization of
human & non-human resources.

Planning
It is all pervasive, it is an intellectual activity and it
also helps in avoiding confusion, uncertainties, risks,
wastages etc.

Organizing
Organizing is the process of bringing together
physical, financial and human resources.
It helps in developing productive relationship
amongst them for achievement of organizational
goals
Organizing as a process involves the
following
 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

Staffing
The main purpose of staffing is to put right man on
right job
Staffing involves following
 Manpower Planning (estimating man power in terms of
searching, choose the person and giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.

Directing
Direction is that inert-personnel aspect of
management which deals directly with influencing,
guiding, supervising, motivating sub-ordinate for the
achievement of organizational goals.
Direction has following elements:
 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates
by their superiors. It is the act of watching & directing
work & workers.
Motivation- means inspiring, stimulating or encouraging
the sub-ordinates with zeal to work. Positive, negative,
monetary, non-monetary incentives may be used for this
purpose.
Leadership- may be defined as a process by which
manager guides and influences the work of subordinates in
desired direction.
Communications- is the process of passing information,
experience, opinion etc from one person to another. It is a
bridge of understanding.
Directing

Controlling
It implies correction of deviation if any to ensure
achievement of organizational goals.
The purpose of controlling is to ensure that
everything occurs in conformities with the standards.
An efficient system of control helps to predict
deviations before they actually occur.
 According to Theo Haimann, “Controlling is the
process of checking whether or not proper progress
is being made towards the objectives and goals and
acting if necessary, to correct any deviation”.

Controlling
Controlling has following steps
 Establishment of standard performance.
 Measurement of actual performance.
 Comparison of actual performance with the standards
and finding out deviation if any.
 Corrective action.

Functions of management
For theoretical purposes, it may be convenient to
separate the function of management
But practically these functions are overlapping
in nature i.e. they are highly inseparable.
 Each function blends into the other & each affects
the performance of others.

Difference between management and
administration
1. Management is the act or function of putting into
practice the policies and plans decided upon by the
administration.
2. Administration is a determinative function, while
management is an executive function.
3. Administration makes the important decisions of an
enterprise, whereas management makes the decisions
within the confines of the framework, which is set up by
the administration.
4. Administrators are mainly found in government,
military, religious and educational organizations.
Management, on the other hand, is used by business
enterprises.

Management Administration
1.Definition
Art of getting things done
through others by directing
their efforts towards
achievement of pre-
determined goals.
Formulation of broad
objectives, plans & policies.
2.Nature
executing function, doing
function
decision-making function,
thinking function
3.Scope
Decisions within the
framework set by the
administration.
Major decisions of an
enterprise as a whole.
4.Level of authority Middle level activity Top level activity
5.Status
Group of managerial
personnel who use their
specialized knowledge to
fulfill the objectives of an
enterprise.
Consists of owners who
invest capital in and receive
profits from an enterprise.

Management Administration
6.Usage
Used in business
enterprises.
Popular with government,
military, educational, and
religious organizations.
7.Influence
Decisions are influenced by
the values, opinions, beliefs
and decisions of the
managers.
Influenced by public
opinion, government
policies, customs etc.
8.Main functions Motivating and controlling Planning and organizing
9.Abilities Handles the employees.
Handles the business
aspects such as finance.

Management as science, art and profession
Management as a Science:
Science can be defined as a systematic and organised
body of knowledge based on logically observed
findings, facts and events.
Science comprises of exact principles which can be
verified and it can establish cause and effect
relations.

Management as science
Main characteristics/features of science are:
1. Systematic body of knowledge:
In science organised and systematic study material is
available which is used to acquire the knowledge of
science.
Like science in management also there is
availability of systematic and organised study
material.
So first feature of science is present in management.

2. scientists vs managers:
The scientists perform logical observation before
deriving any principle or theory. They are very
objective while doing the observations.
 But when managers are observing they have to
observe human beings and observation of human
being cannot be purely logical and objective.
All the scientific principles have same effect,
wherever we try them whereas effect of management
principles varies from one situation to other.

3. Principles are based on repeated
experiments:
Before developing scientific principles scientists test
these principles under different conditions and
places.
 Similarly, managers also test and experiment
managerial principles under different conditions in
different organisations.
So this feature of science is present in management.

4. Universal Validity:
Scientific principles have universal application and
validity.
Management principles are not exact like scientific
principles so their application and use is not
universal.
 They have to be modified according to the given
situation.
So this feature of science is not present in
management.

5. Replication is possible:
In science replication is possible as when two scientists are
undertaking the same investigation working independently
and treating the same data under the same conditions may
desire or obtain the identical or exactly same result.
But in management managers have to conduct research or
experiments on human beings. So if’ two managers are
investigating same data, on different sets of human beings
they will not get identical or same result because human
beings never respond in exactly identical manner.
So this feature of science is also not present in
management.

Management as an Art:
Art can be defined as systematic body of knowledge
which requires skill, creativity and practice to
get perfection.

The main features of art are:
1. Systematic body of knowledge
In every art there is systematic and organized study
material available to acquire theoretical knowledge
of the art.
For example, various books on different ragas are
available in music.
 In management also there is systematic and
organised body of knowledge available which can
help in acquiring managerial studies.
So this feature of art is present in management also.

2. Personalised application:
In the field of art only theoretical knowledge is not enough.
Every artist must have personal skill and creativity to apply
that knowledge.
For example, all musicians learn same ragas but they apply
these ragas according to their personal skill and creativity
which makes them different.
In management also all managers learn same management
theories and principles.
 But their efficiency depends on how well they use these
principles under different situations by applying personal
skills and creativity so this feature of art is also present in
management

3. Based on Practice and creativity:
The artist requires regular practice of art to become
more fine and perfect.
Without practice artists lose their perfection. Art
requires creative practice, i.e., artist must add his
creativity to the theoretical knowledge he has
learned.
Same way with experience managers also improves
their managerial skills and efficiency.
So this feature of art is also present in management.

Management: Both Science and Art:
Management is both science as well as art.
 Like science it has systematic and well- organised
body of knowledge
Like art it requires personal skill, creativity and
practice to apply such knowledge in the best possible
way.
Science and art are not in contrast to each other;
both exist together in every function of management.

Management as a Profession:
Profession can be defined as an occupation backed
by specialised knowledge and training, in which
entry is restricted.

The main features of profession are:
1. Well defined Body of knowledge:
In every profession there is practice of systematic body of
knowledge which helps the professionals to gain specialised
knowledge of that profession.
In case of management also there is availability of
systematic body of knowledge.
There are large numbers of books available on management
studies.
Scholars are studying various business situations and are
trying to develop new principles to tackle these situations.
So presently this feature of profession is present in
management also.

2. Restricted Entry:
The entry to a profession is restricted through an
examination or degree. For example a person can
practice as Doctor only when he is having MBBS degree.
Whereas there is no legal restriction on appointment of a
manager, anyone can become a manager irrespective of
the educational qualification.
But now many companies prefer to appoint managers
only with MBA degree.
Presently this feature of profession is not present in
management but very soon it will be.

3. Presence of professional associations:
For all the professions, special associations are
established and every professional has to get himself
registered with his association before practising that
profession.
For example, doctors have to get themselves
registered with Medical Council of India, lawyers
with Bar Council of India etc.

In case of management various management
associations are set up at national and international
levels which have some membership rules and set of
ethical codes
For example, AIMA in New Delhi, National Institute
of Personal Management at Calcutta etc., but legally
it is not compulsory for managers to become a part
of these organisations by registration.
So presently this feature of profession is not present
in management but very soon it will be included and
get statutory backing also.

4. Existence of ethical codes:
For every profession there are set of ethical codes fixed
by professional organisations and are binding on all the
professionals of that profession.
In case of management there is growing emphasis on
ethical behaviour of managers. All India Management
Association (AIMA) has devised a code of conduct for
Indian managers.
But legally it is not compulsory for all the managers to
get registered with AIMA and abide by the ethical codes.
So presently this feature of profession is not present in
management but very soon it will be included with
statutory backing.

5. Service Motive:
The basic motive of every profession is to serve the
clients with dedication.
Whereas basic purpose of management is achievement of
management goal, for example for a business
organisation the goal can be profit maximisation.
But nowadays only profit maximisation cannot be the
sole goal of an enterprise.
To survive in market for a long period of time, a
businessman must give due importance to social
objectives along with economic objectives.
So presently this feature of profession is not present but
very soon it will be included.

Functional areas of management
Various functional areas of management are:
Production management
Marketing management
Financial management
Personal management

Production management:
Production means creation of utilities by converting
raw material in to final product by various scientific
methods and regulations.
Plant lay out and location:
Deals with designing of plant layout,
decide about the plant location for products
providing various plant utilities

Production planning: Managers has to plan
about various production policies and production
methods.
Material management: Deals with purchase,
storage, issue and control of the material required
for production department.
Research and Development: Refinement in
existing product line or develop a new product are
the major activities.
Quality Control: Quality control department
works for production of quality product by doing
various tests which ensure the customer satisfaction.

Marketing management:
Marketing management involves distribution of the
product to the buyers.
It may need number of steps.
Advertising: This area deals with advertising of
product, introducing new product in market by
various means and encourage the customer to buy
thee products.

Sales management: Sales management deals with
fixation of prices, actual transfer of products to the
customer after fulfilling certain formalities and after
sales services.
Market research: It involves in collection of data
related to product demand and performance by
research and analysis of market.

Finance and accounting management:
Financial and accounting management deals with
managerial activities related to procurement and
utilization of fund for business purpose.
Financial accounting: It relates to record keeping
of various financial transactions their classification
and preparation of financial statements to show the
financial position of the organization.

Management accounting: It deals with analysis
and interpretation of financial record so that
management can take certain decisions on
investment plans, return to investors and dividend
policy
Taxation: This area deals with various direct and
indirect taxes which organization has to pay.
Costing: Costing deals with recording of costs, their
classification, analysis and cost control.

Personnel Management:
Personnel management is the phase of management
which deals with effective use and control of
manpower.
Personnel planning: This deals with preparation
inventory of available manpower and actual
requirement of workers in organization.
Recruitment and selection: This deals with
hiring and employing human being for various
positions as required.

Training and development: Training and
development deals with process of making the
employees more efficient and effective by arranging
training programmes. It helps in making team of
competent employees which work for growth of
organisation.
Wage administration: It deals in job evaluation,
merit rating of jobs and making wage and incentive
policy for employees.
Industrial relation: It deals with maintenance of
overall employee relation, providing good working
conditions and welfare services to employees

Levels of Management
The term “Levels of Management” refers to a line
of demarcation between various managerial
positions in an organization.
The number of levels in management increases when
the size of the business and work force increases.
 The level of management determines a chain of
command, the amount of authority & status enjoyed
by any managerial position.

The levels of management can be classified in three
broad categories:
Top level / Administrative level
Middle level / Executory
Low level / Supervisory / Operative / First-
line managers

Top Level of Management
Represented by - Board of directors, chief executive
or managing director.
The top management is the ultimate source of
authority.
It manages goals and policies for an enterprise.
 It devotes more time on planning and coordinating
functions.

• Top management decides the objectives and policies of the
enterprise.
• It prepares strategic plans for the enterprise.
• It issues necessary instructions for preparation of budgets,
procedures, schedules etc.
• It appoints the executive for middle level.
• It is also responsible for maintaining a contact with the outside
world.
• The top management is also responsible towards the
shareholders for the performance of the enterprise.
• It provides guidance and direction

Middle Level of Management
Represented by - The branch manager, departmental
managers, (finance, marketing , sales).
They are responsible to the top management for the
functioning of their department.
 They devote more time to organizational and
directional functions.
In small organization, there is only one layer of
middle level of management but in big enterprises,
there may be senior and junior middle level
management.

• They execute the plans of the organization.
• They make plans for the sub-units of the organization.
• They participate in employment & training of lower level
management.
• They interpret and explain policies from top level management
to lower level.
• They are responsible for coordinating the activities within the
division or department.
• It also sends important reports and other important data to top
level management.
• They evaluate performance of junior managers.
• They are also responsible for inspiring lower level managers
towards better performance

Lower Level of Management
Represented by - supervisors, foreman, section
officers, superintendent etc.
supervisory / operative level of management.
They are concerned with direction and controlling
function of management.

 Assigning of jobs and tasks to various workers.
 They are responsible for the quality as well as quantity of
production.
 They are also entrusted with the responsibility of maintaining
good relation in the organization.
 They communicate workers problems, suggestions, and
recommendatory appeals etc to the higher level and higher
level goals and objectives to the workers.
 They help to solve the grievances of the workers.
 They supervise & guide the sub-ordinates.
 They are responsible for providing training to the workers.

 They arrange necessary materials, machines, tools etc for
getting the things done.
 They prepare periodical reports about the performance of the
workers.
 They ensure discipline in the enterprise.
 They motivate workers.
 They are the image builders of the enterprise because they are
in direct contact with the workers.

Evolution of management thought
The current thoughts of management theory (1975
onwards)
Can be better understood by having idea about
evolution.
It can be studied under the following topics
1. Pre scientific management period.
2.Early management approaches.
3. modern management approaches.

Pre scientific management period
Early management thoughts have originated from
Religious and military organizations, a group of
German and Austrian public administrators and
intellects from 16th
to 18th
century.
Their concept of management were mostly related to
the principles of specialization, selection of
subordinate and their training and simplification of
administrative process.

In later period contributions were made by Charles
Babbage, James Watt and Robinson Boultan, Robert
Owen, Towne and Simon.
However the contribution of management thinkers
were the concept to make resources more effective at
the shop.
The contributions and approach were bit haphazard
However their ideas created awareness.
A stage was set for the systematic study of
management and it was begun by Fedric Taylor

Early management approaches
I. Psychological development
II. Scientific management
III. Process management

Psychological development
In earlier days there was no experience and
knowledge of business, they had to depend upon
inborn abilities.
This gave rise to management that was totally based
on Psychological process.
hence it gave rise to belief that managers are born
and cannot be made

Scientific management
Scientific management is nothing but the application
of scientific knowledge and scientific methods to
various aspects of management.
Scientific management can be summarized as
follows
Science isn’t a thumb rule
Cooperation not individual
Maximum output, not restricted output
Specialization not generlization

F.W. Taylor, Gilbreth, Gantt and others have made
significant contributions
 Among these Taylors contribution was significant

WHY STUDY MANAGEMENT
THEORY?
Theories are perspectives with which people make
sense of their world experiences.
First, theories provide a stable focus for
understanding what we experience.
To Henry Ford, a large and compliant work force
was onerelevant factor as he theorized about his
business.
Second, theories enable us to communicate
efficiently and thus move into more and more
complex relationships with other people.

Frustration you would encounter if, in dealing with
other people, you always had to define even the most
basic assumptions you make about the world which
you live!
 Because Ford and his managers fully understood
Ford's theory about manufacturing automobiles,
they could interact easily as they faced day to day‐ ‐
challenges.
Third, theories make it possible indeed,‐‐ challenge
us to keep learning about our world.‐‐

SCIENTIFIC MANAGEMENT
Scientific Management theory arose in part from the
need to increase productivity.
In the United States especially, skilled labour was in
short supply at the beginning of the twentieth
century,
The only way to expand productivity was to raise the
efficiency of workers.
Therefore, Frederick W. Taylor, Henry L. Gantt, and
Frank and Lillian Gilbreth devised the body of
principles known as scientific management
theory.

FREDERICK W. TAYLOR
Frederick W. Taylor (1856 1915) rested his‐
philosophy on four basic principles:
The development of a true science of management,
so that the best method for performing each task
could be determined.
The scientific selection of workers, so that each
worker would be given responsibility for the task for
which he or she was best suited.
The scientific education and development of the
worker.
Intimate, friendly cooperation between management
and labour.

Taylor contended that the success of these principles
required "a complete mental revolution" on the part
of management and labour.
 Rather than quarrel over profits, both sides should
try to increase production; by so doing, he believed,
profits would rise to such an extent that labour and
management would no longer have to fight over
them. In short, Taylor believed that management
and labour had a common interest in increasing
productivity.

Taylor based his management system on
production line time studies‐ . Instead of relying
on traditional work methods, he analyzed and timed
steel workers' movements on a series of jobs.
Using time study as his base, he broke each job down
into its components and designed the quickest and
best methods of performing each component.
 In this way he established how much workers
should be able to do with the equipment and
materials at hand.

He also encouraged employers to pay more
productive workers at a higher rate than others,
using a "scientifically correct" rate that would benefit
both company and worker.
Thus, workers were urged to surpass their previous
performance standards to earn more pay Taylor
called his plan the differential rate system.

CONTRIBUTIONS OF SCIENTIFIC
MANAGEMENT THEORY
The modem assembly line pours out finished
products faster than Taylor could ever have
imagined.
This production "miracle" is just one legacy of
scientific management.
 In addition, its efficiency techniques have been
applied to many tasks in non industrial‐
organizations, ranging from fast food service to the‐
training of surgeons.

LIMITATIONS OF SCIENTIFIC
MANAGEMENT THEORY
Although Taylor's method led to dramatic increases
in productivity and to higher pay in a number of
instances, workers and unions began to oppose his
approach
Because they feared that working harder or faster
would exhaust whatever work was available, causing
layoffs.
Moreover, Taylor's system clearly meant that time
was of the essence. His critics objected to the "speed
up" conditions that placed undue pressures on
employees to perform at faster and faster levels.

The emphasis on productivity—and, by extension,
profitability—led some managers to exploit both
workers and customers.
As a result, more workers joined unions and thus
reinforced a pattern of suspicion and mistrust that
shaded labour management relations for decades.‐

RECENT DEVELOPMENTS IN
MANAGEMENT THEORY
Three perspectives on management theory that can
grow in importance
The systems approach, the contingency approach,
and the dynamic engagement approach

THE SYSTEMS APPROACH
Rather than dealing separately with the various
segments of an organization, the systems
approach to management views the organization as
a unified, purposeful system composed of
interrelated parts.
 This approach gives managers a way of looking at
the organization as a whole and as a part of the
larger, external environment Systems.

Production managers in a manufacturing plant, for
example, prefer long uninterrupted production runs
of standardized products in order to maintain
maximum efficiency and low costs.
Marketing managers, on the other hand, who want
to offer customers quick delivery of a wide range of
products, would like a flexible manufacturing
schedule that can fill special orders on short notice.
Systems oriented production managers make
scheduling decisions only after they have identified
the impact of these decisions on other departments
and on the entire organization.

The point of the systems approach is that managers
cannot function wholly within the confines of the
traditional organization chart.
They must mesh their department with the whole
enterprise. To do that, they have to communicate not
only with other employees and departments, but
frequently with representatives of other
organization.

SOME KEY CONCEPTS
SYNERGY.
 Synergy means that the whole is greater than the
sum of its parts. In organizational terms, synergy
means that as separate departments within an
organization cooperate and interact,
They become more productive than if each were to
act in isolation. For example, in a small firm,
It is more efficient for each department to deal with
one finance department than for each department to
have a separate finance department of its own.

OPEN AND CLOSED SYSTEMS.
A system is considered an open system if it
interacts with its environment; it is considered a
closed system if it does not.
 All organizations interact with their
environment, but the extent to which they do so
varies.

SYSTEM BOUNDARY.
Each system has a boundary that separates it from
its environment.
In a closed system, the system boundary is rigid; in
an open system, the boundary is more flexible.
The system boundaries of many organizations have
become increasingly flexible in recent years.
 For example, managers at oil companies wishing to
engage in offshore drilling now must consider public
concern for the environment.

FLOW.
 A system has flows of information, materials, and
energy (including human energy).
These enter the system from the environment as
inputs (raw materials, for example),
Undergo transformation processes within the
system (operations that alter them), and exit the
system as outputs (goods and services).

FEEDBACK.
 Feedback is the key to system controls.
As operations of the system proceed, information is
fed back to the appropriate people, and perhaps to a
computer, so that the work can be assessed and, if
necessary, corrected.

THE CONTINGENCY APPROACH
The contingency approach (sometimes called
the situational approach) was developed by
managers, consultants, and researchers who tried
to apply the concepts of the major schools to real life‐
situations.
When methods highly effective in one situation
failed to work in other situations, they sought an
explanation.
 Why, for example, did an organizational
development program work brilliantly in one
situation and fail miserably in another.

Advocates of the contingency approach had a logical
answer to all such questions: Results differ because
situations differ; a technique that works in one case
will not necessarily work in all cases.
According to the contingency approach the
manager's task is to Identify which technique will, in
a particular situation, under particular
circumstances, and at particular time, best
contribute to the attainment of management goals.

ENTERING AN ERA OF DYNAMIC
ENGAGEMENT
Dynamic opposite of static implies continuous‐‐ ‐‐
change, growth, and activity; engagement the‐‐
opposite of detachment implies intense involvement‐‐
with others.
We therefore think the term dynamic engagement
best expresses the vigorous way today's most
successful managers focus on human relationships
and quickly adjust to changing conditions over time.

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