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Page 1: Principles of Management

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ManagementManagement is usually understood to be the science and art of getting things done through others. Management in all business and organizational activities is the action of getting people together to complete objectives and goals using available resources effectively and effectively.Management comprises planning, organizing, staffing, leading, and controlling a business or effort with regards to achieving an objective.

Management functionThe four management functions are:

1. Planning or decision making: This includes deciding objectives or aims of the work and organization being managed and working out the detailed way and means of achieving these objectives.

2. Organizing including staffing: This includes dividing the work to be done in its constituent jobs, and assigning specific jobs and responsibilities among individuals in the total group required to work together to accomplish the objectives. Thus this requires the design of structure of people into an organization. It also includes the function to fulfil the positions as per organizational design.

3. Motivating or leading: This is the function concerned with the effort of the people in the organization towards achievement of organizational objectives.

4. Controlling: is the function concerned with ensuring the work managed is carried out in line with decisions and expectations specified in the previous three steps. It also means reviewing and revising the decisions and approaches adopted in the previous three steps when actual results obtained or developments in the environment point to the need for same.

As can be seen from the description given above, the four management functions are quite different from each other. Each of these functions requires different types of skill and capabilities. It is not necessary that a manager skilled in one or more of these functions will be skilled in all of them. As a matter of fact people in general do not naturally possess high level of proficiency in all the four functions. Managers need to make conscious efforts to become good at performing all the four functions well.

Purpose of management course It is not possible to answer this question in terms of simple 'agree' or 'disagree'.Of course the purpose of teaching management is to teach students to be managers. But this does not mean that management coursed does not teach about management. To become good managers the students must understands the basic principles of management and various concept that help to understand and analyze nature of work to be managed, the behaviour of people performing the work or otherwise affected by work, and the environment within which work is performed. Managers must also learn specific tools and techniques of

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management. The part of management courses that impart such understanding may be described as teaching about management.In addition, management courses must also help students to develop specific skills required by them as managers. The students acquire such skills through assignments, case studies and group interactions. This part of management course may be described as teaching to be managers.Thus management courses teach students about management as well as to be managers.

Ten Manager Roles

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Category Role Activity Examples

Informational

Monitor Seek and acquire work-related information

Scan/read trade press,  periodicals, reports; attend seminars andtraining; maintain personal contacts

DisseminatorCommunicate/ disseminate information to others within the organization

Send memos and reports; inform staffers and subordinates of decisions

Spokesperson

Communicate/transmit information to outsiders

Pass on memos, reports and informational materials; participate inconferences/meetings and report progress

Interpersonal

Figurehead Perform social and legal duties, act as symbolic leader

Greet visitors, sign legal documents, attend ribbon cutting ceremonies,host receptions, etc.

LeaderDirect and motivate subordinates, select and train employees

Includes almost all interactions with subordinates

LiaisonEstablish and maintain contacts within and outside the organization

Business correspondence, participation in meetings with representativesof other divisions or organizations.

Decisional

Entrepreneur Identify new ideas and initiate improvement projects

Implement innovations; Plan for the future

Disturbance Handler

Deals with disputes or problems and takes corrective action

Settle conflicts between subordinates; Choose strategic alternatives; Overcome crisis situations

Resource Allocator Decide where to apply resources

Draft and approve of plans, schedules, budgets; Set priorities

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MANAGEMENT ROLES In addition to the broad categories of management functions, managers in different levels of the hierarchy fill different managerial roles. These roles were categorized by researcher Henry Mint berg, and they can be grouped into three major types: decisional, interpersonal, and informational.

DECISIONAL ROLES. Decisional roles require managers to plan strategy and utilize resources. There are four specific roles that are decisional. The entrepreneur role requires the manager to assign resources to develop innovative goods and services, or to expand a business. Most of these roles will be held by top-level managers, although middle managers may be given some ability to make such decisions. The disturbance handler corrects unanticipated problems facing the organization from the internal or external environment. Managers at all levels may take this role. For example, first-line managers may correct a problem halting the assembly line or a middle level manager may attempt to address the aftermath of a store robbery. Top managers are more likely to deal with major crises, such as requiring a recall of defective products. The third decisional role that of resource allocator, involves determining which work units will get which resources. Top managers are likely to make large, overall budget decisions, while middle managers may make more specific allocations. In some organizations, supervisory managers are responsible for determine allocation of salary raises to employees. Finally, the negotiator works with others, such as suppliers, distributors, or labour unions, to reach agreements regarding products and services. First-level managers may negotiate with employees on issues of salary increases or overtime hours, or they may work with other supervisory managers when needed resources must be shared. Middle managers also negotiate with other managers and are likely to work to secure preferred prices from suppliers and distributors. Top managers negotiate on larger issues, such as labour contracts, or even on mergers and acquisitions of other companies.INTERPERSONAL ROLES. Interpersonal roles require managers to direct and supervise employees and the organization. The figurehead is typically a top of middle manager. This manager may communicate future organizational goals or ethical guidelines to employees at company meetings. A leader acts as an example for other employees to follow, gives commands and directions to subordinates, makes decisions, and mobilizes employee support. Managers must be leaders at all levels of the organization; often lower-level managers look to top management for this leadership example. In the role of liaison, a manger must coordinate the work of others in different work units, establish alliances between others, and work to share resources. This role is particularly critical for middle managers, who must often compete with other managers for important resources, yet must maintain successful working relationships with them for long time periods. INFORMATIONAL ROLESInformational roles are those in which managers obtain and transmit information. These roles have changed dramatically as technology has improved. The monitor evaluates the performance of others and takes corrective action to improve that

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performance. Monitors also watch for changes in the environment and within the company that may affect individual and organizational performance. Monitoring occurs at all levels of management, although managers at higher levels of the organization are more likely to monitor external threats to the environment than are middle or first-line managers. The role of disseminator requires that managers inform employees of changes that affect them and the organization. They also communicate the company's vision and purpose. Managers at each level disseminate information to those below them, and much information of this nature trickles from the top down. Finally, a spokesperson communicates with the external environment, from advertising the company's goods and services, to informing the community about the direction of the organization. The spokesperson for major announcements, such as a change in strategic direction, is likely to be a top manager. But, other, more routine information may be provided by a manager at any level of a company. For example, a middle manager may give a press release to a local newspaper, or a supervisor manager may give a presentation at a community meeting

Organizational performanceEfficiency and Effectiveness, which is more important?In today’s business environment, efficiency and effectiveness are critical to success. Aside from those businesses run by the government and those, which are so regulated that competition has been eliminated, a business, which is not run efficiently and effectively, will not survive. However, which of these two critical factors is more important? Before answer a question, we must understand what each of these term means.Efficiency: Getting the most output from the least amount of inputs; referred to as “doing things right”. Effectiveness: Completing activities so that organizational goals are attained; referred to as “doing the right things”.According to Mark Kelly of McKinney Secondary College, in his Information Processing and Management lecture notes, efficiency and effectiveness are often at odds with each other. He goes so far as to say that they can be “natural enemies.” His definitions differ slightly from Robbins/Coulter’s:Efficiency means: saving TIME, MONEY or EFFORT.Effectiveness means: how well the job is done. I.e. the quality of the output.

One example Kelly gives to demonstrate the conflict between our two terms is that of a party hat manufacturer who decides to be “efficient” by cutting down on the amount of glitter used on Christmas hats. If the hats still satisfied the customer, Mr. Kelly would almost have a valid point. It would be efficient to use less glitter. If, however, sales were lost because the hats had less appeal to consumers, efficiency would not be achieved. Less input would cause less output. Mr. Kelly’s definition is his error here. Efficiency does not mean using less of a particular resource. It means using resources in such a way that maximizes output per unit of resource.

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From this, we must realize that efficiency and effectiveness are not two distinct aspects of management. The two are inseparable. No business can be effective without being efficient and the only valid measurement of a company’s overall efficiency is its effectiveness. Managers who “do things right” invariable end up “doing the right things.” The only cause of not “doing the right things” is not “doing things right.” Therefore, neither efficiency nor effectiveness is more important. They are simply the two sides of a coin, and the coin could not exist if either side was not present.MANAGEMENT LEVELSManagers are organizational members who are responsible for the work performance of other organizational members. Managers have formal authority to use organizational resources and to make decisions. In organizations, there are typically three levels of management: top-level, middle-level, and first-level. These three main levels of managers form a hierarchy, in which they are ranked in order of importance. In most organizations, the number of managers at each level is such that the hierarchy resembles a pyramid, with many more first-level managers, fewer middle managers, and the fewest managers at the top level. Each of these management levels is described below in terms of their possible job titles and their primary responsibilities and the paths taken to hold these positions. Additionally, there are differences across the management levels as to what types of management tasks each does and the roles that they take in their jobs. Finally, there are a number of changes that are occurring in many organizations that are changing the management hierarchies in them, such as the increasing use of teams, the prevalence of outsourcing, and the flattening of organizational structures.

TOP-LEVEL MANAGERS Top-level managers, or top managers, are also called senior management or executives. These individuals are at the top one or two levels in an organization, and hold titles such as: Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operational Officer (COO), Chief Information Officer (CIO), and Chairperson of the Board, President, Vice president, and corporate head. Often, a set of these managers will constitute the top management team, which is composed of the CEO, the COO, and other department heads. Top-level managers make decisions affecting the entirety of the firm. Top managers do not direct the day-to-day activities of the firm; rather, they set goals for the organization and direct the company to achieve them. Top managers are ultimately responsible for the performance of the organization, and often, these managers have very visible jobs.Top managers in most organizations have a great deal of managerial experience and have moved up through the ranks of management within the company or in another firm. An exception to this is a top manager who is also an entrepreneur; such an individual may start a small company and manage it until it grows enough to support several levels of management. Many top managers possess an advanced degree, such as a Masters in Business Administration, but such a degree is not required.Some CEOs are hired in from other top management positions in other companies. Conversely, they may be promoted from within and groomed for top

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management with management development activities, coaching, and mentoring. They may be tagged for promotion through succession planning, which identifies high potential managers.

MIDDLE-LEVEL MANAGERSMiddle-level managers, or middle managers, are those in the levels below top managers. Middle managers' job titles include: General Manager, Plant manager, Regional manager, and Divisional manager.Middle-level managers are responsible for carrying out the goals set by top management. They do so by setting goals for their departments and other business units. Middle managers can motivate and assist first-line managers to achieve business objectives. Middle managers may also communicate upward, by offering suggestions and feedback to top managers. Because middle managers are more involved in the day-to-day workings of a company, they may provide valuable information to top managers to help improve the organization's bottom line.Jobs in middle management vary widely in terms of responsibility and salary. Depending on the size of the company and the number of middle-level managers in the firm, middle managers may supervise only a small group of employees, or they may manage very large groups, such as an entire business location. Middle managers may be employees who were promoted from first-level manager positions within the organization, or they may have been hired from outside the firm. Some middle managers may have aspirations to hold positions in top management in the future.

FIRST-LEVEL MANAGERS First-level managers are also called first-line managers or supervisors. These managers have job titles such as: Office manager, Shift supervisor, Department manager, Foreperson, Crew leader, Store manager.First-line managers are responsible for the daily management of line workers—the employees who actually produce the product or offer the service. There are first-line managers in every work unit in the organization. Although first-level managers typically do not set goals for the organization, they have a very strong influence on the company. These are the managers that most employees interact with on a daily basis, and if the managers perform poorly, employees may also perform poorly, may lack motivation, or may leave the company.In the past, most first-line managers were employees who were promoted from line positions (such as production or clerical jobs). Rarely did these employees have formal education beyond the high school level. However, many first-line managers are now graduates of a trade school, or have a two-year associates or a four-year bachelor's degree from college.

MANAGEMENT LEVELS AND THE FOUR MANAGERIAL FUNCTIONS

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Managers at different levels of the organization engage in different amounts of time on the four managerial functions of planning, organizing, leading, and controlling.Planning is choosing appropriate organizational goals and the correct directions to achieve those goals. Organizing involves determining the tasks and the relationships that allow employees to work together to achieve the planned goals. With leading, managers motivate and coordinate employees to work together to achieve organizational goals. When controlling, managers monitor and measure the degree to which the organization has reached its goals.The degree to which top, middle, and supervisory managers perform each of these functions is presented in Exhibit 1. Note that top managers do considerably more planning, organizing, and controlling than do managers at any other level. However, they do much less leading. Most of the leading is done by first-line managers. The amount of planning, organizing, and controlling decreases down the hierarchy of management; leading increases as you move down the hierarchy of management.

Exhibit 1 Time Spent on Management Functions at Different

Management Levels

MANAGEMENT SKILLS Regardless of organizational level, all managers must have five critical skills: technical skill, interpersonal skill, conceptual skill, diagnostic skill, and political skill.

TECHNICAL SKILLTechnical skill involves understanding and demonstrating proficiency in a particular workplace activity. Technical skills are things such as using a computer word processing program, creating a budget, operating a piece of machinery, or preparing a presentation. The technical skills used will differ in each level of management. First-level managers may engage in the actual operations of the organization; they need to have an understanding of how production and service occur in the organization in order to direct and evaluate line employees. Additionally, first-line managers need skill in scheduling workers and preparing budgets. Middle managers use more technical skills related to planning and organizing, and top managers need to have skill to understand the complex financial workings of the organization. INTERPERSONAL SKILLInterpersonal skill involves human relations, or the manager's ability to interact effectively with organizational members. Communication is a critical part of interpersonal skill, and an inability to communicate effectively can prevent career progression for managers. Managers who have excellent technical skill, but poor interpersonal skill are unlikely to succeed in their jobs. This skill is critical at all levels of management.

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CONCEPTUAL SKILLConceptual skill is a manager's ability to see the organization as a whole, as a complete entity. It involves understanding how organizational units work together and how the organization fits into its competitive environment. Conceptual skill is crucial for top managers, whose ability to see "the big picture" can have major repercussions on the success of the business. However, conceptual skill is still necessary for middle and supervisory managers, who must use this skill to envision, for example, how work units and teams are best organized.DIAGNOSTIC SKILLDiagnostic skill is used to investigate problems, decide on a remedy, and implement a solution. Diagnostic skill involves other skills—technical, interpersonal, conceptual, and politic. For instance, to determine the root of a problem, a manager may need to speak with many organizational members or understand a variety of informational documents. The difference in the use of diagnostic skill across the three levels of management is primarily due to the types of problems that must be addressed at each level. For example, first-level managers may deal primarily with issues of motivation and discipline, such as determining why a particular employee's performance is flagging and how to improve it. Middle managers are likely to deal with issues related to larger work units, such as a plant or sales office. For instance, a middle-level manager may have to diagnose why sales in a retail location have dipped. Top managers diagnose organization-wide problems, and may address issues such as strategic position, the possibility of outsourcing tasks, or opportunities for overseas expansion of a business.POLITICAL SKILLPolitical skill involves obtaining power and preventing other employees from taking away one's power. Managers use power to achieve organizational objectives, and this skill can often reach goals with less effort than others who lack political skill. Much like the other skills described, political skill cannot stand alone as a manager's skill; in particular, though, using political skill without appropriate levels of other skills can lead to promoting a manager's own career rather than reaching organizational goals. Managers at all levels require political skill; managers must avoid others taking control that they should have in their work positions. Top managers may find that they need higher levels of political skill in order to successfully operate in their environments. Interacting with competitors, suppliers, customers, shareholders, government, and the public may require political skill.

Managing Crises and unexpected EventsMany managers may dream of working in an organization and a world life seems relatively calm, orderly and predictable, but their reality is one of increasing turbulence and disorder. Today’s managers and organizations face various levels of crisis every day – everything from the loss of computer data, to charges of racial discrimination to a factory fire, to workplace violence.Dealing with the unexpected has always been part of the manager’s job, but our world has become so fast, interconnected and complex that unexpected events happen more frequently and often with greater and more painful consequences.

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Some of the most recent thinking on crisis management suggests the importance of five leadership skills.

1. Stay calm2. Be visible3. Put people before business4. Tell the truth5. Know when to get back to business.

1. Stay calm A leader’s emotions are contagious so leaders have to stay calm focused optimistic about the future. Perhaps the most important part of a manager’s job in a crisis situation is to absorb people’s fears and uncertainties. Leaders have to suppress their own fears, doubts, and pain to encourage others. Although they acknowledge the difficulties they remain rock steady and hopeful who give comfort inspiration and hope to others. 2. Be visible When people’s worlds have become ambiguous and freighting they need to feel that someone is in control. The Monday following the September 11, 2001 terrorists attacks the CEO of Young & Rubicam Advertising shook hands with every employee as he or she entered headquarters. Crisis is a time when leadership cannot be delegated when Russian President Vladimir Putin continued his holiday after the sinking of the submarine Kursk in August 2000, his reputation diminished worldwide. 3. Put people before business: The companies that weather a crisis best, whether the crisis is large or small are those in which managers make people and human feelings their top priority . As ray O’Rourke managing director for global corporate affairs at Morgan Stanley put it following September 11. Even though we are a financial service company we didn’t have a financial crisis on our hands we had a human crisis. After that point, everything was focused on our people. 4. Know when to get back to business Although managers should first deal with the physical and emotion needs of people they also need to get to business as soon as possible. The company has to keep going and there’s a natural human tendency to want to rebuild and move forward. The rejuvenation of the business is a sign of hope and an inspiration to employees. Moments of crisis also present excellent opportunities for looking forward and using the emotional energy that has emerged to build a better company.

Theory X and Theory YIn his 1960 book, The Human Side of Enterprise, Douglas McGregor proposed two theories by which to view employee motivation. He avoided descriptive labels and simply called the theories Theory X and Theory Y. Both of these theories begin with the premise that management's role is to assemble the factors of

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production, including people, for the economic benefit of the firm. Beyond this point, the two theories of management diverge.Theory XTheory X assumes that the average person:

Dislikes work and attempts to avoid it. Has no ambition, wants no responsibility, and would rather follow than lead. Is self-centred and therefore does not care about organizational goals. Resists change. Is gullible and not particularly intelligent.

Essentially, Theory X assumes that people work only for money and security.Theory X - The Hard Approach and Soft ApproachUnder Theory X, management approaches can range from a hard approach to a soft approach.The hard approach relies on coercion, implicit threats, close supervision, and tight controls, essentially an environment of command and control. The soft approach is to be permissive and seek harmony with the hope that in return employees will cooperate when asked to do so. However, neither of these extremes is optimal. The optimal management approach under Theory X probably would be somewhere between these extremes. However, McGregor asserts that neither approach is appropriate because the assumptions of Theory X are not correct.Theory YThe higher-level needs of esteem and self-actualization are continuing needs in that they are never completely satisfied. As such, it is these higher-level needs through which employees can best be motivated.Theory Y makes the following general assumptions:

Work can be as natural as play and rest. People will be self-directed to meet their work objectives if they are

committed to them. People will be committed to their objectives if rewards are in places that

address higher needs such as self-fulfilment. Under these conditions, people will seek responsibility. Most people can handle responsibility because creativity and ingenuity are

common in the population.Under these assumptions, there is an opportunity to align personal goals with organizational goals by using the employee's own quest for fulfilment as the motivator. McGregor stressed that Theory Y management does not imply a soft approach.McGregor recognized that some people may not have reached the level of maturity assumed by Theory Y and therefore May need tighter controls that can be relaxed as the employee develops.Theory Y Management ImplicationsIf Theory Y holds, the firm can do many things to harness the motivational energy of its employees:

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Decentralization and Delegation - If firms decentralize control and reduce the number of levels of management; each manager will have more subordinates and consequently will be forced to delegate some responsibility and decision making to them.

Job Enlargement - Broadening the scope of an employee's job adds variety and opportunities to satisfy ego needs.

Participative Management - Consulting employees in the decision making process taps their creative capacity and provides them with some control over their work environment.

Performance Appraisals - Having the employee set objectives and participate in the process of evaluating how well they were met.

If properly implemented, such an environment would result in a high level of motivation as employees work to satisfy their higher level personal needs through their jobs.

Four stages of globalizationCorporation can participate in the international arena on a variety of levels and the process of globalization typically passes through four distinct stages as illustrated in table.

Table : Four stages of globalization

1. Domestic

2. International

3. Multinational

4. Global

StrategicOrientation

Domestically oriented

Export-oriented, multi

domesticMultinational Global

Stage ofDevelopme

nt

Initial foreign

involvementCompetitive positioning Explosion Global

StructureDomestic structure

plus export department

Domestic structure plus international

division

Worldwide geographic,

product

Matrix, trans-

national

MarketPotential

Moderate, mostly

domesticLarge, multi

domesticVery large,

multinationalWhole world

1. Domestic

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In the domestic stage, market potential is limited to the home country with all production and marketing facilities located at home. Managers may be aware of the global environment and may want to consider foreign involvement.2. International In the international stage, exports increase and the company usually adopts a multi-domestic approach, probably using an international division to deal with the marketing of products in several countries individually.3. MultinationalIn the multinational stage, the company has marketing and production facilities located in many countries, with more than one-third of its sales outside the home country. Companies typically have a single home country. Although they might adopt for a bi-national approach, whereby two parent companies in separate countries maintain ownership and control.4. GlobalFinally, the global (or stateless) stage of corporate international development transcends any single home country. These corporations operate in true global fashion, making sales and acquiring resources in whatever country offers the best opportunities and lowest cost. At this stage, ownership, control and top management tend to be dispersed among several nationalities.

E-business (electronic business)E-business (electronic business), derived from such terms as "e-mail" and "e-commerce," is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners. One of the first to use the term was IBM, when, in October, 1997, it launched a thematic campaign built around the term. Today, major corporations are rethinking their businesses in terms of the Internet and its new culture and capabilities. Companies are using the Web to buy parts and supplies from other companies, to collaborate on sales promotions, and to do joint research. Exploiting the Convenience, availability, and world-wide reach of the Internet, many companies, such as Amazon.com, the book sellers, have already discovered how to use the Internet successfully.Increasingly, much direct selling (or e-tailing) is taking place on the Internet of computer-related equipment and software. Travel bookings directly or indirectly as a result of Web research are becoming significant.With the security built into today's browsers and with digital certificates now available for individuals and companies from VeriSign, a certificate issuer, much of the early concern about the security of business transaction on the Web has abated and e-business by whatever name is accelerating.IBM considers the development of intranets and extranets to be part of e-business. E-business can be said to include e-service, the provision of services and tasks over the Internet by application service providers (ASP).

Corporation

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The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern. The process of becoming a corporation, call incorporation, gives the company separate legal standing from its owners and protects those owners from being personally liable in the event that the company is sued (a condition known as limited liability). Incorporation also provides companies with a more flexible way to manage their ownership structure. In addition, there are different tax implications for corporations, although these can be both advantageous and disadvantageous. In these respects, corporations differ from sole proprietorships and limited partnerships.Types of CorporationsBusinesses may choose from a variety of corporate entities, based on their needs. Below are useful descriptionsGeneral CorporationA general corporation, also known as a “C” corporation, is the most common corporate structure. A general corporation may have an unlimited number of stockholders. Consequently, it is usually chosen by those companies planning to have more than 30 stockholders or large public stock offerings. Since a corporation is a separate legal entity, a stockholder’s personal liability is usually limited to the amount of investment in the corporation and no more.Close CorporationA close corporation is most appropriate for the individual starting a company alone or with a small number of people. There are a few significant differences between a general corporation and a close corporation. A close corporation limits stockholders to a maximum of 30. In addition, many close corporation statutes require that the directors of a close corporation must first offer the shares to existing stockholders before selling to new stockholders. Not all states recognize close corporations.Subchapter S CorporationA Subchapter S Corporation is a general corporation that has elected a special tax status with the IRS after the corporation has been formed. Subchapter S corporations are most appropriate for small business owners and entrepreneurs who prefer to be taxed as if they were still sole proprietors or partners.When a general corporation makes a profit, it pays a federal corporate income tax on the profit. If the company also declares a dividend, the stockholders must report the dividend as personal income and pay more taxes.S Corporations avoid this “double taxation” (once at the corporate level and again at the personal level) because all income or loss is reported only once on the personal tax returns of the stockholders.For many small businesses, the S Corporation offers the best of both worlds, combining the tax advantages of a sole proprietorship or partnership with the limited liability and enduring life of a corporate structure.

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Limited Liability Company (LLC)A Limited Liability Company is not a corporation, but it offers many of the same advantages. Many small business owners and entrepreneurs prefer LLC because they combine the limited liability protection of a corporation with the “pass through”" taxation of a sole proprietorship or partnershipNon-profit CorporationsA non-profit corporation (“NPC”, or “non-profit” or “not-for-profit” or non-stock) is a corporation whose primary objective is to support an issue or matter of private interest or public concern for non-commercial purposes. Nonprofits may be involved in an innumerable range of areas relating to the arts, charities, education, politics, religion (churches), research, sports or some other endeavour.

8 Steps Decision Making ProcessGood Decision Making is critical to all areas of life. Reaching a decision brings conclusions, enables change and helps move situations forward. However, it can be a difficult task. Decisions often have strong emotional links, or their results can have effects on the needs and desires of certain individuals. These emotions and needs can cloud judgment, making reaching a decision a complicated process.Following (tab.1) a set of guidelines and steps to assist in the Decision making process can help simplify it. Here are eight steps that add structure and simplicity to the Decision making process.

1. Recognize and identify the problem: Decisions are responses to situations or problems that need addressing. Therefore is important to have a clear definition of what needs addressing before attempting to go further in the decision making process.

2. Consider the nature of the problem that you are trying to resolve: What is the type issue, problem, or situation you need to address? Is it problematic in terms of creating an awkward situation between individuals, is it needed to change direction of a business? Why does the problem need a decision? What are the results you are hoping to achieve by this decision?

3. Analyze or research the problem: It is important to gather all the information involved in the problem or question, so that informed choices can be made.

4. Develop a list of possible solutions: List the possible decisions that could be made, and what their consequences would be.

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Recognize and identify the problemConsider the nature of the problem that you are trying to resolveAnalyze or research the problemDevelop a list of possible solutionsSelect the best alternativeExecute the best choiceFollow Up and communicationFeedbackTable 1 : 8 steps for decision- making

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5. Select the best alternative: Look at the list drawn up in point four and choose the best solution for the situation.

6. Execute the best choice: Sometimes the hardest part of making a decision is taking action. The best decisions are ones that deliver strong decision action.

7. Follow Up and communication: A good decision needs to be followed throughout its process and constant communication made with those involved.

8. Feedback: It is extremely important to gather feedback on a decision. This determines the overall success of and reaction to the decision.

People are required to make decisions of varying degrees every day, whether in a work or personal capacity and following these steps adds clarity and logic into the decision making process

PlanningPlanning involve defining the organization’s goals, establishing an overall strategy for achieving those goals, and developing a comprehensive set of plans to integrate and coordinate organizational work. It is concerned with both end (what to be done) and means (how it is to be done).Types of planning Planning can be either formal or informal.Informal planningAll managers engage in some planning, but their planning might be informal. In informal, nothing is written down, and there is little or no sharing of goals with others in the organization. Informal planning is general and lacks continuity.Formal planningWhen we use the term planning in management. We mean formal planning. In formal planning, specifies goals covering a period of years are defined. These goals are written and shared with organizational members. Managers clearly define the path they want to take to get the organization and the various work units from where they are to where they want them to be.Purposes of planning There are at least four reasons for planning. Planning provides direction reduce uncertainty, minimizes waste and redundancy, and sets the standards used in controlling.Provides directionPlanning provides directions to managers and non-managers alike. Without planning, departments and individuals might work at cross-purposes, preventing the organization from moving efficiently towards its goals.Reduces uncertainty

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Planning reduces uncertainty by forcing managers to look ahead, anticipates change, consider the impact of changes, and develop appropriate responses.Minimizes waste and redundancyIn addition, planning reduces overlapping and wasteful activities. When means and ends are made clear through planning, inefficiencies become obvious and can be corrected or eliminated.Sets the standards of controlling Finally, planning established the goals or standards that are used in controlling. In planning, we develop the goals and the plans. Then, through controlling, we compare actual performance against the goals, identify and significant deviations, and take any necessary corrective action. Without planning, there would be no way to control.

Decision makingIn an organization, managers at all levels make decision.al decision; have some influence large or small on performance. Thus, managers must develop decision-making skills. The life of a manager is filled with making decisions. Making a decision means choosing between alternative courses of action. Some believes that management is all about decision-making.In the words of Peter F. Drucker, “Whatever a manager does, he does through decision making.”According to management expert Griffin. “Decision making is the cornerstone of planning. It is the catalyst that drives the planning process.”

Effective Decision MakingLike so many things, smart decision-making can benefit from the addition of structure, s, and focus. While imperfect in their own ways, the kinds of tools that support this mental corralling can help tremendously in quieting the chaos, surveying the available options, and then collecting and evaluating the information, you need to choose the best course of action.The eight of the most popular and reliable tools for decision-making are listed below.

1. Pareto Analysis: Often better known as “The 80/20 Rule,” Pareto helps you locate where you can derive the greatest benefit by expending the least relative effort (or cost or resources or what have you).

2. Paired Comparison: Compose a table that pits each option directly against each other option, cage-match-style, and weighting each for relative importance.

3. Grid Analysis: Evaluate a larger set of options based on numerous criteria, and then weight the importance of each criterion to derive the best choice.

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4. Decision Trees: Build a set of “what-ifs” based on a tree of possible options, assigning the estimated value, cost, or savings associated with each choice.

5. PMI (Pluses, Minuses, & Implications): List all the pluses, minuses, and implications behind any decision. Then assign a + or - numerical value to each based on the positive or negative impact. Tally up the columns, and your better option emerges.

6. Force Field: Identify all the forces for and against a theoretical change, weighted for amount of force exerted by each “side.”

7. Six Thinking Hats: It’s a method for seeing an issue from all perspectives by forcing yourself (or more often your team) to one at a time—adopt different “thinking hats” that reflect opposing and orthogonal points of view (analytical, positive, negative, creative, etc.).

Cost/Benefit: This is an evergreen you’ve probably used a dozen or more times; estimate the costs and the benefits and decide if the delta is worth the hassle. As ever, be sure to account for all the costs of a change, including the Meta stuff.

A Definition of EntrepreneurshipThe concept of entrepreneurship has a wide range of meanings. On the one extreme an entrepreneur is a person of very high aptitude who pioneers change, possessing characteristics found in only a very small fraction of the population. On the other extreme of definitions, anyone who wants to work for him or herself is considered to be an entrepreneur.The word entrepreneur originates from the French word, entreprendre, which means "to undertake." In a business context, it means to start a business.

Entrepreneurship & Small BusinessMany people use the terms "entrepreneur" and "small business owner" synonymously. While they may have much in common, there are significant differences between the entrepreneurial venture and the small business. Entrepreneurial ventures differ from small businesses in these ways:

1. Amount of wealth creation: Rather than simply generating an income stream that replaces traditional employment, a successful entrepreneurial venture creates substantial wealth, typically in excess of several million dollars of profit.

2. Speed of wealth creation: While a successful small business can generate several million dollars of profit over a lifetime, entrepreneurial wealth creation often is rapid; for example, within 5 years.

3. Risk: The risk of an entrepreneurial venture must be high; otherwise, with the incentive of sure profits many entrepreneurs would be pursuing the idea and the opportunity no longer would exist.

4. Innovation: Entrepreneurship often involves substantial innovation beyond what a small business might exhibit. This innovation gives the

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venture the competitive advantage that results in wealth creation. The innovation may be in the product or service itself, or in the business processes used to deliver it.

My point of viewDifferences above confirm that entrepreneurship and small business have much in common but both are different from each other. Therefore I totally disagree with this statement that “Entrepreneurship is only for small, start up businesses.”

What is Globalization?Before we proceed to the various globalization issues in business, it is important to understand what exactly it means. Globalization is nothing but the functioning of a business on a global level. When you treat the entire globe as your potential market, you globalize your business. Globalization and international business thus, also mean the sharing of ideas and views on an international level.Globalization Issues in BusinessesBusiness is not just a corporate firm that provides certain goods and services. Business is any initiative started to earn profit. If this business, for earning more profit, is operating from different regions in the world, it will be affected by certain globalization issues in business. A business can be an IT firm developing some software. Let's check out both, the pros and cons of globalization on a business.

Pros:Increase of MarketOne of the best advantages of globalization is that it increases your prospects and your opportunities. When you look at the entire world as your customer, you suddenly increase your profit margin by many folds. Similarly, a bigger market also means better competition.Foreign CurrencyGlobalization issues in business also include positive ones, and this is one of them. Globalization has also brought about a huge investment in poor countries in terms of labour and capitalization. With this, we see global development of countries together. There is more stability in global financial relations.Technological DevelopmentTechnological development is a great boon for almost every country. Technology is something that is continuously redefined. Continuous innovation in the smallest parts of the world, lead to technological changes for the better. These technological advances can be shared with the entire world through globalization.

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Cons:Shift in EmploymentThough a business creates a lot of employment due to globalization, it does not do so necessarily in the actual country that it is home to. This is one of the most discussed globalization issues in businesses today. This might affect the business from the social perspective, where it also has a responsibility towards the society it functions from.Recessions and DepressionsThis is perhaps one of the most negative effects of globalization on businesses, as compared to any other. Before globalization came into the picture, companies were affected by financial situations pertaining to their own country only. This means that due to globalization, the dependability of one country on another has increased to a greater extent than before.Unfair PaymentsOne of the most common complaints against globalization in businesses is that it leads to unfair payment of wages and salaries. Skilled labour is paid differently in different countries by the same company.Globalization issues in businesses also include the effects on environment due to their expansion. Globalization, if done in the right way, is most profitable for any kind of business. Though all these globalization issues in business will continue to exist, will proper planning, the negative effects can be curbed to some extent.

Profit & non-profit organizationSure. The only difference between a non-profit and a for-profit organization it that a for-profit organization has shareholders that are entitled to a share of the firm's proceeds, while non-profit organizations funds are reinvested into the organization's future activities.In either case, you need a competitive advantage in order to successfully operate your organization and continue to operate into the future.Consider a college or university, which is a well-known example of a non-profit organization. If the school does not have a competitive advantage, or some attractive attributes that will allow it to attract students, it will run out of money and cease to operate.Many non-profit groups also rely heavily on donations as a source of operating funds. Most donors want to know that their donations are going to a group that is going to use them wisely and most effectively. If your NPO is not as effective or efficient as a competing organization, donors will send their money elsewhere.For example, let’s say you have two competing organizations that do pretty much the same thing. Group A has proprietary software system that allows them to automate many of their activities, while Group B relies on employees to do the same thing. Odds are Group A will be much more "profitable", in other words, more of their funds will be available to go to the organization's ultimate cause rather than to administrative costs. If you are a donor, and you could donate to Group A, where you know that 80 cents of every dollar is going to the ultimate cause the group is working for, or Group B where only 50 cents will go to the

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cause, which would you donate to? In this case, the competitive advantage is their proprietary technology, which allows them to be more efficient in deploying their money and hence to attract more donor funding than the competition.

Goals and plansGoals and plans have become general concepts in our society. A goal is a desire future state that the organization attempts to realize. Goals are important because organizations exist for a purpose and goals define and state that purpose. A plan is a blueprint for goal achievement and specifies the necessary resource allocations, schedules, tasks and other actions. Goals specify future ends; plans specify today’s means. The word planning usually incorporates both ideas; it means determining the organization’s goals and defining the means for achieving them.Figure 2 illustrates the level of goals and plans in an organization. The planning process starts with a formal mission that defines the basic purpose of the organization, especially for external audiences. Top managers are typically responsible for establishing strategic goals and plans that reflects a commitment to both organizational efficiency and effectiveness. Tactical goals and plans are the responsibility of middle managers, such as the heads of major divisions or functional units. Operational plans identify the specific procedures or processes needed at lower level of the organization, such as individual departments and employees. Planning at each level supports the other levels.

Strategic or long term plansBroad statement describing where the organization wants to be in the future are called strategic goals. Strategic plans define the action steps by which the company intends to attain strategic goals. The strategic plan is the blueprint that defines the organizational activities and resources allocations in the form of cash, personnel, space and facilities required for meeting these targets, strategic planning tends to be long term and may define organizational action steps from two to five years in the future. The purpose of strategic plans is to turn organizational goals into realities within that time period.Tactical or intermediate plansThe results that major divisions and departments within the organization intend to achieve are defined as tactical goals. Tactical plans are designed to help execute major strategic plans and to accomplish a specific part of the company’s strategy. Tactical plans typically have a shorter time horizon than strategic plans over the next year or so. The word tactical originally comes from the military. In a business organization, tactical plans define what major departments and organizational subunits will do to implement the organization’s strategic plan.Operational or short term planThe specific results expected from departments, work groups and individuals are the operational goals. Operational plans are developed at the lower level of the organization to specify action steps toward achieving operational goals and to support tactical plans. The operational plan is the department manager’s tool for daily and weekly operations. Goals are stated in quantitative terms and the

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department plan describes how goals will be achieved. Operational planning specifies plan for supervisors, department managers and individual employees.Schedules are an important component of operational planning. Schedules define precise time frames for the completion of each operational goal required for the organizations tactical and strategic goals. Operational planning also must be coordinated with the budget, because resources must be allocated for desired activities.

Table 2 : levels of goals/plans and their importance

Significances of planningPlanning is one of the most important functions of management because of the following factors:

1. Makes the objectives clear and specific: planning clearly specifies the objectives and the policies or activities to be performed to achieve these objectives in other words what is to be done and how it is to be done are clarified in planning.

2. Offsetting the uncertainty and change: planning is necessary to look ahead towards future and to take decisions regard facing the expected changes/requirement of the future. E.g. before coming of summer session producers started production for the products to be used in summer.

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STRATEGIC

GOALS/PLANSSENIOR

MANAGEMENT(ORGANIZATION

AS A

WHOLE)

TACTICALS

GOALS/PLANMIDDLE

MANAGEMENT(MAJOR

DIVISIONS,

FUNCTIONS)

OPERATIONAL

GOALS/PLANSLOWER

MANGEMENT(DEPARTMENTS,

INDIVIDUALS)

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3. Plans facilitate decision-making: to achieve the objective predetermined under planning, business has to take various decisions by considering the available resources. If job may be completed by using various alternatives (e.g. manually or by machines) and the best alternative is decided by the management, which is more helpful in achieving the objective.

4. Provides basis of control: under controlling actual performance is compared with the planed performance (target/objective). So planning is the base of controlling process.

5. Leads to economy and efficiency: planning clarifies the work and its method of doing. Resultantly it reduces confusion and wastage of resources in the form of thinking at the time of doing. So efficiency of the worker will rose which will further result economy in production.

6. Facilitates integration: under planning proper directions as per plane are provided to the subordinates. Resultantly they all make effort towards the achievement of pre-planned objective. Such co-ordination of sub-ordinates and their departments will certainly help the organisation in achieving its objective.

7. Encourages innovation and creativity: planning is the process of thinking in advance and so plans are made to achieve a target at future date by using latest methods and technology to perform the industrial/business activities and so plans lead to innovation.

8. Facilitates control: planning facilitates the managers in performing their function of control. Planning and control are inseparable in the sense that unplanned action cannot be controlled because control involves keeping activities on the predetermined course by rectifying deviations from plans. Planning facilitates control by furnishing standards of control. It lays down objectives and standards of performance, which are essential for the performance of control function.

9. Improves motivation: the effective planning system ensures participation of all managers, which improves their motivation. It improves the motivation of workers also because they know clearly what is expected of them. Moreover, planning also serves as a good training device for future managers.

10. Improves competitive strength: effective planning gives a competitive edge to the enterprise over other enterprises that do not have planning or have ineffective planning. This is because planning may involve expansion of capacity, changes in work methods, changes in quality, anticipation of tastes and fashion of people and technological changes, etc.

11. Encourages innovation and creativity: planning helps innovative and creative thinking among the managers because many new ideas come to the mind of a manager when he is planning. It creates a forward-looking attitude among the managers.

12. Achieves better coordination: planning secures unity of direction towards the organisational objectives. All the activities are directed

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towards the common goals. There is an integrated effort throughout the enterprise. It will also help in avoiding duplication of efforts. Thus, there will be better coordination in the organisation.

Limitation of planningPlanning is an important function of management. However, the planning may fail if the following limitations.

1. Lack of accuracy: planning relates to future and future is always uncertain and so prediction about future is so much difficult. Moreover planning are based on data/information relating to past and as such planning based on any wrong information may not be useful to the organisation.

2. Costs: formulation of plans involves too much cost which are in the form of time spend, money spent etc. but sometimes there is little benefit from in plan and then it becomes a burden for the institution. If the plan is not useful than the amount or time spent on its formulation is a waste.

3. Advance effect on decisions: some plans are rigid and a manager faces difficulty while making any changes where as there may be continuous change in environment where as the quick decision is required as per the changed environment.

4. Delay in actions: planning requires some time for thinking, analyzing the situation and designing the final plan and so in case emergency decision is required it will take time and business will lose its opportunity. Moreover delay in decision will further delay the action.

5. Psychological barrier: people in organisation have to work strictly according to plan where as they may be able to give better performance in a way decided by themselves. Secondly they do not think beside the plan and performs their activities like a machine without using their psychology.

6. Limited flexibility: there may be some changes in planning only up to some extent because measure changes in plan will further attract the changes in supporting plans also and as such the whole system is disturbed moreover changes in plans time and again will prove a wastage of time and money spent on previous plan (pre-changed plan).

7. Human elements: planning are the results of thinking of human being. Information on the basis of which plan is formulated may not be free from bias or there may be some other errors which will further Reebok (problem) the better plan.

8. Limited practical value: planning is too much theoretical and have a less practical use planning is more suitable when environment is suitable but due to unsuitability of environment business has to take various quick steps/decision time and again and as such the importance of other resources which are used according to changing environment, is more than that of planning.

9. Improper plan: planning/target set at the lower side than the capability of or resources and target on over side than the capacity of the resources both is termed as improper planning because lower target will be easily

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achieved and we will feel false sense of security. On the other hand over planned target beyond resources cannot be achieved even all effort both are the situation of improper plan.

10. Planning is a time-consuming and costly process: this may delay action if certain cases. But it is also true that, if sufficient time is not given to the planning process, the plans so produced may prove to be unrealistic. Similarly, planning involves costs of gathering and analyzing information and evaluation of various alternatives. If the management is not willing to spend on planning, the result may not be good.

11. Planning is a forward-looking process: the planner must possess the required initiative. He should be an active planner and should take adequate follow up measures to see that plans are understood and implemented properly.

12. Resistance to change is another important factor, which puts limits on planning: It is commonly experienced phenomenon in many organisations. Sometimes, planners themselves do like change and on other occasion, they do not think it desirable to bring change, as it will create resistance on the part of the workers. This attitude makes the planning process ineffective.

13. Internal inflexibility in the organisation may compel the planners to make rigid plans: this may deter the managers from taking initiative and doing innovative thinking. So, the planners must have sufficient discretion and flexibility in the enterprise. They should not always be required to follow the procedures rigidly.

14. Psychological factors also limit the scope of planning: some people consider present as more important than future because present is less uncertain. Such persons are psychologically opposed to planning. But it should not be forgotten that dynamic managers always look ahead. Long-term well being of the enterprise cannot be achieved unless proper planning is done for future.

15. The effectiveness of planning is sometimes limited: because of external factors, which are beyond the control of the planners. External stringencies are very difficult to predict. Sudden breakouts of war, government controls, natural havocs and may other factors are beyond the control of management. They make the execution of plans very difficult.

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