Principles of Management

Principles and Practices of Management

Dr (Capt) C M Chitale
Dean- Faculty of Management, University of Pune, Pune 411 007

Principles of Management

Principles of Management

Principles of Management

I Introduction to Management II - Planning III Organizing IV Direction V - Staffing VI Controlling VII Coordination VIII- Decision Making

Principles of Management

I. Introduction to Management

Principles of Management

I. Introduction to Management
Agenda
1. Introduction a. Business b. Organization c. Administration d. Management Why Management? Objectives, Efficiency and Effectiveness Different Roles of Manager Survival of Organization Internal and External Environment Management Whether Science or Art? Different Approaches to Management Evolution of Management thought Contribution of Henry Fayol and F. W. Taylor Different Functions of Management
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2. 3. 4. 5.
6. 7. 8.

Principles of Management

I. Introduction to Management
1. Introduction
a. Business
Business may be identified as any activity which leads to the creation of utilities of goods and services for the satisfaction of human wants in return for a price.

b.

Organization
C.H. Nothcott has applied the term organization to arrangements by which tasks are assigned to men and women so that their individual efforts contribute effectively to some more or less clearly defined purpose for which they have been brought together.

Principles of Management

I. Introduction to Management
1. Introduction
c. Administration
Administration is fundamentally the direction of business affairs - 3 main Elements:
I. Formulation of goals II. The choice of ways & means to achieve these goals III. The direction of the people in some group purpose

Principles of Management

I. Introduction to Management
1. Introduction
d. Management
8 Ms of management
I. Men II. Money III. Material IV. Machines V. Methods VI. Markets VII. Milieu VIII. Minutes

Principles of Management

I. Introduction to Management
1. Introduction
d. Management
Is an artful science Direction of people towards predetermined goal Accomplishment, of the desired objectives by establishing an environment favorable to performance by people operating in the organized groups A multipurpose organ, manages a business, manages managers and manages workers & work Is a process of getting things through the people for the successful accomplishment of the organizational goals Is always the art of the possible, art of the acceptable and art of the fruitful

Principles of Management

I. Introduction to Management
1. Introduction
d. Management
Definitions
Dr. William R Spriegel: Management is an executive function which is primarily concerned with carrying out of the broad policies laid down by the administration; it is that function of an enterprise which concerns itself with the direction & control of the various activities to attain the business objectives. S George: Management consists of getting things done through others. Manager is one who accomplishes the objectives by directing the effort of others.

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Principles of Management

I. Introduction to Management
2.

Why Management? Objectives, Efficiency and Effectiveness

Why Management?
A Manager is
One who can step on your toes without damaging your shine One who can bring about an excellent, compromise between the individual objective and organizational objectives of a worker One who can get extra-ordinary work from an ordinary worker

Objectives
To make profit, the logical and publicly desirable aim of the management should be a surplus.

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Principles of Management

I. Introduction to Management
Survival of Organization Internal and External Environment
The General Environment consists of all conditions in external environment that form a background context for managerial decision making. Typical external environmental issues include:
Economic Conditions Social Cultural Conditions Legal Technological Conditions Natural Environment conditions Ethical

Growth and Development is the strategy for Survival

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Principles of Management

I. Introduction to Management
2.

Why Management? Objectives, Efficiency and Effectiveness

Objectives
In search of excellence Thomas J. Peters & Robert H.Waterman identified the following 8 attributes of successful firms.
i. ii. iii. iv. Were oriented toward action Learned about the need of their customers Promoted managerial autonomy and entrepreneurship Achieved productivity by paying close attention to the needs of their people v. Were driven by a company philosophy often based on the values of their leaders vi. Focused on the business they knew best vii. Had a simple organization structure with a lean staff viii. Were centralized as well as decentralized, depending on appropriateness.
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Principles of Management

I. Introduction to Management
2.

Why Management? Objectives, Efficiency and Effectiveness

Efficiency and Effectiveness
Efficiency is doing things right, Ability to do things right. Effectiveness is doing the right things, setting right job.

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Principles of Management

I. Introduction to Management
2.

Why Management? Objectives, Efficiency and Effectiveness

Efficiency and Effectiveness
Managerial effectiveness:
Information Functional Information Organizational Information Environmental Information Skills Functional skills Interpersonal Skills Vision Insight: The understanding of how is his job contributes to the objectives of his organization Foresight: How the job is likely to develop in future
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Principles of Management

I. Introduction to Management
3.

Different Roles of a Manager (by Mintzberg)

Interpersonal Roles
The figurehead role (performing ceremonial and social duties as the organizations representative) The leader role The liaison role (particularly with outsiders)

Informational Roles
The recipient role (receiving information about the operation of an enterprise) The disseminator role (passing information to subordinates) The spokesperson role (transmitting information to those outside the organization)

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Principles of Management

I. Introduction to Management
3.

Different Roles of a manager

Decision roles
The entrepreneurial role The disturbance-handler role The resource-allocator role The negotiator role (dealing with various persons and groups of persons)

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Principles of Management

I. Introduction to Management
4.

Management Whether Science or Art? Different Approaches to Management

Managing: Science or Art Three important characteristics of science:
It is an systematized body of knowledge & uses scientific methods for observation Its principles are evolved on the basis of continued observation & experiment Its principles are exact and have universal applicability without any information.

What is Art?
Art refers to the way of doing specific things It indicates how an objective is to be achieved It is know-how to accomplish a desired concrete results Getting the things done
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Principles of Management

I. Introduction to Management
5.

Management Whether Science or Art? Different Approaches to Management

Elements of Science
Science is organized knowledge. Scientific approach first requires clear concepts words and terms that are exact, relevant to the things being analyzed & informative to the scientists & practitioner alike. Theory is a systematic grouping of interdependent concepts and principles which give a framework to or tie together, a significant area of knowledge Principles in management, like those in the physical sciences, are descriptive or productive and not prescriptive.

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Principles of Management

I. Introduction to Management
5.

Management Whether Science or Art? Different Approaches to Management

Different Approaches to Management

* For figure refer page 19

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Par

Principles of Management

Different Approaches to Management

Classical School (People are Rational)

Scientific Mgt School Babbage Charles F W Taylor Gilbreths Grantt Henry

Organisational School Fayol Henri Weber Max Mooney & Reilly Chester Barnard Herbert Simon

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Principles of Management

I. Introduction to Management
Contribution by F.W. Taylor
F.W. Taylor is generally acknowledged as Father of Scientific Management. Principal concern
increasing efficiency in production, not only to lower costs & raise profits, but, also to make possible increased pay for workers through their higher productivity.

The fundamental principles underlying the scientific approach to managing (according to F.W. Taylor)
Applying rules of thumb with science (organized knowledge) Obtaining harmony in group action, rather than disorder. Achieving Cooperation of human beings, rather than chaotic individualism Working for maximum outputs, rather than restricted output. Developing all workers to the fullest extent possible for their own and their companys highest prosperity.
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Principles of Management

I. Introduction to Management
Contribution by Henry Fayol
14 Principles and Management teaching by Henry Fayol
i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii. xiv. Division of work Authority & Responsibility Discipline Unity of command Unity of Direction Subordination of Individual interest to general interest Remuneration of personnel Centralization Scalar Chain Order A place for everything & everything in its place Equity is a combination of kindliness & Justice Stability of tenure of personnel Initiative Espirit de Corps
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Principles of Management

Different Approaches to Management

Behavioural School

(People are Social and Self-Actualizing)

Robert Owen Hugo Munsterberg Elton Mayo Mary Parker Follett Abraham Maslow Douglas McGregor

Chris Argyris

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Principles of Management

Different Approaches to Management

Quantitative School

(People can use applied mathematics )

Management Science Operations Management Management Information System

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Principles of Management

I. Introduction to Management
Quantitative School Characterized by:
1. Primary Focus on Decision Making The end result of problem analysis will include direct implications for managerial action. 2. Based on Economic Decision Theory Final actions are chosen on such criteria as costs, revenues, and rates of return on investment. 3. Use of Formal Mathematical Models Possible solutions to problems are specified as mathematical equations and then analyzed according to mathematical rules and formulas. 4. Frequent Use of Computers Heavy reliance is placed on computers and their advanced processing capabilities (Schermerhorn, 1989)
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Principles of Management

I. Introduction to Management
Quantitative School Management Science
Applies Mathematical Analysis to decision Making Application of quantitative methods to the organizational tasks of production and operations control Management Information Systems (MIS) are integrated programs for the collection, analysis and dissemination of information to support management decision making.

Operations Management

Management Information Systems

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Principles of Management

Different Approaches to Management

Integration School

(There is no one best way to Manage)

Contingency Theory System Theory

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Principles of Management

I. Introduction to Management
Evoluation of Management thought
Integration School
Contingency Theory
Contingency theory is based on the notion that the proper management technique in a given situation depends upon the nature and conditions of that situation.

Systems Theory
A system may be defined as a goal-oriented organism that is composed of parts interrelated in such a way that the total system is greater than the sum of its parts. For any organism, the number one objective is survival.

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Principles of Management

Different Approaches to Management

Contemporary School

(People are Complex)

Global Theory Z McKinsey 7 S Excellence Quality/ Productivity

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Principles of Management

I. Introduction to Management
Contemporary School
Theory Z

Ouchi and Jaeger (1978) studied Japanese and American management practices and classified them under three headings Type J forms which use typical Japanese Management practices Type A firms which use typical American management techniques Type Z firms which are those highly successful American firms that use many of the Japanese management practices.

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Principles of Management

I. Introduction to Management
Contemporary School
Mc Kinsey 7s Factors
Strategy, or the plans that determine the allocation of an organizations scarce resources and commit the organization to a specified course of action Structure, or the design of the organization that determines the number of levels in its hierarchy and the location of the organizations authority Systems, or the organizational processes and proceduralized reports and routines Staff, or the key human resource groups within an organization, described demographically. Style or the manner in which managers behave in pursuit of organizational goals. Skills, or distinct abilities of the organizations personnel Superordinate goals (shared values), or the significant meanings or guiding concepts that an organization instils in its members (Pascale and Athos, 19 81).

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Principles of Management

I. Introduction to Management
Different Functions of Management
a. b. c. d. e. f. Planning, Organizing, Staffing, Leading, Controlling Coordination

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Principles of Management

I. Introduction to Management
What have we covered:
1. Introduction a. Business b. Organization c. Administration d. Management Why Management? Objectives, Efficiency and Effectiveness Different Roles of Manager Survival of Organization Internal and External Environment Management Whether Science or Art? Different Approaches to Management Evolution of Management thought Contribution of Henry Fayol and F. W. Taylor Different Functions of Management
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2. 3. 4. 5.
6. 7. 8.

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II. Planning

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Principles of Management

II. Planning
1.

What is Planning?
Planning involves selecting from among alternative future courses of action for the enterprise as a whole and for every department or section within it.
Planning bridges the gap between from where we are to where we want to go. Planning is an intellectually demanding process

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Principles of Management

II. Planning
2.

Steps of Planning
Being Aware of opportunity Setting Objectives or goals Considering planning premises Identifying alternatives Comparing Alternatives in light of goals sought Choosing an Alternative Formulating supporting plans Numberizing plans by making Budgets

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Principles of Management

II. Planning
3. The Hierarchy of Plans

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II. Planning
Vision

Mission

Involves thinking strategically about

Firms future business plans Where to go

Tasks include

Creating a roadmap of the future Deciding future business position to stake out Providing long-term direction Giving firm a strong identity

Defines current business activities Highlights boundaries of current business Conveys

Who we are, What we do, and Where we are now

Company specific, not generic so as to give a company its own identity

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III. Organizing

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III. Organizing
1.

Formal & Informal Organization, Forms of Departmentation

Organizing is defined as the management function of assigning duties, grouping tasks, establishing authority, & Allocating resources to carry out a specific plan.
Formal Organization: means the Intentional structure of roles in a formally organized enterprise Informal Organization: A network of personal and social relations not established or required by the formal organization but arising spontaneously as people associate with one another

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Principles of Management

III. Organizing
1.

Formal & Informal Organization, Forms of Departmentation

Forms of Departmentation:
i. ii. iii. iv. v. vi. vii. Function Product or Service Territory Customer Processes Project Matrix

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Principles of Management

III. Organizing
2. Line and staff organization, Authority, Responsibility, Accountability, Power, Centralization and Decentralization, Delegation of Authority
Line and Staff Organization
The line organization refers to those departments which are held directly responsible for accomplishing the major activities of the organization. Staff departments refer to those that are not directly involved in the mainstream activity of the organization or department.
It is the right to give orders and power to exact obedience

Authority

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Principles of Management

III. Organizing
2. Line and staff organization, Authority, Responsibility, Accountability, Power, Centralization and Decentralization, Delegation of Authority
Responsibility & Accountability
Responsibility refers to the obligation that is created when an employee accepts a managers authority to delegate tasks or assignments. Accountability refers to the fact that employee will be judged by the extent to which they have fulfilled their responsibilities (Both cannot be delegated). Power is used in terms of ability or capacity to do something or to get intended results. Power is ability to exert influences in the organization
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Power

Principles of Management

III. Organizing
2. Line and staff organization, Authority, Responsibility, Accountability, Power, Centralization and Decentralization, Delegation of Authority
Centralization and Decentralization

Centralization refers to concentrating the power and authority near the top, or in the head of an organization. Decentralization is dispersing the power and decision making to successively lower levels of organization.

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Principles of Management

III. Organizing
2. Line and staff organization, Authority, Responsibility, Accountability, Power, Centralization and Decentralization, Delegation of Authority
Comparison between Delegation and Decentralization
Delegation is a process while decentralization is the end result of a deliberate policy of making delegation widespread in the organization. Delegation is between superior & Subordinate while decentralization is company wide. Delegation is between top management and departments or divisions of the organization In delegation, the delegator exercises supervision and control over the delegatees, while in decentralization, top management exercises broad & minimum control.
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IV. Direction

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Principles of Management

IV. Direction
1. Communicating
Definition of communication: Communication as a transfer of information from the sender to the receiver with the information being understood by both the sender and the receiver Koontz / ODonnel. Communication is a perception Communication is expectation Communication makes demands and Communication and information though different are largely interdependent

Four fundamentals of communication

i. ii. iii. iv.

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Principles of Management

IV. Direction
Five Factors contributing towards successful communication
Source Message Channel Receiver A destination or a goal

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Principles of Management

IV. Direction
Model of Communication

Feedback

Thought Sender

Encoding

Transmission of Message

Reception

Decoding Receiver

Understanding

Noise
A Communication Process Model

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Principles of Management

IV. Direction
Barriers of Effective Communication
Barriers
Lack of planning Un-clarified Assumptions Semantic Distortion Poorly expressed messages Loss in Transmission or poor retention Poor listening & premature evaluation Impersonal communication Distrust, Threat or Fear Insufficient period for adjustment to change Information overload.

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Principles of Management

IV. Direction
2. Leading
Definition of Leadership
Leadership is the process of Influencing and supporting others to work enthusiastically toward achieving objectives Leadership is the catalyst that transforms potential into reality

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IV. Direction
Leading Leadership Traits

Stogdills Trait factors

Intelligence & Scholarship: Physical traits, Personality, Social Status & Experience, Task Orientation

Ghisellis personnel traits

Very Important : Decisiveness , Intellectual capacity, Job achievement, orientation , self-actualization feelings, Selfconfidence, Management Ability-team builder
Moderately Important: Affinity for working classes drive & Initiative, need for a lot of money, need for job security, personal maturity Almost No importance Masculinity Vs. Femininity
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Principles of Management

IV. Direction
Leadership Continuum

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Principles of Management

IV. Direction
Leading Autocratic verses Democratic Leader

Autocrat & Democrat Leader

Autocratic Democratic This type of leadership centralizes managerial authority. The leaders decisions are taken after consultation with his followers and after their participation in the decision-making process. He involves the members of his group in the decisions on the feasibility and workability of an idea, or a job and its content, and on the extent and the content of the problems that affect them. He believes that their co-operation in the attainment of organizational goals can be enlisted only if they are committed to the organization, and that commitment can be ensured only by an honest and open communication of ideas with them and by the development of a team spirit. 56

An autocratic leader is work- centered or leader-centered. He concentrates all the authority and all the decision- making powers in himself. He structures the complete work situation for his employees. There is no process; they simply do what they are told to do. He tolerates no deviation from the orders. His subordinates fully depend upon him and are unaware of the goals of the organization. The leader takes and assumes full responsibility for decision making, for initiating action, and for directing, motivating and controlling his subordinates.

Principles of Management

IV. Direction
Leading The Managerial Grid

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Principles of Management

IV. Direction
Leading Hersey & Blanchard's Situational Leadership

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Principles of Management

IV. Direction
3. Motivation
The Need Want Satisfaction Chain

Needs

Give rise to

Wants

Which cause

Tensions

Which give rise to

Actions

Which result in

Satisfaction

Need want satisfaction Chain

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Principles of Management

IV. Direction
Motivation
Motivation
Differences between motivation and satisfaction

Motivation

Results

Satisfaction DIFFERENCES BETWEEN MOTIVATION AND SATISFACTION

Motivation is the drive to satisfy a want (achieve an outcome); satisfaction is experienced when the outcome has been achieved.
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Principles of Management

IV. Direction
Maslows - The Hierarchy of Needs Theory

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IV. Direction
The Hertzbergs Model

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IV. Direction
Maslows Theory Vs Herzbergs Theory

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IV. Direction
Employee Moral and Satisfaction
Morale is a feeling on the part of the employee , of being accepted & belonging to a group of employees, through adherence to common goals & confidence in the desirability to those goals

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V. Staffing

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Principles of Management

V. Staffing
1. Staffing Definition of Staffing: Staffing is defined as filling positions in the organization structure through identifying work-force requirements, inventorying the people available, recruitment, selection, placement, promotion, appraisal, compensation, and training of needed people.

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Principles of Management

Staffing
Job Analysis is the systematic study of job requirements and the factors that influence the performance of those job requirements. This is the first step in the staffing process and is designed to identified who is to do what, where, when, and how.

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Principles of Management

Staffing
According to McCormick(1976) job analysis usually concentrates on : 1.Work Activities 2. Performance Standards 3. Job-related Tangibles and Intangibles 4. Job Context 5. Personal Requirements

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Principles of Management

Staffing
The objective of Human Resource Management process is to attract an effective work force, which requires four basic activities: 1. To identify human resource needs by monitoring growth, retirements, and terminations. 2. Recruitment activities. 3. Selection process. 4. Orientation of new employees.

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Principles of Management

Staffing
Forecasting HR Supply and Demand Recruitment and Selection Orientation / Induction Training and Development Replacement Performance Appraisal Compensation and Benefits

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Principles of Management

Staffing
Four Cs Model for Human Resource Management: 1. Competence 2. Commitment 3. Congruence 4. Cost-effectiveness

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VI. Controlling

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VI. Controlling

The Control functions essentially insures that planned performance is achieved with a minimum of disorder and disruptions
Types of controlling
Feed forward controls Concurrent (prevention) control Feedback controls

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Principles of Management

Controlling
The Process of Control
i. Establishing Standards: Physical, Technical, Monetary, Managerial, time standards, Qualitative Standards ii. Determining Performance standards iii. Measuring performance: Ways of measuring performance,
a. b. c. d. Observation Reports both oral and written Automatic Methods Inspections, tester samples

iv. Comparing performance with standards and analyzing deviations: Comparison between what is and what should be v. Taking corrective action, if needed

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Controlling
Controlling Key Function Areas
Financial Control: Return on Investment (ROI)
ROI = Sales Investments X Profit Sales

Ratio Analysis (RA)

RA simply involves selecting two or more components of a firms financial statement and expressing their relationship as a percentage ratio

Profit and loss control Budgets

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Principles of Management

Controlling
Controlling Key Function Areas
Inventory Control:
Purposes Establish the maximum and minimum amounts of inventory to have available Keep inventory levels and costs at desired minimum Provide feedback about the movement of inventory and changes in inventory controls Signal management when items reach or fall below the minimum (required) level

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Controlling

Controlling Key Function Areas

Quality Control:
Activities Involved Setting Standards Inspection Statistical techniques Testing

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VII. Coordination

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VII. Coordination
Major task in the organizing process is that of coordination. The activities of different departments/units are required to be linked together to assure the achievement of overall organizational goals and the attainment of synergy. This is done through coordination, or the process of linking the activities of the various departments in the organization.

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Principles of Management

Coordination
The departments in an organization are basically interdependent, as they depend upon one another for the resources that are required to perform their respective tasks. James Thompson(1967) identified three major forms of interdependence: 1. Pooled,

2. Sequential, and
3. Reciprocal.

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Principles of Management

Coordination
Pooled Interdependence: The lowest level of interdependence is called

pooled interdependence. Departments with this low degree of

interdependence tend to operate with little interaction, as the output of each of the units is pooled at the organizational level. Sequential Interdependence: When two departments operate in a state of sequential interdependence, the output of one department becomes the input for the other in a sequential manner. Reciprocal Interdependence: The most complex and interrelated level is

reciprocal interdependence, whereby activities flow both ways for both

departments.

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Principles of Management

Coordination
Characteristics of Good Co-Ordination
Co-Ordination is a continuous process carried on by the managers. Co-ordination should not be made through orders. Co-ordinating activities must respond to time, policies, programs and objectives. Co-ordinating approach should be balanced and as far as possible it should be of both the types vertical as well as horizontal. It should be based on personal contact, mutual co-operation, mutual confidence, good human relations and above all on the continuity principles. It should aim at morale boosting of the workers.

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Principles of Management

Coordination

Principles of Co-ordination
Principle of Early Beginning The success of co-ordinating
activities depends on the beginning itself. If it has started at an early stage it proves fruitful. Planning is the beginning of an enterprise. Coordination should from this very stage start functioning.

Principle of Direct Contact Instead of issuing orders and

instructions it is better and helpful if the co-ordinating parties meet personally and talk over the matter. This helps in mutual understanding and creates mutual confidence

Principle of Reciprocity This helps in co-ordinating the efforts of

each other thus help in establishing an effective and harmonious relation between each other.

Principle of Continuity Co-ordination is a continuous process. It

goes on relentlessly from the very beginning.

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VIII. Decision Making

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Principles of Management

VIII. DECISION MAKING

Decisions and Decision Making A decision may be defined as a choice made from available alternatives. Four decision-making activities: 1. The manager identifies the existence of a problem or an opportunity to

improve a situation.
2. 3. 4. The manager generates a set of alternate courses of action. The manager selects one of the alternatives. The manager implements the selected course of action.

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Principles of Management

Types Of Decisions
Programmed Decisions: are those that are applied to routine situations that have occurred often and for which decision rules and procedures have been developed and used again and again. These rules are recorded as the organizations standard operating manual / procedures (SOM / SOP ) Non-programmed Decisions: are applied to non-routine situations that are new and different from situations experienced in the past. There are no standard methods that appear to be appropriate. So manager must apply judgment, intuition, and creative thinking to the development of alternatives that are compatible with past operating procedures and organizational policy.

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Decision Making Environments

Certainty: A state of certainty exists only when the manager knows the available alternatives as well as the conditions and consequences of

those actions.
Risk: A state of risk exists when the manager is aware of all the alternatives, but is unaware of their consequences. Uncertainty: Most significant decisions made in todays complex environment are formulated under a state of uncertainty, where there is an unawareness of all the alternatives and so also the outcomes even for the known alternatives. Ambiguity: The most difficult decision situation is the state of ambiguity, in which the problem to be resolved or the goals to be reached are not clear.

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Models of Decision Making

Classical Model:
Is a prescriptive approach that is based on critical economic assumptions. Traditional management theory assumed that managers made decisions to serve the economic interests of the organisation.

Administrative Model (Simon, 1987):

This model is a normative approach in that it does not prescribe how decisions should be made, instead it describes how decisions are actually made.

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Principles of Management

When faced with a decision situation, Manager should:

Classical model
Obtain complete and perfect information Eliminate uncertainty Evaluate everything rationally and logically

Administrative model
Use incomplete and imperfect information Are constrained by bounded rationality Tend to satisfy

and end up with a decision that best serves the interests of the organisation

and end up with a decision that may or may not serve the interest of the organisation

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Principles of Management

Administrative Model of Decision Making Simons model is based on two concepts: 1) Bounded rationality infers that decision makers have limits or boundaries on the extent to which they can be rational. The decision makers rationality is limited by inherently individualized beliefs, values, attitudes, education, skills, habits, and unconscious reflexes. It is also limited by the complexity of the organization and its environments as well as the amount of information to be processed and the amount of time and money needed to rationalize the situation. Because of these and other limitations, managers usually satisfice.
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Principles of Management

2) Satisficing infers that the decision maker will tend to select the first solution alternative that satisfies some minimal set of outcome expectations. That is, the manager is not in a position to sort through all the alternatives in search of that single course of action that will maximize the economic returns for the organization. Instead, the manager will probably opt for the first solution that appears to resolve a problem situation, even if better solutions are believed to exist. Limited time and money usually discourage in-depth analysis, especially when an apparently acceptable solution has already been identified.
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The Steps of Rational Decision Making

1) 2) 3) 4) 5) 6) Recognize and Define the Decision Situation Identify Appropriate Alternatives Evaluate Each Alternative Select the Best Alternative Implement the Selected Alternative Evaluate the Results and follow-up

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Behavioural Nature of Decision Making

1) Political Forces and Coalitions One of the major behavioral influences in decision making is the existence of political forces Within the organization, a coalition is defined as an informal alliance among individuals or groups that is designed to achieve some common objective. 2) Intuition Intuition can be defined as an innate belief about something without conscious analysis. 3) Escalation of Commitment Too often, managers make decisions and then become so committed to that course of action, that they continue with it long after it becomes quite obvious that the results are less than successful, or that better alternatives are now available.

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Deciding Who is to Decide Individual Decisions Consultative Decisions Group Decisions

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Quantitative Decision Making Tools Payoff Matrix Payoff Matrix depicts the probable value of each of the decision alternatives, by displaying the various outcomes and the probabilities of their occurrence. Decision Tree Decision Tree is graphic representation of the sequence of decisions required in determining the expected values of alternative courses of action. Queuing Models Queuing Models are used by managers to control various sorts of waiting lines.
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Principles of Management

Quantitative Decision Making Tools Distribution Models Distribution Model helps the marketing manager deal with the problems of product distribution. Inventory Models Inventory Model helps the manager determine how much inventory to maintain. Game Theory Game Theory is a technique for the application of computers to the measurement of outcome under a variety of contingencies.

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