Management theory

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Taimur Ali Tiwana

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Management has been around since the dawn of civilization. In primitive societies everyone had to do labour. When we read that Pharaoh built the Pyramids, we know that in fact other people did that actual work, as these labourers cut, moved, and placed the stones. The first managers were to tell them what to do, to see what they did it, and to chastise those whose performance was unsatisfactory. Another example of Management in the ancient times is the Great Wall of China.

Management is vital in every type of organization. The duty of a manager is to set high standards by intelligently and efficiently leading its organization by adapting to new ways as required by the society. The 1st century has seen new types of organizations and new ways of doing business arise, so, too will there be new management trends, ideas, and techniques.

In the last three decades a large number of management theories and concepts were presented but the primary challenge to the previous bureaucratic management theories came from the successful Japanese business culture, which sent shockwaves through Western business thinking in the 170's.

An organization may have more than one manager who have special concerns that may be at the highest and the lowest level and set long term goals and sometimes are involved in the day to day activity of the business. Managers try to accomplish their objectives in the shortest period of time and in an organized manner. They have to make instant decisions and inability to cope with change in result in disastrous consequences including not only financial loss but also the loss of organizational reputation. Wise managers having acumen apply the best current thinking and strategy.

Organizations in today's global environment operate dynamically. Introduction of sophisticated new economies, technological advancements and competition from emerging nations, all contribute significantly in making most organizations unstable and volatile. For organizations to continue keeping that upper hand in the market and maintain their stability, they need to manage change and be innovate. External environment outside organizational boundaries influence how the organization operates and how and what it produces, consequently it plays a major role in shaping manager's actions.

Due to the increasing rate at which the change in the environment is occurring the managers are not sure about the outcomes of their decisions, as the outcomes of changes are hard to identify. Managers are held responsible for the slow down and the speed up of the business as they are the strategy makers and it is his or her responsibility to get much better work for the working staff and to take care of the assets and possessions of the organization.

Technological, Economic, and Socio-culture are significantly changing the way management is conducted these days and are the powerful levers for influencing the field of management to take it to a new and higher level.

Technological effects

The speed at which improvements in technology have occurred is increasing at an ever-expanding rate. Its effect on management is reduction in costs of doing business and saving valuable time.

Over 100 years ago standard for general merchandise marketing for managers was through catalogs, but during this 100 years technology has completely changed the way management is conducted. Technology has affected managers in every field and has reduced the cost of input. With new technologies managers find new ways to transfer resources into a product or service, using new materials, new methods, machines and techniques. Technology helps produce cheaper, faster and better and in a way helps companies to prosper.

Technological dimensions are the methods available for converting resources into products or services, which includes improved information technology and more efficient operating systems. Managers study the impact of technology in practice and are the basis for improvements in its application and help to improve the strategic effects of investment in technology.

Today managers have found new ways of communicating through telephone, fax, Emails, SMS, web-collaboration, Document Management, IP Telephony, e-business systems and through many other means. Internet has facilitated managers today with much greater access to the information, who now can sort and process information faster and is able to communicate with others without any difficulty. They can connect their computers and telecommunication devices into an integrated system. For example a manager of a stock exchange company will have up to second information about his company which definitely will help him make his job easier and well-organized. Computers have revolutionized the way management is done these days. Hardware devices like Disk Drives, which stores large amounts of Data are commonly used and eliminate the hassle of bookkeeping and manual record keeping as it is easier to capture, manipulate, store, and share information. Devices like Scanners, Video Input Devices and computer programmes like AutoCAD, Microsoft word, Microsoft Excel and other managerial tools have taken management to a new level and have changed the way business is managed. The use of Mobile phone has connected every personnel of an organization anywhere they are. Electronic communication systems reduce the effect of distance and allow one-way conversation when the planned recipient is not available.

Managers must have up to date and latest information about the domestic and international market to cope with technological changes as failure to do so may wipe out certain organizations from the marketplace. They must use the proper work techniques and latest means to get their job done effectively.

"Applications of computer and communications technology have revolutionized the way most business professionals work and play essential roles in the way businesses compete. The personal impacts starts with the personal productivity tools such as word processors and spreadsheets that have become essential for everyday office work. Communication tools such as voice mail, electronic mail, cellular telephones, and pagers have made communication so much more immediate that people in fast-moving firms sometimes feel overwhelmed with the amount of communication they receive."

(Alter,S. 1,rd edition, Information Systems, a management perspective,p.6).

Technology helps produce cheaper, faster and better and assists companies to prosper, but due to technological changes some managers are faced with many implications to their IT decisions that the managers of yesterday were not involved in. As Technology improves at an ever faster rate and the market drives prices lower, power higher and Technology as a whole further, managers are forced with increasingly more difficult decisions as technological innovations effects are unforeseeable. A company's strategic and secret information stored in the computers can be hacked by its rivals or can be used by the unauthorised personnel in an illicit way. Data error can also create a panic in an organization. Combating these difficulties can be made more manageable, and accomplished by being aware of the implications and being abreast of the technology available at any given time.

Managers face serious competitive challenges due to the rapid rate and unpredictability of technological advances. Managers have to be innovative with their ideas and decisions in order to keep floating in the market. So Companies that survive and prosper are those whose management is able to guide the process of change so that the organization makes the necessary adaptations in the face of altering conditions of technological improvements. So managers try to satisfy the customer groups it is targeting, by technologies it use and the functions it performs in serving the target market.

Economics affects

Economic changes have played a major part in shaping current management practices and are significantly changing the way management is being conducted. Economy is the financial strength of a country. Managers always keep in mind the economy of the region where they are operating business and set the price of their products accordingly. Many firms engage in price discrimination when selling their products and in a way maximize their profits. They charge more prices from the buyers who can afford the product at a high price and low price for their customers who cannot buy it at higher price. For example fast food giant McDonalds realise price discrimination by charging relatively low in low economy countries like Afghanistan and charging more in the more developed countries like North America and Europe. In this way firms increase their sales and revenues with the expense of slightly high marginal cost for the extra units sold.

Recession, unemployment rate, rate of investment, deregulation of the banking industry, rapid rise and fall of oil prices, variations in the inflation rate, floating exchange rates are some of the economic factors. Consumer buying power in the country where the economy is low and people are on low income cannot afford to buy luxurious products and it would not be sensible to offer such a product in large quantities in that region for a firm. For example a luxury car making company like Mercedes or BMW would probably not yield any profit if it starts making cars in some low economy country. The fundamental task of management is to mediate in establishing good relationship between economic environment and the organization and how these economic factors could affect the company's long and short-term goals. In order to hold a competitive edge in the marketplace, managers must be aware of the economic transitions at the national level and as well as globally. They must have correct strategies to cope with the changing conditions of the economy of the country to keep the business going even in a sluggish economy.

"No organization can afford to ignore the effects of global economic and political forces on its activity. The rise of low-cost foreign competitors, the development of new technology that can erode a company's competitive advantage, and the failure to exploit low-cost sources of input abroad can all doom an organization that does not change and adapt to the realities of the global marketplace"

(M.G Jennifer, R.J Gareth, 00,rd edition, "Organizational Behaviour", p.647.)

When inflation takes place in the country the currency depreciates and organizations realise higher costs of input due to the higher salaries they pay to their workers and labourers and increase in prices of the resources uses to make the product as was the case of Brazil during the late 1880s and early 10s.To solve this organizations had to cut down other costs and adjust their operations due to the poor economy of the country.

A decrease in the real wealth of the individuals of a country will result in decreased number of buyers of the product and therefore less demand of the goods the firms make and in turn the firms have to react by cutting on the prices so that they can at least generate the cost price of the product or in some cases firms will sell at below cost in order to avoid a total loss.

The firms should keep in mind the rules and regulations of the country they are operating in, as the government may be imposing restrictions and price ceilings by which the company may be in danger of inflicting losses.

A healthy Economy is absolutely vital for an organization to gain economic profits and to be successful. Managers should be prepared for the unexpected changes in the economic conditions of the country they are operating in if they are to continue running their business successfully.

The incident of 11th September 001 has brought great change in the economic world. Many major companies had to shut down their business and one such popular company was Ansett Australia that went out of business.

So, If Organizations are to survive in the long-term, managers must learn how to create organizational architectures that can be at once, centralized and decentralized, small and large, local and global i.e. ambidextrous.

Managers cannot operate independently and be isolated and must be informed about the global and domestic changes taking place.

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