Principles of Management (old course)

1. Education and communication: explain the need and the effects of the change in advance.
2. Participation and involvement: let affected employees take part in planning the change.
3. Facilitation and support: provide training, counselling and emotional support to those who struggle with the change.
4. Negotiation and agreement: offer incentives or concessions to those who would lose out. (Other methods include manipulation and co-optation, and explicit or implicit coercion.)

• CPM: Critical Path Method.
• PERT: Program (or Project) Evaluation and Review Technique.

Both are network-based planning and control tools used to schedule and monitor projects.

Two tools for decision making are:

1. Decision tree: a diagram showing alternatives, chances and outcomes.
2. Payoff matrix (or linear programming, break-even analysis, PERT/CPM, queuing theory).

Tall structure has many levels and a narrow span of management.

            CEO
          /     \
        M1       M2
       /  \     /  \
     S1   S2   S3   S4
    / \  / \  / \  / \
    (many levels, few subordinates per manager)

Flat structure has few levels and a wide span of management.

                  CEO
   /     |     |     |     |     |     \
  E1    E2    E3    E4    E5    E6    E7
 (few levels, many subordinates per manager)

A tall structure gives close supervision but slow communication, while a flat structure gives faster communication and more autonomy but needs wide supervision.

Organizational change is any alteration in an organization's structure, technology, people, tasks or strategy, made to adapt to the internal and external environment and improve performance.

Areas of organizational change

1. Structure: Changes in departments, authority relationships, span of control, job design and reporting levels (e.g. restructuring into a flat or matrix form).
2. Technology: Changes in equipment, work methods, processes and automation (e.g. computerization, new machinery).
3. People: Changes in employees' skills, attitudes, perceptions and behaviour through training, team building and counselling.
4. Tasks (job design): Redesign of jobs, work flow and responsibilities (e.g. job enrichment).
5. Strategy and goals: Changes in the mission, products, markets and objectives.
6. Culture: Changes in the shared values, beliefs and norms of the organization.
7. Physical setting: Layout, facilities and the work environment.

These areas are interrelated, and a change in one area usually requires adjustments in the others, so changes should be planned together.

A network organization is a small core organization that concentrates on its key activities and outsources other functions, such as manufacturing, distribution or accounting, to external specialist firms linked by contracts and information technology. It is flexible, lean and relies on coordination among independent partners rather than on a large hierarchy.

• PERT: Program (Programme) Evaluation and Review Technique
• QC: Quality Control
• PDCA: Plan, Do, Check, Act

Modern managers work in a fast-changing environment. The main emerging issues and challenges are:

1. Globalization: markets, competition and supply chains cross borders, so managers need cross-cultural skills and a global outlook.
2. Technological change: rapid growth of information technology, automation, e-commerce and artificial intelligence forces constant adaptation and reskilling.
3. Workforce diversity: employees differ in age, gender, culture and education, and managers must manage the diversity fairly and use it as a strength.
4. Ethics and social responsibility: stakeholders expect honest, transparent and socially responsible conduct, including environmental protection.
5. Quality and productivity: customers demand high quality at low cost, which requires TQM, innovation and continuous improvement.
6. Knowledge management and learning: organizations must create, share and use knowledge, and build learning organizations.
7. Empowerment and teamwork: flatter structures and team-based work need delegation and participative leadership.
8. Change management: frequent change requires managing resistance and building flexible organizations.
9. Talent attraction and retention: skilled workers are scarce and mobile, so motivation, compensation and work-life balance matter.
10. Political and economic uncertainty: instability, inflation and regulatory change require strategic flexibility.

Managers who anticipate these issues and respond proactively can keep their organizations competitive.

1. Flatter structures and fewer management levels (downsizing and delayering).
2. Team-based and project-based structures.
3. Virtual and network organizations, and outsourcing.
4. Boundaryless organizations and flexible, modular designs.
5. Learning organizations and knowledge management.
6. Empowerment and decentralization.
7. Globalization and diversity of the workforce.
8. Use of information technology and remote work.

According to Robert L. Katz, a successful manager needs three basic skills, and many authors add two more.

1. Technical skill: the ability to use specific knowledge, methods and tools of a field, such as accounting or engineering. It is most important for first-line managers.
2. Human (interpersonal) skill: the ability to work with, understand, motivate and lead people and teams, including communication and conflict handling. It is important at all levels.
3. Conceptual skill: the ability to see the organization as a whole, analyze complex situations and plan for the long term. It is most important for top managers.
4. Diagnostic and analytical skill: the ability to identify the causes of problems and choose the right solution.
5. Communication and decision-making skill: the ability to convey ideas clearly and take timely, sound decisions.

The relative importance of the skills varies by level:

A successful manager develops all of these skills through education, training and experience.

• PDCA: Plan, Do, Check, Act (the Deming cycle)
• PERT: Program (or Project) Evaluation and Review Technique

Modern managers work in a fast-changing, competitive and global setting. The main emerging issues and challenges are:

1. Globalization: Open markets bring foreign competition, cross-border sourcing and cultural diversity. Managers must think and compete globally and manage across cultures.
2. Technology and digitalization: Rapid change in information technology, e-commerce, automation and artificial intelligence demands constant upgrading of systems and skills and raises data security concerns.
3. Workforce diversity: Employees differ in gender, age, ethnicity, religion and background. Managers must build an inclusive environment and use diversity as a strength.
4. Ethics and social responsibility: Stakeholders expect honest, transparent and environmentally responsible conduct, including good governance and sustainability.
5. Quality and productivity: Customers demand better quality at lower cost, so continuous improvement (TQM) is required.
6. Innovation and change: Organizations must innovate and manage resistance to change to survive.
7. Knowledge and talent management: Attracting, developing and retaining skilled knowledge workers, and motivating them, is a major challenge.
8. Environmental and political uncertainty: Economic instability, regulation changes and crises (such as pandemics) make planning difficult.

Managers meet these challenges through flexibility, learning, strategic thinking and strong leadership.

Business environment is the sum of all external and internal forces, factors and institutions that surround a business and affect its decisions, operations and performance. It has an internal part (controllable factors such as employees, finance, culture) and an external part (largely uncontrollable). The external environment is divided into the general (macro) environment and the task (specific) environment.

Components of the general environment

1. Economic environment: Inflation, interest rates, income levels, exchange rates, economic growth, employment and fiscal and monetary policies affect demand, costs and investment.
2. Socio-cultural environment: Values, beliefs, customs, lifestyle, education, population trends and attitudes shape consumer needs and workforce behaviour.
3. Political and legal environment: Government stability, laws on taxation, labour, consumer protection, company regulation and political relations influence what a business can do.
4. Technological environment: New inventions, automation, information technology and R&D change products, processes and competition.
5. Natural (physical) environment: Climate, natural resources, pollution and environmental regulations influence resource availability and sustainability.
6. Global (international) environment: Foreign markets, trade agreements, global competition and international events affect trade and investment.
7. Demographic environment: Size, age, distribution and structure of the population influence markets and the labour force.

Managers must continually scan these factors to identify opportunities and threats and adjust their strategies.

Organization design is the process of structuring an organization to achieve its goals. Changing technology, markets and workforce expectations have created new issues in how organizations are designed.

Emerging issues

1. Flatter structures and delayering: Fewer management levels give faster decisions, lower cost and better communication, but widen spans of control.
2. Network and virtual organizations: Firms link with outside partners and use information technology; a small core manages outsourced activities, giving flexibility but less control.
3. Boundaryless organization: Barriers between departments, levels and with outsiders are reduced to improve cooperation and speed.
4. Team-based structures: Cross-functional and self-managed teams replace rigid departments, increasing creativity and responsiveness.
5. Empowerment and decentralization: Authority is pushed down to employees closest to customers.
6. Learning organization: Structures support continuous learning, knowledge sharing and adaptation.
7. Downsizing and outsourcing: Reducing size and contracting out non-core work cut costs but can harm morale and loyalty.
8. Global and diverse structures: Multinational operations require designs that handle cultural differences and different time zones.
9. Flexible working arrangements: Remote work, flexible hours and gig work are changing the idea of a fixed workplace.
10. Organic over mechanistic design: Dynamic environments favour flexible, loosely structured designs with fewer rules.

Designers must balance flexibility and innovation with coordination, control and employee well-being.

Business environment is the totality of external and internal forces, factors and institutions that surround a business and influence its decisions, operations and performance. The external environment has two parts: the general (macro) environment and the task (specific) environment.

Components of the general environment

1. Economic: Inflation, interest and exchange rates, income, growth and economic policies affect demand and costs.
2. Socio-cultural: Values, customs, lifestyles, education and demographics shape consumer tastes and employee behaviour.
3. Political-legal: Government stability, laws, taxation, labour and consumer regulation set the limits within which business works.
4. Technological: New technology, automation and innovation change products, processes and competition.
5. Natural (ecological): Resources, climate and environmental regulation affect operations and sustainability.
6. Global: International markets, trade agreements and foreign competition affect firms operating across borders.

Managers monitor these factors to find opportunities and threats and to adjust strategy.

According to Robert Katz, managers need the following skills.

1. Technical skill: Knowledge and ability to use specific methods, tools and techniques of a particular field (for example, accounting, engineering). It is most important at lower levels of management.
2. Human (interpersonal) skill: Ability to understand, motivate, communicate with and work with people and teams. It is equally important at all levels.
3. Conceptual skill: Ability to see the organization as a whole, analyse complex situations, think strategically and relate parts to the whole. It is most important at top management.
4. Design (problem-solving) skill: Ability to find practical solutions to problems that benefit the organization (added by Peter Drucker and others).
5. Communication skill: Clear speaking, writing and listening to pass information and instruction.
6. Political and diagnostic skills: Building networks and power, and identifying causes of problems.

The mix changes with level: top managers rely most on conceptual skill, middle managers need a balance of all, and first-line managers rely more on technical skill.

Based on management levels, managers are classified into three groups.

• Top-level managers: chairman, CEO, managing director and general managers. They set overall goals, strategy and policy.
• Middle-level managers: departmental and divisional heads. They carry out top management's plans and coordinate the units below them.
• First-line (supervisory) managers: supervisors and foremen. They direct operating employees in day-to-day work.

The systems view treats an organization as an open system that takes inputs from its environment, transforms them, and returns outputs to the environment, with feedback closing the loop.

 ENVIRONMENT (customers, suppliers, government, competitors, society)
  ┌────────────────────────────────────────────────────────┐
  │                                                        │
  │  INPUTS            TRANSFORMATION            OUTPUTS   │
  │  Human, material -> (management, technology, -> Goods, │
  │  financial,          operations, subsystems)   services,│
  │  information                                   profit  │
  │        ^                                          │    │
  │        └──────────────── FEEDBACK ────────────────┘    │
  └────────────────────────────────────────────────────────┘

Management science (quantitative) theory is made up of three main branches.

• Operations research / management science: mathematical models such as linear programming, queuing, simulation and PERT/CPM for decision problems.
• Operations management: application of quantitative methods to production, inventory and quality control.
• Management information systems (MIS): computer-based systems that give managers timely information for planning and control.

• Strategic plans (long term, organization-wide) belong to top management.
• Tactical or administrative plans (medium term, departmental) belong to middle management.
• Operational plans (short term, day-to-day: schedules, budgets, procedures) belong to first-line management.

Authority is commonly categorized as:

• Line authority: the direct superior-subordinate command relationship.
• Staff authority: the right to advise and support line managers.
• Functional authority: the right of a specialist to direct others in a specific function across departments.

(Authority is also classed as formal and informal, or as legal and acceptance-based.)

A matrix structure combines functional and project (product) departmentation, so that an employee reports to two bosses at once: a functional manager and a project manager.

• Vision and sound judgement
• Integrity and honesty
• Communication skill and the ability to motivate others
• Self-confidence and initiative
• Decisiveness and courage in taking risks

Psychological control means influencing employees' behavior through their attitudes, motives and values rather than through formal rules or rewards. It relies on internalized norms, organizational culture, commitment and self-discipline, so that people regulate themselves and act in line with organizational goals.

By timing, the process of control uses three types.

• Feedforward (pre/steering) control: acts before work begins to prevent problems.
• Concurrent control: monitors and corrects while the work is being done.
• Feedback (post-action) control: compares results after completion and corrects future performance.

• Fear of losing job, status, power or income
• Uncertainty and fear of the unknown
• Habit and comfort with existing ways of working
• Poor communication, or not being involved in the change decision
• Lack of trust in management, or disruption of group relationships and the need to learn new skills

Managerial roles are the sets of organized behaviors and activities that are expected of a manager because of the position held. Henry Mintzberg, from a study of executives, grouped ten roles into three categories.

1. Interpersonal roles (arising from formal authority and status)

• Figurehead: performs ceremonial and symbolic duties such as receiving visitors or signing documents.
• Leader: motivates, staffs, trains and directs subordinates.
• Liaison: builds contacts outside the unit for information and favors.

2. Informational roles (receiving and passing on information)

• Monitor: scans the environment and collects information.
• Disseminator: passes information to subordinates.
• Spokesperson: speaks for the organization to outsiders.

3. Decisional roles (making choices)

• Entrepreneur: initiates change and improvement projects.
• Disturbance handler: deals with crises and unexpected problems.
• Resource allocator: decides who gets money, time and people.
• Negotiator: bargains with unions, suppliers and other groups for the organization.

The roles overlap, and their relative importance varies with the manager's level and function.

Behavioral perspective. This school holds that management is mainly about getting work done through people, so understanding human behavior, motives and group relations is central. It emerged as a reaction to the classical school's mechanical view of workers.

Main contributions

• Hawthorne studies (Elton Mayo): productivity depended on social factors, group norms and attention, not only on physical conditions and pay. This started the human relations movement.
• Motivation theories: Maslow's need hierarchy, Herzberg's two-factor theory, McGregor's Theory X and Y, and Argyris on individual and organizational needs.
• Group dynamics and leadership: the role of informal groups, communication, participation and leadership style (Lewin, Likert).
• Organizational behavior: later systematic study of individual, group and organizational behavior.

Relevance to management

• Managers learn to motivate employees with both financial and non-financial rewards.
• It supports participative management, teamwork and better communication.
• It helps in choosing appropriate leadership styles and in handling conflict and informal groups.
• Satisfied and committed employees raise productivity and lower turnover.

Its limits are that it can neglect technical efficiency, and that its findings do not apply equally to all situations.

Planning premises are the assumptions about the future environment in which a plan will operate. They include forecasts of market demand, prices, technology, government policy, inflation, competitors' actions and the firm's own policies. Premises can be external (uncontrollable) or internal (controllable). They give planners a common base, so that all departments plan on the same assumptions.

Pitfalls of planning

• Uncertainty: the future is hard to predict, and wrong premises make plans useless.
• Rigidity: a plan can reduce flexibility and discourage initiative and creativity.
• Cost and time: planning needs data, expertise and time; the cost may exceed the benefit.
• Lack of commitment: if employees do not take part, or top management does not support the plan, it is not implemented.
• Over-reliance on past data, which may not repeat.
• Resistance to change and fear of failure, which cause delay and paper planning.
• Poor communication of objectives, and objectives that are unclear or unrealistic.
• Environmental changes that make the plan obsolete before it is completed.

Decentralization is the systematic dispersal of decision-making authority to lower levels of management, with top management keeping control of overall policy, strategy and key resources. It is a deliberate policy, unlike delegation to one person.

Advantages

• Quicker decisions: they are made where the problem arises, with no delay in referring up.
• Less burden on top management, who can concentrate on strategy and policy.
• Better decisions: local managers know the actual conditions.
• Motivation and morale: responsibility and autonomy give a sense of achievement and recognition.
• Management development: lower managers gain experience and a supply of future leaders is created.
• Flexibility and adaptability to local environments and customers.
• Better control and performance measurement through divisional profit centers.
• It supports diversification and growth by managing large organizations in smaller units.

Communication is the process of exchanging information, ideas or feelings between a sender and a receiver so that the message is understood by both. It involves sender, encoding, message, channel, decoding, receiver and feedback.

Barriers to effective communication

• Semantic (language) barriers: jargon, ambiguous words, different meanings and translation problems.
• Physical barriers: noise, distance, poor equipment and faulty channels.
• Psychological barriers: prejudice, emotions, inattention, mistrust and differing perception.
• Organizational barriers: many levels in the hierarchy, rigid rules, status differences and poor flow of information.
• Personal barriers: poor listening skills, unwillingness to communicate, lack of confidence in subordinates and fear of superiors.
• Information overload, which makes people ignore or misread messages.
• Cultural barriers: differences in values, customs and habits.
• Lack of feedback, so errors are not detected.

These can be reduced by clear messages, active listening, feedback, good channels and building trust.

Yes, organizational change is a must. An organization is an open system. If it does not adapt to a changing environment and new internal needs, it loses competitiveness and eventually fails. Change is therefore a condition of survival and growth.

Forces that push organizations to change

External forces

• Technological change: new machines, computers and the internet make old methods obsolete.
• Market and competition: changing customer tastes, new competitors and globalization.
• Economic conditions: inflation, recession, interest rates and exchange rates.
• Political and legal changes: new laws, government policy and regulations.
• Social and demographic changes: values, lifestyle, education and workforce composition.

Internal forces

• Changes in strategy or goals and growth in size.
• Problems in structure and process, such as poor communication, low morale and conflicts.
• New workforce expectations and leadership change.
• Poor performance, low productivity, or the need to cut costs.

Management must therefore plan the change, reduce resistance and implement it in a managed way.

(a) Assessment of Nepal Academy from the general management perspective

NA has a clear mission (to grow into a university) and experienced promoters, but its management is weak on all the basic functions.

• Planning: there is no shared plan. The mission is long term, yet Yogesh runs the operation for short-term profit through intermediate programs and coaching classes.
• Organizing: authority and responsibility are violated and roles are unclear. The three executives act without coordination.
• Directing/leading: the leaders are autocratic and do not build a team. Rakesh and Mukesh take decisions first and get board approval later, and tell dissenters to quit.
• Communication: it has broken down, with rare operation-level and board meetings and growing misunderstanding.
• Controlling: there is no mechanism to check performance against the mission, and the principles of management (unity of direction, authority-responsibility, discipline) are ignored.
• Result: conflict, formation of groups, loss of shareholder confidence (65 percent have lodged a complaint) and an unstable future.

(b) Strengths, weaknesses and resolving the misunderstanding

Strengths

• A clear long-term mission and a vision of becoming a university.
• Promoters with a record of seven successful institutions over fifteen years.
• Equal capital from 25 members, a stable investor base and a strong market share at the intermediate level.
• Yogesh's practical focus on cash flow and growth, with low discipline problems.

Weaknesses

• Conflict between long-term and short-term views and no common strategy.
• Autocratic decisions and neglect of the board and minority investors.
• Communication breakdown and rare meetings.
• Group formation and an unhealthy atmosphere.
• Executives take perquisites in addition to the earnings, which creates doubts about fairness.
• Blurred authority and responsibility.

Correcting the misunderstanding. It is possible, because both sides want the success of NA. The three should meet under the chair or an outside facilitator, restate the mission, and agree on a phased plan in which the intermediate and coaching business funds the growth of higher programs. Roles and authority must be redefined in writing, and regular board and operation meetings, with open communication, should be restored.

(c) Factors contributing to the uncongenial environment, and rescue measures

Factors

• Conflicting objectives and no shared strategy.
• Unilateral decisions with after-the-fact approval of the board.
• Threatening statements ("quit with your investment") and Yogesh's proposal to split investors.
• Communication breakdown, with few meetings and violation of authority and responsibility.
• Rival groups among investors and no conflict-resolution mechanism.
• Weak governance and lack of a professional management system.

Rescue measures

• Call the special general meeting early and discuss the problems openly.
• Form a strategic plan that balances short-term revenue and long-term quality, with clear targets.
• Clarify the organization structure, job descriptions and decision rights, and make a policy on executive perquisites.
• Re-establish regular meetings and reporting channels.
• Use a mediator or independent director to resolve conflict, and consider a performance review of the executives.
• Build a team culture with shared rewards, and if the differences remain, plan an orderly exit for dissatisfied members at fair value.

(d) Advice

• To Rakesh and Mukesh: respect the board and minority investors, consult before deciding, accept that financial survival in the short run is also needed, and phase the long-term programs. Do not use threats.
• To Yogesh: accept the institution's mission and raise issues through the board, not by dividing the investors. Use the profit of your programs to build the higher levels.
• To all three: put the institution above personal interest, communicate openly, follow the principles of management, and settle differences through dialogue and a common plan.

The hierarchy of management has three levels.

1. Top management: board of directors, chairman, CEO, managing director.
2. Middle management: departmental and divisional managers.
3. Lower (first-line) management: supervisors, foremen and section officers.

Theory X assumes that:

• The average person dislikes work and avoids it if possible.
• People must be coerced, controlled and threatened with punishment to make them work.
• People avoid responsibility, prefer to be directed and want security above all.

Theory Y assumes that:

• Work is as natural as play or rest, and people can enjoy it.
• People exercise self-direction and self-control when committed to objectives.
• People seek responsibility and have creativity and imagination that is widely distributed.

• Behavior is caused: it is driven by needs, motives and stimuli.
• Behavior is goal-directed: people act to satisfy their needs.
• Individuals differ in perception, personality, attitudes and abilities, so each person behaves differently in the same situation.

• Team-based structure
• Network (virtual) organization
• Boundaryless organization (also modular and learning organizations)

A tall structure has many levels with a narrow span of control; a flat structure has few levels with a wide span.

 TALL (narrow span)              FLAT (wide span)

        [ CEO ]                        [ CEO ]
          |                  ┌───┬───┬───┼───┬───┬───┐
        [ M1 ]              [M] [M] [M] [M] [M] [M] [M]
        /    \
     [M2]    [M2]
     /  \    /  \
   [S]  [S] [S]  [S]
   (many levels, few per boss)   (few levels, many per boss)

• Formal groups: created by the organization (command groups, task groups, committees).
• Informal groups: formed naturally on the basis of friendship or common interest (friendship and interest groups).
• Groups are also classed as primary and secondary, or temporary and permanent.

Managerial roles (Mintzberg). A manager performs ten roles in three groups.

• Interpersonal: figurehead (ceremonial duties), leader (motivating and directing staff), liaison (contacts with outsiders).
• Informational: monitor (collects information), disseminator (passes it on), spokesperson (represents the organization externally).
• Decisional: entrepreneur (starts improvement projects), disturbance handler (deals with crises), resource allocator (distributes resources), negotiator (bargains on behalf of the organization).

Skills required (Robert Katz)

• Technical skill: knowledge of the methods, processes and tools of the specific job. It matters most for first-line managers.
• Human (interpersonal) skill: ability to work with, lead, motivate and communicate with people. It is needed at all levels.
• Conceptual skill: ability to see the organization as a whole, analyze complex situations and plan. It matters most for top managers.
• Diagnostic and analytical skill: finding the cause of problems and choosing the best solution.
• Communication and political skills: building networks and securing support.

The mix changes with level: technical skill is most important at the lower levels and conceptual skill at the top, while human skill is vital at every level.

F.W. Taylor (1856-1915), the "father of scientific management", wanted to raise productivity through scientific methods in place of rule of thumb. His main works are Shop Management and The Principles of Scientific Management (1911).

Contributions

• Science, not rule of thumb: each element of a job is studied scientifically to find the one best way.
• Scientific selection and training of workers for each task.
• Harmony, not discord, between management and workers, with a "mental revolution" on both sides.
• Cooperation, not individualism, and a clear division of work and responsibility between managers (planning) and workers (execution).
• Techniques: time and motion study, standard tools and methods, differential piece-rate wage system, functional foremanship, and the exception principle.
• He showed that productivity and wages could both rise, and laid the base for industrial engineering and later management study.

Criticisms

• It treated workers as machines motivated by money alone, and ignored social and psychological needs.
• It led to job monotony, specialization and exploitation, with fatigue and speeding up.
• Trade unions opposed it as it ignored collective bargaining.
• Functional foremanship violated unity of command and caused confusion.
• It concentrated on the shop floor and neglected administration, marketing and finance.
• It assumed there was only "one best way", which is not true in all situations.

Decision making is the process of choosing the best course of action from the available alternatives to solve a problem or achieve an objective. It is central to all managerial functions.

Steps for making a rational decision

1. Identify and define the problem correctly, separating the symptoms from the real cause.
2. Identify decision criteria and their weights (cost, time, quality, risk, resources).
3. Develop alternatives that could solve the problem.
4. Analyze and evaluate alternatives against the criteria, weighing the advantages, disadvantages and risks of each, using tools such as cost-benefit analysis, break-even analysis or decision trees.
5. Select the best alternative that gives the maximum benefit.
6. Implement the decision, communicating it clearly and getting the commitment of those affected.
7. Follow up and evaluate: compare results with expectations and take corrective action.

A decision is rational when it is based on a clear objective, complete information and logical analysis. In practice managers face bounded rationality (limited information, time and ability), so they often "satisfice". Group participation, good information systems and quantitative tools improve the rationality of decisions.

Functional structure. Activities are grouped by function (production, marketing, finance, HR), each under a functional head who reports to the chief executive.

• Strengths: specialization and economies of scale, clear career paths, simple control, low duplication.
• Weaknesses: poor coordination between departments, a narrow view among specialists, slow response, and difficulty in judging the performance of each product.

Multidivisional (M-form) structure. The organization is split into self-contained divisions based on product, market or geography. Each division has its own functions and a manager responsible for its profit, while headquarters handles overall strategy, finance and control.

• Strengths: focus on products or markets, faster decisions, clear accountability, and top management is freed for strategy.
• Weaknesses: duplication of resources, higher cost, rivalry between divisions, and a loss of economies of scale.

When to recommend which

• Functional structure suits a small or medium firm with a single or few closely related products, a stable environment, and routine operations. Reason: efficiency and specialization matter more than product diversity, and coordination is easy.
• Multidivisional structure suits a large firm with diversified products or markets, widely spread geographic operations, or a fast-changing environment. Reason: top management cannot control everything centrally, and divisions can respond to their own markets and be held accountable for results.

Total Quality Management (TQM) is a management philosophy and approach in which every member of the organization is committed to continuous improvement of the quality of products, services and processes so as to satisfy or exceed customer expectations. Its main elements are customer focus, total employee involvement, continuous improvement (kaizen, PDCA), process orientation, fact-based decisions and strong leadership. Pioneers include Deming, Juran and Crosby.

Emerging issues in quality management

• ISO standards (ISO 9000, 14000) and certification as a market requirement.
• Six Sigma and lean: aiming at near-zero defects, and removing waste.
• Benchmarking against the best in class.
• Quality of services (not just goods) and measuring customer satisfaction.
• Globalization and international competition, which requires world-class quality.
• Supply chain and supplier quality management, including outsourcing.
• Technology and automation: use of IT, data analytics and real-time quality monitoring.
• Employee empowerment and quality culture, training and teamwork (quality circles).
• Environmental and social responsibility, with sustainable quality.
• Cost of quality and the balance between cost and benefits, as well as the criticism that TQM programs often fail from lack of top-management support.

Change management is the planned and systematic process of preparing, implementing and reinforcing changes in an organization (structure, technology, people or processes), while minimizing resistance and disruption, so that the change achieves its objectives.

Barriers to change

• Individual: fear of the unknown and of loss of job, status or income; habit; selective perception; low trust; need to learn new skills.
• Organizational: structural inertia, rigid culture, limited resources, threats to existing power and relationships, and past failed changes.
• Group: group norms and cohesion that oppose change.
• Poor management of change: lack of communication, no participation, weak top-management support and bad timing.

Overcoming the barriers (Kotter and Schlesinger)

• Education and communication: explain the need and the consequences of change.
• Participation and involvement: let those affected help in planning.
• Facilitation and support: training, counselling and time to adjust.
• Negotiation and agreement: offer incentives to those who would lose.
• Manipulation and co-optation: selective use of information, or giving key people a role (to be used carefully).
• Explicit and implicit coercion: a last resort, when speed is essential.

Using Lewin's model of unfreezing, changing and refreezing, together with a clear vision, committed leadership, pilot projects and rewards for the new behavior, helps make the change lasting.

(a) Basic problems in the case

Adroit outgrew its organization: revenue rose from Rs 10 million in 2004 to over Rs 100 million in 2008, and six branches had been opened, but it was still run like a small family firm.

• Absence of clearly defined roles and areas of responsibility.
• People were given jobs on the basis of family relationships and not skills.
• Important decisions were made by a few people who lacked full information (over-centralization).
• No strategic plan; the firm was reactive and not proactive.
• Duplication of effort in some tasks and neglect in others, since everybody assumed someone else was responsible.
• Informal, entrepreneurial style management unsuited to a large firm.

(b) Why the organization planned to change its structure

• The mismatch between the old structure and practices and the needs of a large firm, so that "success had outgrown the organization".
• To move from an entrepreneurial style to a professionally managed firm.
• To define roles and responsibilities and remove overlap and gaps.
• To decentralize day-to-day decisions to branch managers while central office keeps overall direction through planning and control.
• To set a formal and explicit chain of command and reporting channel to the CEO.
• To make the firm proactive through an annual planning process with objectives for each branch.

(c) New organization chart (geographic departmentation)

                    ┌───────────────────────────┐
                    │  Chief Executive Officer  │
                    │      (Central Office)     │
                    └─────────────┬─────────────┘
          Central staff: planning, finance, HR, control
     ┌────────────┬───────────────┼───────────────┬────────────┐
┌────┴─────┐ ┌────┴─────┐   ┌─────┴────┐   ┌──────┴───┐  ┌─────┴────┐
│ Branch 1 │ │ Branch 2 │   │ Branch 3 │   │ Branch 4 │  │ Branch 5 │ ... Branch 6
│Kathmandu │ │Kathmandu │   │Kathmandu │   │ Pokhara  │  │ Pokhara  │
│ Manager  │ │ Manager  │   │ Manager  │   │ Manager  │  │ Manager  │
└────┬─────┘ └────┬─────┘   └────┬─────┘   └────┬─────┘  └────┬─────┘
 Sales staff   Sales staff    Sales staff    Sales staff   Sales staff

(d) Roles of the branch and central offices, and whether the structure can manage the branches

Branch offices

• Run the day-to-day activities of the branch.
• Take part in the annual planning, with objectives set for each branch, and are responsible for achieving those targets.
• Submit progress, financial and sales reports through the chain of command.

Central office

• Gives overall direction through planning and controlling.
• Sets organizational objectives and policies.
• Monitors branch performance against objectives, and provides the common functions and top decisions.
• Maintains the formal job descriptions and reporting system.

Was the new structure able to manage the branches?

Mostly yes. Geographic departmentation gives each branch local authority, so decisions are faster and closer to customers, and the central office can still coordinate through planning, objectives and reports. Defined job descriptions reduce overlap, and the explicit chain of command improves communication and accountability. The structure also trains branch managers.

Some risks remain: the change takes two years or more, over-formal channels can slow information and reduce initiative, there may be duplication of functions across branches, and the benefit depends on skilled branch managers and effective central control. With these managed, the structure suits the firm's growth.

Short-term plans (up to one year) are prepared for routine, day-to-day operating activities such as production schedules, sales targets, purchasing, staffing, cash flow and annual budgets.

Decentralization of authority is the systematic delegation of decision-making power to lower levels of the organization, so that decisions are made close to where the work is done. Top management keeps control over overall policy and strategy.

1. Improves performance: motivated employees put in more effort, raising individual and organizational productivity.
2. Reduces absenteeism and turnover: satisfied, motivated staff stay longer, lowering recruitment and training costs.
3. Helps achieve organizational goals: it aligns personal goals with organizational goals.
4. Builds a positive work climate: it improves morale, cooperation and job satisfaction, and makes change easier to accept.

1. More information and knowledge: a group pools the experience and expertise of many members, so decisions rest on more complete information.
2. More alternatives and better quality: diverse views generate more alternatives and reduce errors through mutual checking.
3. Greater acceptance and commitment: members who take part in a decision are more willing to implement it.

A matrix structure combines functional and project (product) departmentation, so each member reports to two bosses: a functional manager and a project manager.

                         General Manager
                               |
        -----------------------------------------------
        |              |               |              |
   Production       Finance        Marketing        Personnel
   Manager          Manager         Manager          Manager
        |              |               |              |
Project A Manager ---[ staff ]------[ staff ]------[ staff ]
Project B Manager ---[ staff ]------[ staff ]------[ staff ]
Project C Manager ---[ staff ]------[ staff ]------[ staff ]

Functional managers run the vertical lines (specialist departments). Project managers run the horizontal lines (project teams drawn from each function). Each box where a row meets a column is an employee with dual reporting.

Managers make decisions under three conditions:

1. Certainty: the outcome of each alternative is known, so the manager simply picks the best one.
2. Risk: outcomes are not certain but their probabilities can be estimated from past data or experience.
3. Uncertainty: neither the outcomes nor their probabilities are known, so the decision relies on judgement and intuition.

1. Customer focus: quality is defined by the customer, so the organization must understand and exceed customer needs and expectations.
2. Continuous improvement (Kaizen): processes, products and services are improved constantly in small steps.
3. Employee involvement and empowerment: everyone in the organization, not only the quality department, is responsible for quality and takes part in problem solving. (Other principles: process-centred approach, fact-based decisions, and strong leadership commitment.)

Active listening means fully concentrating on a speaker, understanding the message and its feelings, and responding to show that one has understood. The listener gives full attention, avoids interrupting, maintains eye contact, nods, asks clarifying questions and paraphrases the message. It involves the whole person, not just the ears, and it reduces misunderstanding and improves communication effectiveness.

Leader

A leader is a person who influences, guides and inspires others to willingly work towards the achievement of group or organizational goals. A leader may be formally appointed, such as a manager, or may emerge informally from the group.

Qualities of a leader

1. Vision and foresight: the ability to see future opportunities and set a clear direction.
2. Intelligence and knowledge: sound technical and conceptual knowledge, and good judgement.
3. Integrity and honesty: consistent ethical behaviour that earns trust and respect.
4. Self-confidence: belief in one's own ability, which inspires confidence in followers.
5. Communication skills: the ability to explain goals clearly and to listen to followers.
6. Decisiveness: the ability to take timely decisions and accept responsibility for them.
7. Emotional stability and empathy: staying calm under pressure and understanding others' feelings.
8. Motivational ability: the skill of encouraging people and recognizing their efforts.
9. Initiative and drive: a strong urge to achieve and to take action without waiting to be told.
10. Social skills and adaptability: building relationships and adjusting leadership to changing situations.

A leader who combines these qualities can win the willing cooperation of followers and build an effective team.

Motivation is the process of stimulating people to act to accomplish goals. The main techniques are:

1. Financial (monetary) techniques

• Wages, salary and allowances: a fair basic pay meets the basic needs of employees.
• Bonus and profit sharing: a share in profit links reward to company results.
• Incentive plans: piece rate, commission and performance-based pay reward higher output.
• Stock options and fringe benefits: insurance, provident fund, housing and medical benefits build loyalty.

2. Non-financial techniques

• Job enrichment: adding responsibility, variety and autonomy to a job.
• Job enlargement and rotation: widening tasks and moving employees between jobs to reduce monotony.
• Participation and empowerment: involving employees in decisions and delegating authority.
• Recognition and praise: awards, appreciation letters and publicity of achievements.
• Promotion and career development: training and advancement opportunities.
• Good working conditions and job security: safe, comfortable work places and stable employment.
• Management by objectives (MBO): joint goal setting with feedback.
• Quality of work life and flexible hours: improve satisfaction and balance.

3. Application of theories

• Maslow's hierarchy: satisfy unmet needs from physiological up to self-actualization.
• Herzberg's two-factor theory: remove dissatisfiers (hygiene factors) and provide motivators such as achievement and recognition.
• Expectancy theory: make clear that effort leads to performance and performance to valued rewards.

A manager should combine financial and non-financial techniques according to the needs of the employees.

Definition

Controlling is the managerial function of monitoring actual performance, comparing it with planned standards, and taking corrective action to ensure that organizational goals are achieved.

Process of control

1. Establishing standards: set measurable targets for quantity, quality, cost and time, derived from the plans.
2. Measuring actual performance: collect data through reports, observation and audits, at the right frequency.
3. Comparing performance with standards: find the deviations between actual and planned results.
4. Analyzing deviations: decide whether a deviation is significant and find its causes.
5. Taking corrective action: if performance is below standard, correct it by changing methods, training, or reallocating resources. If the standard itself was unrealistic, revise it.

Set standards -> Measure performance -> Compare with standards -> Analyze deviation -> Take corrective action
        ^                                                                                  |
        -----------------------------------feedback---------------------------------------

Control is a continuous cycle and links back to planning.

Nature of organizational change

• Inevitable and continuous: every organization faces change because its environment keeps changing.
• Planned or unplanned: change may be deliberately designed by management or forced by events.
• Affects all parts: changes in structure, technology, people or tasks affect the whole system.
• Needs resources and time: it requires planning, money and effort.
• Causes resistance: people fear loss of status, security or comfort.
• Needs leadership and participation: its success depends on commitment and involvement.
• Aims at adaptation and improvement: the goal is to survive, grow and be more effective.

Forces that bind organizations to change

External forces

1. Technological: new machines, IT and automation.
2. Economic and market: competition, inflation, globalization, changing customer demand.
3. Social and demographic: changes in values, lifestyles, education and workforce composition.
4. Political and legal: new laws, regulations and government policy.

Internal forces

1. Changes in strategy and goals: new products or markets.
2. Employee needs and attitudes: lower morale, higher expectations, turnover.
3. Poor performance or conflict: falling profit, inefficiency and communication problems.
4. Leadership change: new managers often bring new methods.

These forces compel organizations to change or risk decline.

Managers face different kinds of problems and so apply different kinds of decisions.

1. Programmed and non-programmed decisions

• Programmed decisions are routine and repetitive, and handled by rules, policies or procedures, e.g. reordering stock or approving leave.
• Non-programmed decisions are unique, unstructured and need judgement and creativity, e.g. entering a new market or launching a new product.

2. Strategic, tactical and operational decisions

• Strategic: long-term, made by top management, affect the whole organization (diversification, merger).
• Tactical (administrative): medium-term, made by middle managers to implement strategy (budget allocation, staffing).
• Operational: short-term, daily decisions by lower managers (work schedules, routine supervision).

3. Individual and group decisions

• Individual decisions are made by one manager and are fast and clear in responsibility.
• Group decisions are made by committees or teams, giving more ideas and acceptance but taking more time.

4. Organizational and personal decisions

• Organizational decisions are made in an official capacity and can be delegated.
• Personal decisions concern the manager's own life and cannot be delegated.

5. Decisions by condition

Decisions are made under certainty, risk or uncertainty, depending on how much is known about outcomes.

A good manager selects the type of decision suited to the problem, time available and level of the decision.

(a) Objectives for Macalu Fashion

The firm faces falling sales, weak finances, new competitors, rapid fashion change and unionization, so its objectives should be:

1. Market objective: regain market share and expand beyond the eastern region, for example raise sales by a set percentage in the next two years.
2. Financial objective: restore profitability, improve cash flow and reduce dependence on banks, for example reach a target return on investment.
3. Product and innovation objective: introduce new designs regularly in line with changing fashion, using Pooja's skills.
4. Human resource objective: develop skilled employees, reduce conflict and improve motivation and productivity.
5. Operational objective: improve technology, quality and cost efficiency through scientific job design.
6. Social objective: maintain good relations with employees, unions, bankers and customers.

(b) Suitable organization structure

Macalu is a small partnership with three partners, so a simple functional structure led by the partners is suitable, with design given special importance.

                  Partners (Kapil, Binod, Pooja)
                               |
        --------------------------------------------------
        |               |               |                |
  Design and       Production       Marketing        Finance and
  Development       Manager          and Sales       Administration
  (Pooja)                            Manager           Manager
        |               |               |                |
   Designers      Supervisors /     Sales staff      Accountants,
                  Workers                            HR staff

Explanation:

• Design and Development: led by Pooja, it creates new fashion designs and follows trends.
• Production: manufactures garments, with clear job design and standards for workers.
• Marketing and Sales: studies markets, handles promotion and distribution to new regions.
• Finance and Administration: manages funds, bank relations, records and human resources.

Advantages: specialization, clear authority, simplicity and low cost. Departmentalization by function replaces the earlier absence of scientific job design and departments. As the business grows, the firm may later add product-based departments.

(c) Suitable motivation techniques and why

The present incentive system gives nominal salary to those who miss the standard, and it does not motivate workers. Suitable techniques are:

1. Better financial incentives: a piece rate or bonus linked to output and quality, a profit-sharing scheme, and a fair basic salary. Workers then see a direct link between effort and reward (expectancy theory).
2. Recognition and awards: employee-of-the-month awards and public appreciation satisfy esteem needs.
3. Training and career development: workers are mostly semi-skilled, so training raises skill, confidence and promotion chances.
4. Participation and empowerment: involving workers and the union in setting standards builds commitment and reduces conflict.
5. Job enrichment and good working conditions: varied tasks, safety and welfare benefits improve satisfaction (Herzberg's hygiene and motivators).
6. Job security and fringe benefits: provident fund, insurance and medical support retain staff.

Reason: with competition, high expectations and unionization, money alone is inadequate. A mix of financial and non-financial techniques meets different needs and improves productivity and loyalty.

(d) Will Macalu capture a good market share after making Pooja a partner?

Yes, probably, but only if other changes accompany her entry.

Reasons for success:

• She is an experienced designer with ten years in the business, and the firm's main weakness is lack of design capability in a market where fashion changes rapidly.
• Rs 10 million of fresh capital can fund new machinery, designs, marketing and working capital, easing the weak financial position and satisfying the bankers.
• New design and quality can win customers back and open new regions.

Risks:

• Pooja has had conflicts with previous partners, so conflict among the three partners may recur, and equal shares may cause deadlock.
• Design alone will not solve poor incentive systems, lack of job design, union pressure, competition and technological change.

Conclusion: Pooja's entry is a positive step, but Macalu will regain a good market share only if it also adopts a clear partnership agreement, a sound structure, effective motivation, modern technology and strong marketing.

1. Planning: setting objectives and deciding the actions needed to achieve them.
2. Organizing: arranging resources, tasks and authority relationships.
3. Staffing, directing (leading) and controlling: recruiting people, guiding and motivating them, and comparing performance with standards. (Any three of planning, organizing, staffing, directing/leading, coordinating and controlling are acceptable.)

Planning is the managerial function of deciding in advance what is to be done, when, how and by whom. It involves setting objectives and choosing the best course of action to reach them, and it bridges the gap between where the organization is and where it wants to be.

There are three levels of management:

1. Top-level management: board of directors, chief executive, general manager; responsible for overall strategy, goals and policies.
2. Middle-level management: departmental or divisional heads; implement top-level plans and coordinate departments.
3. Lower (first-line) level management: supervisors and foremen; direct day-to-day work of operating employees.

Active listening is the process of fully concentrating on, understanding and responding to what a speaker says, both the words and the feelings behind them. The listener pays full attention, avoids interrupting, gives feedback such as nodding or paraphrasing, and asks questions to confirm understanding.

   Sender (encodes idea)
        |
        v
     Message
        |
        v
 Channel / Medium   <----- Noise (may disturb at any stage)
        |
        v
  Receiver (decodes message)
        |
        v
     Feedback
        |
        v
   back to Sender

Steps: the sender has an idea and encodes it into a message, which is sent through a channel. The receiver decodes it, and feedback returns to the sender to confirm understanding. Noise can interfere at any point.

Esprit de corps is Henri Fayol's fourteenth principle of management. It means "union is strength": it stresses team spirit, harmony and unity among employees, so that people work together as a team. Managers should promote it through good communication and by avoiding the divide-and-rule policy.

Responsibility is the obligation of a subordinate to perform the duties or tasks assigned by a superior. It arises from accepting a job, and the person is accountable for the results. It cannot be delegated away: when a manager delegates, he or she remains answerable to the superior. It should always be matched with authority.

Organizational development (OD) is a planned, long-term, organization-wide effort, supported by top management, to improve the organization's effectiveness and health through change in its people, culture, processes and structure. It uses behavioural science techniques such as team building, survey feedback and sensitivity training, usually with the help of a change agent.

Managers today work in a complex, dynamic environment, and face the following issues and challenges.

1. Globalization and competition: companies compete in international markets, needing cross-cultural understanding and low-cost, high-quality operations.
2. Rapid technological change: managers must adopt new technologies such as IT, automation and e-commerce, and keep staff skilled.
3. Workforce diversity: managing people of different ages, genders, cultures and values fairly and productively.
4. Ethics and social responsibility: maintaining honesty and meeting responsibilities to society and the environment.
5. Quality and productivity: meeting customer demand for better quality and lower cost.
6. Motivation and retention of employees: attracting and keeping skilled people, who expect good pay, growth and work-life balance.
7. Managing change: introducing change and overcoming resistance.
8. Empowerment and teamwork: moving from controlling to coaching and delegating.
9. Economic and political uncertainty: unstable policy, inflation and regulation; in Nepal, also limited resources and infrastructure.
10. Knowledge management: creating and using information effectively.

Managers meet these challenges by continuous learning, innovation, flexible structures and ethical leadership.

Henri Fayol, a French mining engineer and a founder of administrative management, proposed 14 general principles of management:

1. Division of work: specialization of tasks raises efficiency and output.
2. Authority and responsibility: managers have the right to give orders, and with authority comes responsibility.
3. Discipline: obedience, respect and observance of agreed rules by all.
4. Unity of command: each employee should receive orders from only one superior.
5. Unity of direction: one head and one plan for a group of activities with the same objective.
6. Subordination of individual interest to general interest: the interest of the organization comes first.
7. Remuneration: pay should be fair and satisfy both employees and the organization.
8. Centralization: the degree of concentration of decision-making should suit the circumstances.
9. Scalar chain: the line of authority from top to bottom; "gang plank" allows direct cross-communication in urgent cases.
10. Order: a place for everything and everything in its place; right people in the right jobs.
11. Equity: kindness and justice in treatment of employees.
12. Stability of tenure of personnel: avoid unnecessary turnover; give job security.
13. Initiative: allow employees to think out and carry out plans.
14. Esprit de corps: team spirit and unity among employees.

These principles are flexible guidelines, not rigid laws, and their application depends on the situation.

Barriers are obstacles that distort or block a message between sender and receiver. They can be grouped as follows.

1. Physical (environmental) barriers

Noise, distance, faulty equipment or poor lighting. Example: a machine's noise in a factory prevents a supervisor's instruction from being heard.

2. Semantic (language) barriers

Different meanings of words, jargon or ambiguity. Example: a technical term used by an engineer is not understood by a worker.

3. Psychological (personal) barriers

Attitudes, emotions, prejudice, fear, lack of attention, and selective perception. Example: an angry employee may misread a manager's feedback as criticism.

4. Organizational barriers

Complex hierarchy, long communication chains, status differences, poor policy and rigid rules. Example: a message passes through many levels and is filtered or delayed.

5. Cultural barriers

Differences in customs, values and gestures. Example: a gesture that is polite in one culture may offend in another.

6. Information overload and poor timing

Too much information makes the receiver ignore parts of it; late messages lose value.

7. Poor listening and lack of feedback

Interrupting, inattention and absence of feedback leave the sender unaware of misunderstanding.

Overcoming the barriers

Use clear and simple language, encourage feedback, listen actively, choose suitable channels, reduce levels, and train staff in communication skills.

Definition

Leadership is the process of influencing and inspiring people to willingly work to achieve group or organizational goals.

Styles of leadership

1. Autocratic (authoritarian) style

The leader makes decisions alone and gives orders, with little consultation. It is quick and gives control, but reduces creativity and morale. It suits emergencies or unskilled workers.

2. Democratic (participative) style

The leader consults the team and shares decision-making. It increases motivation, commitment and quality of decisions, but is slower. It suits skilled and committed teams.

3. Laissez-faire (free-rein) style

The leader gives group members full freedom to decide and work. It encourages creativity among highly skilled, self-motivated people, but may cause lack of direction and poor coordination.

4. Other styles

• Paternalistic: the leader acts like a father, caring for employees while retaining decisions.
• Transformational: inspires followers with vision to exceed expectations.
• Transactional: works through rewards and penalties for performance.
• Task-oriented and people-oriented: emphasis on production versus on relationships (Blake and Mouton's managerial grid combines both).

No style is best in all situations. The effective leader selects the style according to the task, the followers and the situation (contingency or situational approach).

Planning can fail for the following reasons, called pitfalls:

1. Unclear or unrealistic objectives: vague or unachievable goals give no direction.
2. Lack of top management support: without commitment, plans are not resourced or enforced.
3. Inaccurate information and forecasting: wrong assumptions about the future make plans unreliable.
4. Lack of participation: plans made without those who must implement them are resisted.
5. Resistance to change: employees fear change and do not follow the plan.
6. Rigidity and inflexibility: refusing to modify plans when conditions change.
7. Insufficient resources: lack of money, time or skills.
8. Excessive planning or overemphasis on details: time is wasted in planning and action is delayed.
9. Poor communication and coordination: people do not understand the plan or conflicting plans exist.
10. Lack of control and follow-up: progress is not monitored and corrected.
11. Fear of failure and reliance on past: managers avoid risk and repeat old methods.

Pitfalls can be avoided by setting clear objectives, involving people, using sound information, being flexible and monitoring progress.

(a) Major problems of the organization

1. Poor communication handling: Hari presented weaknesses and conflict-sensitive facts before outsiders such as media and consultants, and in front of all employees, causing embarrassment and tension.
2. Family versus non-family conflict: non-family qualified employees feel that family members, mostly seniors, are favoured despite poor performance.
3. Poor performance of seniors compared with subordinates: this brought resentment and demands for promotion and resignation.
4. Ineffective reward system and low pay: salary is below competitors, causing rising turnover and dissatisfaction.
5. Poor working conditions: pollution and old machinery threaten health and productivity.
6. Indiscipline: violations of disciplinary rules by named persons were exposed publicly.
7. Weak human resource management: no development, promotion or performance appraisal system.
8. Failed negotiation and weak leadership: Hari's promises and requests for time did not satisfy employees, so the problem escalated.

(b) Strengths and weaknesses

Strengths

• A young, well-qualified leader with an MBA in Strategic Management.
• Research-based diagnosis, with a report of status and key areas.
• Some qualified, high-performing subordinates.
• Willingness of management to accept feedback and reform.
• An established family business with continuity.

Weaknesses

• Low salary and ineffective reward system, with high turnover.
• Poor working conditions: pollution and poorly maintained machines.
• Poor discipline and no clear rules enforcement.
• Underperforming senior employees and favouritism toward family members.
• Weak communication, confidentiality and conflict management.
• Lack of training and development.
• Hari's lack of experience in handling people.

(c) Suggestions to improve working conditions

1. Replace or repair old machines and arrange regular maintenance.
2. Install pollution control: ventilation, dust collectors, protective equipment and masks.
3. Follow safety and health standards, provide medical checkups, first aid and clean drinking water and sanitation.
4. Improve lighting, noise control, rest rooms and canteen.
5. Introduce fair pay and a performance-linked reward system, with welfare benefits such as insurance and provident fund.
6. Improve quality of work life through participation, suggestion systems and job security.
7. Set up a grievance-handling committee and enforce discipline equally for all.
8. Form a joint labour-management committee to monitor conditions.

(d) Immediate steps to solve the burning problems

1. Calm the situation: hold an open meeting with employee representatives, apologize for the way information was handled and assure fair treatment.
2. Form a committee of management and employee representatives to examine demands on salary, promotion and working conditions, with a time-bound schedule.
3. Take quick visible actions: repair the worst machines and pollution hazards immediately, and announce an interim pay adjustment if affordable.
4. Evaluate performance objectively through a transparent appraisal, and promote qualified employees on merit, whether family or not.
5. Handle indiscipline through fair, confidential procedures.
6. Announce training and development for employees with weak performance, and set a clear timeline for the reward system revision.
7. Control communication: future reports should go first to management, and a single spokesperson should handle outsiders and the media.

1. Planning: setting objectives and deciding how to achieve them.
2. Organizing: arranging tasks, people, authority and resources into a structure.
3. Staffing: recruiting, selecting, training and developing people.
4. Directing (leading): guiding, motivating, communicating with and supervising employees.
5. Coordinating: harmonizing the activities of different departments.
6. Controlling: comparing actual performance with standards and correcting deviations.

The building blocks of organizing are:

1. Work specialization (division of labour)
2. Departmentalization
3. Chain of command (authority and responsibility)
4. Span of management (control)
5. Centralization and decentralization
6. Delegation of authority
7. Coordination

• Administrative management theory: Henri Fayol (also Lyndall Urwick and Luther Gulick).
• Bureaucratic management theory: Max Weber.

Delegation of authority is the process by which a manager assigns part of his or her work, together with the necessary authority, to a subordinate and holds the subordinate accountable for it. It involves three elements: assigning responsibility, granting authority and creating accountability. The manager keeps final responsibility. Delegation saves the manager's time, develops subordinates and speeds up decisions.

1. Forecasting: estimating future conditions.
2. Budgeting: expressing plans in financial terms.
3. Gantt chart: a bar chart showing tasks against time.
4. Network techniques (PERT and CPM): scheduling projects by activity paths.
5. Other tools: SWOT analysis, MBO, break-even analysis, linear programming.

Groups develop through five stages (Tuckman's model):

1. Forming: members meet, are uncertain about purpose, roles and leadership, and are polite and cautious.
2. Storming: conflict appears over leadership, roles and methods, and members resist control.
3. Norming: cohesion develops, rules and roles are agreed, and cooperation grows.
4. Performing: the group works effectively towards its goals.
5. Adjourning: a temporary group completes its task and disbands.

Organizational development (OD) is a planned, systematic, long-term effort applying behavioural science knowledge to improve an organization's effectiveness, health and capacity to adapt to change. It is supported by top management and focuses on people, culture, teamwork and processes. Techniques include team building, survey feedback, sensitivity training, process consultation and intergroup development, often with the help of a change agent. Its aim is to improve both organizational performance and employee satisfaction.

• SWOT: Strengths, Weaknesses, Opportunities and Threats.
• TQM: Total Quality Management.

Decoding is the step in the communication process in which the receiver interprets the symbols, words or signals of the received message and converts them into meaning. Its accuracy determines whether the receiver understands the message as the sender intended.

Staffing is the managerial function of filling and keeping filled the positions in the organization structure with suitable people. It covers human resource planning, recruitment, selection, placement, training and development, appraisal and compensation of employees.

Today's managers work in a fast-changing, uncertain environment, so their roles and responsibilities are widening. The main emerging challenges are as follows.

1. Globalization: Competition now comes from foreign firms and markets are open across borders. Managers must understand different cultures, laws and customers, and manage in a global setting.
2. Technological change: Rapid growth of information technology, automation, e-commerce and artificial intelligence changes how work is done. Managers must adopt new technology and keep skills up to date.
3. Workforce diversity: Employees differ in gender, age, ethnicity, education and values. Managers must manage diversity fairly and use it as a strength.
4. Ethics and social responsibility: Stakeholders expect honest, transparent and responsible conduct, including care for the environment and the community.
5. Quality and productivity: Customers demand high quality at low cost, so managers must apply TQM, continuous improvement and efficient use of resources.
6. Changing employee expectations: Employees want participation, empowerment, work-life balance and career growth, so managers must lead rather than simply command.
7. Managing change and innovation: Managers must lead organizational change, reduce resistance and encourage creativity to survive.
8. Knowledge management and remote work: Knowledge workers, virtual teams and flexible work require new methods of coordination and control.
9. Crises and uncertainty: Economic shocks, pandemics and political instability require flexibility and risk management.

To meet these challenges, managers need strong conceptual, human and technical skills, a learning attitude and the ability to adapt.

Planning is the managerial function of deciding in advance what is to be done, when, how and by whom. It bridges the gap between where the organization is now and where it wants to be, by setting objectives and choosing the courses of action to reach them.

Steps in the planning process

1. Awareness of opportunity: Scanning the internal and external environment (market, competitors, resources, strengths and weaknesses) to identify opportunities and threats.
2. Establishing objectives: Setting clear, measurable objectives for the whole organization and for each department, stating what is to be achieved and by when.
3. Developing premises: Making assumptions about the future conditions (forecasts, policies, tax rates, demand, competitors' actions) under which the plan will operate.
4. Identifying alternatives: Searching for the different ways of achieving the objectives.
5. Evaluating alternatives: Weighing each alternative against the objectives, its cost, benefits, risks and available resources.
6. Selecting an alternative: Choosing the best course of action; sometimes more than one is chosen as a backup.
7. Formulating supporting (derivative) plans: Preparing budgets, schedules, programmes and procedures to support the basic plan (for example plans for purchasing, hiring and training).
8. Implementation and follow-up: Putting the plan into action, monitoring results against the objectives and revising the plan when needed.

Planning is continuous: feedback from the last step goes back into the first, so that the plan keeps adapting to change.

Organization structure is the formal framework that shows how tasks are divided, grouped and coordinated, who reports to whom, and how authority and responsibility flow among positions.

Matrix organization structure combines functional departments with project (or product) teams. An employee reports to two bosses: the functional manager and the project manager.

                     General Manager
                            |
      +---------------------+---------------------+
      |                     |                     |
 Production Mgr        Marketing Mgr          Finance Mgr
      |                     |                     |
Project A Mgr -- [staff] -- [staff] ------- [staff]
Project B Mgr -- [staff] -- [staff] ------- [staff]
Project C Mgr -- [staff] -- [staff] ------- [staff]

Functional departments run vertically and projects run horizontally, so each staff member sits at an intersection.

Unique features

1. Dual chain of command: Each member reports to both a functional head and a project head (breaking the unity of command principle).
2. Two-dimensional grouping: Departmentation is by function and by product or project at the same time.
3. Shared resources: Specialists are shared across projects, so skills are used efficiently.
4. Temporary project teams: Teams form for a project and are dissolved or reassigned when it ends.
5. Strong coordination and flexibility: Cross-functional interaction improves communication and adaptation to change.
6. Shared authority: The functional manager decides how and who, while the project manager decides what and when.

Its drawbacks are role conflict, confusion over authority and higher conflict and cost of coordination.

Leadership is the process of influencing and guiding people so that they willingly work towards achieving group or organizational goals.

Traits of an effective managerial leader

1. Intelligence and knowledge: Good judgment, analytical ability and technical know-how.
2. Vision: The ability to see the future direction and communicate it clearly.
3. Integrity and honesty: Consistency between words and actions, which earns trust.
4. Self-confidence: Belief in own abilities, enabling decisive action.
5. Initiative and drive: High energy, ambition and persistence in achieving goals.
6. Communication skill: Listening and explaining clearly and persuasively.
7. Emotional stability and empathy: Calm under pressure and understanding of followers' needs.
8. Decisiveness: Willingness to take timely decisions and accept risks and responsibility.
9. Ability to motivate: Inspiring and rewarding people to perform better.
10. Adaptability and openness to change: Flexibility in dealing with changing situations.
11. Fairness and social skills: Treating people equally and building good relationships.

Trait theory suggests that such qualities help leaders, but modern views add that effective leadership also depends on followers and the situation.

Communication is the process of exchanging information, ideas and understanding between a sender and a receiver through a medium, so that the message is understood in the same sense by both.

Barriers to effective communication

1. Semantic (language) barriers: Jargon, ambiguous words, and different meanings of words.
2. Physical barriers: Noise, distance, poor equipment or faulty channels.
3. Psychological barriers: Prejudice, emotions, attitudes, inattention and lack of trust.
4. Organizational barriers: Too many levels, rigid hierarchy, unclear authority and poor information flow.
5. Personal barriers: Differences in perception, status, poor listening, and fear of superiors.
6. Cultural barriers: Differences in customs, values and gestures.
7. Information overload and filtering: Too much information, or a sender altering a message to please the receiver.

Removing the barriers

1. Use simple, clear and precise language, and avoid jargon.
2. Encourage feedback to confirm that the message is understood.
3. Develop active listening skills.
4. Reduce the number of levels, and use open-door and two-way communication.
5. Choose the proper channel and remove physical noise.
6. Create trust and a positive climate; control emotions while communicating.
7. Train employees in communication skills and cultural awareness.
8. Follow up and repeat important messages in more than one form.

Organizational change is any alteration in an organization's structure, technology, people, strategy or processes made to adapt to the environment and improve performance.

Reasons for resistance to change

1. Fear of the unknown: People are uncertain about what the change will bring.
2. Economic fear: Worry about job loss, lower pay or reduced benefits.
3. Habit and comfort with the status quo: People prefer familiar routines.
4. Loss of status, power or security: Change may threaten position or authority.
5. Poor communication or misunderstanding: Lack of information leads to rumours and mistrust.
6. Lack of participation: Changes imposed without involving employees are resisted.
7. Threat to skills and expertise: New technology may make existing skills obsolete.
8. Group norms and social ties: Change may break up work groups and relationships.
9. Poor timing or low trust in management: Employees doubt the motives or the ability of management.
10. Fear of failure and extra workload: Learning new methods requires extra effort.

Resistance can be reduced through education and communication, participation, support and negotiation.

(a) Major problems in the case

• Divisional managers are doing routine clerical work (filing, secretarial work, mailing, reproduction) instead of managing.
• Functions are scattered and duplicated, with no integrated information system. The CEO has to contact several sources, which wastes time.
• Reports and decisions are delayed; idle equipment goes unnoticed.
• Junior staff are given major functions (purchasing, payroll, cost accounting, dispatch) without proper supervision.
• The managers refuse to change their routines or staff, so resistance to change blocks improvement.
• The CEO is overloaded with information collection, because the company has grown with no matching management system.

(b) Principles of management violated

• Division of work/specialization: Similar functions (payroll, accounting) are split between departments, and managers do clerical work.
• Unity of direction and coordination: Related activities are not grouped and coordinated, so no single point holds the information.
• Scalar chain / proper delegation: Managers do not delegate routine work to subordinates, and so do not use their time on managerial work.
• Principle of exception and management by objectives: The CEO is concerned with routine detail rather than exceptions.
• Order and equity/right person for the job: Important functions are given to junior assistants without suitable authority.
• Flexibility: Managers resist adapting.

(c) Evidence of decentralized authority

There is little. The company has three divisions each headed by a manager, so there is structural departmentation, and the managers have the power to refuse changes to staff and routines. But the CEO cannot get information easily and managers spend time on clerical tasks, so real decision-making authority is not exercised at the right levels. The company is thus formally divisional but practically ineffective in decentralization: authority is divided, but not used for managerial decisions.

(d) Present form and suggested structure

The company is presently a private limited/proprietary business organization of a line-and-functional type: a functional departmental structure (manufacturing, marketing, finance) under a General Manager.

To overcome the problems, I would suggest a line and staff organization with a centralized information/management information system (MIS) unit, or a divisional/matrix structure: create a staff office for information and administration that handles the filing, mailing, records and reports for all divisions. The managers would then focus on planning, organizing and controlling, with proper delegation to qualified staff for purchasing, payroll and accounts. This will remove duplication, give the CEO quick information and permit timely decisions.

An organization's resources are:

• Human resources (employees, managers)
• Financial resources (capital, funds)
• Physical resources (land, buildings, machinery, materials)
• Informational resources (data, knowledge)
• Technological resources

A psychological contract is the unwritten, informal set of mutual expectations between an employee and the employer about what each will give and receive, such as effort, loyalty, fair treatment, job security and growth, beyond the formal employment contract.

Four functions of leadership:

1. Setting vision, goals and direction
2. Motivating and inspiring followers
3. Guiding and directing the work of the group
4. Building teamwork and resolving conflict (also representing the group and promoting change)

Groups are classified as:

• Formal groups: created by the organization for specific tasks, which are of two kinds: command groups (a manager and subordinates) and task groups (e.g. committees or project teams).
• Informal groups: formed naturally by employees from social needs, which are of two kinds: interest groups and friendship groups.

Types of control, by timing:

1. Feedforward (preliminary) control: applied before work begins, to prevent problems by checking inputs.
2. Concurrent (steering) control: applied while work is going on.
3. Feedback (post-action) control: applied after the work is done, by comparing results with standards.

Managerial ethics are the moral principles and standards of right and wrong that guide managers' conduct and decisions in dealing with employees, customers, owners and society, such as honesty, fairness and responsibility.

Two assumptions of Theory X (McGregor):

1. The average person dislikes work and will avoid it if possible.
2. Because of this, people must be controlled, directed and threatened with punishment to make them work (they also prefer to avoid responsibility and want security).

Planning is the managerial function of deciding in advance what is to be done, when, how and by whom. It bridges the gap between where the organization is now and where it wants to be, by setting objectives and choosing the courses of action to reach them.

Steps in the planning process

1. Awareness of opportunity: Scanning the internal and external environment (market, competitors, resources, strengths and weaknesses) to identify opportunities and threats.
2. Establishing objectives: Setting clear, measurable objectives for the whole organization and for each department, stating what is to be achieved and by when.
3. Developing premises: Making assumptions about the future conditions (forecasts, policies, tax rates, demand, competitors' actions) under which the plan will operate.
4. Identifying alternatives: Searching for the different ways of achieving the objectives.
5. Evaluating alternatives: Weighing each alternative against the objectives, its cost, benefits, risks and available resources.
6. Selecting an alternative: Choosing the best course of action; sometimes more than one is chosen as a backup.
7. Formulating supporting (derivative) plans: Preparing budgets, schedules, programmes and procedures to support the basic plan (for example plans for purchasing, hiring and training).
8. Implementation and follow-up: Putting the plan into action, monitoring results against the objectives and revising the plan when needed.

Planning is continuous: feedback from the last step goes back into the first, so that the plan keeps adapting to change.

Management is the process of planning, organizing, leading and controlling the efforts of organization members and the use of resources, so as to achieve stated goals efficiently and effectively.

Mintzberg's managerial roles: Henry Mintzberg observed managers at work and grouped their activities into ten roles in three categories.

(a) Interpersonal roles

1. Figurehead: performs ceremonial and symbolic duties (receiving visitors, signing documents).
2. Leader: motivates, directs and staffs subordinates.
3. Liaison: builds a network of contacts outside the unit.

(b) Informational roles

4. Monitor: seeks and receives information to understand the environment.
5. Disseminator: passes information to subordinates.
6. Spokesperson: gives information to outsiders on behalf of the organization.

(c) Decisional roles

7. Entrepreneur: initiates change and improvement projects.
8. Disturbance handler: deals with unexpected crises and conflicts.
9. Resource allocator: decides how to distribute money, time and people.
10. Negotiator: bargains on behalf of the organization with unions, suppliers and others.

The importance of each role varies with the manager's level and function, but all managers perform them to some degree.

Organizing is the managerial function of dividing work into tasks, grouping them into departments, assigning authority and responsibility, and establishing relationships so that people can work together to achieve objectives.

Importance of matrix structure in a modern multiproduct, multifunctional enterprise

A matrix structure overlays project/product teams on the functional departments, so members have two reporting lines.

1. Efficient use of specialists: Experts from each function (production, marketing, finance) are shared among several products or projects instead of being duplicated.
2. Coordination across functions: Product managers integrate the contributions of different functions, which suits firms with many products.
3. Flexibility and quick response: Teams can be formed, enlarged or dissolved as projects and markets change.
4. Better decision making: Decisions are made closer to the product or customer with the knowledge of both functional and project managers.
5. Balances competing demands: Both technical excellence (functional) and product/customer results (project) are given attention.
6. Employee development and motivation: Staff gain wider experience and responsibility.
7. Suitable for complex, changing environments: Handles many simultaneous projects and high information-processing needs.

Its limitations (dual authority, conflict, higher administrative cost) can be reduced by clear roles and good communication.

A system is a set of interrelated and interdependent parts that work together as a whole to achieve a common purpose. It takes inputs from the environment, transforms them through processes, and returns outputs to the environment, with feedback as a control.

Application of systems theory in a dynamic organization

A dynamic organization works in a changing environment, and systems theory suits it because it views the organization as an open system.

1. Environmental interaction: It makes managers scan changes in customers, competitors, technology and law, and adapt accordingly.
2. Interdependence of subsystems: Departments are seen as linked, so a change in one (e.g. production) is planned with its effect on others (marketing, finance).
3. Feedback: Continuous feedback of results allows quick correction and learning.
4. Holistic view: Decisions aim at overall organizational goals rather than departmental interests (synergy).
5. Equifinality and flexibility: There are many ways to reach a goal, so managers can choose the most suitable method for the situation.
6. Integration of other approaches: It combines the technical, human and structural views.
7. Survival and growth: By adjusting continuously, the organization avoids entropy (decay) and survives.

Hence systems theory gives a framework for managing complexity and change in dynamic organizations.

Quality control is the process of measuring the quality of goods or services against set standards, detecting deviations, and taking corrective action so that the product meets customer requirements.

Emerging issues in quality management

1. Total Quality Management (TQM) and continuous improvement: Quality is now the responsibility of everyone, not just inspectors (kaizen).
2. Customer focus: Quality is defined by customer expectations and satisfaction.
3. ISO standards and certification: International standards (ISO 9000, 14000) are used to ensure and prove quality in global trade.
4. Six Sigma and lean: Data-driven methods aim at near-zero defects and waste reduction.
5. Benchmarking: Comparing practices with the best performers.
6. Supplier quality and supply-chain management: Quality must be ensured through suppliers and partners.
7. Technology: Automation, IT and data analytics improve monitoring and control.
8. Employee empowerment and training: Workers take part in solving quality problems (quality circles).
9. Environmental and ethical concerns: Quality includes green products, safety and social responsibility.
10. Global competition and the cost of quality: Firms need high quality at low cost to compete.

Organizational development (OD) is a planned, long-term, organization-wide effort, supported by top management and using behavioural science knowledge, to improve an organization's effectiveness and the well-being of its members through planned interventions.

Areas of organizational change

1. Structure: Changes in departmentation, span of control, authority relationships, job design and levels (e.g. moving from a tall to a flat or matrix structure).
2. Technology: Changes in equipment, methods, processes, work flow and automation (e.g. computerization).
3. People (human behaviour): Changes in employees' attitudes, skills, knowledge and behaviour through training, team building and sensitivity training.
4. Tasks and job design: Redesign of jobs, work methods and responsibilities.
5. Strategy and objectives: Changes in mission, products, markets and goals.
6. Culture: Changes in the shared values, beliefs and norms.
7. Physical setting/work environment: Layout, space and facilities.

These areas are interrelated, so a change in one usually requires changes in the others.

(a) Motivation techniques at Lincoln Electric

• Financial incentives: The piecework system gives pay in direct proportion to output (money as a motivator, linked to expectancy theory and reinforcement).
• Merit-rated bonuses: Semiannual bonuses based on objective and subjective criteria.
• Respect and equality (non-financial): Open door policy, equal treatment, same cafeteria and no reserved parking, which satisfy esteem and social needs.
• Fair sharing of productivity gains: Employees see that effort is rewarded.
• Responsibility for quality: Workers repair their own defects, giving autonomy and ownership.

They appear largely adequate: pay well above the area average and a high-trust culture support high productivity. But they rely heavily on money, so they may be incomplete for job security, career growth and intrinsic satisfaction, and they motivate individuals more than teams.

(b) Unintended consequences of piecework and safeguards

Possible consequences: a focus on quantity at the expense of quality; stress, overwork and accidents; lack of cooperation or help between workers; resistance to new methods or rate changes; the earnings of workers being uncertain when work is low; and cheating or hoarding of output.

Lincoln's safeguards: workers must correct defects before the pieces are counted, so quality is protected; the merit rating includes subjective criteria such as cooperation and dependability, which discourages selfishness; the rates are set so that normal effort earns an average wage; and productivity gains are shared, which builds trust.

(c) Leadership and culture

James Lincoln's leadership was based on respect for the individual, meritocracy, egalitarianism and open communication. This created trust, commitment, and a culture that supports high productivity and low cost. Strengths: a clear vision, a fair reward system and strong employee loyalty.

Issues: the culture depends on the founder's values and may be hard to maintain or to adapt in a changing environment; the heavy emphasis on individual pay may weaken teamwork and innovation; and the system may not suit other cultures or industries.

It is a very effective way for this company's business (cost-competitive, price-sensitive), but it is not the only best way; it should be reviewed over time and combined with team incentives and development, as in contingency thinking.

(d) Control system and strategy

Yes. Lincoln's strategy is cost leadership through high productivity. The control system matches this: output-based pay is a built-in control on productivity; worker responsibility for quality and the inspection of defects is quality control before payment; the merit ratings control behaviour; and the lower cost structure than competitors shows that the controls support the strategy. Control is largely self-control and feedforward through incentives, rather than heavy supervision, which fits the culture.

Decisional role is one of Mintzberg's three categories of managerial roles, in which the manager makes significant choices for the unit or organization. It includes the entrepreneur, disturbance handler, resource allocator and negotiator roles.

The levels of management are:

1. Top-level management (board of directors, CEO, general manager)
2. Middle-level management (departmental or divisional managers)
3. Lower or first-line management (supervisors, foremen)

Conceptual skill is the mental ability to see the organization as a whole, understand how its parts relate to each other and to the environment, and to think analytically and creatively in order to solve complex problems. It is most important for top-level managers.

Non-programmed decisions are decisions made for new, unusual, unstructured and non-repetitive problems for which no ready procedure exists. They require judgment, creativity and analysis, and are mostly taken by top management (e.g. launching a new product).

Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. It balances the interests of shareholders, the board, management, employees, customers and the community, and promotes accountability, transparency and fairness.

Four disadvantages of centralization:

1. Delays in decision making because every decision goes to the top.
2. Top management is overloaded with details.
3. Lower motivation and initiative among subordinates, who get little chance to use their abilities.
4. Poor decisions in local conditions, and slow response to change; it also hinders the training of future managers.

A command group is a formal group made up of a manager and the subordinates who report directly to that manager, as shown on the organization chart (e.g. a principal and the teachers).

Four features of motivation:

1. It is an internal psychological process that arises from needs and drives.
2. It is goal-directed behaviour.
3. It is a continuous process, because needs are never fully satisfied.
4. It can be positive (rewards) or negative (punishment) and differs among individuals.

Quality of work life (QWL) is the degree to which employees are able to satisfy their important personal needs through their work in the organization. It covers fair pay, safe and healthy working conditions, job security, participation, work-life balance and opportunities for growth.

A system is a set of interrelated and interdependent parts that work together as a whole to achieve a common objective. It has inputs, a transformation process, outputs and feedback, and operates within an environment.

Contribution of systems theory to the development of management

1. Holistic (whole) view: It teaches managers to see the organization as a whole made of subsystems (production, marketing, finance, HR) rather than separate parts.
2. Interdependence: It shows that decisions in one department affect others, so improving coordination and integration.
3. Open-system concept: It treats the organization as interacting with its environment, so managers continuously scan the environment and adapt.
4. Feedback and control: It emphasizes feedback for monitoring performance and taking corrective action.
5. Synergy: The whole can achieve more than the sum of its parts.
6. Integration of earlier schools: It brings together the classical, behavioural and quantitative approaches in one framework.
7. Better problem solving: It encourages analysis of the cause and effect of problems across the organization.
8. Contingency approach: It laid the base for the contingency view that there is no one best way, as management depends on the situation.
9. Planning and decision making: It supports long-term planning and tools such as MIS.

A manager's effectiveness (doing the right things) and efficiency (doing things right, with the least resources) depend on three things.

1. Education

• It provides the theoretical knowledge, concepts and principles of management and the technical knowledge of the field.
• It builds analytical, conceptual and decision-making skills and a professional attitude.
• It helps the manager understand the environment and use new techniques. But education alone is not enough, as it needs to be put into practice.

2. Experience

• It gives practical skills, judgment and understanding of how people behave, and shows what works in real conditions.
• Learning from past successes and failures improves decisions and builds confidence, human skills and the ability to handle crises.
• Experience without education may be narrow and based on trial and error.

3. Situation

• Managerial behaviour must fit the situation: the task, the people, the organization's culture and size, and the environment (contingency view).
• A manager must adapt the leadership style, planning and control to conditions, such as the maturity of subordinates or the degree of uncertainty.
• The same manager may succeed in one situation and fail in another.

Conclusion: Education provides the base, experience develops skill, and situational understanding allows both to be applied correctly. All three together make a manager effective and efficient.

Planning is the managerial function of deciding in advance what is to be done, when, how and by whom. It bridges the gap between where the organization is now and where it wants to be, by setting objectives and choosing the courses of action to reach them.

Steps in the planning process

1. Awareness of opportunity: Scanning the internal and external environment (market, competitors, resources, strengths and weaknesses) to identify opportunities and threats.
2. Establishing objectives: Setting clear, measurable objectives for the whole organization and for each department, stating what is to be achieved and by when.
3. Developing premises: Making assumptions about the future conditions (forecasts, policies, tax rates, demand, competitors' actions) under which the plan will operate.
4. Identifying alternatives: Searching for the different ways of achieving the objectives.
5. Evaluating alternatives: Weighing each alternative against the objectives, its cost, benefits, risks and available resources.
6. Selecting an alternative: Choosing the best course of action; sometimes more than one is chosen as a backup.
7. Formulating supporting (derivative) plans: Preparing budgets, schedules, programmes and procedures to support the basic plan (for example plans for purchasing, hiring and training).
8. Implementation and follow-up: Putting the plan into action, monitoring results against the objectives and revising the plan when needed.

Planning is continuous: feedback from the last step goes back into the first, so that the plan keeps adapting to change.

Total Quality Management (TQM) is a management approach in which all members of the organization work continuously to improve quality in all processes, products and services, with the aim of satisfying or exceeding customer expectations. Its main principles are customer focus, total employee involvement, continuous improvement (kaizen), process orientation, and decisions based on data.

Emerging issues in quality management

1. Customer-driven quality: Quality is judged by customers' changing needs, so organizations need constant feedback.
2. ISO certification and international standards: ISO 9000 and 14000 are increasingly demanded in trade.
3. Six Sigma and lean management: Statistical methods to reduce defects and waste.
4. Benchmarking and continuous improvement: Learning from the best practices of others.
5. Employee empowerment, teamwork and training: Quality circles and cross-functional teams.
6. Supplier partnership and supply-chain quality: Quality must be built in from inputs to delivery.
7. Use of technology: IT, automation, data analytics and AI for monitoring and process control.
8. Cost of quality and competitiveness: Balancing prevention, appraisal and failure costs while keeping prices competitive.
9. Quality of services and e-commerce: Growth of the service sector and online services raises service quality issues.
10. Environmental and social concern: Green production, safety and ethical conduct are now part of quality.
11. Resistance to cultural change: Success needs top management commitment and a quality culture.

Emerging issues in organization design

1. Flatter structures: firms cut layers of management to speed up decisions and reduce cost, widening spans of control.
2. Network, virtual and boundaryless organizations: non-core work is outsourced and partners are linked by information technology.
3. Team-based and project structures: cross-functional teams replace rigid departments.
4. Technology and digitalization: automation, e-commerce and remote work change how work is divided and coordinated.
5. Empowerment and decentralization: decisions are pushed closer to customers.
6. Globalization and diversity: structures must handle multinational operations and a diverse workforce.
7. Learning organization and flexibility: the structure must adapt quickly to change and competition.

Principles of organization

1. Unity of objective: all units should contribute to the common organizational goal.
2. Division of work (specialization): work is divided so people perform tasks suited to their skills.
3. Unity of command: each person reports to one superior only.
4. Scalar chain: a clear line of authority from top to bottom.
5. Span of control: a manager supervises only as many subordinates as can be managed effectively.
6. Authority and responsibility: authority must match responsibility, and responsibility cannot be delegated away.
7. Delegation and the principle of exception: routine matters are delegated; managers handle exceptions.
8. Coordination: the activities of units are harmonized.
9. Balance and flexibility: the structure should be stable yet able to adapt to change.

(a) Scenarios in the case

• Scenario 1, Sagarmatha Foods: the production manager, Mr. Gurung, uses punishment, deduction of pay and threat of dismissal. Staff are regular and punctual and meet their targets, so he is successful.
• Scenario 2, Kanchenjunga Foods: he is hired as CEO at a higher salary and uses the same methods, such as threats, longer hours and punishments. After six months performance falls, absenteeism and turnover rise, and conflict grows. He blames the organization's staff, and is dismissed as incompetent.

The scenarios show a style that worked in one setting but failed in another.

(b) Leadership style

In both companies Mr. Gurung is an autocratic (authoritarian), task-centred leader, matching McGregor's Theory X. He makes the decisions, sets targets alone, enforces them by fear and punishment, and ignores employees' needs and views. He lacks flexibility and does not adapt his style to the situation. At Sagarmatha it produced short-term results with a compliant workforce. At Kanchenjunga, at a higher level and with a different, more skilled workforce, it failed.

(c) Motivational practices and reasons for success and failure

His practices rely on negative motivation: fear of pay deduction, dismissal and punishment, and extra work hours. He offers no recognition, participation or rewards.

Why successful at Sagarmatha: the workers probably depended on their jobs (lower-level needs such as pay and security dominated, so fear was effective); the work was routine and production-focused, his role was supervising, and the culture was used to strict control.

Why unsuccessful at Kanchenjunga:

• As CEO he needed to lead, motivate and show vision across departments, not only to supervise.
• The existing managers and staff were more experienced, with higher-level needs (esteem, belonging), so threats demotivated them (Herzberg: punishment is a hygiene factor and does not motivate).
• Different organizational culture and expectations; he did not study the situation or use situational leadership.
• Resulting resentment led to absenteeism, turnover and conflict.

Hence a style is effective only when it suits the people, task and situation.

(d) Techniques Kanchenjunga Foods should use

1. Fair pay, bonuses, profit sharing and fringe benefits.
2. Recognition and rewards, such as employee of the month and praise.
3. Participation in setting goals (MBO) and decision-making.
4. Job enrichment, rotation and empowerment.
5. Training, career development and promotion paths.
6. Good working conditions, reasonable hours and job security.
7. Open communication, a supportive leader and team-building to reduce conflict.
8. Replace punishment with positive reinforcement, and counselling to deal with absenteeism.

Four principles of scientific management (F. W. Taylor):

1. Replace rule-of-thumb methods with science, by studying each task scientifically.
2. Scientific selection, training and development of workers.
3. Cooperation between management and workers, not conflict.
4. Equal division of work and responsibility between management and workers.

Programmed decisions are routine, repetitive decisions made by following established rules, policies or procedures, so no fresh judgement is needed each time. Examples are reordering stock when it falls to a set level, or approving leave under a fixed policy. They are mostly taken at lower management levels.

Two assumptions of McGregor's Theory Y:

1. Work is as natural as play or rest, and people can enjoy it and accept responsibility.
2. People exercise self-direction and self-control when committed to objectives, so external control and threat of punishment are not the only means of getting work done.

Two advantages of centralization of authority:

1. It ensures uniformity and consistency of policies, decisions and actions across the organization.
2. It gives top management strong control and coordination, and avoids duplication of effort, which also reduces costs.

Managers can be classified as:

• By level: top-level (strategic), middle-level (tactical) and first-line or supervisory (operational) managers.
• By scope of work: functional managers (marketing, finance, production, HR) and general managers.

• MBO: Management by Objectives.
• PERT: Program (Project) Evaluation and Review Technique.

Planning is the managerial function of deciding in advance what to do, when, how and who is to do it. It bridges where we are and where we want to go by setting objectives and choosing the course of action to reach them.

Steps in the planning process

1. Perceiving opportunities (awareness): scan the internal and external environment for opportunities and threats.
2. Establishing objectives: state what is to be achieved, by when and where, for the whole organization and each unit.
3. Developing premises: make assumptions about the future environment, such as forecasts, policies and existing plans.
4. Identifying alternatives: search for different ways of achieving the objectives.
5. Evaluating alternatives: compare them against objectives and premises, in terms of cost, benefit, risk and feasibility.
6. Selecting an alternative: choose the best course, sometimes combining more than one.
7. Formulating derivative (supporting) plans: prepare plans in departments to support the main plan, such as budgets, procurement and hiring.
8. Implementation and follow-up (budgeting): convert plans into budgets, execute them, and monitor to take corrective action.

Organizing is the managerial function of identifying and grouping activities, assigning duties, delegating authority, and establishing relationships among people so that the objectives of the enterprise can be achieved efficiently. It results in the organization structure.

Functional departmentation

In functional departmentation, activities are grouped according to the major business functions, such as production, marketing, finance and personnel. Each department is headed by a specialist manager who reports to the chief executive.

Chief Executive
 |-- Production
 |-- Marketing
 |-- Finance
 |-- Human Resource

Advantages

1. Gives a logical reflection of the functions and follows the principle of occupational specialization.
2. Makes efficient use of specialized skills, equipment and resources.
3. Simplifies training, and eases control and coordination within each function.
4. Maintains strong top-management control, since the chief executive coordinates the functions.
5. Avoids duplication of effort and is economical.

Disadvantages

1. Responsibility for overall profit is hard to fix because it rests only with the top.
2. Departments may become narrow and focus on their own goals rather than the organization's (the silo effect).
3. Coordination between functions becomes difficult and slow as the firm grows.
4. Develops specialists rather than general managers, which weakens managerial succession.
5. Not suitable for firms with many products or markets.

Organization development (OD) is a planned, systematic, long-term effort, usually supported by top management and often with the help of a change agent, to improve an organization's effectiveness and health by changing its people, culture, structure and processes using behavioural science knowledge.

Areas of organizational change

1. Structure: changing the design of jobs, departments, span of control, authority and reporting relationships, for example moving from a tall to a flat structure.
2. Technology: introducing new equipment, methods, automation and information systems that change how work is done.
3. People (human behaviour): changing attitudes, skills, perceptions and behaviour through training, team building, sensitivity training and counselling.
4. Tasks and job design: job enrichment, enlargement and rotation.
5. Culture and values: altering shared beliefs, norms and ways of doing things.
6. Strategy and products: changing goals, markets, products and services in response to the environment.
7. Physical setting: changes in layout and work environment.

Change is managed through Lewin's three steps: unfreezing, changing and refreezing.

Management is the process of planning, organizing, staffing, directing and controlling the efforts of organizational members and resources to achieve stated goals effectively and efficiently.

Bureaucratic management (Max Weber)

Max Weber, a German sociologist, proposed the bureaucracy as the ideal, most rational form of organization, based on legal authority and impersonal rules rather than personal rule or tradition.

Main features

1. Division of labour: each position has clearly defined duties and authority.
2. Hierarchy of authority: positions are arranged in a chain of command, with each lower office under a higher one.
3. Formal rules and regulations: written rules ensure consistent, predictable action.
4. Impersonality: rules apply equally to all, without favouritism or emotion.
5. Selection and promotion on merit: staff are chosen on technical qualifications and promoted by merit or seniority.
6. Career orientation: officials are salaried, full-time professionals with a career path.
7. Written records: decisions and actions are documented.
8. Separation of ownership from management.

Merits: efficiency, consistency, fairness, stability and predictability.

Limitations: rigidity and red tape, slow decisions, little initiative or innovation, a dehumanizing atmosphere, and resistance to change.

Leader: A leader is a person who influences and guides others, individually or in a group, to willingly work toward the achievement of objectives. Leadership is the ability to inspire and influence people in this way.

Qualities of good leadership

1. Vision and foresight: sees where the organization should go and plans ahead.
2. Intelligence and knowledge: has technical, human and conceptual skills.
3. Integrity and honesty: earns trust by being ethical and consistent.
4. Communication skill: conveys ideas clearly and listens well.
5. Decisiveness: takes timely and sound decisions, and accepts responsibility.
6. Self-confidence and courage: takes risks and stands by decisions.
7. Emotional stability and empathy: understands followers' feelings, and stays calm under pressure.
8. Motivating ability: inspires and rewards followers.
9. Initiative and creativity: takes the lead and welcomes new ideas.
10. Fairness and social skill: treats people equally and builds relationships.
11. Adaptability: adjusts style to the situation.

Controlling is the managerial function of measuring actual performance against planned standards, finding deviations, and taking corrective action so that organizational goals are achieved.

Process of control

1. Establishing standards: set targets or criteria, such as output, cost, quality and time, derived from plans.
2. Measuring actual performance: collect performance data by observation, reports, audits and statistics, in a way that matches the standards.
3. Comparing performance with standards: find the deviations between actual and planned results.
4. Analysing deviations: determine whether they are significant (using the principle of exception) and identify their causes.
5. Taking corrective action: correct the performance, or revise the standards or plans if they are unrealistic.

Control is then followed up in a continuous cycle, since the output of each step feeds back to planning.

(a) The real problem

The real problem is not simply falling sales but the company's failure to adapt to a changing environment:

• It relied on traditional production and routine jobs, with no innovation or new technology.
• It copied Western designs and ignored local design and customer taste, so it lost its distinctiveness when competitors made similar designs.
• It lacked strategic planning and environmental scanning, and competitors followed proper management functions with new technology.
• Top management combined all functional work at the top, with no specialization or delegation, and no proper marketing and R&D.
• The owner was slow to act on the managers' feedback.

(b) Suitable organization and structure

A functional (departmental) structure led by a general manager is suitable for a medium-sized, single-line firm:

Owner / Managing Director
 |-- Production (design, cutting, stitching, quality)
 |-- Marketing and Sales (Kathmandu Valley, outside the Valley)
 |-- Finance and Accounts
 |-- Human Resource
 |-- Research and Design / Technology

Features: specialization by function, clear authority and responsibility, delegation to department heads, a design and R&D unit for local and new designs, and marketing teams for the Valley and outside regions. Teams can be formed across departments for new product development.

(c) Environmental factors

• Internal: owner's vision, organizational culture, workforce skill mix (30% skilled, 60% unskilled and semi-skilled), traditional technology, finance, structure.
• External, micro: customers (changing tastes), competitors (similar designs), suppliers of fabric, distributors, and the public.
• External, macro: economic (income, inflation, imports, prices), socio-cultural (fashion, preference for local design), technological (new machines and design software), political-legal (taxes, labour law, trade policy), and global (cheap imports and Western fashion trends).

(d) Should Mr. Aarush hire a consultant?

Yes, but with conditions. Reasons for: the managers say they have the same knowledge and skills as competitors, so the gap lies in strategy and technology that a consultant with 20 years of garment industry experience could provide; the consultant brings an outside, unbiased view, specialised expertise and new ideas, and saves management time.

Cautions: cost, and a consultant does not know the firm and its culture. Mr. Aarush should first act on the problems already identified (local design, structure, technology), define the scope clearly, and involve his managers so that the advice is implemented. If these are done, hiring a consultant is justified.

Span of control (span of management) is the number of subordinates who report directly to one manager and can be effectively supervised by him or her. A narrow span gives a tall structure, while a wide span gives a flat structure.

Business ethics is the set of moral principles and standards of right and wrong that guide the conduct of a business and its people in dealing with employees, customers, owners, competitors, government and society.

Two quantitative tools of planning:

1. Break-even analysis.
2. PERT/CPM network analysis.

(Others include linear programming, forecasting and budgeting.)

Team management is the process of organizing, guiding and coordinating a group of people with complementary skills so that they work together toward a common goal. It involves setting clear objectives, assigning roles, encouraging cooperation and communication, and resolving conflicts so that the team's combined output exceeds individual efforts.

Mintzberg classified managerial roles into three groups.

• Interpersonal roles: figurehead, leader, liaison.
• Informational roles: monitor, disseminator, spokesperson.
• Decisional roles: entrepreneur, disturbance handler, resource allocator, negotiator.

The communication process runs through these steps:

1. Sender (source) develops an idea.
2. Encoding of the idea into a message.
3. Transmission of the message through a channel (medium).
4. Receiver gets the message.
5. Decoding of the message.
6. Feedback from the receiver to the sender.

Sender -> Encoding -> Message/Channel -> Decoding -> Receiver
   ^                                                    |
   +------------------- Feedback -----------------------+

Noise can disturb the process at any step.

Factors affecting decentralization:

1. Size and complexity of the organization.
2. Costliness and importance of the decision.
3. Philosophy and attitude of top management.
4. Availability of competent managers at lower levels.
5. Geographical dispersion of operations.
6. Desire for uniformity of policy.
7. Quality of communication and control techniques.
8. Pace of environmental change and competition.

TQM (Total Quality Management) is a management approach in which all members of an organization are committed to continuously improving the quality of products, services, processes and culture, with the aim of meeting or exceeding customer expectations.

Controlling is the managerial function of comparing actual performance with planned standards, finding deviations, and taking corrective action to ensure that objectives are achieved.

Characteristics of controlling

1. Goal-oriented: it aims to ensure that organizational objectives are achieved.
2. Continuous process: it is an ongoing activity, not a one-time act.
3. Linked with planning: plans give the standards, so planning and controlling are inseparable ("twin blades of scissors").
4. Pervasive function: it is needed at all levels and in all departments.
5. Forward-looking: it aims to prevent future deviations by learning from the past.
6. Dynamic and flexible: it must adjust to changing conditions.
7. Involves measurement and comparison: it depends on standards and feedback.
8. Action-oriented: it ends in corrective action.
9. Both a positive and negative function: it rewards good performance and corrects poor performance.
10. Economical and understandable: its cost should not exceed its benefits, and people should understand it.

Emerging management issues and challenges

1. Globalization: competition and markets cross borders, so managers must handle cultural differences, trade rules and global supply chains.
2. Technological change and digitalization: e-commerce, automation, artificial intelligence and data analytics demand new skills and continuous innovation.
3. Workforce diversity: managers must integrate people of different gender, age, culture and background, and avoid discrimination.
4. Ethics and social responsibility: stakeholders expect honest, transparent and socially responsible conduct, including care for the environment and sustainability.
5. Quality and customer focus: TQM, continuous improvement and customer satisfaction are needed to survive.
6. Knowledge management and the learning organization: knowledge workers must be attracted, developed and retained.
7. Change and uncertainty: rapid change requires flexibility, and managing resistance to it.
8. Empowerment and teamwork: decision-making moves to teams and employees.
9. Talent retention and work-life balance: skilled people migrate or leave, so motivation and good working conditions matter, especially in Nepal.
10. Entrepreneurship and innovation: firms must adapt to new business models and competitors.
11. Political and economic instability (especially in developing countries): policy changes and resource shortages complicate planning.

Leadership is the process of influencing and inspiring individuals or groups to willingly and enthusiastically work toward achieving organizational goals. It rests on the leader's ability to guide, motivate and set direction for followers.

Qualities of a good leader

1. Vision: a clear picture of the future and the ability to share it.
2. Integrity and honesty: sets an ethical example and wins trust.
3. Intelligence and knowledge: sound technical, human and conceptual skill.
4. Communication skill: explains ideas and listens.
5. Decisiveness and responsibility: makes timely decisions and accepts the outcome.
6. Self-confidence and courage: takes risks and handles pressure.
7. Empathy and emotional stability: understands and handles people's feelings.
8. Motivating and influencing ability: inspires followers to give their best.
9. Initiative and creativity: takes action and generates ideas.
10. Adaptability: adjusts the style to the situation and followers.

Motivation is the inner drive that makes people act in a particular way to achieve goals. Managers use financial and non-financial techniques to motivate employees.

A. Financial (monetary) techniques

1. Pay and salary: fair, competitive pay is the basic motivator.
2. Bonus: extra payment for exceptional performance or profit.
3. Profit sharing and stock options: give employees an ownership interest.
4. Incentive plans: piece rate or commission, linked to output.
5. Fringe benefits: insurance, provident fund, medical and housing allowance.

B. Non-financial techniques

1. Job enrichment, enlargement and rotation: make work more varied, challenging and meaningful.
2. Participation and empowerment: involve employees in decisions and give autonomy.
3. Recognition and appreciation: awards such as "employee of the month", praise and certificates.
4. Job security and good working conditions.
5. Career development: training, promotion and growth opportunities.
6. Management by Objectives: clear goals with feedback and rewards.
7. Quality of work life, flexible hours and a friendly climate.
8. Leadership style and communication: open, supportive relations.

Positive motivation (rewards) and negative motivation (fear, penalty) can both be used, but positive techniques generally give lasting results.

Barriers to communication are factors that block or distort the meaning of a message between sender and receiver.

1. Semantic (language) barriers: jargon, ambiguous words, poor translation or different meanings of the same word.
2. Psychological barriers: attitudes, emotions, prejudice, fear, distrust, inattention, and differences in perception.
3. Physical (environmental) barriers: noise, distance, poor equipment and faulty channels.
4. Organizational barriers: long hierarchy, rigid rules, status differences, specialization and poor information flow.
5. Personal barriers: lack of skills in speaking, listening or writing, poor memory, selective perception, and information overload.
6. Cultural barriers: differences in customs, values and gestures.
7. Technological barriers: failures in or misuse of communication technology.
8. Poor feedback or listening: the sender is unsure the message was understood.

Overcoming them: use simple, clear language, encourage feedback, listen actively, choose the right channel, reduce noise, and build trust and a flatter structure.

Resistance to change is the opposition, whether open or hidden, of individuals or groups to proposed changes in the organization, because they fear or dislike the effects of the change.

Causes: fear of the unknown, loss of job, status or power, habit, economic insecurity, threat to social relations, poor communication and lack of trust, and a belief that the change is not needed.

Ways to mitigate resistance (Kotter and Schlesinger)

1. Education and communication: explain the need, nature and benefits of the change early.
2. Participation and involvement: let those affected help plan the change.
3. Facilitation and support: training, counselling and time to adjust.
4. Negotiation and agreement: offer incentives or trade-offs to those who would lose.
5. Manipulation and co-optation: selective information, or giving key people a role (used with care).
6. Explicit and implicit coercion: threats of job loss or transfer, as a last resort.

Other steps include introducing change gradually, building trust, and following Lewin's unfreezing, changing and refreezing approach.

(a) Practice of motivation in Big Bazar, with reference to theories

• Maslow's hierarchy: profit sharing and salary meet physiological and security needs; social gatherings and the family-like "associates" culture meet belonging needs; "employee of the month" and honour rolls meet esteem needs; freedom to be innovative and training meet self-actualization needs.
• Herzberg's two-factor theory: profit sharing and working conditions are hygiene factors; recognition, achievement, responsibility, growth and training are motivators, which are strongly present.
• McGregor's Theory Y: Ramesh trusts employees, gives freedom and encourages innovation.
• Vroom's expectancy theory: high performers are regularly rewarded, so effort leads to performance and then to rewards, which people value.
• Equity theory: profit sharing for all associates gives a sense of fairness, though some staff left for better salaries, which suggests perceived inequity in pay.
• McClelland's theory: competition among stores and the awards stimulate achievement and affiliation needs.

Overall the practice of motivation is strong and mostly non-financial.

(b) Is "people-oriented" management appropriate for Nepal?

It is largely appropriate. Nepali culture values relationships, respect and collectivism, so personal concern, social meetings and a family-like atmosphere create loyalty and commitment. Training and empowerment help develop scarce skilled labour and reduce turnover, and brain drain makes retention important. Limits: people-orientation alone is insufficient when competitors offer higher pay; it must be combined with competitive compensation, productivity focus and systems, and some employees may take advantage of a soft approach. A balanced approach, people-oriented plus performance-oriented, suits the Nepalese corporate world best.

(c) Strengths and weaknesses of Big Bazar

Strengths: strong growth (sales up 30% and profits up 25% each year); a leader respected by employees; people-oriented culture; training and development; profit sharing and rewards; open communication; cost cutting without lowering quality; wide network of more than 10 stores.

Weaknesses: loss of competent staff to Home Needs Stores (pay not fully competitive); dependence on the founder's personality and philosophy (possible succession problem); Ramesh's complacency about competition; no stated strategy for technology or marketing; expansion may strain control and quality; rising competition from a similar chain.

(d) Motivational techniques used, and their appropriateness

Techniques: right person in the right place, freedom to innovate, on-the-job and formal training, profit sharing for all associates, treating staff as "associates", social meetings with managers, personal contact and use of first names, "employee of the month", honour rolls for stores, and regular rewards for high performers.

These are appropriate because they combine financial and non-financial, individual and team incentives, and meet higher-level needs. However, they need to be supported with market-competitive pay, a career path and retention measures, as some competent staff have already left for better salaries.

The principle of exception states that managers should concentrate on significant deviations from plans or standards and leave routine matters that go as planned to subordinates. Only exceptional cases, either unusually good or bad, are reported upward, which saves managers' time and makes control efficient.

Corporate social responsibility (CSR) is the obligation of a business to act in ways that benefit society as well as owners, by considering economic, legal, ethical and philanthropic duties to employees, customers, the community and the environment.

Sender -> Encoding -> Message through Channel -> Decoding -> Receiver
   ^                                                            |
   +------------------------ Feedback --------------------------+
                  (Noise may affect every step)

Steps: the sender forms an idea, encodes it into a message, sends it through a channel, the receiver decodes it, and gives feedback to the sender.

A psychological contract is the set of unwritten, mutual expectations between employees and the organization about what each will give and receive, for example effort, loyalty and commitment in exchange for fair pay, job security, respect and development. It is not a formal agreement, but when it is breached, motivation and trust fall.

Staffing is the managerial function of filling and keeping filled the positions in the organization structure. It covers human resource planning, recruitment, selection, placement, training and development, appraisal and compensation of people.

Three tools and techniques of controlling:

1. Budgetary control.
2. Management audit (internal and external audit).
3. PERT/CPM, or break-even analysis.

(Other tools include MIS and ratio analysis.)

Three levels of planning:

1. Strategic planning, done by top management for the long term.
2. Tactical (administrative) planning, done by middle management to implement the strategy.
3. Operational planning, done by lower management for day-to-day activities.

Resistance to change is the unwillingness or opposition of employees or groups to accept, support or adapt to changes in the organization, such as new technology, structure, procedures or policies, usually because of fear of loss, uncertainty or habit.

• Nature: Line authority is the direct superior-subordinate authority to command and take decisions on main operations; staff authority is advisory and supports line managers with expert advice and service.
• Chain of command: Line authority flows down the scalar chain; staff authority has no right to command outside its own department and only recommends.

Total Quality Management (TQM) is a management philosophy in which every member of the organization is committed to continuously improving quality in all processes, products and services so as to satisfy or delight customers.

Tools and techniques of TQM

1. Quality circles: Small groups of employees from the same area meet regularly to identify, analyse and solve work-related quality problems.
2. Benchmarking: Comparing the organization's products and processes with those of the best performers and adopting their best practices.
3. Kaizen (continuous improvement): Small, ongoing improvements made by everyone in the organization.
4. Just-in-Time (JIT): Materials arrive only when needed, reducing inventory, waste and defects.
5. Six Sigma: A data-driven method aimed at near-zero defects (about 3.4 per million opportunities) using the DMAIC cycle.
6. Statistical process control and quality tools: Check sheets, Pareto charts, cause-and-effect (fishbone) diagrams, histograms, scatter diagrams and control charts.
7. Employee empowerment and teamwork: Involving employees in decisions on quality.
8. ISO 9000 standards: Internationally recognised quality system certification.
9. PDCA cycle (Plan-Do-Check-Act): A repeated cycle for solving problems and improving processes.

Leadership style is the pattern of behaviour a leader uses to influence followers. The main styles are:

1. Autocratic (authoritarian): The leader takes all decisions and gives orders with little consultation. It gives quick decisions and control, but lowers morale and creativity.
2. Democratic (participative): The leader consults the group and shares decision making. It raises motivation and commitment but can be slow.
3. Laissez-faire (free-rein): The leader gives almost complete freedom to subordinates. It suits highly skilled, self-motivated people but may cause lack of direction.
4. Paternalistic: The leader acts like a father, caring for employees' welfare while expecting loyalty and obedience.
5. Transformational: The leader inspires followers with vision and charisma to go beyond self-interest and achieve change.
6. Transactional: The leader uses rewards and punishments to exchange for performance against set goals.

Managerial grid (Blake and Mouton), based on concern for people and for production, further describes styles such as impoverished, country club, authority-compliance, middle-of-the-road and team management. The best style depends on the situation, the followers and the task.

Decentralization of authority means the systematic delegation of decision-making power to lower levels of management, so that authority is dispersed throughout the organization rather than kept at the top.

Advantages

1. Reduces the burden of top managers, who can concentrate on strategic matters.
2. Faster decisions because those close to the problem decide without waiting for approval.
3. Better quality of decisions as lower managers know local conditions.
4. Motivation and morale improve through greater responsibility and autonomy.
5. Develops managers by training them for higher positions.
6. Better control and accountability through divisional performance measurement.
7. Supports diversification and growth by letting units adapt to local markets.
8. Greater flexibility and responsiveness to change.

For a control system to work well, it should have the following essentials:

1. Suitability: It should fit the nature, size and needs of the organization and the activity controlled.
2. Timeliness: Deviations should be detected quickly so that corrective action can be taken before major loss occurs.
3. Accuracy: Information and standards must be correct and reliable.
4. Objectivity: Standards and measurement should be clear, quantifiable and free from personal bias.
5. Economy: The cost of control should be less than the benefit gained.
6. Flexibility: It should adapt to changed plans and circumstances.
7. Simplicity and understandability: Employees should easily understand the system.
8. Focus on critical points (strategic control points): Attention should go to the key areas that most affect results.
9. Exception principle: Managers should deal only with significant deviations.
10. Corrective action: The system should show who is responsible and lead to action to correct deviations.
11. Acceptability: Employees should accept the system and take part in setting standards.
12. Integration with planning: Standards should come directly from plans.

(a) Purpose of Theory Y

Theory Y (McGregor) assumes that people like work, accept responsibility, and are capable of self-direction and creativity. In Janak Paper Mill it was meant to motivate employees and department heads by giving them independence in decisions about their own departments' problems. This would encourage initiative, responsibility, faster decisions and better involvement, and so higher productivity and quality.

(b) Reasons for the Mill's early expansion

• It was established to meet a real national demand for paper products, so the market was ready.
• It produced a variety of quality products as per demand and distributed them to major cities.
• Better quality products were exported to India and other countries, widening the market.
• Theory Y and decentralised decision making let departments act quickly.
• Growing business justified adding two production shifts.

(c) Reasons for the decline in business

• Theory Y was not properly implemented; some employees ignored responsibility, so efficiency and quality fell.
• Poor quality of products and delays in delivery caused complaints from clients.
• New competitors entered the paper sector and took market share.
• Weak supervision and control, and lack of monitoring of working procedures.
• Failure to keep up quality and productivity improvement and to adapt to the changing market.

(d) Will Mr. Rana's team work concept succeed?

Yes, it is likely to succeed, with some conditions.

• Mr. Rana is qualified (MBA, a decade of experience) and first diagnosed the problem through supervisors' reports.
• Self-managed teams of specialists with full authority and responsibility increase ownership, motivation and speed of decisions, and the case already shows some improvement.
• Rewards linked to targets give incentive and reduce shirking.
• Supervisors acting as facilitators reduces control burden and promotes coordination.

However, results will depend on proper team training, clear targets and performance measurement, fair reward systems, and monitoring so that the earlier problem of some members avoiding responsibility (social loafing) does not return. With these safeguards, it should improve quality and productivity.

Management is the process of planning, organizing, staffing, directing and controlling human, financial, physical and informational resources to achieve organizational goals efficiently and effectively. It is a universal, goal-directed and continuous activity carried out by managers at all levels.

Roles of managers (Henry Mintzberg)

Mintzberg identified ten managerial roles grouped in three categories.

A. Interpersonal roles (arising from formal authority and status)

1. Figurehead: Performs ceremonial and symbolic duties such as receiving visitors, signing documents and attending functions.
2. Leader: Motivates, guides, hires, trains and directs subordinates.
3. Liaison: Maintains a network of contacts outside the unit or organization to obtain information and support.

B. Informational roles (receiving and passing information)

4. Monitor: Scans the environment and collects information about the organization and its surroundings.
5. Disseminator: Passes information to subordinates and others inside the organization.
6. Spokesperson: Communicates on behalf of the organization to outsiders such as the press, government and shareholders.

C. Decisional roles (making choices)

7. Entrepreneur: Initiates and designs change and improvement projects and takes opportunities.
8. Disturbance handler: Takes corrective action when unexpected problems or crises arise.
9. Resource allocator: Decides who gets money, time, people and equipment.
10. Negotiator: Represents the organization in negotiations with unions, suppliers and others.

Managers' emphasis on each role varies with level and function, but all roles together enable them to run the organization effectively.

Contingency theory (situational approach) holds that there is no single best way to manage in all situations. The most effective management practice depends on (is contingent upon) the circumstances facing the organization. It developed in the 1960s through the work of Joan Woodward, Burns and Stalker, Lawrence and Lorsch, and Fiedler as a reaction to the universal principles of classical theory.

Main ideas

• Management is situational: "if X, then Y" thinking replaces universal rules.
• Managers must analyse the situation and choose the techniques and style that fit it.
• Organizations are open systems affected by the environment, so structure and practices must match it.

Contingency (situational) variables

1. Environment: Stable environments suit mechanistic (rigid, hierarchical) structures; dynamic ones suit organic (flexible) structures.
2. Technology: The production technology (unit, mass, process) decides suitable structure (Woodward).
3. Organization size: Large organizations need more formal rules and specialisation.
4. People: Individual differences in needs, skills and attitudes affect leadership and motivation.
5. Task and time: The nature of tasks and urgency influence the style used.

Example: Fiedler's model says task-oriented leadership works best in very favourable or very unfavourable situations, while relationship-oriented leadership works best in moderate ones.

Evaluation

• Strengths: Realistic, flexible, integrates other approaches, encourages situational analysis.
• Weaknesses: No complete theory; hard to identify and measure all variables; may be complex and lack clear guidance.

Control is the managerial function of measuring actual performance, comparing it with planned standards, and taking corrective action where there are deviations so that organizational objectives are achieved.

Types of control systems

A. Based on timing

1. Feedforward (preliminary) control: Applied before work starts, to prevent problems by ensuring quality inputs, resources and policies (for example, screening raw materials, selecting qualified staff).
2. Concurrent (steering) control: Applied while work is in progress, using supervision and real-time monitoring to correct problems immediately (for example, direct supervision, quality checks on the production line).
3. Feedback (post-action) control: Applied after the activity is completed, comparing results with standards to learn and improve in future (for example, financial statements, variance analysis, customer surveys).

B. Based on the nature or area of control

4. Financial control: Budgets, ratio analysis, break-even analysis and audits.
5. Operational control: Inventory, quality and production control.
6. Strategic and management control: Assessing overall performance against strategic goals.

C. Based on the approach

7. Bureaucratic control: Rules, procedures, hierarchy and authority.
8. Market control: Prices and competition used to evaluate performance.
9. Clan control: Shared values, culture and norms guide behaviour.

A good system combines these types to prevent, monitor and correct deviations.

Leadership style is the consistent way a leader influences, directs and motivates followers. The major styles are:

1. Autocratic (authoritarian) style The leader makes decisions alone and expects obedience. Merits: quick decisions, clear control, suited to crises and unskilled workers. Demerits: low morale, little creativity, dependence on the leader.

2. Democratic (participative) style The leader consults and involves subordinates in decisions. Merits: high motivation, better ideas, commitment. Demerits: slow decisions and possible conflict.

3. Laissez-faire (free-rein) style The leader gives subordinates almost total freedom with minimal interference. Merits: encourages creativity among skilled, motivated staff. Demerits: lack of direction, confusion and poor coordination.

4. Paternalistic style The leader acts as a caring parent, looking after employees' welfare while expecting loyalty.

5. Transactional style The leader clarifies tasks and exchanges rewards or punishments for performance.

6. Transformational style The leader inspires through vision, charisma and intellectual stimulation to achieve extraordinary change.

7. Charismatic and situational styles A charismatic leader influences through personal appeal. Situational leadership (Hersey and Blanchard) says style should change with follower maturity: telling, selling, participating, delegating.

Behavioural frameworks: Ohio State studies (initiating structure and consideration), Michigan studies (job-centred and employee-centred) and Blake and Mouton's managerial grid (team management 9,9 is considered best).

No single style is best; effectiveness depends on the leader, followers and the situation.

Planning is the primary managerial function of deciding in advance what is to be done, when, how and by whom. It involves setting objectives and selecting the courses of action to achieve them.

Process of planning

1. Being aware of opportunities: Scan the external and internal environment (SWOT) to identify opportunities and threats.
2. Setting objectives: Establish clear, measurable, time-bound goals for the organization and each unit; they guide all later steps.
3. Developing premises: Make assumptions about future conditions (forecasts, policies, market trends) on which plans will be based.
4. Identifying alternatives: Find the various ways of achieving the objectives.
5. Evaluating alternatives: Compare the options by cost, benefit, risk, resources and feasibility.
6. Selecting an alternative: Choose the best course of action (decision making).
7. Formulating derivative (supporting) plans: Prepare detailed plans such as budgets, schedules and policies to support the main plan.
8. Implementation and follow-up (control): Put the plan into action, monitor results and revise the plan when required.

Planning is a continuous, cyclical process, and its quality depends on accurate information and managerial judgement.

Organization development (OD) is a planned, organization-wide, long-term effort, managed from the top and supported by behavioural science knowledge, to improve the organization's effectiveness and health and its ability to adapt to change by changing attitudes, values, behaviour and structure.

Characteristics: planned change, top management support, a systems view, use of a change agent, participation, and a focus on both people and performance.

Areas (interventions) of organization development

1. Individual level:
   • Sensitivity (T-group) training: improves self-awareness and understanding of others.
   • Counselling, coaching and training: develop skills and attitudes.
2. Interpersonal and group level:
   • Team building: improves cooperation and effectiveness of work groups.
   • Process consultation: helps groups understand and improve their processes.
   • Intergroup development: reduces conflict between groups.
   • Survey feedback: data collected from employees is fed back to guide change.
3. Organization-wide level:
   • Structural change and job redesign: job enrichment, restructuring and sociotechnical systems.
   • Management by objectives, TQM and reengineering: improve overall performance.
   • Culture change and strategic change: realign values and strategy with the environment.
4. Management and career development: training of managers, succession planning and leadership programmes.
5. Conflict management and change management: handling resistance and conflict during change.

Process: diagnosis, planning the intervention, implementation and evaluation/follow-up.

Interpersonal roles are the managerial roles that arise from a manager's formal authority and involve dealing with people, both inside and outside the organization. They are three: figurehead (ceremonial duties), leader (motivating and directing subordinates) and liaison (building outside contacts).

1. Division of labour and specialisation of tasks.
2. A clear hierarchy of authority, with each lower office under a higher one.
3. Formal written rules, regulations and procedures applied uniformly.
4. Impersonal relationships and promotion based on merit and technical qualification (also: records in writing and career orientation).

Corporate social responsibility (CSR) is the obligation of a business to act in ways that benefit society as well as earn profit, by behaving ethically, obeying laws, protecting the environment and contributing to the welfare of employees, customers, the community and other stakeholders.

• Programmed (routine) and non-programmed (non-routine) decisions
• Strategic, tactical (administrative) and operational decisions
• Individual and group decisions
• Decisions under certainty, risk and uncertainty
• Organizational and personal decisions
• Major and minor decisions

Staffing is the managerial function of filling and keeping filled the positions in the organization structure with the right people. It includes manpower planning, recruitment, selection, placement, training and development, appraisal and compensation of employees.

In centralization, decision-making authority is concentrated at the top level of management, whereas in decentralization it is delegated and spread to middle and lower levels, who take decisions on matters within their area.

• Formal groups: command (functional) groups, task groups, committees and teams
• Informal groups: interest groups and friendship groups
• Primary and secondary groups
• Reference groups, membership groups and in-groups/out-groups

In the all-channel network, every member communicates freely and directly with every other member, so there is no central leader. Each person (node) is connected to all the others:

        A
      / | \
     /  |  \
    E---+---B
     \ / \ /
      X   X
     / \ / \
    D---+---C

Simplified: with five members A, B, C, D and E, every pair is linked, giving 10 two-way lines (A-B, A-C, A-D, A-E, B-C, B-D, B-E, C-D, C-E, D-E). It is also called the star-free or full-matrix network and is typical of self-managed teams.

1. Education and communication
2. Participation and involvement
3. Facilitation and support
4. Negotiation and agreement (Also: manipulation and co-optation, and explicit or implicit coercion.)

MBO stands for Management by Objectives.

The systems theory views an organization as a system: a set of interrelated and interdependent parts working together to achieve a common goal. The idea comes from general systems theory (Ludwig von Bertalanffy) and was applied to management by Chester Barnard, Kast and Rosenzweig, and others.

Elements of a system

• Inputs: Resources such as people, money, materials, information and technology.
• Transformation process: Activities that convert inputs, such as production and management processes.
• Outputs: Goods, services, profit, employee satisfaction.
• Feedback: Information on results used to correct and improve the system.
• Environment: The surroundings that affect and are affected by the system.

Types of systems

• Closed system: little interaction with its environment.
• Open system: continually interacts with its environment; organizations are open systems.

Key concepts

• Subsystems: Departments and units that are parts of the larger system.
• Synergy: The whole is greater than the sum of its parts.
• Interdependence: A change in one part affects the others.
• Entropy: Systems without new inputs tend to decay.
• Equifinality: The same goal can be reached by different paths.

Implications: Managers should look at the organization as a whole, coordinate subsystems, scan the environment and use feedback.

Limitations: It is abstract and gives little practical, specific guidance.

Leadership is the process of influencing and inspiring people to willingly work toward the achievement of group or organizational goals.

Qualities of a good leader

1. Vision and foresight: Clear sense of direction and the ability to anticipate the future.
2. Integrity and honesty: Ethical conduct that earns trust.
3. Intelligence and knowledge: Sound judgement and technical and managerial competence.
4. Communication skill: Ability to explain ideas clearly and listen to others.
5. Self-confidence and decisiveness: Taking timely decisions and standing by them.
6. Emotional stability and empathy: Staying calm and understanding followers' feelings.
7. Initiative and drive: Energy and willingness to take responsibility and risks.
8. Ability to motivate and develop others: Inspiring, coaching and delegating.
9. Fairness and impartiality: Treating everyone equally.
10. Adaptability and social skills: Flexibility to the situation and ability to work with different people.

Quality is the degree to which a product or service meets or exceeds the needs and expectations of customers; it is often described as "fitness for use" or conformance to requirements.

Importance of quality

1. Customer satisfaction and loyalty: Quality products bring repeat purchases and good word of mouth.
2. Competitive advantage: Superior quality differentiates the firm from rivals.
3. Higher sales and profit: It allows premium prices and a larger market share.
4. Lower costs: Fewer defects, rework, wastage and returns reduce cost.
5. Good reputation and brand image.
6. Employee morale: Pride in work improves motivation and productivity.
7. Reduced liability: Fewer complaints, legal claims and safety risks.
8. Access to global markets: Quality standards (such as ISO) are needed for export.

Resistance to change is the opposition or unwillingness of individuals or groups to accept and support changes in the organization, such as new technology, structure or procedures. It may be open or hidden, immediate or delayed.

Causes: fear of the unknown, fear of job or income loss, habit, threat to status or power, lack of trust, poor communication, selective perception, and group pressure.

Ways to overcome resistance (Kotter and Schlesinger)

1. Education and communication: Explain the need and the effect of change in advance.
2. Participation and involvement: Involve those affected in planning the change so that they feel ownership.
3. Facilitation and support: Provide training, counselling and emotional support.
4. Negotiation and agreement: Offer incentives or concessions to groups who would lose from the change.
5. Manipulation and co-optation: Selective use of information or giving key people a role in the change.
6. Explicit and implicit coercion: Threats of transfer or loss of promotion; a last resort when speed is essential.

Other methods include building a sense of urgency, leading by example, introducing change gradually and rewarding adopters. Managers should choose the approach to suit the situation, the speed required and the strength of resistance.

(a) Analysis of Knight's managerial approach

Knight is a visionary, innovative and strategic leader. His approach is:

• Strategic and analytical: He plans carefully and decides after analysing internal and external environments, taking calculated risks.
• Participative yet decisive: He is able to take independent decisions, but seeks insight and ideas from his management teams first, and formed a multi-disciplinary opinion-leaders' group of stakeholders.
• Culture-building: He created a culture of employee loyalty and team spirit.
• Empowering and hands-off: He does not closely guide or question managers about product details, which shows trust in them (a delegating style).
• Structure-conscious: He keeps hierarchy flat and organizes around teams, decentralizing authority.

Overall, it is a modern, democratic-delegative, team-based approach that has made Nike a global leader.

(b) Advantages of decentralized and participative leadership

1. Faster decisions by those closest to the market.
2. Better quality decisions from many ideas and expertise.
3. Higher motivation, commitment and job satisfaction.
4. Encourages creativity, innovation and risk taking.
5. Reduces the burden on top management, which can focus on strategy.
6. Develops future leaders.
7. Builds teamwork, loyalty and lower turnover.
8. Flexibility and responsiveness to local conditions.

(c) Internal and external factors to analyse

Internal: strengths and weaknesses in finance, production and contract factories, marketing and brands, R&D and innovation, human resources, organizational culture and structure, and product portfolio and efficiency.

External: economic conditions and exchange rates, competitors (such as Adidas and Puma), changing customer tastes and fashion trends, technology and e-commerce, political and legal conditions in the Asian countries where factories are located, labour practices and social expectations, trade policies, and environmental concerns.

These form a SWOT analysis guiding strategy.

(d) Challenges for the new CEO

1. Maintaining the strong culture of loyalty and team spirit and the founder's vision.
2. Replacing the leadership and credibility of a legendary CEO; stakeholder expectations will be high.
3. Retaining the freedom and autonomy of teams while preserving coordination and control.
4. Sustaining innovation and staying ahead of intense global competition.
5. Managing a global supply chain of outsourced factories, including ethical labour issues, costs and reputation.
6. Adapting to changing technology, digital sales and consumer trends.
7. Handling resistance or uncertainty among employees during the leadership transition.
8. Balancing growth in apparel and equipment with the core footwear business.