MGMT10002 - Principles of Management SUMMARY NOTES
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Course
Principles of Management (MGMT10002)
Institution
University Of Melbourne (UM
)
Covering core topics such as planning, organizing, leading, and controlling, these notes provide valuable insights, practical examples, and key takeaways to help you excel in the dynamic field of management. Whether you're a student aiming for academic success or a professional seeking to enhance y...
What is Management?
• Management is the process of planning, organising, leading, and controlling resources to achieve specific goals and
objectives within an organisation.
• Good management seeks to allocate resources effectively and efficiently while
also balancing the interests of stakeholders.
• Micro level of management involves managing oneself.
Macro level of management involves managing large organisations/companies.
Job as a Manager
• Involves overseeing the activities of a team or department within an organisation.
• Managers make decisions that impact the success of their team business as a
whole.
• Comes with responsibility, however, given the hardship is rewarded financially
and psychologically.
Why Does Management Matter? (NAB Case)
Rise
• During the period Don Argus was the Chief Executive Officer of NAB and had a high responsibility and authority of
the organisation, its profitability and share price was rising at a considerably higher rate than the rest of the market.
• Professional shareholders were keen to invest their money with firm hope of profit.
Fall
• When Don Argus resigned, his team of executives soon followed, leading to rapid decline in NAB’s profitability under
the authority of subsequent CEOs.
• NAB faced major financial losses, was involved in public scandals, and within years became the underperforming bank
in Australia.
• Point to be noted: never take good management for granted. Difference between effective and weaker management can
make colossal difference.
Process of Management
1. Planning – setting objectives, determining strategies, and
deciding what resources, products and staff is needed.
2. Organising – gathering the resources and appointing the
staff in a way that maximises efficiency.
3. Leading – setting a vision, motivating, and inspiring
everybody in the organisation to achieve the desired
outcomes.
4. Controlling – monitoring progress, evaluating
performance, or addressing shortcomings that may affect
the work such as staff absences or delays.
Management Skills
• Conceptual skills – cognitive ability to see the organisation as a whole and the relationship between its parts.
• Human skills – ability to work with and through other people and to work effectively as a group member.
• Technical skills – the understanding of and proficiency in the performance of specific tasks.
When skills fail
• Flaws and weaknesses become most apparent under conditions of rapid change, uncertainty, or crisis.
• During turbulent times, managers must stay on their toes and apply all their skills and competencies in a way that
benefits the organisation and its stakeholders – employees, customers, investors, the community, and the environment.
• Primary reason for management failure is ineffective communication skills and practices.
,Is Good Management Easy?
• There are numerous lousy and ineffective managers in the industry.
• However, there is substantial evidence to suggest that productive and successful management is possible given that
many elements are integrated well and stakeholders such as employees, customers and environment are treated well.
• The following issues can arise:
- Complex human behaviour: dealing with people
- Multiplicity of stakeholders: dealing with conflicting goals.
- Environmental uncertainty: coping with rapid changes and ambiguity in the environment.
- Contextual dependence: matching managerial style and type of organisations.
Management Types
Vertical Differences - Hierarchy
• Top managers are responsible for the entire organisation (president, chairperson, executive director, CEO etc.).
They look at long-term future and general environmental trends and the organisation’s overall success.
• Middle managers are responsible for business units and major departments (department head, division head, director
of the research lab etc.).
Responsible for implementing strategies defined by top managers.
• First-line managers are directly responsible for production of goods and services (supervisor, line manager, office
manager).
Primary concern is application of rules and procedures to achieve efficient production.
Evolution of Management Thinking
Classical Perspective
• Early study of management as we know it today.
• Scientific management is a subfield of classical management that emphasises scientifically determined changes in
management practices as the solution to improving labour productivity.
th th
• Emerged during 19 and early 20 centuries.
• Factory system that began to appear in the 1800s posed new challenges that earlier organisations had not encountered.
• New challenges included: training employees, tooling plants, scheduling complex manufacturing operations, and
dealing with labour dissatisfaction and resulting strikes.
• Between 1880 and 1920, number of professional managers grew substantially in the developed world, who began
developing and testing solutions to mounting challenges in organising, coordination and controlling growing
workforce.
Humanistic Perspective
• Emphasised the importance of understanding human behaviours, needs and attributes in the workplace.
• Three primary subfields:
Human relations movement – based on the idea that truly effective control comes from satisfaction of employees’
basic needs as the key to increased worker productivity.
Human resources perspective – suggests jobs should be designed so that tasks are not perceived as demeaning but
instead allow workers to use their full potential.
Behavioural sciences approach – applies social science in an organisational context, drawing from economics,
psychology, sociology, and other disciplines to cope with change, improve internal relationships and increase problem-
solving capabilities.
, THE EXTERNAL ENVIRONMENT
External Organisational Environment
• Includes all elements existing outside the
boundary of the organisation that have the
potential to affect the organisation.
• Can be conceptualised into two components:
general and task environments.
General Environment
• Affects organisations indirectly.
• Includes factors part of the acronym PEST.
1. Political-legal
Political regime and stability of the region.
(E.g., trade issues with foreign countries).
2. Economic
Overall economic health of the region in which the organisation operates (employment, inflation, recession,
interest rates, cost of raw materials)
3. Social-cultural
Changes in demographics (population numbers), customs, values, and lifestyle trends of the population.
4. Technology
Advances in technology and scientific knowledge.
• Also includes changes in federal regulations, international dimension, an economic recession, shifting social attitudes
towards how and where the products are made, and increasing pressure from environment activists.
Task Environment
• Closer to the organisation and includes the sectors that conduct day-to-day transactions and directly influence the
organisation’s basic operations and performance.
• Includes competitors, supplies, customers, and the labour market.
• For example, customers today have greater power because of the internet, and can directly influence an organisation’s
reputation and success. It’s not just millennials or most affluent putting evolving drivers in the mix, but rather the entire
consumer market that is changing in a fundamental way.
Internal Environment
• Includes elements within the organisation’s boundaries.
• Composed of current employees, management, and especially corporate culture, which defines employee behaviour in
the internal environment and how well the organisation will adapt to the external environment.
Porter’s Five Competitive Forces
Forces that help determine an organisation’s position compared
to its competitors in the industry.
1. Suppliers – Source raw materials that ramp up production,
hence, can put pressure on the organisation. This is critical
during times of difficulty since their contribution becomes all
the more essential to the organisation.
2. Potential new entrants – Internet has made it much easier for
new companies to enter an industry by reducing the need of an
established sales force, physical assets such as buildings and
machinery, or access to existing supplier and sales channels.
1. Threat of new entrants is dependent on the industry, for example, the barriers to enter (finances, resources etc.) the
restaurant business are much less than the automobile industry.
2. Regulations from competitors can affect this force, e.g., chemist shops can’t open near another chemist shop.
3. Bargaining power of buyers – Informed customers become empowered customers. Internet provides easy access to a
wide range of information about products, services, and competitors, thereby increasing the customers bargaining
power.
4. Threat of Substitutes – Many goods or services have substitutes, for instance, the customer may have an alternative to
suit their needs rather than buying from a given industry or organisation.
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