LESSON 1

THE MANAGEMENT CONCEPT

OBJECTIVES
At the end of this lesson, the students will be able to
1. discuss the nature of management,
2. explain the importance and meaning of management,
3. differentiate efficiency from effectiveness,
4. identify factors that influence management practices and trends, and
5. appreciate the importance of management in the success of organizations.

Management has always been attributed to the activities of an organization, specifically its
day-to-day operations. It consists of administrative job functions that require crirical thinking and
decision making. It also entails responsobilities concerned not only with the people, resources, and
processes within the organization but also with outside factors such as the environment where the
organization operates.

Let’s Examine
Do you have the potental to become a good manager? Take this quiz to find out. Read each
statement and then encircle the corresponding number of your answer.

Behavioral / Trait Strongly Somewhat Somewhat Strongly

Disagree Disagree Agree Agree

1. I ofen take chances even if I am not certain of the

Outcome 2 4 6 8
2. I enjoy working with others to achieve a common 2 4 6 8
goal.
3. I often tend to have an influence on others. 2 4 6 8
4. I have strong views about what is right and wrong
and can easily convince people to share my views. 2 4 6 8
5. I inspire confidence in other people 2 4 6 8
6. I provide constructive criticism to people who need 2 4 6 8
them
7. I make myself available to others 2 4 6 8
8. I exude confidence and determinaton to others 2 4 6 8
9. I express genuine concern for the well-being and
interest of others. 2 4 6 8
10. I ofen tell people when they perform poorly or do
not meet my expectatons. 2 4 6 8
 Add your scores for all the statements and then check the table below for an interpretaton of your
total score.
Points You are a potental managerial candidate. Keep up the good performance and you can
68-80 become one of the best managers in the future.
You are a good managerial candidate. You have most of the qualites of a good manager.
55-67 With consistent improvement, you can become one of the best in the future.
You are an average managerial candidate. You have some of the qualites of a good
manager but stll have traits and skills that you need to improve on. With determinaton
41-54 and practce, you can take the next step to become a good manager.
You are a below-average managerial candidate. You have one or two traits of good
manager but stll need improvement in may aspects. Take tme to gain new knowledge
40 below and practce your skills. Improvement is a reward gained only by a persistent learner.

If your total score is at least 55, then that is good. You have the basic qualites of a good manager. If
you score less than 40 points, do not feel bad. The test result is only an outline of your current skill. It does
not dictate whether you will be a good or bad manager in the future. This test will help you recognize
aspects that you should contnue to improve upon, as well as traits that you need to develop and
enhance. With dedicaton and practce, anyone can become a potental managerial candidate. Be ready
to become one!

Let’s Discuss

Nature of Management
Management is a science as well as an art. It is a body of knowledge whose ideas and
principles have become the basis of organizational frameworks employed by many
businesses and organizations. It is considered a science because it evolved from a
number of theories that involved extensive studies and experiments. The management
principles practiced by business people and professionals are based on scientific
principles, scholarly studies, and statistical data. The problem solving nature of
management benefits greatly from methods and practices adopted from scientific
principles.

However, many management experts points out that management is not an

exact science like mathematics. Despite the accuracy of data from statistics, the
use of mathematical tools is only one aspect of management. A good manager
must be able to look at situations and use creativity and imagination in coming
up the solutions to problems. It is in this aspect that one can consider
management as an art. Creativity and ingenuity are important traits of
managers that enable them to effectively use business strategies in any
situation, and make innovations that result in new products, services, and
processes. This ingenuity can be drawn from the effective application of
knowledge and skills of decision-makers.

Meaning and Importance of Management

Good management is the art of making problems so interesting and their solutions so-constructive that
everyone wants to get to work and deal with them.

-Paul Hawken

Management is the process of planning, organizing, leading, and controlling the

activities of an organization effectively and efficiently to achieve its goals. It plays a
crucial role in every organization, especially in today’s world that is much more complex
and where constant change is the norm Organizations, therefore, need to keep abreast
of all these changes and managers need to be dynamic and flexible to address the
challenges that changes bring.

Management also provides the means to maintain a firm’s competitive

advantage. It lays out the foundation of successful operations that lead to
efficiency and profitability,and establishes the link between the development of
strategies and their implementation and control. The effective application of plans
require skilled managers who are able to combine resources and capital in executing
strategies and sustaining the operations of their organizations.

Efficiency and Effectiveness

Efficiency and Effectiveness are closely related concepts that managers apply to render
excellent performance. A skillful balance between the two defines the success or failure of a
manager. Some people interchange the concepts of efficiency and effectiveness, believing that they
have the same meaning. However, these two concepts are different from each other.

Efficiency is the ability to maximize output with minimum input. It is often referred to as
“doing things right,” and seeks to limit the wasted input which is costly for business. There is an
element of speed in efficiency since it requires things to be done quickly to avoid wasting time and
effort.

Effectiveness, meanwhile, is the capacity to attain an intended objective or result. It is often

called “doing the right thing.” The intention is to meet the desired goal regardless of the amount of
input required. Careful analysis and critical thinking are present in effectiveness. If there is a goal
that needs to be achieved, the things that need to be done are prioritized to achieve that goal.

Factors Influencing Management

There are five factors that influence today’s business environment. They are globalization,
technology, sustainability and corporate social responsibility, psychology, and ecosystems.
Effective managers should determine the extent that these factors affect their
respective business organizations and make plans to address the challenges they
pose. They should take advantage of the opportunities presented by developments
in these areas.

Globalization
Refers to the phenomenon of growing interconnectivity and interdependent
relations between nations. This growth has been greatly influenced by
advancements in technology,transportation, communication, and calculation,
as well as the gradual deregulation of trade. As a result, local companies have now
become part of a highly competitive global market that is characterized by a wide
audience and a great potential for increased profit. This poses a challenge for
managers to consistently make good decisions to satisfy and maintain their customers
and attract more buyers for their products and services. Managers also have the
responsibility to oversee the performance of employees to ensure that they deliver products
and services that are compliant with the minimum standards of global competency.

Technology
Is one of the main driving forces of business. Advancements in this area have immensely
improved business trends. New technologies have rendered business functions and
related tasks easier to accomplish, bringing about increased levels of productivity.
For example, customers and suppliers now use websites, social media, and email in several business
functions. People located in different places can now work and communicate with each other at the
same time. A worker may perform one task at the office while another performs a task at home or
at another site. This has led a number of companies to establish “virtual workplaces” where people
no longer need to interact in a physical space or office but mostly collaborate and share information
online.
Marketing, distribution, and manufacturing have also improved with real-time information systems.
Improved communication channels shorten the transaction time between companies to a matter of
minutes. Customers order products online, companies finalize transactions within minutes, and
deliveries are done at the soonest possible time.
Online tools and technology now allow managers to have a firmir control over the different
functions of the company, from receiving and carrying out orders from the top management to
managing every individual team member. At the click of a button, the manager is able to view
business transactions and processes, determine the best courses of action, and identify areas of
improvement.
A significant phenomenon brought about by technology is outsourcing. Outsourcing is defined as
the transfer of an organizational function to a third party. When the third party is located in another
country, the transfer is called offshore outsourcing or simply “offshoring.” Unlike in the
conventional business model where management closely controls labor, outsourcing transfers
management control and decision making of certain business functions to the external supplier or
third party. The relationship between the business and the external supplier now involves
informartion exchange, close coordination, and mutual trust that each party will fulfill their
respective functions. Typically, outsourced business functions include information technology,
human resources, facilities and real estate management, accounting, manufacturing, and
engineering.

Sustainability and Corporate Social Responsibility

Sustainability in business means that companies should plan and conduct long-term
business operations to ensure minimal negative impact on the social, cultural, and
economic aspects of their external environment or community.Corporate
socialresponsibility,meanwhile, is defined as the willingnessof companies to run
their business operations in a sustainable andresponsible manner.

An example of sustainability in business is the implementation of cost-saving mechanisms

such as recycling, reduction of energy consumption in the workplace, and the use and
production of environmentally friendly products. Corporate social responsibility, on the
other hand, is expressed through social outreach programs, support of significant causes,
and other forms of philanthropic activities. Managers are continually challenged to
implement programs and processes that will enable their organizations to engage in
sustainable and socially responsible activities while maintaining their level of productivity.

Psychology

The study of psychology is an important facet in management since it focuses on

developing people management skills and analyzing customer satisfaction. A better
understanding of psychological concepts such as motivation, behavior, attitude, and
personality is vital for effective management.
Psychology can help managers foster closer relations and better communication with
employees. Improved communication, in turn, enables managers to better assess their
employees, determine their strengths and weaknesses, and guide them toward personal
and professional development. Psychology also aids managers in gauging and analyzing
customer satisfaction and the external business environment, enabling them to carry out
sound decisions.
Ecosystems
A business ecosystem consist of a group of firms that provide related products and
services. The emergence of business ecosystems has resulted in improvements and
innovations in industries.A good example is the collaboration between
telecommunication firms, media, and technology to disseminate information to the
public.

Having several key players in a business ecosystem presents each company a wider
perspective of their product or service. A particular business can no longer consider its own
particular interests but should also take into account the interests of other players in the
industry. Thus, business ecosystems rely on collective and collaborative action in carrying
out organizational decisions. Information sharing among organizations within a business
ecosystem is crucial in determining the direction that the industry should take, especially in
implementing significant changes that might impact their businesses and external
environment.

HIGHLIGHTS

 Management is the process of planning, organizing, leading, and controlling the

activities of the organization effectively and efficiently to achieve
organizational goals.
 Management is a science because it contains a body of knowledge that
becomes the organizational framework of companies. Management is also an art
because of the creativity applied in strategies, the innovations used on new
products and services, and the reliance on intuition in some decisions.
 Efficiency is maximizing outputs while minimizing inputs. On the other hand,
effectiveness is the capacity to attain the intended objectives or results.
 Management plays an important role in laying out the foundation of a
profitable company strategy and attaining successful operations.
 The five areas that influence today’s business environment are globalization,
technology, sustainability and corporate social responsibility, psychology and
ecosystems.

LEARNING TASKS

Business Vocabulary

Write T if the statement is true. If the statement is false, correct the underlined word at
the end of the sentence to make it true.
_____________________1. Management is a science but not an art.
____________________2. The Management principles, which are now practiced by
business practitioners and professionals, are based on scientific principles.
____________________3. Efficiency is the quality of being able to maximize output with
minimum input.
____________________4. Some companies failed to implement their strategies
because of the lack of employees who will execute them.
_____________________5. Efficiency means “doing the right thing”.
____________________6. The driving force of people to do business in a faster way is
communication.
____________________7. Globalization enables people to do business in any part of the
world.

____________________8. Several concepts from psychology such as motivation,

behavior, attitude, and personality give managers the means to know their
employees better.
____________________9. A business environment consists of a group of firms which
provide related products and services to meet the needs and interests of all the key
players involved.
____________________10. Management is the process of planning, organizing,
leading, and controlling the activities of an organization effectively and efficiently to achieve
organizational goals.

Manager in Action
Answer briefly the following questions.

1. What important role does management play in organizations?

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2. Should one be effective first before being efficient or is it the other way around? Justify
your answer.
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3. Which among the factors influencing management have the most impact in businesses in
the Philippines? Why do you think so?
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Critical Thinking

Read the article below and answer the questions that follow.

Steve Jobs and Management

Apple’s beginnings can be traced to Steve Jobs’ garage
which housed the first circuit board that later on became
the Apple II personal computer (PC) in 1976. That year,
Steve Jobs and Steve Wozniak established Apple Computer,
Inc., a company that produced affordable personal
computers. The growing popularity of personal computers
enabled Apple Computer to grow into a highly profitable
business. In. 1984, the Apple Macintosh computer was
introduced and it became popular in certain industries like
publishing, advertising, cinema, and the arts. Sales of Apple
computers eventually grew to almost $2 billion in 1985.

Despite being one of the forces that drove Apple’s success, Steve Job’s
management style soon brought about difficulties for his company. For one, he played
favorites among his project teams and his sparked conflicts and misunderstandings
among the members. He was also not in good terms with John Sculley, Apple’s Chief
Executive Officer (CEO). Sculley and Jobs were at odds regarding the best marketing
strategy for Apple computers. Sculley favored selling Apple computers to the wider
public, while Jobs preferred to focus on industries. The two also clashed over control in
the company, as Sculley was CEO but Jobs had unlimited control over the product
development division of Apple. The employees were confused as to who was actually
leading the company. While Jobs and Sculley were fighting it out for the company’s
control. Apple’s efficiency suffered; costs soared and profits fell. Apple’s decline was
further hastened by the entry of a new computer company. IBM, and its introduce of the
IBM PC which soon surpassed the Apple II in sales.
In 1985, amidst plans for the reorganization of Apple Computer, Inc., Steve Jobs resigned.
He founded Next and developed powerful PCs which would outperform Apple PCs. He
also founded Pixar, the computer animation company that made blockbuster movies such
as Toy Story and Finding Nemo.
In these two companies, Steve Jobs’ management style was the exact opposite of his Apple
days. Jobs developed a vision for managers and empowered his project teams to put this
vision into practice. He encourage collaboration and innovation, and developed a
team of managers who can perform on their own even without his supervision. He
also encouraged his people to love what they do and be passionate about their work.
In the meantime, Apple was suffering heavily with the introduction of Michael Dell’s
low priced PCs loaded with Microsoft Windows Software. Jobs came to the rescue and
convinced Apple to buy his company Next for $400 million and use its own operating
system in 1996. Jobs worked for Apple’s turnaround and in 1997, he was appointed its
new CEO.
One of the first things Jobs did when he came back to Apple was to define the values
of the company in two words: “think different”. Aside from hiring people who were
technically equipped, he also hired poets, musicians, artists, biologist - creative people
who were also computer experts. Their only qualification was that they believe they can
change the world. For Jobs, that was enough for Apple to take the risk of hiring them.
For Jobs, software, hardware, and content must be intuitively connected. He also
believed that one must have intuition and foresight to be successful. One result of his
vision was the new line of iMac PCs which were then followed by more stylish and
modern PCs. In 2003, Apple announced an online music store called iTunes. Then the
iPod, a device which can store thousands of downloaded songs, was also introduced to
complement iTunes.
There are two ways to run a business: focus on profits or focus on products. Jobs focused
on the products, believing that profits would eventually follow. He focused on the
development of three products: iPod, iPad, and iPhone. Jobs led his project teams to
develop the iPhone, a smartphone which can download applications from the Web. In
2010, over 2 million iPhone applications could be downloaded by iPhone users, making
Apple the leader in the smartphone market. In that same year, Jobs introduced its new
iPad tablet which became another convenient way to surf the Web, send emails, take
photos, and share content online. With these new products, Apple once again regained
its distinction as the most profitable computer company in the world.

Discussion Questions
1. What changes and development brough about the emergence of Apple
Computer, Inc. as a leading computer company during the 1980s?
2. Describe Steve Jobs’ management style during the early years of Apple.
How did this affect the company?
3. Describe Jobs’ management style when he came back on Apple. How did this
new management style benefit Apple?
4. What do you think influenced the changes in Steve Jobs’ management style?

The Observer
Form groups of five members each. Visit a fast-food restaurant and observe how the manager
attends to customers and employees. Record your obervations and present them in a report to
the class.

Self-assessment
Recall the discussion on effectiveness and efficiency. If you were to choose between effectiveness
and efficiency, how would you like to characterize yourself? Are you more of an effecttive student
or an efficient student?