Unit 1: Evolution of management thought

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

Everything can be achieved from the process of management. management can be applied
everywhere.
Modern managers use many of the practices, principal, and techniques developed from earlier
concepts and experience.
In 1975, Raymond E. Miles wrote Theories of Management: Implications for organizational
behavior and development. In it, he evaluated management includes classical, human relations,
and human resources management.
Meaning of thoughts
The schools of management thought are theoretical frameworks for the study of management.
Each of the schools of management thought are based on somewhat different assumptions about
human beings and the organizations for which they work.
Meaning of principles
Principle is the tested guide lines for a certain course of action .In another way a principle can be
defined as a fundamental statement of truth providing a guide to thought and action. We can also
say that it is a statement which reflects the fundamental truth about some phenomenon. A
fundamental statement tells us what results are expected when the principle is applied.
Nature of management principle
1. Flexibility
2. Universal application
3. Principal are relative not absolute
4. Based on situation
5. General statement.
The development of management thought has been evaluated in nature under the following four
parts:

Classification
Sub Classification
Pre-Scientific Management Era family unit was the basic production organization
(before 1880)
in ancient and medieval period
1776, Adam Smith (1723 1790)
Robert Owen (1771 1858)
Classical
management
Era Scientific Management School; F. W. Taylor (1856
(1880-1930)
1915)
Administration Management; Henri Fayol (1841 1925)
Bureaucracy Management; Max Weber (18641920)
Neo-classical Management Era
(1930-1950)

Human relation school; 1930s' Hawthorne studies

Behavioral Management School; 1950

Modern Management era(1950-

on ward)

Social system school (March and Simon's 1958 )

Decision theory school
Quantitative Management school
System Management school
Contingency Management school.

Pre-Scientific Management Era (before 1880)

In the Middles Ages (and even until recently in many countries) the family unit was the basic
production organization. A skilled craftsman taught his sons a trade, and the family was known
by its particular trade and skill. Modern surnames as Carpenter, Goldsmith, Butcher, Farmer, and
Taylor are evidence of this development. Problems of administration were of interest to students
of government even in ancient Greek and Biblical times. Formally, In 1776, Adam Smith wrote
The Wealth of Nations in which he developed important economic concepts. He emphasized
the importance of division of labor with its three chief advantages: (1) an increase in the
dexterity of every workman; (2) the saving of time lost in passing from one type of work to the
next; and (3) the better of new machines. The development of the factory system resulted in an
increased interest in the economics of production and the entrepreneur.
The inventions of the eighteenth century initiated a change which Toynbee later called the
Industrial Revolution. Production moved from the home to a separate installation the factory
where machinery was concentrated and labor employed. In the early stages of the Industrial
Revolution, owners of factories directed production but generally did not distinguish between
their ownership functions and their management duties.
In the early nineteenth century, the need for larger aggregations of capital to support factory
operations resulted in increased applications of a special legal form of organizing a business. The
corporation, as a separate legal entity, could sell shares of stock to many individuals and thus
raise large sums of capital. Stockholders then became so numerous that all could not actively
manage a business. By the middle of the nineteenth century, general incorporation acts made it
possible for many businesses to use this legal form of organization at a time in which
technological developments were forcing an increase in the size of the manufacturing unit. If the

family fortune was insufficient for the family owners to expand, the corporation provided a
means by which capital could be secured from owners who were not managers. The distinction
between the function of owners and the function of managers became clear.
The social evils of the Industrial Revolution received wide attention in the early nineteenth
century. In England, social reformers sought legal regulation of employment practices in the
Factory of 1802, 1819, and 1831. One reformer also became a pioneer in management. Robert
Owen, as manager of a large textile firm in New Lanark, Scotland, concentrated on the
improvement of working conditions and on the development of a model community. The social
impact of modern productive methods became an important interest of such men in operating
management.
Classical management Era (1880-1930)
Classical Management includes
1. Scientific Management School
2. Administration Management school
3. Bureaucracy Management.
1. Scientific Management
Frederick Taylor, known as the father of Scientific Management, Published Principals of
Scientific Management , in which he proposed work methods designed to increase worker
productivity.
Scientific Management focuses on worker and machine relationships.
Organizational productivity can be increased by increasing the efficiency of production
processes. The efficiency perspective is concerned with creating job that economizes on time,
human energy, and other productive resources. Job are designed so that each worker has a
specified, well controlled task that can be performed as instructed.
Principles of scientific management
1. Replacement of old rule of thumb method.
2. Scientific selecting and training.
3. Labor management co-operation.
4. Maximizes output.
5. Equal division of responsibility.
Perspective of scientific Management
There are four scientific management systems:

1. Develop a science for each element of the job to replace old rule of thumb method.
2. Scientifically select employees and then train them to do the job as described in step 1.
3. Supervise employees to make sure they follow the prescribed method for performing
their job.
4. Continue to plan the work but use worker to actually get the work done.
2. Administrative Management
Administrative Management emphasizes the manager and the functions of management. Henri
fayol known as the father of modern Management.
He wrote General and Industrial Management. His five function of managers were plan,
organize, command, co-ordinate, and control.
Principal of administrative management
1. Division of labor
2. Authority & responsibility,
3. Discipline,
4. Unity of command,
5. Unity of direction,
6. Subordination of individual interests to general interest,
7. Remuneration of personnel,
8. Centralization,
9. Scalar chain,
10. Order,
11. Equity,
12. Stability of tenure,
13. Initiative and
14. Esprit de crops (union of strength).
Mary parker Folletts concepts included in the administration management that is

3.

The universal goal,

The universal principal,

Law of the situation: Emphasizes that there is no one best way to do anything, but that it
all depends on the situation.

Bureaucracy

Max Weber known as father of modern Sociology analyzed bureaucracy as the most logical &
structure for large organization.
Features of Bureaucracy

Rational authority: This is based on law, procedures, rules, and so on.

Positional authority: Positional authority of superior over a subordinate stems from legal
authority.

Charismatic authority: Charismatic authority stems from the personal qualities of an

individual.

Principles of Bureaucracy
1. Clearly defined and specialized functions.
2. Use of legal authority;
3. Hierarchical form;
4. Written rules and procedures;
5. Technically trained bureaucrats;
6. Appointment to positions based on technical expertise;
7. Promotions based on competence;
8. Clearly defined career paths.
Neo- classical Management
It includes
1. Human relation school
2. Behavioral Management School
1. Human relation school
Behavioral or human relations management emerged in the 1920s and dealt with the human
aspects of organizations. It has been referred to as the neo-classical school because it was
initially a reaction to the shortcoming of the classical approaches to management. The human
relations movement began with the Hawthorne studies.
The Hawthorne studies are significant because they demonstrated the important influence of
human factors on worker productivity.
There are four major phases to the Hawthorne studies:
1. The illumination experiment: Tried to determine whether better lighting would lead to
increased productivity.
2. The real assembly group experiments

3. The interviewing program and

4. The bank wiring group studies.
2. Chester Barnard
Record his insights about Management in his book function of Executive.
It outlined the legitimacy of the supervisors directive and the extend of the subordinates
acceptance.
Barnard taught that the three top functions of the executive were to
1. establish and maintain an effective communication system,
2. Hire and retain effective personnel
3. Motivate those personnel.
His Acceptance Theory of authority state that managers only have as much authority as
employees. The acceptance of authority depends on four conditions.
1. Employees must understand what the manager wants them to do.
2. Employees must be able to comply with the directive.
3. Employees must think that the directive is in keeping with organizational objectives.
4. Employees must think that the directives are not contrary to their personal goal.
3. Behavioral Management school
The behavioral approach did not always increase productivity. Thus, motivates and leadership
techniques became a topic of great interest. The human resources school understands that
employees are very creative and competent, and that much of their talent is largely untapped by
their employers. Employee want meaningful work; they want to contribute; they want to
participate in decision making and leadership functions.
Modern Management concept
1. The Social System School
The members of the social system school of management theory view management as a social
system. March and Simon's 1958 book Organizations published by Wiley is used as an example,
but Koontz indicates that Chester Barnard is the spiritual father of this school of management.
The social system school identifies the nature of the cultural relationships of various social
groups and how they are related and integrated. Barnard's work includes a theory of cooperation
which underlies the contributions of many others in this school. Herbert Simon, and others
expanded the concept of social systems to include any cooperative and purposeful group
interrelationship or behavior.
2. Decision theory school
Herbert Simon, Glurk and lyndall urwick the major contributors to this school of thought.

The main features of this theory are as follow:-1. Decision is central to the study of organization.
2. The organization effectiveness depends on the quality of decision.
3. All factors affecting decision making are the subject matter of the study of Management.
4. The member of the organization is decision makers and problem solvers.
3. Quantitative Management school
The mathematical school of management views management as a system of mathematical
models and processes. This includes the operations researchers and management scientists.
But Koontz points out that in his view mathematics is a tool, not a school.
4. System theory
A system is a collection of part unified to accomplish an overall goal.
Inputs would include resources such as raw materials, money, technologies and people. These
inputs go through a process where theyre planned, organized, motivated and controlled,
ultimately to meet the organizations goals. Outputs would be products or services to a market.
Outcomes would be, e.g., enhanced quality of life or productivity for customers/clients,
productivity. Feedback would be information from human resources carrying out the process,
customers/clients using the products, etc. Feedback also comes from the larger environment of
the organization, e.g., influences from government, society, economics, and technologies. This
overall system framework applies to any system, including subsystems (departments, programs,
etc.) in the overall organization.
5. Contingency Management school / Situational approach
The latest approach to management which interact the various approaches to management is
known as the contingency approach or open and adaptive systems approach. The work of Joan
Woodward in the 1950s marked the beginning of this approach in management.
Contingency school states that management is situational & the study of management lies in
identifying the important variables in the situation.
It recognizes that all the subsystem of the environment are interconnected and interrelated. By
studying their interrelationship, the management can find solution to specific situation.
Emerging Management position
New management viewpoints are emerging. Quality management emphasizes achieving
customer satisfaction by providing high quality goods & services.
Reengineering the organization redesigns the processes that are crucial to customer satisfaction.

Unit 2: Entrepreneurship Development

Entrepreneurship development: Meaning of entrepreneurship, role of entrepreneurs in economics
development, factors affecting entrepreneurship development, creativity and innovations,
preparation of business plan
Meaning of entrepreneurship
Entrepreneur (Oxford Dictionary) Person who undertakes an enterprise with chances of profit
or loss. (As I have understood, Entrepreneur is a person who undertakes a business activity of
which he has no background and faces considerable risks in the process. If either of the two
elements, i.e., no background or considerable risk is missing in the venture, it is no
entrepreneurship).
Standard (New) Definition
Entrepreneurship is the process of creating something differentwith value by devoting the
necessary time and effort, assuming the accompanying financial, psychic, social risks and
receiving the resulting rewards of monetary and personal satisfaction and independence. Word
Entrepreneur stems from French Verb Entreprendre means between; taker or go between
New Definition involves four aspects
(a) The creation process
(b) Devotion of time and efforts
(c) Assumption of risks
(d) Rewards of independence, satisfaction, money.
Entrepreneurship model

Role of entrepreneurs in economics development

To an Individual
(a) Provides Self Employment for the entrepreneur
(b) Entrepreneur can provide employment for near & dearone as well
(c) Entrepreneurship often provides an employment and livelihood for next
generations as well.
(d) Freedom to use own ideas Innovation and creativity
(e) Unlimited income / higher retained income Bill Gates has risen to become
richest in the world in a single life time through entrepreneurship
(f) Independence
(g) Satisfaction
To the nation
(a) Provides larger employment Entrepreneurs provide employment for self as well as
other people and is source of employment creation.
(b) Results in wider distribution of wealth This is a logical sequel of above issue.
Higher the employment, greater the distribution of wealth
(c) Mobilizes local resources, skills and savings
(d) Accelerates the pace of economic development Entrepreneurship is the govts
one of the most trusted vehicles for economic development

(e) Stimulates innovation & efficiency

Role of entrepreneurship in economic development
Entrepreneurial spirit of people is greatly responsible for economic development of
any country. There is no resource including diamond mines as valuable as human
resource.
South Africa and a few other African countries despite their fertile gold and diamond
mines have remained poor/relatively poor, where as Japan with literally no natural
resources and
having suffered devastation during WWII became a developed country in just
three decades. Therefore, if a country allows its human resources to be
unutilized/underutilized (unemployment/disguised unemployment), its economic
development would be severely hampered.
Failure of communism worldwide and our own harrowing experience with
socialism has shown that Govt. has no business to be in Business. Govt should
only govern. Business activity should be left to people. And this is where entrepreneurs
enter the picture.
(a) Entrepreneurs set up enterprises which provide employment not only to
themselves but to many others directly and indirectly and thereby put into utilization
human resource of the country.
(b) Entrepreneurs combine resources, put their time and efforts and produce goods or
services. The Value Addition that they do to the resources brings prosperity to the
country.
(c) What they contribute productivity, output, value addition, income and employment
(d) Entrepreneurship is a Low Cost Strategy. An entrepreneur works with
maximum financial efficiency in order to maximize his profits.
Entrepreneurs rarely indulge themselves in luxury of Business Class travel
and 5 Star Hotel comforts which the managers avail without fail. Thus, many such
costs are either avoided or kept in check. Entrepreneurs perform the crucial role
themselves.
(e) The spirit of Entrepreneurship Drive, achieving higher goals, creativity, innovative
attitude.
(f) A dynamic society emerges and the spirit spreads like a chain reaction Many
entrepreneurs have proved to be catalyst for growth of a bevy of smaller
entrepreneurs. Jamshedpur was a small town before Tata Steel Plant was set up. Once the
plant came up in the place, many people set up their small enterprises to cater to the
needs of the growing population.
Factors Favoring Entrepreneurship
1. Developed Infrastructure Facilities Availability of infrastructure reduces the cost &
efforts and improves viability of projects through higher profit margins.

2. Financial Assistance Easy availability of cheap funds is vital for promoting

entrepreneurship.
3. Protective and Promotional Policies Most of the entrepreneurship projects start very
small and have no resilience. They are extremely vulnerable to competitors, market,
money markets, etc., for considerable time. Favorable Gov. Policies shelter them from
such vagaries.
4. Growth of Education Science, Technology & Management Growth of education
is believed to be promoting entrepreneurship. However, there are enough examples to
suggest otherwise. A very large proportion of first generation entrepreneurs are low
educated. Take the case of Microsoft Chairman Mr Bill Gates or Reliance Founder Mr
Dhirubhai Ambani. (We also have Mr Narayan Murthy and Mr Ajim Premji to balance
this scale). On a wider spectrum, Kerala, the most literate state and West Bengal,
another state high on literacy front, are least entrepreneurial states where as
Punjab, with 5 rank from bottom was top on entrepreneurial charts.
5. Risk Taking Abilities Risk taking ability is one of the pillars of entrepreneurial
spirits.
6. Hunger for Success (Capitalistic View) Fire in the belly and dreams of riches is what
drives most entrepreneurs on this risky path. Any person content with what he has would
take the easier route of salaries job.
7. Environment/Culture Impact Entrepreneurship is contagious. Communities like
Punjabis and Marwaries are historically entrepreneurial. They are known for seeking
and exploiting business opportunities in most remote areas. A culture propels them.
8. Social Security Social security acts as a safety net against failure of enterprise. Social
security guarantees basic roti, kapada aur makan in case of failure. Entrepreneurial
spirit of United States is born partly out of this security.
9. Technical/Industrial Training Facilities Industrial Training facilities on one
hand generate skilled manpower so vitally required for setting up enterprises while on
the other hand they are also nursery for future entrepreneurs. Among the educated
entrepreneurs, a majority is product of technical institutes from IIT to ITI (Tier I to Tier
III institutes).
10. Globalization Globalization has provided another avenue for business. Many dare
devils have taken a head along plunge into this uncharted water and have written new
success stories.

Creativity and innovation in an entrepreneurial organization

Growth and development cannot be sustained without additional innovations (usually in the
product or services or in its marketing) with additional innovations, firms become glamorous
Introducing new products is usually seen as part of the process of innovation, which is itself
seen as the engine driving continued growth and development.
The winning performance of the entrepreneur and the organization focuses on.

Competing on quality not prices:

Domination of a market niche;

Competing in an area of strength

Having tight financial, and operating controls:

Frequent product or service innovation (particularly important in

manufacturing).

Creativity
Creativity is marked by the ability to create, bring into existence, to invent into a new form, to
produce through imaginative skill, to make to bring into existence something new. Creativity is
not ability to create out of nothing (only God can do that), but the ability to generate new ideas
by combining, changing, or reapplying existing ideas. Some creative ideas are astonishing and
brilliant, while others are just simple, good practical ideas that no one seems to have thought, of
yet. (Harris, 1998).
Everyone has substantial creative ability including you the reader. So you should count yourself
and believe it that you are a creative genius. All you need is to be reawakened and be highly

committed to creativity. I want you to start thinking now, in the process something new will
flow. Explore that something new today and you will be a different personality tomorrow.
Creativity is also an attitude, the ability to accept change and newness, a willingness to play
with ideas and possibilities, a flexibility of outlook, the habit of enjoying the good, while looking
for ways to improve it, we are socialized into accepting only a small number of permissible or
normal things, like chocolate-covered strawberries for example. The creative person realizes that
there are other possibilities like peanut butter and banana sandwiches, or chocolate-covered
prunes. Harris (1998). Creativity is also a process. Creative person work hard and continually to
improve ideas and solutions, by making gradual alterations and refinements to their works.
Contrary to the mythology surrounding creativity, very few of creative excellence are produced
with a single stroke of brilliance or in a frenzy of rapid activity. Much closer to the real truth are
the stories of companies which had to take the invention away from the inventor in order to
market it because the inventor would have kept on tweaking it and fiddling with it,, always trying
to make it a little better, (Harris, 1998).
A product is creative when it is novel and appropriate. A novel product is original, not
predicable. The bigger the concept, and the more the product stimulates further work ideals, the
more the product is creative (Stermbering and Lubart). Creativity requires passion and
commitment. Out of the creative is born symbols and myths. It brings to our awareness what
was previously hidden and points to new life.
The experience is one of heightened
consciousness-ecstasy- Rollow May.
Innovation
Innovation is the process of bringing the best ideas into reality, which triggers a creative idea,
which generates a series of innovative events. Innovation is the creation of new value.
Innovation is the process that transforms new ideas into new value- turning an idea into value.
You cannot innovate without creativity. Innovation is the process that combines ideas and
knowledge into new value. Without innovation an enterprise and what it provides quickly
become obsolete.
The dictionary defines innovation as the introduction of something new or different.
Innovation is the implementation of creative inspiration. The National Innovation Initiative
(NII) defines innovation as the inter-section of invention and insight, leading to the creative
of social and economic value Innovation is value the creation of value adding value to
customers satisfaction- delighting the customers.
Innovation is the basis of all competition advantages, the means of anticipating and meeting
customers needs and the method of utilization of technology.
Innovation is fostered by information gathered from new connections; from insights gained
by journeys into other disciplines or places; from active, collegial networks and fluid open
boundaries. Innovation arises from organizing circles of exchange, where information is not
just accumulated or stored, but created. Knowledge is generated a new from connections that
were not there before. Wheatley (1994).
Innovation requires a fresh way of looking at things, an understanding of people, and an
entrepreneurial willingness to take risks and to work hard. An idea does not become an
innovation until it is widely adopted and incorporated into peoples daily lives. Most people
resist change, so a key part of innovating is convincing other people that your idea is a good one

 by enlisting their help, and, in doing so, by helping them see the usefulness of the idea- Art
Fry.
Enterprises throughout the world are experiencing what can be legitimately described as a
revolution: rising energy and material costs, fierce international competition, new
technologies, increasing use of automation and computers. All these are major challenges, which
demand a positive response from the entrepreneur and management if the enterprise is to survive
and prosper. At a time when finance is expensive, the firms liquidity is bordering on crisis,
the need for creativity, and innovation is more pressing than ever and as competitors fall by
the way side, the rewards for successful products and process are greater.
The instigation of new development is the responsibility of the enterprises themselves,
which, through experience, are aware of the difficulties created when undertaking
innovative investments in a period of great uncertainty. Innovation calls for special
entrepreneurial and management skills, the cooperation of a committed workforce, finance
and a climate which will create the optimum overall conditions to encourage success.
Joseph Schumpeter (1934) believes that the concept of innovation, described as the use of an
invention to create a new commercial product or service, is the key force in creating new demand
and thus new wealth. Innovation creates new demand and entrepreneurs bring the innovations
to the market. This destroys the existing markets and creates new ones, which will in turn be
destroyed by even newer products or services. Schumpeter calls this process creative
destructions.
Business plan
A business plan is a formal statement of a set of business goals, the reasons they are believed
attainable, and the plan for reaching those goals. It may also contain background information
about the organization or team attempting to reach those goals.
Business plans may also target changes in perception and branding by the customer, client,
taxpayer, or larger community. When the existing business is to assume a major change or when
planning a new venture, a 3 to 5 year business plan is required, since investors will look for their
annual return in that timeframe.
Outline of a business s plan
1. Introductory page
(a) Name and address of the venture
(b) Names and addresses of the principals
(c) Nature of business
(d) Statement of financing needed
(e) Statement of confidentiality of the report
2. Executive Summary
3. Industry Analysis
(a) Future outlook and trends
(b) Analysis of competitors

(c) Market segmentation

(d) Industry forecasts
4. Description of Venture
(a) Product(s)/Service(s)
(b) Size of business
(c) Office equipment and personnel
(d) Background of entrepreneurs
5. Production Plan or Operations Plan
(a) Manufacturing process (amount subcontracted)
(b) Physical plant
(c) Machinery and equipment
(d) Names of suppliers of raw materials
6. Marketing Plan
(a) Pricing
(b) Distribution
(c) Promotion
(d) Product forecasts
(e) Controls
(f) e initiatives
7. Organizational Plan
(a) Form of ownership
(b) Identification of partners or principal shareholders
(c) Authority of principals
(d) Management team background
(e) Roles and responsibilities of members of organization
8. Assessment of Risk
(a) Evaluation of weaknesses of business
(b) New technologies
(c) Contingencies plans
9. Financial Plan
(a) Pro forma income plan
(b) Cash flow projections
(c) Pro forma balance sheet
(d) Break even analysis
(e) Sources and applications of funds

10. Appendices (contains backup material)

(a) Resumes of principals
(b) Letters
(c) Market research data and survey results
(d) Leases or contracts
(e) Price lists from suppliers
(f) Facility layout
(g) Draft marketing brochure with or without pricing
(h) Structure of e marketing thrusts, if any

Unit 3: Strategic planning and management

What is Strategic Planning?
Strategic planning is an organizational management activity that is used to set priorities, focus
energy and resources, strengthen operations, ensure that employees and other stakeholders are
working toward common goals, establish agreement around intended outcomes/results, and
assess and adjust the organization's direction in response to a changing environment. It is a
disciplined effort that produces fundamental decisions and actions that shape and guide what an
organization is, who it serves, what it does, and why it does it, with a focus on the future.
Effective strategic planning articulates not only where an organization is going and the actions
needed to make progress, but also how it will know if it is successful.
What is a Strategic Plan?
A strategic plan is a document used to communicate with the organization the organizations
goals, the actions needed to achieve those goals and all of the other critical elements developed
during the planning exercise.

What is Strategic Management?

Strategic management is the comprehensive collection of ongoing activities and processes that
organizations use to systematically coordinate and align resources and actions with mission,
vision and strategy throughout an organization. Strategic management activities transform
the static plan into a system that provides strategic performance feedback to decision making and
enables the plan to evolve and grow as requirements and other circumstances change.
What Are the Steps in Strategic Planning & Management?

There are many different frameworks and methodologies for strategic planning and
management. While there is no absolute rules regarding the right framework, most follow a
similar pattern and have common attributes. Many frameworks cycle through some variation
on some very basic phases: 1) analysis or assessment, where an understanding of the current
internal and external environments is developed, 2) strategy formulation, where high level
strategy is developed and a basic organization level strategic plan is documented 3) strategy
execution, where the high level plan is translated into more operational planning and action
items, and 4) evaluation or sustainment / management phase, where ongoing refinement and
evaluation of performance, culture, communications, data reporting, and other strategic
management issues occurs.
Steps of strategic management are:
1.
2.
3.
4.
5.
6.
7.

Develop vision and mission

External environment analysis
Internal environment analysis
Establish long-term objectives
Generate, evaluate and choose strategies
Implement strategies
Measure and evaluate performance

Davids Model of the Strategic Managements Process

What Are the Attributes of a Good Planning Framework?

The Association for Strategic Planning (ASP), a U.S.-based, non-profit professional association
dedicated to advancing thought and practice in strategy development and deployment, has
developed a Lead-Think-Plan-Act rubric and accompanying Body of Knowledge to capture and
disseminate best practice in the field of strategic planning and management. ASP has also
developed criteria for assessing strategic planning and management frameworks against the
Body of Knowledge.
These criteria are used for three primary purposes:

Ensure that the ASP Body of Knowledge is continuously updated to include frameworks
that meet these criteria.

Maintain a list of qualifying commercial and academic frameworks recommended for

study and training, to prepare participants to sit for the three ASP certification
examinations.

Provide a resource and check list for practitioners as they refine and improve their
organizations systems and for consultants as they improve their product and service
offerings.

The criteria developed by the ASP are:

1. Uses a Systems Approach that starts with the end in mind.

2. Incorporate Change Management and Leadership Development to effectively transform

an organization to high performance.
3. Provide Actionable Performance Information to better inform decision making.
4. Incorporate Assessment-Based Inputs of the external and internal environment, and an
understanding of customers and stakeholder needs and expectations.
5. Include Strategic Initiatives to focus attention on the most important performance
improvement projects.
6. Offer a Supporting Toolkit, including terminology, concepts, steps, tools, and techniques
that are flexible and scalable.
7. Align Strategy and Culture, with a focus on results and the drivers of results.
8. Integrate Existing Organization Systems and Align the Organization Around Strategy.
9. Be Simple to Administer, Clear to Understand and Direct, and Deliver Practical Benefits
Over the Long-Term.
10. Incorporate Learning and Feedback, to Promote Continuous Long-term Improvement.
Dimension of Strategic Decisions
Michael E. Porter (1996) opines that the core general management is strategy and elaborates strategy
as developing and communicating the companys unique position, making trade-offs, and forging fit
among activities.
Dimension of strategic decisions (Pearce and Robinson)
1.
2.
3.
4.
5.
6.

Strategic Issues require top management decision

Involves the allocation of large amount of company resources
Likely to have significant impact on the long term prosperity of the firm.
future oriented
Have major multifunctional or multi-business consequences
Necessitates considering factors in the firm's external environment

Level of strategy
Three Levels of Strategy are
1. Corporate level strategy
2. Business level strategy
3. Functional level strategy
Level

Corporate level strategy

(Chief Executives, Board of

Characteristics of Strategic Management Decisions

Greater risk, cost, and profit potential

Greater need for flexibility
Longer time horizons

Directors)
Business level strategy(
Business Heads of Multiple
Business Units)

Functional level
strategy(Functional
managers, like, HRM,
Finance Managers, etc)

Bridge decisions at corporate and functional levels

Are less costly, risky, and potentially profitable than
corporate-level decisions
Are more costly, risky, and potentially profitable than
functional-level decisions
Functional- level decisions
Involve action-oriented operational issues
Are relatively short range and low risk
Incur only modest costs

Unit 4: Principles of Marketing Management

Marketing is the activity of developing connection between product/service and customers. The
management process through which goods and services move from concept to the customer. It
includes the coordination of four elements called the 4 P's of marketing:
(1) Identification, selection and development of a product,
(2) Determination of its price,
(3) Selection of a distribution channel to reach the customer's place, and
(4) Development and implementation of a promotional strategy.

Market Analysis
o

Market analysis includes taking a look at a company's past, present and future
activities. With the majority of the focus being on future activities, marketing
managers explore information such as competitive, economic, social, political and
legal environments. Marketing managers use S.W.O.T. analysis to determine
strengths and weaknesses, as well as opportunities and threats within the market.
They also evaluate trends, growth, market size, distribution channels and even
costs. All of these aspects affect how, when, why and what people buy, so it's
important to take them into consideration.

Market Planning
o

After analyzing the market, marketing managers are able to come up with a
marketing plan, which details how they will reach a company's target market.
They also come up with measurable marketing objectives based on the goals of
the company. This aspect of marketing management takes details such as product,
placement, pricing, packaging, positioning, people and promotion into account.

Market Implementation

When marketing managers put their research and market planning into action, it's
referred to as the market implementation aspect of market management.
Marketing managers pay special attention to the timing of each activity and make
adjustments where necessary. Examples of marketing activities include website
launches, coupon promotions, distributing direct mail pieces, radio
advertisements, commercials and even email marketing.

Market Control
o

After implementation, marketing managers review the results of each marketing

activity to figure out successes and failures. The only true way to know if a
campaign was a success is to put measures in place to evaluate the market
situation after a plan is implemented. Market control can include surveying
customers, evaluating sales and feedback and tracking repeat purchases.

Marketing Manager
o

Marketing managers play an integral role in following the marketing management

principles from start to finish. According to the "Occupational Outlook
Handbook," marketing managers work more than 40 hours a week. It's hard to
pinpoint their salaries, because they vary depending on experience, location,
workload, education and even company size. Most often, they hold a bachelor's or
master's degree in business administration.

Whether you are thinking of setting up, starting or expanding your business or selling any
product or service, these four elements should be top-of-mind all the time:
1. The product: Exactly what product or service are you going to sell to this market?
Define it in terms of what it does for your customer. How does it help your customer to
achieve, avoid or preserve something? You must be clear about the benefit you offer and
how the customers life or work will be improved if he or she buys what you sell.
2. The price: Exactly how much are you going to charge for your product or service, and on
what basis? How are you going to price it to sell at retail? How are you going to price it
at wholesale? How are you going to charge for volume discounts? Is your price correct
based on your costs and the prices of your competitors?
3. The place: Where are you going to sell this product at this price? Are you going to sell
directly from your own company or through wholesalers, retailers, direct mail, catalogs
or the Internet?
4. The promotion: Promotion includes every aspect of advertising, brochures, packaging,
salespeople and sales methodology. How are you going to promote, advertise and sell this
product at this price at this location? What will be the process from the first contact with
a prospect through to the completed sale?
In recent years, there have been attempts to develop a package (mix) that will not only satisfy the
needs of the customer, but simultaneously maximize the performance of the organization. This
model suggests the expansion of the marketing mix to 5Ps to include People or Personnel.
However, this mix does nothing to address the uncontrollable factors affecting your marketing.
Controllable factors vs. uncontrollable facts can be defined as:

Controllable - The 4Ps representing the elements of marketing we can control internally. They
depend upon such givens as your budget, personnel, creativity, etc.
Uncontrollable - The current economic environment including such elements as consumer
confidence, degree of unemployment, new technologies, the threat of displacement, competitors,
government regulations or changing consumer preferences.
Many marketing specialists are now seeing the 4Ps as too product-oriented and have adopted the
4Cs marketing mix. This model looks at the marketing from the customers point of view.
1. Place becomes Convenience
2. Price becomes Cost to the user
3. Promotion becomes Communication
4. Product becomes Customer needs and wants
Issues on 4 PS
Product/Service

Place

What does the customer want from the product/service?

What needs does it satisfy?

What features does it have to meet these needs?

Are there any features you've missed out?

Are you including costly features that the customer

won't actually use?

How and where will the customer use it?

What does it look like? How will customers experience it?

What size(s), color(s), and so on, should it be?

What is it to be called?

How is it branded?

How is it differentiated versus your competitors?

What is the most it can cost to provide, and still be sold

sufficiently profitably? (See also Price, below).

Where do buyers look for your product or service?

If they look in a store, what kind? A specialist boutique or in

a supermarket, or both? Or online? Or direct, via a
catalogue?

How can you access the right distribution channels?

Do you need to use a sales force? Or attend trade fairs? Or

make online submissions? Or send samples to catalogue
companies?

What do you competitors do, and how can you learn from

that and/or differentiate?

Price

Promotion

What is the value of the product or service to the buyer?

Are there established price points for products or services in

this area?

Is the customer price sensitive? Will a small decrease in

price gain you extra market share? Or will a small increase
be indiscernible, and so gain you extra profit margin?

What discounts should be offered to trade customers, or to

other specific segments of your market?

How will your price compare with your competitors?

Where and when can you get across your marketing

messages to your target market?

Will you reach your audience by advertising in the press, or

on TV, or radio, or on billboards? By using direct marketing
mailshot? Through PR? On the Internet?

When is the best time to promote? Is there seasonality in the

market? Are there any wider environmental issues that
suggest or dictate the timing of your market launch, or the
timing of subsequent promotions?

How do your competitors do their promotions? And how

does that influence your choice of promotional activity?

The concept of 7 ps in marketing

The seven Ps of marketing mix are price, product, place, promotion, physical presence, provision
of service, and processes. This refers to the requirements of successfully marketing a product. It
also serves as a means to encourage brand loyalty in consumers. Customers make judgments
about service provision and delivery based on the people representing your organization. All
services need to be underpinned by clearly defined and efficient processes. Physical evidence is
about where the service is being delivered. It is particularly relevant to retailers operating out of
shops. This element of the marketing mix will distinguish a company from its competitors
Extended marketing mixes are given in the figure

Unit 5: Principles and practices of human resource management

Definition
HRM is a distinctive approach to employment management which seeks to achieve competitive
advantage through the strategic deployment of a highly committed and capable workforce, using
an array of cultural, structural and personnel techniques. Storey (1995: 5).
HRM is a managerial perspective which argues the need to establish an integrated series of
personnel policies to support organizational strategy. Buchanan and Huczynski (2004: 679).
Human Resource Management- Functions and Objectives
HRM and its importance started to be considered as an integral function of the organization and
as a specialized field of study with the realization of the fact that employees, independently or
jointly, play a pivotal role in the achievement of the overall organizational goals and objectives.
Today, HR is an exclusive department in almost all organizations and has a number of important
functions to perform. These are as follows:
Functions
1. Employee Career Goals:
2. Organizational Goals:
3. Training and Development:
4. Recruitment:
5. Staffing:
6. Ensuring employee health and safety by abiding to the employee safety and health
regulations.
7. Managing grievances
8. Ensuring provisions for adequate and promised compensation with fixed and variable
benefits to keep them motivated.
9. Making strategies for reducing the employee turnover rate.
10. To ensure a positive work environment in the organization.
11. To continuously stimulate a sense of belonging, responsibility and accountability in
employees.
12. Ensuring effective communication between employees and minimizing conflicts.
13. To ensure latest appraisal methods, fair and unbiased salary hikes for keeping the
employees motivated.
14. To keep a record of the employee profiles and database so that it can be readily
available at the time of recruitment and staffing and also ensuring its confidentiality.
15. To keep a bird eye view on each employees performance and regularly providing
feedbacks on the same.
Objectives
There are also some objectives for which HRM performs its aforesaid functions in an
organization. Some of the objectives are as follows:
1. To achieve the organizational goals and objectives.

2. To ensure employee satisfaction at every level.

3. To instill team spirit in employees.
4. To explore employees capabilities for performing a given job.
5. To ensure maintaining the quality of work life.
6. To respect the employees as individuals and also respect their individual career
goals.
7. To equip the employees with proper resources.
8. To keep the employees motivated.
9. To encourage the feeling of organizational loyalty in employees.
10. To ensure a positive environment of mutual trust and understanding in the
organization.
Principles
Human resources management is guided by very important aspects. These aspects are essential
for any business to succeed. Principles of Human Resources Management have been well
summarized in 10Cs.

Comprehensiveness

This involves the proper management of all aspects of the people

you are working with bearing in mind that human resources is the
most valuable resource your firm has. This means that the financial,
health, transportation, tools and anything employees need to work
should be well taken care of.

Cost-effectiveness

Companies should ensure that they remunerate their employees

accordingly. The employees reward system should be able to
sustain the organization.

Control.

Firms should be able to take charge of their employees and ensure

that productivity and quality is achieved and maintained. Control
should be exercised carefully so that it does not seem like tyranny

Coherence.

All the steps taken by a firm in the management of human resources

must be in line with the mission and vision of the firm. Human
Resources managers should direct their focus on what the company
needs and employee abilities.

Communication

Communication is very important in every organization. Through

communication, firms can ensure there is flow of information that is
necessary for efficiency.

Creativity

Creativity is key if a firm is to be efficient in human resources

management. Firms should adopt new ways of human resources
management as long as it fits their companies.

Competence.

It is an organizations responsibility to ensure that their employees

are skilled to do their duties. Because the competence of a firm
depends on that of its employees, firms should do everything to
increase employee capabilities for example, by training them.

Credibility.

Firms must ensure that they remain the best brand to most of their
clients by maintaining their credibility. They should put in place
strategies that ensure all employees have a clear sense of direction
to a common goal.

Change

Change is inevitable for businesses. The fastest business to embrace

change in management of their human resources is better placed to
produce better results.

Commitments

Commitment. Every organization has objectives which they intend

to meet both for themselves and for their clients. To meet these
goals, firms need committed staff therefore it is the firms
responsibility to keep their employees motivated so as to ensure
they are committed to the organizations course.

HRM framework

Practices of HRM
In one another study, Redman and Matthews (1998) identify an HRM bundle of key practices,
which support service organizations quality strategies, these being.

1. Careful recruitment and selection, for example, total quality recruitment, zero
defects recruitment, right first time recruitment.
2. Extensive remuneration systems, for example, bonuses available for staff willing to be
multi-skilled.
3. Team working and flexible job design, for example, encouraging a sense of
cohesiveness and designing empowered jobs.
4. Training and learning, for example, front line staff having enhanced interpersonal and
social skills.
5. Employee involvement, for example, keeping employees informed of key changes in
the organization.
6. Performance appraisals with links to contingent reward systems, for example,
gathering customer feedback to recognize the work by employees over and above their
expected duties, which in turn is likely to lead to a bonus for staff.
Challenges of human resource management
1. Workplace diversity. This may consist of issues involving age, education, ethnicity, gender,
income, marital status, physical limitations, religion, sexual orientation, or any number of other
things. Understanding the challenges that may be faced by the interaction of any of these diverse
groups, as well as the required openness of the company toward such groups, will help HR
personnel provide assistance in training employees to work with those they may consider
different, accept that such workers may be present in the business, and agree to treat each other
respectfully, even if they never come to agree with each other over various issues.
2. Change management. This is another challenge that more and more HR departments are
facing. Being able to deal with their own changing roles in corporate society, in addition to the
changes to other jobs, the overlapping responsibilities, and more. Understanding that change is
required is the first step toward accepting the change.
3. Compensation and benefits. With a slow economy and tightening corporate purse-strings,
the issue of compensation and employee benefits is one that almost every business must deal
with. The key is to present mandatory changes in such a way that employees can accept, if not
necessarily agree with them while providing non-monetary morale boosting incentives whenever
possible to make the changes less traumatic.
4. Recruiting skilled employees. In an era of rising unemployment, it would seem that finding
qualified workers would be easier than ever. But thats seldom the case. Many industries are
facing dire needs for employees with acceptable skills and the required training or degree. This
applies not only to health care, but also to technology and other fields as well, causing many
employers to search outside their local marketplace for workers who can do the jobs they need
filled.
5. Training and development. This is another challenge that HR managers and personnel must
deal with more frequently. With the need to cut training costs, training itself often suffers. Yet
the skills an employee needs must still be taught. Many companies are meeting this challenge by
providing eLearning opportunities that allow employees to receive the training they need without

the expenses associated with travel, on-site trainers, hours away from their jobs and high-priced
materials.
These are only a few of the many challenges an HR department must be prepared to deal with.
Knowing in advance what type situation might arise will help you to be better equipped in the
event that it does. After all, its always best to hope for the best, but to be prepared for the worst.
Just in case.

Unit 6: International business environment

Definition
1) IB field is concerned with the issues facing international companies and governments in
dealing with all types of crossborder transactions.
2) IB involves all business transactions that involve two or more countries.
3) IB consists of transactions that are devised and carried out across borders to satisfy the
objectives of individuals and organizations.
4) IB consists of those activities private and public enterprises that involve the movement across
national boundaries of goods and services, resources, knowledge or skills.

Reasons for Going International

- There are two primary reasons for going international and a third less common reason.
1. to expand sales by accessing new markets,
2. to reduce costs, and/or
3. to reduce risk.
Meaning international business environment

The international business environment can be defined as the environment in different

sovereign countries, with factors exogenous to the home environment of the organization,
influencing decision-making on resource use and capabilities.

The political environment in a country influences the legislation and government rules and
regulations under which a foreign firm operates.

The technological environment comprises factors related to the materials and machines used
in manufacturing goods and services.

Economic factors exert huge impacts on firms working in an international business

environment. The economic environment relates to all the factors that contribute to a
country's attractiveness for foreign businesses, such as monetary systems, inflation, and
interest rates.
Factors of international environment
The international business environment includes social, political, economic, regulatory, tax,
cultural, legal, and technological aspects.
The political environment in a country influences the legislation and government rules and
regulations under which a foreign firm operates. Every country in the world follows its own
system of law and a foreign company operating within it has to abide by these laws for as
long as it continues to operate there.
The technological environment comprises factors related to the materials and machines used
in manufacturing goods and services. The organization's receptivity and willingness to adopt

to new technology, as well as the willingness of its consumers to do likewize, influences

decisions made in an organization.
Economic factors exert huge impacts on firms working in an international business environment.
The economic environment relates to all the factors that contribute to a country's attractiveness
for foreign businesses.

Businesses rely on a predictable and stable mechanism. A monetary system that

acknowledges countries and economies interdependence and that fosters growth,
stability and fairness at a global level is important for prosperity, and the operation and
growth of companies.

Inflation, interest rates, and the borrowing costs of companies also contribute to a
country's attractiveness. If a country has a high rate of inflation, its central banks will
raise the interest rate, which increases the cost of borrowing for firms. High inflation also
makes the value of the revenue in domestic currency fall, and this exposes firms to
foreign exchange risks. It is even worse if firms produce in countries of high inflation and
then sell products to countries of low inflation, since the input costs are on the rise while
the revenue stays stable.

Absolute purchasing power parity posits that the exchange rate between two countries
will be identical to the ratio of the price levels for those two countries. This concept is
derived from a basic idea known as the law of one price, which states that the real price
of a good must be the same across all countries. As the currency of a country depreciates,
its competitiveness is improved since its goods are cheaper than other countries', helping
companies export more.

Relative purchasing power parity (PPP) is an economic theory used to determine the
relative value of currencies, estimating the amount of adjustment needed on the exchange
rate between countries in order for the exchange to be equivalent to (or on par with) each
currency's purchasing power. It asks how much money would be needed to purchase the
same goods and services in two countries, and uses that to calculate an implicit foreign
exchange rate. PPP rates facilitate international comparisons of income, as market
exchange rates are often volatile; affected by political and financial factors that do not
lead to immediate changes in income, and that tend to systematically understate the
standard of living in poor countries. Another interpretation is that the difference in the
rate of change in prices at home and abroadthe difference in the inflation ratesis
equal to the percentage depreciation or appreciation of the exchange rate so that the
competitiveness of one country could be maintained.

Changing Nature of International Business

US share of world output has dramatically Declined

Sources and destinations of FDI has also changed dramatically in the past 30 years
and the developing countries becoming more important
New MNCs from developing countries
Fall of communism and rise of free enterprise system

Why Intl. Business is different?

Operate in different countries with different cultures, political systems, economic

systems, and are at different levels of economic development
Interact with different governments, conflict between nation-state and MNC
Work within the limits of international trade and investment systems
Complexity of managing intl. businesses
Deal with foreign exchange changes

Managing in the Global Marketplace

An International Business is any firm that engages in international trade or investment.

Managing an international business is different than managing a domestic business:

1. Countries are different.

2. Problems are more complex.

3. Must work within government regulations.
4. Currency conversion presents unique problems
Unit 7: Organizational change and development
Definition

Company or organization going through a transformation. Organization change occurs when

business strategies or major sections of an organization are altered. Also known as
reorganization, restructuring and turnaround.
Organizational change is about reviewing and modifying management structures and business
processes. Small businesses must adapt to survive against bigger competitors and grow.
However, success should not lead to complacency. To stay a step ahead of the competition,
companies need to look for ways to do things more efficiently and cost effectively. There is no
need to fear change. Instead, small businesses should embrace change as a way to lay the
foundations for enduring success.
According to Middlemist and Hitt (1988, p. 493), organizational development is: A systematic
means for planned change that involves the entire organization and is intended to increase
organizational effectiveness.
Cummings and Huse (1988, p. 1) define OD in broader terms: A system wide application of
behavioral science knowledge to the planned development and reinforcement of organizational
strategies, structure, and processes for improving an organizations effectiveness.

Drivers
A company's change drivers include the competitive environment, new technologies, consumer
demand, economic conditions and government policy actions. Information technologies have changed
how businesses operate and interact with one another. New business models, such as outsourcing and
virtual collaboration, would not be possible without high-speed communications and the Internet.
Government regulations also force businesses to adapt, as do changing consumer preferences.
Recessions usually lead to layoffs, which may require restructuring, and mergers and acquisitions lead to
changes in organizational culture.
Benefits of change

Why change?
Companies that refuse to embrace change may disappear. However, change is difficult because it
involves modifying people's behavior. Resistance may come from employees who are generally
skeptical of change initiatives, especially if they have lived through botched implementations in
the past. Successful organizational change requires top management leadership and a clear
explanation of how the contemplated changes can help employees do their jobs more efficiently.
Stages of change

Organizational change typically consists of three stages:

1. establishing the need, implementation and monitoring. To establish a need for change,
senior management could articulate where the company wants to be in five to 10 years
and what it needs to do to get there. For example, a saturated local market may force a
company to consider international expansion.
2. The second stage involves changing structures and processes, such as reducing the
number of management layers, combining business units, reassigning management,
reducing employee headcount and giving division managers more decision-making
flexibility.
3. The final stage involves monitoring the results from the organizational changes and
making appropriate adjustments.
Issues
Change efforts fail for different reasons, including lack of focus and inadequate communication.
Change initiatives that try to do too much tend to fail. It is better to succeed with small change
projects, such as improving the response time in customer service centers, and then building on
this success to implement complicated changes. Leadership should talk to employees in one-onone and group settings to answer questions, exchange ideas and generally alleviate concerns.
Types of change

Structural: Organizations often find it necessary to redesign the structure of the

company due to influences from the external environment. Structural changes involve the
hierarchy of authority, goals, structural characteristics, administrative procedures, and
management systems. Almost all change in how an organization is managed falls under
the category of structural change. A structural change may be as simple as implementing
a nosmoking policy, or as involved as restructuring the company to meet the customer
needs more effectively.

Processoriented: Organizations may need to reengineer processes to achieve optimum

workflow and productivity. Processoriented change is often related to an organization's
production process or how the organization assembles products or delivers services. The
adoption of robotics in a manufacturing plant or of laserscanning checkout systems at
supermarkets are examples of processoriented changes.

Peoplecentered: This type of change alters the attitudes, behaviors, skills, or

performance of employees in the company. Changing peoplecentered processes involves
communicating, motivating, leading, and interacting within groups. This focus may entail
changing how problems are solved, the way employees learn new skills, and even the
very nature of how employees perceive themselves, their jobs, and the organization.

Some peoplecentered changes may involve only incremental changes or small improvements in
a process. For example, many organizations undergo leadership training that teaches managers
how to communicate more openly with employees. Other programs may concentrate on team

processes by teaching both managers and employees to work together more effectively to solve
problems.
Remember that strategic, structural, processoriented, and peoplecentered changes occur
continuously in dynamic businesses. Often, changes in one of these areas impact changes in the
other areas.
Many employees believe that a change is often reactive and nothing more than a quick fix; then
they brace themselves for more changes in the future. Management needs to realize that serious
underlying problems in organizations must be addressed with longterm consequences in mind.
Thus, when management implements changes, careful thought must be given to ensure that the
new processes are for the longterm good of the company.
Change management model

Kotter's 8-Step Change Model Implementing Change Powerfully and Successfully

Step 1: Create Urgency
For change to happen, it helps if the whole company really wants it. Develop a sense of urgency
around the need for change. This may help you spark the initial motivation to get things moving.
This isn't simply a matter of showing people poor sales statistics or talking about increased
competition. Open an honest and convincing dialogue about what's happening in the marketplace

and with your competition. If many people start talking about the change you propose, the
urgency can build and feed on itself.
What you can do:

Identify potential threats , and develop scenarios showing what could happen in the future.
Examine opportunities that should be, or could be, exploited.
Start honest discussions, and give dynamic and convincing reasons to get people talking and
thinking.
Request support from customers, outside stakeholders and industry people to strengthen your
argument.

Kotter suggests that for change to be successful, 75 percent of a company's management needs to
"buy into" the change. In other words, you have to work really hard on Step 1, and spend
significant time and energy building urgency, before moving onto the next steps. Don't panic and
jump in too fast because you don't want to risk further short-term losses if you act without
proper preparation, you could be in for a very bumpy ride.
Step 2: Form a Powerful Coalition
Convince people that change is necessary. This often takes strong leadership and visible support
from key people within your organization. Managing change isn't enough you have to lead it.
You can find effective change leaders throughout your organization they don't necessarily
follow the traditional company hierarchy. To lead change, you need to bring together a coalition,
or team, of influential people whose power comes from a variety of sources, including job title,
status, expertise, and political importance.
Once formed, your "change coalition" needs to work as a team, continuing to build urgency and
momentum around the need for change.
What you can do:

Identify the true leaders in your organization, as well as your key stakeholders .
Ask for an emotional commitment from these key people.
Work on team building within your change coalition.
Check your team for weak areas, and ensure that you have a good mix of people from different
departments and different levels within your company.

Step 3: Create a Vision for Change

When you first start thinking about change, there will probably be many great ideas and solutions
floating around. Link these concepts to an overall vision that people can grasp easily and
remember.

A clear vision can help everyone understand why you're asking them to do something. When
people see for themselves what you're trying to achieve, then the directives they're given tend to
make more sense.
What you can do:

Determine the values that are central to the change.

Develop a short summary (one or two sentences) that captures what you "see" as the future of
your organization.
Create a strategy to execute that vision.
Ensure that your change coalition can describe the vision in five minutes or less.
Practice your "vision speech" often.

Step 4: Communicate the Vision

What you do with your vision after you create it will determine your success. Your message will
probably have strong competition from other day-to-day communications within the company, so
you need to communicate it frequently and powerfully, and embed it within everything that you
do.
Don't just call special meetings to communicate your vision. Instead, talk about it every chance
you get. Use the vision daily to make decisions and solve problems. When you keep it fresh on
everyone's minds, they'll remember it and respond to it.
It's also important to "walk the talk." What you do is far more important and believable than
what you say. Demonstrate the kind of behavior that you want from others.
What you can do:

Talk often about your change vision.

Address peoples' concerns and anxieties, openly and honestly.
Apply your vision to all aspects of operations from training to performance reviews. Tie
everything back to the vision.
Lead by example .

Step 5: Remove Obstacles

If you follow these steps and reach this point in the change process, you've been talking about
your vision and building buy-in from all levels of the organization. Hopefully, your staff wants
to get busy and achieve the benefits that you've been promoting.
But is anyone resisting the change? And are there processes or structures that are getting in its
way?

Put in place the structure for change, and continually check for barriers to it. Removing obstacles
can empower the people you need to execute your vision, and it can help the change move
forward.
What you can do:

Identify, or hire, change leaders whose main roles are to deliver the change.
Look at your organizational structure, job descriptions, and performance and compensation
systems to ensure they're in line with your vision.
Recognize and reward people for making change happen.
Identify people who are resisting the change, and help them see what's needed.
Take action to quickly remove barriers (human or otherwise).

Step 6: Create Short-Term Wins

Nothing motivates more than success. Give your company a taste of victory early in the change
process. Within a short time frame (this could be a month or a year, depending on the type of
change), you'll want to have some "quick wins " that your staff can see. Without this, critics and
negative thinkers might hurt your progress.
Create short-term targets not just one long-term goal. You want each smaller target to be
achievable, with little room for failure. Your change team may have to work very hard to come
up with these targets, but each "win" that you produce can further motivate the entire staff.
What you can do:

Look for sure-fire projects that you can implement without help from any strong critics of the
change.
Don't choose early targets that are expensive. You want to be able to justify the investment in
each project.
Thoroughly analyze the potential pros and cons of your targets. If you don't succeed with an
early goal, it can hurt your entire change initiative.
Reward the people who help you meet the targets.

Step 7: Build on the Change

Kotter argues that many change projects fail because victory is declared too early. Real change
runs deep. Quick wins are only the beginning of what needs to be done to achieve long-term
change.
Launching one new product using a new system is great. But if you can launch 10 products, that
means the new system is working. To reach that 10th success, you need to keep looking for
improvements.
Each success provides an opportunity to build on what went right and identify what you can
improve.

What you can do:

After every win, analyze what went right, and what needs improving.
Set goals to continue building on the momentum you've achieved.
Learn about kaizen , the idea of continuous improvement.
Keep ideas fresh by bringing in new change agents and leaders for your change coalition.

Step 8: Anchor the Changes in Corporate Culture

Finally, to make any change stick, it should become part of the core of your organization. Your
corporate culture often determines what gets done, so the values behind your vision must show in
day-to-day work.
Make continuous efforts to ensure that the change is seen in every aspect of your organization.
This will help give that change a solid place in your organization's culture.
It's also important that your company's leaders continue to support the change. This includes
existing staff and new leaders who are brought in. If you lose the support of these people, you
might end up back where you started.
What you can do:

Talk about progress every chance you get. Tell success stories about the change process, and
repeat other stories that you hear.
Include the change ideals and values when hiring and training new staff.
Publicly recognize key members of your original change coalition, and make sure the rest of the
staff new and old remembers their contributions.
Create plans to replace key leaders of change as they move on. This will help ensure that their
legacy is not lost or forgotten.

Lewins model of change

This is three steps model designed by Kurt lewin

Unfreeze

1. Determine what needs to change.

Survey the organization to understand the current state.
Understand why change has to take place.
2. Ensure there is strong support from upper management.
Use Stakeholder Analysis and Stakeholder Management to identify and
win the support of key people within the organization.
Frame the issue as one of organization-wide importance.
3. Create the need for change.
Create a compelling message as to why change has to occur.
Use your vision and strategy as supporting evidence.
Communicate the vision in terms of the change required.
Emphasize the "why".
4. Manage and understand the doubts and concerns.
Remain open to employee concerns and address in terms of the need to
change.

Change

1. Communicate often.

Do so throughout the planning and implementation of the changes.

Describe the benefits.
Explain exactly the how the changes will effect everyone.
Prepare everyone for what is coming.

2. Dispel rumors.

Answer questions openly and honestly.

Deal with problems immediately.
Relate the need for change back to operational necessities.

3. Empower action.

Provide lots of opportunity for employee involvement.

Have line managers provide day-to-day direction.

4. Involve people in the process.

Refreeze

Generate short-term wins to reinforce the change.

Negotiate with external stakeholders as necessary (such as employee
organizations).

1. Anchor the changes into the culture.

Identity what supports the change.

Identify barriers to sustaining change.

2. Develop ways to sustain the change.

Ensure leadership support.

Create a reward system.
Establish feedback systems.
Adapt the organizational structure as necessary.

3. Provide support and training.

Keep everyone informed and supported.

4. Celebrate success!

MODEL OF ORGANIZATIONAL DEVELOPMENT

Recognition of need for change

Diagnosis of cause(s)
Development of change alternatives
Implementation of change
Reinforcement of change
Evaluation of change
Further change action taken, if required
Feedback

[Middlemist and Hitt (1988), p.493]

Unit 8: Economic and economic development; principles and concern

Definition
Progress in an economy, or the qualitative measure of this. Economic development usually refers
to the adoption of new technologies, transition from agriculture-based to industry-based
economy, and general improvement in living standards.
Economic development is the development of economic wealth of countries, regions or
communities for the well-being of their inhabitants. From a policy perspective, economic
development can be defined as efforts that seek to improve the economic well-being and quality
of life for a community by creating and/or retaining jobs and supporting or growing incomes and
the tax base.
Charles Jenkinson defines it as Economic development is the development of the wealth of
countries or regions for the well-being of their inhabitants. From a policy perspective, economic
development can be defined as efforts that seek to improve the economic well-being and quality
of life for a community by creating and/or retaining jobs.
Differences between economic growth and development
There are significant differences between economic growth and economic development. The
term "economic growth" refers to the increase (or growth) of a specific measure such as real
national income, gross domestic product, or per capita income. National income or product is
commonly expressed in terms of a measure of the aggregate value-added output of the domestic
economy called gross domestic product (GDP). When the GDP of a nation rises economists refer
to it as economic growth.
The term "economic development," on the other hand, implies much more. It typically refers to
improvements in a variety of indicators such as literacy rates, life expectancy, and poverty rates.
GDP is a specific measure of economic welfare that does not take into account important aspects
such as leisure time, environmental quality, freedom, or social justice. Economic growth of any
specific measure is not a sufficient definition of economic development.
In its broadest sense, economic development encompasses three major areas:
1) Policies that governments undertake to meet broad economic objectives such as price stability,
high employment, expanded tax base, and sustainable growth. Such efforts include monetary and
fiscal policies, regulation of financial institutions, trade, and tax policies.
2) Policies and programs to provide infrastructure and services such as highways, parks,
affordable housing, crime prevention, and educational programs and projects.
3) Policies and programs explicitly directed at job creation and retention through specific efforts
in business finance, marketing, neighborhood development, small business start-up and
development, business retention and expansion, technology transfer, workforce training and real
estate development. This third category is a primary focus of economic development
professionals.

Difference between Developed and Developing Countries

Developing countries usually have low levels of affluence and high unemployment rates while
developed countries have developed economies, which translate to high GDP per capita. Another
difference is that developed countries are normally associated with advanced technology, good
infrastructure and a steady government, whereas the developing countries usually suffer from
diseases, natural disasters and war.
Generalized characteristics of developed
countries:

Generalized characteristics of developing

countries:

Post-industrial economies

In the process of industrialization

High level of industrial development

Low level of affluent citizens

High level of affluent citizens

Higher levels of unemployment

Low levels of unemployment

Lower education rates

Higher education rates

Technological advantages

Often contain undeveloped rural

villages

Better roads

Unstable governments

Stable governments

High level of birth rates

Good health care

High level of death rates

Human and natural resources are fully

utilized

High infant mortality rate

Dirty, unreliable water supplies

High level of per capita income

Poor housing conditions

High Human Development Index

(HDI)

Poor nutrition

Increased life expectancy

Diets that are short in calories and/or

protein

Low birth rates

Poor access to medical services

Low death rates

Endemic disease in some countries

Good housing conditions

Low to medium standard of living

Safe water supplies

Limited technological capacity

Abundant food supplies

Unequal distribution of income

Easy to access advanced medical

services

Factors of production are not fully

utilized

Key guiding principles for development

1.
2.
3.
4.

Pass and enforce laws protecting property rights and business contracts
Eliminate corruption
Ensure population is healthy and educated
Cultivate the culture that values honesty and hard work

Nepals development scenario

Its efforts at finding political stability and a new constitution have remained elusive, but
Nepal hopes to improve its rank among nations of the world in the next nine years.

The National Development Council approved the countrys 13th development plan,
which aims at turning Nepal from a least developed country to a developing one by 2022.

The plan is to achieve an annual growth rate of 6% and bring down the percentage of
population living below the poverty line from the existing 23% to just 18% within that
period.

The government is hopeful that the target can be reached by focusing on hydropower,
education, healthcare, tourism, agriculture, industry, trade, infrastructure and good
governance.

Annual growth rate of 4.5% in agriculture and 3.2% in employment, reduction of

maternal mortality and increase in life expectancy to 71 years are also part of the
ambitious plan which will be in force till 2016.

Considering the present state of affairs in Nepal it might seem a difficult if not impossible
goal. And experts have already started voicing doubts over the plan formulated by the
interim non-political government.

Nepals economy is in tatters due to the countrys political instability. Failure to exploit
hydropower potential has affected all manufacturing industries. The countrys
infrastructure also needs a big boost.

If it hadnt been for the billions of rupees sent as remittance by millions of Nepalis
working abroad due to lack of adequate opportunities at home, the countrys condition
would have been far worse.

The Human Development Report 2013 released by UN in March this year ranks Nepal
157th among 187 countries surveyed. Only Afghanistan at 175 ranks below among all
South Asian countries.

At a time when both its bigger neighborsChina and Indiaare witnessing rapid
development, Nepal has lagged behind due to a decade long conflict and failure to
consolidate after peace was achieved.

Even countries like Bangladesh which were known for their backwardness are taking
rapid strides towards development based on human development indicators and a
booming manufacturing industry.

But all is not lost. The HDR 2013 mentions that multidimensional poverty in Nepal has
come down to 44.2% from 64.7% since 2010. The report also says that the wealth gap in
the country has come down by nearly 15% during the same period.

The Oxford Poverty and Human Development Index released earlier this year showed
that the percentage of poor people has come down sharply from 2006 and if this decrease
continues at this rate Nepal could eradicate absolute poverty in another twenty years.

The study also showed positive figures in infant and child mortality rates, maternal
mortality, nutritional level and enrollment in schools. Nepal is progressing very well on
meeting most of the millennium development goals (MDGs) set by UN.

According to latest Nepal Rastra Bank figures the country recorded a balance of payment
surplus of NRs 38.60 billion during the first 10 months of the 2012/13 fiscal year.
Foreign exchange reserves also increased by 10% to NRs 483 billion during the same
period.

Nepalis have heard numerous slogans over past decades on how the country can be
transformed. It remains to be seen whether this latest one remains just that or is able to
achieve the stated goal.