Queens’ College

Faculty of Business and Economics

Department of Business Administration
Postgraduate program
Management Theory and Practice
Individual Assignment 1

Prepared by Hayder Nuredin

ID NO MBA/0107/13

Submitted to Dr. Ermiyas Moges

February 5, 2021
 1. What are the four basic activities that comprise the management process?
How are they related to one another?

The four basic activities that comprise the management process are as follows:

Planning and Decision Making In its simplest form, planning means setting an organization’s
goals and deciding how best to achieve them. Decision making, a part of the planning process,
involves selecting a course of action from a set of alternatives. Planning and decision making
help maintain managerial effectiveness by serving as guides for future activities. In other words,
the organization’s goals and plans clearly help managers know how to allocate their time and
resources. Part Two of this text is devoted to planning and decision-making activities and
concepts.

Organizing Once a manager has set goals and developed a workable plan, the next management
function is to organize people and the other resources necessary to carry out the plan.
Specifically, organizing involves determining how activities and resources are to be grouped.
Although some people equate this function with the creation of an organization chart.

Leading The third basic managerial function is leading. Some people consider leading to be both
the most important and the most challenging of all managerial activities. Leading is the set of
processes used to get members of the organization to work together to further the interests of the
organization. We cover the leading function in detail in Part Four.

Controlling The final phase of the management process is controlling, or monitoring the
organization’s progress toward its goals. As the organization moves toward its goals, managers
must monitor progress to ensure that it is performing in such a way as to arrive at its
“destination” at the appointed time. Part Five explores the control function.

Planning, Organizing, Leading, and Controlling. Managers engage in these activities to combine
human, financial, physical, and information resources efficiently (using resources wisely and in a
 cost-effective way) and effectively (making the right decisions and successfully implementing
them) and to work toward achieving the goals of the organization.

Management process/functions involve 4 basic activities;

1. Planning and Decision Making – – Determining Courses of Action,

2. Organizing – Coordinating Activities and Resources,
3. Leading – Managing, Motivating and Directing People,
4. Controlling – Monitoring and Evaluating activities.

 Fig 1 the relationship between management functions

The first activity is planning. Planning entails making a decision on where a company should be
headed and selecting the necessary steps that the organization needs to take to get there.

The second activity is organizing. Managers do organization by hoarding human, physical and
financial resources to achieve the set objectives. The managers identify the activities that need to
be accomplished, classify and assign these activities to individuals and groups and delegate
authority.

The next activity is leading. Managers should have the ability to motivate their employees to
achieve the goals and objectives of the business. They also required to use their authority to
reach the specified ends. For the latter reasons, effective managers are masters of
communication, motivation, and human personalities. They should have the ability to convince
their employees to do certain things to the best of their capacity to achieve a set objective.
The function of controlling consists of those activities that are undertaken to ensure that the
events do not deviate from the pre-arranged plans. It is the process of devising ways and means
of assuring that planned performance is actually achieved.

These functions work together in the creation, execution and realization of organizational goals. The
four functions of management can be considered a process where each function builds on the previous
function. To be successful, management needs to follow the four functions of management in the proper
order.

Over all Planning and Decision Making set the organization's goals and decides how best to
achieve them. Organizing then determines how best to group activities and resources. Leading
motivates members of the organization to work in the best interests of the organization.
Controlling monitors and corrects ongoing activities to facilitate goal attainment."

2. Identify the major barriers to goal setting and planning, how organizations
overcome those barriers, and how to use goals to implement plans.

Whenever you start to plan and set goals there are a number of road blocks that can stop your
progress. You have to recognize the barriers and then come up with a plan to overcome them
before you can continue. In order for plans to be effective and to yield the desired results,
managers must identify any potential barriers and work to overcome them. The common barriers
that inhibit successful planning are as follows:

 Inability to plan or inadequate planning. Managers are not born with the ability to
plan. Some managers are not successful planners because they lack the background,
education, and/or ability. Others may have never been taught how to plan. When these
two types of managers take the time to plan, they may not know how to conduct planning
as a process.
 Lack of commitment to the planning process. The development of of a plan is hard
work; it is much easier for a manager to claim that he or she doesn't have the time to
work through the required planning process than to actually devote the time to
developing a plan. (The latter, of course, would save them more time in the long run!)
Another possible reason for lack of commitment can be fear of failure. As a result,
managers may choose to do little or nothing to help in the planning process.
 Inferior information. Facts that are out‐of‐date, of poor quality, or of insufficient
quantity can be major barriers to planning. No matter how well managers plan, if they are
basing their planning on inferior information, their plans will probably fail.
  Focusing on the present at the expense of the future. Failure to consider the long‐term
effects of a plan because of emphasis on short‐term problems may lead to trouble in
preparing for the future. Managers should try to keep the big picture — their long‐term
goals — in mind when developing their plans.
 Too much reliance on the organization's planning department. Many companies have
a planning department or a planning and development team. These departments conduct
studies, do research, build models, and project probable results, but they do not
implement plans. Planning department results are aids in planning and should be used
only as such. Formulating the plan is still the manager's responsibility.
 Concentrating on controllable variables. Managers can find themselves concentrating
on the things and events that they can control, such as new product development, but then
fail to consider outside factors, such as a poor economy. One reason may be that
managers demonstrate a decided preference for the known and an aversion to the
unknown.

The good news about these barriers is that they can all be overcome. To plan successfully,
managers need to use effective communication, acquire quality information, and solicit the
involvement of others.

Overcoming Goal Setting Barriers in Organization is a big challenge.

6 Steps of Overcoming Goal Setting Barriers

Guidelines for making goal setting and planning effect by overcoming the barriers are;

1. Understand the Purposes and Limitations of Goals and Planning.

2. Communication and Participation.
3. Consistency, Revision, and Updating.
4. Effective Reward Systems.
5. Encouraging Change and Motivating Employees.
6. Being Ready for Future Contingency.

1. Understand the Purposes and Limitations of Goals and Planning

Managers must understand the purpose of goal-setting and planning processes. The purpose of
goals and plans is; set a target and recognize the possible ways to reach the target.

But setting a goal and making plans are not going to bring success to the company. Managers
must understand they have limitations. And effective goals and planning do not automatically
safeguard success; modifications and exceptions are probably as time passes.

2. Communication and Participation

Although goals and plans may be initiated at high levels in the organization, they must also be
communicated to others in the lower level of the organization.
People responsible for achieving goals and implementing plans must have a voice in developing
them from the outset.

There are other reasons for this; the lower level managers always have valuable information to
contribute, and also they are the one who will be implementing the plans. So the involvement of
them is critical.

3. Consistency, Revision, and Updating

Goals should be consistent both horizontally and vertically. Horizontal consistency means that
goals should be consistent across the organization, from one department to the next and vertical
consistency means that goals should be consistent up and down the organization-strategic,
tactical, and operational goals must agree with one another.

Unequal or inconsistence goals create bureaucratic problems in the organization. Goal setting
and planning are dynamic processes. So to get the best for them they must be revised and
updated frequently.

4. Effective Reward Systems

There should be a proper and fair reward and punishment system in the organization. Before
punishing, a manager must look at the reason for it which could be external and beyond the
employee’s control. Reasons for rewarding should be consistent and equal.

5. Encouraging Change and Motivating Employees

Frequent change is required to be competitive in this most competitive business world. So

employees must be motivated. Managers must show their employees that they trust their ability
and skills to bring success in the company. Change is important but not always pleasant and
welcome and there is fear that the change may be good for them. So managers must encourage
the employees to change.

6. Being Ready for Future Contingency

The business environment is unpredictable and full of risks.

So, managers must be good at understanding the current situation both external and internal
factors; use them to predict and take precautions for confronting any future event that might have
a negative effect on the company.

Managers must be skilled and know how to approach any particular situation for overcoming the
barriers of goal setting and planning process.
 3. Try to develop a different way to departmentalize your college, a restaurant,
a manufacturing firm, or some other organization. What might be the
advantages of your form of organization?

QUEENS’ COLLEGE
BOARD OF DIRECTORS

General consultation PRESIDENT Academic council

committee

Vice president for academic Vice president for Vice president for research
affair administration and extension

AYER TENA BRANCH DEAN

Vice dean Ethics and anti-corruption Administration

Departments Registrar Quality Gender Freshman Human resource

assurance focal coordinator
person
Finance
Accounting Dept.

Management Dept. Plan

HRM Dept. Procurement and property

administration

Post graduate Dept.

Research and publication

Economics Dept.

Banking and finance

 Note: The departmentalization is described by the given figure above

I used functional departmentalization. Functional departmentalization allows the organization to

staff all important positions with functional experts and facilitates coordination and integration.
It also promotes tends to promote centralization. For the organization to operate efficiently in
this design there must be considerable coordination across departments.

Advantages of functional departmentalization

 It provides a logical reflection of functions that maintains the power and prestige of major
functions.
 Follows principle of occupational specialization.
 Simplifies training and supervisor of the subordinates.
 Furnishes means of tight control at the top.
 Each department can be staffed by experts in that functional area.
 Coordination of activates within the departments is easy.

4. Managers often find it necessary to change an organization’s degree of

centralization or decentralization. On the following two very different
scenarios, this issue has arisen:
Scenario A. You’re the top manager in a large organization with a long and
successful history of centralized operations. For valid reasons beyond the
scope of this exercise, however, you’ve decided to make the firm much
more decentralized. Now do the following:
1. For Scenario A, list the major barriers to decentralization that you
foresee.
Scenario B. Assume the exact opposite of the situation in Scenario A: You
still occupy the top spot in your firm, but this time you’re going to
centralize operations in an organization that’s always been decentralized
2. For Scenario B, list the major barriers to centralization that you foresee.
An organizational structure is the outline of a company’s framework and guidelines for
managing business operations. As we all know Organization will change the way of operation if
there is a valid reason which can help the organization to be profitable or if it helps to decrease
its cost and the like according to Scenario A I am expected to change the organization’s former
centralized operation to decentralized one.

Decentralization is a business structure in which the decision-making is made at various levels of

the organization. Typically, decentralized businesses are divided into smaller segments or groups
in order to make it easier to measure the performance of the company and the individuals within
each of the sub-groups.

Many businesses operate in markets and industries that are highly competitive. In order to be
successful, a company must work hard to develop strategic competitive advantages that
distinguish the company from its peers. To accomplish this, the organizational structure must
allow the organization to quickly adapt and take advantage of opportunities. Therefore, many
organizations adopt a decentralized management structure in order to maintain a competitive
advantage.

Fig 2 Decentralized (peer — to — peer)

Major barriers to decentralization
Change is a challenging but critical effort for an organization to meet evolving business
needs. To successfully lead transformative initiatives, leaders need to consider both the
strategic side and human side of a change. So the barriers from centralized to decentralize
will be as follows:

 Leftover elements of the previous system limit the possibility to re-orient re

allocations of scarce resource: The continued presence of leftover structures from
the previous system is a serious impediment to reforming current systems
 Individual to team management: Centralized organizational structures rely on
one individual to make decisions and provide direction for the company.  While,
decentralized organizational structures often have several individuals
responsible for making business decisions and running the business.
 Structural Disadvantages: Decentralized organizations can struggle with multiple
individuals having different opinions on a particular business decision. As such, these
businesses can face difficulties trying to get everyone on the same page when making
decisions.
 The transfer of responsibility
 Can increase administrative costs: Creating additional layers of position is an
expensive proposition.
 Introduces more levels in the organization
 Can disperse scale economies/expertise groups: The need for specialized
personnel is related in part to the size of the organization. Below a certain size, it
might be counterproductive or cost inefficient to have specialists or technical
personnel.
 Unwillingness of senior employees. Especially the one who is in charge.
 Creates new responsibilities for inexperienced actors: Decentralization creates
more opportunities for employees autonomy and responsiveness

2. For Scenario B, list the major barriers to centralization that you

foresee.
Centralization is said to be a process where the concentration of decision making is in a few
hands. All the important decision and actions at the lower level, all subjects and actions at the
lower level are subject to the approval of top management. According to Allen, “Centralization”
is the systematic and consistent reservation of authority at central points in the organization. The
implication of centralization can be :-

1. Reservation of decision making power at top level.

2. Reservation of operating authority with the middle level managers.
3. Reservation of operation at lower level at the directions of the top level.

Fig 3 Centralized (Command & Control)

So, changing the organization management system from decentralization to centralization has its
own barriers. As it’s mentioned above we will see Scenario B as coming from team to individual
this means an organization has a greater degree of decentralization if the number of decisions made
and functions affected at the lower level are higher but when we made change it will be the opposite.

Major barriers to centralization

 Where the concentration of decision making is in a few hands. All the important decision
and actions at the lower level, all subjects and actions at the lower level are subject to the
approval of top management.
 Decision making will be slow compared to the first one.
 Leftover elements of the previous system limit the possibility to re-orient re allocations
of scarce resource:
 Changing the organizations structure will be time consuming.
 Many decision makers will be random employees and they will wait for top to down
decisions so, to some extent there will be conflict.
 Experienced resources will be wasted especially human experts and plus to this it will be
difficult for employees to be promoted from one level to the other.
 The larger the organization, the more authority and responsibility must be delegated to
subordinates by top executive. So, man power will be wasted.
 3. In your opinion, which scenario would be easier to implement in reality? In
other words, is it probably easier to move from centralization to
decentralization or vice versa?

Centralization and Decentralization are desirable in an organizational structure of a company.

But, in my opinion changing from centralization to decentralization is easier to implement in

comparison. Because nowadays centralization structure occurs in small structured business and
when the organization grows its mostly mandatory to make some changes for fast decision
making weather the owner is there or not but when we see from decentralization to centralization
we will lose so many working power and human expertise for the system.

The larger the organization, the more authority and responsibility must be delegated to
subordinates by top executive. If an organization is a conglomeration involving several
industries, the limitation of expertise dictates the need for decentralization of authority to head
the individual units. The rationale behind this is that each product group is likely to have
different types of marketing, manufacturing, distribution, and financial problems. Even where a
large firm having many units produces the same basic type of product, decentralization is
desirable. On the other hand, if the firm is relatively small, centralization of authority is
advisable.

5. Consider the following list of business decisions. Which decisions would

be handled most effectively by group or team decision making? Which
would be handled most effectively by individual decision making? Explain
your answers.
• A decision about switching suppliers

It needs discussion and valid reason to make such decisions but after all these things are done
and made some researches or market study the manager, the material manager, finance and
researchers has the right to decide and change suppliers for the sake of profitability of the
organization.

• A decision about hiring a new CEO

A CEO is elected by the board and its shareholders. Hiring a chief executive officer is a huge
decision, and there is a lot of pressure to choose the perfect candidate. If you are the only person
responsible for making this decision, the pressure intensifies.
In order to make hiring a chief executive officer a little less intimidating, seek out help from
other leaders in your company.

Other executives, mentors, and trusted colleagues can all be a big help when you’re learning how
to hire a CEO. Other people may have different insights on the search process and candidates,
and their perspective can help you get a well-rounded view of the situation.

• A decision about firing an employee for stealing

This will be done by the manager because he has the right to fire any of the organization workers
according to the organization rule. So, for the given mentioned disciplinary action the manager
has the right to decide and fire the person who made it.

• A decision about calling police and fire department to report a fire in the
warehouse

Such kind of decisions are obligatory for any person who works for the organization or not
because according to our country’s law any person who saw such kind of accidents has
obligation to call or tell for fire brigade to control the fire before it covers wide area so, the
decision isn’t given for one person it’s a duty for everybody.

• A decision about introducing a brand new product

First the decision will be made by CEO to make new products after a research or cost benefit
analysis and then if the organization is big it will have its own advertisement department
otherwise it will be decided by the manager and will be advertised by many medias.

6. You’re the vice president of a large company that makes outdoor furniture
for decks, patios, and pools. Each product line and the firm itself have
grown substantially in recent years. Unfortunately, your success has
attracted the attention of competitors, and several have entered the market
in the last two years. Your CEO wants you to determine how to cut costs by
10 percent so that prices can be cut by the same amount. She’s convinced
that the move is necessary to retain market share in the face of new
competition. You’ve examined the situation and decided that you have
three options for cutting costs:
• Begin buying slightly lower-grade materials, including hardwood,
aluminum, vinyl, and nylon.
• Lay off a portion of your workforce and then try to motivate everyone
who’s left to work harder; this option also means selecting future hires
from a lower-skill labor pool and paying lower wages.
• Replace existing equipment with newer, more efficient equipment;
although this option entails substantial up-front investment, you’re sure
that you can more than make up the difference in lower production costs.
With this background in mind, respond to the following questions:
1. Carefully examine each of your three options. In what ways might each
option affect other parts of the organization?
The effect of the three options would be felt in all parts of the organization
since:

1) Lowering the quality of the product would be disastrous in a market where the
competition is only waiting to pull one’s organization down. It could lead to a loss
of market as well as the firm’s reputation in the market. The products that are
manufactured are for use outdoors and hence have to be such as to be able to
stand the effects of sun, wind, rain or snow. A cheaper material could affect the
durability of the products.

2) Laying-off a part of the workforce always has a detrimental effect on the

morale of the remaining workforce. Hence the motivation to work harder is very
likely to fail, especially when they see the new hires coming in with a lower skill
level and at lower wages. Also this move could affect the product quality because
of the lack of skilled workers to do the job properly.

3) A high level of investment means that the firm will have fewer funds for other
expenses like sales promotion and product development. Hence while this
seems to be the least disruptive option, its overall effect has to be evaluated
properly.
 2. Which is the most costly option in terms of impact on other parts of the
organization, not in terms of absolute dollars? Which is the least costly?

 In terms of minimizing cost the least costly one is firing some workforce and hiring the
new ones with cheap payment. There is no upfront cost involved in this decision but
rather our cost is saved. Thus the organization must opt for the 2nd option in order to find
the lowest initial cost.
 In terms of competition the most difficult and heavy one is buying slightly lower-grade
materials because there will be return of materials and decrease in quality.
 In terms of cost the costly one is replacing old machine with new one it might fast our
work may be by double but for the first year it will increase our expense.  if an
organization is going to replace existing equipment with the new machines there is a
definitely high cost involved in it because we do know that modern and newer machines
costs more.

3. What are the primary obstacles that you might face in trying to
implement each of your three options?

Barriers to implement the given options

 if an organization is going to replace existing equipment with the new machines there is a
definitely high cost involved in it because we do know that modern and newer machines
costs more.
 If we go for lower-grade quality, we may face lost sales, or sales return which will add up
to our cost.
 When we fire employees if they were permanent workers there will be compensation.
 When we replace old machines with new one, we will face many difficulties like fund
raising, giving training and the like.
 Buying lower grade material by itself has its own difficulty for the material manager like
buying transporting store and choosing.

4. Are there any other options for accomplishing your goal of reducing costs?

1. Put full-time staff on part-time

Many companies did this when the global financial crisis hit in 2008.
2. Separate good costs from bad costs

Making the distinction between the two is critical but first of all you need to work out your
strategy.

3. Making sure staff work efficiently

“Many researches find that salespeople are spending only 60% of their time or less selling,”
Dwyer says.

“If I can get that up to 70 to 80%, I would get more customers and sales working more efficiently
and I will make more money.”

4. Review all operational expenditure

5. Separate personal finance from business finance

References
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December.

Neely, A.,Adams,C.and Kennerley,M.(2002). The Performance Prism, Harlow: FT Prentice Hall

Price, D. (2009) The Principles and Practice of Change, Basingstoke: Palgrave Macmillan.

Peter A. Facione & Noreen C. Facione. 2007. Thinking and Reasoning in Human Decision
Making: The Method of Argument and Heuristic Analysis, Millbrae, CA: The California
Academic Press.

Pfeffer, J. and Sutton, R.I. (2006). Harvard Business Review, 84 (1) 62-74.; and Pfeffer, J. and
Sutton, R.I. (2006). Hard Facts, Dangerous Half-Truths and Total Nonsense: Profiting From
Evidence-Based Management. Cambridge: Harvard Business School Press.

Zahra, S. (2003) ‘The practice of management: reflections on Peter F. Drucker’s landmark

book’, The Academy of Management Executive,vol.13, no.3,pp. 16– 23.