1. The Management Movement
Business Management
Chapter 2

2. Standards After this lesson you will be able to…
Explain how the U.S. economy changed during the nineteenth and early twentieth century.
Identify various theories of management.
Explain the effects of Japanese business practices on management in the United States.

3. EVOLUTION OF MANAGEMENT

4. The Industrial Revolution
Some forms of management have existed since the beginning of time.
Ever since one human tried to direct another, ideas about management have been developing.
Industrial Revolution
Period during which a country develops an industrial economy

5. Management History
The new industrial enterprises that emerged in the nineteenth century demanded management skills that had not been necessary earlier.

6. In your Journal…
Why was professional management less important when the U.S. economy was based on agriculture?
Think about it and write it down (Think)
Turn to your partner and discus (Pair)
Be prepared to share with the class (Share)

7. Causes of the Industrial Revolution
Changes in technology, communication, and transportation made the Industrial Revolution possible.
Advances in manufacturing processes allowed new products, such as steel, to be created.
The growing use of steam power permitted more and more factories to operate.
Telegraph and cable lines in the United States were extended across the country after the Civil War, linking the country from coast to coast.

8. Causes (continued)
Advances in transportation also improved opportunities for industry.
52,900 miles of railroad
Easier for businesses to send and receive products and supplies.

9. Captains of Industry
Powerful businesspeople who created enormous business empires dominated and shaped the U.S. economy.
John D. Rockefeller (oil)
James B. Duke (tobacco)
Andrew Carnegie (steel)
J.P. Morgan (banking)
Cornelius Vanderbilt (steamships and railroads)

10. Creation of Monopolies
The captains of industry of the 19th century often pursued profit and self-interest above all else in order to create huge enterprises.
They drove competitors out of business and created giant companies than maintained monopolies in their industries.
A monopoly occurs when one party maintains total control over a type of industry.

11. In your Journal… Why are monopolies bad for the economy?
Think about it and write it down (Think)
Turn to your partner and discus (Pair)
Be prepared to share with the class (Share)

12. Rockefeller lowered the prices he charged for oil in order to force his competitors to sell out of join forces with him.
He combined the dozens of companies he owned into a single trust, or giant industrial monopoly.
He controlled more than 90% of the country’s refining capacity.

13. The Break-Up of the Trusts
By 1870, many people became worried about the concentration of wealth in the hands of a few very rich business owners.
Questioned the ways in which these businesses drove their competitors out of business.
Government decided to begin regulating business.

14. Interstate Commerce Act
1887 Congress passed.
Forced railroads to publish their rates and forbade them to changes rates without notifying the public.

15. The Sherman Act 1890 Antitrust Act
Made it illegal for companies to create monopolies.
Law was intended to restore competition at a time when monopolies had taken over many industries.
Government broke up many of the large trusts.
Allowed for competition.

16. In your Journal…
Why is competition in business important for business managers?
Think about it and write it down (Think)
Turn to your partner and discus (Pair)
Be prepared to share with the class (Share)

17. New Challenges for Management
Frederick W. Taylor and Scientific Management
Need for ideas about productivity and motivation.
He noticed workers did not work as hard as they could.
Tried to figure out “one best way” to perform a particular task.
Used a stopwatch to determine which work method was the most efficient. (time and motion studies)

18. Scientific management seeks to increase productivity and make work easier by carefully studying work procedures and determining the best methods for performing particular tasks.
Jobs should be designed according to scientific rules rather than rule of thumb methods.
Employees should be selected and trained according to scientific methods. Employers should study worker strengths and weaknesses.
Employers should train employees in order to improve their performance.
Management and workers should be interdependent so that they cooperate.

19. In your Journal…
What parts of scientific management do you agree with? Disagree with? Why?
Think about it and write it down (Think)
Turn to your partner and discus (Pair)
Be prepared to share with the class (Share)

20. Hawthorne Studies of Productivity
Looked at the relationship between working conditions and productivity.
Examine variables to see what effect they have on productivity.
Tested different wage payments, rest periods, work hours, and other variables. Productivity always increased!
Workers worked harder when they received attention.
Change of any kind increases productivity = “The Hawthorne Effect.”
Other factors psychological and social conditions at work effected productivity.
Informal group pressures
Individual recognition
Participation in decision making
Effective supervision significantly affected both productivity and employee morale.

21. Abraham Maslow Hierarchy of Needs
People have 5 basic types of needs.
Physical needs
Food, water, air, and sleep
Security needs
Freedom from physical, psychological, or financial harm
Social needs
Need to talk to others, express feelings of friendship, accept and be accepted by others.
Status needs
Self-esteem and the esteem in which one is held by others
Self-fulfillment
Need to realize one’s own potential

22. Hierarchy of Needs (continued)
Individuals fulfill lower level needs before seeking to fulfill higher level needs.
People satisfy their need for food before they seek self-fulfillment.
Hierarchy of Needs is Maslow’s grouping and ordering of physical, security, social, status, and self-fulfillment needs.

23. Applying Maslow’s Theory to Management
At the lowest level workers are motivated by basic needs, such as the need for wages or salary. Basic needs also include the physical conditions in which a person works
Heating, lighting, and noise level.
Once those are met employers address safety or security needs.
Provide workers with insurance, retirement benefits, and job security.

24. continued
Social needs are met by providing work environments in which colleagues interact.
Company lunch rooms, company retreats, etc.
Status needs are met by providing workers with signs of recognition that are visible to others.
Job titles, private offices, designated parking spaces, awards, and promotions.
Self-fulfillment is met by allowing workers to be creative at work.

26. In your Journal…
What do you think you as a manager at a coffee shop can do to meet the needs of your employees?
Think about it and write it down (Think)
Turn to your partner and discus (Pair)
Be prepared to share with the class (Share)

27. THE DEVELOPMENT OF MODERN MANAGEMENT

28. Empowering Employees
As organizations grew in size and complexity, new styles and methods of management began to emerge.
Different philosophies developed on how best to manage people.
Theory X and Theory Y
Centralization versus Decentralization

29. Theory X and Theory Y Theory X Theory Y
Assumes that people are basically lazy and will avoid working if they can.
To make sure that employees work, managers impose strict rules to make sure that all important decisions are made only by them.
“Management knew all the answers”
Assumes that people find satisfaction in their work.
Believe that people will work productively if put in the right environment.
People are creative and will come up with good ideas if encouraged to do so.
“In this company, you’ll be fired for not making mistakes.

30. Theory X Most people HATE work
Most people want to AVOID RESPONSIBILITY
Most people have LITTLE AMBITION for themselves
Most people prefer to BE LED
Most people have little ability to SOLVE PROBLEMS
Most people require close CONTROL to prevent mistakes
TWO GROUPS of people; there are “them”, who needs to be watched, controlled, told what to do, who do not like to work. But then there is us, we, the lucky few, the leaders who are going to make sure the organization functions, we are the do’ers that makes the dream happen.

31. Theory Y Work can be ENJOYABLE as play
Most people want to accept reasonable levels of RESPONSIBILITY
Most people have strong GOALS for themselves, and seek organizations that will help to fulfil those goals
Most people like to LEAD occasionally
Most people are good PROBLEM SOLVERS
Most people require NO POLICING or close control by the organization
Most people can be AUTONOMOUS and independent

32. Centralization vs. Decentralization
Refers to the concentration of power among a few key decision makers.
Henry Ford almost destroyed the company he built because the refused to let his managers perform management tasks.
Fear losing control.
Process by which decisions are made by managers at various levels within an organization.
Managers make important decisions.

35. The Emphasis on Quality and Teamwork
Total Quality Management (TQM) is a system of management based on involving all employees in a constant process of improving quality and productivity by improving how they work.
American businesses
Focuses on totally satisfying both customers and employees

36. TQM Standards Improve products to remain competitive.
Adopt a new philosophy.
Stop depending upon mass inspection. Rely on statistical evidence.
Consider quality as well as price in awarding business.
Constantly improve the system of production.
Institute vigorous program of job training.
Adopt and implement leadership.
Drive out fear so that everyone may work effectively for the company.

37. TQM Standards
9. Break down barriers between departments. 10. Eliminate numerical goals, posters, and slogans. 11. Eliminate work standards that prescribe numerical quotas. 12. Remove barriers that stand between the hourly worker and his or her right to pride of workmanship. 13. Encourage education and self improvement for everyone. 14. Create a structure in top management that will work every day to achieve the above 13 points.

38. Total Quality Management
Consumers must be happy with the price and quality of what a business produces.
What are some of the things managers do to assure the quality of their products or services?

39. Applying Total Quality Management
Hourly workers and management work together. It’s not us against them.
Motorola
Employees carry wallet-sized cards that state “Our Fundamental Objective (Everyone’s Overriding Responsibility): Total Customer Satisfaction.”
General Electric
Executives’ bonuses depend on how well the company improves quality.
Burger King
No employee receives a bonus if the company fails to meet its quality goods.

40. Japanese Management Practices
Collective decision making.
Decision making by teams.
Collective responsibility.
Slow evaluation and promotion.
Understood control mechanisms.

41. Theory Z
A business management theory that integrates Japanese and American business practices.
Long term employment.
Participative decision making.
Individual responsibility.
Slow evaluation and promotion.
Moderately specialized career path.