Management and Leadership Models
The goal of management is to combine human and material resources to achieve objectives. There are two main management models:
Authoritarian Style
Top management communicates what needs to be done. Managers receive orders and transmit them to subordinates through a hierarchical chain. Authority and decision-making are concentrated at the top level of senior management.
Participatory Style
Authority and responsibility are decentralized across different management levels. This model fosters coordination and motivation among participants. However, it can lead to delays in decision-making.
Management and Leadership
Management holds the formal authority to achieve objectives. Leadership is a moral authority where a leader influences the thinking and attitudes of a group, inspiring voluntary cooperation towards company goals.
Authoritarian leadership corresponds with an autocratic management style, while participatory leadership aligns with a democratic management style.
Theory X and Theory Y
Douglas McGregor observed that a leader’s behavior depends largely on their view of people. He identified two contrasting positions:
Theory X
- Workers seek to work as little as possible.
- They lack ambition and avoid responsibility.
- They prefer to be told what to do.
- They are resistant to change.
- They are gullible and poorly informed.
- They would do little for the company without management.
(Autocratic style can lead to rebellious behavior from employees.)
Theory Y
- Work is seen as natural and engaging.
- Workers are self-directed towards achieving objectives.
- They seek responsibility and possess imagination and creativity.
- They are motivated by achieving objectives and receiving appropriate compensation.
(Democratic style motivates employees by giving them responsibilities.)
McGregor suggests that a leader’s assumptions about their employees can become self-fulfilling prophecies. Incorrect assumptions can lead to disastrous outcomes.
Sector Analysis and Competitive Forces
A company is affected by two environments: the general environment, which impacts all firms indirectly, and the specific environment, which directly affects a particular group of companies within the same sector.
According to Porter, the basic competitive forces in the specific environment are:
- Threat of potential competitors (influenced by barriers to entry and retaliation from existing members).
- Threat of substitutes.
- Internal rivalry between current competitors (dependent on sector structure, growth, and bargaining power of customers).
Other factors include sector concentration (concentrated or fragmented), sector importance (strategic or basic), and sector maturity (emerging, growing, mature, or declining).
Company Organization and Principal Schools
Organizations must plan their activities to achieve objectives efficiently. The study of organization began in the late 19th and early 20th centuries and has evolved through several eras:
- Mechanistic conceptions of work, authority, and productivity, ignoring psychological aspects.
- Emphasis on motivation, coinciding with the development of psychology and sociology.
- A global vision encompassing multiple facets.
The Scientific School of Labor Management
Frederick Taylor (1856-1915) advocated for the application of scientific methods to work organization. His principles included:
- Separate planning and execution of work.
- Standardized work methods and performance norms.
- Remuneration based on standards (punishment for not meeting standards).
- Specialized training for each task.
Taylor’s methods focused on task decomposition and rationalization to increase production and profits. However, they were criticized for treating humans like machines, promoting excessive specialization, and creating a divide between management and labor.
Henri Fayol (1841-1925)
Fayol emphasized the principle of unity of command, where each worker receives orders from only one boss. He considered a pyramidal hierarchy essential for authority.
The School of Human Relations
In response to criticism of Taylorism, the U.S. industry sought more humane working methods. Elton Mayo’s 1929 experiments demonstrated that attention and consideration positively impact worker satisfaction, morale, and productivity.
This led to a psychological approach to organization, applying psychological concepts to industrial and human relations within companies.
Production Costs and Classifications
Production involves transforming factors of production into goods and services to meet consumer needs. It adds value to things, establishing the utility of goods.
Production costs represent the monetary value of the factors consumed in creating a good. Companies need to accurately assess costs to determine performance and overall profitability.
Costs can be classified based on:
- Type: fixed and variable costs.
- Relationship to product: direct and indirect costs.
- Cost centers: procurement, manufacturing, marketing, and administration.