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Henry Fayol’s Views On Effective Business Management

Introduction

The managerial approach to business stresses the problem-solving and decision-making responsibility of business managers. This method emphasizes their ability to make decisions and solve business problems in a way that enhances the objectives of the whole corporation. The business manager is a specialist in managing markets and business resources; production, finance, and personnel executives are his corporate counterparts. According to Henry Fayol, “to manage is to forecast and plan, to organize, to command, to co-ordinate and to control”.

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Fayol’s point of view

Following Henry Fayol, effective business management includes the following precepts: (1) acceptance of change as a constant; (2) recognition of the centrality of consumer wants and needs; (3) adoption of a systems approach to business issues; (4) recognition and application of meaningful concepts from other disciplines, and the acceptance of theoretical constructs and findings as helpful in managing business effort; and (5) recognition of the relationship between business and other aspects of management. In accepting change as a constant, business management recognizes that customers and consumers change; markets change continuously; and the products and services, the business methods, and even the very nature of a company must change to meet them (Fayol, 1984). Modern companies seek new profit opportunities suggested by them. They must plan innovations and purposely set out to capitalize on new approaches. Business is perceived as a means of adjusting to changes through altering such variables as products, services, prices, and channels of distribution to better meet changing environments. Effective business managers use concepts from a variety of disciplines, including quantitative, social, and behavioral sciences to solve business problems. They recognize that business is interdisciplinary, and that theoretical models and constructs are useful in establishing policies and making decisions. Theoretical constructs (related to such areas as consumer motivation, imagery, communication, diffusion, and buyer behavior) and quantitative models dealing with a retail location, physical distribution, advertising, and product-development problems have proven useful. Business managers are concerned with growth, cultivation, and market trends and movements as part of the change process. Business forces generate not only changing pressures but also methods of controlling and directing business effort to meet them. Change must be pursued on a planned basis through deliberate, coordinated efforts intended to improve business systems. Such effort utilizes the techniques and knowledge available. From the standpoint of the individual firm, the economy, the society, and the culture, business is an agent of change. Business managers assess opportunities for change, creating it in terms of products, supporting systems, and promotional programs (Brooks, 2009).

Mintzberg’s point of view

Similar to Henry Fayol, Mintzberg (1989) underlines that business planning requires sales projections for such periods as one, three, five, and ten years ahead. These projections predict customer and competitor reactions; attempt to gauge acceptance for new products; and highlight economic, social, demographic, technological, psychological, and political changes, all of which are difficult tasks to perform -nor can they be performed with the degree of precision available in other more concrete situations. Yet, information that provides a perspective for future operations is invaluable for corporate decision-making. One of the major characteristics of the adoption of the business philosophy is that plans and programs replace haphazard business methods. By providing the means for anticipating the firm’s future requirements along with an orderly, continuous, systematic, and sequential basis, business planning avoids crisis decisions and concentrates on integrated programs of action. Business planning is a rational way of translating experience, research information, and thought into business action. It is a pragmatic, organized procedure for analyzing situations and meeting the future. Based on information about ends and means to determine various causal relationships, trends, and patterns of behavior, it is concerned with the selection of alternative strategies. In essence, purposeful research, experience, judgment, and decision making (all of which are directed toward guiding the corporate system and bringing it growth, survival, and adjustment) form the fabric of the business planning process. Business planning is an integrated, intelligent, rational process for guiding business change.

The Classical Theorists

In construct to Fayol, Human Relations Theorists underline the importance of employee-orientation in business. In a competitive economy, business planning is an essential element for growth and survival. Moreover, the motivation of employees itself must be planned. As one of the most significant managerial functions, business planning is a prime responsibility of the top business executive. Yet, the very nature of critical day-to-day operations, the pressures of time, and the tendency to act rather than plan, frequently cause executives to neglect this function. One of the major criteria of an executive’s effectiveness is his expenditure of time and resources on creative and contemplative business planning, especially of a longer-range character. The business executive who is too busy to plan is admitting that he is too busy to manage (Brooks, 2009). Control provides a business with a forward-looking view of the total enterprise. It is the basis for determining the fundamental strategies to be employed and the objectives, programs, and resources required. Essentially, planning is to a business enterprise what thinking is to an individual. It supplies the rational means for achieving maximum market-striking power and results from the resources in hand (Evans, 1999).

Thus, for the Classical Theorists with the Human Relations Theorists, business planning might be defined as the group of activities performed to both determine and carry out business and company objectives, and to help specify objectives and alternative courses of action designed to achieve them in the belief that without planning activity, a less desirable event would occur. Good business planning has as its base adequate business intelligence, particularly position, environmental, and project intelligence. For establishing objectives, choosing alternatives evaluating situations, and estimating effectiveness, business planning, and programming require adequate information. Owing to the availability and use of computers, the application of mathematical models, better sales forecasting procedures, and business orientation, business planning is improving and will probably reach a high point when fully integrated business intelligence centers provide sufficient information in a useful manner (Pugh, 1990). Management should present a picture of the external business system. It should cut across various departments and functional activities; it should deal with short-run, intermediate, and long-run situations; it should consider emerging patterns and trends, and it should use past information to glimpse the directions and dimensions of the future. One of the planner’s main problems is to determine the information needed for effective planning (Mintzberg, 1989).

It is possible to say that Human Relations Theorists agree with Fayol that organizing and control functions of management are important in every organization. Thus, management might be defined as the group of activities performed to both determine and carry out business and company objectives, and to help specify objectives and alternative courses of action designed to achieve them in the belief that without planning activity, a less desirable event would occur (Sheldrake, 2003). For establishing objectives, choosing alternatives evaluating situations, and estimating effectiveness, business planning, and programming require adequate information. Owing to the availability and use of computers, the application of mathematical models, better sales forecasting procedures, and business orientation, business planning is improving and will probably reach a high point when fully integrated business intelligence centers provide sufficient information in a useful manner. Planning intelligence should present a picture of the external business system. It should cut across various departments and functional activities; it should deal with short-run, intermediate, and long-run situations; it should consider emerging patterns and trends, and it should use past information to glimpse the directions and dimensions of the future. One of the main problems is to determine the information needed for effective planning. Planned activity is goal-directed and achieves a more efficient expenditure of business resources (Pugh and Hickson 2003).

All management schools of thought agree that the management activity itself consumes time. Time spent on business planning and controlling is one of the investments of a company. Given a total period within which to initiate business programs, the longer the period spent in planning, the less time remains for implementing the program. But as a result of business planning, within realistic limits, both the total time and resource usage become more effective. Moreover, the planning process may be speeded up through the use of computers and various mathematical techniques Pugh and Hickson 2003). Business planning must become a swift and feasible operation, otherwise, business programs cannot be initiated effectively. Business organizing and coordination confers several benefits, in addition to the actual plans and programs evolved. It assures that various segments of the business are adopting a forward-looking perspective concerning their capabilities and that the interrelationships between various aspects of the business as part of a system will be stressed. Thus, the business future will be projected in concert, engendering a coordinated and integrated thrust. Planning tends to promote more efficient operations and leads to a careful analysis of results (Sheldrake, 2003).

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Programming the business mix

The major goal of business programming is programming the business mix. It balances business resources and business inputs in terms of the communication mix, distribution mix, and product and service mix previously described. Business programming is, then, a process of devising or arranging the correct order in which various mixes should be initiated and completed, based on flexible application, evaluation, and revision. It bears on the sequence of business operations in which the outcome of preceding operations governs future ones. In a mathematical sense, programming implies a greater degree of precision and specificity than does programming in the business sense. Mathematical programming, such as linear programming, provides examples through which solutions are found by the programming of diverse factors (Sheldrake, 2003). The optimal solution is not to be found in business, but a satisfactory or good one may be attained through programming. Business programs are narrower in scope than either plans or strategies. They should be easily adaptable to competitive market conditions and flexible enough to meet unexpected actions and reactions. Programs must allow for simultaneous resolution of multiple problems and should be susceptible to abandonment or revision. They should be carried out with specific, clearly defined objectives in mind and should be integrated so that the firm’s overall operation is achieved efficiently. The starting point for successful market programming is a well-organized plan (Pugh and Hickson 2003).

Programming

In setting up a program, the programmer attempts to effect a compromise. On the one hand, he may attempt to determine the optimal scale of business operations and the resources required to implement it. On the other hand, he may estimate the minimal level of operations that is acceptable and the necessary resources. Since resources are limited, the programmer will have to make a less-than-ideal choice. But starting with the ideal, and then realistically assessing company resources and scaling down, he can obtain some idea of the scale of the program he can employ. Then he must determine all the necessary steps and simplify, eliminate, and sequence them. Thus he achieves an internal balance of activities. Programming should also allow for reassessment and reactions to inferior functioning, weaknesses, and competitive reactions (Mintzberg, 1989).

Conclusion

In sum, Fayol’s principles of management are based on similar positions and interpretations proposed by Human relations theorists. The main difference is that Fayol emphasizes the bureaucratic structure of relations while Human relations theorists empathize with motivation as the main principle of work. Specific goals or targets can be assessed against achievements. No change takes place in the basic direction, strategies, and activities of the business operation. In long-range planning, by contrast, the relationship between inputs and outputs is difficult to determine, since the fundamental direction and scope of the organization and its objectives may be changed drastically. Intermediate planning has some of the characteristics of both long- and short-range planning. It has both fairly precise details of the program in terms of company direction and operations. In the intermediate range, objectives like inputs can be altered somewhat.

List of References

Brooks, I., 2009. Organizational Behaviour: Individuals, Groups and Organization. 4th edition, Essex, Pearson Education Limited.

Evans, D., 1999. Supervisory management: principles and practice. 5th edition, London, Thomson Learning.

Fayol, H. 1984. General and industrial management. Rev.ed. Gray Irwin, Pitman Publishing.

Mintzberg, H. 1989. Mintzberg on Management. Free Press; illustrated edition edition.

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Pugh, D.S. 1990. Organizational theory. Selected readings. 3rd edition. Middlesex, Penguin Books.

Pugh, D. and Hickson, D. 2003. Great Writers on Organizations. 3rd Edition, Hampshire, Ashgate Publishing Limited.

Sheldrake, J., 2003. Management Theory. 2nd edition, London, Thomson Learni.

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