CHAPTER 1: OVERVIEW OF CORPORATE MANAGEMENT
1.1. OVERVIEW
1.1.1. Concept of business administration
In general, management is a complex form that business administrators must manage from the beginning to the end of a business production cycle. The essence of business management is to manage input factors, the production and business process, and output factors according to the operating process.
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- According to the business administration process: administration in an enterprise is the process of planning, organizing, coordinating and adjusting the activities of members, departments and functions in the enterprise to maximize all resources to achieve the set goals of the organization.
- According to the management system perspective : management is also the practice of activities in each organization consciously and continuously. Management in an enterprise exists in a system including stages, parts, and divisions that are closely related to each other, interact with each other, and promote each other's development.
In short, business administration is a continuous, organized, and targeted process of the business owner's impact on the collective of employees in the business, making the best use of potentials and opportunities to conduct business production activities of the business to achieve the set goals in accordance with the law and social practices.
1.1.2. The nature of corporate governance
In terms of organization and technique of management activities, business administration is the combination of all human efforts in the enterprise to achieve the common goals of the enterprise and the individual goals of each person in the most reasonable and effective way. It is the process of cooperation and coordination of work between administrators in the management apparatus and workers in the working process and through them to achieve the goals of enterprises in an ever-changing environment. It can be said that the essence of business administration is human management in the production and business process.
When it comes to corporate governance, it often includes:
- Management subjects: are business owners and the team of administrators in the business administration system.
- Subjects of management: include employees with the direction of management impact through functions in the field of management, information systems and management decisions.
- Business operation objectives: In terms of socio-economic aspects, the reason for the existence of a business and the purpose of its operation are proposed by the business owner.
out. Corporate governance activities aim to achieve the business's benefit goals, ensure the business's long-term existence and development, preserve and develop capital to meet the wishes of the owner and all members of the business.
Business administration is to ensure higher efficiency in production and business activities.
1.2. SCHOOLS OF BUSINESS MANAGEMENT
Doctrines, also known as theories, are theoretical generalizations about a certain field, through research and practical testing, and then applied to practical activities in each field.
Business administration theories are theoretical generalizations about the management of business activities. Management theories are the basis, the foundation that guides production and business activities in a scientific and systematic way.
Since the 1800s, when industry and manufacturing activities developed strongly, practice has summarized and drawn out theories with many different schools or groups of theories.
1.2.1. Classical scientific management school
The classical school includes a number of authors with research on management, below are some typical authors and their main ideas.
- Frederich Taylor (1856 - 1915): Taylor was a worker and became an engineer through the process of working during the day and studying at university by correspondence. While working in a steel mill, Taylor had many opportunities to observe and practice management in the factory. He was the author of quite famous research and theories on management from 1890 to 1930.
The basic principles in Taylor's theory are:
+ Develop scientific methods to perform the work and tasks of each worker.
+ Select workers scientifically and train them in scientific methods to do the job.
+ Organize education and supervision of workers to ensure they follow the correct methods
+ Building and strengthening the relationship between workers and managers To implement his principles, Taylor carried out:
+ Research on types of working hours of workers according to each job.
+ Divide each worker's work into small parts to improve and optimize.
+ Build a system to encourage workers to work and pay according to work.
The results of applying Taylor's theory were a rapid increase in labor productivity and a large increase in product volume. However, Taylor's theory leaned toward "technicalizing and mechanizing" people, and labor was exhausted, causing workers to fight against management policies.
- Herny L. Gantt : An engineer specializing in factory control systems. Based on Taylor's theories, Gantt developed and proposed his own theory, which mainly focused on expanding the material incentive system for workers with measures such as:
+ Encourage workers after a day's work if they do a good job.
+ Encourage foremen and supervisors based on the work results of workers under their direct supervision to motivate them in management work.
This measure has encouraged the supervisors to manage better. Also on this basis, new methods of progress management have been introduced into management such as the Critical Path Method (CPM) and the Network Diagram Method (PERT - Program Evaluation and Review Technique). In this theory, the benefit aspect is given more attention.
- Frank B (1868 - 1924) and Liliant M. Gibreth (1878 -1972)
These two authors have studied in great detail the implementation process and the relationship between operations, movements and movements with a certain level of stress and fatigue of workers during work, thereby proposing optimal practice methods to increase labor productivity and reduce worker fatigue.
The methods of this school have made valuable contributions to the development of management thought, developing management skills through division of labor, specialization of the labor process, and were the first to raise the importance of selecting and training employees, using incentives to increase labor productivity. However, the authors have developed a purely scientific management method such as "mechanizing people", tying people to a technological chain to manage and increase labor productivity.
1.2.2. School of administrative management theory
The administrative management school has developed general management principles for the entire organization. Representative authors of this school have research and theoretical works as follows:
- Henry Fayol (1841 - 1925): Fayol's point of view is to focus on building a comprehensive organization to manage the work process. He believes that the labor productivity of people working together in a group depends on the arrangement and organization of the administrator. In order to do a good job of arranging and organizing the business, Fayol proposed and required administrators to apply 14 principles in management:
+ Strict division of labor during the working process
+ Must clearly identify the relationship of authority and responsibility.
+ Must build and apply strict discipline during work.
+ Unified in command and control orders
+ Focused leadership
+ Personal interests must be linked to and serve collective interests and common interests.
+ Build a fair remuneration system based on work results
+ Unified management
+ Decentralization and defining the administrative structure in the organization
+ Order
+ Fairness: create equal relationships at work
+ Each person's job must be stable in the organization.
+ Encourage creativity in the working process
+ Encourage the development of common values in the organization's work process.
- Max Weber (1864 - 1920): is a German sociologist, the author who developed a bureaucratic organization. The concept of bureaucracy is defined as: a system of clearly defined positions and tasks, precise division of tasks, and a system of hierarchical authority.
According to Weber, a business organization system must be:
+ Build a tight organizational structure.
+ Define regulations, laws and policies in administrative activities.
+ Define power and execution in management.
- Chester Barnard (1886 - 1961): The author believes that an organization is a legal system of many people with three basic elements:
+ Willingness to cooperate.
+ Have common goals.
+ There is communication.
If one of these three elements is missing, the organization will collapse. Like Weber, he emphasized the element of authority in the organization, but he believed that the source of authority does not come from the person giving the orders but from the acceptance of the subordinates. That can only be achieved under the following four conditions:
+ Subordinates do not understand orders
+ The content of the command must be consistent with the organization's goals.
+ The content of the order must be consistent with the personal interests of the subordinate.
+ Subordinates are capable of carrying out that order.
The administrative school of management holds that productivity will be high in a well-organized organization. The contribution of this school to the theory of
in theory as well as in management practice: management principles, organizational forms, power and delegation....
1.2.3. Social psychology school
This group of theories emphasizes the role of human in the organization, the view of this group is that labor productivity is not only determined by material factors but also by human psychosocial needs. "The problem of organization is the problem of people" and they point out that in the classical school there are many limitations because it ignores the human factor in the work process.
- The author of “ theory of human relations in organizations” is Mary Parker Pollet (1868 - 1933). This female author believes that, in the process of working, workers have relationships between themselves and between them and a certain organizational institution including:
+ Worker-to-worker relations
+ Relationship between workers and managers
At the same time, the author also emphasizes that the effectiveness of management depends on resolving these relationships.
- Views on human behavior: authors in this school believe that human activities depend a lot on social psychological factors. These factors create good relationships in the labor process, from which high efficiency can be achieved in the work process.
Typical of this view are studies of psychological effects on the labor process at Western Electric's Hawthorne Plant. This research is called the Hawthorne studies. In that study, the authors used measures to make workers feel that they were being noticed by managers, for example:
+ Change brightness mode (increase and decrease brightness).
+ Changes in salary.
+ Change working hours.
This change has led to psychological effects that increase labor productivity.
Approach to human behavioral motivations: the authors focused their research on the factors that influence human behavior during work as their work motivations.
- Abraham Maslow (1908 - 1970): is an American psychologist. The author has built a theory of human needs, including 5 levels ranked from low to high. This theory is applied on the principle: a need that has been relatively satisfied is no longer a strong impulse to urge; a need that has been relatively satisfied, human behavior will be dominated by other higher needs. Thus, to manage effectively, we must pay attention to meeting human needs.
- Douglas Mc Gregor (1906 - 1964) developed the behavioral theory in management. He believed that previous managers had conducted management methods based on false assumptions about human behavior. Those assumptions assumed that most people did not like to work, preferred to be commanded rather than take responsibility for themselves, and most worked for material benefits. Therefore, managers built organizations with centralized authority, set many procedural rules, and at the same time, with a strict monitoring and control system. Gregor called those assumptions X and proposed a series of other assumptions that he called Y assumptions. Y assumptions assumed that people would enjoy their work if they had advantages and they could contribute more to the organization. Mc Gregor believed that, instead of emphasizing the control mechanism, managers should pay more attention to the coordination of activities.
- Herzberg's two-factor theory suggests that the factors that create job satisfaction do not directly contradict the factors that create job dissatisfaction. Herzberg's motivators are people's feelings about the job itself: accomplishment, recognition, the nature of the work, responsibility, and growth opportunities. Hygiene factors relate to the work environment: working conditions, management and company policies, supervision, interpersonal relationships, pay, status, and job security. Herzberg's findings are significant to managers. They draw attention to the fact that job content has a major influence on people's behavior at work and that factors such as pay and working conditions are not necessarily motivators in themselves.
- Chris Argyris : Research on human personality and organizational life factors has shown that an excessive emphasis of managers on controlling employees will lead to employees having a passive, dependent attitude and avoiding responsibility. In that psychological state, they will feel dissatisfied and have a negative attitude towards completing common goals. Argyris believes that human nature always wants independence in action, diversity in interests and the ability to be autonomous. Effective managers are those who know how to create conditions for employees to behave like adults and that is only beneficial to the organization.
The philosophy of the behavioral school emphasizes the social, esteem, and self-actualization needs of workers. This theory complements the classical management theory by arguing that productivity is not merely a technical issue. It also helps to improve the management style and methods in organizations, confirming the connection between productivity and operational style.
Behavior theory has made great contributions to management theory and practice, helping managers better understand human motivation, the influence of the collective on behavior, and management psychology issues.
1.2.4. Systems school in business administration
The results generated
Feedback
This school of theory holds that an organization is viewed as a unified direct system of organically related parts. The following concepts are used to describe organizational relationships in management activities:
Input factors
Usage process
External factors
Figure 1.1: Enterprise system in business environment
- Subsystems in administration: are parts of an organization linked together in a unified organizational system.
- Synergy or promoting the advantages of collective cooperation: is a state in which the common is considered greater than the individual. In an organizational system, synergy means that the parts interact with each other in their activities, creating a common strength that is multiplied and brings much higher efficiency than in the case of parts operating independently.
- An open system is a system that interacts with many factors in the internal and external environment.
- A closed system is a system that has no (very little) interaction with factors in the external environment.
1.2.5. Japanese School of Management
1.2.5.1. Contents of Gouchi's Theory Z
Theory Z is also known as "Japanese Management" and was popularized around the world during the economic boom of Asian countries in the 1980s. Unlike Theory X (which has a negative view of employees) and Theory Y (which is too optimistic about employees), Theory Z focuses on increasing employee loyalty to the company by creating peace of mind and satisfaction for employees both inside and outside of work.
The core of this theory is to satisfy and increase the spirit of workers to achieve quality productivity at work.
The theories of Theory Z are based on the theoretical and practical foundations previously summarized and discovered by Dr. W. Edwards C Deming.
Theory Z is considered an important theory of modern human resource management, along with Theory X and Theory Y. Theory Z leads to the success of many companies, so these companies are classified as Z companies .
Main content of theory Z:
- Lifetime employment
- Collective responsibility
- Measure and evaluate in detail and clearly, but control measures must be delicate, flexible, and preserve the dignity of the workers.
- Collective decision making.
- Evaluate and promote with caution.
- Care about all issues of workers, including their families.
1.2.5.2. Contents of Massakiimai's Kaizen Theory
After studying Japanese and American companies, Massakiimai found a huge difference between Japanese management and Western management. He noticed that in America, change was taking place drastically, an old factory was completely replaced by a new factory, which was built very expensively. He studied the essence of success in Japanese management and built the concept of Kaizen.
Kaizen is a combination of two Japanese words: Kai - "Change" and Zen - "Better", meaning "Change for the better" or "Continuous improvement". Based on the idea that "problems" can arise continuously at any time, in any part of the business during operation, the Japanese proposed the Kaizen management philosophy with the content of 5S (five principles starting with the letter S in Japanese) to overcome these "problems":
- Seiri - Sort (Sort - English): To remove all unnecessary and worthless things from work, factory, organization...
- Seiton - Arrange (Simply - English): Classify, systematize so that anything can be "easy to find, easy to see, easy to get, easy to check, easy to return".
- Seiso - Cleanliness (Shine - English): Essentially cleaning, sweeping, sanitizing, checking to see if everything is arranged in the right place.
- Seiketsu - Care (Standardize - English): To "Standardize" and "process" what has been achieved with the three principles mentioned above so that all members of the enterprise follow them in a systematic and methodical manner.