Management is the direction of an entity, whether it’s a private firm a government agency, or a non-profit organisation. In management theory, there is always a purpose for management and that purpose is to maximise the value of the assets of the enterprise in the most efficient and productive possible manner. The theory is usually expressed in terms of four stages: planning, creating a strategy, implementing the strategy, monitoring the results. The process by which an enterprise attains its objectives is referred to as management. As a discipline, management continues to change and evolve with time.
There are different theories on what management is. Some people believe that management is purely a function of reward and punishment, while other people refer to it as a set of skills, abilities and knowledge that allow a firm to achieve certain goals. Regardless of the precise definition, management theory has a common element: the successful operation of a firm, its ability to profit, and eventually, its value.
A good example of management theory is the famous McKinsey mantra, “You can’t manage what you can’t control”. This quote explains that managers must set a clear, concrete goal and work to achieve that goal. Once a firm has identified a goal, it must then determine what it can do to bring that goal into reality. Once a plan is in place, then a manager can move on to implement that plan and see it succeed or fail.
How does management ensure that a plan achieves its goal? The answer is detailed in the next sentence from the above quote: “a manager is not concerned with the position or level of management; he is only interested in producing the best results.” Obviously, there are limits to the effectiveness of any management plan; after all, a firm cannot successfully achieve its goals if it has not succeeded in creating them in the first place! It is important to identify management problems and work to overcome them. For instance, if a firm does not know where to find the best products to sell, then it is unlikely that it will produce products that people want. If people do not know where to find the goods, then they are likely to go elsewhere, leaving the customer without his or her goods and services.
A third example of a common management theory is “the firm will succeed or fail due to its relationship with the customer.” When a firm does not make customers happy, it will suffer for it. However, when a firm establishes and develops a close relationship with its customers, it can enjoy greater success. A good example of a management theory is when a firm takes care of its customers, then it will be able to create the satisfaction that is necessary for success.
The above three theories provide a framework upon which to examine management issues. Each theory, as mentioned, is important in identifying particular management problems, as well as offering useful alternatives. Once a firm has determined that management theory applies to it, then it can begin to implement the solutions offered by each theory into its overall strategy. This strategy can prove extremely beneficial.