Challenges of Management
Management is an important organ of the modern society. The decisions of management in government, business and other organizations constitute a powerful social force which is vital to the effective functioning of the contemporary society. Management is that organ of the society which is given the responsibility of making the productive use of resources for the betterment of the society. The term ‘management’ is also used to represent an organized body of knowledge which enables the ambitious executives to acquire and master the skills needed to discharge their responsibilities effectively.
This body of knowledge should not be taken as static. It should be studied in the light of socio-economic, political, educational and other changes. These changes make it appropriate (even mandatory) to re-examine the role of modem managers. Modern managers have the responsibility to devise the management practices to meet the new challenges and make use of the opportunities for growth of the organization. Change is an important feature of modern organizations. Significant changes take place every day in social, technological, political and other aspects of modern world.
However, the recent spate of changes in the economies of the world caused, by creation of World Trade Organization (WTO), economic liberalization and trend towards globalization of economies have brought many opportunities and threats for the modern organizations. No manager can afford to ignore such changes; rather he has to make use of them to his advantage. In other words, he has no option, but to accept the challenges. To be successful, the manager must try to forecast the changes because of the following reasons: i) The changes in business environment will have a considerable impact on the theory and practice of management.
Experience that once provided a sense of security to preceding generations of managers may be of little comfort to future managers. New problems will arise which may render the old principles and practices of management obsolete and call for evolving new theories and practices. (ii) The effective handling of change calls for latest information and new skills on the part of managers. Those who prepare themselves for challenges in the future will find many opportunities for growth and expansion of their business.
During the last two decades, there has been a phenomenal growth in Size and complexity of organizations in every field, be it Government, religious, educational, medical, military or business. In fact, an increasing proportion of all our activities occurs within the boundaries of these complex organizations and in that sense, we have become truly a ‘organizational society’. Management concepts and practices, organization structure and behavior have responded to these changing influences.
This chapter aims at sketching out a framework for looking at the future of management of organizations and analyses the important forces at work in this regard. The important areas which would create challenges for the management are as follows: 1. Social environment. 2. Economic environment. 3. Technological environment. 4. Physical environment. 5. Political environment. 6. International environment. The trends of these environments and their relevance for the future manager are discussed below.
Population Explosion. Population of our country and of the world is increasing rapidly. This will require new jobs, more product’s, new methods of production and distribution and new modes of living. The population mix will also change. There will be an increase in the proportion of older people due to increase in the average life span. This will affect the demand for products of many organizations. b. Educational Level. The governments of various countries have been taking steps to eradicate illiteracy and to increase the educational level of their citizens.
Educated consumers and workers will create very tough tasks for the organizations in future. It would become really difficult to satisfy enlightened consumers whose behavior would not be predictable. The workers will be better organized and compel the organizations to safeguard their interests and to allow them to have say in their management. c. Leisure Time. People will have more leisure time because of reduced working hours, increased automation and quick means of traffic and communication. The effects of this trend are many and varied.
For some people, more leisure time means higher spending in pursuits of leisure which will encourage the growth of tourism, fast food and entertainment industries. For others, it means an opportunity for earning more by doing some part-time jobs. d. Public Opinion. Public Opinion about business will shape the attitudes of future managers. If the people have distrust in the market system, they will prefer governed controls to free competition.
The opinion is going to be very complex because of changes in values of society, increased international competition, rise of consumerism use of industrial robots, etc. . Changes in Economic Environment (Globalization and Liberalization) the degree of resource exploitation will have a direct bearing on the economic environment and through this on the business. As is obvious from the present trends, physical environment will not remain confined to land only, but would extend to oceans and space also. In future, oceans will be developed via farming and mining operations; and space flights and missions will concentrate on studying causes of changes in atmospheric conditions and finding reserves of natural resources in land and water.
Economic conditions in India are changing at a fast speed because of Government’s policy of liberalization of industrial licensing and foreign direct investment and also the creation of World Trade Organization (WTO). There is now increased emphasis on the globalization of economy. The Indian managers will have opportunities of raising capital from foreign markets, distribute their products internationally and start industries abroad. Business competition will no• longer be restricted to national boundaries. It will become international because of growth of multinational corporations.
Big organizations will continue growing through diversifications and take-overs. Despite growth of giant corporations, opportunities for small business will not be reduced. Small firms will be needed to serve as feeder to large ones and to supply non-standardized goods. All these will increase the complexity of decisions in the future. 3. Changes in Technological Environment Technological changes will affect management in the future in terms of heavy investment in technology, understanding the principles of production and their consistent application, and effects of technology on markets.
In future, all big organizations will be actively engaged in technological forecasting. Automation and information technology will assume new proportions as discussed below: (a) Automation. Automation has created several problems. Jobs have become routinized and unchallenging. Introduction of industrial robots has created a feeling of job insecurity among workers. Once industrial robots take over from workers, the primary task of the workers would be to set up production runs, to program the robots and to run them under computer control.
Thus, future organizations will have highly automated man-machine systems. (b) Information Technology. There will be remarkable impact of computerized information systems on management. Firstly, there will be Use of electronic equipment to collect and process data. Secondly, Computers will help application of quantitative techniques to management Problems. Thirdly, there will be simulation of higher order thinking though computer programmers. Thus, improved and innovative use of information technology would be an essential factor in future management. In view of the fact that information technology will challenge many long-established practices and doctrines, we will need to rethink some of the attitudes and Values which we have taken for granted.
In particular. we may have to reappraise our traditional notions about the worth of the individual as opposed to the organization and about the mobility rights of young men. This kind of inquiry may be painfully difficult, but will be increasingly necessary. ” It may be noted that technological changes are not an independent force. They overlap the social changes . nd affect the organization relationships. For instance, improved technology would reduce total employment which will create social reactions. Further, the efficiency of managerial personnel and professionals like doctors, chartered accountants, engineers, etc. would increase considerably because of advancements in technology. 4. Changes in Physical Environment. Protection of ecology and maintenance of ecological balance has become a major issue these days. This is evident from the rise of several social groups against felling of trees for commercial use (chipko movement) and air, water and noise pollution.
The society will no longer tolerate environmental pollution. The typical examples are: closure of several tannery units in Kanpur by the Supreme Court as they were polluting the Holy Ganga and closure of several foundries around Taj Mahal by the Supreme Court as they were polluting the air leading to adverse effect on the whiteness of the national monument. The country cannot allow tragedies like Bhopal Gas Leak Case, 1984 at Union Carbide to occur again. The growing awareness of the people about environment will pose problems before the managers.
They will have to study the adverse effects of business operations on the environment and take suitable steps to check all kinds of pollution. Thus, there will be greater emphasis on the development of technology for pollution control and environmental restoration. 5. Changes in Political Environment. There will be greater Government’s interference in business to safeguard the interest of workers, consumers and the public at large. Government’s participation will also pose many challenges before management. The Government may restrict the scope of private sector in certain areas.
It does not mean chances of co-operation between the Government and private sector are ruled out. In fact, there will be more and more joint sector enterprises. The fear of nationalization of the mismanaged units will continue. Financial institutions will not be silent spectators; they will take active part in the policy formulation of the firms whom they have advanced funds. 6. Changes in International Environment. Several changes are taking place in the international environment which may have adverse or favorable impact on a particular business. For example, the disintegration of U. S. S. R. aused great miseries for the Indian exporters in the early nineties. Not only their investment was blocked, further exports were also hindered. This compelled the Indian businessmen to explore new export markets. The managements will have to be alert in future to meet the challenges posed by international forces Because of liberalization of industrial licensing by developing nations and reduction of economic barriers between nations as a result of GAIT agreement 1993; several changes seem to be imminent in the near future. Multilateral trade among the nations will increase.
The role of World Trade Organisation1 I. M. F. , World Bank and other international institutions will change and a new economic order will take place leading to globalization of economies. EMERGING HORIZONS OF MANAGEMENT (Challenges before Future Managers) The changing environment of business is likely to pose the following challenges before the future managers: 1. Reconciliation of Conflicting Demands of Social Groups The organizations are expected to reconcile the conflicting demands of various stakeholders such as owners, employees, suppliers, customers, government and the community.
The shareholders or owners of the business want the highest possible return, the workers the highest possible• wages, the consumers the goods at the lowest possible price and the Government wants the highest possible revenue. It would be the duty of management to bring about a compromise among the interests of various parties. The business managers will also have to take care of the expectations of the society such as higher quality, fair trade practices, maintenance of physical environment, etc. If they fail to meet the needs and expectations of the society, it will be rendered difficult for them to survive.
The managements of organizations will also have to give due consideration to the human resources working with them. They will have to change their policies to give the workers a greater say an influence in organizational functioning. Latent human capability is the most valuable resource of the organization much more important than physical and financial resources. Increasingly, management will emphasize the importance of human resources and recognize that maintaining a viable psycho-social system is one of its most vital tasks.
In other words, the organizations will have to decentralize authority, introduce flexibility in the structure and give sufficient freedom to individuals to take decisions to meet the social, economic and technological challenges successfully. 2. Economic Liberalization The liberalization of the Indian economy has posed the following challenges for the managers : (a) Competition in the fast growing domestic market.
Diversification into the core and infrastructure sectors—power, telecoms, roads, ports, insurance, etc. hich was earlier reserved for the public sector (c) Raising India’s exports and share of the world trade. (d) Achieving the vision of becoming India-based Multinational Corporation. 3. Globalization The world has become a small village, thanks to the rapid means of transportation and telecommunications. Satellite transmission has widened the geographical markets. The countries have become interdependent, in terms of technology, capital, purchases and sales.
Global, companies buy from the cheapest markets and sell where they can get maximum prices. They carry on production in the country where cost of production is the minimum. In other words, globalization calls for reduction of costs, improvement of quality, expansion of markets and diversification into new areas and markets. Indian companies use not only imported components, but are also selling their finished products to markets abroad. To take advantage of global markets, Indian companies are making strategic alliances with foreign companies. We have Mod i-Xerox, HPL-Olivetti, ICIM-Fuji, Kinetic Honda, etc.
Global networking of suppliers, distributors, technical collaborators, ad agencies, etc. is being created. The most successful companies will rely more and more on global integration and networking. 4. Expanding Operations of Business Organizations The changes in environment and technologies during the last four decades have compelled organizations to increase their scope and encompass additional activities. The development of big industrial houses with activities in a wide variety of industri4l fields is a typical example of such expansion of activities of organizations.
Industrial giants have accumulated vast financial resources and spread their risks),y branching out into different areas of economic activity. To cope with the changing requirements, such organizations have developed new organizational structure with focus on planning, control and coordination. The managerial systems of these companies are substantially more flexible and dynamic than of the simplified single-product companies. Another facet of expanding frontiers of organizational activities is the spread of corporations outside the national boundaries. These corporations are known as multinational or transnational corporations.