Management Theory

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Chapter two
The Evolution of Management Theory
Learning Objectives
1. Describe how the need to increase organizational efficiency and effectiveness has guided the evolution of management theory. 2. Explain the principle of job specialization and division of labour, and tell why the study of person–task relationships is central to the pursuit of increased efficiency. 3. Identify the principles of administration and organization that underlie effective organizations. 4. Trace the changes that have occurred in theories about how managers should behave in order to motivate and control employees. 5. Explain the contributions of management science to the efficient use of organizational resources. 6. Explain why the study of the external environment and its impact on an organization has become a central issue in management thought.

A Case in Contrast

Changing Ways of Making Cars
Car production has changed dramatically over the years as managers have applied different views or philosophies of management to organize and control work activities. Prior to 1900, workers worked in small groups, cooperating to hand-build cars with parts that often had to be altered and modified to fit together. This system, a type of small-batch production, was very expensive; assembling just one car took considerable time and effort; and workers could produce only a few cars in a day. To reduce costs and sell more cars, managers of early car companies needed better techniques to increase efficiency. Henry Ford revolutionized the car industry. In 1913, Ford opened the Highland Park car plant in Detroit to produce the Model T. Ford and his team of manufacturing managers pioneered the development of mass-production manufacturing, a system that made the small-batch system almost obsolete overnight. In mass production, moving conveyor belts bring the car to the workers. Each individual worker performs a single assigned task along a production line, and the speed of the conveyor belt is the primary means of controlling their activities. Ford experimented to discover the most efficient way for each individual worker to perform an assigned task. The result was that each worker performed one

This photo, taken in 1904 inside Daimler Motor Co., is an example of the use of small-batch production, a production system in which small groups of people work together and perform all the tasks needed to assemble a product.

In 1913, Henry Ford revolutionized the production process of a car by pioneering mass-production manufacturing, a production system in which a conveyor belt brings each car to the workers, and each individual worker performs a single task along the production line. Even today, cars are built using this system, as shown in this photo of workers along a computerized automobile assembly line.


Chapter Two

Canadian Auto Workers

specialized task, such as bolting on the door or attaching the door handle, and jobs in the Ford car plant became very repetitive.1 Ford’s management approach increased efficiency and reduced costs so much that by 1920 he was able to reduce the price of a car by two-thirds and sell over two million cars a year.2 Ford Motor Company ( became the leading car company in the world, and many competitors rushed to adopt the new mass-production techniques. Two of these companies, General Motors (GM) ( and Chrysler (, eventually emerged as Ford’s major competitors. The CEOs of GM and Chrysler—Alfred Sloan and Walter Chrysler—went beyond simple imitation of the Ford approach by adopting a new strategy: offering customers a wide variety of cars to choose from. To keep costs low, Henry Ford had offered customers only one car—the Model T. The new strategy of offering a wide range of models was so popular that Ford was eventually forced to close his factory for seven months in order to reorganize his manufacturing system to widen his product range. Due to his limited...
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