Academic journal article Management International Review

Policy-Formation and Policy-Execution in the Business Undertaking

Academic journal article Management International Review

Policy-Formation and Policy-Execution in the Business Undertaking

Article excerpt

Posing the problem

More than fifty years ago the American engineer, Frederick Winslow Taylor, first coined the phrase "Scientific Management". He started from the idea that the old style of management was based on the purely empirical, personal experience of the particular head of the business; that the rule-of-thumb principles used were often completely inadequate, resulting in an enormous waste of human effort materials and money; and that it ought to be possible for the human activity of managing a business to be analysed scientifically and systematically improved. Because of the period in which he lived and his own education and experience, he thought primarily of factory management and the application of the methods of the natural sciences to the solution of its problems.

Fifty years have since gone by and efforts to achieve a more systematic management on a scientific basis have, in the course of the years, assumed a vast scale; management literature with its many and varied ramifications has become impossible to keep up with. In spite of all this, most experts in both practice and theory are at this very moment agreed that management on the whole is still carried on predominantly in accordance with empirically-obtained, individually selected information and that there is still a great waste of resources in our undertakings as a result of faulty management, and that the scientific penetration of management problems is still in its infancy. Peter Drucker, for example, says frequently in his books that we shall be able to solve the vast economic problems of the future only by obtaining more systematic knowledge about the nature and art to management in its constantly changing environment. To avoid misunderstanding, I should like to emphasize that we are not concerned here with the ideas of isolated theoretical scholars prejudiced against practice because they know nothing about it, but with the ideas of people who are very successful in practice as well.

The reasons why, in spite of the continuous efforts of many people, there is still no satisfactory doctrine of management, are very numerous. One of the reasons is certainly that in the course of a few years the tasks of management have undergone a fundamental change, and that in accordance with general technical and economic development, they are changing ever more rapidly, so that scientific analysis is constantly lagging behind and so the practitioner must, in the first instance, concern himself with the up to the moment problems of his firm and scarcely ever finds time to reflect about them at length. Numerous problems of factory management to which Taylor once addressed himself, have in the meantime been completely solved, at least in theory--to mention only work study, efficiency-promoting incentive payments or the organization of the main areas of control. But for every problem solved, two new ones have arisen in the meantime, and the deeper we enter into individual problems, the more we realize that what is involved is not (or, at least not in the first instance) the solution of these individual problems in a fragmentary area of the undertaking alone, but the organization and the conduct of the undertaking as a whole. In what follows, the attempt will be made to comprehend management as a process of policy-formation and policy-execution, and to probe as deeply as possible into it. It is obvious that, given the complex character of the management problems of an undertaking, it will not be possible by this means to obtain an all-embracing picture of the conduct of a business. However, it should be possible to illuminate these problems from a certain point of view and thus obtain another constituent element for a future doctrine of management.

The Undertaking as an organisation

The undertaking is an independent economic unit which, from the point of view of the economy as a whole, is given the task of producing and passing on to other economic units products which are required somewhere within the whole economic process, whether it be in the sphere of production, distribution or consumption. …

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