INTRODUCTION

Tesla, Inc. (formerly Tesla Motors, Inc.) is an American

automotive and energy company based in Palo Alto,
California. The company specializes in electric car
manufacturing and, through its SolarCity subsidiary, solar
panel manufacturing. It operates multiple production and assembly
plants, notably Gigafactory 1 near Reno, Nevada, and its main vehicle
manufacturing facility at Tesla Factory in Fremont, California. As of March
2019, Tesla sells the Model S, Model X, and Model 3 automobiles.It is
accepting reservations for the Model Y,Roadster (2020),and
Semi vehicles. Tesla also sells Powerwall and
Powerpack batteries, solar panels,solar roof tiles, and
some related products.
Tesla was founded in July 2003, by engineers Martin Eberhard and Marc Tarpenning,
under the name Tesla Motors. The company's name is a tribute to engineer Nikola
Tesla. In early Series A funding, Tesla Motors was joined by Elon Musk, J. B.
Straubel and Ian Wright, all of whom are retroactively allowed to call themselves co-
founders of the company. Musk, who formerly served as chairman and is the current
chief executive officer, said that he envisioned Tesla Motors as a technology
company and independent automaker, aimed at eventually offering electric cars at
prices affordable to the average consumer. Tesla Motors shortened its name to Tesla
in February 2017.
After 10 years in the market, Tesla ranked as the world's best selling plug-in
passenger car manufacturer in 2018, both as a brand and by automotive group, with
245,240 units delivered and a market share of 12% of the plug-in segment sales.Tesla
vehicle sales in the U.S. increased by 280% from 48,000 in 2017 to 182,400 in 2018
and globally were up by 138% from 2017.
CHAIRMAN,TESLA INC
Elon Reeve Musk , born June 28, 1971 is a technology entrepreneur, investor, and
engineer.He holds South African, Canadian, and U.S. citizenship and is the founder,
CEO, and lead designer of SpaceX; co-founder, CEO, and product architect of Tesla,
Inc.;[co-founder and CEO of Neuralink; founder of The Boring Company;[9] co-
founder and co-chairman of OpenAI;[10] and co-founder of PayPal. In December
2016, he was ranked 21st on the Forbes list of The World's Most Powerful People.[11]
He has a net worth of $22.3 billion and is listed by Forbes as the 40th-richest person
in the world.
He subsequently co-founded Zip2, a web software company, which was acquired by
Compaq for $340 million in 1999. Musk then founded X.com, an online bank. It
merged with Confinity in 2000 and later that year became PayPal, which was bought
by eBay for $1.5 billion in October 2002.
In May 2002, Musk founded SpaceX, an aerospace manufacturer and space transport

services company, of which he is CEO and lead designer. He helped fund Tesla, Inc.,
an electric vehicle and solar panel manufacturer, in 2003, and became its CEO and
product architect. In 2006, he inspired the creation of SolarCity, a solar energy
services company that is now a subsidiary of Tesla, and operates as its chairman. In
2015, Musk co-founded OpenAI, a nonprofit research company that aims to promote
friendly artificial intelligence. In July 2016, he co-founded Neuralink, a
neurotechnology company focused on developing brain–computer interfaces. In
December 2016, Musk founded The Boring Company, an infrastructure and tunnel-
construction company.
TESLA INC’S VISION
Tesla’s vision statement is “to create the most compelling car company of the 21st
century by driving the world’s transition to electric vehicles.” This corporate vision
emphasises the company’s focus on renewable energy. Specifically, the corporation
addresses the electric vehicle market as a major avenue for facilitating growth of the
global renewable energy market. The following components are significant in Tesla
Inc.’s vision statement:
• Mo
st compelling
• Car
company
• 21s
t Century
• The
world’s transition to electric vehicles

TESLA INC’S MISSION

Tesla’s mission statement was “to accelerate the world’s transition to sustainable

transport.” However, in mid-2016, under Elon Musk’s leadership, the company

changed the corporate mission to “to accelerate the world’s transition to sustainable
energy.” This new statement indicates a slight but significant shift in the company’s
business, to address market opportunities for renewable energy. In a way, the new
corporate mission recognizes the relevance of the firm’s batteries and related energy
storage products in markets in addition to the electric vehicle market. Tesla Inc.’s
mission statement has the following notable components:

• To
accelerate
• The
world’s transition
• To
sustainable energy

TESLA
INC’S
EVOLUTION
Tesla Motors was incorporated in July 2003 by Martin Eberhard and Marc
Tarpenning who financed the company until the Series A round of funding.The
founders were influenced to start the company after GM recalled all its EV1 electric
cars in 2003 and then destroyed them.Elon Musk led the Series A round of
investment in February 2004, joining Tesla's board of directors as its chairman.
Tesla's primary goal was to commercialise electric vehicles, starting with a premium
sports car aimed at early adopters and then moving into more mainstream vehicles,
including sedans and affordable compacts.
Musk took an active role within the company and oversaw Roadster product design at
a detailed level. In addition to his daily operational roles, Musk was the controlling
investor in Tesla from the first financing round, funding $6.5M the Series A capital
investment round of US$7.5 million with personal funds.Musk later led Tesla Motors'
Series B, $9M of US$13 million, and co-led the third, $12M of US$40 million round
in May 2006. Tesla's third round included investment from prominent entrepreneurs
including Google co-founders Sergey Brin & Larry Page, former eBay President Jeff
Skoll, Hyatt heir Nick Pritzker and added the VC firms Draper Fisher Jurvetson,
Capricorn Management and The Bay Area Equity Fund managed by JPMorgan
Chase.The fourth round in May 2007 added another US$45 million and brought the
total investments to over US$105 million through private financing.

TESLA ORGANISATIONAL STRUCTURE :

DIVISIOAL AND FLEXIBLE
Tesla is a unique company in many ways and this uniqueness also extends to its
organizational culture. Specifically, “Tesla, unlike most companies its size, doesn’t
have any known management structure. There’s no organizational chart or public list
of senior leaders.” Nevertheless, Tesla organizational structure can be characterized
as divisional.
As it is illustrated in figure below, Tesla organizational structure comprises a number
of divisions such as energy, engineering and production, HR and communications,
legal and finance, sales and software. Each division is led by several vice presidents,
except software division, which is led by 1 vice president and Director of Artificial
Intelligence. Tesla benefits from divisional organizational structure through less
bureaucracy compared to many other companies of similar sizes.  Divisional
organizational structure also helps the electric automaker to increase the speed of
communication among different layers of management with positive implications on
decision making and flexibility of the business.

The current pattern of Tesla organizational structure illustrated above is a result of

recent management changes in the company.  Specifically, following the departure of
Jon McNeill, Tesla’s president of global sales, marketing and delivery and service to
join ride-hailing service Lyft Inc. in February 2018, Tesla’s sales division started
directly reporting to CEO Elon Musk.
Tesla organizational structure is going through further considerable changes. CEO
Elon Musk is “flattening the management structure to improve communication,
combining functions where sensible and trimming activities that are not vital to the
success”of Tesla mission.
TESLA’S ORGANISATIONAL CULTURE AND IT’S
CHARACTERISTICS
Tesla, Inc.’s (formerly Tesla Motors, Inc.) organizational culture creates human
resource competence necessary for innovative products in the global automotive
business. A firm’s organizational or corporate culture represents the customs and
values that define workers’ behaviors and decisions. Tesla’s organizational culture
empowers its workforce to search for ideal solutions that make the business stand out
in the automotive industry and the energy generation and storage industry. The
company encourages employees to innovate to support continuous improvement of
the business. For example, through its corporate culture, Tesla maintains the human
resource capabilities important in its continuing growth in the global market for
electric automobiles, batteries, solar panels, and related products. In this way, the
corporation’s cultural traits function as a channel for adding to strategic effectiveness
in enhancing the business. Through the organizational culture, Tesla Inc.’s
management optimizes employees to achieve creative and innovative behaviors.
These behaviors are essential to maintaining the technological innovation that forms
part of the company’s foundation.

Tesla’s organizational culture creates opportunities for innovation that keeps the
competitiveness of the electric car business. The characteristics of this corporate
culture encourage the company’s employees to generate new ideas and solutions. In
this company analysis case, such behavioral factors contribute to Tesla Inc.’s
competitiveness in facing automobile manufacturing firms like General Motors
Company, Toyota Motor Corporation, Honda Motor Company, Nissan Motor
Company, Bavarian Motor Works (BMW), Volkswagen, and others.
TESLA’S ORGANISATIONAL CULTURE TYPES
AND FEATURES
Tesla, Inc. has an innovative problem-solving organizational culture. This type of
corporate culture motivates employees to develop profitable solutions to current and
emerging problems in the target market. For example, the company employs its
organizational culture in developing advanced electric vehicles as a solution to
environmental issues surrounding automobiles that have internal combustion engines.
The company’s ability to keep introducing advanced electric vehicles reflects the
benefits of its corporate culture. Tesla Inc. identifies six main features of its
organizational culture:

• Mo
ve Fast
• Do
the Impossible
• Co
nstantly Innovate
• Rea
son from “First Principles”
• Thi
nk Like Owners
• We
are ALL IN
 Move Fast.
Speed affects Tesla Inc.’s
competitive advantage. This
characteristic of the
organizational culture highlights
the importance of employees’
capability to rapidly respond to
trends and changes in the
international market. For
example, the corporation’s
human resources provide the
capability to develop cutting-edge
products that match or exceed those from competing
automotive firms. In this way, Tesla’s corporate culture facilitates business
resilience through speedy responses to current issues and challenges in the
global automotive industry.

Do the Impossible. In
developing cutting-edge
products, Tesla must ensure
that its corporate culture
encourages employees to
think outside the box. This
cultural characteristic
recognizes the importance of
new ideas and solutions, but
it also emphasizes the
benefits of considering
unconventional ways. For
example, human resource managers train employees to go beyond
conventional limits of productivity and creativity in automotive design, leading
to the development of new solutions to energy and transportation needs. This
condition opens new opportunities for Tesla Inc. to strategically improve its
business performance. This cultural condition also makes the company an
influential entity in prompting radical ideas in the international automotive and
energy solutions market.

Constantly Innovate.
Innovation is at the heart of
Tesla, Inc. This feature of
the organizational culture
focuses on the continuous
nature of innovation at the
company. For example, the
corporation continuously researches and develops solutions that improve
current energy storage product designs. In this context of the business
analysis, constant innovation helps develop cutting-edge electric cars and
related products. Continuous innovation maintains the competitive advantage
necessary to address the strong force of industry competition determined in
the Porter’s Five Forces analysis of Tesla Inc. The company addresses this
need through a corporate culture that rewards constant innovation. Managers
motivate employees to contribute to constant innovation in business
processes and output.

Reason from “First

Principles.”
CEO Elon Musk
promotes reasoning
from first principles.
These principles
revolve around
identifying root factors
to understand and
solve problems in the
real world. For
example, Tesla Inc.’s
energy storage
products are one of the solutions to challenges in using renewable energy,
and challenges in improving the efficiency of energy utilization. Through the
company’s corporate culture, employees use first principles in fulfilling their
jobs. Tesla’s human resource management involves training programs to
orient employees to this feature of its organizational culture.

Think Like Owners.

Tesla employs its

organizational culture as a tool
to maintain a mindset that
supports business
development. For example,
the company motivates its
workers to think like they own
the organization.

This ownership mindset supports Tesla’s corporate vision and

mission statements by encouraging employees to
take responsibility and accountability in their jobs and in the overall
performance of the multinational business. The ownership mindset is a
powerful behavioral factor that helps grow and strengthen the integrity of
businesses in various industries. This corporate cultural trait aligns workers
with the company’s strategic objectives, thereby improving strategic
effectiveness.

We are ALL IN. Tesla,

Inc.’s organizational
culture unifies
employees into a team
that works to improve
the business. For
example, this cultural
characteristic helps
minimize conflicts
through teamwork. Such teamwork
also develops synergy in the
company’s human resources. As a result, the corporate culture
maximizes the benefits from employees’ talents and skills.
Synergistic teamwork contributes to Tesla’s competitiveness in the
international automotive market. This unifying cultural approach also
facilitates corporate management and strategy implementation throughout the
organization.
The abovementioned cultural characteristics indicate that Tesla, Inc. focuses
on encouraging innovation that leads to useful products for the global market.
The company’s progress and growth are based on technological innovation.
Tesla Inc.’s organizational culture has remained focused on such innovation
since the founding of the business. However, it is expected that the company
will gradually change its corporate culture to accommodate new needs as the
business expands and diversifies its product offerings.

Tesla, Inc.’s Corporate Culture Implications,

Advantages & Disadvantages

Tesla’s organizational culture puts emphasis on innovation. An advantage of this

cultural trait is that it enables the corporation to develop high-technology products
that attract its customers. For example, Tesla automobiles, combined with the
company’s powerful branding, have an increasing share of the automotive market.
This advantage aligns with Tesla’s generic competitive strategy and intensive growth
strategies. The corporate culture is also advantageous in terms of support for rapid
response and problem solving. This cultural trait keeps the company abreast with new
technologies while making its products effective and relevant to customers’ needs
and preferences.
A disadvantage of Tesla’s organizational culture is its pressure on employees to
constantly innovate. Innovation benefits the company, but puts a strain on human
resources. Nonetheless, properly implemented, this cultural characteristic ensures
long-term business competitiveness. Also, Tesla’s corporate structure imposes limits
on the responsiveness of employees, thereby counteracting some of the effects of the
corporate culture in facilitating speedy decisions and actions to address concerns in
the automotive business.

Tesla, Inc.’s Generic Strategy & Intensive Growth

Strategies
Tesla, Inc. (formerly Tesla Motors, Inc.) applies its generic strategy to achieve
competitive advantage against other firms in the global automotive industry. In
Michael Porter’s model, a generic competitive strategy represents the company’s
approach to competing in the market. In this business analysis case of Tesla, the
generic strategy reflects the company’s focus on using advanced technologies in its
electric vehicles and related products, as a way of competing against General Motors
Company, Toyota Motor Corporation, Honda Motor Company, Nissan Motor
Company, Bavarian Motor Works (BMW), and Volkswagen, among other
automobile manufacturers. Aside from the generic competitive strategy, a company
uses intensive strategies to ensure business growth. This company analysis case
shows that Tesla Inc.’s intensive growth strategies gradually evolve. Such an
evolution is a reflection of the company’s increasing popularity and improving
profitability, along with the business strengths identified in the SWOT analysis of
Tesla Inc. Strategic adjustments, over time, ensure the corporation’s resilience in the
face of technological advancement and changing customer preferences.
Tesla’s generic strategy (Porter’s model) enables the company to maintain
competitive advantage, and attract early adopters in the global automotive market.
The corresponding intensive strategies support organizational growth based on
increasing sales revenues from current markets where Tesla, Inc. operates. The
matching of the intensive growth strategies with the generic competitive strategy
contributes to the company’s operational effectiveness.

TESLA’S GENERIC STRATEGY (PORTER’S

MODEL)
TESLA’S GENERIC COMPETITIVE STRATEGY IS BROAD
DIFFERENTIATION. THIS GENERIC STRATEGY BUILDS COMPETITIVE
ADVANTAGE BASED ON THE DEVELOPMENT OF PRODUCTS THAT
DIFFERENTIATE THE COMPANY FROM OTHER FIRMS IN THE INDUSTRY.
FOR EXAMPLE, TESLA INC.’S PRODUCTS ARE COMPETITIVE BECAUSE
THEY INTEGRATE ADVANCED ENVIRONMENTALLY FRIENDLY
TECHNOLOGY, CONSIDERING THAT THE VAST MAJORITY OF
AUTOMOBILES TODAY USE INTERNAL COMBUSTION ENGINES. IN
USING THIS GENERIC COMPETITIVE STRATEGY, THE COMPANY
BROADLY ATTRACTS ALL POTENTIAL CUSTOMERS, WHO ARE NOW
INCREASINGLY INTERESTED IN ENVIRONMENTALLY FRIENDLY
PRODUCTS. INITIALLY, TESLA USED DIFFERENTIATION FOCUS AS ITS
GENERIC STRATEGY FOR COMPETITIVE ADVANTAGE. IN APPLYING THE
DIFFERENTIATION FOCUS STRATEGY, THE COMPANY EMPHASIZED THE
UNIQUENESS OF ITS PRODUCTS, BUT ALSO FOCUSED MAINLY ON
EARLY ADOPTERS IN THE HIGH-END MARKET FOR ELECTRIC VEHICLES.
THESE EARLY ADOPTERS ARE AFFLUENT CUSTOMERS WHO HAVE A
HIGH TENDENCY TO PURCHASE NEWLY INTRODUCED PRODUCTS.
HOWEVER, NOW THAT THE COMPANY IS ALREADY POPULAR AND
PRODUCTION COSTS ARE DECLINING, TESLA’S GENERIC COMPETITIVE
STRATEGY HAS SHIFTED TO BROAD DIFFERENTIATION. THE DECLINING
PRODUCTION COSTS AND INCREASING BRAND POPULARITY ENABLES
THE COMPANY TO BROADLY TARGET CUSTOMERS IN THE
AUTOMOBILE MARKET.

The generic strategy of Tesla, Inc. requires suitable strategic objectives to ensure
competitive advantage. For example, one of the company’s strategic objectives is to
increase investment in research and development (R&D) to develop new products
that satisfy market demand for enhanced renewable energy solutions, such as
batteries for various purposes. Another strategic objective connected to Tesla’s
generic competitive strategy is to strengthen competitiveness by broadening its
market reach to generate more sales and support brand popularity.

TESLA’S INTENSIVE STRATEGIES (INTENSIVE

GROWTH STRATEGIES)

Market Penetration (Primary Strategy). Tesla, Inc. uses market penetration

as its current primary intensive growth strategy. This intensive strategy
enables business growth by increasing sales revenues in current markets.
For example, with aggressive marketing, the company aims to rollout and sell
more of its electric cars in the United States. In this way, the corporation
maximizes its revenues from the markets where it currently operates. This
intensive growth strategy relates with Tesla’s generic strategy by developing
competitive advantage based on increased market share. A strategic
objective based on this intensive strategy is to grow the company’s sales
revenues through aggressive marketing.

Product Development (Secondary Strategy). Product development is Tesla

Inc.’s secondary intensive growth strategy. In this intensive strategy, the
company grows by developing new products that generate new sales. The
company applies this strategy by developing new products with advanced
technologies for minimal environmental impact. For example, the company
offers solar panels, and developed the Tesla Roadster, which was the world’s
first fully electric sports car. This intensive strategy supports Tesla Inc.’s
differentiation generic competitive strategy by focusing on unique high-
technology automobiles and related products that attract target customers. In
relation, a strategic objective for this intensive growth strategy is to maintain
extensive investments in research and development (R&D).

Market Development. Tesla, Inc. uses market development as a tertiary

intensive growth strategy. This strategy involves entering new markets to
generate more sales and grow the global business. For example, the
company gradually expands its market reach worldwide by establishing new
offices and facilities. At present, the company sells in only a handful of
countries, but further international expansion is expected. This intensive
strategy supports Tesla’s mission and vision statements, which highlight
global leadership in the automotive industry, with energy solutions for the
transportation and other sectors. The differentiation generic strategy enables
market development by creating unique products that attract customers when
the company enters new markets. Based on the market development
intensive strategy, a strategic objective is to grow Tesla Inc.’s multinational
business by establishing alliances with other companies that make it easier to
enter new markets.

Diversification. Tesla applies diversification, but only as a minimally

significant intensive growth strategy. This intensive strategy helps grow the
company through new business creation. For example, the firm aims to
create new battery products for a variety of non-automotive applications.
However, this intensive growth strategy currently has insignificant effects on
the company’s financial performance. Tesla focuses most of its efforts on
market penetration and product development to grow its automotive and
energy solutions businesses. The company can apply the differentiation
generic competitive strategy to increase the likelihood of success in using this
intensive growth strategy. A strategic objective linked to diversification is to
increase Tesla’s R&D investment to identify new business opportunities.
Another strategic objective based on this intensive strategy is to acquire other
firms or enter joint ventures to develop entirely new products.
 PRINCIPLES OF
MANAGEMENT FOLLOWED
BY TESLA
Discipline
This third principle of the 14 principles of
management is about obedience. It is often
a part of the core values of a mission and
vision in the form of good conduct and
respectful interactions. This management
principle is essential and is seen as the oil to make the engine of an
organization run smoothly.

Unity of Command
The management principle ‘Unity of command’ means that an
individual employee should receive orders from one manager and
that the employee is answerable to that manager. If tasks and
related responsibilities are given to the employee by more than one
manager, this may lead to confusion which may lead to possible
conflicts for employees. By using this principle, the responsibility
for mistakes can be established more easily.

Unity of Direction
This management principle of the 14 principles of management is
all about focus and unity. All employees deliver the same activities
that can be linked to the same objectives. All activities must be
carried out by one group that forms a team. These activities must
be described in a plan of action. The manager is ultimately
responsible for this plan and he monitors the progress of the
defined and planned activities. Focus areas are the efforts made by
the employees and coordination.

Remuneration
Motivation and productivity are close to one another as far as the
smooth running of an organization is concerned. This management
principle of the 14 principles of management argues that the
remuneration should be sufficient to keep employees motivated and
productive. There are two types of remuneration namely non-
monetary (a compliment, more responsibilities, credits) and
monetary (compensation, bonus or other financial compensation).
Ultimately, it is about rewarding the efforts that have been made.

Equity
The management principle of equity often
occurs in the core values of an organization.
According to Henri Fayol, employees must
be treated kindly and equally. Employees
must be in the right place in the
organization to do things right. Managers
should supervise and monitor this process
and they should treat employees fairly and
impartially.

Initiative
Henri Fayol argued that with this management principle employees
should be allowed to express new ideas. This encourages interest
and involvement and creates added value for the company.
Employee initiatives are a source of strength for the organization
according to Henri Fayol. This encourages the employees to be
involved and interested.

Esprit de Corps
The management principle ‘esprit de corps’ of the 14 principles of
management stands for striving for the involvement and unity of
the employees. Managers are responsible for the development of
morale in the workplace; individually and in the area of
communication. Esprit de corps contributes to the development of
the culture and creates an atmosphere of mutual trust and
understanding.

Scalar Chain
Hierarchy presents itself in any given organization. This varies from
senior management (executive board) to the lowest levels in the
organization. Henri Fayol ’s “hierarchy” management principle
states that there should be a clear line in the area of authority
(from top to bottom and all managers at all levels). This can be
seen as a type of management structure. Each employee can
contact a manager or a superior in an emergency situation without
challenging the hierarchy. Especially, when it concerns reports
about calamities to the immediate managers/superiors.
Order
According to this principle of the 14 principles of
management, employees in an organization
must have the right resources at their disposal so
that they can function properly in an
organization. In addition to social order
(responsibility of the managers) the work
environment must be safe, clean and
tidy.

Division of Work
In practice, employees are specialized in
different areas and they have different
skills. Different levels of expertise can be
distinguished within the knowledge
areas (from generalist to specialist).
Personal and professional developments support this. According
to Henri Fayol specialization promotes efficiency of the workforce
and increases productivity. In addition, the specialization of the
workforce increases their accuracy and speed. This management
principle of the 14 principles of management is applicable to both
technical and managerial activities.

Authority and Responsibility

In order to get things done in an organization, management has
the authority to give orders to the employees. Of course with this
authority comes responsibility. According to Henri Fayol, the
accompanying power or authority gives the management the right
to give orders to the subordinates. The responsibility can be traced
back from performance and it is therefore necessary to make
agreements about this. In other words, authority and responsibility
go together and they are two sides of the same coin.
SCHOOL OF THOUGHTS
The schools of management thought are theoretical frameworks for the study of
management. Each of the schools of management thought are based on somewhat
different assumptions about human beings and the organizations for which they work.
Since the formal study of management began late in the 19th century, the study of
management has progressed through several stages as scholars and practitioners
working in different eras focused on what they believed to be important aspects of
good management practice. Over time, management thinkers have sought ways to
organize and classify the voluminous information about management that has been
collected and disseminated. These attempts at classification have resulted in the
identification of management schools.
Disagreement exists as to the exact number of management schools. Different writers
have identified as few as three and as many as twelve. Those discussed below include
(1) the classical school, (2) the behavioral school, (3) the quantitative or management
science school, (4) the systems school, (5) and the contingency school. The formal
study of management is largely a twentieth-century phenomenon, and to some degree
the relatively large number of management schools of thought reflect a lack of
consensus among management scholars about basic questions of theory and practice.

1) THE CLASSICAL SCHOOL

The classical school is the oldest formal school of management thought. Its
roots pre-date the twentieth century. The classical school of thought
generally concerns ways to manage work and organizations more
efficiently. Three areas of study that can be grouped under the classical
school are scientific management, administrative management, and
bureaucratic management.

• ADMINISTRATIVE MANAGEMENT.
Administrative management focuses on the management process and principles of
management. In contrast to scientific management, which deals largely with jobs and
work at the individual level of analysis, administrative management provides a more
general theory of management. Henri Fayol is the major contributor to this school of
management thought.
Fayol was a management practitioner who brought his experience to bear on the
subject of management functions and principles. He argued that management was a
universal process consisting of functions, which he termed planning, organizing,
commanding, coordinating, and controlling. Fayol believed that all managers
performed these functions and that the functions distinguished management as a
separate discipline of study apart from accounting, finance, and production. Fayol
also presented fourteen principles of management, which included maxims related to
the division of work, authority and responsibility, unity of command and direction,
centralization, subordinate initiative, and team spirit.
Although administrative management has been criticized as being rigid and inflexible
and the validity of the functional approach to management has been questioned, this
school of thought still influences management theory and practice. The functional
approach to management is still the dominant way of organizing management
knowledge, and many of Fayol's principles of management, when applied with the
flexibility that he advocated, are still considered relevant.

2) THE QUANTITATIVE SCHOOL

The quantitative school focuses on improving decision making via the

application of quantitative techniques. Its roots can be traced back to
scientific management.

• MANAGEMENT SCIENCE AND MIS.

Management science (also called operations research) uses mathematical and
statistical approaches to solve management problems. It developed during World War
II as strategists tried to apply scientific knowledge and methods to the complex
problems of war. Industry began to apply management science after the war. George
Dantzig developed linear programming, an algebraic method to determine the optimal
allocation of scarce resources. Other tools used in industry include inventory control
theory, goal programming, queuing models, and simulation. The advent of the
computer made many management science tools and concepts more practical for
industry. Increasingly, management science and management information systems
(MIS) are intertwined. MIS focuses on providing needed information to managers in
a useful format and at the proper time. Decision support systems (DSS) attempt to
integrate decision models, data, and the decision maker into a system that supports
better management decisions.

• PRODUCTION AND OPERATIONS MANAGEMENT.

This school focuses on the operation and control of the production process that
transforms resources into finished goods and services. It has its roots in scientific
management but became an identifiable area of management study after World War
II. It uses many of the tools of management science.
Operations management emphasizes productivity and quality of both manufacturing
and service organizations. W. Edwards Deming exerted a tremendous influence in
shaping modern ideas about improving productivity and quality. Major areas of study
within operations management include capacity planning, facilities location, facilities
layout, materials requirement planning, scheduling, purchasing and inventory control,
quality control, computer integrated manufacturing, just-in-time inventory systems,
and flexible manufacturing systems.

CONTINGENCY SCHOOL
The contingency school focuses on applying management principles and processes as
dictated by the unique characteristics of each situation. It emphasizes that there is no
one best way to manage and that it depends on various situational factors, such as the
external environment, technology, organizational characteristics, characteristics of
the manager, and characteristics of the subordinates. Contingency theorists often
implicitly or explicitly criticize the classical school for its emphasis on the
universality of management principles; however, most classical writers recognized
the need to consider aspects of the situation when applying management principles.
The contingency school originated in the 1960s. It has been applied primarily to
management issues such as organizational design, job design, motivation, and
leadership style. For example, optimal organizational structure has been theorized to
depend upon organizational size, technology, and environmental uncertainty; optimal
leadership style, meanwhile, has been theorized to depend upon a variety of factors,
including task structure, position power, characteristics of the work group,
characteristics of individual subordinates, quality requirements, and problem
structure, to name a few. A few of the major contributors to this school of
management thought include Joan Woodward, Paul Lawrence, Jay Lorsch, and Fred
Fiedler, among many others.