Chapter 2-Mgt.in Medieval Period

7/28/2019 Chapter 2-Mgt.in Medieval Period

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Chapter contents

Feudal Organizations

Early Writings

The Merchants of Venice

The Arsenal of Venice: warehousing,assembly line, personnel, standardization,control by accounting, inventory control, costcontrol.

The Sixteenth Century Writers: Sir ThomasMoore, Niccolo Machiavelli


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Feudal OrganizationThe Emergence

With the fall of Roman Empire, the peoples of

Western Europe were filling the basic need ofself-preservation. The necessity was protectionagainst murder, robbery and violence. Theindividual sought the protection of a personmore powerful than himself and in return he

paid the price of subservience, including theloss of individual freedom and the rise offeudal relationship.


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Feudal Organization (continued) The Structure

A brief description of the

main features of thefeudal organization cangive us a better idea of thesystem of the state

organization thatdominated Europe duringthese four centuriesknown as the Dark Ages.


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The organization of feudalism was a scalar onewith descendinggrades of delegated authority.

At the top of the great feudal pyramid stoodthe emperor of the kingand all the land in hisdominions belonged to him.

He kept large areas for his personal use andinvested the highest nobles with the remainder.


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The process ofdecentralization was

further emphasized by thegrowth of the institution ofimmunity where the vassalwon the right to govern hisown territory as he wished.

The feudal unit, the manor,became the governmentalunit with its one-man court.


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Feudal Organization (continued)

The Primary Problem The primary problem was to determine how to

preserve the proper balance between centralizedauthority and local autonomy.

Decentralized operation was necessary to providethe immediate attention and flexibility needed to

adjust policies to local conditions. Centralized authority was equally important to

insure that all advantages arising out of the totalintersection of all the parts would be realized.


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Feudalism taught managers that strength oforganization was gained through scalar control.

They also found that t he common i nt erestconcept must exi st .

One major defect of feudalism was theinaccurate assumption that this common interest

did exist. The same assumption was also made by the

organizers of the Roman, Egyptian and Greekempires.


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Finally, feudalism organization taughtmanagement that del egat i on of aut hori t y i s notabdication.

Delegation was conferringnot a transferringofauthority.

The inappropriate delegation of authority bytransfershowed that if a manager wished to

organize a function on a decentralized basis, theorganization must be accomplished on a base ofconferr ed aut hori t y, otherwise the sought-afterdecentralization would turn into disintegration.

The Lesson


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Early Writings During the Dark Ages, virtually no books were

written concerning the concepts ofmanagement.

People lived under hostile conditions and littleor no attention was given to concepts asopposed to physical things.

Those who wrote were either scribes, membersof religious orders or well educated leaders ofthe court.

Books were written by hand and only the mostimportant concepts were worth recordingunder these circumstances.


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Alfarabi 900 AD

- Emphasized HierarchicalOrganizational Structure

- Listed the traits of a Leader,e.g.,Great IntelligenceExcellent MemoryFirmness without weakness

Firmness in the achievement ofgood

Love for justiceLove for studyLove for truth


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Early Writings (continued)

According to Alfarabi, for running astate, these traits-

Must be possessed by one individualif not found in one person,

Two or more individuals my be chosen, whojointly possess these traits

(dual manager ship or control by complementary group)


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AlGhazali 1100 AD- AlGhazali, like Alfarabi, also listed

some traits- According to him a King must keep

with him

JusticeIntelligencePatienceModesty

-

Further, a King must not possess Envy Arrogance Narrow-mindedness Malice


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Luca Pacioli 1494 ADDouble Entry BookkeepingEven today his concepts remain

applicable

Pointed out the need for internalmanagerial controlsRecommended that

memorandum, journal andledger be numbered and dated

Documents for all transactionsmust be complete in detailThey must be recordedpermanently

Periodic audits must be madefor internal checks


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Merchants of Venice (continued)

Partnerships were very tightly organizedOne man, owner of large capital, would

join with partners of lesser power andwealth

The duration of the partnership wasspecified usually 3 to 5 years

Partnerships are renewable.


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Merchants of Venice

(continued)Partnerships were centralizedHowever, typical family partnerships were

loose and decentralized in which brotherspooled their inheritance

The family partnerships became combinationinvestment trusts and holding company

These Partnerships spread among real-estate,government bonds etc.


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Merchants of Venice

(continued)These family firms with their enormous

prestige and wealth were able to exert political

and economic pressure International businesswere carried out using legal relationships suchas joint ownership and agency

Joint ownership usually was a joint venturewith limited liability

These joint ventures had shares, shareholders,


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Merchants of Venice

(continued)Owners shared expenses and profit proportionatelyAre comparable with the modern day joint stock

companiesBesides Joint ownerships, Agencies were also usedThese commission Agents were paid fixed p.c. of

transaction

Agents could in turn appoint agentsAgents and sub-agents formed a network tosupport market informational need.


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Merchants of Venice

(continued)

Loose business organizations were droppedonce the project were completed

This offered the flexibility shift from venture toventure, product to product, agent to agent

This flexibility gave more success over fixedfocus on one type of product


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Merchants of Venice

(continued)Accounting as a managerial devise

Venetian merchants necessitated a systemof documentation and record keeping

Showed that an important function ofJournal was to serve as the basis for theledger.

Barbarigo had account for goods in process.


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Merchants of Venice

(continued)

He drew consolidations of accounts so as tosimplify the statement of his net worth.

He also used a profit and loss accountsRecords relating to cost accounting were foundDetailed wages for the spinner, weaver, dyer

etc

Corresponding prices and materials inventoryrecords were also maintained


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The Arsenal of Venice Maritime power needed to protect trade routes In 1436 Government built a shipyard called the Arsenal In this Venetian Shipyard bookkeeping was just as

important as it was in business The Shipyard kept strict accounting of money, materials

and men An early form of cost accounting

was used

All accounts were consolidatedinto two journals and one ledger

The ledgers were kept separatefor safe keeping


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The Arsenal of Venice (continued) The Arsenal of Venice

became the industrialplant as a consequence

It covered 60 acres ofground and water &employed 2000workers


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The Arsenal of Venice (continued) Problems associated with large size was also

created

Such problems, however, were solved, efficiently The Arsenal of Venice was Noted for checks and

balances

While the top management looked after functionssuch as financial management, purchasing etc

The foreman and the technical advisors headed theactual ship building


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The Arsenal of Venice(continued)

The Arsenal had three fold tasks:

The manufacture of galleys, arms, and equipment

The storage of the equipment until neededThe assembly and the refitting of the ships onreserve

The management practices of the Arsenal thatdemand attention are

Numbering and warehousing of finished partsAssembly line outfitting of the galleysPersonnel practices


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The Sixteenth Century Writers

Sir Thomas Moore

Niccolo Machiavelli


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Sir Thomas Moore (continued) They were the unproductive parasites, did not

learn a trade nor earned a livelihood, lived on thelabour of their farm tenants

Moore was contemptuous of the rich for theirexcesses in consumption, dresses and foods

The poor on the other hand were underemployed,even unemployed

Added to their misery, the poor squandered theirmeager money into anti social activities andenjoyment


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Utopia emphasizedon specialization

Economies of massproduction was alsohighlighted inUtopia

He was a moralistand a humanist.


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Niccolo Machiavelli

Reliance on Massconsent

CohesivenessLeadershipWill to survive