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Chapter: 2
Chapter contents
Feudal Organizations Early Writings The Merchants of Venice The Arsenal of Venice: warehousing, assembly line, personnel, standardization, control by accounting, inventory control, cost control. The Sixteenth Century Writers: Sir Thomas Moore, Niccolo Machiavelli
Feudal Organization
The Emergence
With the fall of Roman Empire, the peoples of Western Europe were filling the basic need of self-preservation. The necessity was protection against murder, robbery and violence. The individual sought the protection of a person more powerful than himself and in return he paid the price of subservience, including the loss of individual freedom and the rise of feudal relationship.
The Structure A brief description of the main features of the feudal organization can give us a better idea of the system of the state organization that dominated Europe during these four centuries known as the Dark Ages.
The organization of feudalism was a scalar one with descending grades of delegated authority. At the top of the great feudal pyramid stood the emperor of the king and all the land in his dominions belonged to him. He kept large areas for his personal use and invested the highest nobles with the remainder.
The process of decentralization was further emphasized by the growth of the institution of immunity where the vassal won the right to govern his own territory as he wished. The feudal unit, the manor, became the governmental unit with its one-man court.
The primary problem was to determine how to preserve the proper balance between centralized authority and local autonomy. Decentralized operation was necessary to provide the 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 total intersection of all the parts would be realized.
Feudalism taught managers that strength of organization was gained through scalar control. They also found that the common interest concept must exist. One major defect of feudalism was the inaccurate assumption that this common interest did exist. The same assumption was also made by the organizers of the Roman, Egyptian and Greek empires.
The Lesson
Finally, feudalism organization taught management that delegation of authority is not abdication. Delegation was conferring not a transferring of authority. The inappropriate delegation of authority by transfer showed that if a manager wished to organize a function on a decentralized basis, the organization must be accomplished on a base of conferred authority, otherwise the sought-after decentralization would turn into disintegration.
Early Writings
During the Dark Ages, virtually no books were written concerning the concepts of management. People lived under hostile conditions and little or no attention was given to concepts as opposed to physical things. Those who wrote were either scribes, members of religious orders or well educated leaders of the court. Books were written by hand and only the most important concepts were worth recording under these circumstances.
Alfarabi 900 AD
- Emphasized Hierarchical Organizational Structure - Listed the traits of a Leader, e.g.,
Great Intelligence Excellent Memory Firmness without weakness Firmness in the achievement of
good Love for justice Love for study Love for truth
AlGhazali 1100 AD
- AlGhazali, like Alfarabi, also listed some traits - According to him a King must keep with him Justice Intelligence Patience Modesty - Further, a King must not possess Envy Arrogance Narrow-mindedness Malice
Frederic C, Lane chose Barbarigo as representative of Venetian Business Venetian business is of interest to us because The type of business organization employed Use of accounting as managerial device
Partnerships were very tightly organized One man, owner of large capital, would
join with partners of lesser power and wealth The duration of the partnership was specified usually 3 to 5 years Partnerships are renewable.
prestige and wealth were able to exert political and economic pressure International business were carried out using legal relationships such as joint ownership and agency Joint ownership usually was a joint venture with limited liability These joint ventures had shares, shareholders,
Owners shared expenses and profit proportionately Are comparable with the modern day joint stock
companies Besides Joint ownerships, Agencies were also used These commission Agents were paid fixed p.c. of transaction Agents could in turn appoint agents Agents and sub-agents formed a network to support market informational need.
simplify the statement of his net worth. He also used a profit and loss accounts Records relating to cost accounting were found Detailed wages for the spinner, weaver, dyer etc Corresponding prices and materials inventory records were also maintained
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 consolidated into two journals and one ledger The ledgers were kept separate for safe keeping
Three types of expense accounts were recognizedFixed Variable Extraordinary A meticulous record of everything that entered and left the shipyard were kept As Venetian business grew, its Navy also grew. By 16th century Venetian state and the navy were at the zenith of power
The Arsenal of Venice became the industrial plant as a consequence It covered 60 acres of ground and water & employed 2000 workers
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 functions such as financial management, purchasing etc The foreman and the technical advisors headed the actual ship building
The Arsenal had three fold tasks: The manufacture of galleys, arms, and equipment The storage of the equipment until needed The assembly and the refitting of the ships on reserve The management practices of the Arsenal that demand attention are Numbering and warehousing of finished parts Assembly line outfitting of the galleys Personnel practices
Wrote Utopia in an attempt to create the Ideal State Died as he could not reconcile his principles with the desires of the king His ideal state would correct the managerial injustices and abuses present in the British society of his time Moore blamed the ruling class and the ruling elite for the economic ills
They were the unproductive parasites, did not learn a trade nor earned a livelihood, lived on the labour of their farm tenants Moore was contemptuous of the rich for their excesses in consumption, dresses and foods The poor on the other hand were underemployed, even unemployed Added to their misery, the poor squandered their meager money into anti social activities and enjoyment
Utopia emphasized on specialization Economies of mass production was also highlighted in Utopia He was a moralist and a humanist.
Niccolo Machiavelli
Reliance on Mass
consent Cohesiveness Leadership Will to survive