Question

1. What did Drucker mean when he talked about ‘the economists’ model of the
firm’?

2. What are the main benefits assumed to flow from a merger and consolidation
or takeover? Why do so many mergers and takeovers fail to deliver improved
financial performance?

Answer 1

1. Peter Ferdinanad Drucker is considered as the father of modern management. The organisation and practive of management firms today is largely derived from the thinking of Peter Drucker. When he talked about 'the economists model of the firm' he :-

• was always against bureaucratic system because it has hierarchy and rules, that means the organisation become so monotonous and routine. Most of the bureaucratic system are never innovative and creative in nature.
• wanted the firm be creative and innovative. It happens by introducing new ideas or with the combination of new and old ideas or adapted ideas form others , but the firm shoud be innovative and creative.
• told that the management should have right perspective. As we know the management  should have skills and techniques with it, but according to Drucker the management should have right perspective , that means management should understand where to use what kind of skills and where to use what kind of techniques.
• said that management needs more practice compared to science.
• believed that management has no any function, it is an organ of organsiation which contributes to the missions of the firm and should be helpful in making the work as well as workers productive. Apart from this the management should fulfill the social responsibility along with profit making.
• suggested that the management should ;

1. set objectives , in other words goals should be set which are clear and defenit.
2. take right decision regarding the resources like money, manpower and material.
3. organise the above said resources ie. money, manpower and matertial for their optimum utilisation.
4. motivate people so that they will work for organisatin with high commitment level.

• said that the organsiation structure should be based on perfromance not on position and the number of levels of organisation should be lessen.
• highlighted three things such as Activity Analysis, Decisions Analysis and Relationship Analysis.
• promoted Centralised control over decentraised structure among top level management, middle level management and lower level management.  
• gifted the concept of Management by Objective which involved jointly setting goals, periodic reviewing, allocating rewards based on progress, control if goals are not fulfilled.