Contemporary Issues on Management
Business Studies — Grade 12 | Chapter 8 | NEB Nepal
Table Of Contents
Introduction
The classical and functional theories of management — planning, organizing, leading, controlling — provide the enduring framework of management practice. But the business environment of the 21st century has generated new challenges that demand new management responses. Chapter 8 of NEB Grade 12 Business Studies addresses five contemporary management issues: conflict management, talent management, quality management, supply chain management, and family business management. Each represents a domain where modern organizations — including Nepal’s rapidly growing enterprises — must develop specific competencies to remain competitive, sustainable, and effective.
1. Conflict Management
1.1 Meaning of Conflict
Conflict is a situation in which two or more parties perceive that their interests, goals, values, or needs are incompatible, and in which one party’s pursuit of its objectives threatens or blocks the other’s.
According to Stephen Robbins, “Conflict is a process that begins when one party perceives that another party has negatively affected, or is about to negatively affect, something that the first party cares about.”
According to Louis Pondy, “Conflict is a dynamic process underlying organizational behaviour — it is not merely a breakdown but a fundamental feature of organizational life that, when managed well, drives learning and improvement.”
According to Kenneth Thomas, “Conflict occurs whenever incompatible activities are present — one person’s actions obstruct, interfere with, or in some way make it less likely that another person will achieve their goals.”
Conflict is neither inherently good nor bad. According to the interactionist view of conflict, developed by Robbins and others, some level of conflict is necessary for organizational vitality — stimulating creativity, challenging assumptions, and driving improvement. Too little conflict creates complacency; too much destroys cohesion.
1.2 Sources of Conflict
i. Scarce Resources: When two departments or individuals compete for limited budget, staff, equipment, or management attention, conflict arises. In Nepal’s resource-constrained organizations, resource scarcity is a major conflict driver.
ii. Goal Incompatibility: Different organizational units often have goals that pull in different directions. Sales departments want maximum customer flexibility; finance departments want strict credit controls. Both goals are legitimate — the tension between them is a structural source of conflict.
iii. Communication Problems: Misunderstandings, incomplete information, and poor communication channels create confusion and mistrust that generate conflict.
iv. Task Interdependence: When one unit’s work depends on another’s output, delays and quality problems in the upstream unit create frustration and conflict in the downstream one.
v. Role Ambiguity: When responsibilities overlap or are unclear, conflict arises over who should do what — and who should get credit or blame for results.
vi. Personality Differences: Clashes of personality, working style, values, and communication preferences create interpersonal conflict even when structural conditions are otherwise favourable.
vii. Organizational Change: Change disrupts established roles, relationships, and power structures — generating conflict between those who benefit from change and those who lose from it.
1.3 Levels of Conflict
i. Intrapersonal Conflict: Conflict within an individual — competing values, roles, or goals. Example: a manager torn between loyalty to a team member and the need to report a rule violation.
ii. Interpersonal Conflict: Conflict between two individuals — personality clashes, competing interests, or communication breakdowns.
iii. Intragroup Conflict: Conflict within a team or department — disagreements about methods, goals, or interpersonal relationships within the group.
iv. Intergroup Conflict: Conflict between different teams, departments, or organizational units — the most common and organizationally significant form of conflict in larger organizations.
v. Interorganizational Conflict: Conflict between different organizations — between a company and its suppliers, competitors, regulators, or unions.
1.4 Conflict Management Strategies
According to Kenneth Thomas, conflict management strategies can be plotted on two dimensions — assertiveness (pursuit of own interests) and cooperativeness (concern for the other party’s interests) — producing five approaches:
i. Competing (Win-Lose): High assertiveness, low cooperativeness. One party pursues its interests at the expense of the other. Appropriate in genuine emergencies or when a clearly correct decision must be made quickly.
ii. Collaborating (Win-Win): High assertiveness, high cooperativeness. Both parties work together to find a solution that fully satisfies both sets of interests. The most constructive approach — produces the best outcomes when time allows.
iii. Compromising: Moderate assertiveness and cooperativeness. Both parties make concessions — neither gets everything, but both get something. Appropriate when a quick solution is needed or when interests are genuinely incompatible.
iv. Avoiding: Low assertiveness, low cooperativeness. One or both parties withdraw from the conflict without resolving it. Appropriate only for trivial issues or when the timing is not right for resolution.
v. Accommodating: Low assertiveness, high cooperativeness. One party yields to the other’s interests — appropriate when the issue matters more to the other party, or when preserving the relationship is more important than the outcome.
According to Mary Parker Follett, the pioneer of conflict analysis in management, “Conflict can be resolved in three ways: domination (one side wins), compromise (both sides give something up), or integration (a new solution is found that satisfies both sides fully). Integration — what we now call collaboration — is the most desirable outcome.”
2. Talent Management
2.1 Meaning of Talent Management
Talent management is the systematic process of attracting, identifying, developing, retaining, and deploying individuals with high potential and high performance capability to ensure the organization has the leadership and skills it needs now and in the future.
According to McKinsey & Company, who coined the term “War for Talent” in their 1997 research, “Talent management is the ability to attract, develop, and retain talented individuals — it is a critical source of competitive advantage in the knowledge economy.”
According to David Ulrich, the leading authority on human resource strategy, “Talent management is the integrated system of HR practices — attraction, selection, development, performance management, and retention — designed to build and sustain organizational capability.”
According to CIPD (Chartered Institute of Personnel and Development), “Talent management is the systematic attraction, identification, development, engagement, retention, and deployment of individuals with high potential who are of particular value to the organisation.”
2.2 Importance of Talent Management
i. Competitive Advantage: According to Jeffrey Pfeffer of Stanford University, “The most durable source of competitive advantage in the modern economy is the quality of an organization’s people — their skills, knowledge, creativity, and commitment.” In knowledge-intensive industries, talent is the primary production factor.
ii. Succession Planning: Talent management identifies and develops future leaders before the need for them becomes urgent — preventing organizational crisis when senior leaders retire, resign, or are promoted.
iii. Employee Retention: Structured talent development gives high-potential employees clear career paths and development opportunities — increasing their commitment and reducing costly turnover. According to Gallup research, employees who feel their strengths are used and developed are 6 times more likely to be engaged.
iv. Organizational Agility: A pipeline of developed talent gives organizations the capacity to respond quickly to new opportunities, expand into new markets, and adapt to changing conditions without being constrained by skill shortages.
v. Innovation: Talented, engaged employees are the primary source of organizational innovation. According to Peter Drucker, “Innovation is the specific function of entrepreneurship — and entrepreneurship is a function of talented, empowered people.”
2.3 Key Components of Talent Management
i. Talent Attraction: Building an employer brand that attracts high-quality candidates — through reputation, culture, compensation, and development opportunities.
ii. Talent Identification: Systematically identifying which employees have the highest potential — through performance assessments, competency frameworks, and potential evaluation tools.
iii. Talent Development: Providing structured learning and development experiences — training programs, mentoring, coaching, stretch assignments, job rotations — that build capability in identified talent.
iv. Performance Management: Setting clear performance expectations, providing regular feedback, and differentiating rewards based on performance — creating accountability and recognizing outstanding contribution.
v. Succession Planning: Identifying critical roles and developing ready successors for each — ensuring organizational continuity and leadership depth.
vi. Retention: Creating conditions — compensation, culture, career opportunity, meaningful work — that keep talented people engaged and committed to the organization.
2.4 Talent Management in Nepal
Nepal faces a severe talent management challenge — the large-scale emigration of skilled and educated Nepalis to foreign employment. According to the Nepal Rastra Bank, remittances from foreign employment constitute approximately 25–27% of Nepal’s GDP — reflecting the massive scale of Nepal’s human capital outflow.
Organizations that invest in genuine talent development, competitive compensation, and meaningful career opportunities consistently achieve better retention of Nepal’s educated workforce. The growth of Nepal’s IT sector — companies like Leapfrog Technology, Cotiviti Nepal, and F1Soft — demonstrates that competitive talent management can retain and attract skilled Nepali professionals in the domestic market.
3. Quality Management
3.1 Meaning of Quality Management
Quality management is the systematic approach to ensuring that an organization’s products, services, and processes consistently meet or exceed customer expectations and established standards.
According to Philip B. Crosby, “Quality is conformance to requirements — it is not goodness or elegance. It is simply meeting the specification.”
According to W. Edwards Deming, the father of the quality movement, “Quality is defined by the customer. The purpose of quality management is to reduce variation and improve processes so that customer needs are consistently met.”
According to Joseph M. Juran, “Quality means fitness for use — a product or service has quality if it successfully serves the purposes of the user during use.”
According to the International Organization for Standardization (ISO), “Quality management is coordinated activities to direct and control an organization with regard to quality — encompassing quality planning, quality assurance, quality control, and quality improvement.”
3.2 Components of Quality Management
i. Quality Planning: Establishing quality objectives and the processes needed to achieve them. Planning defines what quality means for specific products or services and how it will be measured.
ii. Quality Assurance (QA): The systematic activities that provide confidence that quality requirements will be fulfilled — focused on preventing defects rather than detecting them. QA includes process design, staff training, supplier qualification, and documented procedures.
iii. Quality Control (QC): The operational activities that monitor specific processes and ensure they meet quality standards — including inspection, testing, and statistical process control. QC detects defects.
iv. Quality Improvement: Systematic efforts to raise quality performance beyond current levels — through process redesign, technology upgrades, skills development, and elimination of root causes of defects.
3.3 Total Quality Management (TQM)
According to W. Edwards Deming, “Total Quality Management is a philosophy of management driven by the continual improvement of quality, involving everyone in the organization — from the CEO to the frontline worker — in the pursuit of customer satisfaction.”
According to Joseph Juran, “TQM requires a fundamental shift in organizational culture — from inspecting quality into products after the fact, to building quality into every process and activity.”
Key principles of TQM:
- Customer focus: Quality is defined by what the customer values
- Continuous improvement (Kaizen): Every process can be improved; improvement is never finished
- Employee involvement: Quality is everyone’s responsibility, not just the quality department’s
- Process orientation: Focus on improving the processes that produce outputs, not just the outputs themselves
- Fact-based decisions: Quality decisions must be based on data, not opinions
The Deming Cycle (PDCA):
- Plan: Identify the problem and plan an improvement
- Do: Implement the plan on a small scale
- Check: Measure and analyse the results
- Act: If successful, implement fully; if not, revise and repeat
3.4 Quality Management in Nepal
Nepal’s growing export sector — particularly carpets, pashmina, herbs, tea, and handicrafts — requires quality management systems to meet international standards and access global markets. Nepal Bureau of Standards and Metrology (NBSM) administers quality standards in Nepal and facilitates ISO certification for Nepali organizations. Nepal’s tourism and hospitality sector increasingly applies quality management — particularly hotels seeking international star ratings and trekking companies seeking sustainable tourism certification.
4. Supply Chain Management
4.1 Meaning of Supply Chain Management
A supply chain is the network of organizations, people, activities, information, and resources involved in moving a product or service from raw material through production to the final customer. Supply chain management (SCM) is the active coordination and optimization of this network to maximize efficiency, minimize cost, and ensure timely delivery to customers.
According to Martin Christopher, “Supply chain management is the management of upstream and downstream relationships with suppliers and customers in order to deliver superior customer value at less cost to the supply chain as a whole.”
According to David Simchi-Levi, “Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service-level requirements.”
According to the Council of Supply Chain Management Professionals (CSCMP), “Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities.”
4.2 Importance of Supply Chain Management
i. Cost Reduction: Efficient supply chain management reduces procurement costs, inventory costs, transportation costs, and waste — directly improving profitability. According to Michael Porter, supply chain efficiency is a primary source of cost advantage.
ii. Customer Service: Fast, reliable delivery of the right products in the right condition is a key driver of customer satisfaction and loyalty. An efficient supply chain delivers this consistently.
iii. Competitive Advantage: According to Martin Christopher, “The competition of the future will not be between individual companies but between supply chains.” Organizations with superior supply chains can deliver better value to customers than competitors operating with inferior chains.
iv. Risk Management: Diversified supply chains reduce dependence on single suppliers or geographic regions — providing resilience against disruptions (natural disasters, political instability, supplier failures).
v. Innovation: Close supply chain relationships — particularly with key suppliers — facilitate sharing of technical knowledge, joint development of new products, and continuous process improvement.
vi. Sustainability: Modern supply chain management addresses environmental and social responsibility throughout the supply chain — reducing carbon footprint, eliminating child labour, and ensuring fair labour practices among suppliers.
4.3 Key Components of Supply Chain Management
i. Sourcing and Procurement: Selecting and managing suppliers — ensuring that materials, components, and services are obtained at the right quality, price, and delivery terms.
ii. Production and Operations: Managing the conversion of raw materials into finished products — including production scheduling, capacity management, and quality control.
iii. Inventory Management: Balancing the cost of holding inventory against the risk of stockouts — determining optimal stock levels for raw materials, work-in-progress, and finished goods.
iv. Logistics and Distribution: Planning and executing the physical movement of goods — transportation, warehousing, packaging, and last-mile delivery.
v. Information Management: Sharing real-time information across the supply chain — demand forecasts, inventory levels, production schedules, shipment status — enabling all parties to plan and respond efficiently.
vi. Demand Management: Forecasting customer demand and translating it into supply chain requirements — the foundation of all supply chain planning.
4.4 Supply Chain Management in Nepal
Nepal’s geographic challenges — landlocked status, mountainous terrain, poor road infrastructure in hill and mountain regions — make supply chain management uniquely difficult and important. Key supply chain challenges include:
- Import dependency: Nepal imports approximately 90% of its petroleum, significant proportions of its food and consumer goods, and virtually all its industrial machinery — through border crossings with India and China
- Infrastructure constraints: Road conditions, seasonal closures, and limited cold chain infrastructure create cost and reliability challenges
- Agricultural supply chains: Nepal’s diverse agricultural sector — tea, coffee, herbs, fruits — requires efficient supply chains to connect remote producers to domestic and international markets
Nepal’s growing e-commerce sector — led by platforms like Daraz, SastoDeal, and various food delivery apps — is driving rapid improvement in last-mile distribution infrastructure in urban areas.
5. Family Business Management
5.1 Nature of Family Business
A family business is one in which ownership, management, or both are controlled by members of a single family, and in which family relationships significantly influence business decisions and dynamics.
According to John Davis and Renato Tagiuri, who developed the foundational Three-Circle Model of family business, “A family business is a system consisting of three overlapping subsystems — the family, the business, and ownership — each with its own norms, values, and goals. The overlaps between these three circles are the source of both family businesses’ unique strengths and their characteristic challenges.”
According to Peter Leach, “Family businesses are distinctive in that the values, culture, and relationships of the owning family fundamentally shape the culture, strategy, and practices of the business — creating both advantages and vulnerabilities that non-family businesses do not experience.”
According to the Family Business Network, “Family businesses account for the majority of all businesses worldwide — in most economies they generate 50–80% of GDP and the majority of employment.”
In Nepal, family businesses dominate the private sector — from the Chaudhary Group, Golchha Organization, and Jyoti Group among the largest conglomerates, to the vast majority of small and medium enterprises operated by family partnerships across the country.
5.2 Characteristics of Family Businesses
i. Concentrated Ownership: Ownership is concentrated in one family — giving the family control over strategic direction and governance.
ii. Long-Term Orientation: Family businesses typically take longer investment horizons than publicly listed companies — prioritizing sustainable growth over short-term financial metrics.
iii. Strong Organizational Culture: Family values — loyalty, trust, hard work, frugality — permeate the organizational culture, creating a distinctive working environment.
iv. Overlap of Family and Business Roles: Family members often hold multiple roles — owner, director, manager, employee — creating complexity in authority, accountability, and compensation.
v. Emotional Dynamics: Family relationships — loyalty, sibling rivalry, parental authority — influence business decisions in ways that purely commercial logic would not, creating both cohesion and conflict.
vi. Succession Challenges: Transferring ownership and leadership from one generation to the next is the defining challenge of family business management.
5.3 Roles of Family Members in Business
i. Founder/Patriarch/Matriarch: The founding generation typically holds both ownership authority and operational leadership — often reluctant to delegate or relinquish control.
ii. Next Generation Leaders: Heirs who join the business must navigate the tension between family loyalty and professional accountability — often needing external experience and education to bring new perspectives.
iii. Non-Family Professional Managers: Many family businesses hire professional managers for specific functions — bringing outside expertise while the family retains ownership control.
iv. Family Board Members: Family members on the board of directors exercise governance oversight — balancing family interests with fiduciary duty to the business.
v. Silent Partners: Family members who hold ownership stakes but do not participate in management — whose interests must nonetheless be represented in governance.
5.4 Business Succession in Family Business
Business succession — the planned transfer of ownership and management control from the current generation to the next — is the most critical and difficult challenge in family business management.
According to John Ward, who has written extensively on family business succession, “Only about 30% of family businesses survive to the second generation, only 12% to the third, and only 3% to the fourth. The primary reason for failure is the absence of deliberate, planned succession.”
According to Ivan Lansberg, “Succession in a family business is not a single event but a long developmental process — one that ideally begins 10–15 years before the actual transition takes place.”
Key stages of succession planning:
- Preparation: The incoming generation develops skills, experience, and credibility — often through outside employment before joining the family business
- Entry: The successor joins the business — often in a defined role with clear accountability, not automatically as a senior manager
- Development: The successor demonstrates capability in progressively more responsible roles — earning leadership credibility among non-family employees
- Transition: Formal transfer of management authority — while the outgoing generation may retain ownership and board involvement
- Consolidation: The new generation establishes their own leadership style and strategic direction
Challenges in succession:
- Founder reluctance to let go of control
- Competition among siblings for leadership roles
- Non-family employees’ uncertainty about the new leader’s capability and style
- Estate and tax planning complexities
- Governance gaps — absence of formal boards, shareholder agreements, and family constitutions
Tools for managing succession:
- Family Constitution: A written document articulating the family’s values, vision for the business, rules for family member employment, dividend policy, and governance structure
- Family Council: A forum for family members to discuss family-business matters separate from board and management meetings
- Independent Board: A board including non-family independent directors who provide objective governance and mentorship to family management
6. Contemporary Issues in Nepal’s Management Context
i. Conflict Management: Nepal’s increasingly diverse and educated workforce — combined with rapid organizational growth — is generating more complex workplace conflicts. Organizations investing in formal conflict resolution mechanisms (HR grievance procedures, mediation programs) achieve better outcomes than those relying on informal suppression.
ii. Talent Management: The “War for Talent” is particularly acute in Nepal, where domestic organizations compete not only with each other but with the entire global employment market for educated young Nepalis. Organizations that fail to develop and retain talent fund their competitors’ — including foreign employers’ — talent pipelines.
iii. Quality Management: Nepal’s aspiration to develop export-oriented industries depends on achieving international quality standards. The adoption of ISO 9001, GMP (Good Manufacturing Practice), and sector-specific quality certifications is accelerating among Nepal’s manufacturers and service providers.
iv. Supply Chain Resilience: Nepal’s experience with the 2015 earthquake and COVID-19 pandemic — both of which severely disrupted supply chains — has driven increased attention to supply chain resilience, inventory buffer management, and supplier diversification.
v. Family Business Professionalization: Nepal’s large family business sector is undergoing gradual professionalization — driven by growth requirements, regulatory demands, and the expectations of a new generation of family members with formal management education.
Conclusion
Contemporary management issues reflect the complexity of the modern organizational environment. Conflict is inevitable — the skill is in managing it constructively. Talent is the ultimate competitive resource — the skill is in attracting, developing, and retaining it. Quality is non-negotiable in competitive markets — the skill is in building it into every process. Supply chains are the arteries of commerce — the skill is in making them efficient, resilient, and sustainable. Family businesses are the backbone of Nepal’s economy — the skill is in professionalizing them without losing their distinctive strengths.
As Peter Drucker observed, “The greatest danger in times of turbulence is not the turbulence itself but to act with yesterday’s logic.” For Nepal’s managers, confronting these contemporary challenges with knowledge, skill, and adaptability is the defining competency of effective 21st-century management.
Prepared for NEB Grade 12 Business Studies — Chapter 8: Contemporary Issues on Management Aligned with the National Curriculum Framework 2076, Curriculum Development Centre, Sanothimi, Bhaktapur
