Chapter 1.
Basic Management
Concept
WHAT IS MANAGEMENT?
Management is the art of getting things done through people
identifies a special group of people whose job is to direct and control the
effort and activities of other people towards common objectives
The 5 FUNCTIONS OF MANAGEMENT
1. Planning(when, how, & who)
the predetermining of the course of action to be taken in relation to the
known event ..(Plan A). It also includes anticipating the possibilities of future
problems that might appear (Plan B or Contingency Plan)
D/t planning executed in d/t levels of an organization
1. Strategic planning:- That is concerned primarily with deciding what
the objectives and policies of the business should be for
two, four, five, or even ten years ahead
2. Tactical planning:- This often entails devising and operating short-
term plans, for up to a year ahead to execute the strategic plan.
Chapter 1. Basic Management Concept 1
Senior management- planning how the overall strategies are to
be achieved.
3. Operational planning:- involves planning the day-to-day running of
departments or sections and individual assignments, for example
planning how to meet a particular quota of production, or deciding
what each member of staff should be doing at any given time. lower
levels management- involved mainly in very short-term activities
planning.
The Planning Process(5 elements)
I. Setting Primary & Intermediate Goals
II. Search for Opportunities:- This includes forecasting events and
identifying changes in demand competition technology finance and
industrial facilities
III. Formulation of Plans:- This is translating or converting the
opportunities discovered into strategies and policies which are directed
toward the primary and intermediate goals
IV. Target Setting:- This in effect is translating the formulated plans into
specific and detailed quantities and times for many
decision-makers and workers
V. Follow up of Plans:- involves continual checks whether the actual
performance is consistent with the original plan
2. Leading
effect/implement the decisions, plans and programs that have been
worked out by the respective managers
LEADERSHIP STYLES
1. Dictatorial leader:- maintains a highly critical and negative attitude in
his relation with subordinates and advocates the accomplishment of
tasks through fear of penalties
2. Benevolent /autocratic leader:- assumes a paternalistic role which
forces the worker to rely on him for satisfaction
3. Democratic leader:- suggests better methods and tries to improve
the worker's attitude
Chapter 1. Basic Management Concept 2
4. Laissez-faire:- where the leader assumes the role of just another
member of the group and depends completely on subordinates to
establish their own goals and make their own decision
3. Organizing
Organizing may be defined as the structure and process
by which:- 1. a group allocates its tasks among its members, 2. identifies
relationships, 3. integrates its activities toward common objectives
brings together human and physical resources in an orderly manner and
arranges them in coordinated pattern to accomplish planned objectives
Some of the benefits of organizing are:
Good communication between the management and employees,
Sound basis to evaluate the performance of individuals and groups,
Well-defined areas of work for each employee
Adequate and effective control
4. Staffing
the process of placing the right person in the right organizational position
by careful preparation of specifications necessary for
positions and raising the performance of personnel by training and
retraining of people to fit the needs of the organizational position
5. Controlling
the process of measuring current activities,
quantitatively(if possible), and guiding it toward some
predetermined goal, plan, policy, standard, decision, rule
and criterion
Controlling:
Establishing standards based upon objectives
Measuring and reporting performance
Comparing the two
Taking corrective/preventive action
Directing
Chapter 1. Basic Management Concept 3
WHO ARE MANAGERS?
Someone who coordinates and oversees the work of other people so
that organizational goals can be accomplished.
TYPES OF MANAGER
1. Functional Managers: manager who supervises specialized activities
such accounting, marketing, manufacturing, engineering etc.
2. General Managers: supervise the work of several different groups
that perform a variety of functions.
3. An Administrator: is typically a manager who works in government or
nonprofit organization.
4. An Entrepreneur: is a person who founds and operates an innovative
business.
5. A Team Leader: coordinates the work of a small group of people,
while acting as facilitator or catalyst.
LEVELS OF MANAGEMENT
1. Top Level Management: board directors, CEO/ managing director,
president, vice president
2. Middle-Level Management: incorporates branch managers and
departmental managers.
3. First Level Management: consists of supervisor, foreman, section officer.
Lower level managers are mediators between workers and higher level
management.
Mintzberg’s manager roles
A. Interpersonal Roles
1. Figurehead
2. Leader
3. Liaison(communication between two parties or groups)
B. Informational Roles
1. Monitor
Chapter 1. Basic Management Concept 4
2. Disseminator
3. Spokesman
Decisional Roles
1. Entrepreneur
2. Disturbance Handler
3. Resource Allocator
4. Negotiator
MANAGEMENT SKILLS
1. Technical skills
2. Human Skills
3. Conceptual and design Skills
4. Time Skills:
PERSONAL QUALITIES NEEDED: important personality traits/characters of
a successful manager
1. Ability to Think Clearly and Logically
2. The Abilities to Make Decisions and to Act Decisively
3. The Ability to Use Initiative:
4. Ability to Handle Conflict
5. Ability to Adapt Change and be Flexible
6. Ability to Be Emotionally Stable
7. Stamina(ENERGY) and Concentration
8. Leadership
Principles of Management as suggested by Henry
Fayol .
1. Division of work
2. Authority
3. Discipline
4. Unity of command
Chapter 1. Basic Management Concept 5
5. Unity of Direction
6. Equity
7. Scalar Chain
8. Initiative
ORGANIZATIONAL STRUCTURE
a graphical representation of the people working in the enterprise showing
their lines of authority, responsibility, and coordination
An organized unit is an enterprise/organization which
is established by the combination of human and non
human resources ( machines, money, land,
methods and system)
The stages in the setting up of an effective
organizational structure
a. The activities which will be necessary to achieve the objectives of the
business must be established
b. The various related activities should be grouped together into
departments
c. The activities of a particular department will be further divided and
grouped together into sections
d. Then an organization chart should be produced to depict the proposed
organization
e. Based on estimates of the volume of work, which will be performed by
each section, the number of staff required must be determined
TYPES OF ORGANIZATIONAL STRUCTURE
I. Line (vertical organization or
departmental organization)
the oldest and simplest form of organization, and can be very
efficient, particularly in small and medium-size enterprises
There is a clear ' of responsibility and authority right through the
management structure from the top management to the lowest level
of supervision
Chapter 1. Basic Management Concept 6
chain command is direct- decisions can be made quickly and
implemented rapidly
directness of the control- the coordination of the activities of all those
employed in a department is simplified
Advantages of Line Organization
1. It is simple and easy to understand by the members of
the enterprise
2. It provides a clear-cut division of authority and
responsibility
3. Quick decisions can be taken
4. Maintenance of discipline is easy
5. Direct flow of authority and responsibility which
minimizes confusions
Limitations of Line organization
1. Not suitable for complex and large organizations
2. Executives become overloaded with too many duties
3. Lack of Specialization
II. Functional
It is the function (the type of activity), which determines the areas of
authority and responsibility
Chapter 1. Basic Management Concept 7
An expert or specialist is placed in charge of each function, and will
have direct control of that function wherever it is undertaken within
the enterprise
However, this form of organization makes control difficult as there
are no clear lines of authority and it is similarly difficult to establish
responsibility when things do not go right
staff as well as supervisors and junior managers become confused
at being subjected to the authority of more than one functional
managers
Advantages of Functional organization
1. It works on the basis of expert knowledge
2. Operational Speed
3. Operational Clarity which clarifies organizational responsibility
and allocation of tasks
4. It relives the line executives of specialized decisions
5. Quality of work is better
Limitations of functional organization
1. Expenditure in coordinating the efforts of various functional
sections
Chapter 1. Basic Management Concept 8
2. The inability to locate and fix responsibility may lead to
indiscipline
3. Overlapping authority may create friction b/n various executives
4. Lack of Coordination (managers of other functional groups may
not respond helpfully or in a timely way)
III. Line and staff
the line managers control the primary functions, such as marketing
and production, which are directly concerned with achieving the
objectives of the business; whilst the staff managers are generally
involved with secondary functions which assist the smooth and
efficient running of the primary functions
Advantages of Line and staff organization structure
1. Specialization:- staff officers- planning function, & line officers-
“doing” function
2. Flexibility
3. Expert Advice
4. Sound Decisions
5. Relief to Line Executives
6. Opportunities for Advancement
Chapter 1. Basic Management Concept 9
Limitations of Line and staff organization structure
1. Confusion
2. Advice Ignored
3. Encourages Carelessness
4. Expensive
5. Conflict between Line and Staff
IV. Matrix organization
temporary organizational structures formed for specific projects for a
specific period of time and are dismantled, once the required goal is
achieved
These structures are very useful when:
The project is clearly defined in terms of objectives to be
achieved and the target date for completion of the project
The project must be separate and unique and not be a part of
daily work routine of the organization
The project must be temporary in nature and not extended into
other related projects
This kind of organization occurs frequently in:
Chapter 1. Basic Management Concept 10
1. Construction
2. Aerospace engineering
3. Marketing
4. Installation of an electronic data processing system
advantages of matrix organization
1. Decision making is decentralized
2. Extensive communication networks help to process large
amount of information
3. Employee learns the collaborative skills needed to function
through frequent meeting and more informal interactions
PRODUCTIVITY
defined as the ratio of value of output to the value of input
a measure of how well the input resources are utilized to achieve the desired
objectives
Productivity is an indicator to how well the factors of production (human,
material land, capital, labor and energy) are utilized.
Factors Influencing Productivity
A. Internal factors(controllable)
1. Product design
2. Input materials
3. Energy consumption
4. Human competence and skill
5. Material handling techniques
B. External factors(uncontrollable)
1. Capital availability
2. Natural resources and their mobility
3. Taxation, interest rate etc.
4. Laws and restrictions imposed by government
5. Competition in the market
Chapter 1. Basic Management Concept 11
6. Political, social and economic conditions
Reasons for Low Productivity
Poor product design
Lack of standardization (of products, input materials etc.)
Poor process planning
Poor plant layout
Non-standardization of methods of production
Unnecessary variety of products
Poor working conditions
Careless and poor workmanship
Lack of motivations among workers
More absenteeism of workers
Idleness of workers
Measuring productivity
1. Total Productivity Measure (TPM): It is based on all the inputs. The
model can be applied to any manufacturing organization or service
company.
2. Partial Productivity Measures (PPM): Depending upon the individual
input partial productivity measures are calculated.
Partial productivity measures the performance of each resources
Chapter 1. Basic Management Concept 12
Land Productivity
Material Productivity
Machine Productivity
Productivity of Man
Productivity Improvement Techniques
A) TECHNOLOGY BASED
1. Computer-Aided Design (CAD)
2. Computer Aided Manufacturing (CAM)
B) EMPLOYEE BASED
1. Financial and non financial incentives at individual and group
level.
2. Employee promotion
3. Job design, job enlargement, job enrichment and job rotation.
4. Worker participation in decision making
C) MATERIAL BASED
1. Material planning and control
2. Purchasing, logistics
3. Material storage and retrieval
4. Source selection and procurement of quality material
D) PROCESS BASED
1. Methods of engineering and work simplification
Chapter 1. Basic Management Concept 13
2. Job design evaluation, job safety
3. Human factors engineering
E) PRODUCT BASED
1. Value analysis and value engineering
2. Product diversification
3. Standardization and simplification
4. Reliability engineering
F) TASK BASED
1. Management style
2. Communication in the organization
3. Work culture
4. Motivation
PRODUCTIVITY IMPROVEMENT STRATEGIES
A. Short term Strategy
1. First strategy- improving organizational planning and control to
implement planned maintenance of machinery and effective
production system in plants would show an increase in machine
productivity and reduction in maintenance cost
2. Second action- increasing manpower efficiency and
effectiveness at all levels. Effectiveness and efficiency
are the main tools of productivity.
Efficiency:- doing things right- Getting the most output for the
least inputs
Effectiveness:- Doing the right things- Attaining organizational
goals
Management Strives for: Low Resource Waste (High Efficiency)
& High Goal Attainment (High Effectiveness)
3. Third short term- improving operation methods The techniques
of method study involve breaking a process into detailed
components
Chapter 1. Basic Management Concept 14
B. Medium Term Strategy
At this stage the firm may require capital to simplify and improve
the products, and reduce variety
C. Long Term Strategy
research and development is the backbone for productivity
increment
FUNCTIONS OF AN INDUSTRIAL ENTERPRISE
Manufacturing functions
Engineering Functions
Control Functions
Support Functions
Chapter 1. Basic Management Concept 15