Management and Economics

for IT Engineers
22ADS51

MODULE 1
 Contents
Chapter 1:
Meaning, Nature and characteristics of
management, Scope and Functional areas of
management, Levels of management and Goals of
management.
Chapter 2:
Planning- Nature, importance, types of plans, steps
in planning, Organizing- nature and purpose, Types
of Organization, Staffing- Meaning, Process of
recruitment and selection.
Case Study: The Bangalore International Airport

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 Chapter 1

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 ⚫ Japanese management concepts- JIT (just in time), TQM(total quality
management)

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 ⚫ Management was formally introduced as
academics in Harvard Business School,
USA in 1908
⚫ In India –IIM-1962

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 Managerial knowledge
⚫ Katz proposed three areas of managerial
knowledge.
⚫ Technical skills-tools, scientific methods to
solve technical problems
⚫ OperationalKnowledge-designing,
implementing skills or proper resource
allocation.
⚫ Strategic Knowledge-long term planning for
the organization like allocating budgets,
human resources etc.

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 Chapter – 2
PLANNING
“Successful managers deal with foreseen
problems and unsuccessful managers
struggle with unforeseen
problems”….Terry

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 Agenda
• Nature of planning
• Importance of planning
• Types of Plans
• Steps in Planning

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 What is Planning?
• Deciding in advance what to do, how to do it ,
when to do it and who to do it.
• A forecast for accomplishment.
• Predetermined course of action.
• To produce a scheme for future action and to bring
about specified results at a specified cost in a
specified period of time.

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 Definition
• Based on futurity:
– “Planning is a trap laid down to capture the future” (Allen)
– “Deciding in advance what is to be done in future” (Koontz)
– “Informed anticipation of future”( Haimann)
– Anticipatory decision making” (R L Ackoff)

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 Definition
• As an intelligence function:
– “Planning is a thinking process, an organized foresight,
a vision based on fact and experience that is required
for intelligent action”( Alford & Beatty)
– “Deciding in advance what to do, how to do it, when to
do it and who is to do it” ( Koontz & O’ Donnell)

Planning focuses on future and it involves all the

activities that determine objectives for the future and the
appropriate means for achieving those objectives.
Outcome of planning is a plan, which is a document that
specifies the course of action the organization will take. 25
 Nature of Planning
• Provides basic foundation from which all future
management functions arise.
• Goal oriented
• Intellectual exercise
• Continuous process
• Futuristic
• Integrated Process

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 Planning- A bridge

Planning Where we want to

Where we are
be

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 Importance of Planning
• Provides direction
• Creates a unifying frame work
• Leads to economical utilization of resources
• Reduces the risks of uncertainty
• Facilitates decision making
• Encourages Innovation & Creativity
• Improves morale
• Facilitates control
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• Setting objectives and priorities - Manager should be
given clear objectives to be achieved.
• Credibility and trust of stakeholders – managers should
take stakeholders into confidence by sharing plans and
actions.
• Building consensus – setting common organizational
objectives for all.
• Setting and managing expectations – manager should set
the realistic expectations from the employee.
• Allocation of resources – planning helps allocate limited
resources like staff and materials.
• Current challenges and future problems – manager has
to think critically to resolve current challenges and avoid
future problems.

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• Co - ordination – what performance outputs are expected
to be generated by the managers' unit.
• Time Management – planning aids in effective time
management.

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 Types of Plans

• Long range Vs Short range

• Strategic Vs Operational

• Corporate Vs Functional

• Proactive Vs Reactive

• Standing Vs Single Use

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 Long range Vs Short range
Long range plan Point of Short range plan
distinction
Covers many years & Meaning Covers less than one year
affects many departments and is more specific &
of an organization detail
5 yrs or more Time Up to one year

Organizations linkage Primary Linkage with various

with external factors focus parts of an organization
Mission ,long term goals Deals with Current operations of
and strategies organization
Top management Prepared Lower level executives
by
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 Strategic Vs Operational
Strategic Plan Point of Operational Plan
distinction
5 years or more Time Under one year
horizon
Adapt to external Purpose Implement internal goals
environment based on
internal strengths
Total institutional Activity Internal tasks &
performance controlled Operations
Top management Level Middle & lower level
involved

Primarily judgmental Basis for Exact data & Standards

planning used
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 Corporate Vs Functional
• Corporate Plan:
– A comprehensive plan that outlines the broad objectives
of a company as a whole and develops plans to achieve
those objectives
– Holistic and Unified focus
– Focus on organizational performance

• Functional Plan:
– Is unit planning and deals with different departments in
an isolated manner.
– Focus on departmental performance

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 Proactive Vs Reactive
• Proactive Planning:
– Managers challenge the future, anticipating
future contingencies and get ready with
alternative routes for unforeseen circumstances
• Reactive Planning:
– Organizations react to events as and when they
arise

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 Standing Vs Single Use
• Standing Plans • Single Use plans
– Developed for – Developed to carry
activities that recur out a course of
regularly over a action that is not
likely to be
period of time repeated in future
• Ex: • Ex:
– Objectives, Policies, – Programmes,
Procedures, Methods, Schedules, Projects,
Rules Budgets
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Hierarchy of Plans

Purpose
or Mission

Objectives

Strategies

Policies: Major or Minor

Procedures

Rules

Programs: Major or minor and supporting

Budgets: numberized programs

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 Vision/Purpose/Mission /Objectives
• Vision is the dream that management creates for the
organization’s preferred future.
Ex: Become world leader in health care field in a decade
• Purpose is the primary role of the organization
defined by the society in which it operates
Ex: Hospital-Provide health care
• Mission is the unique aim that sets an organization
apart from the others of its type
Ex: Hospital –to treat heart disorders only
• Objectives are the ends(specific targets)toward which
enterprise activities are aimed
Ex: Hospital –admit certain number of indoor patients

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 Policies
• General statements which guide in decision making
• All policies need not be statements.(practice over a
period of time can be interpreted as policy)
• Define an area within which a decision is to be made
and ensure that the decision will be consistent and
contribute to the objective
• Ex: Recruiting only through campus for the post of
probationary officers.

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 Procedures
• Establish a required method of handling future
activities.
• Guides to action, rather than thinking
• Detail the exact manner in which certain activities
must be accomplished.
• Procedures and Policies are related
– Ex: Company policy of granting vacations, Procedures established
to implement this policy will provide for scheduling of vacations
with out disrupting the work, determining rates of vacation pay,
spelling out the means for applying vacation

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 Rules
• Spell out specific required actions or non actions,
allowing no discretion.
• Are different from procedures in that they guide action
without specifying a time sequence.
• Procedure can be Sequence of rules ,but a rule may or
may not be part of procedure
– Ex: “No Smoking” is a rule quite unrelated to
procedure.

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 Programs
• Goals, policies , procedures , rules , task assignments ,
steps to be taken, resources to be employed and other
elements necessary to carry out a given course of action.
-- Ex: Introducing new product in the market

• Essential ingredients are : Time phasing, Budgeting

• Absence of the above ingredients is a hope.

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 Budgets
• A statement of expected results expressed in numerical
terms.
• Referred as numberized program
• Expressed in financial terms( Cash flows), labor hours,
units of production, etc
• Fundamental planning instrument

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 Steps in Planning
Being Aware of Opportunity Comparing alternatives in light of
In light of: goals sought
The Market Which alternative will give us the
Competition best chance of meeting our goals at
What customer want the lowest cost and highest profit?
Our strengths
Our weaknesses

Choosing an Alternative
Setting objectives or Goals Selecting the course of action we
Where we want to be and what will pursue
we want to accomplish and
when

Formulating supporting plans

Such as plan to
Considering planning Buy equipment
premises Buy materials
In what environment – internal Hire and train workers
or external – will our plans Develop a new product
operator?

Numerizing plans by Marking

Budgets
Identifying Alternatives Develop such budgets as:
What are the most promising Volume and price of sales
alternatives to accomplishing Operating expenses
our objectives? Necessary for plans
Expenditures for capital 47
Equipment
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 Decision Making
• Essential part of management
• Taking conscious and sub conscious
decisions is every day phenomenon
• Ex: In directing – determining the course, deciding
the orders and instructions to be given, providing
dynamic leadership.

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 Meaning of a Decision

• Choice between two or more alternatives

• Implies three things
– Choosing,
– Availability of alternatives,
– Having a purpose

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 Rational Decision Making
1. Recognizing the problem
2. Deciding priorities among problems
3. Diagnosing the problem
4. Developing alternative solutions or courses of
action
5. Measuring and comparing the consequences of
alternative solutions
6. Converting the decision into effective action
and follow-up of action.
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 Recognizing the problem
• Deviation from past experience
– Ex: Employees’ turnover has grown
• Deviation from plan
– Ex: Department is exceeding its budget
• Other people bringing problems to manager
– Ex: Customers complaining about late
deliveries
• Competitors out performance
• Ex: Other companies developing new
processes

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 Deciding priorities
• Some problems can be solved at the subordinate
level
• Some problems can be referred upwards
• Some problems can be deferred and allowed to be
solved without any effort
• Ex: Napolean’s 3 week delay in looking at mail

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 Diagnosing the Problem
• Symptoms of problem can mislead
• Careful diagnosis is a pre requisite
– Ex: Sales Decline
• Reasons could be:
– Poor selling procedures, sharp competition,
saturation of old markets
– Real reason---Changes in customers demand
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 Developing alternative solutions

• For every problem there are alternative solutions.

– Ex: Manager considering a proposal to raise

production to meet increased demand

– Alternatives: build a new plant, buy better

equipment, add extra shift, authorize overtime

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 Measuring & Comparing
alternative solutions
• Involves “quality” and “acceptability” of various
alternative solutions.
• Quality involves assessing tangible and intangible
out comes
– Ex: Calculating the cost of various alternatives
– Good industrial relations in a particular area

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 Measuring & Comparing
alternative solutions
• Technical matters –Quality is important

– Ex: Engg., Production

• Human matters –Acceptability is important

– Ex: Working conditions, office layout

• Another alternative is Pilot testing

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Converting Decision to Action &
Follow up
• Translation requires effective communication of
decision to employees in clear and unambiguous
manner.
• Ensure employee acceptance
• Ensure employee participation in the
implementation

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Organizing and Staffing

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 Agenda
 Nature and Purpose of organization
 Types of organization
 Meaning of Staffing
 Process of Selection and Recruitment

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 Organization
 An Organization is a social unit or human grouping
deliberately structured for the purpose of attaining
specific goals.
… Amitai Etizoni

 The rational coordination of the activities of a number of

people for the achievement of some common explicit
purpose or goal, through division of labour and function,
and through a hierarchy of authority and reponsibility.
… Sehein

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 Organization
 The process of identifying and grouping of the
work to be performed, defining and delegating
responsibility and authority and establishing
relationships for the purpose of enabling people to
work most effectively together in accomplishing
their objectives.
… Allen

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 Nature of Organization

A clear concept of the major duties or

activities required to achieve the purpose.
 Classification of activities into jobs
 Establishment of relationships between
these jobs.

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 Purpose of Organizing
 The organizing function of mgmt. naturally &
logically follows the planning function.
 Through organizing managers decide how the
strategy & planned objectives will be
accomplished.
 Involves managers in decisions which result in a
system of specialized coordinated jobs.
 To achieve coordinated effort through the design
of a structure of task & authority relationships.

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 Types of organizations
 Line: Line, Military or Scalar Organization
 Functional Organization
 Line and Staff Organization
 Product / Project Organization or
Departmentation
 Matrix or Grid Organization
 Committee Organization

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Case Study- Bangalore
International Airport

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 Indian airport was built in just thirty three
months.
 Siemens provided the new airport with airport-
specific equipment as well as with safety and
security technology and power supply and
distribution
 the airport is capable of handling 720 aircraft
movements in a day and 11.5 million
passengers per year.

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 The first stage of the airport was originally
designed to handle approximately 4.5 million
passengers each year but a study
commissioned in 2006 forecast a dramatic rise
in demand by 2008 when the airport was due
to open.
 The passenger terminal is a single, fully air-
conditioned, three-level building designed to
accommodate 3,000 passengers at peak hour,
with a total floor area of approximately 71,000
m2.

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 It has twenty gates, nine aero-bridges,
including one double arm and nineteen remote
bus bays. There are a total of forty two aircraft
stands, each with its own underground fuelling
pit.
 A 2,000 vehicle car park in front of the
terminal building at ground level, for the
convenience of passengers and visitors to the
airport, has been developed in the first phase
of development.

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 The success of the project was largely
attributable to the cross-sector collaboration
between the various teams .
 From the initial design concept and
procurement phase, through to the on-site
requirements of installation supervision and
commissioning, and on to customer training.

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 Thomas Moser, CEO of Siemens Industrial
Technologies commented: “To successfully
complete a project like Bengaluru international
Airport takes a global solutions provider such
as Siemens. We had to deliver a logistical tour
de force by co-ordinating various suppliers,
always considering the region’s culture and
always working towards a successful and
scheduled completion.”

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 Johannes Schmidt, Head of Equity & Project
Finance at Siemens Financial Services, said:
“Thanks to the right financing and our ability
to manage complex technologies, Siemens
played a major role in further expanding
India’s infrastructure and in doing so, set a
new standard for outstanding infrastructure
projects.”

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 The Bangalore International Airport (BIA) is a
prime example of successful airport planning
and management. The airport has been able to
achieve significant growth in recent years,
despite a challenging economic environment.
This case study examines the key factors that
have contributed to the BIA's success, and
identifies some of the lessons that can be
learned from its experience.

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 The BIA is a public-private partnership (PPP)
between the Government of India and a
consortium of private companies. The airport
was opened in 2008, and has since grown to
become one of the busiest airports in India.
The BIA is a major hub for both domestic and
international travel, and serves as a gateway to
the city of Bangalore, which is a major center
for information technology and outsourcing.

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 The planning and development of the BIA was
a complex and challenging process. The
airport was built on a greenfield site, and
required the relocation of several villages. The
project was also subject to a number of
environmental challenges.

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 Despite these challenges, the BIA was able to
open on schedule and within budget. This was
due to a number of factors, including:
• A strong and experienced project team
• A clear and well-defined vision for the airport
• Effective stakeholder management
• A commitment to innovation and sustainability

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 The BIA is managed by a professional team of
airport operators. The airport has a number of
innovative features, such as:
• A paperless boarding process
• A biometric identification system
• A self-service baggage drop system

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 The BIA faces a number of challenges,
including:
• Competition from other airports in the region
• The need to continue to invest in infrastructure
and technology
• The impact of climate change
 However, the BIA also has a number of
opportunities, such as:
• The growth of the Indian economy
• The increasing demand for air travel in India
• The development of new technologies
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 There are a number of lessons that can be
learned from the experience of the BIA. These
include:
• The importance of having a clear and well-
defined vision
• The need for effective stakeholder
management
• The importance of investing in infrastructure
and technology
• The need to be adaptable and innovative

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