Management

Interpretation of the term Management

1. The group of Managerial personnel of an enterprise. 2. Process of managing i.e. planning, organizing, staffing, leading and controlling. 3. A subject, body of knowledge and practice as a whole, separate discipline.

Administration and Management

1. Oliver Sheldon:
Administration is concerned with the determination of corporate policy, the coordination of finance, production and distribution, the settlement of organizational structure. Management is concerned in the execution of policy within the limits set up by the administration.

Administration and Management

2. Brech:
Management involves responsibility for effective planning and regulation of operation of an enterprise. Administration is that part of management which is connected with the installation and carrying out of the procedures regulated and checked against plans.

Administration and Management

3. Fayol:
There is no distinction between the 2 terms. The term Administration is used for higher executive functions in the government circle, while the term Management is used for the same functions in the business world.

Definition of Management
Koontz: Management is a process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims. Aim of a Manager : Create Surplus.

Organization: A group of people working together to create a surplus.

Functions of Managers
The basic functional areas of Management are : 1. Planning 2. Organizing 3. Staffing 4. Leading 5. Controlling There have been no new ideas, research findings or techniques that cannot be readily placed in these classifications.

Planning
Consists of selecting the Enterprise objectives Formulation of strategies Policies Procedures Rules Programs Budgets.

Organizing
Determination of activities required to achieve the goals Grouping these activities into departments or sections Assignment of each group of activities to a manager Delegation of authority Coordinating of activities, authority and information.

Staffing
Involves filling and keeping filled the positions provided for by the organization structure Defines manpower requirements for the job to be done, i.e. inventorying, appraising, and selecting candidates for the position. Compensating, training and developing both the candidates and current job holders to accomplish their tasks effectively. Also includes, establishing of executive manning tables, tables of replacements and promotions, appraisals, progress and rotations.

Leading
This area of management involves Motivation Leadership styles and approaches Communication. Leading deals with inter-personal aspects of managing.

Controlling
Involves measuring and correcting the activities of the subordinates to assure that events conform to plans. The basic control process involves three steps 1. Establishing standards 2. Measuring actual performance against the standards 3. Taking corrective action when deviations exist.

Principle of Universality of Management Functions

Managers perform the same functions regardless of their place in the organization structure. Implication of the principle: Anything significant that is said about the functions of one manager applies to all managers. Managerial knowledge and experience are transferable from department to department and from enterprise to enterprise.

1. Planning
Selecting missions and objectives as well as actions to achieve them, which requires decision making, that is choosing a course of action from among alternatives.

Types of Plans
Purpose or Mission

Objectives Strategies Policies: Major/ Minor Procedures and Rules Programs

Budgets

Purpose or mission
Identify the basic function of the enterprise. Enterprise/ organization
University Hospital Business Religious institutions DuPont Kimberly Clark

Purpose
Educate and research Heal the sick Produce and distribute Nourish people spiritually Better things through chemistry Production and sale of paper and paper products.

Objective ( Targets or Goals)

Ends toward which activity is aimed. For example:
Increasing the market share from 35% to 40% by the end of the year. Improvement in customer satisfaction by at least 20% in the next 6 months.

Strategies
The determination of basic long term objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary to achieve those goals. For example: Marketing strategy Pricing strategy

Policies
General understandings, which guide decision making. For Example: Privacy Policy Energy Policy Anti-Ragging Policy

Procedures
Required method of handling activities. They detail the exact manner in which a certain activity must be accomplished. For example: Quality procedures Performance appraisal procedures Student registration procedure

Rules
Specific required actions or non-actions allowing no discretion For example: No smoking Traffic Rules

Programs
Complex of goals, rules, tasks etc. to carry out a given course of action For example: Student orientation program Employee induction program

Budget
Statement of expected results in numerical terms.

Steps in planning
1. 2. 3. 4. 5. 6. 7. 8. Being aware of opportunity Establishing objectives Premising Determine alternative courses Evaluating alternative courses Selecting a course Formulating derivative plans Numbering plans by budgeting

Steps in planning
1. BEING AWARE OF OPPORTUNITY In light of: The Market Competition Customers needs Our strengths and weaknesses

2. OBJECTIVES OR GOALS

Where we want to be? What we want to accomplish? When?

3. CONSIDER PLANNING PREMISES

In what environment, internal or external will our plan operate?

4. IDENTIFY ALTERNATIVES

What are the most promising alternatives to accomplishing our objectives?

5. COMPARE ALTERNATIVES

Which alternative will give us the best chance of meeting our goals at the lowest cost and highest profit?

6. CHOOSE AN ALTERNATIVE

Selecting the course of action we will pursue.

7. FORMULATING SUPPORTING PLANS Such as plans to Buy equipment Buy material Hire and train workers Develop a new product

8. NUMBERIZE PLAN BY MAKING BUDGETS Develop such budgets as Volume and price of sales Operating expenses necessary for plans Expenditures for capital equipment

An Objective ( a goal, a target) serves to determine what action to take today to obtain results tomorrow. Hierarchy of Objectives:

Network of objectives.
Objectives must be interconnected and mutually supportive.
TOP MANAGEMENT 1. Net Profit of 10% or more 2. Assets and sales to double each decade 3. Provide reliable product and quick service PRODUCTION DEPARTMENT 1. Keep cost no more than 50% of the sales 2. Increase productivity by 3% 3. Keep Stable production rate within plus or minus 10% of yearly average 4. Rejects at less than 2% FOREMAN 1. Handle worker grievances within 24 hours 2. Keep scrap to 2% of material usage

Multiplicity of Objectives.
To manage a business is to balance a variety of needs and goals.

Long and short range objectives

Integration of Long range and short range objectives crucial for success of a business. No short range plans should be made unless it contributes to the achievement of relevant long term plans.

What should be the objectives of business?

Eight key result areas: 1. Market standing 2. Innovation 3. Productivity 4. Physical and financial resources 5. Profitability 6. Manager performance and development 7. Worker performance and attitude 8. Public responsibility

Why strategies and policies?

The key function of strategies and policies is to unify and give direction to the plans. The more carefully developed and clearly understood strategies and policies are , the more consistent and effective ensuing planning will be

Similarities between strategies and policies

1. Both give direction to plans 2. Both are the basis for operational plans 3. Both affect all areas of managing

Differences between strategies and plans

STRATEGY Determination of basic long term objectives, courses of action and allocation of resources. Have implied commitment and resources, money, time, reputation etc to go in a given direction POLICY General statement and understanding which guide managers decision making Essence of policy is discretion

What is strategy?
There are two perspectives: 1. From the perspective of What an organization intends to do 2. From the perspective of What an organization eventually does, whether or not its activities were originally intended.

What is strategy? strategy? Contd..

From the first perspective, Strategy can be defined as the broad program for defining and achieving an organizations objectives. From the second perspective, Strategy is the pattern of organization's response to the environment over time.

3 modes of strategy making

1. Entrepreneurial mode
Dramatic leaps

2. Adaptive mode
Moves in a series of small disjointed steps

3. Planning mode
Has a strong sense of direction Choice is systematic and structured based on rational estimates of opportunities

Three levels of strategy

1. Corporate level What business should we get into? Which should we get out of? Which customers should we serve? What new technologies should we use? How do we acquire and allocate resources?

Three levels of strategy

2. Business unit level strategies: How will business compete within its market? What product/ service it should offer? How will various functions be managed? How in will resources be distributed within business?

Three levels of strategy

3. Functional level strategies: These are more detailed and specific.

STRATEGIC PLANNING PROCESS

1. 2. 3. 4. 5. 6. 7. 8. 9. INPUTS ENTERPRISE PROFILE ORIENTATION OF TOP MANAGERS PURPOSE AND MAJOR OBJECTIVES OF THE ENTERPRISE EXTERNAL ENVIRONMENT (Opportunities & Threats) INTERNAL ENVIRONMENT (Strengths and Weaknesses) DEVELOPMENT OF STRATEGIES EVALUATION AND CHOICE OF STRATEGIES EFFECTIVE IMPLEMENTATION

SWOT ANALYSIS S- THE TOWS MATRIX

Threats (T)
o Negative external environmental factors.

Opportunities (O)
o Positive external environmental factors.

Weaknesses (W)
o Resources that an organization lacks or activities that it does not do well.

Strengths (S)
o Internal resources that are available or things that an organization does well.

SWOT ANALYSISS- THE TOWS MATRIX

THREATS: (T) Political instability Economic turmoil Rapidly changing technology Competitor strength Restrictive trade

SWOT ANALYSISS- THE TOWS MATRIX

OPPORTUNITIES: (O) Social Changes Economic growth Open trade Monetary conditions Demographic factors Government incentives Access to resources Lack of competition

SWOT ANALYSISS- THE TOWS MATRIX

WEAKNESSES: (W) Limited resources Low market share Low brand value Outdated technology Products vulnerability to price competition

SWOT ANALYSISS- THE TOWS MATRIX

STRENGTHS (S) Strong equity Quality products Technological know-how Strong dealer network Brand name Differentiated brands IP assets

TOWS Matrix

TOWS matrix- Strategies

S-O strategies (Maxi-Maxi) pursue opportunities that fit well the company's strengths. W-O strategies (Mini- Maxi) overcome weaknesses to pursue opportunities. S-T strategies (Maxi-Mini) identify ways that the firm can use its strengths to reduce its vulnerability to external threats. W-T strategies (Mini-Mini) make a defensive plan to prevent the firm's weaknesses from making it susceptible to external threats.

Dynamics of TOWS analysis

What TOWS Matrix reveals

1. What future strengths and capabilities that we will need to respond to emerging opportunities? 2. Will the current strengths matter as much in the future? 3. Which resources and capabilities need be given greater emphasis? 4. Are there resource gaps that need to be filled? 5. How urgent it is to correct our particular weaknesses and guard against particular external threats?

TOWS Matrix
Case study: Volkswagen

TOWS Matrix
Case study: Volkswagen

Planning premises
Define as the anticipated environment in which plans are expected to operate. They include assumptions or forecasts of future and known conditions that will affect the operation of the plans.

External Planning Premises

a) Assumptions about market demand and nature of competition b) Government policies and legal factors c) Political climate d) Population trends etc..

Internal Planning Premises

a) Sales Forecast b) Basic policies on product, pricing, labor, financing etc..