Industrial Management

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INDUSTRIAL MANAGEMENT HANDOUTS

LECTURE 1

INTRODUCTION

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ANO LEVELS OF MANAGEMENT
OF THE INDUSTRIAL MANAGEMENT UNIT

FUNCTIONS OF.MANAGEMENT

EVOLUTION OF THE INDUSTRIAL MANAGEMENT

AN ANALYSIS OF THE EMERGENCE STAGES OF EVOLLJTlON OF INDUSTRIAL

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INTRODUCTION

FUNCTIONS

OF MANAGEMENT

AND LEVELS OF MANAGEMENT

Management supposes directing an organization in its way to become profitable and competitive. It represents a dynamic endeavor carried out amid constantly changing factors, both internal and external to the organization. Management takes place in aII economic functions of an industrial unit: research &. development, production (operations), bumen resources, finance &accounting end commercial. Management represents the process used to accomplish organizational goals through planning, organizing, coordinating, leading, end controlling people and other organizational resources. They are known as the primary functions of management. Planning includes anticipating trends and determining the best strateg ies and tactics to achieve organizational objectives. The trend todayis to have planning teams to help monitor the environment, find business opportunities, and watch for challenges. Planning involves: Setting organizational goals _ Developing strateg ies and tactics to achieve those goals (through strategic planning, tactical planning, operational planning and contingency planning) Determining resources needed Setting precise standards

A common planning tool is represented by SWC;:>T analysis (see figure 1). It is used to analyze an organization's strengths, weaknesses, opporlunities, end
threats. The company begins such a process with an analysis of the business environment in general. Then it identifies strengths and weaknesses. These are internal to the firm and can be studied relatively easily. Finally, as a result of the environmental analysis, it identifies opportunities and threats that are externa I to the firm. Potential STRENGTHS (Internal) Core competencies in key areas An acknowledged market leader Cost advantages Better advertising campaigns Potential OPPORTUNITIES (External) Potential WEAKNESSES (Internal)

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No clear strategic direction Obsolete facilities . Lack of managerial depth and talent Weak market image Potential THREATS (External)

Ability to serve additional customer groups Entry of lower-cost foreign competitors Expand product lines Falling trade barriers in attractive foreign rnarkets Rising sales of substitute products Ability to grow due to increases in market Costly regulatory requirements demand Vulnerabilitv to recession Fiqure 1. SWOT analysis.

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Organizing includes resource management, designing the structure of the organization (includ ing organization chart) and creating conditions and systems in which everyone and everything work together to achieve the organization's objectives. Organizing involves: Allocating resources Preparing a structure (organization chart) showing lines of authority and responsibility Assigning tasks and establishing procedures for accomplishing goals Recruiting, selecting, training, and developing employees An organization chart is a visual device that shows relationships among people and divides the organization's work (is a graphical representation of the company structure). The corporate hierarchy may include top, middle, and first-line managers and these are known as the levels of management (see figure 2)

President Chancellor Chief Executive Officer

Divisiol1 heads Branch managers Deans

Section heads Supervisors Foremen

Figure 2. The management pyramid: levels of management. There are ditferent manners to portray an organization chart of an industrial unit. Two of the most usual are functional and departmental charts and are presented next (see figure 3).

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Coordinating supposes synchronization of people, processes, and information within organizations in order to maximize productivity. It relies on how actors can work together harmonious/y. Pure coordination processes include identifying goa/s, ordering activities, assigning activities to actors (scheduling), allocating resources, and synchronizing activities. Group decision making is a second class of co-ordination processes and is about making collective decisions. This includes proposing a/ternatives, eva/uating a/ternatives, and making choices. Communication is another class of co-ordination processes and is about establishing common /imguages, routing information ttows, and diffusing information within an organisation. Finally, the last class of co-ordination processes is about the perception of common objects. It is important that actors see objects (products, customers, plans, etc.) in the same way 50 that any decisions made are not based on different interpretations of the facts. This is where standards, training, or the use of shared databases come into play. Coordinating involves: Direct supervision: how a person is made responsible for the work of another,' and how a person manages this relation, are the prime responsibilities of a line manager. Standardization of work ptocesses. Standardization of outputs: this is do ne through the planning function, where levels of outputs (quantities, costs, quality levels) areset. Standardization by skills and knowledge: when workers. are given specific roles that use their specific (and standardized) skills. Leading supposes creating a vision for the organization and communicatlnq, guiding, training, coaching, and motivating others to workeffectively to achieve the organization's objectives. The trend is to empower employees, giving them as much freedom as possible to become self-directed and self-motivated. Empowerment means giving employees the authority (the right to make a decision without consulting the manager) and responsibility (the requirernent to accept the consequences of one's actions) to respond quickly to customer requests. This means that more planning, organizing, and controlling are being delegated to lower-Ievel managers. This function was once known as directing, meaning telling employees exactly what to do. In many smaller firms, that is still the role of managers. In most large modern firms, however, managers no longer tell people exactly what to do because knowledge workers often know how to do their jobs better than the manager. Nevertheless, leadership is necessary to keep employees focused on the right tasks at the right time along with training, coaching, motivating, and the other leadership tasks. Leading involves: Guiding and motivating employees to work effectively to accomplish organizational objectives. Giving assignments Explaining routines. Clarifying policies. Providing feedback on performance.

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Controlling involves establishing clear standards to determine whether an organization is progressing toward its objectives, rewarding people for doing a good job, and taking corrective action if they are not. Basically, it means measuring whether what actually occurs meets the organization's goals and seeking new opportunities. Controlling involves: Measuririg results against corporate objectives Monitoring performance relative to standards Rewarding outstanding performance Taking corrective action when necessary.

EVOLUTION OF THE INDUSTRIAL MANAGEMENT

Industrial Management deals with the development and improvement of integrated systems of resources (people, materials - raw materials, energy, equipment-, money, knowledge, information). Historical events have shown that crucial shifts in firm organization coincide with industrial revolutions. Even the factory itself was the result of the First Industrial Revolution and later, following the Second Industrial Revolution, the large modern business enterprise appeared by the 1920s.

The factory (industrial unit, plant) replaced the system that was based an the family firm craft-shop. The craft-shop was run by a master craftsman together with family helpers and apprentices. The entrepreneur owned the raw materials, the goods in process, the equipments and tools, and outsourced the labor to workers who usually operated at home. The factory was a new organizational farm: it was a firm, while the putting-out systern was a market-like organization based on market contracts. The main factors characterizing the emergence of a factory are considered to be: Technological factor. largely driven by the new technology: new source of power - steamengine (1789,James Watt) The technological advances occurred mostly in the following four areas: o energy (water power, steam engine) o metallurgy (iron making) o cotton (cotton spinning, mechanical weaving) o several industries and services (canals and road building). The main technological features were a new intrestructure (railways), a new source of power (steam engine), and new machine tools that led to expanding trade. Commercial factor. expanding markets - growing population due to a longer lifespan gained through the improvement of living conditions (hygiene, development of medicine). Financial factor. partner ownership, important investments.

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1. Empirical 2. Scientific War)

management approach

(1650 ~ 1850) management (1850 ~ 1stWorld

of the industrial approach

3. Humanistic/behavioral 4. Industrial management

(between the 2 World Wars)

as a science (2ndWorld War ~ present)

Main characteristics 1. - small units (workshops, manufactures) - no or slow evolution of technologies and products - the manager is also the sole owner - the managerial process is based on applying the ancestral ideas (formula) 2. -Iarge units (factories) -development of many technologies and products -distributive ownership -experimental approach of some management aspects. For the first time the management process is approached on a quantitative, rigorous way. This approach called the c/assic approach has 2 points of view: Scientific management represented by Fr. W. Taylor (an American mechanical engineer; Ptinciples of Scientific Management, 1911). This perspective is concentrated on the problems of lower-Ievel management dealing with everyday problems of the work force.

The classical organization theory represented by Henri Fayol (a French mining engineer; Administration industrielle et generale, 1916). This perspective is concentrated on the problems of top level management dealing with everyday problems of managing the entire organization. Within the administrative activities he identified the rnost important tasks of a manager: planning, organizing, commanding and controlling. 3. Humanistic/behavioral approach management and has two directions: appeared as a rejection of the scientific

The human re/ations approach has as focal point the human personality, the work relation between groups of workers. This approach refers to the manner in which managers interact with subordinates. For the first time training programs for managers have appeared. The behaviora/ science approach considers that an individual is more complex and they are motivated to work for many reasons in addition to making money (social relations, social status, etc.)

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4. This stage is characterized by the use of mathematics and statistics to solve . production & operation problems. Systems approach: the organization must be viewed as total systems with each part linked to every other part. Contingency approach: the correctness of the managerial practice depends on how it fits the particular situation to which is applied.

Rapid development of new technologies (electronics, nuclear physics) Developrnent of computers (allow solving of very complex problems).