2. functions of management

ENGINEERING MANAGEMENT AND INDUSTRIAL ECONOMY (EENG410)

2. FUNCTIONS OF MANAGEMENT 2.1 INTRODUCTION

Industries are confronting a number of challenges originating from different angles. To have a victory over these challenges, the managers should carry out their activities, which consist of a number of functions, in a systematic way.

The challenges of the managements arise from:

Inside Present Local

Outside Future Global

Inside challenges are those managers face with in their industry/company:

Implement projects/programs; Manage people, technologies, and resources to add value; Develop new product features to enhance company competitiveness; Define, control and reduce costs to improve profitability; Initiate technology projects to sustain company position.

Outside challenges may include:

Keep abreast of emerging technologies and apply them to strengthen company’s core competencies;

Apply web-based tools to enhance operations and foster customer relations; Identify best practices to improve engineering operations and surpass them; Create supply chain networks to derive speed, quality and cost benefits.

Present challenges that managers should worry about:

Do things right to keep company operating smoothly; Monitor non-financial and financial performance; Control costs and eliminate wastes to attain profitability in the short-run.

Future challenges:

Seek e-transformation opportunities to create company profitability in the long-run;

Introduce new generation products timely; Create vision for the future related to technologies; Define what should be done for technology-based success in the future.

Local challenges:

Utilize resources to best achieve company’s objectives; Take ethical and lawful actions while taking into account local conditions; Maintain and nurture local professional networks; Share lessons gained with people at other company sites.

Global challenges:

Apply location-based resources to realize global economies of scale and scope for achieving cost and technology advantages;

Develop global professional networks; Acquire a global mindset; Exercise leadership roles in international settings.

2. Functions of Management 1


2.2 PLANNING

Planning is the most basic of all the management functions. Planning is thinking before doing. Planning is the work done to predetermine a course of action, in order to provide focus and direction for enhancing the efficiency and effectiveness of the company. Planning is made necessary by rapid change of

a. Technology ( web-based tools, broadband communications options, mobile access),

b. Environment (globalization, competition, marketplace), andc. Organization (mergers & acquisitions, networks, outsourcing and alliances).

Planning defines who, how, where, when and using which resources to do the what work.

Planning can be divided in to two as:

1. Strategic planning, and2. Operational planning.

Strategic planning is to define future activities which are worth doing by the unit/company to assure that the company applies its recourses (skilled manpower, time, money, physical resources, equipment, facilities, and business relationships) effectively to achieve its short-term and long-term goals.

The following questions should be addressed while strategic planning

What are the company’s vision, mission and value system? What specific goals (profitability, market share, sales, technology leadership

position, global penetration) to accomplish by when, with what investment and which technology?

Which new/improved product streams to offer by when (considering product life cycle)?

What core technologies (design, production, distribution, service) to maintain, develop, acquire and/or apply?

Which business networks/partnerships to create (suppliers, co-marketing, production, logistics, service)?

With which performance metrics to monitor corporate progress?


MISSION AND VISION

Mission Why do we exist?Whom are we serving? What do we do to serve them? Examples Dell’s mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet consumer expectations of highest quality; leading technology; competitive pricing; individual and company accountability; best-in-class service and support; flexible customization capability; superior corporate citizenship; financial stability.

Vision - Company Aspiration Market capitalBusiness standingRanking in industrial sectorMarket Share Others. ExampleGeneral Motors’ vision is to be the world leader in transportation products and related services.PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today. Dell’s vision is to create a company culture where environmental excellence is second nature.


Sample Corporate Values

Innovation Honesty Quality Social responsibility Continuous improvement Stability Collaboration Accountability Trust and openness Quality of work Life Empowerment Initiative Diversity and equal

opportunity Respects for others Open communications



Tools for Strategic Planning

Market research SWOT analysis Sensitivity analysis (what-if, scenarios, Monte Carlo) External benchmarking Technology forecasting Product life cycle analysis

Operational planning is to define tasks/events to be accomplished with the least amount of resources within the shortest time, to assure that the company applies its resources efficiently to achieve its short-term and long-term goals.

Like strategic planning, operational planning has questions that have to be addressed:

What is the most efficient way of accomplishing a project/task with known objectives (doing things right) ?

How to link up with the best suppliers in the marketplace for parts needed? What are the operational guidelines for performing specific work?

Tools for Operational Planning

Project management including action planning Design, test and analysis procedures Operational guidelines

Objectives of planning

The important objectives of planning are:

1. Planning helps in effective forecasting2. Planning provides certainty in the activities3. Planning provides performance standards4. Planning gives a specific direction to the organization5. Helps the organization to tune with the environment6. It provides economy in the management7. It is very much helpful in preparing the budgets8. The need for plan arises from constant change9. Planning is directed towards efficiency

Steps in planning

The details of planning may differ depending up on the specific requirements of a particular business. However, in all types of business planning process involves certain necessary steps summarized as follows:

1. Determination of objectives



2. Forecasting to assist planning3. Decide the planning period4. Collection, classification and processing of information5. Deciding alternative courses of action6. Evaluation of alternatives7. Selection of best plan8. Subsidiary plans to aid master plan9. Controlling plans

Advantages of planning

1. Maximum utilization of resources2. Minimization of unproductive work3. Reduces uncertainty4. Basis for managerial action5. Basis for control6. Avoids bottlenecks in production7. Encourages innovation and creativity8. Improves motivation9. Facilitates effective delegation of authority10. Gives competitive edges to the enterprise

Limitations of planning

Though planning facilitates various planning functions and brings orderliness, stability and continuity of operation, it suffers from certain limitations:

1. Limitations of forecast2. Costly affair3. Influence of external factors4. Resistance to change5. Rigidity and inflexibility

Elements/components of planning or types of planning

i. Goals-any achievement of an end point (quantitative)ii. Objectives-ends towards which activities of a company are directed (derived

from goals)iii. Policies-verbal, written or implied overall guide setting up boundaries that

supply the general limits and directions in which managerial actions will take place. Not to employ any person over 60 years of age.

iv. Rules-specific action to be taken or not taken in a given situation. No smoking.v. Procedures-How a particular activity is carried out. Steps that must be

followed after the receipt of an order till dispatch of products to customers.

vi. Programs-precise plan which lays down the operations to be carried out to accomplish a given work.

vii. Schedules-time sequence of the work to be done.viii. Budget-an appraisal of expected expenses against anticipated income for a

future period.

2.3 FORECASTING



Forecasting is an important and essential part of effective planning. It refers to a systematic analysis of past and present circumstances. It is essentially a technique of anticipation. It provides key information and pertinent facts relating to the future. The success of a business greatly depends on the efficient forecasting and preparing for future events.

Definitions of forecasting

Some of the important definitions of forecasting are as follows:

i. Forecasting is defined as the estimation of future activities (type, quantity and quality of future work). This estimates the basis to plan the future requirements for men, machines, materials, time, money, etc.

ii. Forecasting is a systematic attempt to probe the future by inference from known facts. The purpose is to provide management with information on which it can base planning decisions.

iii. Forecasts are predictions or estimates of change, if any in characteristic economic phenomena which may affect ones business plans.

iv. Business forecasting refers to the statistical analysis of the past and current movements in the given time series so as to obtain clues about the future pattern of the movements.

Forecasting may be done in connection with sales, production or any other type of business activities. Forecasting begins with the sales forecast and is followed by production forecast and forecast for probable costs, finance, purchases, profit or loss etc.

While making the forecast invention of new materials, fashion changes, policies of competitors, unseasonable weather, threat of war and the general economic situation expected in the country and foreign markets should be taken in to consideration.

Importance of business forecasting

1. Importance in planning2. Accuracy in managerial decision3. Facilitates control-it discloses the areas where control is lacking4. Formulating future policies5. Develops coordination-a common effort of many persons6. Helps in preparing budgets7. It contributes to business success-better utilization of resources

2.4 ORGANIZING

Organizing involves determining activities needed to fulfill the objectives, grouping these activities into manageable units or departments and assigning such groups of activities to managers. Organizing provides a framework of management or a mechanism for positive, integrated and cooperative action by many people, in a joint effort to implement plan. Planning decides what management wants to do, while organizing provides an effective machine for achieving the plan or objectives.

Thus organizing involves identification and grouping the activities to be performed and dividing them among the individuals and creating authority and responsibility, relationship among them. Organization, in fact, is a backbone of management, which establishes relationship between people, work and resources. It coordinates these factors in such a way that maximum output is obtained effectively and efficiently with minimum total cost.



Steps in organizing

The process of organizing involves the following steps:

1. Determination of activities2. Division of activities3. Fitting individuals in to jobs4. Developing relationships in terms of authorities and responsibilities

2.5 STAFFING

Staffing is filling the positions needed in the organization structure by appointing competent and qualified persons for the jobs. Staffing involves:

i. Recruitment,ii. Selectioniii. Placementiv. Trainingv. Personal developmentvi. Developing system for remuneration

Staffing is important since people differ in their intelligence, knowledge, skills, experience, physical condition, age and attitudes. Therefore, management must understand in addition to the technical and operational competence, the sociological and psychological structure of the work force. This will enable them to select right man for the right job and train and motivate them to increase the organizational effectiveness and productivity.

2.6 DIRECTING

Directing consists of motivating, guiding and supervising the subordinates in their activities. Only giving orders is not directing. This is an important managerial function because the managerial decisions are put in to action through effective directing. Actual activity starts only when manager issues directions to his subordinates so as to what is to be done and how it should be done. The person who directs must have dynamic leadership skill.

Steps in directing:

i. Issue of orders and instructionsii. Guidance and trainingiii. Supervision-(work as per plan, subordinates as directed)

Directions given should be definite, clear cut, understandable, communicable and practicable. A manager can plan and organize, but no tangible results can be obtained until he implements the proposed course of action. This needs directing or actuating which literally means moving in to action.

2.7 MOTIVATING

Motivating means inspiring people to intensify their desire and willingness to perform their duties effectively and cooperate for the achievement of common objectives of the business.

It is the mental preparation of an individual to do a specific job.



Motivation is the act of stimulating someone or oneself to get a desired course of action, to push the right button to get desired action.

The concept of motivation is mainly psychological. It relates to those forces operating within the individual employee or subordinate which imputes him to act or not active in certain ways.

Fundamentals of motivation

1.A person wants to exist and survive and for this he needs basic necessities of life.2.The desire to achieve a goal, for satisfaction or bliss. Basically people are motivated to

put in sincere efforts if they are assured of fulfilling their needs, such as psychological needs, social needs, security needs, ego (needs for self respect) etc.

Classifications of motivation

i. Internal motivation-interests, emotional attachments, burning desires, fighting spirit for some noble cause, ...

ii. External motivation-attractive salary, bonus, praise, incentive, punishment, fear of loss of job, …

Importance of motivation

i. Arise desire to work.ii. Appropriate use of factors of production.iii. Reduction in labor turnover.iv. Increase in production and productivity.v.Basis of cooperation-good employer-employee relationship.

Thus without motivation the workers will not discharge their duties efficiently. Effective motivation is secrete of improved quantity and quality.

2.8 CONTROLLING

Controlling can be defined as:

Setting standards, measuring actual performance, and taking corrective action. It is more than mere evaluation, appraisal or correction.

Verifying whether everything occurs in conformity with the plan adopted, the instructions issued and the principles established.

Necessity of controlling

To ensure that every activity is carried out according to the plan and directions. Control enables the manager to keep a check and coordinating the activities of his

subordinates so as to meet the objectives of the company, economically and effectively.

Essential steps in controlling procedure

1.Setting standards. (output, quality, cost, production targets, time standards, …)2.Checking and reporting of performance.3.Taking corrective action.



Types of control

1.Physical control. (quality and quantity)2.Financial control. (cost per unit of production, cost of material, labor, indirect

expenses)3.Budgetary control. Physical and financial standards for future are determined and

results are compared against the pre-determined standards.

2.9 COORDINATING

Coordination is an ongoing process whereby a manager develops an integrated, orderly and synchronized pattern of group effort among his subordinates and tries to attain unity of effort in the pursuit of a common purpose.

Coordination deals with the task of blending efforts in order to ensure successful attainment of an objective. It is accomplished by means of planning, organizing, actuating and controlling.

Need for coordination by management arises because of:

Numerous persons at work. Subdivisions and complexity of work. Delegation of responsibility and authority. Chances of difference between executives and specialists. Human nature and their problems. Growth in size of organization.

Tools of coordination

Clear cut objectives. Clear cut authority and responsibility of every subordinate. Effective communication. Good human relationship.

Types of coordination

Internal coordination- (departments, branches, sections, …) External coordination- (customers, suppliers, society, government, …) Vertical coordination- (top to bottom or bottom to top) Horizontal coordination-(managements at the same level-purchase, sales, accountant,

finance, …)

2.10 COMMUNICATING

Communication is a process by which instructions, ideas, thoughts or information are transmitted, received and understood, by the persons working in an organization.

Process of effective communication

For every communication, at least two persons are required i.e. a sender and a receiver. The various steps involved are shown below.



Methods of communication

1.Verbal or written2.Formal or informal3.Downward, upward or horizontal communication

Purposes of formal communication

Essentials of communication

For effective communication the following are important points:

1.It must be clear in purpose and intention.2.It has to be participatory.3.It must be simple and the language used has to be understandable and specific.


Creating ideaEncoding TransmissionReceivingDecodingActionFeedbackPurposes of formal communicationDownward-instructions-rationale-policies-feedback-motivationUpward-feedback-suggestions-requests-grieviencesLateral-information-coordination-problem solving


4.It has to attach importance to action rather than words.5.There should be cordial employer-employee relations.

Communication is the flow of accurate information which people want, need and are entitled to have for successful completion of the job. It is an established fact that one of the foundation stones upon which organization rests is a system of communication. Coordination is largely achieved through communications. The importance of effective communication in management is described below.

1.Smooth and unrestricted running of the enterprise.2.Quick decision and implementation.3.Proper planning and coordination.4.Maximum productivity with minimum cost.5.Morale building and democratic management.

2.11 DECISION MAKING

Decision-making, along with leadership and communication is one of the top three attributes a successful manager needs. It is a direct result of thinking and you need to be able to think until it hurts. Decision-making is directed to reaching a goal/objective. It is about the how, what, why, when (and where) of a course of action and of how to overcome obstacles and to solve problems. Decision-making is what turns thought into action: it implies change and requires a decision to be made against a background of uncertainty and risk.

Decision-making skills

You need to be able to choose the action or course of action that is the best for you/your organization to meet its objective(s). An effective decision is one that produces the goods, i.e. gives the desired end result.

It is important to be able to project ahead, to take the expected and unexpected into account, to have contingency plans in case events intrude in such a way as will turn a good decision into a bad one.

There are usually several different decisions that can be taken and pressure to decide. Decide you must, even if trial and error are then used to assess the decision, amend it or overturn it.

Fear of failure must not serve to make you risk-averse; rather it should push you harder to think until it hurts.

The effective decision has these six elements:

1.Defining the objective2.Gathering sufficient information3.Identifying the feasible options4.Evaluating those options5.Making the decision (choosing an option)6.Testing its implementation: by feel, by measurement and by assessment.

An effective decision-maker is always an effective thinker. The three essential skills are those of:



1. analyzing2. synthesizing3. Valuing.

An effective decision-maker knows that quick decisions are not necessarily the best ones and decisiveness only results from thinking things through. Key decisions (and recognizing when you are being asked to make or be involved in the making of key decisions) demand that great care must go into analyzing (the component elements), synthesizing (putting ideas together) and valuing (assessing relative worth).

Characteristics of decision making

1.It is a continuous process.2.The question of decision making comes in to picture only when there are alternatives.3.Decision making is always purposive.4.It is an intellectual process supported by sound reasoning and judgment.5.Decision making is all pervasive in that all levels of management take decisions

though the impact and scope of decisions vary.


2. functions of management

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