Professional Documents
Culture Documents
goals. It is the art of getting the work done through and with
people in formally organized groups."
Mary Parker Follett defines management as the "art of getting things done through
people". This definition calls attention to the fundamental difference between a
manager and other personnel of an organization. A manager is one who contributes to
the organizations goals indirectly by directing the efforts of others not by performing
the task himself. On the other hand, a person who is not a manager makes his
contribution to the organizations goals directly by performing the task himself.
The term concepts of Management has been interpreted in several ways, some of
which are given below :
1. Management is an Activity
Managemet is an activity just like playing, studying, teaching. As an activity has
been defined as the art of getting things done throught the efforts of other people.
The activities of management are :
a. Interpesonal activities
b. Decisional activities
c. Informative activities
2. Management is a Processs
Management is considered a process, because it involves a series of interrelated
functions. It consists of getting the objectives of an organization and taking steps to
achieve objectives.
Managemet as a process has the following implications :
a. Social Process, management involves interaction among people. Goals can be
achieved only when relations between people are productive. Human factor is
the most important part of the management.
1.
2.
Organizing
The design of pattern of roles and relathionships that constribute to the goal.
Roles are assigned, authority, and responsibility are determined, and provision is
made cooedination. Organizing typically involves the development of the
organization chart, job descriptions, and statements of work flow. (Jones and
Barlett, 2014)
3.
Staffing
The determination of personnel needs and the selection, orientation, training,
and continuing evaluation of the individuals who hold the required positions
identified in the organizing process. Some theorists class the staffing function
within the organizing function, rather than viewing it as a separate function. (Jones
and Barlett, 2014)
4.
Directing
Directing is the function of leading the employees to perform efficiently, and
contribute their optimum to the achievement of organizational objectives. Jobs
assigned to subordinates have to be explained and clarified, they have to be
provided guidance in job performance and they are to be motivated to contribute
their optimum performance with zeal and enthusiasm. The function of directing
thus involves the following sub-functions :
5.
a.
Communication
b.
Motivation
c.
Leadership
Coordinating
Coordinating is the function to establish relationships among various parts of the
organization that they all together pull in the direction of organizational objectives.
It is thus the process of tying together all the organizational decisions, operations,
activities and efforts so as to achieve unity of action for the accomplishment of
organizational objectives.
6.
Reporting
Management reporting is a system of communication, essentially a mechanism for
monitoring the mission of an organization. Normally in the written form of facts
which should be brought to the attention of various levels of management who use
them to take suitable action.
7.
Budgeting
Management Budgeting is a process of measuring and converting plans for the use
of real (i.e. physical resources) into financial values. It is the classic problem of
how to add together quantities of apples and oranges into a meaningful economic
measurement, the only practical way for everyday use is to express their economic
values in terms of monetary costs and revenues.
Planning
Planning is concerned with 'what', 'how, and 'when' of performance. It is
deciding in the present about the future objectives and the courses of action for
their achievement. It this involves:
a. Determination of objectives
b. Forecasting and choice of a course of action
c. Formulation of policies, programmes, budgedts, schedules, to achieve objectives
d. Laying down of procedures and standards of performance.
2.
Organizing
Organizing process results in a structure of the organization. It comprises
organizational positions, accompanying tasks and responsibilities, and a network of
roles and authority-responsibility relationships. Organizing is thus the basic
b.
c.
d.
e.
3.
Actuating
Actuating can be called by various names leading, directing, motivating.
Actuating involves getting the members of the organization to perform in ways that
will help it achieves organizations goals
Task of directing are:
4.
a.
b.
c.
Controling
Controlling implies that objectives, goals and standards of performance exist
and are known to employees and their superiors. It also implies a flexible and
dynamic organization which will permit changes in objectives, plans, programmes,
strategies, policies, organizational design, staffing policies and practices,
leadership style, communication system, for it is not uncommon that employees
a.
b.
c.
Middle
Characteristics of Lower Level:
Lower
1.
Set objectives
Scan environment
Plan and make decisions
Top Level
Top level is the ultimate source of authority and it lays down goals, policies and
plans for the group of organization. It devotes more time on planning and
coordinating functions. It is accountable to the owners of the business of the
overall management. It is also described as the policy making group responsible for
the overall direction and success of all company activities. The authorityof top
management include :
a.
b.
c.
d.
e.
f.
Middle Level
The job of middle level is to implement the policies and plans framed by the top
level. It serves as an essential link between the top level and the lower level or
operative management. They are responsible to the top level for the functioning of
their departments. They devote more time on the organization and motivation
functions of management. They provide the guidance and the structure for a
purposeful enterprise. Without them the top management's plans and ambitious
expectations will not be fruitfully realized. The following are the main authoritesof
middle level :
a. To interpret the policies chalked out by top level.
b. To prepare the organizational set up in their own departments for fulfilling the
objectives implied in various business policies.
Lower level
It is placed at the bottom of the hierarchy of management, and actual operations are
the responsibility of this level of management. Lower level is in direct touch
withthe rank and file or workers. Lower levels authority and responsibility is
limited, as follow:
a. To pass on the instructions of the middle level to workers.
b. To interpret and divide the plans of the management into short-range operating
plans.
c. To involved in the process of decisions-making.
d. To get the work done through the workers.
e. To allot various jobs to the workers, evaluate their performance and report to the
middle level management.
f. To more concerned with direction and control functions of management.
g. To devote more time in the supervision of the workers.
Lower level managementconsists of Superintendents, Foremen, Supervisors.
2.2. SCOPE OF MANAGEMENT SCIENCE
The field of management is very wide, so its needs to be classified into following
categories. Its consists of : financial management, marketing management, production
management, personnel management, total quality management and inventory management.
2.2.1 Financial Management
Financial management seeks to ensure the right amount and type of funds to
business at the right time and at reasonable cost. It comprises the following activities:
1. Estimating the volume of funds required for both long-term and short-term needs of
business.
2. Selecting the appropriate source of funds.
3. Raising the required funds at the right time.
4. Ensuring proper utilisation and allocation of raised funds so as to maintain safety
and liquidity of funds and the creditworthiness and profitability of business, and
5. Administration of earnings
Thus, financial management involves the planning, organising and controlling of the
financial resources.
Financial and accounting management deals with managerial activities related to
procurement and utilization of fund for business purpose. Its sub areas are as follows:
b.
c.
Business activity
d.
3. Financial Institution
a. Investment banks and brokerage activity
b. Deposit taking financial intermediaries
1) Saving and loan associations (S&Ls)
2) Credit unions
3) Commercial banks
c. Investment funds
At some financial institutions, savers have an ownership interest in a pool of
funds rather than owning deposit account. Examples include mutual funds,
hedge funds, and private equity funds.
d. Life insurance companies and pension funds
4. Financial market
There are many differnt financial markets in a developed economy. Each market
deals with a somewhat different type of instrument, customer, or geographic
location.
2.2.2 Marketing Management
Marketing is about identifying and meeting human and social needs. One of the shortest
good definitions of marketing is meeting needs profitably.
1.
Goods
Physical goods constitute the bulk of most countries production and marketing efforts.
Each year, U.S. companies market billions of fresh, canned, bagged, and frozen food
products and millions of cars, refrigerators, televisions, machines, and other mainstays of a
modern economy.
2.
Services
As economies advance, a growing proportion of their activities focuses on the production
of services. The U.S. economy today produces a 7030 services-to-goods mix. Services
include the work of airlines, hotels, car rental firms, barbers and beauticians, maintenance
and repair people, and accountants, bankers, lawyers, engineers, doctors, software
programmers, and management consultants. Many market offerings mix goods and
services, such as a fast-food meal.
3.
Events
Marketers promote time-based events, such as major trade shows, artistic performances,
and company anniversaries. Global sporting events such as the Olympics and the World
Cup are promoted aggressively to both companies and fans.
4.
Experiences
By orchestrating several services and goods, a firm can create, stage, and market
experiences. Walt Disney Worlds Magic Kingdom allows customers to visit a fairy
kingdom, a pirate ship, or a haunted house. There is also a market for customized
experiences, such as a week at a baseball camp with retired baseball greats, a four-day rock
and roll fantasy camp, or a climb up Mount Everest.
5.
Persons
Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other
professionals all get help from celebrity marketers. Some people have done a masterful job
of marketing themselves David Beckham, Oprah Winfrey, and the Rolling Stones.
Management consultant Tom Peters, a master at self-branding, has advised each person to
become a brand.
6.
Places
Cities, states, regions, and whole nations compete to attract tourists, residents, factories,
and company headquarters.
7.
Properties
Properties are intangible rights of ownership to either real property (real estate) or
financial property (stocks and bonds). They are bought and sold, and these exchanges
require marketing. Real estate agents work for property owners or sellers, or they buy and
sell residential or commercial real estate. Investment companies and banks market
securities to both institutional and individual investors.
8.
Organizations
Organizations work to build a strong, favorable, and unique image in the minds of their
target publics. In the United Kingdom, Tescos Every Little Helps marketing program
reflects the food marketers attention to detail in everything it does, within the store and in
the community and environment. The campaign has vaulted Tesco to the top of the UK
supermarket chain industry. Universities, museums, performing arts organizations,
corporations, and nonprofits all use marketing to boost their public images and compete
for audiences and funds.
9.
Information
The production, packaging, and distribution of information are major industries.
Information is essentially what books, schools, and universities produce, market, and
distribute at a price to parents, students, and communities.
10. Ideas
Every market offering includes a basic idea. Charles Revson of Revlon once observed: In
the factory we make cosmetics; in the drugstore we sell hope. Products and services are
platforms for delivering some idea or benefit. Social marketers are busy promoting such
ideas as Friends Dont Let Friends Drive Drunk and A Mind Is a Terrible Thing to
Waste.
A marketer is someone who seeks a response attention, apurchase, a vote, a donation from
another party, called the prospect. If two parties are seeking tosell something to each other, we
call them both marketers. Marketers are skilled at stimulating demand for their products, but
thats a limited view of whatthey do. Just as production and logistics professionals are
responsible for supply management, marketersare responsible for demand management. They
seek to influence the level, timing, and compositionof demand to meet the organizations
objectives. Eight demand states are possible:
1. Negative demand
Consumers dislike the product and may even pay to avoid it.
2. Nonexistent demand
Consumers may be unaware of or uninterested in the product.
3. Latent demand
Consumers may share a strong need that cannot be satisfied by an existing product.
4. Declining demand
Consumers begin to buy the product less frequently or not at all.
5. Irregular demand
Consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis.
6. Full demand
Consumers are adequately buying all products put into the marketplace.
7. Overfull demand
More consumers would like to buy the product than can be satisfied.
8. Unwholesome demand
Consumers may be attracted to products that have undesirable social consequences.
Marketing management not only involves distribution of the product to the buyers,
but also identifying of consumers needs. It may need number of steps. Sub areas are as
follows:
1. Market research: It involves in collection of data related to product demand and
performance by research and analysis of market.
2. Planning and developing suitable product.
3. Setting appropriate prices.
4. Selecting the right channel of distribution.
5. Advertising: This area deals with advertising of product, introducing new product in
market by various means and encourage the customer to buy thee products.
6. Sales management: Sales management deals with fixation of prices, actual transfer
of products to the customer after fulfilling certain formalities and after sales
services.
Key Customer Market
Consider the following key custumer markets:
1.
Consumer markets
Companies selling mass consumer goods and services such as juices,cosmetics, athletic
shoes, and air travel spend a great deal of time establishing a strong brand imageby
developing a superior product and packaging, ensuring its availability, and backing it
withengaging communications and reliable service.
2.
Business markets
Companies selling business goods and services often face well-informedprofessional
buyers skilled at evaluating competitive offerings. Business buyers buy goods to makeor
resell a product to others at a profit. Business marketers must demonstrate how their
productswill help achieve higher revenue or lower costs. Advertising can play a role, but
the sales force, theprice, and the companys reputation may play a greater one.
3.
Global markets
Companies in the global marketplace must decide which countries to enter;how to enter
each (as an exporter, licenser, joint venture partner, contract manufacturer, or
solomanufacturer); how to adapt product and service features to each country; how to price
productsin different countries; and how to design communications for different cultures.
They face differentrequirements for buying and disposing of property; cultural, language,
legal and politicaldifferences; and currency fluctuations. Yet, the payoff can be huge.
4.
The set of interrelated management activities, which are involved in manufacturing certain
products, is called as production management. If the same concept is extended to services
management, then the corresponding set of management activities is called as operations
management.
1. Concept Of Production
Production function is that part of an organization, which is concerned with the
transformationof a range of inputs into the required outputs (products) having the requisite
quality level.Production is defined as the step-by-step conversion of one form of material
intoanother form through chemical or mechanical process to create or enhance the utility
ofthe product to the user. Thus production is a value addition process. At each stage
ofprocessing, there will be value addition.
they would become highly skilled and officient. In the early twentieth century, F.W.tylor
implemented Smiths theories and developed scientific management. From then till 1930,
many techniques were developed prevailing the traditional view. Brief information about the
contributions to manufacturing management is shown in the Tabel.
TABLE Historical Summary Of Operations Management
Date
1776
Contributtion
Specialization of labour in manufacturing
Contributor
Adam Smith
1799
1832
Charles Babbage
1900
Frederick W. Taylor
1900
Frank B. Gilbreth
1901
Henry L. Gantt
1915
F.W. Harris
1927
Elton Mayo
1931
W.A. Shewart
1935
1940
1946
1947
1950
1951
Sperry Univac
1960
L. Cummings, L. Porter
1970
1980
emphasized the
broadening of our field to service organizations. The second, more suitable change
was the beginning of an emphasis on synthesis, rather than just analysis, in
management practices.
3. Production System
The production system of an organization is that part, which produces products of an
organization. It is that activity whereby resources, flowing within a defined system, are
combined and transformed in a controlled manner to add value in accordance with the
policies communicated by management. A simplified production system is shown above.
The production system has the following characteristics:
a.
b.
c.
d.
There exists a feedback about the activities, which is essential to control and improve
system performance.
a.
1) Characteristics
The Job-shop production system is followed when there is:
2) Advantages
a) Following are the advantages of job shop production: Because of
general purpose machines and facilities variety of products can be
produced.
b) Operators will become more skilled and competent, as each job
gives them learning opportunities.
c) Full potential of operators can be utilised.
d) Opportunity exists for creative methods and innovative ideas.
3) Limitations
Following are the limitations of job shop production:
a) Higher cost due to frequent set up changes
b) Higher level of inventory at all levels and hence higher inventory
cost
c) Production planning is complicated
d) Larger space requirements.
b.
Batch Production
Batch production is defined by American Production and Inventory Control
Society (APICS) as a form of manufacturing in which the job passes through
the functional departments in lots or batches and each lot may have a different
routing. It is characterised by the manufacture of limited number of products
produced at regular intervals and stocked awaiting sales.
1) Characteristics
Batch production system is used under the following circumstances:
a) When there is shorter production runs.
b) When plant and machinery are flexible.
c) When plant and machinery set up is used for the production of item in a
batch and change of set up is required for processing the next batch.
d) When manufacturing lead time and cost are lower as compared to job
order production.
2) Advantages
Following are the advantages of batch production:
a) Better utilisation of plant and machinery.
b) Promotes functional specialisation.
c) Cost per unit is lower as compared to job order production.
d) Lower investment in plant and machinery.
e) Flexibility to accommodate and process number of products.
f)
3) Limitations
a) Following are the limitations of batch production:
b) Material handling is complex because of irregular and longer flows.
c) Production planning and control is complex.
d) Work in process inventory is higher compared to continuous
production.
e) Higher set up costs due to frequent changes in set up.
c.
Mass Production
Manufacture of discrete parts or assemblies using a continuous process are
called mass production. This production system is justified by very large
volume of production. The machines are arranged in a line or product layout.
Product and process standardisation exists and all outputs follow the same path.
1) Characteristics
2) Advantages
Following are the advantages of mass production:
a) Higher rate of production with reduced cycle time.
b) Higher capacity utilisation due to line balancing.
c) Less skilled operators are required.
d) Low process inventory.
e) Manufacturing cost per unit is low.
3) Limitations
Following are the limitations of mass production:
a) Breakdown of one machine will stop an entire production line.
b) Line layout needs major change with the changes in the product design.
c) High investment in production facilities.
d) The cycle time is determined by the slowest operation.
d.
Continuous Production
Production facilities are arranged as per the sequence of production operations
from the first operations to the finished product. The items are made to flow
through the sequence of operations through material handling devices such as
conveyors, transfer devices.
4) Characteristics
Continuous production is used under the following circumstances:
a) Dedicated plant and equipment with zero flexibility.
b) Material handling is fully automated.
c) Process follows a predetermined sequence of operations.
d) Component materials cannot be readily identified with final product.
e) Planning and scheduling is a routine action.
5) Advantages
Following are the advantages of continuous production:
a) Standardisation of product and process sequence.
b) Higher rate of production with reduced cycle time.
c) Higher capacity utilisation due to line balancing.
d) Manpower is not required for material handling as it is completely
automatic.
e) Person with limited skills can be used on the production line.
f) Unit cost is lower due to high volume of production.
6) Limitations
Following are the limitations of continuous production:
a) Flexibility to accommodate and process number of products does not
exist.
The terms Human Resource Management (HRM) and Human Resources (HR)
have largely replaced the term personnel management as a description of the
processes involved in managing people in organizations.
Human resource management is defined as a strategic and coherent approach to the
management of an organizations most valued assets the people working there who
individually and collectively contribute to the achievement of its objectives.
1.
2.
a. Organizational effectiveness
Extensive research has shown that such practices can make a significant impact
on firm performance. HRM strategies aim to support programmes for improving
organizational effectiveness by developing policies in such areas as knowledge
management, talent management and generally creating A great place to
work.
b. Human capital management
Human capital can be regarded as the prime asset of an organization and
businesses need to invest in that asset to ensure their survival and growth. HRM
aims to ensure that the organization obtains and retains the skilled, committed
and well-motivated workforce it needs. This means taking steps to assess and
satisfy future people needs and to enhance and develop the inherent capacities
of people their contributions, potential and employability by providing
learning and continuous development opportunities.
c. Knowledge management
Knowledge management is any process or practice of creating, acquiring,
capturing, sharing and using knowledge, wherever it resides, to enhance
learning and performance in organizations (Scarborough et al, 1999). HRM
aims to support the development of firm-specific knowledge and skills that are
the result of organizational learning processes.
d. Reward management
HRM aims to enhance motivation, job engagement and commitment by
introducing policies and processes that ensure that people are valued and
rewarded for what they do and achieve and for the levels of skill and
competence they reach.
e. Employee relations
The aim is to create a climate in which productive and harmonious relationships
can be maintained through partnerships between management and employees
and their trade unions.
f. Meeting diverse needs
HRM aims to develop and implement policies that balance and adapt to the
needs of its stakeholders and provide for the management of a diverse
workforce, taking into account individual and group differences in employment,
personal needs, work style and aspirations and the provision of equal
opportunities for all.
g. Bridging the gap between rhetoric and reality
The research conducted by Grattonet al (1999) found that there was generally a
wide gap between the sort of rhetoric expressed above and reality.
Managements may start with good intentions to do some or all of these things
but the realization of them theory in use is often very difficult. This arises
because of contextual and process problems: other business priorities, shorttermism, limited support from line managers, an inadequate infrastructure of
supporting processes, lack of resources, resistance to change and lack of trust.
3.
management-driven
activity
managementresponsibility;
g. Focused on business values.
the
delivery
of
HRM
is
line
In recent years, Total Quality Management (TQM) has received worldwide attention
and is being adopted in many industries, particularly in developed economies. TQM
may be defined as a continuous quest for excellence by creating the right skills and
attitudes in people to make prevention of defects possible and satisfy customers/users
totally at all times. TQM is an organization-wide activity that has to reach every
individual within an organization.
Oakland has defined Total Quality Management (TQM) is an approach to improving
the effectiveness and flexibility of business as a whole. It is essentially a way of
organizing and involving the whole organization; every department, every activity,
every single person at every level.
TQM is regarded as an integration of various processes characterizing the
behavioural dynamics of an organization. For this, an organization is referred to as a
total system (socio-technical), where all the activities carried out are geared towards
meeting the requirements of customers with efficiency and effectiveness.
Zaire and Simintiras have propounded this viewpoint by stating: Total Quality
Management is the combination of the socio-technical process towards doing the right
things (externally), everything right (internally) first time and all the time, with
economic viability considered at each stage of each process.
Price and Gaskill have identified three dimensions of TQM. They are:
1. The product and service dimension: the degree to which the customer is satisfied
with the product or service supplied;
2. The people dimension: the degree to which the customer is satisfied with the
relationship with the people in the supplying organizations;
3. The process dimension: the degree to which the supplier is satisfied with the internal
work processes, which are used to develop the products and
services supplied to the customers.
2.2.6 Inventory Management
In dictionary meaning of inventory is a detailed list of goods, furniture etc. Many
understand the word inventory, as a stock of goods, but the generally accepted meaning
of the word goods in the accounting language, is the stock of finished goods only.
Inventory management is a science primarily about specifying the shape and
percentage of stocked goods. It is required at different locations within a facility or
within many locations of a supply network to precede the regular and planned course of
production and stock of materials. All organizations keep inventory. Inventory
includes a companysraw materials, work in process, supplies used in operations,and
finished goods. Inventory can be something as simple as a bottle of glass cleaner used
as part of a buildings custodial program or something complex such as a mix of raw
materials and subassemblies used as part of a manufacturing process.
The primary objectives of inventory management are:
1. To minimize the possibility of disruption in the production schedule of a firm for
want of raw material, stock and spares.
2. To keep down capital investment in inventories.
A.
Inventory Costs
Inventory brings with it a number of costs. These costs can include:
1.
Dollars
2.
Space
3.
Labor to receive, check quality, put away, retrieve, select, pack, ship, and account
for
4.
5.
Theft
Inventory costs generally fall into ordering costs and holdingcosts. Ordering, or
acquisition, costs come about regardless ofthe actual value of the goods. These costs
include the salaries ofthose purchasing the product, costs of expediting the
inventory,and so on.
B.
2.
3.
timed product releases, price or term penalties for nonperformance, better verbal
and electronic communications between the parties, etc. This will result in a
lowering of your on-hand inventory needs.
4.
5.
Quantity discounts: Often bulk discounts are available if you buy in large rather
than in small quantities.
6.
Lower ordering costs: If you buy a larger quantity of an item less frequently, the
ordering costs are less than buying smaller quantities over and over again.
A.
STRATEGIC MANAGEMENT
All organizations engage in the strategic management process either formally or
informally. Strategic management is equally applicable to public, private, not-for-profit,
and religious organizations.
a.
b.
c.
Time scales. The strategic time horizon is long. However, it for company in real
trouble can be very short.
d.
e.
Strategic management process involves the entire range of decisions. The strategic
management process requires competent individuals to ensure its success. Therefore, to
understand strategic management, we must know where strategic decisions are made in
organizations.
Inputs to strategic decisions can be generated in a number of ways. Overall, top
management, board of directors, and planning staff tend to be those positions that have
the most significant involvement and influence in the strategic management process of
organizations. The failure of an organization to achieve its objectives can often be
traced to a breakdown at the level of the board or top management. However, the final
responsibility rests with top management.
4. The Strategic Management Process
Strategic management process
decisions and actions that determines the long run performance of a corporation. It
includes environmental observation, strategic planning, formulation, implementation,
evaluation and control.
Crucial considerations :
a) Demand
b) Competition
c) Technology
d) Scarcity
Major steps:
a. First stage ( definitions)
1) Preparations of missions
2) Setting of Objectives
3) Fixation of goals
4) Policies
5) Analysis of environment
b. Second stage ( formulation)
1) Formulation of strategies
2) Implementation of strategies
c. Third stage ( Evaluation)
1) SWOT Analysis
2) Evaluation
5. Strategic Management Models
a.
Andrews Models
b.
Gluecks Models
c.
d.
e.
Koreys Models
f.
B.
Schematic Models
Operation Management
1. Definition
Joseph G .Monks defines Operations Management as the process whereby
resources, flowing within a defined system, are combined and transformed by a
controlled manner to add value in accordance with policies communicated by
management.
The operations managers have the prime responsibility for processing inputs into
outputs. They must bring together under production plan that effectively uses the
materials, capacity and knowledge available in the production facility. Given a demand
on the system work must be scheduled and controlled to produce goods and/or services
required. Control must be exercised over such parameters such as costs, quality and
inventory levels.
2. Resources
Resources are the human, material and capital inputs to the production process.
Human resources are the key assets of an organisation. As the technology advances, a
large proportion of human input is in planning and controlling activities. By using the
intellectual capabilities of people, managers can multiply the value of their employees
into by many times. Material resources are the physical facilities and materials such as
plant equipment, inventories and supplies. These are the major assets of an
organisation. Capital in the form of stock, bonds, and or taxes and contributions is a
vital asset. Capital is a store of value, which is used to regulate the flow of the other
resources.
3. Systems
Systems are the arrangement of components designed to achieve objectives
according to the plan. The business systems are subsystem of large social systems.
In turn, it contains subsystem such as personnel, engineering, finance and
operations, which will function for the good of the organisation. A systems approach to
operations management recognises the hierarchical management responsibilities. If
subsystems goals are pursued independently, it will results in sub-optimization.
A consistent and integrative approach will lead to optimization of overall system
goals. The system approach to specific problems requires that the problem first be
identified and isolated from the maze of the less relevant data that constitute the
environment. The problem abstracted from the overall (macro) environment. Then it
can be broken into manageable (micro) parts and analysed and solutions proposed.
Doing this analysis is advantageous before making any changes. If the solution appears
to solve the problem in a satisfactory way, changes can be made to the real system in an
orderly and predictable way.
The ability of any system to achieve its objective depends on its design and its
control. System design is a predetermined arrangement of components. It establishes
the relationships that must exist between inputs, transformation activities and outputs in
order to achieve the system objectives. With the most structured design, there will be
less planning and decision-making in the operations ofthe system. System control
consists of all actions necessary to ensure that activities conform to preconceived plans
or goals. It involves following four essential elements:
a. Measurement by an accurate sensory device.
b. Feedback of information in a timely manner.
c. Comparison with standards such as time and cost standards.
d. Corrective actions by someone with the authority and ability to correct.
A closed loop control system can automatically function on the basis of data from
within its ownsystem.
4. Transformation and Value Adding Activities
The objective of combining resources under controlled conditions is to transform
them into goodsand services having a higher value than the original inputs. The
transformation process applied willbe in the form of technology to the inputs. The
effectiveness of the production factors in thetransformation process is known as
productivity.The productivity refers to the ratio between values of output per work hour
to the cost of inputs.
The firms overall ratio must be greater than 1, then we can say value is added to
the product.Operations manager should concentrate improving the transformation
efficiency and to increase theratio.
7. Resource Utilisation
Another major objective of operating systems is to utilize resources for the
satisfaction of customerwants effectively. Customer service must be provided with the
achievement of effective operationsthrough efficient use of resources. Inefficient use of
resources or inadequate customer serviceleads to commercial failure of an operating
system.Operations management is concerned essentially with the utilisation of
resources, i.e. obtainingmaximum effect from resources or minimising their loss, under
utilisation or waste.
The extent ofthe utilisation of the resources potential might be expressed in terms
of the proportion of availabletime used or occupied, space utilisation, levels of activity,
etc. Each measure indicates the extent towhich the potential or capacity of such
resources is utilised. This is referred as the objective ofresource utilisation.
8. Operations Objectives
The overall objective of the operations subsystem is to provide conversion
capabilities for meeting the organizations goals and strategy. The sub-goals of the
operations subsystem, must specify the following:
a.
b.
Process characteristics.
c.
d.
Efficiency
e.
f.
g.
h.
i.
j.
k.
should be direct reflections of the organizations mission. Relating these six operations
sub-goals to the broader strategic choices above, it is clear that quality, efficiency, and
dependability (customer service) are reflected in the sub-goals. Flexibility encompasses
adaptability but also relates to product/service and process characteristics: Once choices
about product and process are made, boundaries for meeting the other operations
objectives are set.
Acording to the strategic management and operation management, we can decide
that role of level management as follow:
STRATEGIC
DICISIONS
OWNERS/ BOARD
OF DIRECTORS
TACTICAL
DECISIONS
MANAGERS
OPERATIONAL
DECISIONS
MOST EMPLOYEES
kind of work for which an employee suited and hire and assign workers accordingly.
Management is not responsible for execution of work but they are responsible for how
the work is done. Co-operation between management and workers can enhance the work
and achieve the maximum output.
Taylor called it as Mental Revolution, because it creates the mutual
understanding, trust and confidence between the management and workers for achieving
goal (higher production).
Principles of scientific Management
Under scientific management, Taylor developed the following parameters for
organization.
a) Science not rule of thumb : the first principle of scientific management requires
scientific study and analysis of each element of a job in order to replace the old
rule of thumb approach development of a science for each element of a mans job
requires that decisions should be made on the basis of facts rather than opinions
and beliefs.
b) Scientific selection, training and development of workers : this principles requires
that workers should be selected and trained in accordance with the requirements of
the jobs, to be entrusted to them. Instead of allowing workers to learn themselves,
systematic training and development programmers should designed to improve
their skills and efficiency. Efforts should be made to develop each employee to his
greatest efficiency.
c) Close cooperation between workers and management : close cooperation between
management and workers to ensure that work is done in accordance with the
developed scientific principles. The interests of employer and employees should be
fully harmonised so as to create a mutually beneficial relationship.
i) Less wastage.
3. Administrative management
Henri Fayol was real father of modern Management. Henri Fayol is the French
industrialist in 1841-1925. He was a mining engineer in. Henri Fayol spent his entire
working career in French industry, French cool and iron combine of commentary
fourchambault. Henri Fayol developed a general theory of Business Administration.
Henri Fayol was concerned the principles of organization and the function of
management. Fayol laid the foundation of management as a separate body of
knowledge. He always insisted that if scientific forecasting and proper methods are
used in management than company can get satisfactory results. According to Fayol,
management was not personal talent, it is a knowledge base skill.
Henri Fayols Administrative Management is based on six admin activities, that
are :
a) Technical : Production and manufacture
b) Managerial : Planning, controlling, co-ordination
c) Commercial : Purchasing and selling
d) Financial : Use of capital
e) Accounting : Asset, Liabilities, cost, profits
f) Security : Protection of goods and Person
Fayols fourteen Principles of management. Fayol derived the following
fourteen principles.
a) Division of work: Division of work means specialization. Each job and work
should be divided into small task and should be assigned to specialist of it.
b) Authority and responsibility: Authority means right to give order and command
while responsibility means to accomplish objective.
understanding.
Through
proper
communication,
management
can
easily identified the problem faced by its employees and can easily solve out.
3) Social factors: Social factors are responsible for deciding the level of output.
4) Behavior of workers: workers are not as individual identity but as members of a group
in an organization and they have their own norms and beliefs. Workers behavior
depends upon his mental level and emotions. Workers began to influence their group
behavior towards management.
5) Relationship: Employees do not like order and command. They preferred to maintain
amicable relationship with their co-workers. They want co-operative attitude from
their superiors.
6) Production level: Teamwork and Group psychology increases productivity.
Criticism of Hawthrone Experiments:
1) Hawthrone experiment was not conducted scientifically.
2) In the experiment, various format and structure are not feasible.
3) Eltone Mayo gives more importance to human aspect and ignoring other important
aspects.
4) Group conflict is prevalent in an organization.
5) Hawthrone experiment did not give any recognition to the forces which are
responsible for productivity in the organization.
6) During experiment, Eltone Mayo has assumed that a satisfied employee would be
productive. But the finding was different. There is no link between working condition
and productivity.
Major contributors of Neo-classical theory are:
1) Chris Argyris- He recommended that worker should be given freedom to make their
own judgments.
2) Mary Praker Follett: He referred group influence.
3) Dougals Me Gorgor: he referred two views.
X-theory- it is based on classical theory and
Y-theory- it is based on neo-classical theory.
4) Abraham Maslow: He referred individual needs.
C. Modern Management Theory
Management is one or the other form has existed in every nook and corner of the
world since the dawn of civilization. Modern Management has grown with the growth of
social-economics and scientific institution. Modern view consists that a worker does not
work for only money. They work for their satisfaction and happiness with good living
style. Here Non- financial award is most important factor.
Modern management theories started after 1950s. Modern management theory
focuses the development of each factor of workers and organization. Modern
management theory refers to emphasizing the use of systematic mathematical techniques
in the system with analyzing and understanding the inter-relationship of management and
workers in all aspect. It has following three streams, that are :
1) Quantitative Approach
Quantitative approach also called Operation Research. Quantitative approach is
a scientific method. It emphasizes the use of statistical model and systematic
mathematical techniques to solving complex management problems. Its helps the
management to making decisions in operations. It can only suggest the alternatives
based on statistical data. It cannot take final decision.
It helps the management for improving their decision making by increasing the
number of alternatives and giving faster decisions on any problem. Management can
easily calculate the risk and benefit of various actions. the characteristic of this
approach are as under :
a) Management is essentially decision making and organization is a decision
making unit.
b) Organisational efficiency depends upon the quality of managerial decisions.
c) A problem is expressed in the form o a quantitative or mathematical model
containing mathematical symbols and relationship.
d) The different variables in management can be quantified and expressed in the
form of an equation.
Major contributors in Quantitative Approach are :
Johan MacDonald
George R. Terry
Andrew Szilagyi
2) System Approach
System approach was developed inlate1960s. Herbert A. Simon is the father of
system theory. A System is defined as a set of regularly interacting or inter dependent components that create as a whole unit. The system concept enables us to
see the critical variables and constraints and their interactions with one another.
The main features of systems approach are as follows :
a) An organization is a system consisting of four main parts or sub-systems
namely task, structure, people and environment.
b) The sub-systems of the organization system are interconnected and
interdependent. Therefore, all parts of the organization must be in balance
with one another. Task refers to the nature of jobs and technology used to
perform theory structure is the network of authority relationships including
single and ownership patterns. People constitute the human and social
aspects. Environment sub-system is the aggregate of forces within which
the other sub-system operate.
c) An organization is an open adaptive system which continuously interacts
with its environment. It is also a dynamic system because the equilibrium in
it always keeps on changing. The organization system must, therefore, be in
harmony with its environment.
d) It is the responsibility of management to regulate and modify the system so
as to optimize performance. Management is expected to perform
maintenance and adaptation functions. Maintenance function is concerned
with ensuring the stability and efficiency of the system. Adaptation function
involves adjusting the system to the changing demands of the environment
so as to make it more in tune with the organizations goals.
e) An organization is more than the aggregate of various parts. This is called
synergy. The focus should be on the total system rather than on individual
sub-systems. Several pioneers have made significant contributions to the
development of the systems approach. Notable among them are Ludwig
Von Bertelanffy, Stafford Beer, D. Kutz, R.L. Kahn, R.A. Johnson, Rosenz
Weig, Robert Weener, E.L. Trist, Kenneth Boulding.
Some of the key concepts of the systems approach are :
Synergy : synergy means thaht the whole is greater than the sun of its parts.
This implies that departments within an organization which interact
3) Contingency Approach
Contingency Approach also knows as situational approach. In 1980s, it is
recognized as a key to effective management. This approach accepts the dynamics and
complexities of the organization structure. An organization is affected by its
environment and environment is composed by physical resources, climate, persons,
culture, economic and market conditions and their laws.
The principles of this approach as under :
a.) Contingency approach is situation oriented urging upon the managers to
study, analyse and diagnose the situation. It is to be done in terms of