2. Functions of Management
Transcript of 2. Functions of Management
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2. FUNCTIONS OF MANAGEMENT
2.1 INTRODUCTION Managers should carry out their
activities, which consist of a number of functions, in a systematic way to overcome challenges that arise from different perspectives.
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2. FUNCTIONS OF MANAGEMENT… Functions of ManagementPlanning
ForecastingOrganizing
StaffingDirecting
MotivatingControlling
CoordinatingCommunicatingDecision making
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Manageme
nt
Inside Outside
Present Future Local
Global
Fig. 2.1 Sources of Challenges
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Planning defines who, how, where, when and using which resources to do the what work.Planning
Strategic planning
Operational planning
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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.
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2. FUNCTIONS OF MANAGEMENT… The following questions should be addressed by the
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?
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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 capital•Business standing•Ranking in industrial sector•Market Share •Others. Examples• General 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.
15 Sample corporate valuesInnovation
Honestyquality
Social responsibilityContinuous improvement
StabilityCollaborationAccountability
Trust and opennessEtc…
Fig. 2.2 Sample Values
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Tools for Strategic PlanningMarket researchSWOT analysisSensitivity analysis (what-if, scenarios)External benchmarkingTechnology forecastingProduct life cycle analysis
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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.
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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?
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Tools for Operational Planning Project management including action
planning Design, test and analysis procedures Operational guidelines
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Objectives of planningThe important objectives of planning are:
Planning helps in effective forecasting Planning provides certainty in the activities Planning provides performance standards Planning gives a specific direction to the organization Helps the organization to tune with the environment It provides economy in the management It is very much helpful in preparing the budgets The need for plan arises from constant change Planning is directed towards efficiency
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Steps in planningThe 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:
Determination of objectives Forecasting to assist planning Decide the planning period Collection, classification and processing of information Deciding alternative courses of action Evaluation of alternatives Selection of best plan Subsidiary plans to aid master plan Controlling plans
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Advantages of planning Maximum utilization of resources Minimization of unproductive work Reduces uncertainty Basis for managerial action Avoids bottlenecks in production Improves motivation Facilitates effective delegation of authority Gives competitive edges to the enterprise
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Limitations of planningThough planning facilitates various planning
functions and brings orderliness, stability and continuity of operation, it suffers from certain limitations:
Limitations of forecast Costly affair Influence of external factors Resistance to change/Rigidity and inflexibility
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Elements/components of planning or types of planning
Goals-any achievement of an end point (quantitative)
Objectives-ends towards which activities of a company are directed (derived from goals)
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.
Rules- specific action to be taken or not taken in a given situation. No smoking.
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Elements/components of planning or types of planning…
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.
Programs-precise plan which lays down the operations to be carried out to accomplish a given work.
Schedules- time sequence of the work to be done. Budget-an appraisal of expected expenses against
anticipated income for a future period.
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2.3 FORECASTINGForecasting is estimating and predicting future
conditions and events. e.g., technology, products, marketplace, customers, competition and economy, global supply chains, manpower, capital and facilities.
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Definitions of forecastingi. 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.
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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.
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While making the forecast the following points should be taken in to consideration. 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.
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Purposes of Forecasting Set bounds for possibilities to help focus
on specifics Form basis for setting objectives Promote inter-group coordination Provide basis for resources allocation
(manpower, budget, facilities and business relations - alliances, joint ventures)
Induce innovation through forecasted needs
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Steps to Forecast Identify critical success factors for
achieving company goals Determine forecasting horizon (short,
intermediate and long terms) Select forecasting techniques (e.g., trend
analysis, statistics, intuition, judgment) Predict future states and their probability
of occurrence
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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.
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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.
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Steps in organizingThe process of organizing involves the
following steps: Determination of activities Division of activities Fitting individuals in to jobs Developing relationships in terms of
authorities and responsibilities
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2.5 STAFFING Staffing is filling the positions needed in the
organization structure by appointing competent and qualified persons for the jobs.
Staffing involves: Recruitment, Selection Placement Training Personal development Developing system for remuneration
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Staffing is important since people differ in their intelligence, knowledge, skills, experience, physical condition, age and attitudes.
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.
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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.
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2. FUNCTIONS OF MANAGEMENT… Steps in directing:
Issue of orders and instructions Guidance and training 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.
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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.
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Fundamentals of motivation1. 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.
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Classifications of motivation Internal motivation-interests, emotional
attachments, burning desires, fighting spirit for some noble cause, ...
External motivation-attractive salary, bonus, praise, incentive, punishment, fear of loss of job, …
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Importance of motivation Arise desire to work. Appropriate use of factors of production. Reduction in labor turnover. Increase in production and productivity. 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.
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2.8 CONTROLLINGControlling 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.
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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.
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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.
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Types of control Physical control. (quality and quantity) Financial control. (cost per unit of
production, cost of material, labor, indirect expenses)
Budgetary control. Physical and financial standards for future are determined and results are compared against the pre-determined standards.
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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.
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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.
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Tools of coordination Clear cut objectives. Clear cut authority and responsibility of
every subordinate. Effective communication. Good human relationship.
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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, …)
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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.
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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.
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Creating idea
Encoding
Transmission
Receiving
Decoding
Action
Feedback
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Methods of communication Verbal or written Formal or informal Downward, upward or horizontal
communication
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Purposes of formal communication
Purposes of formal communicationDownwa
rd-
instructions
-rationale-policies
-feedback-
motivation
Upward-feedback
-suggestio
ns-requests
-grievienc
es
Lateral-
information-
coordination
-problem solving
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Essentials of communicationFor effective communication the following are
important points: It must be clear in purpose and intention. It has to be participatory. It must be simple and the language used has to be
understandable and specific. It has to attach importance to action rather than
words. There should be cordial employer-employee
relations.
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The importance of effective communication in management is described below.
Smooth and unrestricted running of the enterprise.
Quick decision and implementation. Proper planning and coordination. Maximum productivity with minimum
cost. Morale building and democratic
management.
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DECISION MAKING Decision-making, along with leadership and
communication is one of the top three attributes of 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.
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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).
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.
Fear of failure must not serve to make you risk-averse; rather it should push you harder to think until it hurts.
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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.
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Characteristics of decision making It is a continuous process. The question of decision making comes in to
picture only when there are alternatives. Decision making is always purposive. It is an intellectual process supported by
sound reasoning and judgment. Decision making is all pervasive in that all
levels of management take decisions though the impact and scope of decisions vary.