Management functions. Management of decision- making process.

Management functions. Management functions. Management of decision-Management of decision-making process.making process.

The management process involves The management process involves a wide variety of activities a wide variety of activities

including planning, organizing, including planning, organizing, motivating, and controlling. These motivating, and controlling. These activities are the main functions activities are the main functions

of management. of management.

PLANNINGPLANNING

PlanningPlanning is the conscious, is the conscious, systematic process of making systematic process of making

decisions about goals and decisions about goals and activities that an individual, activities that an individual,

group, work unit, or group, work unit, or organizations pursue in the organizations pursue in the

future. future.

PLANNINGPLANNING

Types of planningTypes of planning Strategic planning Strategic planning Tactical Tactical Operational planningOperational planning

PLANNINGPLANNING

Strategic planning Strategic planning Involves making decisions about the Involves making decisions about the

organization: long-term goals and organization: long-term goals and strategies.strategies.

Have a strong external orientation and Have a strong external orientation and cover major portions of the organization.cover major portions of the organization.

Senior executives are responsible for the Senior executives are responsible for the development and execution of the development and execution of the strategic planstrategic plan

PLANNINGPLANNINGTactical and operational planningTactical and operational planning

Once the organization's strategic goals and plans are identified, Once the organization's strategic goals and plans are identified, they become the basis of planning undertaken by tactical and they become the basis of planning undertaken by tactical and operational managers. Goals and plans become more specific operational managers. Goals and plans become more specific

and involve shorter periods of time as planning moves from the and involve shorter periods of time as planning moves from the strategic level to the operational level. strategic level to the operational level.

Tactical planning Tactical planning translates broad strategic goals and plans translates broad strategic goals and plans into specific goals and plans that are relevant to a definite into specific goals and plans that are relevant to a definite portion of the organization, often a functional area like portion of the organization, often a functional area like marketing or human resources. Tactical plans focus on the marketing or human resources. Tactical plans focus on the major actions that a unit must take to fulfill its part of the major actions that a unit must take to fulfill its part of the strategic plan.strategic plan.

Operational planning Operational planning identifies the specific procedures and identifies the specific procedures and processes required at lower levels of the organization. processes required at lower levels of the organization. Operational managers usually develop plans for very short Operational managers usually develop plans for very short periods of time and focus on routine tasks such as production periods of time and focus on routine tasks such as production runs, delivery schedules, and human resources requirements.runs, delivery schedules, and human resources requirements.

PLANNINGPLANNINGThe major components of the The major components of the

strategic management process are: strategic management process are: establishment of a mission and vision;establishment of a mission and vision; establishing strategic goals;establishing strategic goals; environmental analysis;environmental analysis; internal assessment;internal assessment; formulation and analysis of strategies;formulation and analysis of strategies; selecting the strategy alternative;selecting the strategy alternative; strategy implementation;strategy implementation; strategic control.strategic control.

PLANNINGPLANNING

Establishing a mission and Establishing a mission and visionvision

The mission The mission isis the basic purpose and values the basic purpose and values of the organiza tion, as well as its scope of of the organiza tion, as well as its scope of operations. It is a statement of the operations. It is a statement of the organization's reason to exist. organization's reason to exist.

The strategic visionThe strategic vision moves beyond the moves beyond the mission statement to provide a Perspective mission statement to provide a Perspective on where the company is headed and what on where the company is headed and what the organization can be come. the organization can be come.

PLANNINGPLANNINGEstablishing strategic goalsEstablishing strategic goalsStrategic goals Strategic goals are major targets or end are major targets or end

results that relate to the long-term survival, results that relate to the long-term survival, value, and growth of the organization. value, and growth of the organization.

Strategic managers usually establish goals Strategic managers usually establish goals that reflect both effectiveness (providing that reflect both effectiveness (providing appropriate outputs! and efficiency (high appropriate outputs! and efficiency (high ratio of outputs to inputs). ratio of outputs to inputs).

Typical strategic goals include various Typical strategic goals include various measures of return to shareholders, measures of return to shareholders, profitability, quantity and quality of profitability, quantity and quality of outputs, market share, productivity and outputs, market share, productivity and contribution to society.contribution to society.

Environmental analysisEnvironmental analysis Industry and market analysisIndustry and market analysis: : major product lines and significant market major product lines and significant market

segments in the industry.segments in the industry. Industry growth:Industry growth: growth rates for the entire industry, growth rates for key growth rates for the entire industry, growth rates for key

market segments, projected changes in patterns of growth, and the determinants market segments, projected changes in patterns of growth, and the determinants of growth.of growth.

Industry forces:Industry forces: threat of new industry entrants, threat of substitutes, eco threat of new industry entrants, threat of substitutes, eco nomic power of buyers, economic power of suppliers, and the internal industry nomic power of buyers, economic power of suppliers, and the internal industry rivalry.rivalry.

Competitor analysis: Competitor analysis: major competitors and their market shares. Competitor major competitors and their market shares. Competitor analysis: goals, strategies, strengths, and weaknesses of each major competitor.analysis: goals, strategies, strengths, and weaknesses of each major competitor.

Competitor advantages:Competitor advantages: the degree to which industry competitors have the degree to which industry competitors have Political and regulatory analysisPolitical and regulatory analysis::the level of political activity that the level of political activity that

organizations and as sociations-within the industry undertake.organizations and as sociations-within the industry undertake. Social analysisSocial analysis::current and potential social issues and their effects on the current and potential social issues and their effects on the

industryindustry;;consumer, environmental, and similar activist groups that attempt to consumer, environmental, and similar activist groups that attempt to influence the industry.influence the industry.

Human resources analysisHuman resources analysis: : key labour needs, shortages, opportunities, and key labour needs, shortages, opportunities, and problems «fronting the industry.problems «fronting the industry.

Macroeconomic analysisMacroeconomic analysis: : economic factors that affect supply, demand, economic factors that affect supply, demand, growth, competition, and profitability within the industry.growth, competition, and profitability within the industry.

Technological analysisTechnological analysis: : scientific or technical methods that affect the industry, scientific or technical methods that affect the industry, particularly recent and potential innovations.particularly recent and potential innovations.

Internal analysisInternal analysis Financial analysis Financial analysis examines financial strengths and weaknesses through examines financial strengths and weaknesses through

financial statement such as a balance sheet and an income statement and financial statement such as a balance sheet and an income statement and compares trends to historical and industry figures.compares trends to historical and industry figures.

Human resources assessment Human resources assessment examines strengths and weaknesses of all examines strengths and weaknesses of all levels of management and employees and focuses on key human resources levels of management and employees and focuses on key human resources activities, including recruitment selection, placement, training, labour (union) activities, including recruitment selection, placement, training, labour (union) relationships, compensation, pp motion, appraisal, quality of work life, and relationships, compensation, pp motion, appraisal, quality of work life, and human resources planning.human resources planning.

Marketing audit Marketing audit examines strengths and weaknesses of major marketing examines strengths and weaknesses of major marketing activities or identifies markets, key market segments, and the competitive activities or identifies markets, key market segments, and the competitive position (mark share) of the organization within key markets,position (mark share) of the organization within key markets,

Operations analysis Operations analysis examines the strengths and weaknesses of the examines the strengths and weaknesses of the manufacturing, production or service delivery activities of the organization.manufacturing, production or service delivery activities of the organization.

Other internal resource analyses Other internal resource analyses examine, as necessary and appropriate, examine, as necessary and appropriate, the strengths and weaknesses other organizational activities, such as research the strengths and weaknesses other organizational activities, such as research and development (product ail process), management information systems, and development (product ail process), management information systems, engineering and purchasing.engineering and purchasing.

Core CompetenceCore Competence. . Without question, an effective internal analysis requires a Without question, an effective internal analysis requires a clear grasp at understanding of a company's core competencies. A core clear grasp at understanding of a company's core competencies. A core competence is something a company does especially well relative to its competence is something a company does especially well relative to its competitors. competitors.

BenchmarkingBenchmarking is the process of assessing how well one company's basic is the process of assessing how well one company's basic functions and skills compare to those of some other company or set of compa functions and skills compare to those of some other company or set of compa nies. nies.

PLANNINGPLANNING

Formulation and analysis of Formulation and analysis of strategiesstrategies

A strategy A strategy is a pattern of actions is a pattern of actions and resource allocations designed and resource allocations designed

to achieve the goals of the to achieve the goals of the organization. organization.

PLANNINGPLANNINGLEVELS OF STRATEGIESLEVELS OF STRATEGIES

Corporate StrategyCorporate Strategy

Corporate strategy identifies the set of businesses, markets, or industry in Corporate strategy identifies the set of businesses, markets, or industry in which the organization competes. The corporate strategy of an which the organization competes. The corporate strategy of an organization is sometimes called its business portfolio.organization is sometimes called its business portfolio.

Business StrategyBusiness Strategy

After the top management team and board make the corporate strategy After the top management team and board make the corporate strategy decisions, executives must determine how they will compete in each decisions, executives must determine how they will compete in each business area. Business strategy defines the major actions by which an business area. Business strategy defines the major actions by which an organization builds and strengthens its competitive position in the organization builds and strengthens its competitive position in the marketplace.marketplace.

Functional StrategyFunctional Strategy

The Final step in strategy formulation is to establish the major function The Final step in strategy formulation is to establish the major function strategies. Functional strategies are implemented by each functional strategies. Functional strategies are implemented by each functional area of organization to support the business strategy. The typical area of organization to support the business strategy. The typical functional areas include production, marketing, research and functional areas include production, marketing, research and development, finance and distribution.development, finance and distribution.

PLANNINGPLANNINGSelecting the strategy Selecting the strategy

alternativealternative

Main factors of choice of the strategy Main factors of choice of the strategy are: > purposes; > trend of the are: > purposes; > trend of the market; > competitive position of market; > competitive position of the firm; > risks;> experience of the firm; > risks;> experience of past strategies; > orientation to past strategies; > orientation to owners; > opportunities; > time owners; > opportunities; > time factor.factor.

PLANNINGPLANNINGStrategy implementationStrategy implementation

The basic components of strategy implementation The basic components of strategy implementation are: are:

tactics (short-term strategy agreed to the tactics (short-term strategy agreed to the general long-term plans of man agement);general long-term plans of man agement);

policy (general manual for actions and decision-policy (general manual for actions and decision-making, which facilitates achievement of the making, which facilitates achievement of the purposes);purposes);

procedures (describe actions, which are procedures (describe actions, which are necessary to be undertaken in a definite necessary to be undertaken in a definite situation); rules (determine precisely, what situation); rules (determine precisely, what should be done in a specific individual should be done in a specific individual situation).situation).

PLANNINGPLANNINGStrategic controlStrategic control

A strategic control system is designed to support A strategic control system is designed to support managers in evaluating organization's progress with managers in evaluating organization's progress with its strategy and, when discrepancies exist, in taking its strategy and, when discrepancies exist, in taking corrective action. corrective action.

There are qualitative and quantitative indicators There are qualitative and quantitative indicators of strategyof strategy..

quantitativequantitative (market share, sales volume, expenses (market share, sales volume, expenses level, production efficiency, net profit, turnover rate of level, production efficiency, net profit, turnover rate of personnel, share price, etc.)personnel, share price, etc.)

qualitativequalitative (ability to attract highly qualified (ability to attract highly qualified managers, quality of service reducing of risk, etc.).managers, quality of service reducing of risk, etc.).

ORGANIZING PROCESSORGANIZING PROCESS

An organization is a means of performing the tasks An organization is a means of performing the tasks that are essential achieving an objective more that are essential achieving an objective more

easily. Organizing is the process of creating easily. Organizing is the process of creating organization. Organizing is the activities involved organization. Organizing is the activities involved

in designing an appropriative organizational in designing an appropriative organizational structure, assigning employee duties, and structure, assigning employee duties, and

developing work relationships among people and developing work relationships among people and among tasks. Organizing addresses questions among tasks. Organizing addresses questions such as: Who reports to whom? How are tasks such as: Who reports to whom? How are tasks

linked together? Who responsible for the linked together? Who responsible for the completion of tasks? Who coordinates this group completion of tasks? Who coordinates this group

of people?of people?

ORGANIZING PROCESSORGANIZING PROCESSReasons for OrganizingReasons for Organizing

Main reasons include achieving synergy, avoiding duplication of Main reasons include achieving synergy, avoiding duplication of sources, establishing lines of authority and facilitating sources, establishing lines of authority and facilitating communication.communication.

Achieving SynergyAchieving Synergy. One reason to form organizations is to . One reason to form organizations is to achieve synergistic effects. Synergy is the ability of a whole achieve synergistic effects. Synergy is the ability of a whole system to equal more than sum of its parts. system to equal more than sum of its parts.

Avoiding the Duplication of Resources.Avoiding the Duplication of Resources. A second reason for A second reason for organizing closely related to the first one, is to avoid duplicating organizing closely related to the first one, is to avoid duplicating resources.resources.

Establishing Lines of AuthorityEstablishing Lines of Authority. A third reason for organizing is . A third reason for organizing is to establish lines of authority. As individuals are working, different to establish lines of authority. As individuals are working, different questions at raised such as: "At what pace should everyone questions at raised such as: "At what pace should everyone work?", "What happens if materials are defective?" To keep the work?", "What happens if materials are defective?" To keep the work flowing someone must make decisions, answer these and work flowing someone must make decisions, answer these and other questions and tell others hat should be done specifically and other questions and tell others hat should be done specifically and when. when.

Facilitating CommunicationFacilitating Communication. Finally, organizing fosters better . Finally, organizing fosters better commu nication. In large and even smaller companies, the number commu nication. In large and even smaller companies, the number of people who must communicate may be formidable. of people who must communicate may be formidable.

ORGANIZING PROCESSORGANIZING PROCESSThere is no one best way to organize. However, any organizing effort There is no one best way to organize. However, any organizing effort

typically involves several activities: grouping tasks into jobs, grouping typically involves several activities: grouping tasks into jobs, grouping jobs into departments, and determining authority and channels of jobs into departments, and determining authority and channels of communication. communication.

GROUPING TASKS INTO JOBSGROUPING TASKS INTO JOBS

Job design is the process of grouping tasks into jobs. A job is a set of tasks Job design is the process of grouping tasks into jobs. A job is a set of tasks common to more than one worker. In this grouping, the manager must common to more than one worker. In this grouping, the manager must de cide how many tasks to include in a job and how complex these de cide how many tasks to include in a job and how complex these tasks should be. tasks should be.

GROUPING JOBS INTO DEPARTMENTSGROUPING JOBS INTO DEPARTMENTS

Departmentalization means grouping related jobs to form an Departmentalization means grouping related jobs to form an administrative unit—department, area, or center. A company's administrative unit—department, area, or center. A company's departmentalization serves for its specific purposes and may be unique departmentalization serves for its specific purposes and may be unique to that organization, we have talked about four basic types of to that organization, we have talked about four basic types of departmentalization: functional, customer, Product, and geographic.departmentalization: functional, customer, Product, and geographic.

DETERMINING AUTHORITY RELATIONSHIPSDETERMINING AUTHORITY RELATIONSHIPS

The third activity involved in organizing is determining authority The third activity involved in organizing is determining authority relationships among employees. Usually these authority relationships relationships among employees. Usually these authority relationships flow down j organizational chart, from high positions such as president flow down j organizational chart, from high positions such as president and vice preside down to the lower levels of the organization.and vice preside down to the lower levels of the organization.

MOTIVATIONMOTIVATIONJeremy Bentham’s “The Carrot and the Stick Jeremy Bentham’s “The Carrot and the Stick

Approach” :Approach” : Possibly the essence of the traditional view of people at Possibly the essence of the traditional view of people at

work can be best appreciated by a brief look at the work work can be best appreciated by a brief look at the work of this English philosopher, whose ideas were also of this English philosopher, whose ideas were also developed in the early years of the Industrial Revolution, developed in the early years of the Industrial Revolution, around 1800. Bentham’s view was that all people are around 1800. Bentham’s view was that all people are self-interested and are motivated by the desire to avoid self-interested and are motivated by the desire to avoid pain and find pleasure. Any worker will work only if the pain and find pleasure. Any worker will work only if the reward is big enough, or the punishment sufficiently reward is big enough, or the punishment sufficiently unpleasant. This view - the ‘carrot and stick’ approach - unpleasant. This view - the ‘carrot and stick’ approach - was built into the philosophies of the age and is still to was built into the philosophies of the age and is still to be found, especially in the older, more traditional be found, especially in the older, more traditional sectors of industry.sectors of industry.

MOTIVATIONMOTIVATION

Abraham Maslow’s “Need Abraham Maslow’s “Need Hierarchy Theory” : Hierarchy Theory” :


Frederick Herzberg’s motivation-Frederick Herzberg’s motivation-hygiene theory :hygiene theory :

Frederick has tried to modify Maslow’s need Hierarchy theory. His theory Frederick has tried to modify Maslow’s need Hierarchy theory. His theory is also known as two-factor theory or Hygiene theory. He stated that is also known as two-factor theory or Hygiene theory. He stated that there are certain satisfiers and dissatisfiers for employees at work. there are certain satisfiers and dissatisfiers for employees at work.

He devised his theory on the question : “What do people want from their He devised his theory on the question : “What do people want from their jobs ?” He asked people to describe in detail, such situations when they jobs ?” He asked people to describe in detail, such situations when they felt exceptionally good or exceptionally bad. From the responses that he felt exceptionally good or exceptionally bad. From the responses that he received, he concluded that opposite of satisfaction is not dissatisfaction. received, he concluded that opposite of satisfaction is not dissatisfaction. Removing dissatisfying characteristics from a job does not necessarily Removing dissatisfying characteristics from a job does not necessarily make the job satisfying. He states that presence of certain factors in the make the job satisfying. He states that presence of certain factors in the organization is natural and the presence of the same does not lead to organization is natural and the presence of the same does not lead to motivation. However, their nonpresence leads to demotivation. In similar motivation. However, their nonpresence leads to demotivation. In similar manner there are certain factors, the absence of which causes no manner there are certain factors, the absence of which causes no dissatisfaction, but their presence has motivational impact.dissatisfaction, but their presence has motivational impact.

Vroom’s Valence x Expectancy Vroom’s Valence x Expectancy theory :theory :

The most widely accepted explanations of motivation has been propounded by The most widely accepted explanations of motivation has been propounded by Victor Vroom. His theory is commonly known as expectancy theory. The Victor Vroom. His theory is commonly known as expectancy theory. The theory argues that the strength of a tendency to act in a specific way depends theory argues that the strength of a tendency to act in a specific way depends on the strength of an expectation that the act will be followed by a given on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual to make outcome and on the attractiveness of that outcome to the individual to make this simple, expectancy theory says that an employee can be motivated to this simple, expectancy theory says that an employee can be motivated to perform better when their is a belief that the better performance will lead to perform better when their is a belief that the better performance will lead to good performance appraisal and that this shall result into realization of good performance appraisal and that this shall result into realization of personal goal in form of some reward. Therefore an employee is :personal goal in form of some reward. Therefore an employee is :

Motivation = Valence x Expectancy. Motivation = Valence x Expectancy. The theory focuses on three things :The theory focuses on three things : Efforts and performance relationshipEfforts and performance relationship Performance and reward relationshipPerformance and reward relationship Rewards and personal goal relationshipRewards and personal goal relationship

MOTIVATIONMOTIVATIONMcClelland’s Theory of Needs :McClelland’s Theory of Needs :

David McClelland has developed a theory on three types of motivating David McClelland has developed a theory on three types of motivating needs :needs :

Need for PowerNeed for Power Need for AffiliationNeed for Affiliation Need for AchievementNeed for Achievement

Basically people for high need for power are inclined towards influence Basically people for high need for power are inclined towards influence and control. They like to be at the center and are good orators. They and control. They like to be at the center and are good orators. They are demanding in nature, forceful in manners and ambitious in life. are demanding in nature, forceful in manners and ambitious in life. They can be motivated to perform if they are given key positions or They can be motivated to perform if they are given key positions or power positions.power positions.

In the second category are the people who are social in nature. They try to In the second category are the people who are social in nature. They try to affiliate themselves with individuals and groups. They are driven by affiliate themselves with individuals and groups. They are driven by love and faith. They like to build a friendly environment around love and faith. They like to build a friendly environment around themselves. Social recognition and affiliation with others provides them themselves. Social recognition and affiliation with others provides them motivation.motivation.

People in the third area are driven by the challenge of success and the People in the third area are driven by the challenge of success and the fear of failure. Their need for achievement is moderate and they set for fear of failure. Their need for achievement is moderate and they set for themselves moderately difficult tasks. They are analytical in nature themselves moderately difficult tasks. They are analytical in nature and take calculated risks. Such people are motivated to perform when and take calculated risks. Such people are motivated to perform when they see atleast some chances of success.they see atleast some chances of success.

Control as a function of Control as a function of managementmanagement

All the good planning efforts and brilliant ideas All the good planning efforts and brilliant ideas in the world do little if a firm has no system of in the world do little if a firm has no system of management control. Control, therefore, is an management control. Control, therefore, is an

essential part of effective organizational essential part of effective organizational management. In today's dynamic, management. In today's dynamic,

unpredictable global business world, control unpredictable global business world, control plays a more crucial role than ever before. plays a more crucial role than ever before. Specifically, control helps an organization Specifically, control helps an organization

adapt to changing conditions, the adapt to changing conditions, the magnification of errors, assists in dealing with magnification of errors, assists in dealing with increased complexity helps to minimize costs.increased complexity helps to minimize costs.


The control process consists of four The control process consists of four basic steps: basic steps:

establishing performance establishing performance standardsstandards

measuring performancemeasuring performance comparing performance against comparing performance against

standardstandard evaluation and corrective action. evaluation and corrective action.


Establishing Performance StandardsEstablishing Performance Standards The first step in the control process is to The first step in the control process is to

establish performance standards, targets set by establish performance standards, targets set by management against which actual performance management against which actual performance is compared at a future date. Ideally, is compared at a future date. Ideally, performance standards will be closely related І performance standards will be closely related І organizational goals. Like goals and objectives, organizational goals. Like goals and objectives, performance standards should be stated in very performance standards should be stated in very clear, easily measurable terms, and they should clear, easily measurable terms, and they should be realistic in given both the internal and be realistic in given both the internal and competitive environment, in which the competitive environment, in which the organization operates.organization operates.


Measuring PerformanceMeasuring Performance The second step in the control process is The second step in the control process is

measuring actual performance iii the context measuring actual performance iii the context of the specific activities that management of the specific activities that management wishes to control. In most organizations, this wishes to control. In most organizations, this assessment occurs continually. For example, assessment occurs continually. For example, if a company establishes as a performance if a company establishes as a performance standard a certain maximum acceptable standard a certain maximum acceptable product defect rate, managers must measure product defect rate, managers must measure the rate continually to ensure that all the rate continually to ensure that all products fall below it.products fall below it.


Comparing Performance against Comparing Performance against StandardsStandards

The third step in the control process involves The third step in the control process involves comparing measured act performance against comparing measured act performance against the standards established in step one. Actual the standards established in step one. Actual performance may match the performance performance may match the performance standard exactly, or it may be higher or lower standard exactly, or it may be higher or lower target. Management must decide how much target. Management must decide how much deviation from standards will tolerated before deviation from standards will tolerated before considering a corrective action.considering a corrective action.

Managers should be constantly aware that Managers should be constantly aware that unforeseen conditions that may influence unforeseen conditions that may influence control decisions could occur at any time.control decisions could occur at any time.


Evaluating Performance and Taking Evaluating Performance and Taking Corrective ActionCorrective Action

In the final step of the control process, In the final step of the control process, managers evaluate actual perform ance managers evaluate actual perform ance relative to standards and then take the relative to standards and then take the appropriate action. Performance evaluation appropriate action. Performance evaluation calls not only for quantitative and diagnostic calls not only for quantitative and diagnostic skills, but as already mentioned in the skills, but as already mentioned in the previous step, also for subjective yet crucial previous step, also for subjective yet crucial decision making. Before deciding how to decision making. Before deciding how to respond to deviations between performance respond to deviations between performance standards and actual performance, managers standards and actual performance, managers in charge of control must determine the in charge of control must determine the reason(s) for the deviation. reason(s) for the deviation.

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Management functions. Management of decision- making process.

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