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Management: Definitions
“Management is the process of designing and
maintaining an environment in which individuals,
working together in groups, efficiently accomplish
selected aim(s) viz. to create a surplus(s).” ….
Weihrich & Koontz
Political Regulatory
Economic
Organization
Societal
Globalization
Technological
Decisional
•Entrepreneur Opportunity finding& reacting Strategy Plan
•Trouble shooter Handling unexpected disturbance Contingency
•Resource allocator Initiating/approving changes Budgeting
•Negotiator Getting best deal for Organization
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Management: roles & skills
Managerial Skills(Katz & others)
Management: A Systems
Approach
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Systems approach to Management
ENVIRONMENT
Transformation
input output
process
System Boundary
Systems Concepts
System Boundaries and Subsystems
> Systems often consist of numerous subsystems.
> Each subsystem has elements, interactions with
other subsystems, and objectives.
> Subsystems perform specialized tasks for the
overall system.
Subsystem Interfaces and Interface
Problems
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Systems approach to Management …ctd.
Outputs and Inputs
Systems produce Outputs from Inputs – i.e. the
Inputs are converted to Outputs.
Outputs of one subsystem become inputs to
another subsystem.
Outputs must adhere to standards to be useful
or acceptable to the next subsystem.
System Environment
Environment consists of people, organizations
and other systems that supply data to or that
receive data from the system
Managers at different levels perceive
‘Environment” vikramthadeshvar@hotmail.com
differently
Systems approach to Management …ctd.
“Inputs”: 5 Ms of Management
Inputs or the resources managers deal with are:
Man: human resources, both inside and connected with an
organization;
Materials: goods (hard & software, processed or semi-
finished) and services required to create the sellable end
product;
Machines: technology and expertise deployed towards the
transformation process;
Methods: systems, procedures and processes seamlessly
put together for the transformation;
Measurement: score-keeping and in-process monitoring
continuously with due feedback to keep on-course on time.
“Money” is required for generating all theses Ms –
managers need to acquire, deploy, generate and
distribute money as a primary need for business!
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Systems approach to Management …ctd.
Output for “Stake-holders” in Business:
“Stake”: Something wagered or risked;
an interest in an enterprise with contingent gain or
loss …Webster ‘s dictionary
Organizing
Controlling
Outputs
Planning
Staffing
Leading
Inputs
(External
(Goal
To
Oriented)
Orgnzn.)
EXTERNAL ENVIRONMENT(Opportunities,
vikramthadeshvar@hotmail.com Constraints)
Principles of Management 3
Management Process
First Step: Planning
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Planning
Planning involves selecting objectives or
goals and the course of actions to achieve
them:
Provides the bridge to take us from where we
are to where we want to go;
Is a rational approach to achieving pre-
selected objectives - based on innovation,
knowledge and purpose;
Decision making in choosing the best from
alternative courses of action and is integral to
planning;
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Plans as foundation of Management
What kind of
resources
needed?
How to control in
case of deviation
from plan ?
Thevikramthadeshvar@hotmail.com
primacy of Planning
Types of Plans
Mission / Purpose
The basic function or ‘reason for existence’ of
an enterprise/ organization
Budgeting Formulating
(Numberizing Plans) Supporting Comparing &
plans choosing an
alternative
e.g., Sales budget e.g., plan to buy Decision
Operational Expense budget, Equipment, recruit & train making
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Capital expenditure budget Employees, develop product etc
The Planning Process
Planning Period:
Short range plans e.g. material procurement
plan in a factory
Long range plans e.g. product development
plan, plant/production facility installation;
“Urgent” drives out the “Important” – mismatch
between short & long term plans!
Planning horizon must allow for actions to
run their course – requiring ‘commitments’:
Thus “decisions today” are key to good plans;
Long-term plans reap benefits of good short-
term plans.
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Steps in Planning
Being aware of Setting Goals/
Opportunity Objectives
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Hierarchy of Objectives& Org. Levels
Mission Board of
Directors
Overall
Objectives & CEO
Key result areas.
Division Division
Head Head
Divisional objectives Product X Product Y
Top-down
Approach Mission
Overall
Objectives &
Key result areas.
Bottom-up
Divisional objectives Response:
The result
Departmental objectives
Individual objectives
Strategic
choice
The Strategic Planning Process
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Planning Premises
STAR ???
“Hold” “Build”
Cash Use
Cash Cow DOGS
“Harvest” “Divest”
Lo Lo
Hi vikramthadeshvar@hotmail.com Lo
Relative Market Share
Planning Premises & Strategies …ctd.
Management Process:
Organizing for results
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Nature of Organizing
Organizing may be broadly defined as:
1. The identification and classification of required
activities;
2. The grouping of those activities towards attaining
their set objectives;
3. The assignment of those groupings to a responsible
manager, duly empowered;
4. The provision for coordination among, within and
across the groups in the organization.
Organization structures are designed to:
Clarify tasks & responsibilities,
Remove obstacles,
Furnish decision making & communication network
Support attainment of enterprise objectives
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Nature of Organizing …ctd.
The Business Organization Model: “Value Chain” (Porter,1985)
Firm Infrastructure
Technology Development
Procurement
Primary Activities
The margin reflects the reward for the risks run by the company.
All activities together needvikramthadeshvar@hotmail.com
to generate ‘value’ greater than the sum of its costs.
Nature of Organizing …ctd.
The Value Chain: “Primary Activities”
Inbound Logistics: relate to receiving, storing and disseminating
inputs;
$ $ $
# Span of control
$ Car pool
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Nature of Organizing …ctd.
“Departmentation”
Grouping activities & people into departments makes
it conceptually possible to expand organizations to
an infinite degree.
Different patterns have been successfully used to
group activities:
By simple nos. is a simple method – works well for the
lowest levels where work is routine, uniform and non-
specialized; time-grouping is an extension of this method
where shift-working is required;
By enterprise functions – embodies what enterprises
typically do e.g. Production, Engineering, Sales etc. This
method, defined by F.W.Taylor, is arguably the most
prevalent method still used.
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“Departmentation” …ctd.
By territory or geography – is very common when the
geographical spread is wide. It was a device introduced to
speed up management in similar units for easy and swift
communication e.g. Sales: N/E/W/S; Fire Brigade: Camp,
Hinjewadi, Aundh etc.
By Customer/Account orientation – reflecting the primary
interest in nature of markets/business/customer e.g.
Banks: Institutional banking, Small Savings etc.
By Process groups – encountered primarily in specialized/
manufacturing operations where processes are vital e.g.
Advertising: Copy-writing, Creative etc.; Manufacturing:
Steel Melting, Wire-drawing etc.
By Product Lines – has evolved with enterprises becoming
“multi-line” with ‘function’ needing adaptation/integration
to suit specific products e.g. Tata Motors: Passenger
Vehicles / Commercial vehicles
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“Departmentation” …ctd.
By ‘grid’ control – in essence combining the ‘functional’
and the ‘product-line’ patterns to best effect. Functional
excellence is not subjugated to Operational ease.
In ‘projects’, this serves to bring together the diversity
of skills required into one team.
The Strategic Business Unit: companies today are
organizing themselves as ‘companies within a company’
to allow for maximum flexibility and freedom of
operations, especially when the products/businesses are
unconnected e.g. General Electric. Generally, SBU’s
have:
Their own Missions, Goals and Strategies;
Distinct and definable set of competitors;
Deploy and manage resources in key areas;
A reasonable ‘size’.
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“Departmentation” …ctd.
Example of “Grid Control” & S.B.U’s
C.E.O
Sin.
T&D
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Nature of Organizing …ctd.
Span-of-Management
The purpose of organizing is to make human cooperation
effective and is limited by:
the number of persons a manager can ‘supervise’ effectively and
efficiently;
while the total number is dictated by the quantum of work/
nature of task/spread etc. Thus the two dimensions, “Level”
(depth) and “Span of control” (width) are interrelated .
The reason for creating Levels of organization is the limitation in
the span of control. “Effective span” is influenced by:
Training/skill of subordinates and personal contact required;
Clarity of delegation of authority;
Clarity of plans, use of objective standards and communication
techniques;
Rate of change;
Maturity and experience of the manager and organization.
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Span-of-Management …ctd.
Levels, per se, are not desireable:
They are expensive – as they increase, both infrastructure costs
and staffing tends to increase;
Real work is accomplished at the ‘gemba’ (Japanese: workplace)
where the actual value-addition/transformation takes place. The
contribution of levels on top are not directly co- relatable, thus
best avoided;
Communication become complicated – omissions, filterations
and misinterpretations lead to wasted and misdirected effort;
Planning and control become tortuous, requiring complicated
coordination and alignment between levels.
Studies reveal that between 8 to 10 people at ‘higher’ levels
and upto 15 at lower levels is a good “span”. Increasingly,
enterprises are attempting to cut back levels to 5 or less.
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