Eng Man Midterms Outline PDF

LESSON 1 INTRODUCTION TO ENGINEERING MANAGEMENT “Engineers- are often faced with responsibilities requiring outputs that will depend on the individual accomplishments of subordinates. Managing people- is one area where the engineer is expected to be lea...

LESSON 1 INTRODUCTION TO ENGINEERING MANAGEMENT “Engineers- are often faced with responsibilities requiring outputs that will depend on the individual accomplishments of subordinates. Managing people- is one area where the engineer is expected to be least prepared. “Yet, many are hoping that organizations will continuously turn out useful and innovative products and service, unaware that many of these organizations are under the direction of professional engineers.” – Roberto G. Medina FUNCTIONS OF ENGINEERS IN DIFFERENT AREAS ► Production of more food for fast growing world population ► Elimination of air and water pollution ► Solid waste disposal and materials recycling ► Reduction of noise in various forms ► Supplying the increasing demand for energy ► Supplying the increasing demand for mobility ► Preventing and solving crimes ► Meeting the increasing demand for communication facilities AREAS OF SPECIALIZATION 1. Research- Where the engineer is engaged in the process of learning about nature and codifying this knowledge into usable theories. 2. Design and Development- Where the engineer undertakes the activity of turning a product concept to a finished physical item. Design for manufacturability and value engineering teams are charged with improvement of designs and specifications at the research, development, design, and production stages of product development. 3. Testing- Where the engineer works in a unit where TYPES OF MANAGERS new products or parts are tested for workability. Organizational Position Functional Title 4. Manufacturing- Where the engineer is directly in Level charge of production personnel or assumes Top Managers Executives President responsibility for the product. (have managers VP, Production 5. Construction- This is where the construction as subordinates) VP, Sales engineer is either directly in charge of the VP, HR construction personnel or may have responsibility for Chief Financial the quality of the construction process. Officer 6. Sales- Where the engineer assists the company’s Middle Managers Managers Production Managers customers to meet their needs, especially those that (Have managers or Directors Sales Director require technical expertise. as HR Manager 7. Consulting- Where the engineer works as consultant subordinates) Finance Manager of any individual or organization requiring his First Line Supervisors Production Supv. services. Managers Regional Sales Mgr. 8. Government- Where the engineer may find (Have Asst. HR Manager employment in the government performing any of nonmanagers as Chief Bookkeeper the various tasks in regulating, monitoring, and subordinates) controlling the activities of various institutions, public or private. 9. Teaching- Where the engineer gets employment in a LESSON 3: WHAT IS ENGINEERING MANAGEMENT school and is assigned as a teacher of engineering courses. Some of them later become deans, vice Engineering management refers to the activity combining "technical knowledge with the ability to organize and presidents, and presidents. coordinate worker power, materials, machinery, and money. 10. Management- Where the engineer is assigned to manage groups of people performing specific tasks. First phase of engineering management- When the engineer is assigned to supervise the work of even a few people. Engineering management main responsibility- is to lead his LESSON 2 THE ENGINEER IN VARIOUS group into producing a certain output consistent with the TYPES OF ORGANIZATION required specifications. The Engineer in Various Types of Organization Level One- Those with minimal engineering jobs General managership or presidency- The top position an like retailing firms. engineer manager may hope to occupy of any firm. Level Two- Those with moderate degree of engineering jobs like transportation companies Management- defined as the creative problem solving- Level Three- Those with high degree of engineering process of planning, organizing, leading, and controlling: an jobs like construction firms organization's resources to achieve its mission and objectives. THE AUSTRALIAN EDMUND YOUNG ▪ Directing the actions of a group to accomplish a desired goal "Management"- has been one of the most abundant and or objective in the most efficient manner misused words in the 20th century English language It has been a "fad" word as well. THE PROCESS OF MANAGEMENT Management is a process consisting of planning, organizing, Civil engineers- discuss river basin management and costal directing (or leading), and controlling. management, management seek to: AIDS management, garbage collectors are now "waste ▪ find out the objectives of the organization, management experts," ▪ think of ways on how to achieve them June Fonda the glamorous Hollywood actress has a "school ▪ decide on the ways to be adapted and the material resources of figure management” to be used ▪ determine the human requirements of the total job MCFARLAND ▪ assign specific tasks to specific persons Manage- seems to have come into English usage directly ▪ motivate them from the Italian maneggiare, meaning "to handle," ▪ and provide means to make sure that the activities are in the especially to handle or train horses. right direction It traces back to the Latin word manus, "hand." ▪ In the early sixteenth century manage was gradually extended to the operations of war and used in the general REQUIREMENTS FOR THE ENGINEER MANAGER’S sense of taking control, taking charge, or directing. JOB ▪ Management was originally a noun used to indicate the 1. a bachelor's degree in engineering from a reputable process for managing, training, or directing. school; In some cases, a master's degree in ▪ It was first applied to sports, then to housekeeping, and only engineering or business management is required; later to government and businesses. 2. a few years experience in a pure engineering job; McFarland continues by identifying "FOUR IMPORTANT 3. training in supervision; USES OF THE WORD MANAGEMENT,: 4. special training in engineering management (1)an organizational or administrative process; (2) a science, discipline, or art; THREE GENERAL PRECONDITIONS FOR (3) the group of people running an organization; and ACHIEVING LASTING SUCCESS AS A (4) an occupational career MANAGER. (Kreitner) ► 1. ability According to some of these authors, management is: ► 2. motivation to change (Albanese) The work of creating and maintaining ► 3. opportunity. environments in which people can accomplish goals efficiently and effectively ABILITY (Bedeian) The process of achieving desired results Managerial ability refers to the capacity of an engineer through efficient utilization of human and manager to achieve organizational objectives effectively material resources and efficiently (Certo) The process of reaching organizational Effectiveness- according to Higgins, refers to a goals by working with and through people description of "whether objectives are accomplished", and other organizational resources while efficiency is a description of the relative number of (Griffin) A set of activities (including planning and resources used in obtaining effectiveness." decision making, organizing, leading, and controlling) directed at an organization’s MOTIVATION TO CHANGE resources (human, financial, physical, and John B. Miner- management researcher who developed a information) with the aim of achieving psychometric instrument to measure objectively an organizational goals in an efficient and individual's motivation to manage. effective manner The test is anchored to the following dimensions: (McFarland) The process by which managers create, 1. Favorable attitude toward those in positions of direct, maintain, and operate purposive authority, such as superiors. 2. Desire to engage in games organizations through coordinated, or sports competitions with peers. cooperative human effort 3. Desire to engage in occupational or work-related (Pringle, The process of acquiring and combining competition with peers. Jennings human, financial, informational, and 4. Desire to assert oneself and take charge. and physical resources to attain the 5. Desire to exercise power and authority over others. Longnecker) organization's primary goal of producing a 6. Desire to behave in a distinctive way, which includes product or service desired by some segment standing out from the crowd. of society 7. Sense of responsibility in carrying out the routine duties associated with managerial work. Albanes- provides a set of definitions of the word High scores in the foregoing dimensions are associated "management" suggested by a sample of business executives: with high motivation to manage. ▪ Being a respected and responsible representative of the company to your subordinates OPPORTUNITY ▪ The ability to achieve willing and effective accomplishments Successful managers- become possible only if those from others toward a common business objective having the ability and motivation are given the ▪ Organizing and coordinating a profitable effort through good opportunity to manage. decision making and people motivation The opportunity for successful management has two ▪ Getting things done through people requirements: ▪ The means by which an organization grows or dies 1. Obtaining a suitable managerial job, and ; ▪ The overall planning, evaluating, and enforcement that goes 2. Finding a supportive climate once on the job. into bringing about"the name of the game"-profit Newspaper advertisements abound with needs for ▪ Keeping your customers happy by delivering a quality engineer managers. product at a reasonable cost Supportive climate is characterized by the recognition of The use of penalties is only one-and often the least managerial talent through financial and nonfinancial effective mechanism for handling disturbances. rewards. 3. The resource allocator role of distributing the (normally scarce) resources of money, labor, MANAGERIAL ROLES-WHAT MANAGERS DO materials. and equipment where they will provide Henry Mintzberg Managerial Roles greatest benefit to the organization. A. Interpersonal 4. The negotiator role of bargaining with suppliers B. Informational or customers, or subordinates, peers, or superiors, to C. Decisional roles. obtain agreements favorable to the enterprise (or at A. Interpersonal least the portion of it for which the manager is 1. The figurehead role responsible). 2. The leader role 3. The liaison role Henri Fayol, the famous French mining engineer and executive, divided managerial activities into five "elements": 1.The figurehead role - It involves the ceremonial ▪ Planning or legal actions of the symbolic head of an ▪ Organizing organization in welcoming dignitaries and ▪ Command signing official documents, largely outward ▪ Coordination relationships. ▪ Control. 2. The leader role- It is the widely recognized downward relationship of selecting, guiding, and "There have been no new ideas, research findings, or motivating subordinates. techniques that cannot readily be placed in these 3. The liaison role- It consists primarily of the classifications." horizontal relationships with peers and people in - Harold Koontz other organizations that are built and nurtured for mutual assistance. The modern term Planning networking is much the same. - It involves selecting missions and objectives and the actions to achieve them B. Informational - It requires decision making, that is. choosing future courses 1. The monitor role of action from among alternatives. 2. The disseminator role Organizing 3. The spokesman [or spokespersons] role - It is that part of managing that involves establishing an intentional structure of roles for people to fill in an 1. The monitor role - It involves collecting information enterprise. about both internal operations and external events. Staffing This is done by reviewing activities and reading [included by most authors with Organizing] involves filling, reports internally, attending professional meetings or and keeping filled, the positions in the organization structure. trade shows, and reading the professional and trade literature to monitor the external environment and Leading understand the trends that will affect the future of the - It is influencing people to strive willingly and enterprise. The researcher (often a supervisor) who enthusiastically toward the achievement of organization performs this function is known as a gatekeeper. and group goals. 2. The disseminator role- It involves the transmission - It has to do predominantly with the interpersonal aspect of information internally to subordinates, superiors, of managing and peers so that everyone has the information they Controlling need to know to do their job. The manager here acts - It is the measuring and correcting of activities of as a sort of "telephone switchboard“ in transmitting subordinates to ensure that events conform to plans. information. This role as the source of information, if carefully handled, and strengthen a manager's formal LESSON 4: DECISION MAKING authority. Good decisions - will provide the right environment for 3. The spokesman [or spokespersons] role - It is continuous growth and success of any organized effort. normally carried out by higher management. DECISION-MAKING Involves speaking for the organization to the press, - responsibility of the engineer manager. the public, and other external groups. In an internal - "the process of identifying and choosing alternative courses version of this role, which might be called advocate, of action in a manner appropriate to the demands of the successful supervisors "carry the ball" for their situation”. subordinates to get the resources they need or the rewards they have earned. VARIOUS MANAGEMENT LEVELS C. Decisional roles -top, middle, and lower levels 1. The entrepreneurial role 2. The disturbance handler role VARIOUS MANAGEMENT FUNCTIONS 3. The resource allocator role -planning, organizing, directing, and controlling. 4. The negotiator role DECISION MAKING (NICKEL &OTHERS) 1. The entrepreneurial role of initiating change, - the heart of all the management functions assuming risk, and transforming ideas into useful 8 RATIONAL DECISION-MAKING PROCESS according products. to DAVID H. HOLT" is a process involving: 2. The disturbance handler role of dealing with unforeseen problems or crises and resolving them. ▪ 1. DIAGNOSE PROBLEM - first move must to identify the problem.  CHOICE-MAKING - refers to the process of selecting PROBLEM - exists when there is a difference between among alternatives representing potential solutions to a an actual situation. problem (can be ranked from best to worst on the basis of some factors like benefit, cost, or risk.) ▪ 2. ANALYZE ENVIRONMENT - identification of constraints, which may be spelled out as either internal or ▪ 7. IMPLEMENT DECISION - after decision making that external limitations. (SWOT ANALYSIS) is necessary, or decision making will be an exercise of futility. - At this stage, the resources must be made available so that - PESTEL analysis (Political, Economic, Social, the decision may be properly implemented. Technological, Environmental, Legal) IMPLEMENTATION - carrying out the decision so that the 3 INTERNAL LIMITATIONS objectives sought will be achieved. 1. Limited funds available for the purchase of equipment. 2. Limited training on the part of employees. ▪ 8. EVALUATE AND ADAPT DECISION RESULTS - 3. Ill-designed facilities. (LAST STAGE) -- use control and feedback mechanisms to ensure results 3 EXTERNAL LIMITATIONS and to provide information for future decisions. 1. Patents are controlled by other organizations. -- engineer manager will find out whether or not the 2. A very limited market for the company's products and desired result is achieved. services exists. -- (ACHIEVED = GOOD; NOT ACHIEVED = FURTHER 3. Strict enforcement of local zoning regulations. ANALYSIS) 2 COMPONENTS OF THE ENVIRONMENT FEEDBACK - process which requires checking at each stage 1. INTERNAL - refers to organizational activities within a of the process to assure that the alternatives generated,….. firm that surrounds decision making CONTROL - actions made to ensure that activities performed 5 IMPORTANT ASPECTS OF THE INTERNAL match the desired activities or goals, that have been set. ENVIRONMENT (WHAT, WHO, WHY, WHEN, WHERE, HOW) 1. ORGANIZATIONAL ASPECTS - like org. Structures, policies, procedures, rules, ability of management, etc. 2 APPROACHES IN SOLVING PROBLEM 2. MARKETING ASPECTS - like product strategy, 1. QUALITATIVE EVALUATION - evaluation of promotion strategy, etc. alternatives using intuition and subjective judgment. 3. PERSONNEL ASPECTS - recruitment practices, incentives systems, etc. STEVENSON states that managers tend to use the qualitative 4. PRODUCTION ASPECTS - plant facility layout, approach when: inventory control, etc. 5. FINANCIAL ASPECTS - liquidity, profitability, etc. ► 1. The problem is fairly simple. ► 2. The problem is familiar. 2. EXTERNAL - refers to variables that are outside the ► 3. The costs involved are not great. organization and not typically within the short-run control of ► 4. Immediate decisions are needed. top management. EX: (Government, Labor Unions, Suppliers, Banks, Public's, 2. QUANTITATIVE EVALUATION - evaluation of Competitors, Clients, Engineers) alternatives using any technique in a group classified as rational and analytical. ▪ 3. ARTICULATE PROBLEM OR OPPORTUNITY - ▪ 4. DEVELOP VIABLE ALTERNATIVES TYPES OF QUANTITATIVE TECHNIQUES ► Steps: ► 1. INVENTORY MODELS - consist of several types all ► 1. Prepare a list of alternative solutions designed to help the engineer manager make decisions ► 2. Determine the viability of each solutions regarding inventory. ► 3. Revise the list by striking out those which are not ⚫ Economic Order Quantity Models ▪ this one is used to Viable calculate the number of items that should be ordered at one time to minimize the total yearly cost of placing ▪ 5. EVALUATE ALTERNATIVES - a necessary orders and carrying the items in inventory. evaluation of the remaining alternatives is a step after ⚫ Production Order Quantity Model ▪ an economic determining the viability of the alternatives and a revised list order quantity technique applied to production orders has been made. ⚫ Backorder inventory model ▪ used for planned shortages ► ANALYTIC HEIRARCHY PROBLEM ⚫ Quantity Discount Model ▪ used to minimize the total ► MULTI CRITERIA DECISION MAKING cost when quantity discount are offered by suppliers ► PUGH’s MATRIX ⚫ Queuing Theory - describes how to determine the ► FACTOR RATING METHOD number of service units that will minimize both customer waiting time and cost of service. (applicable in SOUDER (sggst) - alternatives must be analyzed and companies where waiting lines are a common situation) evaluated in terms of VALUE, COST, RISK CHARACTERISTICS. ► 3. NETWORK MODELS - models where large complex tasks are broken into smaller segments that can be managed VALUE OF THE ALTERNATIVES - refers to benefits independently. that can be expected. TWO MOST PROMINENT NETWORK MODELS RISK CHARACTERISTICS - refer to the likelihood of 1. THE PROGRAM EVALUATION REVIEW achieving the goals of the alternatives. TECHNIQUE (PERT) ▪ a technique which enables engineer managers to schedule, ▪ 6. MAKE A CHOICE - point where he must be convinced monitor, and control large and complex projects by employing that all the previous steps were correctly undertaken. three-time estimates for each activity. 2. THE CRITICAL PATH METHOD (CPM) (b) considering the whole complex of consequences that ▪ this is a net work technique using only one time factor per would follow on each choice, activity that enables engineer managers to schedule, monitor, (c) with the system of values as criterion singling out one and control large and complex projects. from the whole set of alternatives. ► 4. FORECASTING - instances when engineer managers RATIONAL DECISION MAKING - consists of optimizing, make decisions that will have implications in the future. or maximizing, the outcome by choosing the single best -- 'The collection of past programming is very useful as a from among all possible ones, which is the approach in the decision-making tool when supply and demand limitations at planning/decision making model. plants, warehouse, or market areas are constraints upon the system. Simon believes that actual behavior falls short, in at least three ways, of objective rationality: ► 5. REGRESSION ANALYSIS - a forecasting method that examines the association between two or more variables. It 1. Rationality requires a complete knowledge and uses data from previous periods to predict future events. anticipation of the consequences that will follow on each choice. In fact, knowledge of consequences is always SIMPLE REGRESSION - 1 independent variable fragmentary. MULTIPLE REGRESSION - 2 or more independent variable 2. Since these consequences lie in the future, imagination must supply the lack of experienced feeling in attaching ► 6. SIMULATION - model constructed to represent reality, value to them. But values can be only imperfectly anticipated. on which conclusions about real-life problems can used. -- highly sophisticated tool by means of which the decision 3. Rationality requires a choice among all possible maker develops a mathematical model of the system under alternative behaviors. In actual behavior, only a few of these consideration. possible alternatives ever come to mind. -- does not guarantee an optimum solution, but it can evaluate the alternatives fed into the process by the decision-maker. 3. Level of Uncertainty ▪ Decisions may also be classified as being made under ► 7. LINEAR PROGRAMMING - a quantitative technique conditions of certainty, risk, or uncertainty, depending on that is used to produce an optimum solution within the bounds the degree with which the future environment determining imposed by constraints upon the decision. the outcome of these decisions is known. -- useful as a decision-making tool when supply and demand limitations at plants, warehouse, or market areas are ► Categories of Decision Making constraints upon the system. ▪ Decision making under certainty: we are certain of the future state of nature (or assume we are). Linear programming ► 8. SAMPLING THEORY - quantitative technique where is a tool for the decision making under certainty. samples of populations are statistically determined to be used for a number of processes, such as quality control and LINEAR PROGRAMMING - common techniques for marketing research. decision making under certainty. It is a desired benefit (such -- if expensive it provides alternatives as profit) can be expressed as a mathematical function (the -- saves time and money value model or objective function) of several variables. ► 9. STATISTICAL DECISION THEORY - rational way ▪ Decision making under risk: expected value, decision trees, to queuing theory, and simulation -- one assumes that there conceptualize, analyze, and solve problems in situations exist a number of possible future states of nature Nj. involving limited, or partial information about the decision environment. DECISION TREES - provides another technique used in finding expected values. It begins with a single decision node, BAYESIAN ANALYSIS is to revise and update the initial from which a number of decision alternatives radiates. assessments of the event probabilities generated by the alternative solutions. Risk as variance - Another common meaning of risk is variability of outcome, measured by the variance or (more BAYES CRITERION - selects the decision alternative often) its square root, the standard deviation. having the maximum expected payoff, or the minimum expected loss if he is working with a loss ▪ Decision making under uncertainty: game theory -- table. Uncertainty occurs when there exists several (i.e., more than one) future states of nature Nj, but the TYPES OF DECISIONS probabilities Pj of each of these states occurring are 1. Routine and nonroutine decisions not known. ⚫ ROUTINE focusing on well-structured situations that recur frequently, involve standard decision procedures LESSON 5 and entail a minimum of uncertainty. (payroll processing, FUNCTION OF MANAGEMENT: reordering standard inventory items, or paying suppliers.) PLANNING / COORDINATING = 90% of management decision Nature of Planning ⚫ NONROUTINE “deal with unstructured situations or a There are many instances when managers are novel, nonrecurring nature”,often incomplete knowledge, overwhelmed by various activities which at times be high uncertainty, and the use of subjective judgment or cloud his judgment. even intuition, where “no alternative can be proved to be This must be expected since anybody who is the best possible solution to the particular problem.” confronted by several situations happening simultaneously will lose sight of the more important 2. Objective versus bounded rationality concerns. Such rational decisions are made by To minimize mistakes in decision-making, planning (a) viewing the behavior alternatives prior to decision in panoramic[exhaustive (thorough)] fashion is undertaken.  A plan, which is the output of planning, provides a The Planning/Decision-Making Process methodical way of achieving desired results. On the other hand, chronic (perennial) problems or In the implementation of activities, the plan serves as opportunities often go unrecognized. a useful guide. Assumptions about the environment (premises) need Without the plan, some minor tasks may be afforded to be stated, and the solution found will be valid only major attention which may, later on, hinder the if these assumptions prove true. accomplishment of objectives. Finally, the constraints or limitations bounding the solution must be defined. A Challenge in Planning: Information bearing on alternative solutions is The management of an engineering firm was able to then gathered, and alternative solutions are identify the need to hire additional three employees. formulated. The manager proceeded to invite applicants, screen This is the most creative step in problem solving, them, and finally hired three of them. since alternatives that are not considered are lost. When the hiring expense report was analyzed, it Simply stating an alternative is not enough—each involved more than double the amount spent by other concept must be fleshed out in enough detail that its firms in hiring the same number of people. benefits and disadvantages can be effectively evaluated. When an inquiry was made, it was found out that the At the same time, some “value model” or measure manager committed some errors of judgment. of merit—quantitative or qualitative—needs to be defined, against which alternatives can be evaluated. For instance, he used an expensive advertising layout The solution that best satisfies this value model is in a newspaper when a simple message will do. then recommended. Identification of alternatives often leads to a search Also, it was found out that the absence of a hiring for more information. plan contributed to the high cost of hiring. Evaluation often leads to modification or combination of alternatives to find a new one that “FAILURE IS NOT AND OPTION” combines the advantages of several. - From the movie “Apollo 13” After the solution is put into effect (implemented), it What is PLANNING? is important to check back later to determine if the According to Nickels and others: problem as stated was really resolved by the solution. It refers to "the management function that involves Often, there will be unexpected secondary effects anticipating future trends and determining the best strategies that, once realized, need to be defined as a new and tactics to achieve organizational objectives." This definition useful because it relates the future to what problem, and the process begins anew. could be decided now. Problem solving/decision making is, therefore, more According to Aldag and Stearns: often an iterative process, involving feedback at It is the selection and sequential ordering of tasks required to several steps before the best resolution is found. achieve an organizational goal. This definition, centers on the activity required to accomplish PLANNING AT VARIOUS MANAGEMENT the goals. LEVELS According to Cole and Hamilton: Planning activities undertaken at various levels are as It is deciding what will be done, who will do it, where, when follows: and how it will be done, and the standards to which it will be ► 1. Top management level done. ▪ strategic planning For our purpose, it will suffice to define planning as: ► 2. Middle management level selecting the best course of action so that the desired result ▪ intermediate planning may be achieved. It must be stressed that the desired result ► 3. Lower management level takes first priority and the course of action chosen is the ▪ operational planning means to realize the goal. Strategic Planning The term strategic planning refers to the process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals. The top management of any firm is involved in this type of planning. In strategic planning, the whole company is considered, specifically its objectives and current resources. The output of strategic planning is the strategic plan which spells out "the decision about long-range goals and the course of action to achieve these goals.  A vision statement describes in graphic terms where the goal setters want to position The basic vision, purpose, or mission of an themselves in the future. organization must next be interpreted in terms of A mission statement resembles a vision goals and objectives. statement but has a more immediate business Goals give purpose and direction to accomplish focus with a time horizon. the mission of an organization. The mission statement sets forth what the Strategies are statements about the way company is attempting to do and is usually what objectives are to be achieved. They are relevant the public sees. only to the extent that they help meet the The role of an organization’s mission and objectives. vision is to align work toward meeting customer official goals - it is pursuing in its public statements expectations. Not all companies have both a mission and operative goals that it actually is pursuing. vision. SWOT - This analysis should address all factors Peter Drucker believes that objectives need to be established in all areas on which the organization’s survival depends. He that are key to the organization’s future success. distinguishes eight such key result areas: (Strengths, Weaknesses, Opportunities, and ► 1. Market Share Threats) ► 2. Innovation ► 3. Productivity and Quality Strengths and weaknesses are basically internal to an ► 4. Physical and Financial Resources organization and may include the following: ► 5. Manager Performance and Development ▪ Management ► 6. Worker Performance and Attitude ▪ Marketing ► 7. Profitability ▪ Technology ► 8. Social Responsibility ▪ Research ▪ Finances 1. Market share. ▪ Systems ▪ Market share is the ratio of dollar sales of an enterprise in a particular market to the total sales of all competitive products The external opportunities and threats may and services in that market. be in some of the following areas: ▪ Customers ▪ Firms with a small market share usually are less profitable ▪ Competition because they have fewer sales over which to spread the fixed ▪ New technologies costs of operation, and managers often decline to enter or ▪ Government policies remain in a specific market unless they can either achieve a satisfactory market share or can define a smaller “market Use the SWOTs to help identify possible strategies as follows: segment” in which they can be a leader. ▪ Build on Strengths ▪ Resolve Weaknesses 2. Innovation. ▪ Exploit Opportunities ▪ Most successful companies, especially in the areas of ▪ Avoid Threats technology where most engineers will work, are continually searching for new products and services. The resulting strategies can then be modeled to form the basis of a realistic strategic plan. 3. Productivity and quality. ▪ Productivity measures an organization’s ability to produce The SWOTs identified will assist in the more goods and services per unit of input (labor, materials, and investment). planning, as well as in determining, the gap analysis. 4. Physical and financial resources. A gap analysis is a technique used to ▪ An enterprise needs to establish goals for the resources analyze/assess where you currently are with (plant, equipment, inventory, and capital) it needs to perform respect to where you would like to be in the effectively. future. 5. Manager performance and development. ▪ Since good management is the key to enterprise success, effective firms plan carefully to assure that managers will be available in the years ahead in the quality and quantity needed for the organization to prosper.  6. Worker performance and attitude. THE PLANNING PROCESS ▪ Peters and Waterman found that respect for the individual ▪ 1. setting organizational, divisional, or unit goals employee was a common thread running through America’s ▪ 2. developing strategies or tactics to reach those goals most successful businesses. ▪ 3. determining resources needed and ▪ 4. setting standards. ▪ Personnel are crew members at McDonald’s, “hosts” at Disneyland, “ambassadors” at Six Flags, and associates at J.C. Setting Organizational, Divisional, or Unit Goals Penney stores. An unfortunate outcome of Frederick Taylor’s scientific management revolution was, the division of work ► The first task of the engineer manager is to provide a into deciding how to do it (by management) and doing as you sense of direction to his firm (if he is the chief executive), to are told (by the workers). his division (if he heads a division), or to his unit (if he is a supervisor). 7. Profitability. ▪ The profitability of an enterprise is essential to its ► The setting of goals provides an answer to the said continuation, and the desired level should be set explicitly as concern. an objective against which to measure enterprise success. ► If everybody in the firm (or division or unit, as the case 8. Social responsibility. may be) is aware of the goals, there is a big chance that ▪ Every enterprise has responsibilities as a corporate citizen everybody will contribute his share in the realization of such that extend beyond the legal and economic requirements. goals. ▪ These include responsibilities to customers, employees, ► What is a “GOAL”? suppliers, community, and society as a whole. - It may be defined as the "precise statement of results sought, quantified in time and magnitude, where possible." ▪ The organization that does not at least take responsibility for its effect on the environment deserves to be penalized by Developing Strategies or Tactics to Reach Goals society. ► After determining the goals, the next task is to devise some means to realize them. Intermediate Planning ► The ways to realize the goals are called strategies and these will be the concern of top management. - Intermediate planning refers to "the process of ► The middle and lower management will adapt their own determining the contributions that sub-units can tactics to implement their plans. ► A strategy may be defined as "a course of action aimed at make with allocated resources." This type of ensuring that the organization will achieve its planning is undertaken by middle management. objectives." Intermediate Plan- is designed to support the strategic plan. Tactic is a short-term action taken by management to adjust to negative internal or external influences. They are Operational Planning formulated and implemented in support of the firm's strategies. ► The term operational planning refers to the process of determining how specific tasks can best beaccomplished on The decision about short-term goals and the courses of action time with available resources. are indicated in the tactical plan. ► This type of planning is a responsibility of lower management. Setting Standards ► It must be performed in support of the strategic plan and the intermediate plan. The standards for measuring performance may be set at the planning stage. A standard may be defined as "a quantitative or qualitative measuring device designed to help monitor the performances of people, capital goods or processes”. TYPES OF PLANS They may in terms of: ▪ functional areas ▪ time horizon ▪ use Functional Area Plans Marketing plan- this is the written document or blueprint for implementing and controlling an organization's marketing' activities related to a particular marketing strategy Production plan- this is a written document that states the quantity of output a company must produce in broad terms and by product family Financial plan- it is a document that summarizes the current financial situation of the firm, analyzes financial needs, and recommends a direction for financial activities.  Human resource management plan- it is a The Contents of the Financial Plan document that indicates the human resource ► 1. An analysis of the firm's current financial condition as indicated by an analysis of the most recent statements needs of a company detailed in of quantity and ► 2. A sales forecast quality and based on the requirements of the ► 3. The capital budget company's strategic plan. ► 4. The cash budget ► 6. A set of pro forma (or projected) financial Plans With Time Horizon Statements ► Short range plans- these are plans intended to cover a ► 6. The external financing plan period of less than one year. First-line supervisors are mostly concerned with these plans. Contents of the Human Resources Plan ► Long-range plans- these are plans covering a time span of ► 1. personnel requirements of the company more than one year. These are mostly undertaken by middle ► 2. plans for recruitment and selection and top management. ► 3. training plan ► 4. retirement plan Plans According to Frequency of Use 1. standing plans PARTS OF THE STRATEGIC PLAN 2. single-use plans ► 1. Company or corporate mission ► 2. Objectives or goals Standing Plans- These are plans that are used again and ► 3. Strategies again, and they focus on managerial situations that recur repeatedly. MAKING PLAN EFFECTIVE ► 1. recognize the planning barriers Classification of Standing Plans ► 2. use of aids to planning ► 1. Policies ▪ they are broad guidelines to aid managers at every level in ► The planning barriers, according to Plunkett and Attner: making decisions about recurring situations or function. ▪ 1. manager's inability to plan ► 2. Procedures ▪ 2. improper planning process ▪ they are plans that describe the exact series of actions to be ▪ 3. lack of commitment to the planning process taken in a given situation. ▪ 4. improper information ► 3. Rules ▪ 5. focusing on the present at the expense of the future ▪ they are statements that either require or forbid a certain ▪ 6. too much reliance on the planning department action. ▪ 7. concentrating on only the controllable variables Single-Use Plans- these plans are specifically developed to ► Aids to Planning: implement courses of action that are relatively unique and are ▪ 1. Gather as much information as possible unlikely to be repeated. ▪ 2. Develop multiple sources of information ▪ 3. Involve others in the planning process ► Classification of Single-Use Plans ► 1. budgets LESSON 6 - FUNCTIONS OF MANAGEMENT - ▪ A budget, according to Weston and Brigham, is "a plan ORGANIZING which sets forth the projected expenditure for a certain activity and explains where the required funds will come from. ORGANIZING - is undertaken to facilitate the ► 2. programs implementation of plans. The structuring of resources and ▪ It is a single-use plan designed to coordinate a large set of activities to accomplish objectives in an efficient and effective activities manner. ► 3. projects ▪ It is a single-use plan that is usually more limited in scope Weihrich and Koontz - “will work together most effectively than a program and is sometimes prepared to support a if they know the parts they are to play in any team operation program and how their roles relate to one another.... Designing and maintaining these systems of roles is basically the managerial The Contents of the Marketing Plan function of organizing.” ► The structure and content of marketing plans vary depending on the nature of the ORGANIZATIONAL ROLES MUST INCORPORATE: organizations adapting them. ▪ (1) verifiable objectives, which... are a major part of ► William Cohen maintains that the following must planning; be included in the marketing plan: ▪ (2) a clear idea of the major duties or activities involved; and ► 1. The Executive Summary ▪ (3) an understood area of discretion or authority, so that the ▪ - which presents an overall view of the marketing project person filling the role knows what he or she can do to and its potential. accomplish goals. ► 2. Table of Contents ► 3. Situational Analysis and Target Market ORGANIZING AS ► 4. Marketing Objectives and Goals ▪ (1) the identification and classification of required activities, ► 5. Marketing Strategies ▪ (2) the grouping of activities necessary to attain objectives, ► 6. Marketing Tactics ▪ (3) the assignment of each grouping to a manager with the ► 7. Schedules and Budgets authority (delegation) necessary to supervise it, and ► 8. Financial Data and Control ▪ (4) the provision for coordination horizontally (on the same or similar organizational level) and vertically (for The Contents of the Production Plan example, corporate headquarters, division, and department) in ► 1. the amount of capacity the company must the organization structure. have ► 2. how many employees are required STRUCTURE - arrangement or relationship of positions ► 3. how much material must be purchased within an organization. It is also known as the result of organizing process.  2. PRODUCT/MARKET ORGANIZATION - refers to the PURPOSE: organization of a company by divisions that brings together all ► 1. It defines the relationships between tasks and authority those involved with a certain type of product customer. for individuals and departments. ► 2. It defines formal reporting relationships, the number of 3. MATRIX ORGANIZATION - organizational structure in levels in the hierarchy of the organization, and the span of which each employee reports to both a functional or division control. manager and to a project or group manager. ► 3. It defines the groupings of individuals into departments and departments into organization. ADVANTAGES OF FUNCTIONAL ORGANIZATION ► 4. It defines the system to effect coordination of effort in 1. The grouping of employees who perform a common task both vertical (authority) and horizontal (tasks) directions. permit economies of scale and efficient resource use. 2. Since the chain of command meets at the top of the CONCERNS ON STRUCTURING AN ORGANIZATION organization, decision-making is centralized, providing a ⚫ DIVISION OF LABOR - determining the scope of unified direction from the top. work and how it is combined in a job. 3. Communication and coordination among employees within ⚫ DELEGATION OF AUTHORITY - the process of each department are excellent. assigning various degrees of decision-making authority 4. The structure promotes high-quality technical problem- to subordinates. solving. ⚫ DEPARTMENTATION - the grouping of related jobs, 5. The organization is provided with in depth skill activities, or processes into major organizational sub- specialization and development. units. 6. Employees are provided with career progress within ⚫ SPAN OF CONTROL - the number of people who functional departments. report directly to a given manager. ⚫ COORDINATION - the linking of activities in the DISADVANTAGES OF FUNCTIONAL organization that serves to achieve a common goal or ORGANIZATION objective. 1. Communication and coordination between the departments are often poor. FORMAL ORGANIZATION (the planned structure) - the 2. Decisions involving more than one department pile up at structure that details lines of responsibilities, authority, and the top management level and are often delayed. position. 3. Work specialization and division of labor, which are stressed in a functional organization, produce routine, non- FORMAL STRUCTURE IS DESCRIBED THROUGH: motivating employee tasks. 1. ORGANIZATION CHART - a diagram of the 4. It is difficult to identify which section or group is organization's official positions and formal lines of authority. responsible for certain problems. 5. There is limited view of organizational goals by employees. 2. ORGANIZATIONAL MANUAL - provides written 6. There is limited general management training for descriptions of authority relationships, details the functions of employees major organizational units, and describes job procedures. ADVANTAGES OF PRODUCT/MARKET 3. POLICY MANUAL - describes personnel activities and ORGANIZATION company policies. 1. The organization is flexible and responsive to change. 2. The organization provides a high concern for customer's INFORMAL GROUP needs. ⚫ It is not a part of the formal organization and it does not 3. The organization provides excellent coordination across have a formal performance purpose. functional departments. ⚫ are oftentimes very useful in the accomplishment of 4. There is easy pinpointing of responsibility for product major tasks, especially if these tasks conform with the problems is provided. expectations of the members of the informal group 5. There is emphasis on overall product and division goals. 6. The opportunity for the development of general INFORMAL ORGANIZATION management skills. -- “vulnerable to expediency, manipulation, and opportunism,” - according to VALENTINE DISADVANTAGES OF A PRODUCT/MARKET ORGANIZATION REASONS/FACTORS FOR JOINING/FORMING A 1. There is a high possibility of duplication of resources across GROUP divisions. 1. FRIENDSHIP 2. There is less technical depth and specialization in divisions. 2. COMMON INTEREST - love/concern for the 3. There is poor coordination across divisions. environment 4. There is less top management control. 3. PROXIMITY - gives people the chance to share ideas, 5. There is competition for corporate resources. opinions, and feelings 4. NEED SATISFACTION - derived from unions, cultural MATRIX ORGANIZATION societies, fraternities, etc. ⚫ Thompson & Strickland 5. COLLECTIVE POWER - derived from unions, - “is a structure with two (or more) channels of command, two fraternities, etc. lines of budget authority, and two sources of performance and 6. GROUP GOALS - attracts individuals like: consumer reward.” society, sports club, etc. ⚫ Higgins - “the matrix structure was designed to keep employees in a TYPES OF ORGANIZATIONAL STRUCTURES central pool and to allocate them to various projects in the 1. FUNCTIONAL ORGANIZATION - is a form of firm according to the length of time they were needed.” Departmentalization in which everyone engaged in one functional activity, such as engineering or marketing, is ADVANTAGES OF MATRIX ORGANIZATION grouped into one unit. 1. There is more efficient use of resources than the divisional structure. 2. There is flexibility and adaptability to changing environment. 3. The development of both general and functional management skills are present. 4. There is interdisciplinary cooperation and any expertise is available to all divisions. 5. There are enlarged tasks for employees which motivate them better DISADVANTAGES OF MATRIX ORGANIZATION 1. There is frustration and confusion from dual chain of command. 2. There is high conflict between divisional and functional interests. 3. There are many meetings and more discussion than action. 4. There is a need for human relations training for key employees and managers. 5. There is a tendency for power dominance by one side of the matrix. TYPES OF AUTHORITY 1. LINE AUTHORITY - a manager's right to tell Subordinates what to do and then see that they do it. 2. STAFF AUTHORITY - a staff specialist's right to giv e advice to a superior. 3. FUNCTIONAL AUTHORITY - A specialist’s right to oversee lower level personnel involved in that specialty, regardless of where the personnel are in the organization. LINE DEPARTMENT - performs tasks that reflect the organization’s primary goal and mission. STAFF DEPARTMENT - include all those that provide specialized skills in support of line departments. -- Ex: those which perform strategic planning, labor relations, research, accounting and personnel. CLASSIFICATION OF STAFF OFFICERS 1. PERSONNEL STAFF - Those individuals assigned to a specific manager to provide needed staff and services. 2. SPECIALIZED STAFF - Those individuals providing needed staff services for the whole organization. FUNCTIONAL AUTHORITY - is one given to a person or a work group to make decisions related to their expertise even if these decisions concern other departments. (given to most budget officers of organizations, as well as other officers.) PURPOSE OF COMMITTEE When certain formal groups are deemed inappropriate to meet expectations, committees are oftentimes harnessed to achieve organizational goals. COMMITTEE - a formal group of persons formed for a specific purpose. PRODUCT PLANNING COMMITTEE - often staffed by top executives from marketing, production, research, engineering, and finance who work part time to evaluate and approve product lines (MILLEVO) - usually formed to provide the necessary line-up of expertise needed to achieve certain objectives. CLASSIFICATION OF COMMITTEES 1. AD HOC COMMITTEE - One created for a short-term purpose and have a limited life. ▪ Ex: committee created to manage the anniversary festivities of a certain firm. 2. STANDING COMMITTEE - It is relatively permanent committee that deals with issues on an ongoing basis. ▪ Ex: Grievance Committee set up to handle initially complaints from employees of the organization