Management and Entrepreneurship 18EE51 PDF

MANAGEMENT AND ENTREPRENEURSHIP 18EE51 Prof. VK Gupta Department of Electrical and Electronics Engineering www.cambridge.edu. in  Module One: Management 1. Definition 2. Importance – Nature and Characteristics of Managem...

MANAGEMENT AND ENTREPRENEURSHIP 18EE51 Prof. VK Gupta Department of Electrical and Electronics Engineering www.cambridge.edu. in  Module One: Management 1. Definition 2. Importance – Nature and Characteristics of Management 3. Management Functions 4. Roles of Manager 5. Levels of Management 6. Managerial Skills 7. Management & Administration 8. Management as a Science, Art &Profession Department of Electrical and Electronics Engineering www.cambridge.edu  Module One: Continued….. 9. Planning: Nature 10. Importance and Purpose Of Planning 11. Types of Plans 12. Steps in Planning 13. Limitations of Planning 14. Decision Making – Meaning 15. Types of Decisions- Steps in Decision Making Department of Electrical and Electronics Engineering www.cambridge.edu  What is management ? A set of activities (including planning and decision making, organizing, leading, and controlling) directed at an organization’s resources (human, financial, physical, and informational) with the aim of achieving organizational goals in an efficient and effective manner. Efficient – Using resources wisely and in a cost-effective way. Effective – Making the right decisions and successfully implementing them. Department of Electrical and Electronics Engineering www.cambridge.edu  What is management ?  Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims. 1. As managers, people carry out the managerial functions of planning, organizing, staffing, leading and controlling. 2. Management applies to any kind of organization. 3. It applies to managers at all organization levels. 4. The aim of all managers is the same: to create a surplus. 5. Managing is concerned with productivity; this implies efficiency and effectiveness.  Management is the art of getting things done through people. Department of Electrical and Electronics Engineering www.cambridge.edu  Who is a Manager? One who plans, makes decisions, organizes, leads and controls human, financial, physical and information resources. Helping others to do their work Responsible for getting things done Department of Electrical and Electronics Engineering www.cambridge.edu  Nature of Management Management – as an Economic and organizational resource: The inputs of men, money, machines, materials , methods and technology do not themselves ensure growth. They requires catalyst of management to produce results. Management – as group of people / team: Management as a group of people refers to those who carry the activities of management. Board of directors, chairman, managing director, General manager are referred to as management. Department of Electrical and Electronics Engineering www.cambridge.edu  Nature of Management Management – as a process: Management is considered as a process which includes all the activities – starting from the setting up of activities of a business enterprise. It include the process of planning, staffing, directing, machines, marketing etc. Management – as a Art of getting things: Management is getting things done through others. Non-managers have responsibility for their own work while managers are responsible for their own work as well as that of their sub-ordinates. Department of Electrical and Electronics Engineering www.cambridge.edu  Nature of Management Management – as a system Authority: Management is often describe as a system of Authority. System refers to a set of things connected and authority means power of individual. Management – as an Art: Art is “ bringing about of a desired results through the application of skill”. “The function of an Art is to accomplish concrete ends, effect results, produce situations that would not come about without the deliberate effort to secure them”. Department of Electrical and Electronics Engineering www.cambridge.edu  Nature of Management Management – as a Science: “Science is a systematised body of knowledge which establishes relationship between cause and effect. Management – as a Academic Discipline: Academic discipline means field of study or branch of knowledge. It comprises management theory and principle of tackling problems. Department of Electrical and Electronics Engineering www.cambridge.edu  Characteristics of Management 1. Management is an activity 2. Management is goal-oriented 3. Management is a group-activity 4. Management is a process 5. Management is a integrative process 6. Management is a social process 7. Management is a discipline 8. Management is multi-disciplinary 9. Decision making is the primary part of managerial process Department of Electrical and Electronics Engineering www.cambridge.edu  Characteristics of Management 10. Management is a global function 11. Management and society 12. Management is a profession 13. Management is art as well as science 14. Management is dynamic and not static 15. Management is situational Department of Electrical and Electronics Engineering www.cambridge.edu  Functions of Management Henri Fayol identifies five functions of management:  Planning  Organising  Commanding  Coordinating  Controlling Department of Electrical and Electronics Engineering www.cambridge.edu  Functions of Management According to Lyndall Urwick, the functions of management:  Forecasting  Planning  Organising  Commanding  Communication  Coordinating  Controlling  Investigation Department of Electrical and Electronics Engineering www.cambridge.edu  Functions of Management Department of Electrical and Electronics Engineering www.cambridge.edu  Functions of Management Planning – Determines in advance what should be done. It is looking ahead and preparing for the future. It is a process of deciding the business objectives and charting out the methods of attaining those objectives. Organising – To organise a business is to provide it with everything useful to its functioning: personnel, raw materials, tools, capital. All this may be divided into two main sections, the human organisation and the material organisation. Structure results from identifying and grouping work, defining and delegating responsibility and authority, and establishing relationships. Department of Electrical and Electronics Engineering www.cambridge.edu  Functions of Management Staffing: Selecting and training individuals for specific job functions and charging them with associated responsibilities. Directing: Moving towards its defined objectives. Directing involves three sub-functions communication, leadership and motivation. Communication is the process of passing information and understanding from one person to another. Leadership is the process by which a manager guides and influences the work of his subordinates. Motivation means arousing desire in the minds of workers to give their best to the enterprise. Department of Electrical and Electronics Engineering www.cambridge.edu  Functions of Management  Controlling – Manager must ensure that everything occurs in conformity with the plans adopted, the instructions issued and the principles established. Involves three elements. 1. Establishing standards of performance. 2. Measuring current performance and comparing it against the established standards. 3. Taking action to correct any performance that does not meet those standards.  Coordinating: integration of activities of the separate parts of an organization to accomplish organizational goals. Department of Electrical and Electronics Engineering www.cambridge.edu  Functions of Management Reporting: process of executives keeping superiors and subordinates informed about what is going on. Budgeting: formal quantitative statement of resources allocated for planned activities over stipulated periods of time. Department of Electrical and Electronics Engineering www.cambridge.edu  Functions of Management Innovation – Means creating new ideas which may either result in the development of new products or finding new uses for the old ones. Representation – A manager is also required to spend a part of his time in representing his organisation before various outside groups which have some stake in the organisation. These stake holders can be government officials, labour unions, financial institutions, suppliers, customers etc. Department of Electrical and Electronics Engineering www.cambridge.edu  Roles of Manager 1. Interpersonal Roles Figurehead – Every manager has to perform some duties of a ceremonial nature, such as attending the wedding of an employee, taking an important customer to lunch and so on. Leader – As a leader, every manager must motivate and encourage his employees. Liaison – Every manager must cultivate contacts outside his vertical chain of command to collect information useful for his organization. Department of Electrical and Electronics Engineering www.cambridge.edu  Roles of Manager 2. Informational Roles  Monitor – The manager has to perpetually scan his environment for information, interrogate his liaison contacts and his subordinates, and receive unsolicited information, much of it as a result of the network of personal contacts he has developed.  Disseminator – The manager passes some of his privileged information directly to his key subordinates who would otherwise have no access to it.  Spokesman - A manager is also required to spend a part of his time in representing his organisation before various outside groups which have some stake in the organisation. These stake holders can be government officials, labour unions, financial institutions, suppliers, customers etc. Department of Electrical and Electronics Engineering www.cambridge.edu  Roles of Manager 3. Decisional Roles  Entrepreneur – The manager proactively looks out for innovation to improve his organisation. Innovation means creating new ideas, which may either result in the development of new products or services, or finding new uses for the old ones.  Disturbance Handler – The manager has to work reactively like a fire fighter. He must seek solutions of various unanticipated problems-a strike may loom large, a major customer may go bankrupt and so on.  Resource Allocator – The manager must divide work and delegate authority among his subordinates.  Negotiator – The president of a company may negotiate with the union leaders on a new strike issue, the foreman may negotiate with the workers a grievance problem and so on. Department of Electrical and Electronics Engineering www.cambridge.edu  Levels of management 1) Top Management: Directors, Chairman, Director, General manager, CEO etc 2) Middle Managements Department heads, executive officers etc 3) Lower Managements Supervisors, foremen, sales officers, accounts officer etc. Department of Electrical and Electronics Engineering www.cambridge.edu  Levels of management Department of Electrical and Electronics Engineering www.cambridge.edu  Levels of management Objective of Top management a) To establish the goals of the enterprise b) To make policies and plans c) To assemble the resource of men, money, materials, machines etc. d) To set up frame work to conduct the operations. e) To approve budget. f) To provide overall direction and leadership. Department of Electrical and Electronics Engineering www.cambridge.edu  Levels of management Objective of Middle management a) To monitor and control the operation. b) To train, motivate and develop supervisory. c) To assist in recruit and select suitable staff. d) To achieve co-ordination between different parts of the organising. e) To report to top management. Department of Electrical and Electronics Engineering www.cambridge.edu  Levels of management Objective of lower management a) To plan day-to-day production b) To issue orders and instructions to workers c) To arrange necessary materials, equipments, tools etc. d) To evaluate the workers performance. e) To maintain good human relations among workers. f) To maintain discipline among workers. Department of Electrical and Electronics Engineering www.cambridge.edu  Managerial Skills 1. Technical skills: 2. Human Skills: 3. Conceptual Skills: 4. Diagnostic Skills Department of Electrical and Electronics Engineering www.cambridge.edu  Management and Administration Administration Management 1. Nature Thinking function Doing functions 2. Scope Making policies Implementing policies 3. Level Top level Top and Middle level 4. Nature of status Owners of organisation Salaried personnel 5. Influence on Influence by public Influence by policies functioning opinion 6. Main functions Planning and Directing and organising Department of Electrical and Electronics controlling Engineering www.cambridge.edu  Management and Administration Administration Management 7. Direction of human Not directly concerned Actively concerned effort 8. Administration Technical Ability Administration/Technic al Department of Electrical and Electronics Engineering www.cambridge.edu  Management and Administration Department of Electrical and Electronics Engineering www.cambridge.edu  Planning Department of Electrical and Electronics Engineering www.cambridge.edu  Planning  Planning : Nature, Importance and purpose of planning process  Objectives, types of plans  Decision making  Importance of planning  Steps in planning and planning premises  Hierarchy of plans Department of Electrical and Electronics Engineering www.cambridge.edu  Planning - Meaning  Planning involves selecting missions and objectives and the actions to achieve them; it requires decision making, that is choosing from among alternative future courses of action.  Plans thus provide a rational approach to achieving preselected objectives  Planning bridges the gap from where we are to where we want to go. Department of Electrical and Electronics Engineering www.cambridge.edu  What kind of organization structure to have Which helps us know What kind of people we PLANS need and when Objectives and Which affects the kind of how to achieve leadership them we have and direction How most effectively to lead people In order to ensure success of plans By furnishing standards of control Department of Electrical and Electronics Engineering www.cambridge.edu  Nature of Planning Planning is an intellectual process – It requires a manager to think before acting. It is thinking in advance. It is by planning that managers of organizations decide what is to be done, when it is to be done how it is to be done and who is to do it. For eg, in planning for their organization, managers must first decide which goal to pursue, which assumptions about the future and about the environment they will use in making their plans and how they will allocate their resources to attain their goals. Planning is a continuous process – A manager should constantly watch the progress of his plans. He must constantly monitor the conditions, both within and outside the organisation to determine if changes are required in his plans. It requires a plan to be flexible, so that it can easily be changed as per the changes in the economy, technology and political and legal environments. Department of Electrical and Electronics Engineering www.cambridge.edu  Nature of Planning Planning is an all-pervasive function – Planning is important to all managers regardless of their level in the organisation. Top level managers are generally concerned with longer time periods. Lower level managers are more concerned with planning activities for the day, week or the month. Top level managers generally spend more time on planning. Lower level managers are more involved in executing these plans. Department of Electrical and Electronics Engineering www.cambridge.edu  Importance and Purpose of Planning Minimises risk and uncertainty – By providing a more rational, fact-based procedure for making decisions, planning allows managers and organisations to minimize risk and uncertainty. In a dynamic society such as ours, in which social and economic conditions alter rapidly, planning helps the manager to cope with and prepare for the changing environment. Leads to success –Planning leads to success by doing beyond mere adaptation to market fluctuations. With the help of a sound plan, management can act proactively, and not simply react. Focuses attention on the Organisation’s Goals – This makes it easier to apply and coordinate the resources of the organization more economically. The whole organization is forced to embrace identical goals and collaborate in achieving them. Department of Electrical and Electronics Engineering www.cambridge.edu  continue…….. Facilitates control – In planning, the manager sets goals and develops plans to accomplish these goals. These goals and plans then become standards or benchmarks against which performance can be measured. The function of control is to ensure that the activities conform to the plans. Trains executives – They become involved in the activities of the organisation, and the plans arouse their interest in the multifarious aspects of planning. Planning Provides efficiency in operation – Planning makes things to occur , improves the strength of the organization, guides proper utilization of resources, hence improves efficiency. Planning encourages innovation and creativity- Planning requires continues monitoring of environment foe new ideas and development. Department of Electrical and Electronics Engineering www.cambridge.edu  Types of Planning 1. Strategic Plans – General plan outlining decisions of resource allocation, priorities and action steps necessary to reach strategic goals. These plans are set by the board of directors and top management, generally have an extended time horizon and address questions of scope, resource deployment, competitive advantage and synergy. For eg. Tata’s plan of entering into Insurance Sector in India forming a Joint Venture with AIG is a strategic plan. 2. Tactical Plans – Aimed at achieving tactical goals, is developed to implement specific parts of a strategic plan. Typically involve upper and middle management and compared with strategic plans, have a somewhat shorter time horizon and a more specific and concrete focus. For eg. Any new insurance product to launch or making changes in the existing insurance products of AIG is a tactical plan. 3. Operational Plans – Focuses on carrying out tactical plans to achieve operational goals. Developed by middle and lower-level managers, operational plans have a short-term focus and are relatively narrow in scope. For eg. Policies, budgets of Insurance specially for Indian Market is an example of operation plan. Department of Electrical and Electronics Engineering www.cambridge.edu Department of Electrical and Electronics Engineering www.cambridge.edu  Steps in Planning Being Aware of Opportunities – All managers should take a preliminary look at possible future opportunities and see them clearly and completely, know where they stand in light of their strengths and weaknesses, understand what problems they wish to solve and why, and know what they expect to gain. Setting Objectives or Goals – Establish objectives for the entire enterprise and then for each subordinate work unit. Objectives specify the expected results and indicate the end points of what is to be done, where the primary emphasis is to be placed, and what is to be accomplished by the network of strategies, policies, procedures, rules, budgets and programs. Department of Electrical and Electronics Engineering www.cambridge.edu  Steps in Planning Analysis of External Environment: The term external environment covers vide range ie. Market conditions, price level, political conditions , nature of competitions, different class of society etc. Analysis of Internal Environment: Internal environment means men, machine, money, materials, methods, technology etc. Establishing Planning Premises: Establish planning premises means certain assumptions about the future on the basis of which the plan will be ultimately formulated. Planning premises are vital to the success of planning as they supply pertinent facts and information relating to the future such as population trends, the general economic conditions, production costs and prices, probable competitive behavior, capital and material availability, government control and so on. Department of Electrical and Electronics Engineering www.cambridge.edu  Steps in Planning Deciding the Planning Period – In some instances plans are made for a year only while in others they span decades. In each case, however there is always some logic in selecting a particular time range for planning based on lead time in development and commercialization of a new product, time required to recover capital investment and length of commitments already made. Finding Alternatives in light of Goals sought – The fourth step in planning is to search for alternative courses of action. For example, products may be sold directly to the consumer by the company’s salesmen or through exclusive agencies. Evaluating and selecting a Course of Action - Having sought alternative courses, the next step is to evaluate them in the light of the premises and goals and to select the best course or courses of action. Department of Electrical and Electronics Engineering www.cambridge.edu  Steps in Planning Developing Derivative Plans – Once the plan has been formulated, its broad goals must be translated into day-to-day operations of the organization. Middle and lower level managers must draw up the appropriate plans, programmes and budgets for their sub-units. These are described as derivative plans. Measuring and Controlling the progress – Process of controlling is a critical part of any plan. Managers need to check the progress of their plans so that they can a) take whatever remedial action is necessary to make the plan work, or b) change the original plan if it is unrealistic. Department of Electrical and Electronics Engineering www.cambridge.edu  Limitations/disadvantages of Planning 1. Panning suffers from inaccurate and un-reliable information. 2. Planning suffers from weak unreliable premises. 3. Planning involves rigidity and inflexibility. 4. Planning suffers from people resistance. 5. Planning encourages false sense of security. 6. Planning delays action. 7. Planning is effected by external limitations. 8. Existing capital investment as a limitation. Department of Electrical and Electronics Engineering www.cambridge.edu  Decision Making A decision is a choice between two or more alternatives. This implies three things: 1. When managers make decisions they are choosing-they are deciding what to do on the basis of some conscious and deliberate logic or judgement. 2. Managers have alternatives available when they are making a decision. 3. Managers have a purpose in mind when they make a decision. Department of Electrical and Electronics Engineering www.cambridge.edu  Types of Decision Programmed Decisions – Programmed decisions are those that are made in accordance with some policy, rule or procedure so that they do not have to be handled de novo each time they occur. These decisions are generally repetitive, routine and are obviously the easiest for managers to make. Eg. Pricing ordinary customer’s orders, determining salary payments to employees who have been ill. Non-Programmed Decisions are novel and non-repetitive. If a problem has not arisen before or if there is no cut and dry method for handling it or if it deserves a custom-tailored treatment, it must be handled by a non- programmed decision. Eg. How to allocate organization’s resources, what to do about a failing product line etc. Department of Electrical and Electronics Engineering www.cambridge.edu  Types of Decision Major and Minor Decisions – Some decisions are considerably more important than others based on the impact of the decision on other functional areas. Routine and strategic Decisions – Routine, tactical or housekeeping decisions are those which are supportive of, rather than central to, the company’s operations. Provision for air conditioning, better lighting, parking facilities, cafeteria service etc. are all routine decisions. On the other hand, lowering the price of the product, changing the product line, installation of an automatic plant, etc. are strategic decisions. Individual and Group Decisions – Decisions may be taken either by an individual or by a group. Individual decisions are taken where the problem is of a routine nature, where the analysis of variable is simple and where definite procedures to deal with the problem already exist. Important and strategic decisions which may result into some change in the organization are generally taken by a group. Simple and Complex Decisions – When variables to be considered for solving a problem are few, the decision is simple; when they are many, the decision is complex. Department of Electrical and Electronics Engineering www.cambridge.edu  Steps in Decision Making Recognising the Problem – It is necessary to search the environment for the existence of a problem. A problem exists: 1. When this year’s sales are falling behind last year’s. 2. When there is a deviation from the plan (profit levels are lower than anticipated) 3. When other people bring problems to the manager (customers may complain about late deliveries) 4. When competitors outperform the manager’s organisation. Deciding Priorities among Problems – A manager should not allow himself to be bogged down by all sorts of problems. On examination he will find that some of his problems are such which can be solved best not by him but by his subordinates because they are closest to them. All such problems should be passed on to the subordinates. Then ,some problems may need to be referred upward because they affect other departments or require information available only at a higher level. Department of Electrical and Electronics Engineering www.cambridge.edu  Steps in Decision Making Diagnosing the Problem –Every problem should be correctly diagnosed. A manager should remember that the symptoms of a problem that he observes may sometimes mislead him. They may lead him to suspect one part of the system or operation when in fact, the defect may lie hidden in another part which is perhaps less visible.For eg. If the sales decline, the management may think that the problem is one of poor selling procedures but the real problem may be less brand awareness. Developing Alternative Solutions or Courses of Action – After having diagnosed the problem, the next step is to develop alternative solutions. For instance, if a factory manager is considering a proposal to raise production to meet increased demand, there are several alternatives which can be considered. These might be: i) build a new plant, or buy better equipment, add an extra shift or authorise overtime. He should have clear recognition of all the limiting factors which can make the accomplishment of an alternative difficult. Department of Electrical and Electronics Engineering www.cambridge.edu  Steps in Decision Making Measuring and Comparing the Consequences of Alternative Solutions – Once appropriate alternative solutions have been developed, the next step in decision making is to measure and compare their consequences. This involves a comparison of the quality and acceptability of various solutions.The quality of a solution must be determined after taking into account its quantitative and qualitative consequences. Acceptability of a solution by the employees is also very important. Converting the decision into Effective Action And Follow-Up of Action – This requires the communication of decisions to the employees in clear and unambiguous terms. Further, efforts should be made to secure employee’s acceptance of the decision. Department of Electrical and Electronics Engineering www.cambridge.edu