Unit - I: Cmrit Redefining Quality

CMRIT Redefining Quality
UNIT I
III B.Tech II SEMESTER Management Science
1
Definition of Management
Management (from Old French management the art of conducting, directing, from
Latin manu agere to lead by the hand) characterizes the process of leading and
directing all or part of an organization, often a business, through the deployment and
manipulation of resources (human, financial, material, intellectual or intangible).
This definition is interesting because it traces the root meaning back to the atin !hrase
meaning "to lead by the hand#. eading by the hand im!lies gi$ing direction that is
stronger than %ust a !assing suggestion yet still fairly gentle in a!!roach. eading by the
hand also im!lies that the !erson doing the leading is first going &here the follo&er is
being lead. The leader is not asking the follo&er to do something he is not &illing to do
himself.
!he guidance and control of action re"uired to e#ecute a program. $lso, the indi%iduals
charged &ith the responsibility of conducting a program.
This definition of management refers to a "!rogram#. This im!lies that' for management
to be effecti$e there needs to be some ty!e of defined a!!roach or system in !lace. This
system becomes the !lan and management is guiding others in follo&ing that !lan. This is
often the do&nfall of managers. They ha$e no !lan or system. (s a result their actions
seem random to the !eo!le they are managing and this leads to confusion and
disa!!ointment. This is &hy it is so im!ortant for business managers to ha$e an em!loyee
manual. )ithout the em!loyee manual !ro$iding direction' managers &ill struggle to be
fair and balanced in their dealings &ith em!loyees.
's the organizational process that includes strategic planning, setting( ob)ecti%es,
managing resources, deploying the human and financial assets needed to achie%e
ob)ecti%es, and measuring results. Management also includes recording and storing facts
and information for later use or for others &ithin the organization. Management
functions are not limited to managers and super%isors. *%ery member of the organization
has some management and reporting functions as part of their )ob.
This definition is more in de!th and tailored to&ard business management. *otice that it
consists of three !rimary acti$ities. +irst' management establishes a !lan. This !lan
becomes the road ma! for &hat &ork is going to be done. Second' management allocates
resources to im!lement the !lan. Third' management measures the results to see ho& the
end !roduct com!ares &ith &hat &as originally en$isioned. Most management failings
can be attributed to insufficient effort occurring in one of these three areas.
The definition goes on to talk about ho& management is res!onsible for measuring
details that may not be re,uired !resently' but may be useful later on. These
measurements often hel! determine the ob%ecti$es in the !lanning stage.
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)hen management is follo&ing this ty!e of se,uence' it becomes a continuing cycle.
.lan' e/ecute' and measure. The measurements become the basis for the ne/t !lanning
stage and so on.
's the acti%ity of getting things done &ith the aid of people and other resources.
This definition of management focus on management as the !rocess of accom!lishing
&ork through the efforts of others. Skilled managers can accom!lish much more through
others than they can through their o&n single efforts.
*ffecti%e utilisation and coordination of resources such as capital, plant, materials, and
labor to achie%e defined ob)ecti%es &ith ma#imum efficiency.
This definition of management looks at not only the !eo!le but the entire range of
resources necessary to follo& a !lan. *otice ho& it focuses on efficiency. Management
isn0t %ust getting from !oint ( to !oint B. It is getting there by choosing the best !ossible
!ath.
!he process of getting acti%ities completed efficiently &ith and through other people( +.
!he process of setting and achie%ing goals through the e#ecution of fi%e basic
management functions, planning, organizing, staffing, directing, and controlling( that
utilize human, financial, and material resources.
The first definition looks at the fact that management is getting &ork done through other
!eo!le. The second definition di$ides management u! into fi$e com!onents. These
com!onents are all !arts of the three com!onents 1!lan' e/ecute' measure2 that &e looked
at abo$e. 3o&e$er the more detailed definition hel!s sho& the acti$ities that occur in
each of the three !hase definition.
!he process of planning, leading, organizing and controlling people &ithin a group in
order to achie%e goals( also used to mean the group of people &ho do this.
4nce again' this definition of management addresses accom!lishing &ork through other
!eo!le. This definition stresses the acti$ities that are necessary for reaching !articular
goals.
!he process of achie%ing the ob)ecti%es of the business organization by bringing together
human, physical, and financial resources in an optimum combination and ma-ing the
best decision for the organization &hile ta-ing into consideration its operating
en%ironment.
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This definition talks about the different com!onents that managers need to control in
order to achie$e ob%ecti$es. 4ne differentiator of this definition is the &ay it considers the
o!erating en$ironment as !art of &hat a manager must understand.
Management and Administration
(ccording to !heo .aimann' "(dministration means o$erall determination of !olicies'
setting of ma%or ob%ecti$es' the identification of general !ur!oses and laying do&n of
broad !rogrammes and !ro%ects#. It refers to the acti$ities of higher le$el. It lays do&n
basic !rinci!les of the enter!rise. (ccording to *e&man' "(dministration means
guidance' leadershi! 6 control of the efforts of the grou!s to&ards some common goals#.
)hereas' management in$ol$es concei$ing' initiating and bringing together the $arious
elements7 coordinating' actuating' integrating the di$erse organi8ational com!onents
&hile sustaining the $iability of the organi8ation to&ards some !re9determined goals. In
other &ords' it is an art of getting things done through 6 &ith the !eo!le in formally
organi8ed grou!s.
The difference bet&een Management and (dministration can be summari8ed under -
categories: 9
1. Functions
-. Usage / Applicability
On the Basis of Functions:
Basis Management Administation
Meaning Management is an art of getting things
done through others by directing their
efforts to&ards achie$ement of !re9
determined goals.
It is concerned &ith formulation
of broad ob%ecti$es' !lans 6
!olicies.
*ature Management is an e/ecuting function. (dministration is a decision9
making function.
.rocess Management decides &ho should as it 6
ho& should he dot it.
(dministration decides &hat is
to be done 6 &hen it is to be
done.
+unction Management is a doing function because
managers get &ork done under their
su!er$ision.
(dministration is a thinking
function because !lans 6
!olicies are determined under it.
;
Skills Technical and 3uman skills Conce!tual and 3uman skills
e$el Middle 6 lo&er le$el function To! le$el function
On the Basis of Usage: !
Basis Management Administation
(!!licability It is a!!licable to business
concerns i.e. !rofit9making
organi8ation.
It is a!!licable to non9business
concerns i.e. clubs' schools'
hos!itals etc.
Influence The management decisions are
influenced by the $alues'
o!inions' beliefs 6 decisions of
the managers.
The administration is influenced by
!ublic o!inion' go$t. !olicies'
religious organi8ations' customs etc.
Status Management constitutes the
em!loyees of the organi8ation
&ho are !aid remuneration 1in
the form of salaries 6 &ages2.
(dministration re!resents o&ners of
the enter!rise &ho earn return on
their ca!ital in$ested 6 !rofits in the
form of di$idend.
.ractically' there is no difference bet&een management 6 administration. E$ery manager
is concerned &ith both < administrati$e management function and o!erati$e management
function as sho&n in the figure. 3o&e$er' the managers &ho are higher u! in the
hierarchy denote more time on administrati$e function 6 the lo&er le$el denote more
time on directing and controlling &orker0s !erformance i.e. management.
=
The +igure abo$e clearly sho&s the degree of administration and management !erformed
by the different le$els of management
"oncepts of management
Natue and impotance of management
Management is concerned &ith human beings &hose beha$ior is highly un!redictable.
E$er since !eo!le began forming grou!s to achie$e goal' they could not achie$e as
indi$iduals. Managing has been essential to !ro$ide the coordination of indi$idual0s
efforts. Management is found in e$ery &alk of life.
Management does not !erform s!ecific %obs. It moti$ates other !eo!le to !erform s!ecific
%obs. Management is not doing the &ork but getting the &ork done through the effort of
others.
Management brings together basic resources !o!ularly kno&n as > M0s < Men' Material'
Machines' Methods' Money and Market.
This hel!s to achie$e the e/!ected results ,uickly and economically in terms of
1a2 .roduction
1b2 Sales
1c2 .rofit and
1d2 ?ood&ill in the Market
Im!ortance of Management
The im!ortance of management in business is uni$ersally acce!ted. It acts as a dri$ing
force in business. Modern business is highly com!etiti$e and need efficient and ca!able
management. It is through management that business acti$ities are organi8ed and
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conducted efficiently and ob%ecti$es are achie$ed.
The follo&ing !oints &ill suggest the im!ortance of management
12 4!timum use of resources: management facilities o!timum utili8ation of a$ailable
human and !hysical resources' &hich leads to !rogress and !ros!erity of a business
enter!rise. E$en &astage of all ty!es are eliminated or minimi8ed.
-2 Com!etiti$e strength: Management de$elo!s com!etiti$e strength in an enter!rise.
This enables an enter!rise to de$elo! and e/!and its assets and !rofits.
52 Cordial industrial relations: Management de$elo!s cordial industrial relation' ensures
better life and &elfare to em!loyees and raises their morale through suitable incenti$es.
;2 Moti$ates em!loyees: It moti$ates em!loyees to take more interest and initiati$e in the
&ork assigned and contributes for raising !roducti$ity and !rofitability of the enter!rise.
=2 *e& techni,ues: Management facilities the introduction of ne& machines and ne&
methods in the conduct of business acti$ities. It also brings useful technologies
de$elo!ments and inno$ation in the management of business acti$ities.
>2 Effecti$e management: Society gets the benefits of efficient management in terms of
industrial de$elo!ment' %ustice to different social grou!s' consumer0s satisfaction and
&elfare and !ro!er discharge of social res!onsibilities.
@2 E/!ansion of business: E/!ansion gro&th and di$ersification of a business unit are
!ossible through efficient management. It creates good cor!orate image to a business
enter!rise.
A2 Stability and !ros!erity: Efficient management brings success stability and !ros!erity
to a business enter!rise through coo!eration and team s!irit among em!loyees.
B2 Team s!irit: Management de$elo!s team s!irit and raises o$erall efficiency of a
business enter!rise.
1C2 Effecti$e use of managers: Management ensures effecti$e use of managers so that the
benefits of their e/!erience' skills and maturity are a$ailable to enter!rise.
112 Smooth functioning: Management ensures smooth' orderly and continuous
functioning of an enter!rise o$er a long !eriod. It also raises the efficiency' !roducti$ity
and !rofitability of an enter!rise.
1-2 Reduces turno$er and absenteeism: It reduces abour turno$er and absenteeism and
ensures continuity in the business acti$ities and o!erations.
152 Sound organi8ation: ( dynamic and !rogressi$e management guarantees
de$elo!ment of sound organi8ation' &hich can face any situation < fa$orable or
@
unfa$orable &ith ease and confidence.
Management is not only !racticed in organi8ation and business entities but management
!lays an im!ortant role in our daily li$es and is !racticed by e$ery indi$idual is some or
the other &ay.
Importance of Management
It helps in Achie#ing $oup $oals It arranges the factors of !roduction' assembles
and organi8es the resources' integrates the resources in effecti$e manner to achie$e goals.
It directs grou! efforts to&ards achie$ement of !re9determined goals. By defining
ob%ecti$e of organi8ation clearly there &ould be no &astage of time' money and effort.
Management con$erts disorgani8ed resources of men' machines' money etc. into useful
enter!rise. These resources are coordinated' directed and controlled in such a manner that
enter!rise &ork to&ards attainment of goals.
4!timum Utili%ation of &esouces Management utili8es all the !hysical 6 human
resources !roducti$ely. This leads to efficacy in management. Management !ro$ides
ma/imum utili8ation of scarce resources by selecting its best !ossible alternate use in
industry from out of $arious uses. It makes use of e/!erts' !rofessional and these ser$ices
leads to use of their skills' kno&ledge' and !ro!er utili8ation and a$oids &astage. If
em!loyees and machines are !roducing its ma/imum there is no under em!loyment of
any resources.
&educes "osts It gets ma/imum results through minimum in!ut by !ro!er !lanning
and by using minimum in!ut 6 getting ma/imum out!ut. Management uses !hysical'
human and financial resources in such a manner &hich results in best combination. This
hel!s in cost reduction.
'stablishes (ound Ogani%ation *o o$erla!!ing of efforts 1smooth and
coordinated functions2. To establish sound organi8ational structure is one of the ob%ecti$e
of management &hich is in tune &ith ob%ecti$e of organi8ation and for fulfillment of this'
it establishes effecti$e authority 6 res!onsibility relationshi! i.e. &ho is accountable to
&hom' &ho can gi$e instructions to &hom' &ho are su!eriors 6 &ho are subordinates.
Management fills u! $arious !ositions &ith right !ersons' ha$ing right skills' training and
,ualification. (ll %obs should be cleared to e$eryone.
'stablishes ')uilibium It enables the organi8ation to sur$i$e in changing
en$ironment. It kee!s in touch &ith the changing en$ironment. )ith the change is
e/ternal en$ironment' the initial co9ordination of organi8ation must be changed. So it
ada!ts organi8ation to changing demand of market D changing needs of societies. It is
res!onsible for gro&th and sur$i$al of organi8ation.
'ssentials fo *ospeity of (ociety Efficient management leads to better
economical !roduction &hich hel!s in turn to increase the &elfare of !eo!le. ?ood
management makes a difficult task easier by a$oiding &astage of scarce resource. It
im!ro$es standard of li$ing. It increases the !rofit &hich is beneficial to business and
society &ill get ma/imum out!ut at minimum cost by creating em!loyment o!!ortunities
&hich generate income in hands. 4rgani8ation comes &ith ne& !roducts and researches
beneficial for society.
A
Objectives of Management
The main ob%ecti$es of management are:
1. $etting Ma+imum &esults ,ith Minimum 'ffots The main ob%ecti$e of
management is to secure ma/imum out!uts &ith minimum efforts 6 resources.
Management is basically concerned &ith thinking 6 utili8ing human' material 6
financial resources in such a manner that &ould result in best combination. This
combination results in reduction of $arious costs.
-. Inceasing the 'fficiency of factos of *oduction Through !ro!er utili8ation
of $arious factors of !roduction' their efficiency can be increased to a great e/tent
&hich can be obtained by reducing s!oilage' &astages and breakage of all kinds'
this in turn leads to sa$ing of time' effort and money &hich is essential for the
gro&th 6 !ros!erity of the enter!rise.
5. Ma+imum *ospeity fo 'mploye - 'mployees Management ensures
smooth and coordinated functioning of the enter!rise. This in turn hel!s in
!ro$iding ma/imum benefits to the em!loyee in the sha!e of good &orking
condition' suitable &age system' incenti$e !lans on the one hand and higher
!rofits to the em!loyer on the other hand.
;. .uman bettement - (ocial /ustice Management ser$es as a tool for the
u!liftment as &ell as betterment of the society. Through increased !roducti$ity 6
em!loyment' management ensures better standards of li$ing for the society. It
!ro$ides %ustice through its uniform !olicies.
Management as a Process
(s a !rocess' management refers to a series of inter < related functions. It is the !rocess
by &hich management creates' o!erates and directs !ur!osi$e organi8ation through
systematic' coordinated and co9o!erated human efforts' according to ?eorge R. Terry'
"Management is a distinct !rocess consisting of !lanning' organi8ing' actuating and
controlling' !erformed to determine and accom!lish stated ob%ecti$e by the use of human
beings and other resources#. (s a !rocess' management consists of three as!ects:
1. Management is a social pocess Since human factor is most im!ortant among
the other factors' therefore management is concerned &ith de$elo!ing relationshi!
among !eo!le. It is the duty of management to make interaction bet&een !eo!le <
!roducti$e and useful for obtaining organi8ational goals.
-. Management is an integating pocess Management undertakes the %ob of
bringing together human !hysical and financial resources so as to achie$e
organi8ational !ur!ose. Therefore' is an im!ortant function to bring harmony
bet&een $arious factors.
5. Management is a continuous pocess It is a ne$er ending !rocess. It is
concerned &ith constantly identifying the !roblem and sol$ing them by taking
ade,uate ste!s. It is an on9going !rocess.
B
Management as an Activity
ike $arious other acti$ities !erformed by human beings such as &riting' !laying' eating'
cooking etc' management is also an acti$ity because a manager is one &ho accom!lishes
the ob%ecti$es by directing the efforts of others. (ccording to Eoont8' "Management is
&hat a manager does#. Management as an acti$ity includes <
1. Infomational acti#ities In the functioning of business enter!rise' the manager
constantly has to recei$e and gi$e information orally or in &ritten. (
communication link has to be maintained &ith subordinates as &ell as su!eriors
for effecti$e functioning of an enter!rise.
-. 0ecisional acti#ities .ractically all ty!es of managerial acti$ities are based on
one or the other ty!es of decisions. Therefore' managers are continuously
in$ol$ed in decisions of different kinds since the decision made by one manager
becomes the basis of action to be taken by other managers. 1E.g. Sales Manager is
deciding the media 6 content of ad$ertising2.
5. Inte!pesonal acti#ities Management in$ol$es achie$ing goals through
!eo!le. Therefore' managers ha$e to interact &ith su!eriors as &ell as the sub9
ordinates. They must maintain good relations &ith them. The inter9!ersonal
acti$ities include &ith the sub9ordinates and taking care of the !roblem. 1E.g.
Bonuses to be gi$en to the sub9ordinates2.
Management as a Discipline
Management as a disci!line refers to that branch of kno&ledge &hich is connected to
study of !rinci!les 6 !ractices of basic administration. It s!ecifies certain code of
conduct to be follo&ed by the manager 6 also $arious methods for managing resources
efficiently.
Management as a disci!line s!ecifies certain code of conduct for managers 6 indicates
$arious methods of managing an enter!rise. Management is a course of study &hich is
no& formally being taught in the institutes and uni$ersities after com!leting a !rescribed
course or by obtaining degree or di!loma in management' a !erson can get em!loyment
as a manager.
(ny branch of kno&ledge that fulfils follo&ing t&o re,uirements is kno&n as disci!line:
1. There must be scholars 6 thinkers &ho communicate rele$ant kno&ledge through
research and !ublications.
-. The kno&ledge should be formally im!arted by education and training
!rogrammes.
Since management satisfies both these !roblems' therefore it ,ualifies to be a disci!line.
Though it is com!arati$ely a ne& disci!line but it is gro&ing at a faster !ace.
1C
Management as a Group
Management as a grou! refers to all those !ersons &ho !erform the task of managing an
enter!rise. )hen &e say that management of (BC 6 Co. is good' &e are referring to a
grou! of !eo!le those &ho are managing. Thus as a grou! technically s!eaking'
management &ill include all managers from chief e/ecuti$e to the first < line managers
1lo&er9le$el managers2. But in common !ractice management includes only to!
management i.e. Chief E/ecuti$e' Chairman' ?eneral Manager' Board of Firectors etc. In
other &ords' those &ho are concerned &ith making im!ortant decisions' these !ersons
en%oy the authorities to use resources to accom!lish organi8ational ob%ecti$es 6 also
res!onsibility to for their efficient utili8ation.
Management as a Science
Science is a systematic body of kno&ledge !ertaining to a s!ecific field of study that
contains general facts &hich e/!lains a !henomenon. It establishes cause and effect
relationshi! bet&een t&o or more $ariables and underlines the !rinci!les go$erning their
relationshi!. These !rinci!les are de$elo!ed through scientific method of obser$ation and
$erification through testing.
Science is characteri8ed by follo&ing main features:
1. Uni#esally acceptance pinciples Scientific !rinci!les re!resents basic truth
about a !articular field of en,uiry. These !rinci!les may be a!!lied in all
situations' at all time 6 at all !laces. E.g. < la& of gra$itation &hich can be
a!!lied in all countries irres!ecti$e of the time.
Management also contains some fundamental !rinci!les &hich can be a!!lied
uni$ersally like the .rinci!le of Gnity of Command i.e. one man' one boss. This
!rinci!le is a!!licable to all ty!e of organi8ation < business or non business.
-. '+peimentation - Obse#ation Scientific !rinci!les are deri$ed through
scientific in$estigation 6 researching i.e. they are based on logic. E.g. the
!rinci!le that earth goes round the sun has been scientifically !ro$ed.
Management !rinci!les are also based on scientific en,uiry 6 obser$ation and not
only on the o!inion of 3enry +ayol. They ha$e been de$elo!ed through
e/!eriments 6 !ractical e/!eriences of large no. of managers. E.g. it is obser$ed
that fair remuneration to !ersonal hel!s in creating a satisfied &ork force.
5. "ause - 'ffect &elationship .rinci!les of science lay do&n cause and effect
relationshi! bet&een $arious $ariables. E.g. &hen metals are heated' they are
e/!anded. The cause is heating 6 result is e/!ansion.
The same is true for management' therefore it also establishes cause and effect
relationshi!. E.g. lack of !arity 1balance2 bet&een authority 6 res!onsibility &ill
lead to ineffecti$eness. If you kno& the cause i.e. lack of balance' the effect can
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be ascertained easily i.e. in effecti$eness. Similarly if &orkers are gi$en bonuses'
fair &ages they &ill &ork hard but &hen not treated in fair and %ust manner'
reduces !roducti$ity of organi8ation.
;. Test of 1alidity - *edictability Halidity of scientific !rinci!les can be tested
at any time or any number of times i.e. they stand the test of time. Each time these
tests &ill gi$e same result. Moreo$er future e$ents can be !redicted &ith
reasonable accuracy by using scientific !rinci!les. E.g. 3- 6 4- &ill al&ays gi$e
3-4.
.rinci!les of management can also be tested for $alidity. E.g. !rinci!le of unity of
command can be tested by com!aring t&o !ersons < one ha$ing single boss and
one ha$ing - bosses. The !erformance of 1st !erson &ill be better than -nd.
It cannot be denied that management has a systematic body of kno&ledge but it is not as
e/act as that of other !hysical sciences like biology' !hysics' and chemistry etc. The main
reason for the ine/actness of science of management is that it deals &ith human beings
and it is $ery difficult to !redict their beha$ior accurately. Since it is a social !rocess'
therefore it falls in the area of social sciences. It is a fle/ible science 6 that is &hy its
theories and !rinci!les may !roduce different results at different times and therefore it is
a beha$ior science. Ernest Fale has called it as a /oft /cience.
Management as an Art
(rt im!lies a!!lication of kno&ledge 6 skill to trying about desired results. (n art may
be defined as !ersonali8ed a!!lication of general theoretical !rinci!les for achie$ing best
!ossible results. (rt has the follo&ing characters <
1. *actical 2no,ledge: E$ery art re,uires !ractical kno&ledge therefore learning
of theory is not sufficient. It is $ery im!ortant to kno& !ractical a!!lication of
theoretical !rinci!les. E.g. to become a good !ainter' the !erson may not only be
kno&ing different colour and brushes but different designs' dimensions' situations
etc to use them a!!ro!riately. ( manager can ne$er be successful %ust by obtaining
degree or di!loma in management7 he must ha$e also kno& ho& to a!!ly $arious
!rinci!les in real situations by functioning in ca!acity of manager.
-. *esonal (3ill: (lthough theoretical base may be same for e$ery artist' but each
one has his o&n style and a!!roach to&ards his %ob. That is &hy the le$el of
success and ,uality of !erformance differs from one !erson to another. E.g. there
are se$eral ,ualified !ainters but M.+. 3ussain is recogni8ed for his style.
Similarly management as an art is also !ersonali8ed. E$ery manager has his o&n
&ay of managing things based on his kno&ledge' e/!erience and !ersonality' that
is &hy some managers are kno&n as good managers 1like (ditya Birla' Rahul
Ba%a%2 &hereas others as bad.
5. "eati#ity: E$ery artist has an element of creati$ity in line. That is &hy he aims
at !roducing something that has ne$er e/isted before &hich re,uires combination
of intelligence 6 imagination. Management is also creati$e in nature like any
other art. It combines human and non9human resources in useful &ay so as to
1-
achie$e desired results. It tries to !roduce s&eet music by combining chords in an
efficient manner.
;. *efection though pactice: .ractice makes a man !erfect. E$ery artist becomes
more and more !roficient through constant !ractice. Similarly managers learn
through an art of trial and error initially but a!!lication of management !rinci!les
o$er the years makes them !erfect in the %ob of managing.
=. $oal!Oiented: E$ery art is result oriented as it seeks to achie$e concrete results.
In the same manner' management is also directed to&ards accom!lishment of !re9
determined goals. Managers use $arious resources like men' money' material'
machinery 6 methods to !romote gro&th of an organi8ation.
Thus' &e can say that management is an art therefore it re,uires a!!lication of certain
!rinci!les rather it is an art of highest order because it deals &ith moulding the attitude
and beha$ior of !eo!le at &ork to&ards desired goals.
Management as both Science and Art
Management is both an art and a science. The abo$e mentioned !oints clearly re$eals that
management combines features of both science as &ell as art. It is considered as a science
because it has an organi8ed body of kno&ledge &hich contains certain uni$ersal truth. It
is called an art because managing re,uires certain skills &hich are !ersonal !ossessions
of managers. Science !ro$ides the kno&ledge 6 art deals &ith the a!!lication of
kno&ledge and skills.
( manager to be successful in his !rofession must ac,uire the kno&ledge of science 6
the art of a!!lying it. Therefore management is a %udicious blend of science as &ell as an
art because it !ro$es the !rinci!les and the &ay these !rinci!les are a!!lied is a matter of
art. Science teaches to 0kno&0 and art teaches to 0do0. E.g. a !erson cannot become a
good singer unless he has kno&ledge about $arious ragas 6 he also a!!lies his !ersonal
skill in the art of singing. Same &ay it is not sufficient for manager to first kno& the
!rinci!les but he must also a!!ly them in sol$ing $arious managerial !roblems that is
&hy' science and art are not mutually e/clusi$e but they are com!lementary to each other
1like tea and biscuit' bread and butter etc.2.
The old saying that "Manager are Born# has been re%ected in fa$or of "Managers are
Made#. It has been a!tly remarked that management is the oldest of art and youngest of
science. To conclude' &e can say that science is the root and art is the fruit.
Management as a Profession
4$er a large fe& decades' factors such as gro&ing si8e of business unit' se!aration of
o&nershi! from management' gro&ing com!etition etc ha$e led to an increased demand
for !rofessionally ,ualified managers. The task of manager has been ,uite s!eciali8ed. (s
a result of these de$elo!ments the management has reached a stage &here e$erything is
to be managed !rofessionally.
15
( !rofession may be defined as an occu!ation that re,uires s!eciali8ed kno&ledge and
intensi$e academic !re!arations to &hich entry is regulated by a re!resentati$e body. The
essentials of a !rofession are:
1. (peciali%ed 2no,ledge ( !rofession must ha$e a systematic body of
kno&ledge that can be used for de$elo!ment of !rofessionals. E$ery !rofessional
must make deliberate efforts to ac,uire e/!ertise in the !rinci!les and techni,ues.
Similarly a manager must ha$e de$otion and in$ol$ement to ac,uire e/!ertise in
the science of management.
-. Fomal 'ducation - Taining There are no. of institutes and uni$ersities to
im!art education 6 training for a !rofession. *o one can !ractice a !rofession
&ithout going through a !rescribed course. Many institutes of management ha$e
been set u! for im!arting education and training. +or e/am!le' a C( cannot audit
the (DC0s unless he has ac,uired a degree or di!loma for the same but no
minimum ,ualifications and a course of study has been !rescribed for managers
by la&. +or e/am!le' MB( may be !referred but not necessary.
5. (ocial Obligations .rofession is a source of li$elihood but !rofessionals are
!rimarily moti$ated by the desire to ser$e the society. Their actions are influenced
by social norms and $alues. Similarly a manager is res!onsible not only to its
o&ners but also to the society and therefore he is e/!ected to !ro$ide ,uality
goods at reasonable !rices to the society.
;. "ode of "onduct Members of a !rofession ha$e to abide by a code of conduct
&hich contains certain rules and regulations' norms of honesty' integrity and
s!ecial ethics. ( code of conduct is enforced by a re!resentati$e association to
ensure self disci!line among its members. (ny member $iolating the code of
conduct can be !unished and his membershi! can be &ithdra&n. The (IM( has
!rescribed a code of conduct for managers but it has no right to take legal action
against any manager &ho $iolates it.
=. &epesentati#e Association +or the regulation of !rofession' e/istance of a
re!resentati$e body is a must. +or e/am!le' an institute of Charted (ccountants of
India establishes and administers standards of com!etence for the auditors but the
(IM( ho&e$er does not ha$e any statuary !o&ers to regulate the acti$ities of
managers.
+rom abo$e discussion' it is ,uite clear that management fulfills se$eral essentials of a
!rofession' e$en then it is not a full fledged !rofession because: 9
a. It does not restrict the entry in managerial %obs for account of one standard or
other.
b. *o minimum ,ualifications ha$e been !rescribed for managers.
c. *o management association has the authority to grant a certificate of !ractice to
$arious managers.
d. (ll managers are su!!osed to abide by the code formulated by (IM('
e. Com!etent education and training facilities do not e/ist. .
f. Managers are res!onsible to many grou!s such as shareholders' em!loyees and
society. ( regulatory code may curtail their freedom.
g. Managers are kno&n by their !erformance and not mere degrees.
1;
h. The ultimate goal of business is to ma/imi8e !rofit and not social &elfare. That is
&hy 3aymes has rightly remarked' "The slogan for management is becoming <
03e &ho ser$es best' also !rofits most0.#
Features of Management
Management is an acti$ity concerned &ith guiding human and !hysical resources such
that organi8ational goals can be achie$ed. *ature of management can be highlighted as: 9
1. Management is $oal!Oiented: The success of any management acti$ity is
accessed by its achie$ement of the !redetermined goals or ob%ecti$e. Management
is a !ur!oseful acti$ity. It is a tool &hich hel!s use of human 6 !hysical resources
to fulfill the !re9determined goals. +or e/am!le' the goal of an enter!rise is
ma/imum consumer satisfaction by !roducing ,uality goods and at reasonable
!rices. This can be achie$ed by em!loying efficient !ersons and making better use
of scarce resources.
-. Management integates .uman4 *hysical and Financial &esouces: In an
organi8ation' human beings &ork &ith non9human resources like machines.
Materials' financial assets' buildings etc. Management integrates human efforts to
those resources. It brings harmony among the human' !hysical and financial
resources.
5. Management is "ontinuous: Management is an ongoing !rocess. It in$ol$es
continuous handling of !roblems and issues. It is concerned &ith identifying the
!roblem and taking a!!ro!riate ste!s to sol$e it. E.g. the target of a com!any is
ma/imum !roduction. +or achie$ing this target $arious !olicies ha$e to be framed
but this is not the end. Marketing and (d$ertising is also to be done. +or this
!olicies ha$e to be again framed. 3ence this is an ongoing !rocess.
;. Management is all *e#asi#e: Management is re,uired in all ty!es of
organi8ations &hether it is !olitical' social' cultural or business because it hel!s
and directs $arious efforts to&ards a definite !ur!ose. Thus clubs' hos!itals'
!olitical !arties' colleges' hos!itals' business firms all re,uire management. )hen
e$er more than one !erson is engaged in &orking for a common goal'
management is necessary. )hether it is a small business firm &hich may be
engaged in trading or a large firm like Tata Iron 6 Steel' management is re,uired
e$ery&here irres!ecti$e of si8e or ty!e of acti$ity.
=. Management is a $oup Acti#ity: Management is $ery much less concerned
&ith indi$idual0s efforts. It is more concerned &ith grou!s. It in$ol$es the use of
grou! effort to achie$e !redetermined goal of management of (BC 6 Co. is good
refers to a grou! of !ersons managing the enter!rise.
5e#els of Management
5e#els of Management: There are three le$els of management
1. To! le$el management
-. Middle le$el management
5. o& le$el management
1=
To!9le$el management
Re,uire an e/tensi$e kno&ledge of management roles and skills.
They ha$e to be $ery a&are of e/ternal factors such as markets.
Their decisions are generally of a long9term nature
Their decisions are made using analytic' directi$e' conce!tual andDor
beha$ioralD!artici!ati$e !rocesses
They are res!onsible for strategic decisions.
They ha$e to chalk out the !lan and see that !lan may be effecti$e in the future.
They are e/ecuti$e in nature.
Middle management
Mid9le$el managers ha$e a s!eciali8ed understanding of certain managerial tasks.
They are res!onsible for carrying out the decisions made by to!9le$el
management.
o&er management
This le$el of management ensures that the decisions and !lans taken by the other
t&o are carried out.
o&er9le$el managersI decisions are generally short9term ones.
+oreman D lead hand
They are !eo!le &ho ha$e direct su!er$ision o$er the &orking force in office
factory' sales field or other &orkgrou! or areas of acti$ity.
Rank and +ile
The res!onsibilities of the !ersons belonging to this grou! are e$en more
restricted and more s!ecific than those of the foreman
The term "5e#els of Management0 refers to a line of demarcation bet&een $arious
managerial !ositions in an organi8ation. The number of le$els in management increases
&hen the si8e of the business and &ork force increases and $ice $ersa. The le$el of
management determines a chain of command' the amount of authority 6 status en%oyed
by any managerial !osition. The le$els of management can be classified in three broad
categories: 9
1. Top le#el / Administati#e le#el
-. Middle le#el / '+ecutoy
5. 5o, le#el / (upe#isoy / Opeati#e / Fist!line manages
Managers at all these le$els !erform different functions. The role of managers at
all the three le$els is discussed belo&:
1>
1. Top Level of Management
It consists of board of directors' chief e/ecuti$e or managing director. The to!
management is the ultimate source of authority and it manages goals and !olicies
for an enter!rise. It de$otes more time on !lanning and coordinating functions.
The role of the to! management can be summari8ed as follo&s <
a. To! management lays do&n the ob%ecti$es and broad !olicies of the
enter!rise.
b. It issues necessary instructions for !re!aration of de!artment budgets'
!rocedures' schedules etc.
c. It !re!ares strategic !lans 6 !olicies for the enter!rise.
d. It a!!oints the e/ecuti$e for middle le$el i.e. de!artmental managers.
e. It controls 6 coordinates the acti$ities of all the de!artments.
f. It is also res!onsible for maintaining a contact &ith the outside &orld.
g. It !ro$ides guidance and direction.
1@
h. The to! management is also res!onsible to&ards the shareholders for the
!erformance of the enter!rise.
2. Middle Level of Management
The branch managers and de!artmental managers constitute middle le$el. They are
res!onsible to the to! management for the functioning of their de!artment. They
de$ote more time to organi8ational and directional functions. In small
organi8ation' there is only one layer of middle le$el of management but in big
enter!rises' there may be senior and %unior middle le$el management. Their role
can be em!hasi8ed as <
a. They e/ecute the !lans of the organi8ation in accordance &ith the !olicies
and directi$es of the to! management.
b. They make !lans for the sub9units of the organi8ation.
c. They !artici!ate in em!loyment 6 training of lo&er le$el management.
d. They inter!ret and e/!lain !olicies from to! le$el management to lo&er
le$el.
e. They are res!onsible for coordinating the acti$ities &ithin the di$ision or
de!artment.
f. It also sends im!ortant re!orts and other im!ortant data to to! le$el
management.
g. They e$aluate !erformance of %unior managers.
h. They are also res!onsible for ins!iring lo&er le$el managers to&ards better
!erformance.
3. Lower Level of Management
o&er le$el is also kno&n as su!er$isory D o!erati$e le$el of management. It
consists of su!er$isors' foreman' section officers' su!erintendent etc. (ccording to
0.1. 2a%is' "Su!er$isory management refers to those e/ecuti$es &hose &ork has
to be largely &ith !ersonal o$ersight and direction of o!erati$e em!loyees#. In
other &ords' they are concerned &ith direction and controlling function of
management. Their acti$ities include <
a. (ssigning of %obs and tasks to $arious &orkers.
b. They guide and instruct &orkers for day to day acti$ities.
c. They are res!onsible for the ,uality as &ell as ,uantity of !roduction.
d. They are also entrusted &ith the res!onsibility of maintaining good relation
in the organi8ation.
e. They communicate &orkers !roblems' suggestions' and recommendatory
a!!eals etc to the higher le$el and higher le$el goals and ob%ecti$es to the
&orkers.
f. They hel! to sol$e the grie$ances of the &orkers.
g. They su!er$ise 6 guide the sub9ordinates.
h. They are res!onsible for !ro$iding training to the &orkers.
i. They arrange necessary materials' machines' tools etc for getting the things
1A
done.
%. They !re!are !eriodical re!orts about the !erformance of the &orkers.
k. They ensure disci!line in the enter!rise.
l. They moti$ate &orkers.
m. They are the image builders of the enter!rise because they are in direct
contact &ith the &orkers.
Functions of Management
Management has been described as a social !rocess in$ol$ing res!onsibility for
economical and effecti$e !lanning 6 regulation of o!eration of an enter!rise in the
fulfillment of gi$en !ur!oses. It is a dynamic !rocess consisting of $arious elements and
acti$ities. These acti$ities are different from o!erati$e functions like marketing' finance'
!urchase etc. Rather these acti$ities are common to each and e$ery manger irres!ecti$e of
his le$el or status.
Fifferent e/!erts ha$e classified functions of management. (ccording to 3eorge 4 5erry'
"There are four fundamental functions of management i.e. !lanning' organi8ing' actuating
and controlling#. (ccording to 3enry +ayol' "To manage is to forecast and !lan' to
organi8e' to command' 6 to control#. )hereas uther ?ullick has gi$en a key&ord
0*O(0"O&B0 &here . stands for .lanning' 4 for 4rgani8ing' S for Staffing' F for
Firecting' Co for Co9ordination' R for re!orting 6 B for Budgeting. But the most &idely
acce!ted are functions of management gi$en by E44*TJ and 40F4**E i.e.
*lanning' Ogani%ing' (taffing' 0iecting and "ontolling.
+or theoretical !ur!oses' it may be con$enient to se!arate the function of management
but !ractically these functions are o$erla!!ing in nature i.e. they are highly inse!arable.
Each function blends into the other 6 each affects the !erformance of others.
1B
67 *lanning
It is the basic function of management. It deals &ith chalking out a future course of action
6 deciding in ad$ance the most a!!ro!riate course of actions for achie$ement of !re9
determined goals. (ccording to E44*TJ' ".lanning is deciding in ad$ance < &hat to
do' &hen to do 6 ho& to do. It bridges the ga! from &here &e are 6 &here &e &ant to
be#. ( !lan is a future course of actions. It is an e/ercise in !roblem sol$ing 6 decision
making. .lanning is determination of courses of action to achie$e desired goals. Thus'
!lanning is a systematic thinking about &ays 6 means for accom!lishment of !re9
determined goals. .lanning is necessary to ensure !ro!er utili8ation of human 6 non9
human resources. It is all !er$asi$e' it is an intellectual acti$ity and it also hel!s in
a$oiding confusion' uncertainties' risks' &astages etc.
87 Oganising
It is the !rocess of bringing together !hysical' financial and human resources and
de$elo!ing !roducti$e relationshi! amongst them for achie$ement of organi8ational
goals. (ccording to 3enry +ayol' "To organi8e a business is to !ro$ide it &ith e$erything
useful or its functioning i.e. ra& material' tools' ca!ital and !ersonnel0s#. To organi8e a
business in$ol$es determining 6 !ro$iding human and non9human resources to the
organi8ational structure. 4rgani8ing as a !rocess in$ol$es:
Identification of acti$ities.
Classification of grou!ing of acti$ities.
(ssignment of duties.
Felegation of authority and creation of res!onsibility.
Coordinating authority and res!onsibility relationshi!s.
-C
3.Staffing
It is the function of manning the organi8ation structure and kee!ing it manned. Staffing
has assumed greater im!ortance in the recent years due to ad$ancement of technology'
increase in si8e of business' com!le/ity of human beha$ior etc. The main !ur!ose o
staffing is to !ut right man on right %ob i.e. s,uare !egs in s,uare holes and round !egs in
round holes. (ccording to Eoot8 6 40Fonell' "Managerial function of staffing in$ol$es
manning the organi8ation structure through !ro!er and effecti$e selection' a!!raisal 6
de$elo!ment of !ersonnel to fill the roles designed un the structure#. Staffing in$ol$es:
Man!o&er .lanning 1estimating man !o&er in terms of searching' choose the
!erson and gi$ing the right !lace2.
Recruitment' selection 6 !lacement.
Training 6 de$elo!ment.
Remuneration.
.erformance a!!raisal.
.romotions 6 transfer.
4.Directing
It is that !art of managerial function &hich actuates the organi8ational methods to &ork
efficiently for achie$ement of organi8ational !ur!oses. It is considered life9s!ark of the
enter!rise &hich sets it in motion the action of !eo!le because !lanning' organi8ing and
staffing are the mere !re!arations for doing the &ork. Firection is that inert9!ersonnel
as!ect of management &hich deals directly &ith influencing' guiding' su!er$ising'
moti$ating sub9ordinate for the achie$ement of organi8ational goals. Firection has
follo&ing elements:
Su!er$ision
Moti$ation
eadershi!
Communication
(upe#ision! im!lies o$erseeing the &ork of subordinates by their su!eriors. It is the act
of &atching 6 directing &ork 6 &orkers.
Moti#ation! means ins!iring' stimulating or encouraging the sub9ordinates &ith 8eal to
&ork. .ositi$e' negati$e' monetary' non9monetary incenti$es may be used for this
!ur!ose.
5eadeship! may be defined as a !rocess by &hich manager guides and influences the
&ork of subordinates in desired direction.
"ommunications! is the !rocess of !assing information' e/!erience' o!inion etc from
one !erson to another. It is a bridge of understanding.
-1
5.Controlling
It im!lies measurement of accom!lishment against the standards and correction of
de$iation if any to ensure achie$ement of organi8ational goals. The !ur!ose of
controlling is to ensure that e$erything occurs in conformities &ith the standards. (n
efficient system of control hel!s to !redict de$iations before they actually occur.
(ccording to !heo .aimann' "Controlling is the !rocess of checking &hether or not
!ro!er !rogress is being made to&ards the ob%ecti$es and goals and acting if necessary' to
correct any de$iation#. (ccording to Eoont8 6 40Fonell "Controlling is the
measurement 6 correction of !erformance acti$ities of subordinates in order to make
sure that the enter!rise ob%ecti$es and !lans desired to obtain them as being
accom!lished#. Therefore controlling has follo&ing ste!s:
a. Establishment of standard !erformance.
b. Measurement of actual !erformance.
c. Com!arison of actual !erformance &ith the standards and finding out de$iation if
any.
d. Correcti$e action.
Functions of Mangement
Basic functions of management
Management o!erates through $arious functions' often classified as !lanning' organi8ing'
leadingDmoti$ating' and controlling.
*lanning: Feciding &hat needs to ha!!en in the future 1today' ne/t &eek' ne/t
month' ne/t year' o$er the ne/t = years' etc.2 and generating !lans for action.
Ogani%ing: 1Im!lementation2 making o!timum use of the resources re,uired to
enable the successful carrying out of !lans.
(taffing: Kob analy8ing' recruitment' and hiring indi$iduals for a!!ro!riate %obs.
5eading: Fetermining &hat needs to be done in a situation and getting !eo!le to
do it.
"ontolling: Monitoing' checking !rogress against !lans' &hich may need
modification based on feedback.
Moti#ating: the !rocess of stimulating an indi$idual to take action that &ill
accom!lish a desired goal.
--
Principles of Management
( !rinci!le refers to a fundamental truth. It establishes cause and effect relationshi!
bet&een t&o or more $ariables under gi$en situation. They ser$e as a guide to thought 6
actions. Therefore' management !rinci!les are the statements of fundamental truth based
on logic &hich !ro$ides guidelines for managerial decision making and actions. These
!rinci!les are deri$ed: 9
a. 4n the basis of obser$ation and analysis i.e. !ractical e/!erience of managers.
b. By conducting e/!erimental studies.
here are !" Principles of Management described by #enri Fayol.
1. Division of Labor
a. 3enry +ayol has stressed on the s!eciali8ation of %obs.
b. 3e recommended that &ork of all kinds must be di$ided 6 subdi$ided and
allotted to $arious !ersons according to their e/!ertise in a !articular area.
c. Subdi$ision of &ork makes it sim!ler and results in efficiency.
d. It also hel!s the indi$idual in ac,uiring s!eed' accuracy in his !erformance.
e. S!eciali8ation leads to efficiency 6 economy in s!heres of business.
2. art! of "#t$orit! % &esponsibilit!
a. (uthority 6 res!onsibility are co9e/isting.
b. If authority is gi$en to a !erson' he should also be made res!onsible.
c. In a same &ay' if anyone is made res!onsible for any %ob' he should also ha$e
concerned authority.
d. (uthority refers to the right of su!eriors to get e/actness from their sub9ordinates
&hereas res!onsibility means obligation for the !erformance of the %ob assigned.
e. There should be a balance bet&een the t&o i.e. they must go hand in hand.
f. (uthority &ithout res!onsibility leads to irres!onsible beha$ior &hereas
res!onsibility &ithout authority makes the !erson ineffecti$e.
3. rinciple of 'ne (oss
a. ( sub9ordinate should recei$e orders and be accountable to one and only one boss
at a time.
b. In other &ords' a sub9ordinate should not recei$e instructions from more than one
!erson because <
9 It undermines authority
9 )eakens disci!line
9 Fi$ides loyalty
9 Creates confusion
9 Felays and chaos
9 Esca!ing res!onsibilities
9 Fu!lication of &ork
9 4$erla!!ing of efforts
-5
c. Therefore' dual sub9ordination should be a$oided unless and until it is absolutely
essential.
d. Gnity of command !ro$ides the enter!rise a disci!lined' stable 6 orderly
e/istence.
e. It creates harmonious relationshi! bet&een su!eriors and sub9ordinates.
4. )nit! of Direction
a. +ayol ad$ocates one head one !lan &hich means that there should be one !lan for
a grou! of acti$ities ha$ing similar ob%ecti$es.
b. Related acti$ities should be grou!ed together. There should be one !lan of action
for them and they should be under the charge of a !articular manager.
c. (ccording to this !rinci!le' efforts of all the members of the organi8ation should
be directed to&ards common goal.
d. )ithout unity of direction' unity of action cannot be achie$ed.
e. In fact' unity of command is not !ossible &ithout unity of direction.
Basis Unity of command Unity of diection
Meaning It im!lies that a sub9ordinate should
recei$e orders 6 instructions from
only one boss.
It means one head' one !lan for a
grou! of acti$ities ha$ing similar
ob%ecti$es.
*ature It is related to the functioning of
!ersonnel0s.
It is related to the functioning of
de!artments' or organi8ation as a
&hole.
*ecessity It is necessary for fi/ing
res!onsibility of each subordinates.
It is necessary for sound
organi8ation.
(d$antage It a$oids conflicts' confusion 6
chaos.
It a$oids du!lication of efforts and
&astage of resources.
Result It leads to better su!erior sub9
ordinate relationshi!.
It leads to smooth running of the
enter!rise.
Therefore it is ob$ious that they are different from each other but they are de!endent on
each other i.e. unity of direction is a !re9re,uisite for unity of command. But it does not
automatically comes from the unity of direction.
5. *+#it!
a. E,uity means combination of fairness' kindness 6 %ustice.
b. The em!loyees should be treated &ith kindness 6 e,uity if de$otion is
e/!ected of them.
-;
c. It im!lies that managers should be fair and im!artial &hile dealing &ith
the subordinates.
d. They should gi$e similar treatment to !eo!le of similar !osition.
e. They should not discriminate &ith res!ect to age' caste' se/' religion'
relation etc.
f. E,uity is essential to create and maintain cordial relations bet&een the
managers and sub9ordinate.
g. But e,uity does not mean total absence of harshness.
h. +ayol &as of o!inion that' "at times force and harshness might become
necessary for the sake of e,uity#.
,. 'rder
a. This !rinci!le is concerned &ith !ro!er 6 systematic arrangement of
things and !eo!le.
b. (rrangement of things is called material order and !lacement of !eo!le is
called social order.
c. Material order9 There should be safe' a!!ro!riate and s!ecific !lace for
e$ery article and e$ery !lace to be effecti$ely used for s!ecific acti$ity
and commodity.
d. Social order9 Selection and a!!ointment of most suitable !erson on the
suitable %ob. There should be a s!ecific !lace for e$ery one and e$eryone
should ha$e a s!ecific !lace so that they can easily be contacted &hene$er
need arises.
97 0iscipline
a. (ccording to +ayol' "Fisci!line means sincerity' obedience' res!ect of
authority 6 obser$ance of rules and regulations of the enter!rise#.
b. This !rinci!le a!!lies that subordinate should res!ect their su!eriors and
obey their order.
c. It is an im!ortant re,uisite for smooth running of the enter!rise.
d. Fisci!line is not only re,uired on !ath of subordinates but also on the !art
of management.
e. Fisci!line can be enforced if <
9 There are good su!eriors at all le$els.
9 There are clear 6 fair agreements &ith &orkers.
9 Sanctions 1!unishments2 are %udiciously a!!lied.
-. .nitiative
a. )orkers should be encouraged to take initiati$e in the &ork assigned to
them.
b. It means eagerness to initiate actions &ithout being asked to do so.
c. +ayol ad$ised that management should !ro$ide o!!ortunity to its
em!loyees to suggest ideas' e/!eriences6 ne& method of &ork.
d. It hel!s in de$elo!ing an atmos!here of trust and understanding.
e. .eo!le then en%oy &orking in the organi8ation because it adds to their 8eal
and energy.
f. To suggest im!ro$ement in formulation 6 im!lementation of !lace.
-=
g. They can be encouraged &ith the hel! of monetary 6 non9monetary
incenti$es.
/. 0air &em#neration
a. The ,uantum and method of remuneration to be !aid to the &orkers should
be fair' reasonable' satisfactory 6 re&arding of the efforts.
b. (s far as !ossible it should accord satisfaction to both em!loyer and the
em!loyees.
c. )ages should be determined on the basis of cost of li$ing' &ork assigned'
financial !osition of the business' &age rate !re$ailing etc.
d. ogical 6 a!!ro!riate &age rates and methods of their !ayment reduce
tension 6 differences bet&een &orkers 6 management creates
harmonious relationshi! and !leasing atmos!here of &ork.
e. +ayol also recommended !ro$ision of other benefits such as free
education' medical 6 residential facilities to &orkers.
6:7 (tability of Tenue
a. +ayol em!hasi8ed that em!loyees should not be mo$ed fre,uently from
one %ob !osition to another i.e. the !eriod of ser$ice in a %ob should be
fi/ed.
b. Therefore em!loyees should be a!!ointed after kee!ing in $ie& !rinci!les
of recruitment 6 selection but once they are a!!ointed their ser$ices
should be ser$ed.
c. (ccording to +ayol. "Time is re,uired for an em!loyee to get used to a
ne& &ork 6 succeed to doing it &ell but if he is remo$ed before that he
&ill not be able to render &orth&hile ser$ices#.
d. (s a result' the time' effort and money s!ent on training the &orker &ill go
&aste.
e. Stability of %ob creates team s!irit and a sense of belongingness among
&orkers &hich ultimately increase the ,uality as &ell as ,uantity of &ork.
11. Scalar C$ain
a. +ayol defines scalar chain as 0The chain of su!eriors ranging from the
ultimate authority to the lo&est#.
b. E$ery orders' instructions' messages' re,uests' e/!lanation etc. has to !ass
through Scalar chain.
c. But' for the sake of con$enience 6 urgency' this !ath can be cut shirt and
this short cut is kno&n as ?ang .lank.
d. ( $ang *lan3 is a tem!orary arrangement bet&een t&o different !oints to
facilitate ,uick 6 easy communication as e/!lained belo&:
->
In the figure gi$en' if F has to communicate &ith ? he &ill first send the
communication u!&ards &ith the hel! of C' B to ( and then do&n&ards &ith the hel! of
E and + to ? &hich &ill take ,uite some time and by that time' it may not be &orth
therefore a gang !lank has been de$elo!ed bet&een the t&o.
Gang Plank clarifies that management principles are not rigid rather
they are very fle$ible% hey can be moulded and modified as per the
re&uirements of situations
12. S#b1'rdination of .ndivid#al .nterest to 2eneral .nterest
a. (n organi8ation is much bigger than the indi$idual it constitutes therefore interest
of the undertaking should !re$ail in all circumstances.
b. (s far as !ossible' reconciliation should be achie$ed bet&een indi$idual and
grou! interests.
c. But in case of conflict' indi$idual must sacrifice for bigger interests.
d. In order to achie$e this attitude' it is essential that <
9 Em!loyees should be honest 6 sincere.
9 .ro!er 6 regular su!er$ision of &ork.
9 Reconciliation of mutual differences and clashes by mutual agreement.
+or e/am!le' for change of location of !lant' for change of !rofit sharing
ratio' etc.
13.*spirit De3 Corps 4can be ac$ieved t$ro#g$ #nit! of command5
a. It refers to team s!irit i.e. harmony in the &ork grou!s and mutual understanding
among the members.
b. S!irit Fe0 Cor!s ins!ires &orkers to &ork harder.
-@
c. +ayol cautioned the managers against di$iding the em!loyees into com!eting
grou!s because it might damage the moral of the &orkers and interest of the
undertaking in the long run.
d. To inculcate Es!irit Fe0 Cor!s follo&ing ste!s should be undertaken <
o There should be !ro!er co9ordination of &ork at all le$els
o Subordinates should be encouraged to de$elo! informal relations among
themsel$es.
o Efforts should be made to create enthusiasm and keenness among
subordinates so that they can &ork to the ma/imum ability.
o Efficient em!loyees should be re&arded and those &ho are not u! to the
mark should be gi$en a chance to im!ro$e their !erformance.
o Subordinates should be made conscious of that &hate$er they are doing is
of great im!ortance to the business 6 society.
e. 3e also cautioned against the more use of Britain communication to the
subordinates i.e. face to face communication should be de$elo!ed. The managers
should infuse team s!irit 6 belongingness. There should be no !lace for
misunderstanding. .eo!le then en%oy &orking in the organi8ation 6 offer their
best to&ards the organi8ation.
14. Centrali6ation % De1Centrali6ation
a. Centrali8ation means concentration of authority at the to! le$el. In other &ords'
centrali8ation is a situation in &hich to! management retains most of the decision
making authority.
b. Fecentrali8ation means dis!osal of decision making authority to all the le$els of
the organi8ation. In other &ords' sharing authority do&n&ards is decentrali8ation.
c. (ccording to +ayol' "Fegree of centrali8ation or decentrali8ation de!ends on no.
of factors like si8e of business' e/!erience of su!eriors' de!endability 6 ability of
subordinates etc.
d. (nything &hich increases the role of subordinate is decentrali8ation 6 anything
&hich decreases it is centrali8ation.
e. +ayol suggested that absolute centrali8ation or decentrali8ation is not feasible. (n
organi8ation should strike to achie$e a lot bet&een the t&o.
''
Management Theoy
The *inciples of (cientific Management
Fedeic3 ;inslo, Taylo
+redrick )inslo& Taylor 1 March -C' 1A=> 9 March -1' 1B1=2 commonly kno&n as
<Fathe of (cientific Management< started his career as an o!erator and rose to the
!osition of chief engineer. 3e conducted $arious e/!eriments during this !rocess &hich
forms the basis of scientific management. It im!lies a!!lication of scientific !rinci!les
for studying 6 identifying management !roblems.
-A
(ccording to Taylor' "Scientific Management is an art of kno&ing e/actly &hat you &ant
your men to do and seeing that they do it in the best and chea!est &ay#. In Taylors $ie&'
if a &ork is analysed scientifically it &ill be !ossible to find one best &ay to do it.
3ence scientific management is a thoughtful' organi8ed' dual a!!roach to&ards the %ob of
management against hit or miss or Rule of Thumb.
(ccording to 2ruc-er' "The cost of scientific management is the organi8ed study of
&ork' the analysis of &ork into sim!lest element 6 systematic management of &orker0s
!erformance of each element#.
Fedeic3 ;inslo, Taylo 1March -C' 1A=><March -1' 1B1=2' &idely kno&n as F7 ;7
Taylo' &as an (merican mechanical engineer &ho sought to im!ro$e industrial
efficiency. 3e is regarded as the father of scientific management' and &as one of the first
management consultants.
Taylor &as one of the intellectual leaders of the Efficiency Mo$ement and his ideas'
broadly concei$ed' &ere highly influential in the .rogressi$e Era.
Taylor thought that by analy8ing &ork' the L4ne Best )ayL to do it &ould be found. 3e
is most remembered for de$elo!ing the time and motion study. 3e &ould break a %ob into
its com!onent !arts and measure each to the hundredth of a minute. 4ne of his most
famous studies in$ol$ed sho$els. 3e noticed that &orkers used the same sho$el for all
materials. 3e determined that the most effecti$e load &as -1M lb' and found or designed
sho$els that for each material &ould scoo! u! that amount. 3e &as generally
unsuccessful in getting his conce!ts a!!lied and &as dismissed from Bethlehem Steel. It
&as largely through the efforts of his disci!les 1most notably 3.. ?antt2 that industry
came to im!lement his ideas. *e$ertheless' the book he &rote after !arting com!any &ith
Bethlehem Steel.
Mayo<s .a,thone e+peiment
$eoge 'lton /ohn Mayo 1-> Fecember 1AAC 9 @ Se!tember 1B;B2 &as an (ustralian
!sychologist' sociologist and organi8ation theorist.
'lton Mayo<s .a,thon e+peiments
Elton Mayo0s team conducted a number of e/!eriments in$ol$ing si/ female &orkers.
These e/!eriments are often referred to as the 3a&thorne e/!eriments or 3a&thorne
studies as they took !lace at The 3a&thorne )orks of the )estern Electric Com!any in
Chicago.
4$er the course of fi$e years' Mayo0s team altered the female &orker0s &orking
conditions and then monitored ho& the &orking conditions affected the &orkers morale
and !roducti$ity. The changes in &orking conditions included changes in &orking hours'
-B
rest brakes' lighting' humidity' and tem!erature. The changes &ere e/!lained to the
&orkers !rior to im!lementation.
(t the end of the fi$e year !eriod' the female &orker0s &orking conditions' re$erted back
to the conditions before the e/!eriment began. Gne/!ectedly the &orkers morale and
!roducti$ity rose to le$els higher than before and during the e/!eriments.
The combination of results during and after the e/!eriment 1ie the increase in the &orkers
!roducti$ity &hen they &ere returned to their original &orking conditions2 led Mayo to
conclude that &orkers &ere moti$ated by !sychological conditions more than !hysical
&orking condition. 3e also concluded that &orkers &ere moti$ated by more than self
interest and instead the follo&ing a!!lied:
There is an un&ritten understanding bet&een the &orker and em!loyer regarding
&hat is e/!ected from them7 Mayo called this the !sychological contract.
( &orker0s moti$ation can be increased by sho&ing an interest in them. Mayo
classified studying the &orkers 1through the e/!eriments2 as sho&ing an interest
in the &orkers.
)ork is a grou! acti$ity' team &ork can increase a &orker0s moti$ation as it
allo&s !eo!le to form strong &orking relationshi!s and increases trust bet&een
the &orkers. )ork grou!s are created formally by the em!loyer but also occur
informally. Both informal and formal grou!s should be used to increase
!roducti$ity as informal grou!s influence the &orker0s habits and attitudes.
)orkers are moti$ated by the social as!ect of &ork' as demonstrated by the
female &orkers socialising during and outside &ork and the subse,uent increase
in moti$ation.
)orkers are moti$ated by recognition' security and a sense of belonging.
The communication bet&een &orkers and management influences &orkers0
morale and !roducti$ity. )orkers are moti$ated through a good &orking
relationshi! &ith management.
Abraham Maslo( heory of #uman needs
(braham Maslo& bet&een 1B;591B=; de$elo!ed his I3ierarchy of needsI moti$ation
theory. It is !robably the most !o!ular and most read moti$ation theory. 3is theory
suggests that &ithin each !erson their is a hierarchy of needs and the indi$idual must
satisfy each le$el before they mo$e onto the ne/t. There are fi$e hierarchical le$els.
These are:
6hysiological needs: +ood' shelter' se/ual satisfaction i.e those needs needed for
basic sur$i$al.
5C
/afety needs: The need to feel safe &ithin your en$ironment. (lso refers to
emotional and !hysical safety.
/ocial 7eeds, The need for lo$e' friendshi! and belongingness
*steem needs: The need for self res!ect' status and recognition from others.
/elf actualisation: The !oint of reaching ones full !otential. (re you ca!able at
e/celling yourselfN
Fiagram: Maslo,=s .ieachy of Needs

So an indi$idual &ill need to satisfy their most basic need before they can mo$e onto the
ne/t. 4nly &hen that indi$idual kno&s that they ha$e met their !hysiological needs &ill
they mo$e onto their safety needs. Maslo& suggests that if you &anted to moti$ate an
indi$idual you &ill need to kno& &here &ithin the hierarchy they are !laced.
Douglas McGregor)s heory * and heory +
0ouglas Mc$ego 11BC> < 1B>;2 &as a Management !rofessor at the MIT Sloan
School of Management and !resident of (ntioch College from 1B;A to 1B=;. 3is 1B>C
book !he .uman /ide of *nterprise had a !rofound influence on education !ractices. In
the book he identified an a!!roach of creating an en$ironment &ithin &hich em!loyees
are moti$ated $ia authoritati$e' direction and control or integration and self9control'
&hich he called theory O and theory P' res!ecti$ely. Theory P is the !ractical a!!lication
of Fr. (braham Maslo&Is 3umanistic School of .sychology' or Third +orce !sychology'
a!!lied to scientific management.
3e is commonly thought of as being a proponent of Theory P' but' as Edgar Schein tells
in his introduction to Mc?regorIs subse,uent' !osthumous 11B>@2' book !he 6rofessional
51
Manager : LIn my o&n contacts &ith Foug' I often found him to be discouraged by the
degree to &hich theory P had become as monolithic a set of !rinci!les as those of Theory
O' the o$er9generali8ation &hich Foug &as fighting....Pet fe& readers &ere &illing to
ackno&ledge that the content of FougIs book made such a neutral !oint or that FougIs
o&n !resentation of his !oint of $ie& &as that coldly scientificL.
Theoy >
This theory is also referred to as "the authoritarian management style#' as it states that the
a$erage !erson needs to be coerced 1e$en threatened &ith !unishment2' into &orking
to&ards organisational ob%ecti$es.
The a$erage em!loyee does not like &ork and &ill attem!t to a$oid it.
(s em!loyees are la8y they do not &ant res!onsibility and ha$e no ambition.
Indi$iduals !refer to be directed and &ant security abo$e e$erything else.
Indi$iduals need to be closely su!er$ised and controlled.
Theoy ?
(lso kno&n as "the !artici!ati$e management style#' a theory P organisation0s $ie& of
!eo!le is the o!!osite of an organisation a!!lying theory O.
The a$erage em!loyee likes &ork' and is self9moti$ated.
Em!loyees can learn to not only acce!t but seek greater res!onsibility.
Indi$iduals are ambitious not la8y' and &ork is as natural as rest and !lay.
Indi$iduals e/ercise self control and self9direction to achie$e ob%ecti$es that they
are committed to. Threats of !unishment are unnecessary.
The re&ards of achie$ement generate commitment from em!loyees.
If indi$iduals are gi$en freedom there is o!!ortunity to increase !roducti$ity.
Managers a!!lying theory P belie$e that if em!loyees are gi$en the o!!ortunity' they &ill
de$elo! a desire to be imaginati$e and creati$e at &ork. They &ill therefore try and
remo$e obstacles that !re$ent em!loyees from realising their !otential. They belie$e that
negati$e attitudes such as a$oidance of res!onsibility are caused by e/!erience and are
not "inherent characteristics#. Therefore by creating the !ositi$e e/!eriences and
conditions such negati$es can be banished.
Mc?regor0s theory of O and P re!resents t&o e/tremes' &hich !robably aren0t a!!lied in
full by today0s organisations. 3o&e$er the theory has !ro$ided the foundations for
today0s management strategy and elements of it can be seen in other management
e$aluations
5-
#ert,berg)s (o Factor theory of Motivation
Herzberg's Motivation Hygiene Theory
3er8bergIs T&o +actor Theory is a Lcontent theoryL of moti$ationL 1the other main one is
Maslo&Is 3ierarchy of *eeds2.
3er8berg analysed the %ob attitudes of -CC accountants and engineers &ho &ere asked to
recall &hen they had felt !ositi$e or negati$e at &ork and the reasons &hy.
+rom this research' 3er8berg suggested a t&o9ste! a!!roach to understanding em!loyee
moti$ation and satisfaction:
.ygiene Factos
3ygiene factors are based on the need to for a business to a$oid un!leasantness at &ork.
If these factors are considered inade,uate by em!loyees' then they can cause
dissatisfaction &ith &ork. 3ygiene factors include:
9 Com!any !olicy and administration
9 )ages' salaries and other financial remuneration
9 Quality of su!er$ision
9 Quality of inter9!ersonal relations
55
9 )orking conditions
9 +eelings of %ob security
Moti#ato Factos
Moti$ator factors are based on an indi$idualIs need for !ersonal gro&th. )hen they e/ist'
moti$ator factors acti$ely create %ob satisfaction. If they are effecti$e' then they can
moti$ate an indi$idual to achie$e abo$e9a$erage !erformance and effort. Moti$ator
factors include:
9 Status
9 4!!ortunity for ad$ancement
9 ?aining recognition
9 Res!onsibility
9 Challenging D stimulating &ork
9 Sense of !ersonal achie$ement 6 !ersonal gro&th in a %ob
There is some similarity bet&een 3er8bergIs and Maslo&Is models. They both suggest
that needs ha$e to be satisfied for the em!loyee to be moti$ated. 3o&e$er' 3er8berg
argues that only the higher le$els of the Maslo& 3ierarchy 1e.g. self9actualisation' esteem
needs2 act as a moti$ator. The remaining needs can only cause dissatisfaction if not
addressed.
Applying .et%beg=s model to de!moti#ated ,o3es
)hat might the e$idence of de9moti$ated em!loyees be in a businessN
9 o& !roducti$ity
9 .oor !roduction or ser$ice ,uality
9 Strikes D industrial dis!utes D breakdo&ns in em!loyee communication and relationshi!s
9 Com!laints about !ay and &orking conditions
(ccording to 3er8berg' management should focus on rearranging &ork so that moti$ator
factors can take effect. 3e suggested three &ays in &hich this could be done:
9 Kob enlargement
9 Kob rotation and Kob enrichment
5;
5eadeship styles
The leadershi! styles &e look at here are:
(utocratic leadershi!
Bureaucratic leadershi!
Charismatic leadershi!
Femocratic leadershi!
aisse89faire leadershi!
.eo!le9oriented leadershi!
Ser$ant leadershi!
Task9oriented leadershi!
Transactional leadershi!
Transformational leadershi!
$utocratic Leadership
(utocratic leadershi! is an e/treme form of transactional leadershi!' &here a leader
e/erts high le$els of !o&er o$er his or her em!loyees or team members. .eo!le &ithin
the team are gi$en fe& o!!ortunities for making suggestions' e$en if these &ould be in
the teamIs or organi8ation0s interest.
Many !eo!le resent being treated like this. Because of this' autocratic leadershi! often
leads to high le$els of absenteeism and staff turno$er. (lso' the teamIs out!ut does not
benefit from the creati$ity and e/!erience of all team members' so many of the benefits
of team&ork are lost.
+or some routine and unskilled %obs' ho&e$er' this style can remain effecti$e' &here the
ad$antages of control out&eigh the disad$antages.
8ureaucratic Leadership
Bureaucratic leaders &ork "by the book#' ensuring that their staff follo& !rocedures
e/actly. This is a $ery a!!ro!riate style for &ork in$ol$ing serious safety risks 1such as
&orking &ith machinery' &ith to/ic substances or at heights2 or &here large sums of
money are in$ol$ed 1such as cash9handling2.
In other situations' the infle/ibility and high le$els of control e/erted can demorali8e
staff' and can diminish the organi8ationIs ability to react to changing e/ternal
circumstances.
1harismatic Leadership
( charismatic leadershi! style can a!!ear similar to a transformational leadershi! style' in
that the leader in%ects huge doses of enthusiasm into his or her team' and is $ery energetic
in dri$ing others for&ard.
5=
3o&e$er' charismatic leaders can tend to belie$e more in themsel$es than in their teams.
This can create a risk that a !ro%ect' or e$en an entire organi8ation' might colla!se if the
leader &ere to lea$e: in the eyes of their follo&ers' success is tied u! &ith the !resence of
the charismatic leader. (s such' charismatic leadershi! carries great res!onsibility' and
needs long9term commitment from the leader.
2emocratic Leadership or 6articipati%e Leadership
(lthough a democratic leader &ill make the final decision' he or she in$ites other
members of the team to contribute to the decision9making !rocess. This not only
increases %ob satisfaction by in$ol$ing em!loyees or team members in &hat0s going on'
but it also hel!s to de$elo! !eo!le0s skills. Em!loyees and team members feel in control
of their o&n destiny' and so are moti$ated to &ork hard by more than %ust a financial
re&ard.
(s !artici!ation takes time' this style can lead to things ha!!ening more slo&ly than an
autocratic a!!roach' but often the end result is better. It can be most suitable &here team
&orking is essential' and &here ,uality is more im!ortant than s!eed to market or
!roducti$ity.
Laissez9Faire Leadership
This +rench !hrase means "lea$e it be# and is used to describe a leader &ho lea$es his or
her colleagues to get on &ith their &ork. It can be effecti$e if the leader monitors &hat is
being achie$ed and communicates this back to his or her team regularly. Most often'
laisse89faire leadershi! &orks for teams in &hich the indi$iduals are $ery e/!erienced
and skilled self9starters. Gnfortunately' it can also refer to situations &here managers are
not e/erting sufficient control.
6eople9Oriented Leadership or 0elations9Oriented Leadership
This style of leadershi! is the o!!osite of task9oriented leadershi!: the leader is totally
focused on organi8ing' su!!orting and de$elo!ing the !eo!le in the leader0s team. (
!artici!ati$e style' it tends to lead to good team&ork and creati$e collaboration.
3o&e$er' taken to e/tremes' it can lead to failure to achie$e the teamIs goals.
In !ractice' most leaders use both task9oriented and !eo!le9oriented styles of leadershi!.
/er%ant Leadership
This term' coined by Robert ?reenleaf in the 1B@Cs' describes a leader &ho is often not
formally recogni8ed as such. )hen someone' at any le$el &ithin an organi8ation' leads
sim!ly by $irtue of meeting the needs of his or her team' he or she is described as a
"ser$ant leader#.
In many &ays' ser$ant leadershi! is a form of democratic leadershi!' as the &hole team
tends to be in$ol$ed in decision9making.
5>
Su!!orters of the ser$ant leadershi! model suggest it is an im!ortant &ay ahead in a
&orld &here $alues are increasingly im!ortant' and in &hich ser$ant leaders achie$e
!o&er on the basis of their $alues and ideals. 4thers belie$e that in com!etiti$e
leadershi! situations' !eo!le !racticing ser$ant leadershi! can find themsel$es Lleft
behindL by leaders using other leadershi! styles.
!as-9Oriented Leadership
( highly task9oriented leader focuses only on getting the %ob done' and can be ,uite
autocratic. 3e or she &ill acti$ely define the &ork and the roles re,uired' !ut structures in
!lace' !lan' organi8e and monitor. 3o&e$er' as task9oriented leaders s!are little thought
for the &ell9being of their teams' this a!!roach can suffer many of the fla&s of autocratic
leadershi!' &ith difficulties in moti$ating and retaining staff. Task9oriented leaders can
benefit from an understanding of the Blake9Mouton Managerial ?rid' &hich can hel!
them identify s!ecific areas for de$elo!ment that &ill hel! them in$ol$e !eo!le more.
!ransactional Leadership
This style of leadershi! starts &ith the !remise that team members agree to obey their
leader totally &hen they take a %ob on: the "transaction# is 1usually2 that the organi8ation
!ays the team members' in return for their effort and com!liance. (s such' the leader has
the right to "!unish# team members if their &ork doesn0t meet the !re9determined
standard.
Team members can do little to im!ro$e their %ob satisfaction under transactional
leadershi!. The leader could gi$e team members some control of their incomeDre&ard by
using incenti$es that encourage e$en higher standards or greater !roducti$ity.
(lternati$ely a transactional leader could !ractice "management by e/ce!tion#' &hereby'
rather than re&arding better &ork' he or she &ould take correcti$e action if the re,uired
standards &ere not met.
Transactional leadershi! is really %ust a &ay of managing rather a true leadershi! style' as
the focus is on short9term tasks. It has serious limitations for kno&ledge9based or creati$e
&ork' but remains a common style in many organi8ations.
!ransformational Leadership
( !erson &ith this leadershi! style is a true leader &ho ins!ires his or her team &ith a
shared $ision of the future. Transformational leaders are highly $isible' and s!end a lot of
time communicating. They don0t necessarily lead from the front' as they tend to delegate
res!onsibility amongst their teams. )hile their enthusiasm is often infectious' they can
need to be su!!orted by "detail !eo!le#.
In many organi8ations' both transactional and transformational leadershi! are needed.
The transactional leaders 1or managers2 ensure that routine &ork is done reliably' &hile
the transformational leaders look after initiati$es that add ne& $alue.
5@
The transformational leadershi! style is the dominant leadershi! style taught in the 3o&
to ead: Fisco$er the eader )ithin Pou leadershi! !rogram' although &e do
recommend that other styles are brought as the situation demands.
:sing the 0ight /tyle ; /ituational Leadership
)hile the Transformation eadershi! a!!roach is often a highly effecti$e style to use in
business' there is no one "right# &ay to lead or manage that suits all situations. To choose
the most effecti$e a!!roach for you' you must consider:
The skill le$els and e/!erience of the members of your team.
The &ork in$ol$ed 1routine or ne& and creati$e2.
The organi8ational en$ironment 1stable or radically changing' conser$ati$e or
ad$enturous2.
Pou o&n !referred or natural style.
( good leader &ill find him or herself s&itching instincti$ely bet&een styles according to
the !eo!le and &ork they are dealing &ith. This is often referred to as "situational
leadershi!#.
+or e/am!le' the manager of a small factory trains ne& machine o!erati$es using a
bureaucratic style to ensure o!erati$es kno& the !rocedures that achie$e the right
standards of !roduct ,uality and &ork!lace safety. The same manager may ado!t a more
!artici!ati$e style of leadershi! &hen &orking on !roduction line im!ro$ement &ith his
or her team of su!er$isors.
(ocial &esponsibilities of Management
The term social res!onsibilities can be defined as the obligation of management to&ards
the society and others concerned.
&eason fo (ocial &esponsibilities: Business enter!rises are creatures of society and
should res!ond to the demands of society. If the management does not react to changes in
social demands' the society &ill either force them to do so through la&s or &ill not !ermit
the enter!rise to sur$i$e. Therefore the longterm interests of business are best ser$ed
&hen management assume social res!onsibilities. The image of business organi8ation
liked &ith the ,uality of its !roducts and customer ser$ice and the e/tent to &hich it
fulfills the e/!ectations of o&ners' em!loyees' consumers' go$ernment and the
community at large. +or longterm success it matters a great deal if the firm has a
fa$ourable image in the !ublic mind. E$ery business enter!rise is a organ of society and
its acti$ities ha$e im!act on the social scene. Therefore' it is im!ortant for management
to consider &hether their !olicies and actions are likely to !romote the !ublic good'
ad$ances the basic $alues of society' and constitute to its stability' strength and harmony.
Increasing concern for the social res!onsibility of management' it is no& recogni8ed that
besides taking care of the financial interest of o&ners' managers of business firms must
also take into account the interest of $arious other grou!s such as em!loyees' consumers'
5A
the go$ernment and the community as a &hole. These interested grou!s are directly or
indirectly affected by the !ursuit of business acti$ities and they are the stake9holders of
the business enter!rise.
&esponsibility to,ads o,nes: The !rimary res!onsibilities of management is to
assure a fair and reasonable rate of return on ca!ital and fair return on in$estment can be
determined on the basis of difference in the risks of business in different fields of acti$ity.
)ith the gro&th of business the shareholders can also e/!ect a!!reciation in the $alue of
their ca!ital.
&esponsibility to,ads employees: Management res!onsibility to&ards em!loyees
relate to the fair &ages and salaries' satisfactory &ork en$ironment' labour management
relations and em!loyee &elfare. +air &ages should be fi/ed in the light of labor
!roducti$ity' the !re$ailing &age rates in the same or neighbouring areas and relati$e
im!ortance of %obs. Managers salaries and allo&ances are e/!ected to be linked &ith their
res!onsibility' initiati$e and skill. But the s!read bet&een minimum &ages and highest
salaries should be reasonable. Em!loyees are e/!ected to build u! and maintain
harmonious relationshi!s bet&een su!erior and subordinates. (nother as!ect of
res!onsibility to&ards em!loyees is the !ro$ision of &elfare amenities like safety and
security of &orking conditions' medical facilities' housing' canteen' lea$e and retirement
benefits.
&esponsibility to,ads consumes: In a com!etiti$e market' ser$ing consumers is
su!!osed to be a !rime concern of management. But in reality !erfect com!etition does
not !re$ail in all !roduct markets. In the e$ent of shortage of su!!ly there is no automatic
correction. Besides consumers are often $ictims of unfair trade !ractices and unethical
conduct of business. Consumer interests are thus !rotected to some e/tent &ith la&s and
!ressure of organi8ed consumer grou!s. Management should antici!ate these
de$elo!ments' satisfy consumer needs and !rotect consumer interests. ?oods must be of
a!!ro!riate standard and ,uality and be a$ailable in ade,uate ,uantities at reasonable
!rices. Management should a$oid resorting to hoarding or creating artificial scarcity as
&ell as false and misleading ad$ertisements.
&esponsibility to,ads the $o#enments: (s a !art of their social res!onsibility'
management must conduct business affair in la&ful manner' honestly !ay all the ta/es
and dues' and should not corru!t !ublic officials for selfish ends. Business acti$ities must
also confirm to the economic and social !olicies of the go$ernment.
&esponsibility to,ads the community and society: The socially res!onsible role of
management in relation to the community are e/!ected to be re$ealed by its !olicies &ith
res!ect to the em!loyment of handica!!ed !ersons' and &eaker sections of the
community' en$ironmental !rotection' !ollution control' setting u! industries in back&ard
areas' and !ro$iding relief to the $ictims of natural calamities etc
5B
Fedeic3 Taylo and (cientific Management
In 1B11' +rederick )inslo& Taylor !ublished his &ork' !he 6rinciples of /cientific
Management' in &hich he described ho& the a!!lication of the scientific method to the
management of &orkers greatly could im!ro$e !roducti$ity. Scientific management
methods called for o!timi8ing the &ay that tasks &ere !erformed and sim!lifying the %obs
enough so that &orkers could be trained to !erform their s!eciali8ed se,uence of motions
in the one LbestL &ay.
.rior to scientific management' &ork &as !erformed by skilled craftsmen &ho had
learned their %obs in lengthy a!!renticeshi!s. They made their o&n decisions about ho&
their %ob &as to be !erformed. Scientific management took a&ay much of this autonomy
and con$erted skilled crafts into a series of sim!lified %obs that could be !erformed by
unskilled &orkers &ho easily could be trained for the tasks.
Taylor became interested in im!ro$ing &orker !roducti$ity early in his career &hen he
obser$ed gross inefficiencies during his contact &ith steel &orkers.
(oldieing
)orking in the steel industry' Taylor had obser$ed the !henomenon of &orkersI !ur!osely
o!erating &ell belo& their ca!acity' that is' soldiering. 3e attributed soldiering to three
causes:
1. The almost uni$ersally held belief among &orkers that if they became more
!roducti$e' fe&er of them &ould be needed and %obs &ould be eliminated.
-. *on9incenti$e &age systems encourage lo& !roducti$ity if the em!loyee &ill
recei$e the same !ay regardless of ho& much is !roduced' assuming the em!loyee
can con$ince the em!loyer that the slo& !ace really is a good !ace for the %ob.
Em!loyees take great care ne$er to &ork at a good !ace for fear that this faster
!ace &ould become the ne& standard. If em!loyees are !aid by the ,uantity they
!roduce' they fear that management &ill decrease their !er9unit !ay if the ,uantity
increases.
5. )orkers &aste much of their effort by relying on rule9of9thumb methods rather
than on o!timal &ork methods that can be determined by scientific study of the
task.
To counter soldiering and to im!ro$e efficiency' Taylor began to conduct e/!eriments to
determine the best le$el of !erformance for certain %obs' and &hat &as necessary to
achie$e this !erformance.
Time (tudies
Taylor argued that e$en the most basic' mindless tasks could be !lanned in a &ay that
dramatically &ould increase !roducti$ity' and that scientific management of the &ork &as
more effecti$e than the Linitiati$e and incenti$eL method of moti$ating &orkers. The
;C
initiati$e and incenti$e method offered an incenti$e to increase !roducti$ity but !laced
the res!onsibility on the &orker to figure out ho& to do it.
To scientifically determine the o!timal &ay to !erform a %ob' Taylor !erformed
e/!eriments that he called time studies' 1also kno&n as time and motion studies2. These
studies &ere characteri8ed by the use of a sto!&atch to time a &orkerIs se,uence of
motions' &ith the goal of determining the one best &ay to !erform a %ob.
The follo&ing are e/am!les of some of the time9and9motion studies that &ere !erformed
by Taylor and others in the era of scientific management.
.ig Iron
If &orkers &ere mo$ing 1- 1D- tons of !ig iron !er day and they could be incenti$i8ed to
try to mo$e ;@ 1D- tons !er day' left to their o&n &its they !robably &ould become
e/hausted after a fe& hours and fail to reach their goal. 3o&e$er' by first conducting
e/!eriments to determine the amount of resting that &as necessary' the &orkerIs manager
could determine the o!timal timing of lifting and resting so that the &orker could mo$e
the ;@ 1D- tons !er day &ithout tiring.
*ot all &orkers &ere !hysically ca!able of mo$ing ;@ 1D- tons !er day7 !erha!s only 1DA
of the !ig iron handlers &ere ca!able of doing so. )hile these 1DA &ere not e/traordinary
!eo!le &ho &ere highly !ri8ed by society' their !hysical ca!abilities &ere &ell9suited to
mo$ing !ig iron. This e/am!le suggests that &orkers should be selected according to ho&
&ell they are suited for a !articular %ob.
The Science of Sho$eling
In another study of the Lscience of sho$elingL' Taylor ran time studies to determine that
the o!timal &eight that a &orker should lift in a sho$el &as -1 !ounds. Since there is a
&ide range of densities of materials' the sho$el should be si8ed so that it &ould hold -1
!ounds of the substance being sho$eled. The firm !ro$ided the &orkers &ith o!timal
sho$els. The result &as a three to four fold increase in !roducti$ity and &orkers &ere
re&arded &ith !ay increases. .rior to scientific management' &orkers used their o&n
sho$els and rarely had the o!timal one for the %ob.
Bricklaying
4thers !erformed e/!eriments that focused on s!ecific motions' such as ?ilbrethIs
bricklaying e/!eriments that resulted in a dramatic decrease in the number of motions
re,uired to lay bricks. The husband and &ife ?ilbreth team used motion !icture
technology to study the motions of the &orkers in some of their e/!eriments.
Taylo=s @ *inciples of (cientific Management
(fter years of $arious e/!eriments to determine o!timal &ork methods' Taylor !ro!osed
the follo&ing four !rinci!les of scientific management:
1. Re!lace rule9of9thumb &ork methods &ith methods based on a scientific study of
the tasks.
;1
-. Scientifically select' train' and de$elo! each &orker rather than !assi$ely lea$ing
them to train themsel$es.
5. Coo!erate &ith the &orkers to ensure that the scientifically de$elo!ed methods
are being follo&ed.
;. Fi$ide &ork nearly e,ually bet&een managers and &orkers' so that the managers
a!!ly scientific management !rinci!les to !lanning the &ork and the &orkers
actually !erform the tasks.
These !rinci!les &ere im!lemented in many factories' often increasing !roducti$ity by a
factor of three or more. 3enry +ord a!!lied TaylorIs !rinci!les in his automobile
factories' and families e$en began to !erform their household tasks based on the results
of time and motion studies.
0a,bac3s of (cientific Management
)hile scientific management !rinci!les im!ro$ed !roducti$ity and had a substantial
im!act on industry' they also increased the monotony of &ork. The core %ob dimensions
of skill $ariety' task identity' task significance' autonomy' and feedback all &ere missing
from the !icture of scientific management.
)hile in many cases the ne& &ays of &orking &ere acce!ted by the &orkers' in some
cases they &ere not. The use of sto!&atches often &as a !rotested issue and led to a strike
at one factory &here LTaylorismL &as being tested. Com!laints that Taylorism &as
dehumani8ing led to an in$estigation by the Gnited States Congress. Fes!ite its
contro$ersy' scientific management changed the &ay that &ork &as done' and forms of it
continue to be used today.
0eming=s "ontibution to "all "ente Auality
In !art one of this ongoing series' &e !osed four $ital ,uestions to be addressed in
any effecti$e ,uality9monitoring !rogram:
12 3o& are &e' as an organi8ation' doing at re!resenting our call centerN
-2 )hat can &e' as an organi8ation' do to get better at re!resenting our call centerN
52 3o& is this !articular agent doing at re!resenting our call centerN
;2 )hat can &e' as managers' do to hel! this agent to get better at re!resenting our
call centerN
In the *o$ember issue' &e began looking at the second ,uestion' by considering
boundaries and starting !oints. )ith this as a foundation' &e are ready to consider the
;-
contributions of Ed&ard Feming rele$ant to this discussion. (lthough first !ublished in
1BA>' FemingIs classic book Out of the 1risis has stood the test of time. FemingIs most
famous !rescri!tions for business are contained in his fourteen !oints and his se$en
deadly sins of management. 1If you ha$enIt read the book' %ust do a ?oogle search for
LFeming 1; .oints.L There youIll find se$eral good introductions to his !rece!ts.2
Feming said that' in his e/!erience' B; !ercent of all im!ro$ement o!!ortunities come
from ans&ering $ital ,uestion t&o and only > !ercent from ans&ering the third one.
*ut Fist Things Fist: )hile indi$idual feedback is im!ortant to gi$e' it is
secondary' not !rimary. This ne& model hel!s kee! first things first. It is in ans&ering
$ital ,uestion t&o that you stand to gain the most from ?etting Quality Right. )ith a
consistent system in !lace for ans&ering ,uestion one' you can !rioriti8e your efforts as
you dig into ,uestion t&o. )ithout ans&ering ,uestion one first' itIs easy become
distracted about im!ro$ement that really &onIt make much difference in o$erall ,uality.
Time (eies 1ie, of 0ata: Feming considered a time series $ie& of sam!led data as
im!ortant' as it is to most !ractitioners of total ,uality management. )e can learn a lot
from studying ,uality scores through this lens. This is because ,uality tends to $ary o$er
time.
The key measures &e ha$e used so far in analy8ing distributed data include the mean'
median' range' ske&ness' and standard de$iation. These results are ty!ically re!resented
$isually in a histogram. This a!!roach to analysis has many benefits7 ho&e$er' it hides
$ariations &ithin that time frame.
In $ie&ing a monthIs &orth of data' you can learn a lot about ho& you did for the
month' but not about &hat &ent on &ithin shorter !eriods. Therefore' youIll benefit from
looking at a su!!lementary !oint of $ie& that sho&s the time dimension. ThatIs &hat a
run chart and its close cousin' a control chart' can do.
&un "hats: Pour randomly selected calls are already identified by a dateDtime
stam!. (ll you need to do is sort them by time and date and dra& a run chart. ( run chart
gi$es you a $isual im!ression of ho& $ariation ha!!ens o$er time. E/cel' Minitab' S.SS'
and other statistical !rograms make it easy to generate run charts.
If you !lot a monthIs &orth of sam!led calls' youIre going to ha$e a busy run chart.
ThatIs okay7 itIs &orth considering. Pou can also sim!lify it by looking at shorter !eriods'
or by combining data !oints into subgrou!s. Pou can gain more meaning &hen you $ie&
the data through a control chart.
"ontol "hats: Control charts are more com!le/ than run charts. They allo& you to
con$ert your im!ressions into a ,uantitati$ely $erifiable form from &hich you can dra&
conclusions. Control charts are like run charts on steroids.
Be a&are that control charts come in a $ariety of confusing ty!es. In addition'
different authors tend to use slightly different terms for the $arious ty!es. Therefore'
;5
&ading into this sub%ect is like &andering into a s&am!' but itIs &orth it because control
charts allo& you to con$ert your $isual im!ressions into a statistically $erifiable form.
+or a classic te/t on this sub%ect' see Eaoru Ishika&aIs 3uide to <uality 1ontrol. (t
first glance' the many formulas are forbidding' but stay &ith him. 3is e/!lanations are
clear' though technical.
A 1ey Bief O#e#ie,: Control charts &ork by o$erlaying additional information
u!on run charts. The most ty!ical of those are t&o boundaries kno&n as G!!er Control
imits 1GC2 and o&er Control imits 1C2. These limits are mathematically deri$ed
statistical boundaries of the $ariation in your data7 they are not boundaries that you set by
management fiat.
Control limits sho& you' gi$en the $ariation in your ,uality scores as $ie&ed o$er
time' the range &ithin &hich you can e/!ect to see those scores $ary. If all of your scores
fall &ithin the control limits' then your call handling is kno&n to be in statistical control.
Pour scores may be in control' but you still may not like the &ide range o$er &hich they
$ary. (lternati$ely' you may be dissatisfied &ith the lo& le$el of your a$erage scores. If
either is the case' it is time to address your training' coaching' or scoring !rocesses.
This is &hat ans&ering $ital ,uestion t&o is all about. .rocess im!ro$ement in
,uality call monitoring is largely about t&o things: reduce $ariation and raise o$erall
!erformance.
Most likely' youIll find some scores that fall outside of the control limits. Those calls
are kno&n as outliers. (ny call belo& the C is one that &as scored lo&. (ny call
abo$e the GC &as scored high. If a scored call is outside of those limits' you &ill &ant
to in$estigate &hat &ent on &ith that call. Pou may &ant to recheck your e$aluatorIs
scores. .erha!s someone should e$aluate the same call inde!endently as a check on your
calibration standards.
4nce you confirm that your e$aluatorIs scores are $alid' you may &ant to bring that
call to that agentIs attention 1or su!er$isorIs2 attention. If it is high' this could be a really
&ell handled call' &orthy of !raise. If lo&' remedial training or coaching of that re! may
be needed.
4utliers are %ust one &ay to use control charts to identify s!ecial causes in $ariation.
Pou can also use control charts as Learly &arning indicatorsL that there is something
about the ty!es of calls you are getting' or the &ay that re!s are handling calls' that is
changing o$er time. There are a $ariety of statistical rules of thumb that you can use
&hen studying data !oints in a control chart to determine this. Some things to look for
are a run of data !oints heading in the same direction or !oints alternating about the
central tendency line. (lso' youIll &ant to scrutini8e a cluster of scores that are higher or
lo&er than the central line.
;;
UNIT II
;=
Organi,ation
(n ogani%ation is a social arrangement &hich !ursues collecti$e goals' controls its o&n
!erformance' and has a boundary se!arating it from its en$ironment. In the social
sciences' organi8ations are studied by researchers from se$eral disci!lines' the most
common of &hich are sociology' economics' !olitical science' !sychology' management'
and organi8ational communication. The broad area is commonly referred to as
organi8ational studies' organi8ational beha$ior or organi8ation analysis. Therefore' a
number of different theories and !ers!ecti$es e/ist' some of &hich are com!atible'
4rgani8ation < !rocess9related: an entity is being 1re92organi8ed 1organi8ation as
task or action2.
4rgani8ation < functional: organi8ation as a function of ho& entities like
businesses or state authorities are used 1organi8ation as a !ermanent structure2.
4rgani8ation < institutional: an entity is an organi8ation 1organi8ation as an actual
!ur!oseful structure &ithin a social conte/t2
Ogani%ing is the function of management &hich follo&s !lanning. It is a function in
&hich the synchroni8ation and combination of human' !hysical and financial resources
takes !lace. (ll the three resources are im!ortant to get results. Therefore' organi8ational
function hel!s in achie$ement of results &hich in fact is im!ortant for the functioning of
a concern. (ccording to 1hester 8arnard' "4rgani8ing is a function by &hich the concern
is able to define the role !ositions' the %obs related and the co9 ordination bet&een
authority and res!onsibility. 3ence' a manager al&ays has to organi8e in order to get
results.
( manager !erforms organi8ing function &ith the hel! of follo&ing ste!s:9
1. Identification of acti#ities ! (ll the acti$ities &hich ha$e to be !erformed in a
concern ha$e to be identified first. +or e/am!le' !re!aration of accounts' making
sales' record kee!ing' ,uality control' in$entory control' etc. (ll these acti$ities
ha$e to be grou!ed and classified into units.
-. 0epatmentally ogani%ing the acti#ities ! In this ste!' the manager tries to
combine and grou! similar and related acti$ities into units or de!artments. This
organi8ation of di$iding the &hole concern into inde!endent units and
de!artments is called de!artmentation.
5. "lassifying the authoity ! 4nce the de!artments are made' the manager likes to
classify the !o&ers and its e/tent to the managers. This acti$ity of gi$ing a rank in
order to the managerial !ositions is called hierarchy. The to! management is into
formulation of !olicies' the middle le$el management into de!artmental
su!er$ision and lo&er le$el management into su!er$ision of foremen. The
clarification of authority hel! in bringing efficiency in the running of a concern.
This hel!s in achie$ing efficiency in the running of a concern. This hel!s in
a$oiding &astage of time' money' effort' in a$oidance of du!lication or
;>
o$erla!!ing of efforts and this hel!s in bringing smoothness in a concern0s
&orking.
;. "o!odination bet,een authoity and esponsibility ! Relationshi!s are
established among $arious grou!s to enable smooth interaction to&ard the
achie$ment of the organi8ational goal. Each indi$idual is made a&are of his
authority and heDshe kno&s &hom they ha$e to take orders from and to &hom
they are accountable and to &hom they ha$e to re!ort. ( clear organi8ational
structure is dra&n and all the em!loyees are made a&are of it.
Importance of Organi,ing Function
(peciali%ation ! 4rgani8ational structure is a net&ork of relationshi!s in &hich the
&ork is di$ided into units and de!artments. This di$ision of &ork is hel!ing in bringing
s!eciali8ation in $arious acti$ities of concern.
;ell defined Bobs ! 4rgani8ational structure hel!s in !utting right men on right %ob
&hich can be done by selecting !eo!le for $arious de!artments according to their
,ualifications' skill and e/!erience. This is hel!ing in defining the %obs !ro!erly &hich
clarifies the role of e$ery !erson.
"laifies authoity ! 4rgani8ational structure hel!s in clarifying the role !ositions to
e$ery manager 1status ,uo2. This can be done by clarifying the !o&ers to e$ery manager
and the &ay he has to e/ercise those !o&ers should be clarified so that misuse of !o&ers
do not take !lace. )ell defined %obs and res!onsibilities attached hel!s in bringing
efficiency into managers &orking. This hel!s in increasing !roducti$ity.
"o!odination ! 4rgani8ation is a means of creating co9 ordination among different
de!artments of the enter!rise. It creates clear cut relationshi!s among !ositions and
ensure mutual co9 o!eration among indi$iduals. 3armony of &ork is brought by higher
le$el managers e/ercising their authority o$er interconnected acti$ities of lo&er le$el
manager.
(uthority res!onsibility relationshi!s can be fruitful only &hen there is a formal
relationshi! bet&een the t&o. +or smooth running of an organi8ation' the co9 ordination
bet&een authority9 res!onsibility is $ery im!ortant. There should be co9 ordination
bet&een different relationshi!s. Clarity should be made for ha$ing an ultimate
res!onsibility attached to e$ery authority. There is a saying' "(uthority &ithout
res!onsibility leads to ineffecti$e beha$iour and res!onsibility &ithout authority makes
!erson ineffecti$e.00 Therefore' co9 ordination of authority9 res!onsibility is $ery
im!ortant.
'ffecti#e administation The organi8ation structure is hel!ful in defining the %obs
!ositions. The roles to be !erformed by different managers are clarified. S!eciali8ation is
achie$ed through di$ision of &ork. This all leads to efficient and effecti$e administration.
$o,th and di#esification ! ( com!any0s gro&th is totally de!endant on ho&
efficiently and smoothly a concern &orks. Efficiency can be brought about by clarifying
the role !ositions to the managers' co9ordination bet&een authority and res!onsibility and
concentrating on s!eciali8ation. In addition to this' a com!any can di$ersify if its
!otential gro&. This is !ossible only &hen the organi8ation structure is &ell9 defined.
This is !ossible through a set of formal structure.
;@
(ense of secuity ! 4rgani8ational structure clarifies the %ob !ositions. The roles
assigned to e$ery manager is clear. Co9 ordination is !ossible. Therefore' clarity of
!o&ers hel!s automatically in increasing mental satisfaction and thereby a sense of
security in a concern. This is $ery im!ortant for %ob9 satisfaction.
(cope fo ne, changes ! )here the roles and acti$ities to be !erformed are clear and
e$ery !erson gets inde!endence in his &orking' this !ro$ides enough s!ace to a manager
to de$elo! his talents and flourish his kno&ledge. ( manager gets ready for taking
inde!endent decisions &hich can be a road or !ath to ado!tion of ne& techni,ues of
!roduction. This sco!e for bringing ne& changes into the running of an enter!rise is
!ossible only through a set of organi8ational structure.
Principles of Organi,ing
The organi8ing !rocess can be done efficiently if the managers ha$e certain guidelines so
that they can take decisions and can act. To organi8e in an effecti$e manner' the follo&ing
!rinci!les of organi8ation can be used by a manager.
1. rinciple of Speciali6ation
(ccording to the !rinci!le' the &hole &ork of a concern should be di$ided
amongst the subordinates on the basis of ,ualifications' abilities and skills. It is
through di$ision of &ork s!eciali8ation can be achie$ed &hich results in effecti$e
organi8ation.
2. rinciple of 0#nctional Definition
(ccording to this !rinci!le' all the functions in a concern should be com!letely
and clearly defined to the managers and subordinates. This can be done by clearly
defining the duties' res!onsibilities' authority and relationshi!s of !eo!le to&ards
each other. Clarifications in authority9 res!onsibility relationshi!s hel!s in
achie$ing co9 ordination and thereby organi8ation can take !lace effecti$ely. +or
e/am!le' the !rimary functions of !roduction' marketing and finance and the
authority res!onsibility relationshi!s in these de!artments shouldbe clearly
defined to e$ery !erson attached to that de!artment. Clarification in the authority9
res!onsibility relationshi! hel!s in efficient organi8ation.
3. rinciples of Span of Control7S#pervision
(ccording to this !rinci!le' s!an of control is a s!an of su!er$ision &hich de!icts
the number of em!loyees that can be handled and controlled effecti$ely by a
single manager. (ccording to this !rinci!le' a manager should be able to handle
&hat number of em!loyees under him should be decided. This decision can be
taken by choosing either froma &ide or narro& s!an. There are t&o ty!es of s!an
of control:9
;A
a.;ide span of contol! It is one in &hich a manager can su!er$ise and
control effecti$ely a large grou! of !ersons at one time. The features of this
s!an are:9
i. ess o$erhead cost of su!er$ision
ii. .rom!t res!onse from the em!loyees
iii. Better communication
i$. Better su!er$ision
$. Better co9ordination
$i. Suitable for re!etiti$e %obs
(ccording to this s!an' one manager can effecti$ely and efficiently handle
a large number of subordinates at one time.
b. Nao, span of contol! (ccording to this s!an' the &ork and
authority is di$ided amongst many subordinates and a manager doesnIt
su!er$ises and control a $ery big grou! of !eo!le under him. The manager
according to a narro& s!an su!er$ises a selected number of em!loyees at
one time. The features are:9
i. )ork &hich re,uires tight control and su!er$ision' for e/am!le'
handicrafts' i$ory &ork' etc. &hich re,uires craftsmanshi!' there
narro& s!an is more hel!ful.
ii. Co9ordination is difficult to be achie$ed.
iii. Communication ga!s can come.
i$. Messages can be distorted.
$. S!eciali8ation &ork can be achie$ed.
0actors infl#encing Span of Control
a7Manageial abilities! In the concerns &here managers are ca!able'
,ualified and e/!erienced' &ide s!an of control is al&ays hel!ful.
b7"ompetence of subodinates! )here the subordinates are ca!able and
com!etent and their understanding le$els are !ro!er' the subordinates tend
to $ery fre,uently $isit the su!eriors for sol$ing their !roblems. In such
cases' the manager can handle large number of em!loyees. 3ence &ide s!an
is suitable.
c7Natue of ,o3! If the &ork is of re!etiti$e nature' &ide s!an of
su!er$ision is more hel!ful. 4n the other hand' if &ork re,uires mental skill
or craftsmanshi!' tight control and su!er$ision is re,uired in &hich narro&
s!an is more hel!ful.
d70elegation of authoity! )hen the &ork is delegated to lo&er le$els in
an efficient and !ro!er &ay' confusions are less and congeniality of the
en$ironment can be maintained. In such cases' &ide s!an of control is
suitable and the su!er$isors can manage and control large number of sub9
ordinates at one time.
;B
e70egee of decentali%ation! Fecentrali8ation is done in order to achie$e
s!eciali8ation in &hich authority is shared by many !eo!le and managers at
different le$els. In such cases' a tall structure is hel!ful. There are certain
concerns &here decentrali8ation is done in $ery effecti$e &ay &hich results
in direct and !ersonal communication bet&een su!eriors and sub9 ordinates
and there the su!eriors can manage large number of subordinates $ery
easily. In such cases' &ide s!an again hel!s.
@7 rinciple of Scalar C$ain
Scalar chain is a chain of command or authority &hich flo&s from to! to bottom. )ith a
chain of authority a$ailable' &astages of resources are minimi8ed' communication is
affected' o$erla!!ing of &ork is a$oided and easy organi8ation takes !lace. ( scalar chain
of command facilitates &ork flo& in an organi8ation &hich hel!s in achie$ement of
effecti$e results. (s the authority flo&s from to! to bottom' it clarifies the authority
!ositions to managers at all le$el and that facilitates effecti$e organi8ation.
C7 rinciple of )nit! of Command
It im!lies one subordinate9one su!erior relationshi!. E$ery subordinate is ans&erable and
accountable to one boss at one time. This hel!s in a$oiding communication ga!s and
feedback and res!onse is !rom!t. Gnity of command also hel!s in effecti$e combination
of resources' that is' !hysical' financial resources &hich hel!s in easy co9 ordination
and 'therefore' effecti$e organi8ation.
Authority Flo(s from op to -ottom
Managing Director

Mar.eting Manager

Sales/ Media Manager

Salesmen
(ccording to the abo$e diagram' the Managing Firector has got the highest le$el
of authority. This authority is shared by the Marketing Manager &ho shares his
authority &ith the Sales Manager. +rom this chain of hierarchy' the official chain
of communication becomes clear &hich is hel!ful in achie$ement of results and
=C
&hich !ro$ides stability to a concern. This scalar chain of command al&ays flo&
from to! to bottom and it defines the authority !ositions of different managers at
different le$els.
0entrali,ation and Decentrali,ation
"entali%ation is said to be a !rocess &here the concentration of decision making is in a
fe& hands. (ll the im!ortant decision and actions at the lo&er le$el' all sub%ects and
actions at the lo&er le$el are sub%ect to the a!!ro$al of to! management. (ccording to
(llen' "Centrali8ation# is the systematic and consistent reser$ation of authority at central
!oints in the organi8ation. The im!lication of centrali8ation can be :9
1. Reser$ation of decision making !o&er at to! le$el.
-. Reser$ation of o!erating authority &ith the middle le$el managers.
5. Reser$ation of o!eration at lo&er le$el at the directions of the to! le$el.
Gnder centrali8ation' the im!ortant and key decisions are taken by the to! management
and the other le$els are into im!lementations as !er the directions of to! le$el. +or
e/am!le' in a business concern' the father 6 son being the o&ners decide about the
im!ortant matters and all the rest of functions like !roduct' finance' marketing' !ersonnel'
are carried out by the de!artment heads and they ha$e to act as !er instruction and orders
of the t&o !eo!le. Therefore in this case' decision making !o&er remain in the hands of
father 6 son.
4n the other hand' 0ecentali%ation is a systematic delegation of authority at all le$els
of management and in all of the organi8ation. In a decentrali8ation concern' authority in
retained by the to! management for taking ma%or decisions and framing !olicies
concerning the &hole concern. Rest of the authority may be delegated to the middle le$el
and lo&er le$el of management.
The degree of centali%ation and decentali%ation &ill de!end u!on the amount of
authority delegated to the lo&est le$el. (ccording to (llen' "Fecentrali8ation refers to the
systematic effort to delegate to the lo&est le$el of authority e/ce!t that &hich can be
controlled and e/ercised at central !oints.
Fecentrali8ation is not the same as delegation. In fact' decentrali8ation is all e/tension of
delegation. Fecentrali8ation !attern is &ider is sco!e and the authorities are diffused to
the lo&est most le$el of management. Felegation of authority is a com!lete !rocess and
takes !lace from one !erson to another. )hile decentrali8ation is com!lete only &hen
fullest !ossible delegation has taken !lace. +or e/am!le' the general manager of a
com!any is res!onsible for recei$ing the lea$e a!!lication for the &hole of the concern.
The general manager delegates this &ork to the !ersonnel manager &ho is no&
res!onsible for recei$ing the lea$e a!!licants. In this situation delegation of authority has
taken !lace. 4n the other hand' on the re,uest of the !ersonnel manager 'if the general
manager delegates this !o&er to all the de!artmental heads at all le$el' in this situation
decentrali8ation has taken !lace. There is a saying that "E$erything that increasing the
role of subordinates is decentrali8ation and that decreases the role is centrali8ation#.
Fecentrali8ation is &ider in sco!e and the subordinate0s res!onsibility increase in this
=1
case. 4n the other hand' in delegation the managers remain ans&erable e$en for the acts
of subordinates to their su!eriors.
.mplications of Decentrali6ation
1. There is less burden on the Chief E/ecuti$e as in the case of centrali8ation.
-. In decentrali8ation' the subordinates get a chance to decide and act inde!endently
&hich de$elo!s skills and ca!abilities. This &ay the organi8ation is able to
!rocess reser$e of talents in it.
5. In decentrali8ation' di$ersification and hori8ontal can be easily im!lanted.
;. In decentrali8ation' concern di$ersification of acti$ities can !lace effecti$ely since
there is more sco!e for creating ne& de!artments. Therefore' di$ersification
gro&th is of a degree.
=. In decentrali8ation structure' o!erations can be coordinated at di$isional le$el
&hich is not !ossible in the centrali8ation set u!.
>. In the case of decentrali8ation structure' there is greater moti$ation and morale of
the em!loyees since they get more inde!endence to act and decide.
@. In a decentrali8ation structure' co9ordination to some e/tent is difficult to
maintain as there are lot many de!artment di$isions and authority is delegated to
ma/imum !ossible e/tent 'i.e.' to the bottom most le$el delegation reaches.
Centrali8ation and decentrali8ation are the categories by &hich the !attern of
authority relationshi!s became clear. The degree of centrali8ation and de9
centrali8ation can be affected by many factors like nature of o!eration' $olume of
!rofits' number of de!artments' si8e of a concern' etc. The larger the si8e of a
concern' a decentrali8ation set u! is suitable in it.
4rganisations are structured in a $ariety of &ays' de!endant on their ob%ecti$es and
culture. The structure of an organisation &ill determine the manner in &hich it o!erates
and it0s !erformance. Structure allo&s the res!onsibilities for different functions and
!rocesses to be clearly allocated to different de!artments and em!loyees.
The &rong organisation structure &ill hinder the success of the business. 4rganisational
structures should aim to ma/imi8e the efficiency and success of the 4rganisation. (n
effecti$e organisational structure &ill facilitate &orking relationshi!s bet&een $arious
sections of the organisation. It &ill retain order and command &hilst !romoting fle/ibility
and creati$ity.
Internal factors such as si8e' !roduct and skills of the &orkforce influence the
organi8ational structure. (s a business e/!ands the chain of command &ill lengthen and
the s!ans of control &ill &iden. The higher the le$el of skill each em!loyee has the more
the business &ill make use of the matri/ structure to ma/imi8e these skills across the
organi8ation.
=-
(pan of "ontol
This term is used to describe the number of em!loyees that each managerDsu!er$isor is
res!onsible for. The s!an of control is said to be &ide if a su!erior is in charge of many
em!loyees and narro& if the su!erior is in charge of a fe& em!loyees.
Types of ogani%ations
0iffeent (tuctues
The most common organisation structures are:
1. Tall
-. +lat
5. 3ierarchical
;. Centralised and decentrali8ed
67 Tall (tuctue Oganisation
In its sim!lest form a tall organisation has many le$els of management and su!er$ision.
There is a "long chain of command# running from the to! of the organisation eg Chief
E/ecuti$e do&n to the bottom of the organisation eg sho! floor &orker. The diagram
belo& neatly ca!tures the conce!t of a tall structure.
0iagam: Tall (tuctue
3o&e$er' tall structures rarely e/ceed A le$els of management. This is firstly because the
number of layers 1i.e. management le$els2 decreases the s!an of control. Secondly the
disad$antages of the tall structure begin to out&eigh the ad$antages of a tall structure.
=5

Ad#antages of tall Oganisations 0isad#antages of tall Oganisations
There is a narro& s!an of control ie
each manager has a small number of
em!loyees under their control. This
means that em!loyees can be closely
su!er$ised.
The freedom and res!onsibility of
em!loyees 1subordinates2 is
restricted.
There is a clear management
structure.
Fecision making could be slo&ed
do&n as a!!ro$al may be needed by
each of the layers of authority.
The function of each layer &ill be
clear and distinct. There &ill be clear
lines of res!onsibility and control.
Communication has to take !lace
through many layers of management.
Clear !rogression and !romotion
ladder.
3igh management costs because
managers are generally !aid more
than subordinates. Each layer &ill
tend to !ay it0s managers more
money than the layer belo& it.
87 Flat (tuctue Oganisation
In contrast to a tall organisation' a flat organisation &ill ha$e relati$ely fe& layers or %ust
one layer of management. This means that the "Chain of Command# from to! to bottom
is short and the "s!an of control is &ide#. Fue to the small number of management
layers' flat organisations are often small organisations.
0iagam: Flat (tuctue

=;
Ad#antages of flat Oganisations 0isad#antages of flat Oganisations
MoreD?reater communication
bet&een management and &orkers.
)orkers may ha$e more than one
managerDboss.
Better team s!rit. May limitDhinder the gro&th of the
organisation.
ess bureaucracy and easier
decision making.
Structure limited to small
organisations such as !artnershi!s'
co9o!erati$es and some !ri$ate
limited com!anies.
+e&er le$els of management
&hich includes benefits such as
lo&er costs as managers are
generally !aid more than &orker.
+unction of each
de!artmentD!erson could be
blurred and merge into the %ob
roles of others.
1%2ine and Staff Organi,ation
ine and staff organi8ation is a modification of line organi8ation and it is more com!le/
than line organi8ation. (ccording to this administrati$e organi8ation' s!eciali8ed and
su!!orti$e acti$ities are attached to the line of command by a!!ointing staff su!er$isors
and staff s!ecialists &ho are attached to the line authority. The !o&er of command al&ays
remains &ith the line e/ecuti$es and staff su!er$isors guide' ad$ice and council the line
e/ecuti$es. .ersonal Secretary to the Managing Firector is a staff official.
MANA$IN$0I&'"TO& DDDDDDDDDDDDDDDDDDDDDDDDD
E E E
.roduction Manager Marketing Manager +inance Manager
E E E
.lant Su!er$isor Market Su!er$isor Chief (ssisstant
E E E
+oreman Salesman (ccountant
0eat#res of Line and Staff 'rgani6ation
1. There are t&o ty!es of staff :
a. Staff (ssistants9 ..(. to Managing Firector' Secretary to Marketing
Manager.
b. Staff Su!er$isor9 4!eration Control Manager' Quality Controller' .R4
-. ine and Staff 4rgani8ation is a com!romise of line organi8ation. It is more
com!le/ than line concern.
5. Fi$ision of &ork and s!eciali8ation takes !lace in line and staff organi8ation.
;. The &hole organi8ation is di$ided into different functional areas to &hich staff
s!ecialists are attached.
=. Efficiency can be achie$ed through the features of s!eciali8ation.
==
>. There are t&o lines of authority &hich flo& at one time in a concern :
a. ine (uthority
b. Staff (uthority
@. .o&er of command remains &ith the line e/ecuti$e and staff ser$es only as
counselors.
Merits of Line and Staff 'rgani6ation
1. &elief to line of e+ecuti#es! In a line and staff organi8ation' the ad$ice and
counseling &hich is !ro$ided to the line e/ecuti$es di$ides the &ork bet&een the
t&o.The line e/ecuti$e can concentrate on the e/ecution of !lans and they get
relie$ed of di$iding their attention to many areas.
-. '+pet ad#ice! The line and staff organi8ation facilitates e/!ert ad$ice to the line
e/ecuti$e at the time of need. The !lanning and in$estigation &hich is related to
different matters can be done by the staff s!ecialist and line officers can
concentrate on e/ecution of !lans.
5. Benefit of (peciali%ation! ine and staff through di$ision of &hole concern into
t&o ty!es of authority di$ides the enter!rise into !arts and functional areas. This
&ay e$ery officer or official can concentrate in its o&n area.
;. Bette co!odination! ine and staff organi8ation through s!eciali8ation is able to
!ro$ide better decision making and concentration remains in fe& hands. This
feature hel!s in bringing co9 ordination in &ork as e$ery official is concentrating
in their o&n area.
=. Benefits of &eseach and 0e#elopment! Through the ad$ice of s!eciali8ed staff'
the line e/ecuti$es' the line e/ecuti$es get time to e/ecute !lans by taking
!roducti$e decisions &hich are hel!ful for a concern. This gi$es a &ide sco!e to
the line e/ecuti$e to bring inno$ations and go for research &ork in those areas.
This is !ossible due to the !resence of staff s!ecialists.
>. Taining! Fue to the !resence of staff s!ecialists and their e/!ert ad$ice ser$es as
ground for training to line officials. ine e/ecuti$es can gi$e due concentration to
their decision making. This in itself is a training ground for them.
@. Balanced decisions! The factor of s!eciali8ation &hich is achie$ed by line staff
hel!s in bringing co9 ordination. This relationshi! automatically ends u! the line
official to take better and balanced decision.
A. Unity of action! Gnity of action is a result of unified control. Control and its
effecti$ity take !lace &hen co9 ordination is !resent in the concern. In the line and
staff authority all the officials ha$e got inde!endence to make decisions. This
ser$es as effecti$e control in the &hole enter!rise.
Demerits of Line and Staff 'rgani6ation
1. 5ac3 of undestanding! In a line and staff organi8ation' there are t&o authority
flo&ing at one time. This results in the confusion bet&een the t&o. (s a result' the
&orkers are not able to understand as to &ho is their commanding authority.
3ence the !roblem of understanding can be a hurdle in effecti$e running.
-. 5ac3 of sound ad#ice! The line official get used to the e/!ertise ad$ice of the
staff. (t times the staff s!ecialist also !ro$ide &rong decisions &hich the line
e/ecuti$e ha$e to consider. This can affect the efficient running of the enter!rise.
=>
5. 5ine and staff conflicts! ine and staff are t&o authorities &hich are flo&ing at
the same time. The factors of designations' status influence sentiments &hich are
related to their relation' can !ose a distress on the minds of the em!loyees. This
leads to minimi8ing of co9 ordination &hich ham!ers a concern0s &orking.
;. "ostly! In line and staff concern' the concerns ha$e to maintain the high
remuneration of staff s!ecialist. This !ro$es to be costly for a concern &ith
limited finance.
=. Assumption of authoity! The !o&er of concern is &ith the line official but the
staff dislikes it as they are the one more in mental &ork.
>. (taff steals the sho,! In a line and staff concern' the higher returns are
considered to be a !roduct of staff ad$ice and counseling. The line officials feel
dissatisfied and a feeling of distress enters a concern. The satisfaction of line
officials is $ery im!ortant for effecti$e results.
@7 .ieachical Oganisation
In a hierarchical organisation em!loyees are ranked at $arious le$els &ithin the
organisation' each le$el is one abo$e the other. (t each stage in the chain' one !erson has
a number of &orkers directly under them' &ithin their s!an of control. ( tall hierarchical
organisation has many le$els and a flat hierarchical organisation &ill only ha$e a fe&.
The chain of command 1ie the &ay authority is organi8ed2 is a ty!ical !yramid sha!e.
0iagam: 3ierarchical 4rgani8ation
(bo$e: ( traditional hierarchy' senior managers make u! the board of directors and are
res!onsible for establishing strategy and o$erall business direction' &hilst middle
managers ha$e res!onsibility for a s!ecific function such as finance or marketing.
( traditional hierarchical structure clearly defines each em!loyee0s role &ithin the
organisation and defines the nature of their relationshi! &ith other em!loyees.
3ierarchical organisations are often tall &ith narro& s!ans of control' &hich gets &ider as
=@
&e mo$e do&n the structure. They are often centralised &ith the most im!ortant
decisions being taken by senior management.
In the t&entieth century as organisations gro& bigger' hierarchical organisations &ere
!o!ular because they could ensure command and control of the organisation. 3o&e$er
&ith the ad$ent of globalisation and &ides!read use of technology' in the 1BBC0s tall
hierarchical organisations began to do&nsi8e and reduce their &orkforce. Technology
&as able to carry out many of the functions !re$iously carried out by humans.
Ad#antages of .ieachical
Oganisations
0isad#antages of .ieachical
Oganisations
(uthority and res!onsibility and
clearly defined
Clearly defined !romotion !ath.
The organisation can be bureaucratic
and res!ond slo&ly to changing
customer needs and the market
&ithin &hich the organisation
o!erates.
There are s!ecialists managers and
the hierarchical en$ironment
encourages the effecti$e use of
s!ecialist managers.
Communication across $arious
sections can be !oor es!ecially
hori8ontal communication.
Em!loyees $ery loyal to their
de!artment &ithin the organisation.
Fe!artments can make decisions
&hich benefit them rather than the
business as a &hole es!ecially if
there is Inter9de!artmental ri$alry.

C7 "entalised and 0ecentalised Oganisation
In a centralised organisation head office1or a fe& senior managers2 &ill retain the ma%or
res!onsibilities and !o&ers. Con$ersely decentralised organisations &ill s!read
res!onsibility for s!ecific decisions across $arious outlets and lo&er le$el managers'
including branches or units located a&ay from head officeDhead ,uarters. (n e/am!le of a
decentralised structure is Tesco the su!ermarket chain. Each store of Tesco has a store
manager &ho can make certain decisions concerning their store. The store manager is
res!onsible to a regional manager.
4rganisations may also decide that a combination of centralisation and decentralisation is
more effecti$e. +or e/am!le functions such as accounting and !urchasing may be
centralised to sa$e costs. )hilst tasks such as recruitment may be decentralised as units
a&ay from head office may ha$e staffing needs s!ecific only to them.
Certain organisations im!lement $ertical decentralisation &hich means that they ha$e
handed the !o&er to make certain decisions' do&n the hierarchy of their organisation.
Hertical decentralisation increases the in!ut' !eo!le at the bottom of the organisation
chart ha$e in decision making.
=A
3ori8ontal decentralisation s!reads res!onsibility across the organisation. ( good
e/am!le of this is the im!lementation of ne& technology across the &hole business. This
im!lementation &ill be the sole res!onsibility of technology s!ecialists

Ad#antages of "entalised (tuctue Fo
Oganisations
Ad#antages of 0ecentalised (tuctue
Fo Oganisations
Senior managers en%oy greater
control o$er the organisation.
Senior managers ha$e time to
concentrate on the most im!ortant
decisions 1as the other decisions can
be undertaken by other !eo!le do&n
the organisation structure.
The use of standardised !rocedures
can results in cost sa$ings.
Fecision making is a form of
em!o&erment. Em!o&erment can
increase moti$ation and therefore
mean that staff out!ut increases.
Fecisions can be made to benefit the
organisations as a &hole. )hereas a
decision made by a de!artment
manager may benefit their
de!artment' but disad$antage other
de!artments.
.eo!le lo&er do&n the chain ha$e a
greater understanding of the
en$ironment they &ork in and the
!eo!le 1customers and colleagues2
that they interact &ith. This
kno&ledge skills and e/!erience may
enable them to make more effecti$e
decisions than senior managers.
The organisation can benefit from
the decision making of e/!erienced
senior managers.
Em!o&erment &ill enable
de!artments and their em!loyees to
res!ond faster to changes and ne&
challenges. )hereas it may take
senior managers longer to a!!reciate
that business needs ha$e changed.
In uncertain times the organisation
&ill need strong leadershi! and !ull
in the same direction. It is belie$ed
that strong leadershi! is often best
gi$en from abo$e.
Em!o&erment makes it easier for
!eo!le to acce!t and make a success
of more res!onsibility.
F7 Mati+ G o poBect!basedH oganisations
( Matri/ structure organisation contains teams of !eo!le created from $arious sections of
the business. These teams &ill be created for the !ur!oses of a s!ecific !ro%ect and &ill be
led by a !ro%ect manager. 4ften the team &ill only e/ist for the duration of the !ro%ect and
matri/ structures are usually de!loyed to de$elo! ne& !roducts and ser$ices. The
ad$antages of a matri/ include
Indi$iduals can be chosen according to the needs of the !ro%ect.
=B
The use of a !ro%ect team &hich is dynamic and able to $ie& !roblems in a
different &ay as s!ecialists ha$e been brought together in a ne& en$ironment.
.ro%ect managers are directly res!onsible for com!leting the !ro%ect &ithin a
s!ecific deadline and budget.
)hilst the disad$antages include
( conflict of loyalty bet&een line managers and !ro%ect managers o$er the
allocation of resources.
If teams ha$e a lot of inde!endence can be difficult to monitor.
Costs can be increased if more managers 1ie !ro%ect managers2 are created
through the use of !ro%ect teams.
3% Functional Organi,ation
Functional ogani%ation has been di$ided to !ut the s!ecialists in the to! !osition
throughout the enter!rise. This is an organi8ation in &hich &e can define as a system in
&hich functional de!artment are created to deal &ith the !roblems of business at $arious
le$els. +unctional authority remains confined to functional guidance to different
de!artments. This hel!s in maintaining ,uality and uniformity of !erformance of different
functions throughout the enter!rise.
The conce!t of +unctional organi8ation &as suggested by +.). Taylor &ho recommended
the a!!ointment of s!ecialists at im!ortant !ositions. +or e/am!le' the functional head
and Marketing Firector directs the subordinates throughout the organi8ation in his
!articular area. This means that subordinates recei$es orders from se$eral s!ecialists'
managers &orking abo$e them.
0eat#res of 0#nctional 'rgani6ation
1. The entire organi8ational acti$ities are di$ided into s!ecific functions such as
o!erations' finance' marketing and !ersonal relations.
-. Com!le/ form of administrati$e organi8ation com!ared to the other t&o.
5. Three authorities e/ist9 ine' staff and function.
;. Each functional area is !ut under the charge of functional s!ecialists and he has
got the authority to gi$e all decisions regarding the function &hene$er the
function is !erformed throughout the enter!rise.
=. .rinci!le of unity of command does not a!!ly to such organi8ation as it is !resent
in line organi8ation.
Merits of 0#nctional 'rgani6ation
1. (peciali%ation! Better di$ision of labour takes !lace &hich results in
s!eciali8ation of function and it0s conse,uent benefit.
-. 'ffecti#e "ontol! Management control is sim!lified as the mental functions are
se!arated from manual functions. Checks and balances kee! the authority &ithin
certain limits. S!ecialists may be asked to %udge the !erformance of $arious
sections.
>C
5. 'fficiency! ?reater efficiency is achie$ed because of e$ery function !erforming a
limited number of functions.
;. 'conomy! S!eciali8ation com!iled &ith standardi8ation facilitates ma/imum
!roduction and economical costs.
=. '+pansion! E/!ert kno&ledge of functional manager facilitates better control and
su!er$ision.
Demerits of 0#nctional 'rgani6ation
1. "onfusion! The functional system is ,uite com!licated to !ut into o!eration'
es!ecially &hen it is carried out at lo& le$els. Therefore' co9 ordination becomes
difficult.
-. 5ac3 of "o! odination! Fisci!linary control becomes &eak as a &orker is
commanded not by one !erson but a large number of !eo!le. Thus' there is no
unity of command.
5. 0ifficulty in fi+ing esponsibility! Because of multi!le authority' it is difficult to
fi/ res!onsibility.
;. "onflicts! There may be conflicts among the su!er$isory staff of e,ual ranks.
They may not agree on certain issues.
=. "ostly! Maintainance of s!ecialist0s staff of the highest order is e/!ensi$e for a
concern.
4% Matri$ Organi,ation
The mati+ ogani%ation is an attem!t to combine the ad$antages of the !ure functional
structure and the !roduct organi8ational structure. This form is identically suited for
com!anies' such as construction' that are "!ro%ect9dri$en#. The figure belo& sho&s a
ty!ical Matri/ organi8ation.
In a matri/ organi8ation' each poBect manage re!orts directly to the $ice !resident and
the general manager. Since each !ro%ect re!resents a !otential !rofit centre' the !o&er and
authority used by the !ro%ect manager come directly from the general manager.
Infomation shaing is mandatory in such an organi8ation' and se$eral !eo!le may be
re,uired for the same !iece of &ork. 3o&e$er' in general' the !ro%ect manager has the
total res!onsibility and accountability for the success of the !ro%ect. The functional
de!artments' on the other hand' ha$e functional res!onsibility to maintain technical
e/cellence on the !ro%ect. Each functional unit is headed by a de!artment manager &hose
!rime res!onsibility is to ensure that a unified technical base is maintained and that all
a$ailable information can be e/changed for each !ro%ect.
>1
Typical Matrix organization
The basis for the mati+ ogani%ation is an endea$or to create synergism through shared
res!onsibility bet&een !ro%ect and functional management. 4ther ad$antages of a !ure
matri/ organi8ational form' to !ro%ect management' include:
Because key !eo!le can be shared' the !ro%ect cost is minimi8ed
Conflicts are minimal' and those re,uiring hierarchical referrals are more easily
resol$ed
There is a better balance bet&een time' cost and !erformance
(uthority and res!onsibility are shared
Stress is distributed among the team
>-
UNIT III
*lant lay out
( !lant layout study is an engineering study used to analy8e different !hysical
configurations for an industrial !lant.
.lant ayout is the !hysical arrangement of e,ui!ment and facilities &ithin a .lant. The
.lant ayout can be indicated on a floor !lan sho&ing the distances bet&een different
features of the !lant. 4!timi8ing the ayout of a .lant can im!ro$e !roducti$ity' safety
and ,uality of .roducts. Gnnecessary efforts of materials handling can be a$oided &hen
the .lant ayout is o!timi8ed.
This is $alid for:
9 Fistances Material has to mo$e
9 Fistances E,ui!ment has to mo$e
9 Fistances 4!erators ha$e to mo$e
9 Ty!es of 3andling E,ui!ment needed
9 Energy re,uired to mo$e items against resistance 1i.e. gra$ity2
Ty!es of .lant ayout
The follo&ing are the !o!ular ty!es of !lant layout:
>5
112 .rocess layout
1-2 .roduct layout
152 Combined layout
1;2 Static !roduct layout or .ro%ect layout
1=2 Cellular layout
1>2 Kob Sho! layout.
Each layout is e/!lained in brief in the follo&ing !aragra!hs:
1. .rocess layout: It is also called functional layout. (ll machines !erforming similar ty!e
of o!erations are grou!ed at one location in the !rocess layout e.g. all lathes' milling
machines' cutting machines etc in the engineering sho! &ill be clustered in their like
grou!s. Thus all forging &ill be done in one area and all the lathes &ill be !laced in
another area. In this layout' se$eral !roducts may share a machine to make its full use.
The se,uential arrangement of the machine grou! is generally' but not necessarily made
on the basis of labor o!erations. In this ty!e of layout the !rocess rather than the !roduct
has a dominating role. The !roduct is gi$en secondary consideration and is mo$ed for the
!ur!ose of o!erations to the !rocess section &ith like machines stationed at a !articular
!oint. This ty!e of !rocess is more suitable to %ob order ty!e of !roduction. In such
!roduction the o!eration differs from !roduct to !roduct. So' it is desirable to arrange the
machines on the basis of !rocess rather than on the !roducts.
The ty!ical arrangement of the machines in the !rocess layout &ill be as under:
.roduct Q(0 and .roduct QB0 &ith their differential se,uence &ill be routed for the
!rocessing in the manner.
(d$antages: The !rocess layout a$ails of the follo&ing ad$antages:
12 ike !roduct layout it eliminates the du!lication of machines an enables the o!timum
use of installed ca!acity.
-2 It facilitates the fle/ibility in !roduction. It is more fle/ible than a line layout.
Fifferent !roducts can be made &ithout the changes in the arrangement of machine. The
!roduction ca!acity is not arranged in rigid se,uence and fi/ed rated ca!acity &ith line
balancing.
52 ike !roduct layout' the break do&n of one machine does not interru!t the entire
!roduction flo&.
;2 S!eciali8ation in su!er$ision becomes !ossible.
=2 Indi$idual incenti$e schemes can be de$elo!ed.
Fisad$antages: The follo&ing are the main disad$antages of the !rocess layout:
>;
12 Fue to lack of straight line se,uence of !roduction' it is im!ossible to maintain the line
balancing in !roduction. So the !roblems of bottleneck and &aiting and idle ca!acity
arise.
-2 The cost of material handling increases due to long routing and back tracking bet&een
the !rocesses.
52 The !rocessing time is !rolonged &hich reduces the in$entory turno$er and increase
the in$estments in in$entories.
;2 The ins!ection cost increases. Fue to fre,uent changes in the machine set9u!
ins!ection is re,uired at each stage of the !rocess.
=2 The cost of su!er$ision increase due to s!ecialist su!er$isors and more number of
su!er$isors are re,uired at each !rocess unit.
>2 The !roduction !lanning and control becomes difficult due to com!le/ities arising in
routing' scheduling' dis!atching and follo& u!.
@2 It is not !ossible to im!lement the grou! in$enti$e schemes on the basis of ,uantity of
the !roducts manufacturing
More s!ace is re,uired for internal storing' reser$oir of materials and !ro$ision for the
e/!ansion of the !articular !rocess section.
-. .roduct layout:
In this ty!e of layout' the machines are arranged in the se,uence as re,uired by the
!articular !roduct. (ll machines as re,uired to balance the !articular !roduct the !roduct
line layout. In this layout' one !roduct goes through all the machines lined u!' in the
order re,uired by its manufacture. The best kno&n e/am!le of this ty!e of layout is seen
in motor car !roduction. To make this layout successful' the &ork load on the $arious
machines must be balanced. The !rocess of getting e$en loading at each stage of
!roduction is called line balancing.
In this ty!e of layout' the !roduct is dominating o$er the !rocess' in the sense that the
!roduct is gi$en the !rimary im!ortance and the !rocess machine must remain !resent at
a !oint &here the !roduct needs its ser$ices. Thus' unlike the !rocess layout' the !rocess
is gi$en secondary im!ortance in relation to the !roduct. .roduct layout suitable for
continuous flo& !roduction &ith fe& items of !roduction:
It does not re,uire fre,uent changes in machine set u!. The ty!ical arrangement of the
machines in the !roduct &ith the se!arate inde!endent !roduct lines for the .roduct Q(0
and .roduct QB0 &ill be as sho&n.
(d$antages: The !roduct layout is ad$antageous as under:
12 Reduced material handling cost due to straight line !roduction flo&.
-2 Mechani8ation of material handling is !ossible due to handling bet&een fi/ed !oints.
52 ine balancing may eliminate bottlenecks an idle ca!acity.
;2 Shorter o!erating cycle due to shorter and s!eedier mo$ement of materials.
=2 Ma/imum utili8ation of machine and labor ca!acity through de$elo!ing !ro!er
balance bet&een them.
>2 Effecti$e control o$er !roduction &ith reduced su!er$ision by generalist su!er$isors.
>=
By reducing the manufacturing to sim!le ste!s &e can often use less skilled labor.
@2 Effecti$e ,uality control &ith reduced ins!ection !oints. It does not re,uire fre,uent
changes in machine set9u!.
Effecti$e !roduction !lanning and control. Gnlike !rocess layout' the routing' scheduling'
dis!atching and follo& u! are relati$ely easier.
B2 Ma/imum use of s!ace due to straight !roduction flo& and reduced need of interim
storing.
1C2 It facilitates the im!lementation of the grou! in$enti$e schemes for the &orkers.
112 It is relati$ely easy to control
Methods of *oduction
1. Kob !roduction
-. Batch .roduction
5. Mass !roduction
67/ob poduction
Kob !roduction in$ol$es firms !roducing items that meet the s!ecific re,uirements of the
customer. 4ften these are one9off' uni,ue items such as those made by an architect or
&edding dressmaker. +or an architect' each building or structure that he designs &ill be
different and tailored to the needs of each indi$idual client.
)ith %ob !roduction' a single &orker or grou! of &orkers handles the com!lete task. Kobs
can be on a small9scale in$ol$ing little or no technology. 3o&e$er' %obs can also be
com!le/ re,uiring lots of technology.
)ith lo& technology %obs' !roduction is sim!le and it is relati$ely easy to get hold of the
skills and e,ui!ment re,uired. ?ood e/am!les of the %ob method include:
3airdressers
Tailoring
.ainting and decorating
.lumbing and heating re!airs in the home
3igh technology %obs are much more com!le/ and difficult. These %obs need to be $ery
&ell !ro%ect9managed and re,uire highly ,ualified and skilled &orkers. E/am!les of high
technology D com!le/ %obs include:
+ilm !roduction
arge construction !ro%ects 1e.g. the Millennium Fome2
Installing ne& trans!ort systems 1e.g. trams in Sheffield and Manchester2
(d$antages
>>
The ad$antage of %ob !roduction is that each item can be altered for the s!ecific customer
and this !ro$ides genuine marketing benefits. ( business is likely to be able to Qadd
$alue0 to the !roducts and !ossibly create a uni,ue selling !oint 1GS.2' both of &hich
should enable it to sell at high !rices.
Fisad$antages
)hether it is based on lo& or high technology' Kob !roduction is an e/!ensi$e !rocess as
it is labour intensi$e 1uses more &orkers com!ared to machines2. This raises costs to
firms as the !ayment of &ages and salaries is more e/!ensi$e than the costs of running
machines.
87 Batch poduction
(s businesses gro& and !roduction $olumes increase' the !roduction !rocess is often
changed to a "batch method#. Batch methods re,uire that a grou! of items mo$e through
the !roduction !rocess together' a stage at a time.
+or e/am!le &hen a bakery bakes loa$es of &holemeal bread' a large ball of &holemeal
dough &ill be s!lit into se$eral loa$es &hich &ill be s!read out together on a large baking
tray. The loa$es on the tray &ill then together be cooked' &ra!!ed and dis!atched to
shel$es' before the bakery starts on a se!arate batch of' for e/am!le' crusty &hite bread.
*ote that each loaf is identical &ithin a batch but that loa$es can $ary from batch to
batch.
Batch !roduction is a $ery common method of organising manufacture. ?ood e/am!les
include:
.roduction of electronic instruments
+ish and chi! sho!s
.aint and &all!a!er manufacturers
Cereal farming
(d$antages
The batch method can be an ad$antage for businesses that !roduce a range of !roducts. It
is chea!er to !roduce a number of each item in one go because machines can be used
more effecti$ely' the materials can be bought in bulk and the &orkers can s!ecialise in
that task. There are t&o !articular ad$antages of &orkers being able to concentrate their
skills.
They should become more e/!ert at their tasks' &hich &ill in turn increase
!roducti$ity 1out!ut !er &orker2. This &ill lo&er costs' as fe&er &orkers are
needed to !roduce a set amount.
Better ,uality !roducts should be !roduced as &orkers are more familiar &ith the
task and so can find &ays of im!ro$ing it.
>@
Fisad$antages
Batch !roduction re,uires $ery careful !lanning to decide &hat batch &ill be !roduced
&hen. 4nce a batch is in !roduction it is difficult to change' as s&itching to another batch
takes time and &ill mean a loss of out!ut. Batch methods can also result in the build u! of
significant "&ork in !rogress# or stocks 1i.e. com!leted batches &aiting for their turn to
be &orked on in the ne/t o!eration2. This increases costs as it takes u! s!ace and raises
the chance of damage to stock.
Mass poduction definition 9 business
The automated !roduction of large ,uantities of identical !roducts on a continuous basis.
Mass !roduction is used to !roduce a homogeneous !roduct at lo& cost.
;o3 (tudy
)ork Study is the systematic e/amination of the methods of carrying out acti$ities such
as to im!ro$e the effecti$e use of resources and to set u! standards of !erformance for the
acti$ities carried out.
)ork Study
>A
)ork measurement
R )ork measurement is the a!!lication of techni,ues designed to establish the time
for a ,ualified &orker to carry out s!ecified %obs at a defined le$el of
!erformance.
R )ork measurement 1)M2 is concerned &ith in$estigating' reducing and
eliminating ineffecti$e time' &hate$er may be the cause.
R )M is the means of measuring the time taken in the !erformance of an o!eration
or series of o!erations in such a &ay that the ineffecti$e time is sho&n u! and can
be se!arated out.
R In !ractice' !ro$ing e/istence of the ineffecti$e time is the most difficult task.
)ork measurement is the careful analysis of a task' its si8e' the method used in its
!erformance' and its efficiency. The ob%ecti$e is to determine the &orkload abor
ca!acities.
)ork measurement can be e/tremely effecti$e at informing su!er$isors of the &orking
times and delays inherent in different &ays of carrying out &ork. The !ur!ose of a
measurement method is to achie$e full co$erage of the &ork to be measured.
( good &ork measurement system has many benefits. It hel!s to reduce labor costs'
increase !roducti$ity' and im!ro$e su!er$ision' !lanning' scheduling' !erformance
a!!raisal' and decision making.
>B
)ork Measurement Com!onents
( &ork measurement system has three com!onents: !referred methods' time $alues' and
re !orting. 6referred methods are not al&ays the most efficient or fastest &ay to do a task.
They should enhance safety' ,uality' and !roducti$ity. Safety for the em!loyee and for the
!roduct should be considered. Quality is e,ually im!ortant7 it has been !ro$en that good
!erformance and good ,uality go hand in hand. .eo!le &ho are trained in the !ro!er
method and follo& that method &ill !roduce high9,uality &ork and !er form at an
acce!table !erformance le$el. !ime %alues and reporting should also be considered. The
time that a %ob should take is determined not on the basis of s!eeding u! the motions a
&orker normally makes but on the normal !ace of the a$erage &orker' taking into
consideration allo&ances for rest !eriods' coffee breaks' and fatigue. ( re!orting system
is im!ortant to the success of any &ork measurement method. Su!er$isors and managers
must ha$e access to labor9management information that is both timely and com!lete.
Timely information can be used to manage and shift labor hours to areas &here they are
needed and to correct !roblems or at least !re$ent them from becoming a crisis. .ersonal
com!uters hel! to a!!ly &ork measurement more effecti$ely and more chea!ly and
!ro$ide immediate feedback to the &orkers' su!er$isors' and managers.
)ork Measurement Methods
)ork measurement !rograms in$ol$e the use of a number of techni,ues' each selected to
co$er an a!!ro!riate !art of the task. The !ur!ose of measurement is to collect real data
about actual e$ents. To obtain time standards' the data are usually con$erted to target data
or data that a!!ly under kno&n conditions. (ll &ork measurement systems are based on
the same' sim!le three9stage !rocedure: analysis' data collection and measurement' and
synthesis. They differ in the nature and degree of analysis' the nature and le$el of data
collection and measurement' and the nature of the synthesis !rocess. 3o&e$er' the three9
stage !rocedure remains common.
Before measurement begins' the task to be measured is analyzed and broken do&n into
con$enient !arts that are suitable for the chosen measurement techni,ue. The !ur!ose of
the measurement techni,ue is to deri$e a Lbasic timeL for each of these acti$ities'
elements' or motions. (t the measurement stage' it is necessary to collect descri!ti$e or
,ualitati$e data on the nature of the task' the conditions under &hich it is !erformed' and
other factors' &hich may ha$e a bearing on the time that the task takes to be com!lete.
)hen re!etiti$e %obs are measured' data are collected o$er a number of re!resentati$e
cycles of a %ob to obtain a LmeanL or Lty!icalL $alue. (n analysis of the results can be
done using statistical techni,ues to determine the number of obser$ations that must be
made to !ro$ide a gi$en le$el of confidence in the final results.
(t the synthesis stage' the $arious !arts of the task and their associated basic times are
combined together in correct se,uence and &ith the correct fre,uency to !roduce the time
for a com!lete %ob. Furing this stage' the basic time &ill be ad%usted for allo&ances to
become the standard time for the task.
@C
There are four &ork measurement methods' each of &hich has strengths and &eaknesses.
The historical data method sho&s the time it actually took to com!lete a task. Such data
ha$e the ad$antages of being easy to collect' understand' and communicate' but they
!ro$ide no information for future im!ro$ement. +or the &or- sampling method' a large
number of random obser$ations are made of the task to determine the ste!s in its normal
!erformance. This method is easy to learn and use' and it !ro$ides more o!erational
detail than historical data. The disad$antage of &ork sam!ling is that it re,uires
thousands of sam!les to establish an accurate measure for each ste!.
The time study method uses continuous and sna!back a!!roaches to record the ela!sed
time of a task. The sna!back a!!roach re,uires a sto!&atch &ith a reset button that
allo&s the obser$er to read and record the time at the end of each &ork element then reset
1sna!back2 the &atch to 8ero. (lthough !o!ular' the time9study method is sub%ecti$e and
relies hea$ily on the e/!erience of the time9study analyst. ( com!uteri8ed data collector
!ro$ides more accurate timing than the sto!&atch. 3o&e$er' con$erting actual time to
the e/!ected or normal time remains a !roblem.
The predetermined motion=time systems method is based on the !remises that all &ork
consists of basic human motions and that times can be assigned to these motions if
they are defined and classified in a systematic &ay. ( film or $ideota!e records &hat
a %ob entails and ho& long it takes. This techni,ue is used most fre,uently in studying
high9$olume settings such as a &orkstation or an assembly line. (n obser$er
measures a %ob by &atching and analy8ing it into its basic constituent motions. This
method re,uires substantial training and !ractice to ac,uire and maintain accuracy. It
enables all ty!es of tasks to be assigned timeDduration $alues that can then be
e/tended into cost $alues. The results are not easy to communicate' but &hen !ro!erly
e/ecuted' this method yields $ery accurate times.
Method (tudy
Method study is the systematic recording and critical e/amination of e/isting and
!ro!osed &ays of doing &ork' as a means of de$elo!ing and a!!lying easier and more
effecti$e methods and reducing costs.
4BKECTIHES 4+ MET34F STGFP
Im!ro$ement of !rocesses and !rocedures
-. Im!ro$ement in the design of !lant and e,ui!ment
5. Im!ro$ement of layout
;. Im!ro$ement in the use of men' materials and machines
=. Economy in human effort and reduction of unnecessary fatigue
@1
>. Im!ro$ement in safety standards
@. Fe$elo!ment of better &orking en$ironment.
Time (tudy
Time study is a &ork measurement techni,ue for recording the times of !erforming a
certain s!ecific %ob or its elements carried out under s!ecified conditions' and for
analy8ing the data so as to obtain the time necessary for an o!erator to carry it out at a
defined rate of !erformance.
Gses of Time Study
1. Fetermining schedules and !lanning &ork.
-. Fetermining standard costs and as an aid in !re!aring budgets.
5. Estimating the cost of a !roduct before manufacturing it.
;. Fetermining machine effecti$eness' the number of machines &hich one !erson can
o!erate.
=. Fetermining time standards to be used as a basis for the !ayment of a &age incenti$e
to direct labor and indirect labor.
>. Fetermining time standards to be used as a basis for labor cost control.
Time study e,ui!ment
a sto!9&atch
a study board
time study forms
(tatistical Auality contol
( system for ensuring the maintenance of !ro!er standards in manufactured goods'
es!ecially by !eriodic random ins!ection of the !roduct.
Quality control 1QC2 is a !rocedure or set of !rocedures intended to ensure that a
manufactured !roduct or !erformed ser$ice adheres to a defined set of ,uality criteria or
meets the re,uirements of the client or customer. QC is similar to' but not identical &ith'
,uality assurance 1Q(2. Q( is defined as a !rocedure or set of !rocedures intended to
@-
ensure that a !roduct or ser$ice under de$elo!ment 1before &ork is com!lete' as o!!osed
to after&ards2 meets s!ecified re,uirements. Q( is sometimes e/!ressed together &ith
QC as a single e/!ression' ,uality assurance and control 1Q(DQC2.
In order to im!lement an effecti$e QC !rogram' an enter!rise must first decide &hich
s!ecific standards the !roduct or ser$ice must meet. Then the e/tent of QC actions must
be determined 1for e/am!le' the !ercentage of units to be tested from each lot2. *e/t'
real9&orld data must be collected 1for e/am!le' the !ercentage of units that fail2 and the
results re!orted to management !ersonnel. (fter this' correcti$e action must be decided
u!on and taken 1for e/am!le' defecti$e units must be re!aired or re%ected and !oor
ser$ice re!eated at no charge until the customer is satisfied2. If too many unit failures or
instances of !oor ser$ice occur' a !lan must be de$ised to im!ro$e the !roduction or
ser$ice !rocess and then that !lan must be !ut into action. +inally' the QC !rocess must
be ongoing to ensure that remedial efforts' if re,uired' ha$e !roduced satisfactory results
and to immediately detect recurrences or ne& instances of trouble.
*!chat
( !9chart is an attributes control chart used &ith data collected in subgrou!s of $arying
si8es. Because the subgrou! si8e can $ary' it sho&s a !ro!ortion on nonconforming items
rather than the actual count. .9charts sho& ho& the !rocess changes o$er time. The
!rocess attribute 1or characteristic2 is al&ays described in a yesDno' !assDfail' goDno go
form. +or e/am!le' use a !9chart to !lot the !ro!ortion of incom!lete insurance claim
forms recei$ed &eekly. The subgrou! &ould $ary' de!ending on the total number of
claims each &eek. .9charts are used to determine if the !rocess is stable and !redictable'
as &ell as to monitor the effects of !rocess im!ro$ement theories.
In statistical ,uality control' the p!chat is a ty!e of control chart used to monitor the
!ro!ortion of nonconforming units in a sam!le' &here the sam!le !ro!ortion
nonconforming is defined as the ratio of the number of nonconforming units to the
sam!le si8e' n.
The !9chart only accommodates L!assLDLfailL9ty!e ins!ection as determined by one or
more go9no go gauges or tests' effecti$ely a!!lying the s!ecifications to the data before
theyIre !lotted on the chart. 4ther ty!es of control charts dis!lay the magnitude of the
,uality characteristic under study' making troubleshooting !ossible directly from those
charts.
The binomial distribution is the basis for the !9chart and re,uires the follo&ing
assum!tions
.
The !robability of nonconformity is the same for each unit and that each
unit is inde!endent of its !redecessors or successors
The ins!ection !rocedure is same for each sam!le and is carried out consistently
from sam!le to sam!le
@5
The control limits for this chart ty!e are &here is the estimate of
the long9term !rocess mean established during control9chart setu!. *aturally' if the lo&er
control limit is less than or e,ual to 8ero' !rocess obser$ations only need be !lotted
against the u!!er control limit. *ote that obser$ations of !ro!ortion nonconforming
belo& a !ositi$e lo&er control limit are cause for concern as they are more fre,uently
e$idence of im!ro!erly calibrated test and ins!ection e,ui!ment or inade,uately trained
ins!ectors than of sustained ,uality im!ro$ement. Some organi8ations may elect to
!ro$ide a standard $alue for !' effecti$ely making it a target $alue for the !ro!ortion
nonconforming. This may be useful &hen sim!le !rocess ad%ustments can consistently
mo$e the !rocess mean' but in general' this makes it more challenging to %udge &hether a
!rocess is fully out of control or merely off9target 1but other&ise in control2.
Sam!ling re,uires some careful consideration. If the organi8ation elects to use 1CCS
ins!ection on a !rocess' the !roduction rate determines an a!!ro!riate sam!ling rate
&hich in turn determines the sam!le si8e. If the organi8ation elects to only ins!ect a
fraction of units !roduced' the sam!le si8e should be chosen large enough so that the
chance of finding at least one nonconforming unit in a sam!le is highTother&ise the
false alarm rate is too high. 4ne techni,ue is to fi/ sam!le si8e so that there is a =CS
chance of detecting a !rocess shift of a gi$en amount 1for e/am!le' from 1S defecti$e to
=S defecti$e2. If U is the si8e of the shift to detect' then the sam!le si8e should be set to
.(nother techni,ue is to choose the sam!le si8e large enough so
that the !9chart has a !ositi$e lo&er control limit or .
In the case of 1CCS ins!ection' $ariation in the !roduction rate 1e.g.' due to maintenance
or shift changes2 cons!ires to !roduce different sam!le si8es for each obser$ation !lotted
on the !9chart. There are three &ays to deal &ith this:
Techni,ue Fescri!tion Gse $ariable9&idth control limits
.
Each obser$ation !lots against
its o&n control limits: ' &here ni is the si8e of the sam!le that
!roduced the ith obser$ation on the !9chart Gse control limits based on an a$erage
sam!le si8e
.
Control limits are ' &here is the a$erage si8e of all the
sam!les on the !9chart' Gse a standardi8ed control chart.

Control limits are V5
and the obser$ations' ' are standardi8ed using ' &here ni is the si8e of
the sam!le that !roduced the ith obser$ation on the !9chart.
@;
Techni,ue Fescri!tion
Gse $ariable9&idth control limits Each obser$ation !lots against its o&n
control limits: ' &here
ni is the si8e of the sam!le that !roduced
the ith obser$ation on the !9chart
Gse control limits based on an a$erage
sam!le si8e
Control limits are '
&here is the a$erage si8e of all the
sam!les on the !9chart'
Gse a standardi8ed control chart Control limits are V5 and the obser$ations'
' are standardi8ed using
' &here ni is the si8e of the
sam!le that !roduced the ith obser$ation on
the !9chart
* "hat "alculations
.lotted statistic
The !ercent of items in the sam!le meeting the criteria of interest
&here n% is the sam!le si8e 1number of units2 of grou! %.
"ente 5ine
&here n% is the sam!le si8e 1number of units2 of grou! %' and m is the number of grou!s
included in the analysis.
U"5 4 5"5 GUppe and 5o,e "ontol 5imitH
@=
&here n% is the sam!le si8e 1number of units2 of grou! %' !9bar is the ($erage !erce
Acceptance (ampling
( statistical methodology for %udging &hether batches of !roducts or data meet an
acce!table standard of ,uality. ( random sam!le of a gi$en si8e is e/amined in order to
determine if the sam!le is acce!table.
a statistical !rocedure for acce!ting or re%ecting a batch of merchandise or documents7
in$ol$es determining the ma/imum number of defects disco$ered in a sam!le before the
entire batch is re%ected
(cce!tance sam!ling in$ol$es testing a batch of data to determine if the !ro!ortion of
units ha$ing a !articular attribute e/ceeds a gi$en !ercentage. The sam!ling !lan in$ol$es
three determinations: 112 batch si8e7 1-2 sam!le si8e7 and 152 ma/imum number of defects
that can be unco$ered before re%ection of the entire batch. This techni,ue !ermits
acce!tance or re%ection of a batch of merchandise or documents under !recisely s!ecified
circumstances.
(cce!tance sam!ling is an im!ortant field of statistical ,uality control that &as
!o!ulari8ed by Fodge and Romig and originally a!!lied by the G.S. military to the
testing of bullets during )orld )ar II. If e$ery bullet &as tested in ad$ance' no bullets
&ould be left to shi!. If' on the other hand' none &ere tested' malfunctions might occur in
the field of battle' &ith !otentially disastrous results.
Fodge reasoned that a sam!le should be !icked at random from the lot' and on the basis
of information that &as yielded by the sam!le' a decision should be made regarding the
dis!osition of the lot. In general' the decision is either to acce!t or re%ect the lot. This
!rocess is called Lot $cceptance /ampling or %ust $cceptance /ampling.
(cce!tance sam!ling is Lthe middle of the roadL a!!roach bet&een no ins!ection and
1CCS ins!ection. There are t&o ma%or classifications of acce!tance !lans: by attributes
1Lgo' no9goL2 and by %ariables. The attribute case is the most common for acce!tance
sam!ling' and &ill be assumed for the rest of this section.
( !oint to remember is that the main !ur!ose of acce!tance sam!ling is to decide
&hether or not the lot is likely to be acce!table' not to estimate the ,uality of the lot.
@>
(cce!tance sam!ling is em!loyed &hen one or se$eral of the follo&ing hold:
Testing is destructi$e
The cost of 1CCS ins!ection is $ery high
1CCS ins!ection takes too long
0emings contibution to )uality
;illiam 'd,ads 0eming 14ctober 1;' 1BCC < Fecember -C' 1BB52 &as an (merican
statistician' !rofessor' author' lecturer' and consultant. Feming is &idely credited &ith
im!ro$ing !roduction in the Gnited States during the Cold )ar' although he is !erha!s
best kno&n for his &ork in Ka!an. There' from 1B=C on&ard he taught to! management
ho& to im!ro$e design 1and thus ser$ice2' !roduct ,uality' testing and sales 1the last
through global markets2 through $arious methods' including the a!!lication of statistical
methods.
Feming made a significant contribution to Ka!anIs later re!utation for inno$ati$e high9
,uality !roducts and its economic !o&er. 3e is regarded as ha$ing had more im!act u!on
Ka!anese manufacturing and business than any other indi$idual not of Ka!anese heritage.
Fes!ite being considered something of a hero in Ka!an' he &as only %ust beginning to &in
&ides!read recognition in the G.S. at the time of his death.
Feming ad$ocated that all managers need to ha$e &hat he called a System of .rofound
Eno&ledge' consisting of four !arts:
1. "ppreciation of a s!stem: understanding the o$erall !rocesses in$ol$ing
su!!liers' !roducers' and customers 1or reci!ients2 of goods and ser$ices
1e#plained belo&27
-. 8nowledge of variation: the range and causes of $ariation in ,uality' and use of
statistical sam!ling in measurements7
5. T$eor! of 9nowledge: the conce!ts e/!laining kno&ledge and the limits of &hat
can be kno&n
;. 8nowledge of ps!c$olog!: conce!ts of human nature.
Feming e/!lained' L4ne need not be eminent in any !art nor in all four !arts in order to
understand it and to a!!ly it. The 1; !oints for management in industry' education' and
go$ernment follo& naturally as a!!lication of this outside kno&ledge' for transformation
from the !resent style of )estern management to one of o!timi8ation.L
LThe $arious segments of the system of !rofound kno&ledge !ro!osed here cannot be
se!arated. They interact &ith each other. Thus' kno&ledge of !sychology is incom!lete
&ithout kno&ledge of $ariation.
L( manager of !eo!le needs to understand that all !eo!le are different. This is not
ranking !eo!le. 3e needs to understand that the !erformance of anyone is go$erned
largely by the system that he &orks in' the res!onsibility of management. ( !sychologist
that !ossesses e$en a crude understanding of $ariation as &ill be learned in the
@@
e/!eriment &ith the Red Beads 1Ch. @2 could no longer !artici!ate in refinement of a !lan
for ranking !eo!le.
The $ppreciation of a system in$ol$es understanding ho& interactions 1i.e.' feedback2
bet&een the elements of a system can result in internal restrictions that force the system
to beha$e as a single organism that automatically seeks a steady state. It is this steady
state that determines the out!ut of the system rather than the indi$idual elements. Thus it
is the structure of the organi8ation rather than the em!loyees' alone' &hich holds the key
to im!ro$ing the ,uality of out!ut.
The >no&ledge of %ariation in$ol$es understanding that e$erything measured consists of
both LnormalL $ariation due to the fle/ibility of the system and of Ls!ecial causesL that
create defects. Quality in$ol$es recogni8ing the difference to eliminate Ls!ecial causesL
&hile controlling normal $ariation. Feming taught that making changes in res!onse to
LnormalL $ariation &ould only make the system !erform &orse. Gnderstanding $ariation
includes the mathematical certainty that $ariation &ill normally occur &ithin si/ standard
de$iations of the mean.
0eming<s 6@ points
) Ed&ards Feming &as an (merican statistician &ho &as credited &ith the rise of Ka!an
as a manufacturing nation' and &ith the in$ention of Total Quality Management 1TQM2.
Feming &ent to Ka!an %ust after the )ar to hel! set u! a census of the Ka!anese
!o!ulation. )hile he &as there' he taught Istatistical !rocess controlI to Ka!anese
engineers 9 a set of techni,ues &hich allo&ed them to manufacture high9,uality goods
&ithout e/!ensi$e machinery. In 1B>C he &as a&arded a medal by the Ka!anese Em!eror
for his ser$ices to that countryIs industry.
Feming returned to the GS and s!ent some years in obscurity before the !ublication of
his book L4ut of the crisisL in 1BA-. In this book' Feming set out 1; !oints &hich' if
a!!lied to GS manufacturing industry' &ould he belie$ed' sa$e the GS from industrial
doom at the hands of the Ka!anese.
(lthough Feming does not use the term Total Quality Management in his book' it is
credited &ith launching the mo$ement. Most of the central ideas of TQM are contained in
L4ut of the crisisL.
The 1; !oints seem at first sight to be a rag9bag of radical ideas' but the key to
understanding a number of them lies in FemingIs thoughts about $ariation. Hariation &as
seen by Feming as the disease that threatened GS manufacturing. The more $ariation 9 in
the length of !arts su!!osed to be uniform' in deli$ery times' in !rices' in &ork !ractices
9 the more &aste' he reasoned.
+rom this !remise' he set out his 1; !oints for management' &hich &e ha$e !ara!hrased
here:
1.LCreate constancy of !ur!ose to&ards im!ro$ementL. Re!lace short9term reaction &ith
@A
long9term !lanning.
-.L(do!t the ne& !hiloso!hyL. The im!lication is that management should actually ado!t
his !hiloso!hy' rather than merely e/!ect the &orkforce to do so.
5.LCease de!endence on ins!ectionL. If $ariation is reduced' there is no need to ins!ect
manufactured items for defects' because there &onIt be any.
;.LMo$e to&ards a single su!!lier for any one item.L Multi!le su!!liers mean $ariation
bet&een feedstocks.
=.LIm!ro$e constantly and fore$erL. Constantly stri$e to reduce $ariation.
>.LInstitute training on the %obL. If !eo!le are inade,uately trained' they &ill not all &ork
the same &ay' and this &ill introduce $ariation.
@.LInstitute leadershi!L. Feming makes a distinction bet&een leadershi! and mere
su!er$ision. The latter is ,uota9 and target9based.
A.LFri$e out fearL. Feming sees management by fear as counter9 !roducti$e in the long
term' because it !re$ents &orkers from acting in the organisationIs best interests.
B.LBreak do&n barriers bet&een de!artmentsL. (nother idea central to TQM is the
conce!t of the Iinternal customerI' that each de!artment ser$es not the management' but
the other de!artments that use its out!uts.
1C.LEliminate slogansL. (nother central TQM idea is that itIs not !eo!le &ho make most
mistakes 9 itIs the !rocess they are &orking &ithin. 3arassing the &orkforce &ithout
im!ro$ing the !rocesses they use is counter9!roducti$e.
11.LEliminate management by ob%ecti$esL. Feming sa& !roduction targets as
encouraging the deli$ery of !oor9,uality goods.
1-.LRemo$e barriers to !ride of &orkmanshi!L. Many of the other !roblems outlined
reduce &orker satisfaction.
15.LInstitute education and self9im!ro$ementL.
1;.LThe transformation is e$eryoneIs %obL.
Feming has been critici8ed for !utting for&ard a set of goals &ithout !ro$iding any tools
for managers to use to reach those goals 1%ust the !roblem he identified in !oint 1C2. 3is
ine$itable res!onse to this ,uestion &as: LPouIre the manager' you figure it out.L
@B
The 0eming )uality cycle
). Ed&ards Feming in the 1B=CIs !ro!osed that business !rocesses should be analy8ed
and measured to identify sources of $ariations that cause !roducts to de$iate from
customer re,uirements. 3e recommended that business !rocesses be !laced in a
continuous feedback loo! so that managers can identify and change the !arts of the
!rocess that need im!ro$ements. (s a teacher' Feming created a 1rather o$ersim!lified2
diagram to illustrate this continuous !rocess' commonly kno&n as the .FC( cycle for
.lan' Fo' Check' (ctW:
*5AN: Fesign or re$ise business !rocess com!onents to im!ro$e results
0O: Im!lement the !lan and measure its !erformance
".'"2: (ssess the measurements and re!ort the results to decision makers
A"T: Fecide on changes needed to im!ro$e the !rocess
FemingIs .FC( cycle can be illustrated as follo&s:
AC
UNIT I1
MAT'&IA5 MANA$'M'NT
A1
Materials management is the branch of logistics that deals &ith the tangible com!onents
of a su!!ly chain. S!ecifically' this co$ers the ac,uisition of s!are !arts and
re!lacements' ,uality control of !urchasing and ordering such !arts' and the standards
in$ol$ed in ordering' shi!!ing' and &arehousing the said !arts.
ObBecti#es of Materials Management:
The ob%ecti$es of integrated materials management can be classified in t&o
categories 7
.rimary and
Secondary.
These are discussed belo& 7
.rimary 4b%ecti$es, +ollo&ing may be identified as !rimary ob%ecti$es &hich are to be
achie$ed.
1a2 To !urchase the re,uired materials at minimum !ossible !rices by follo&ing the
!rescribed !urchase !olicies and encouraging healthy com!etition.
1b2 To achie$e high in$entory turno$er i.e. to meet materials re,uirement of the
organi8ation by kee!ing lo& a$erage stocks so that the ca!ital locked u! in materials is
turned o$er a large no of times.
1c2 To incur minimum !ossible e/!enditure on administrati$e and other allied acti$ities
related to !urchase of materials and also to kee! the materials in stock till they are finally
deli$ered to the users.
1d2 To ensure that continuity of su!!ly of materials to the users is maintained by a$oiding
out of stock situation.
1e2 To su!!ly materials of consistent ,uality i.e. of ,uality &hich meets user s!ecification
and is fit for ser$ice.
1f2 To kee! the &age bill of the de!artment lo& by ensuring !ro!er distribution of &ork
among staff and not em!loying sur!lus staff.
1g2 To maintain good relationshi! &ith the su!!liers of materials and also de$elo! ne&
su!!liers for the !roducts for &hich reliable su!!liers do not e/ist.
1h2 To ensure training and de$elo!ment of !ersonnel em!loyed in the de!artment so that
good industrial relations are maintained.
1i2 To maintain !ro!er and u!9to9date records of all stores transactions and !urchases.
Secondary 4b%ecti$es:
1a2 To assist technicalDdesign de!artment in de$elo!ing ne& materials and !roducts &hich
may be more !rofitable to the organi8ation.
A-
1b2 To make economic Imake or buyI decisions.
1c2 To ensure standardi8ation of materials
1d2 To contribute in the !roduct im!ro$ement.
1e2 To contribute in the de$elo!ment of inter de!artmental harmony.
1f2 To follo& scientific methods of forecasting !rices and future consum!tion of
materials.
IN1'NTO&? "ONT&O5 T'".NIAU'(
Optimi%ing 'conomic Ode Auantity G'OAH
In$entory models for calculating o!timal order ,uantities and reorder !oints ha$e been in
e/istence long before the arri$al of the com!uter. )hen the first Model T +ords &ere
rolling off the assembly line' manufacturers &ere already rea!ing the financial benefits of
in$entory management by determining the most cost effecti$e ans&ers to the ,uestions
of )henN and 3o& muchN. Pes long before KIT' TQM' T4C' and MR.' com!anies &ere
using these same 1then unnamed2 conce!ts in managing their !roduction and in$entory. I
recently read 6urchasing and /toring, a te/tbook that &as !art of a "Modern Business
Course# at the (le/ander 3amilton Institute in *e& Pork. The te/tbook !ublished in
1B51 1that0s right 1B512 &as essentially a ho& to book on in$entory management in a
manufacturing en$ironment. If you0re &ondering &hy I &ould &ant to read a @C9year9
old business te/t' my ans&er &ould be that the fundamental conce!ts of managing a
business change $ery little &ith time' and reading about these conce!ts in a $intage te/t is
a great &ay to reinforce the $alue of the fundamentals. The occasional reference to "The
)ar# 1referring to ))I2 also kee!s it interesting and the com!lete absence of acronyms
is refreshing.
(s you may ha$e guessed' this @C9year9old book contained a section on Minimum 1ost
<uantity' &hich is &hat &e no& refer to as *conomic Order <uantity (*O<). I can
imagine that in the 1B5C0s an accountant 1or more likely a room full of accountants2
&ould ha$e calculated E4Q or other in$entory related formulas one item at a time in a
dimly lit office using the in$entory books' a mechanical adding machine and a slide rule.
Time consuming as this &as' some manufacturers of the time recogni8ed the financial
benefits of taking a scientific a!!roach to making these in$entory decisions.
So &hy is it that' in these days of ad$anced information technology' many com!anies are
still not taking ad$antage of these fundamental in$entory modelsN .art of the ans&er lies
in !oor results recei$ed due to inaccurate data in!uts. (ccurate !roduct costs' acti$ity
costs' forecasts' history' and lead times are crucial in making in$entory models &ork.
Ironically' soft&are ad$ancements may also in !art to blame. Many ER. !ackages come
&ith built in calculations for E4Q &hich calculate automatically. 4ften the users do not
understand ho& it is calculated and therefore do not understand the data in!uts and
system setu! &hich controls the out!ut. )hen the out!ut a!!ears to be Lout of &hackL it
is sim!ly ignored. This sometimes creates a situation in &hich the e/ecuti$es &ho had
A5
!urchased the soft&are incorrectly assume the material !lanners and !urchasing clerks
are ordering based u!on the systems recommendations. I should also note that many
o!erations &ill find these built9in E4Q calculations inade,uate and in need of
modifications to deal &ith the di$ersity of their !roduct grou!s and !rocesses.
Cor!orate goals and strategies may sometimes conflict &ith E4Q. Measuring
!erformance solely by in$entory turns is one of the most !rolific mistakes made in the
name of in$entory management. Many com!anies ha$e achie$ed aggressi$e goals in
increasing in$entory turns only to find their bottom line has shrunk due to increased
o!erational costs.
E4Q is essentially an accounting formula that determines the !oint at &hich the
combination of order costs and in$entory carrying costs are the least. The result is the
most cost effecti$e ,uantity to order. In !urchasing this is kno&n as the order ,uantity' in
manufacturing it is kno&n as the !roduction lot si8e.
)hile E4Q may not a!!ly to e$ery in$entory situation' most organi8ations &ill find it
beneficial in at least some as!ect of their o!eration. (nytime you ha$e re!etiti$e
!urchasing or !lanning of an item' E4Q should be considered. 4b$ious a!!lications for
E4Q are !urchase9to9stock distributors and make9to9stock manufacturers' ho&e$er'
make9to9order manufacturers should also consider E4Q &hen they ha$e multi!le orders
or release dates for the same items and &hen !lanning com!onents and sub9assemblies.
Re!etiti$e buy maintenance' re!air' and o!erating 1MR42 in$entory is also a good
a!!lication for E4Q. Though E4Q is generally recommended in o!erations &here
demand is relati$ely steady' items &ith demand $ariability such as seasonality can still
use the model by going to shorter time !eriods for the E4Q calculation. Kust make sure
your usage and carrying costs are based on the same time !eriod.
Foesn0t E4Q conflict &ith Kust9In9TimeN )hile I don0t &ant to get into a long
discussion on the misconce!tions of &hat Kust9In9Time 1KIT2 is' I &ill address the most
common misunderstanding in &hich KIT is assumed to mean all com!onents should
arri$e in the e/act run ,uantities "%ust in time# for the !roduction run. KIT is actually a
,uality initiati$e &ith the goal of eliminating &asted ste!s' &asted labor' and &asted cost.
E4Q should be one of the tools used to achie$e this. E4Q is used to determine &hich
com!onents fit into this KIT model and &hat le$el of KIT is economically ad$antageous
for your o!eration. (s an e/am!le' let us assume you are a la&n e,ui!ment manufacturer
and you !roduce 1CC units !er day of a s!ecific model of la&n mo&er. )hile it may be
cost effecti$e to ha$e 1CC engines arri$e on your dock each day' it &ould certainly not be
cost effecti$e to ha$e =CC scre&s 11 days su!!ly2 used to mount a !lastic housing on the
la&n mo&er shi!!ed to you daily. To determine the most cost effecti$e ,uantities of
scre&s or other com!onents you &ill need to use the E4Q formula.
The basic Economic 4rder Quantity 1E4Q2 formula is as follo&s:

The In!uts
A;
)hile the calculation itself is fairly sim!le the task of determining the correct data in!uts
to accurately re!resent your in$entory and o!eration is a bit of a !ro%ect. E/aggerated
order costs and carrying costs are common mistakes made in E4Q calculations. Gsing
all costs associated &ith your !urchasing and recei$ing de!artments to calculate order
cost or using all costs associated &ith storage and material handling to calculate carrying
cost &ill gi$e you highly inflated costs resulting in inaccurate results from your E4Q
calculation. I also caution against using benchmarks or !ublished industry standards in
calculations. I ha$e fre,uently seen references to a$erage !urchase order costs of X1CC to
X1=C in maga8ine articles and !roduct brochures. 4ften these references trace back to
studies !erformed by ad$ocacy agencies &orking for business that directly benefit from
these e/aggerated 1my o!inion2 costs used in R4I calculations for their !roducts or
ser$ices. I am not denying that some o!erations may ha$e !urchase costs in this range'
es!ecially if you are fre,uently re9sourcing' re9,uoting' andDor buying from o$erseas
$endors. 3o&e$er if your o!eration is !rimarily in$ol$ed &ith re!etiti$e buying from
domestic $endors T &hich is more common T you0ll likely see your !urchase order
costs in the substantially lo&er X1C to X5C range.
(s you !re!are to undertake this !ro%ect kee! in mind that e$en though accuracy is
crucial' small $ariances in the data in!uts generally ha$e $ery little effect on the out!uts.
The follo&ing breaks do&n the data in!uts in more detail and gi$es insight into the
as!ects of each.

(nnual Gsage.
E/!ressed in units' this is generally the easiest !art of the e,uation. Pou sim!ly in!ut
your forecasted annual usage.

4rder Cost.
(lso kno&n as !urchase cost or set u! cost' this is the sum of the fi/ed costs that are
incurred each time an item is ordered. These costs are not associated &ith the ,uantity
ordered but !rimarily &ith !hysical acti$ities re,uired to !rocess the order.
+or !urchased items' these &ould include the cost to enter the !urchase order andDor
re,uisition' any a!!ro$al ste!s' the cost to !rocess the recei!t' incoming ins!ection'
in$oice !rocessing and $endor !ayment' and in some cases a !ortion of the inbound
freight may also be included in order cost. It is im!ortant to understand that these are
costs associated &ith the fre,uency of the orders and not the ,uantities ordered. +or
e/am!le' in your recei$ing de!artment the time s!ent checking in the recei!t' entering the
recei!t' and doing any other related !a!er&ork &ould be included' &hile the time s!ent
re!acking materials' unloading trucks' and deli$ery to other de!artments &ould likely not
be included. If you ha$e inbound ,uality ins!ection &here you ins!ect a !ercentage of
the ,uantity recei$ed you &ould include the time to get the s!ecs and !rocess the
!a!er&ork and not include time s!ent actually ins!ecting' ho&e$er if you ins!ect a fi/ed
,uantity !er recei!t you &ould then include the entire time including ins!ecting'
re!acking' etc. In the !urchasing de!artment you &ould include all time associated &ith
creating the !urchase order' a!!ro$al ste!s' contacting the $endor' e/!editing' and
re$ie&ing order re!orts' you &ould not include time s!ent re$ie&ing forecasts' sourcing'
getting ,uotes 1unless you get ,uotes each time you order2' and setting u! ne& items. (ll
time s!ent dealing &ith $endor in$oices &ould be included in order cost.
A=
(ssociating actual costs to the acti$ities associated &ith order cost is &here many an
E4Q formula runs afoul. Fo not make a list of all of the acti$ities and then ask the
!eo!le !erforming the acti$ities Lho& long does it take you to do thisNL The results of
this ty!e of measurement are rarely e$en close to accurate. I ha$e found it to be more
effecti$e to determine the !ercentage of time &ithin the de!artment consumed !erforming
the s!ecific acti$ities and multi!lying this by the total labor costs for a certain time !eriod
1usually a month2 and then di$iding by the line items !rocessed during that same !eriod.
It is e/tremely difficult to associate inbound freight costs &ith order costs in an
automated E4Q !rogram and I suggest it only if the inbound freight cost has a significant
effect on unit cost and its effect on unit cost $aries significantly based u!on the order
,uantity.
In manufacturing' the order cost &ould include the time to initiate the &ork order' time
associated &ith !icking and issuing com!onents e/cluding time associated &ith counting
and handling s!ecific ,uantities' all !roduction scheduling time' machine set u! time' and
ins!ection time. .roduction scra! directly associated &ith the machine setu! should also
be included in order cost as &ould be any tooling that is discarded after each !roduction
run. There may be times &hen you &ant to artificially inflate or deflate set9u! costs. If
you lack the ca!acity to meet the !roduction schedule using the E4Q' you may &ant to
artificially increase set9u! costs to increase lot si8es and reduce o$erall set u! time. If
you ha$e e/cess ca!acity you may &ant to artificially decrease set u! costs' this &ill
increase o$erall set u! time and reduce in$entory in$estment. The idea being that if you
are !aying for the labor and machine o$erhead any&ay it &ould make sense to take
ad$antage of the sa$ings in reduced in$entories.
+or the most !art' order cost is !rimarily the labor associated &ith !rocessing the order'
ho&e$er' you can include the other costs such as the costs of !hone calls' fa/es' !ostage'
en$elo!es' etc.

Carrying cost.
(lso called 3olding cost' carrying cost is the cost associated &ith ha$ing in$entory on
hand. It is !rimarily made u! of the costs associated &ith the in$entory in$estment and
storage cost. +or the !ur!ose of the E4Q calculation' if the cost does not change based
u!on the ,uantity of in$entory on hand it should not be included in carrying cost. In the
E4Q formula' carrying cost is re!resented as the annual cost !er a$erage on hand
in$entory unit. Belo& are the !rimary com!onents of carrying cost.
Interest. If you had to borro& money to !ay for your in$entory' the interest rate &ould be
!art of the carrying cost. If you did not borro& on the in$entory' but ha$e loans on other
ca!ital items' you can use the interest rate on those loans since a reduction in in$entory
&ould free u! money that could be used to !ay these loans. If by some miracle you are
debt free you &ould need to determine ho& much you could make if the money &as
in$ested.
Insurance. Since insurance costs are directly related to the total $alue of the in$entory'
you &ould include this as !art of carrying cost.
Ta/es. If you are re,uired to !ay any ta/es on the $alue of your in$entory they &ould
also be included.
A>
Storage Costs. Mistakes in calculating storage costs are common in E4Q
im!lementations. ?enerally com!anies take all costs associated &ith the &arehouse and
di$ide it by the a$erage in$entory to determine a storage cost !ercentage for the E4Q
calculation. This tends to include costs that are not directly affected by the in$entory
le$els and does not com!ensate for storage characteristics. Carrying costs for the !ur!ose
of the E4Q calculation should only include costs that are $ariable based u!on in$entory
le$els.
If you are running a !ickD!ack o!eration &here you ha$e fi/ed !icking locations assigned
to each item &here the locations are si8ed for !icking efficiency and are not designed to
hold the entire in$entory' this !ortion of the &arehouse should not be included in carrying
cost since changes to in$entory le$els do not effect costs here. Pour o$erflo& storage
areas &ould be included in carrying cost. 4!erations that use !urely random storage for
their !roduct &ould include the entire storage area in the calculation. (reas such as
shi!!ingDrecei$ing and staging areas are usually not included in the storage calculations.
3o&e$er. if you ha$e to add an additional &arehouse %ust for o$erflo& in$entory then
you &ould include all areas of the second &arehouse as &ell as freight and labor costs
associated &ith mo$ing the material bet&een the &arehouses.
Since storage costs are generally a!!lied as a !ercentage of the in$entory $alue you may
need to classify your in$entory based u!on a ratio of storage s!ace re,uirements to $alue
in order to assess storage costs accurately. +or e/am!le' letIs say you ha$e %ust o!ened a
ne& E9business called LBobs)eSellE$erything.comL. Pou calculated that o$erall your
annual storage costs &ere =S of your a$erage in$entory $alue' and a!!lied this to your
entire in$entory in the E4Q calculation. Pour a$erage in$entory on a !articular !iece of
soft&are and on AC lb. bags of concrete mi/ both came to X1C'CCC. The E4Q formula
a!!lied a X=CC storage cost to the a$erage ,uantity of each of these items e$en though the
soft&are actually took u! only 1 !allet !osition &hile the concrete mi/ consumed @=
!allet !ositions. Categori8ing these items &ould !lace the soft&are in a category &ith
minimal storage costs 11S or less2 and the concrete in a category &ith e/treme storage
costs 1=CS2 that &ould then allo& the E4Q formula to &ork correctly.
There are situations &here you may not &ant to include any storage costs in your E4Q
calculation. If your o!eration has e/cess storage s!ace of &hich it has no other uses you
may decide not to include storage costs since reducing your in$entory does not !ro$ide
any actual sa$ings in storage costs. (s your o!eration gro&s near a !oint at &hich you
&ould need to e/!and your !hysical o!erations you may then start including storage in
the calculation.
( !ortion of the time s!ent on cycle counting should also be included in carrying cost'
remember to a!!ly costs &hich change based u!on changes to the a$erage in$entory
le$el. So &ith cycle counting' you &ould include the time s!ent !hysically counting and
not the time s!ent filling out !a!er&ork' data entry' and tra$el time bet&een locations.
4ther costs that can be included in carrying cost are risk factors associated &ith
obsolescence' damage' and theft. Fo not factor in these costs unless they are a direct
result of the in$entory le$els and are significant enough to change the results of the E4Q
e,uation.

Hariations
A@
There are many $ariations on the basic E4Q model. I ha$e listed the most useful ones
belo&.
Y Quantity discount logic can be !rogrammed to &ork in con%unction &ith the
E4Q formula to determine o!timum order ,uantities. Most systems &ill re,uire
this additional !rogramming.
Y (dditional logic can be !rogrammed to determine ma/ ,uantities for items
sub%ect to s!oilage or to !re$ent obsolescence on items reaching the end of their
!roduct life cycle.
Y )hen used in manufacturing to determine lot si8es &here !roduction runs are
$ery long 1&eeks or months2 and finished !roduct is being released to stock and
consumedDsold throughout the !roduction run you may need to take into account
the ratio of !roduction to consum!tion to more accurately re!resent the a$erage
in$entory le$el.
Y Pour safety stock calculation may take into account the order cycle time that is
dri$en by the E4Q. If so' you may need to tie the cost of the change in safety
stock le$els into the formula.

Im!lementing E4Q
There are !rimarily t&o &ays to im!lement E4Q. Both methods ob$iously re,uire that
you ha$e already determined the associated costs. The sim!lest method is to set u! your
calculation in a s!readsheet !rogram' manually calculate E4Q one item at a time' and
then manually enter the order ,uantity into your in$entory system. If your in$entory has
fairly steady demand and costs and you ha$e less than one or t&o thousand SEGs you
can !robably get by using this method once !er year. If you ha$e more than a cou!le
thousand SEGs andDor higher $ariability in demand and costs you &ill need to !rogram
the E4Q formula into your e/isting in$entory system. This allo&s you to ,uickly re9
calculate E4Q automatically as often as needed. Pou can also use a hybrid of the t&o
systems by do&nloading your data to a s!readsheet or database !rogram' !erform the
calculations and then u!date your in$entory system either manually or through a batch
!rogram. )hiche$er method you use you should make sure to follo& the follo&ing
ste!s:
Y Test the formula. .rior to final im!lementation you must test the !rogramming
and setu!. Run the E4Q !rogram and then manually check the results using
sam!le items that are re!resentati$e of the $ariations of your in$entory base.
Y .ro%ect results. PouIll need to run a simulation or use a re!resentati$e sam!ling
of items to determine the o$erall short9term and long9term effects the E4Q
calculation &ill ha$e on &arehouse s!ace' cash flo&' and o!erations. Framatic
increases in in$entory le$els may not be immediately feasible' if this is the case
you may tem!orarily ad%ust the formula until arrangements can be made to handle
the additional storage re,uirements and com!ensate for the effects on cash flo&.
If the !ro%ection sho&s in$entory le$els dro!!ing and order fre,uency increasing'
you may need to e$aluate staffing' e,ui!ment' and !rocess changes to handle the
increased acti$ity.
AA
Y Maintain E4Q. The $alues for 4rder cost and Carrying cost should be
e$aluated at least once !er year taking into account any changes in interest rates'
storage costs' and o!erational costs.
( related calculation is the Total (nnual Cost calculation. This calculation can be used
to !ro$e the E4Q calculation. Total (nnual Cost Z [1annual usage in units2D1order
,uantity21order cost2\]^[.=1order ,uantity2]1safety stock2\W1annual carrying cost !er
unit2_. This formula is also $ery useful &hen com!aring ,uotes &here $endors offer
different minimum order ,uantities' !rice breaks' lead times' trans!ortation costs.
Gse it` The E4Q calculation is L3ard ScienceL' if you ha$e accurate in!uts the out!ut is
the most cost9effecti$e ,uantity to order based u!on your current o!erational costs. To
further increase in$entory turns you &ill need to reduce the order costs. E9!rocurement'
$endor9managed in$entories' bar coding' and $endor certification !rograms can reduce
the costs associated &ith !rocessing an order. E,ui!ment enhancements and !rocess
changes can reduce costs associated &ith manufacturing set u!. Increasing forecast
accuracy and reducing lead times &hich result in the ability to o!erate &ith reduced
safety stock can also reduce in$entory le$els.
AB" "lassification / Analysis of In#entoy
The (BC classification !rocess is an analysis of a range of ob%ects' such as finished
!roducts 'items lying in in$entory or customers into three categories. ItIs a system of
categori8ation' &ith similarities to .areto analysis' and the method usually categori8es
in$entory into three classes &ith each class ha$ing a different management control
associated :
( 9 outstandingly im!ortant7 B 9 of a$erage im!ortance7 C 9 relati$ely unim!ortant as a
basis for a control scheme. Each category can and sometimes should be handled in a
different &ay' &ith more attention being de$oted to category (' less to B' and still less to
C.
.o!ularly kno&n as the LACD-CL rule (BC conce!t is a!!lied to in$entory management
as a rule9of9thumb. It says that about ACS of the Ru!ee $alue' consum!tion &ise' of an
in$entory remains in about -CS of the items.

This rule ' in general ' a!!lies &ell and is fre,uently used by in$entory managers to !ut
their efforts &here greatest benefits ' in terms of cost reduction as &ell as maintaining a
smooth a$ailability of stock' are attained.
The (BC conce!t is deri$ed from the .aretoIs ACD-C rule cur$e. It is also kno&n as the
AC9-C conce!t. 3ere' Ru!ee D Follar $alue of each indi$idual in$entory item is calculated
on annual consum!tion basis.
Thus' a!!lied in the conte/t of in$entory' itIs a determination of the relati$e ratios
bet&een the number of items and the currency $alue of the items !urchased D consumed
on a re!etiti$e basis :
1C9-CS of the items 1I(I class2 account for @C9ACS of the consum!tion
AB
the ne/t 1=9-=S 1IBI class2 account for 1C9-CS of the consum!tion and
the balance >=9@=S 1ICI class2 account for =91CS of the consum!tion
I(I class items are closely monitored because of the $alue in$ol$ed 1@C9ACS `2.
3igh $alue 1(2' o& $alue 1C2 ' intermediary $alue 1B2

-CS of the items account for ACS of total in$entory consum!tion $alue 1Qty
consumed O unit rate2
S!ecific items on &hich efforts can be concentrated !rofitably
.ro$ides a sound basis on &hich to allocate funds and time
('B 6 C ' all ha$e a !urchasing D storage !olicy 9 L(L' most critically re$ie&ed '
LBL little less &hile LCL still less &ith greater results.
ll the items of in$entories are !ut in three categories' as belo& :
( Items : These Items are seen to be of high Ru!ee consum!tion $olume. L(L items
usually include 1C9-CS of all in$entory items' and account for =C9>CS of the total Ru!ee
consum!tion $olume.
B Items : LBL items are those that are 5C9;CS of all in$entory items' and account for 5C9
;CS of the total Ru!ee consum!tion $olume of the in$entory. These are im!ortant' but
not critical' and donIt !ose sourcing difficulties.
C Items : LCL items account for ;C9=CS of all in$entory items' but only =91CS of the
total
Ru!ee consum!tion $olume. Characteristically' these are standard' lo&9cost and readily
a$ailable items. (BC classifications allo& the in$entory manager to assign !riorities for
in$entory control. Strict control needs to be ke!t on ( and B items' &ith !referably lo&
safety stock le$el. Taking a lenient $ie&' the C class items can be maintained &ith looser
control and &ith high safety stock le$el. The (BC conce!t !uts em!hasis on the fact
that e$ery item of in$entory is critical and has the !otential of affecting 'ad$ersely'
!roduction' or sales to a customer or o!erations. The categori8ation hel!s in better
control on ( and B items.
In addition to other management !rocedures' (BC classifications can be used to design
cycle counting schemes. +or e/am!le' ( items may be counted 5 times !er year' B items
1 to - times' and C items only once' or not at all.
Suggested !olicy guidelines for ( ' B 6 C classes of items
( items 13igh cons. Hal2 B items 1Moderate cons.Hal2 C item 1o& cons. Hal2
BC

Hery strict cons. control Moderate control oose control
*o or $ery lo& safety stock o& safety stock 3igh safety stock
.hased deli$ery 1)eekly2 4nce in three months 4nce in > months
)eekly control re!ort Monthly control re!ort Quarterly re!ort
Ma/imum follo& u! .eriodic follo& u! E/ce!tional
(s many sources as !ossible T&o or more reliable T&o reliable
(ccurate forecasts Estimates on !ast data Rough estimate
Central !urchasing Dstorage Combination !urchasing Fecentralised
Ma/.efforts to control T Moderate Min.clerical efforts
To be handled by Sr.officers Middle le$el Can be delegated
+inally' (BC (nalysis is an intrinsic !art of Materials Management and is the
categori8ation of !roducts into grou!s sorted by their s!end $olume. ?i$en .areto
analysis a ty!ical (BC analysis might find that -CS of a !roducts e,uate for @CS of the
$alue' these are termed (0s and are the more e/!ensi$e grou! 1often com!rised of
com!le/ assets2 . Chea! consumable 1and often easily re!laceable items2 fall into the "C#
class.
*U&".A(' *&O"'0U&'
1..urchase re,uest
The s!ecifications and numberD,uantity and deli$ery of e,ui!ment' de$ices and materials
are determined by the de!artment1s2 that &ill be using the !roduct1s2 or materials. The
.urchasing Fe!artment conducts !urchase acti$ities based on !urchase re,uests
submitted by theDthese de!artment1s2.
-. selection of com!anies for estimation submission
The .urchasing Fe!artment' at its sole discretion' selects com!anies from &hich
estimates &ill be sought. Su!!liers are selected from the files of LCom!anies &ith
.re$iously Established Business Relationshi!sL' LCom!anies from )hich Estimates Can
Be Re,uestedL and L.roducts and Su!!liersL. Selection is made by com!rehensi$ly
e$aluating such factors as the ,uality and !erformance of the e,ui!ment' de$ice1s2 or
materials to be !urchased' com!atibility &ith e/isting facilities' degree of reliability'
!roduct re,uirements including safety' deli$ery time' the scale of the order' after9sale
ser$ice and the com!anyIs !re$ious business record. (s a rule' 4saka ?as asks se$eral
com!anies to submit estimates. 3o&e$er' only one com!any may be s!ecified for
estimate submission in such s!ecial cases as those concerned &ith industrial !ro!erty
rights' those re,uiring ma/imum le$els of safety that only one s!ecific su!!lier can
ensure' cases &here only one s!ecific su!!lier can assure com!atibility &ith e/isting
facilities' or in case of urgency.
5. Estimate re,uest
(s a rule' &hen re,uesting an estimate from a com!any that it has selected' 4saka ?as
&ill set out a s!ecification from listing 4saka ?asIs re,uirements in res!ects of ,uality'
!erformance standard' si8e' ins!ection and method of ins!ection. The selected com!anies
B1
&ill be asked to submit cost estimates and s!ecifications to 4saka ?as !rior to a s!ecified
date.
;. Submission of Estimate
S!ecification sheets submitted by !otential su!!liers at their o&n e/!ense are checked by
the .urchasing Fe!artment and the de!artment1s2 that &ill be using the !roduct1s2' in
order to determine &hether the re,uired standards are met by the !roduct1s2. (ll !roducts
must !ass this e/amination. Furing this !rocess' 4saka ?as may re,uest additions or
changes to the s!ecifications.
=. *egotiation
(fter $alid cost estimates and s!ecifications ha$e been com!rehensi$ely e$aluated in
res!ect of !rice' technical re,uirements' etc. 4saka ?as &ill commence negotiation &ith
the com!any &ith the most attracti$e !ro!osal to discuss the amount of the contract and
other terms and conditions. The selection of such a com!any shall be made by 4saka ?as
at its sole discretion. Contract terms and conditions &ill be decided u!on mutual
agreement.
>. Contract conclusion
The business &ill be established u!on conclusion of a contract' in the form of a &ritten
document if necessary. The obligations and liabilities of 4saka ?as arise only &hen such
contract is concluded.
@. Feli$ery and Ins!ection
Feli$ery dates s!ecified in the contract must be strictly obser$ed. .recise details of the
deli$ery schedule &ill be agreed bet&een the su!!lier and the rele$ant de!artment1s2 of
4saka ?as. Feli$ered e,ui!ment' de$ice1s2 or materials must !ass ins!ections conducted
by the rele$ant de!artment1s2 of 4saka ?as. )hen deemed significant' an interim
ins!ection may be conducted during the manufacturing !rocess.
(toes management and (toes ecod
The (upply Function:
Stores
Res!onsibilities
4rganisation
.osition of Stores )ithin the .urchasing 6 Su!!ly 4rganisation
Relationshi!s &ith 4ther Fe!artments
Materials Management
ogistics
The Su!!ly Chain Conce!t
The British Standard ?uide to Stock Control
Identification of Mateials:
Coding of Materials
(d$antages of a Coding System
Code Symbols
B-
Inter!retation of Codes
Methods of Coding
Self9Halidating Codes
4rganising a Materials Hocabulary
S!ecification
Bar Coding
Hariety Reductions
Some )idely Gsed Coding Systems
&eceipt - Inspection:
E/!editing
Recei!ts from Su!!liers
Transfers from 4ther Storehouses
Returns from .roduction or 4ther Fe!artments
Scra! (rising
Ins!ection
Hendor Quality Rating
Marshalling Recei!ts
Recei!t of Ca!ital Items )ithin the 4rganisation
Issue - 0ispatch:
(uthorisation of Issues
Identification of Re,uirements
Timing of Issues
Methods of Issuing Stores for Internal Gse
Fis!atch of ?oods 4utside the 4rganisation
&ecods - (ystems:
.ur!ose of Stock Records
Manual Systems
Com!uterised Systems
Electronic Fata Interchange
Current Fe$elo!ments
Mateials - Accounting
The Halue of Stores in Stock
Basis of Material Costing
Methods of .ricing Material
(rrangement of Stores (ccounts
.ro$isions
Control of Stock by Halue
Budgetary Control
B5
(nnual (udit
Appoach to the *o#ision of Mateials:
Reasons for 3olding Stock
Fe!endent 6 Inde!endent Femand
(!!roaches Taken in .roduction 4rganisations
Fiffering Stock Control *eeds of Construction' Ser$ice 6 Retail 4rganisations
The E/tent of Stockholdings
4rdering Quantities
Range
Consignment Stocktaking
(toc3 "ontol Techni)ues:
.ro$isioning
(!!roaches to Control
Hisual (!!roaches to Control
.rogramming Feli$eries
4rdering Quantities
The *eed for Fifferential Control
(BC (nalysis Classification of Stock (ccording to .ur!ose
+orecasting Femand
The Gse of .robability in In$entory Control
The Setting of Recorder e$els
The .ro$ision of Safety Stock
Simulation
.hysical Security
Res!onsibility for Stock
.ur!ose of Stocktaking
.eriodic Stocktaking
Continuous Stocktaking
Stocktaking .rocedure
Treatment of Fiscre!ancies
4bsolescence 6 Redundancy
Stock Checking
(toehouses - (toc3yads:
*e& Stores Buildings
arge Central Storehouses
Storehouses Ser$ing 4ne +actory or 4!erating Gnit
3iring of Storage (ccommodation
Stockyards
Construction of Stockyards
Stockyard +acilities
B;
Buildings 6 Enclosures )ithin the Stockyard
(toes Opeations:
Security
Eno&ledge of Materials
.re$ention of Feterioration
Storehouse ocation Systems
+lo&
Fe!artmental Stores
)ork9In9.rogress Stores
S!ecial Storage +acilities
Centralisation of Storage Central Stores
The (ssessment of Stores Efficiency
The Measurement of Stores Efficiency
Redundant Stock
.ealth - (afety:
Euro!ean Firecti$es on 3ealth 6 Safety at )ork
Manual ifting
The Control of Substances 3a8ardous to 3ealth Regulations
Mechanical ifting
+ire .recautions
(toage ')uipment:
(d%ustable Steel Shel$ing
Bins
.allets
Racks
Measuring E,ui!ment
adders 6 Ste!s
Cleaning E,ui!ment
?eneral Tools
i$e Storage
(utomation of )arehouse )ork
Mateials .andling:
Benefits of .ro!er Materials 3andling
Manual 3andling
Mechanical 3andling
(ssessment of 3andling .roblems for Mechanisation
3and94!erated E,ui!ment
.o&er9Fri$en E,ui!ment
B=
The Relationshi! of Materials 3andling to Trans!ort
*ocedues Manuals:
The *eed for .rocedure Manuals
.rocedures
(d$antages 6 Fisad$antages of a Manual
.re!aration of the Manual
Contents of the Manual
.ublication 6 Fistribution
Im!lementation of the Manual
)ork Study
MA&2'TIN$ MANA$'M'NT
Fefinitions of marketing
)idely used definition of marketing is:
?Mar-eting is a social and managerial process by &hich indi%iduals and groups obtain
&hat they need and &ant through creating and e#changing products and %alue &ith
others.? 1Eotler 6 (rmstrong 1BA@2
The mission of marketing is satisfying customer needs. That takes !lace in a social
conte/t. In de$elo!ed societies marketing is needed in order to satisfy the needs of
societyIs members. Industry is the tool of society to !roduce !roducts for the satisfaction
of needs.
There are broad and narro& definitions of marketing. Fifferent ty!es of a!!roaches to
marketing are needed &hen analysing the !ossibilities to im!ro$e marketing.
Marketing has a connecti$e function in society. It connects su!!ly and demand or
!roduction and consum!tion. (t micro9le$el' marketing builds and maintains the
relationshi! bet&een !roducer and consumer.
(t business unit le$el' marketing can ha$e an integrati$e function. It integrates all the
functions and !arts of a com!any to ser$e the markets.
The narro&est definition is to see marketing as a function of a business enter!rise
bet&een !roduction and markets taking care that !roducts mo$e smoothly from
!roduction to customers.
B>
Functions of ma3eting
Marketing is sometimes thought of as sim!ly the !rocess of buying and selling. Its tasks
are much more e/tensi$e than this sim!le descri!tion. +or a marketing system to be
o!erati$e and effecti$e' there are three general ty!es of functions &hich it must !ro$ide.
E/change functions:
9 Buying
9 selling
9 !ricing.
.hysical functions:
9 (ssembling
9 trans!ort and handling
9 storage
9 !rocessing and !ackaging
9 grading and standardi8ation.
+acilitating functions:
9 +inancing and risk9bearing
9 market information
9 demand and su!!ly creation
9 market research.
E/change functions are &hat is commonly thought of as marketing. They in$ol$e finding
a buyer or a seller' negotiating !rice and transferring o&nershi! 1but not necessarily
!hysical transfer2. These functions take !lace at the LmarketL 9 that is' the !hysical
meeting !oint for buyers and sellers at the !oint of !roduction or %ia some other means of
communication. (t this !oint' formal or informal !ro!erty rights are im!ortant to ensure
the reliable transfer of o&nershi! and to guarantee legality 1e.g. those animals on sale
&ere not stolen and &ill not be reclaimed2.
.hysical functions enable the actual flo& of commodities through s!ace and time from
!roducer to consumer and their transformation to a form desirable to the consumer.
(ssembling or concentrating the !roduct at con$enient !oints allo&s its economical
trans!ort 1i.e. getting enough animals together to trans!ort chea!ly2. This is a $aluable
function &hich is often o$erlooked in the !ublic !erce!tion of traders. Storage allo&s the
commodity to be held until !eak season demand' thereby stabilising su!!ly. .rocessing
transforms the commodity into the !roducts desired by the consumers. ?rading and
standardi8ation allo& the consumer to be more confident of the characteristics of the
good being !urchased.
B@
+inancing and risk9bearing are t&o im!ortant facilitating functions. The o&ner of goods
at any marketing stage must sacrifice the o!!ortunity to use the &orking ca!ital needed to
buy those goods else&here. 4r the o&ner must borro& that ca!ital. In either case' ca!ital
must be !ro$ided by the trader or by some lending source. Regardless' cost is in$ol$ed.
+urther' there is an im!licit cost in the risk of losing all or !art of that ca!ital through
theft' s!oilage' mortality or changing market conditions. )ithout the &illingness to
!ro$ide the ca!ital and to bear these costs' no stage of the market chain could function.
4ther facilitating functions enable !roducers to res!ond to consumer needs and thus
!ro$ide goods in the locations' ,uantity and form desired.
These functions create the ma3eting en#ionment4 &hose elements are:
Market and facilities 9 including all of the !hysical infrastructure that a market may
de!end on.
Market information and intelligence 9 including informal and formal communication
systems' and standard &eights and grades on &hich market information de!ends.
Institutional en$ironment 9 including the go$ernment !olicy en$ironment' regulations
and su!!orting legislatio
Marketing Mix.
The marketing mi/ is !robably the most famous marketing term. Its elements are the
basic' tactical com!onents of a marketing !lan. (lso kno&n as the +our .Is' the
mar-eting mi# elements are !rice' !lace' !roduct' and !romotion. Read on for more
details on the marketing mi/.
The conce!t is sim!le. Think about another common mi/ 9 a cake mi/. (ll cakes contain
eggs' milk' flour' and sugar. 3o&e$er' you can alter the final cake by altering the amounts
of mi/ elements contained in it. So for a s&eet cake add more sugar`
BA
Some commentators &ill increase the marketing mi/ to the +i$e .Is' to include !eo!le.
4thers &ill increase the mi/ to Se$en .Is' to include !hysical e$idence 1such as uniforms'
facilities' or li$ery2 and !rocess 1i.e. the &hole customer e/!erience e.g. a $isit the
Fisney )orld2. The term &as coined by *eil 3. Borden in his article !he 1oncept of the
Mar-eting Mi# in 1B>=.
.rice
There are many &ays to !rice a !roduct. etIs ha$e a look at some of them and try to
understand the best !olicyDstrategy in $arious situations.
.lace
(nother element of *eil 3.BordenIs Marketing Mi/ is .lace. .lace is also kno&n as
channel' distribution' or intermediary. It is the mechanism through &hich goods andDor
ser$ices are mo$ed from the manufacturerD ser$ice !ro$ider to the user or consumer
.roduct
+or many a !roduct is sim!ly the tangible' !hsysical entity that they may be
buying or selling. Pou buy a ne& car and thatIs the !roduct 9 sim!le` 4r maybe
not. )hen you buy a car' is the !roduct more com!le/ than you first thoughtN The
Three e$els of a .roduct
The .roduct ife Cycle 1.C2 is based u!on the biological life cycle. +or
e/am!le' a seed is !lanted 1introduction27 it begins to s!rout 1gro&th27 it shoots
out lea$es and !uts do&n roots as it becomes an adult 1maturity27 after a long
!eriod as an adult the !lant begins to shrink and die out 1decline2.
The Customer ife Cycle 1CC2 has ob$ious similarities &ith the .roduct ife
Cycle 1.C2. 3o&e$er' CC focuses u!on the creation of and deli$ery of lifetime
BB
$alue to the customer i.e. looks at the !roducts or ser$ices that customers *EEF
throughout their li$es.
.romotion
(nother one of the ;.Is is !romotion. This includes all of the tools a$ailable to the
marketer for Imarketing communicationI. (s &ith *eil 3.BordenIs marketing mi/'
marketing communications has its o&n I!romotions mi/.I Think of it like a cake mi/' the
basic ingredients are al&ays the same. 3o&e$er if you $ary the amounts of one of the
ingredients' the final outcome is different.
.hysical E$idence
.hysical E$idence is the material !art of a ser$ice. Strictly s!eaking there are no !hysical
attributes to a ser$ice' so a consumer tends to rely on material cues. There are many
e/am!les of !hysical e$idence' including some of the follo&ing:
.eo!le
.eo!le are the most im!ortant element of any ser$ice or e/!erience. Ser$ices tend to be
!roduced and consumed at the same moment' and as!ects of the customer e/!erience are
altered to meet the Iindi$idual needsI of the !erson consuming it.
.rocess
.rocess is another element of the e/tended marketing mi/' or @.Is.There are a number of
!erce!tions of the conce!t of !rocess &ithin the business and marketing literature. Some
see !rocesses as a means to achie$e an outcome' for e/am!le 9 to achie$e a 5CS market
share a com!any im!lements a marketing !lanning !rocess.
( Summary Table of the Marketing Mi/
The follo&ing table summari8es the marketing mi/ decisions' including a list of some of
the as!ects of each of the ;.s.
Summary of Marketing Mi/ Fecisions
.roduct .rice .lace .romotion
+unctionality
(!!earance
ist !rice
Fiscounts
Channel members
Channel moti$ation
(d$ertising
.ersonal selling
1CC
Quality
.ackaging
Brand
)arranty
Ser$iceDSu!!ort
(llo&ances
+inancing
easing o!tions
Market co$erage
ocations
ogistics
Ser$ice le$els
.ublic relations
Message
Media
Budget
"hannels of distibution
Fistribution 1or L.laceL2 is the fourth traditional element of the marketing mi/. The other
three are .roduct' .rice and .romotion.
The Natue of 0istibution "hannels
Most businesses use third !arties or intemediaies to bring their !roducts to market.
They try to forge a Ldistribution channelL &hich can be defined as
:all t$e organisations t$ro#g$ w$ic$ a prod#ct m#st pass between its point of
prod#ction and cons#mption:
)hy does a business gi$e the %ob of selling its !roducts to intermediariesN (fter all' using
intermediaries means gi$ing u! some control o$er ho& !roducts are sold and &ho they
are sold to.
The ans&er lies in efficiency of distribution costs. Intermediaries are s!ecialists in
selling. They ha$e the contacts' e/!erience and scale of o!eration &hich means that
greater sales can be achie$ed than if the !roducing business tried run a sales o!eration
itself.
Functions of a 0istibution "hannel
The main function of a distribution channel is to !ro$ide a link bet&een !roduction and
consum!tion. 4rganisations that form any !articular distribution channel !erform many
key functions:
Infomation ?athering and distributing market research and intelligence 9
im!ortant for marketing !lanning
*omotion Fe$elo!ing and s!reading communications about offers
1C1
"ontact +inding and communicating &ith !ros!ecti$e buyers
Matching (d%usting the offer to fit a buyerIs needs' including grading'
assembling and !ackaging
Negotiation Reaching agreement on !rice and other terms of the offer
*hysical distibution Trans!orting and storing goods
Financing (c,uiring and using funds to co$er the costs of the distribution
channel
&is3 ta3ing (ssuming some commercial risks by o!erating the channel 1e.g.
holding stock2
(ll of the abo$e functions need to be undertaken in any market. The ,uestion is 9 &ho
!erforms them and ho& many le$els there need to be in the distribution channel in order
to make it cost effecti$e.
Numbes of 0istibution "hannel 5e#els
Each layer of marketing intermediaries that !erforms some &ork in bringing the !roduct
to its final buyer is a Lchannel le$elL. The figure belo& sho&s some e/am!les of channel
le$els for consumer marketing channels:
In the figure abo$e' Channel 1 is called a Idiect!ma3etingI channel' since it has no
intermediary le$els. In this case the manufacturer sells directly to customers. (n e/am!le
of a direct marketing channel &ould be a factory outlet store. Many holiday com!anies
1C-
also market direct to consumers' by!assing a traditional retail intermediary 9 the tra$el
agent.
The remaining channels are Iindiect!ma3eting channelsI.
Channel - contains one intermediary. In consumer markets' this is ty!ically a etaile.
The consumer electrical goods market in the GE is ty!ical of this arrangement &hereby
!roducers such as Sony' .anasonic' Canon etc. sell their goods directly to large retailers
such as Comet' Fi/ons and Currys &hich then sell the goods to the final consumers.
Channel 5 contains t&o intermediary le$els 9 a &holesaler and a retailer. ( &holesaler
ty!ically buys and stores large ,uantities of se$eral !roducers goods and then breaks into
the bulk deli$eries to su!!ly retailers &ith smaller ,uantities. +or small retailers &ith
limited order ,uantities' the use of &holesalers makes economic sense. This arrangement
tends to &ork best &here the retail channel is fragmented 9 i.e. not dominated by a small
number of large' !o&erful retailers &ho ha$e an incenti$e to cut out the &holesaler. (
good e/am!le of this channel arrangement in the GE is the distribution of drugs.
1C5
UNIT 1
1C;
0efinition
3uman Resource Management 13RM2 is the function &ithin an organi8ation that focuses
on recruitment of' management of' and !ro$iding direction for the !eo!le &ho &ork in
the organi8ation. 3uman Resource Management can also be !erformed by line managers.
3uman Resource Management is the organi8ational function that deals &ith issues related
to !eo!le such as com!ensation' hiring' !erformance management' organi8ation
de$elo!ment' safety' &ellness' benefits' em!loyee moti$ation' communication'
administration' and training.
Manpo,e planning
The !enalties for not being correctly staffed are costly.
Gnderstaffing loses the business economies of scale and s!eciali8ation' orders'
customers and !rofits.
4$erstaffing is &asteful and e/!ensi$e' if sustained' and it is costly to eliminate
because of modern legislation in res!ect of redundancy !ayments' consultation'
minimum !eriods of notice' etc. Hery im!ortantly' o$erstaffing reduces the
com!etiti$e efficiency of the business.
.lanning staff le$els re,uires that an assessment of !resent and future needs of the
organi8ation be com!ared &ith !resent resources and future !redicted resources.
(!!ro!riate ste!s then be !lanned to bring demand and su!!ly into balance.
Thus the first ste! is to take a Isatellite !ictureI of the e/isting &orkforce !rofile
1numbers' skills' ages' fle/ibility' gender' e/!erience' forecast ca!abilities' character'
!otential' etc. of e/isting em!loyees2 and then to ad%ust this for 1' 5 and 1C years ahead
by amendments for normal turno$er' !lanned staff mo$ements' retirements' etc' in line
&ith the business !lan for the corres!onding time frames.
The result should be a series of crude su!!ly situations as &ould be the outcome of
!resent !lanning if left unmodified. 1This' clearly' re,uires a great deal of information
accretion' classification and statistical analysis as a subsidiary as!ect of !ersonnel
management.2
1C=
)hat future demands &ill be is only influenced in !art by the forecast of the !ersonnel
manager' &hose main task may &ell be to scrutini8e and modify the crude !redictions of
other managers. +uture staffing needs &ill deri$e from:
Sales and !roduction forecasts
The effects of technological change on task needs
Hariations in the efficiency' !roducti$ity' fle/ibility of labor as a result of training'
&ork study' organi8ational change' ne& moti$ations' etc.
Changes in em!loyment !ractices 1e.g. use of subcontractors or agency staffs'
hi$ing9off tasks' buying in' substitution' etc.2
Hariations' &hich res!ond to ne& legislation' e.g. !ayroll ta/es or their abolition'
ne& health and safety re,uirements
Changes in ?o$ernment !olicies 1in$estment incenti$es' regional or trade grants'
etc.2
)hat should emerge from this Iblue sky ga8ingI is a Ithought outI and logical staffing
demand schedule for $arying dates in the future &hich can then be com!ared &ith the
crude su!!ly schedules. The com!arisons &ill then indicate &hat ste!s must be taken to
achie$e a balance.
That' in turn' &ill in$ol$e the further !lanning of such recruitment' training' retraining'
labor reductions 1early retirementDredundancy2 or changes in &orkforce utili8ation as &ill
bring su!!ly and demand into e,uilibrium' not %ust as a one<off but as a continuing
&orkforce !lanning e/ercise the in!uts to &hich &ill need constant $arying to reflect
IactualI as against !redicted e/!erience on the su!!ly side and changes in !roduction
actually achie$ed as against forecast on the demand side
Recruitment and selection of employees
Recruitment of staff should be !receded by:
(n analysis of the %ob to be done 1i.e. an analytical study of the tasks to be !erformed to
determine their essential factors2 &ritten into a %ob descri!tion so that the selectors kno&
1C>
&hat !hysical and mental characteristics a!!licants must !ossess' &hat ,ualities and
attitudes are desirable and &hat characteristics are a decided disad$antage7
In the case of re!lacement staff a critical ,uestioning of the need to recruit at all
1re!lacement should rarely be an automatic !rocess2.
Effecti$ely' selection is IbuyingI an em!loyee 1the !rice being the &age or salary
multi!lied by !robable years of ser$ice2 hence bad buys can be $ery e/!ensi$e.
+or that reason some firms 1and some firms for !articular %obs2 use e/ternal
e/!ert consultants for recruitment and selection.
E,ually some small organi8ations e/ist to Ihead huntI' i.e. to attract staff &ith high
re!utations from e/isting em!loyers to the recruiting em!loyer. 3o&e$er' the
IcostI of !oor selection is such that' e$en for the mundane day9to9day %obs' those
&ho recruit and select should be &ell trained to %udge the suitability of a!!licants.
The main sources of recruitment are:
Internal !romotion and internal introductions 1at times desirable for morale
!ur!oses2
Careers officers 1and careers masters at schools2
Gni$ersity a!!ointment boards
(gencies for the unem!loyed
(d$ertising 1often $ia agents for s!ecialist !osts2 or the use of other local media
1e.g. commercial radio2
)here the organi8ation does its o&n !rinted ad$ertising it is useful if it has some
identifying logo as its trade mark for ra!id attraction and it must take care not to offend
the se/' race' etc. antidiscrimination legislation either directly or indirectly. The form on
&hich the a!!licant is to a!!ly 1!ersonal a!!earance' letter of a!!lication' com!letion of
a form2 &ill $ary according to the !osts $acant and numbers to be recruited.
It is $ery desirable in many %obs that claim about e/!erience and statements about
,ualifications are thoroughly checked and that a!!licants unfailingly com!lete a health
,uestionnaire 1the latter is not necessarily in%urious to the a!!licants chance of being
a!!ointed as firms are re,uired to em!loy a !ercentage of disabled !eo!le2.
Before letters of a!!ointment are sent any doubts about medical fitness or ca!acity 1in
em!loyments &here hygiene considerations are dominant2 should be resol$ed by
re,uiring a!!licants to attend a medical e/amination. This is es!ecially so &here' as for
e/am!le in the case of a!!rentices' the recruitment is for a contractual !eriod or in$ol$es
the firm in training costs.
Inter$ie&ing can be carried out by indi$iduals 1e.g. su!er$isor or de!artmental manager2'
by !anels of inter$ie&ers or in the form of se,uential inter$ie&s by different e/!erts and
can $ary from a fi$e minute IchatI to a !rocess of se$eral days. Gltimately !ersonal skills
in %udgment are !robably the most im!ortant' but techni,ues to aid %udgment include
selection testing for:
1C@
(!titudes 1!articularly useful for school lea$ers2
(ttainments
?eneral intelligence
1(ll of these need skilled testing and assessment.2 In more senior !osts other techni,ues
are:
eaderless grou!s
Command e/ercises
?rou! !roblem sol$ing
1These are some common techni,ues 9 !rofessional selection organi8ations often use
other techni,ues to aid in selection.2
Training in inter$ie&ing and in a!!raising candidates is clearly essential to good
recruitment. argely the former consists of teaching inter$ie&ers ho& to dra& out the
inter$ie&ee and the latter ho& to /rate/ the candidates. +or consistency 1and as an aid to
checking that2 rating often consists of scoring candidates for e/!erience' kno&ledge'
!hysicalDmental ca!abilities' intellectual le$els' moti$ation' !ros!ecti$e !otential'
leadershi! abilities etc. 1according to the needs of the !ost2. (!!lication of the normal
cur$e of distribution to scoring eliminates freak %udgments.
Employee motivation
To retain good staff and to encourage them to gi$e of their best &hile at &ork re,uires
attention to the financial and !sychological and e$en !hysiological re&ards offered by the
organi8ation as a continuous e/ercise.
Basic financial re&ards and conditions of ser$ice 1e.g. &orking hours !er &eek2 are
determined e/ternally 1by national bargaining or go$ernment minimum &age legislation2
in many occu!ations but as much as =C !er cent of the gross !ay of manual &orkers is
often the result of local negotiations and details 1e.g. &hich !articular hours shall be
&orked2 of conditions of ser$ice are often more im!ortant than the basics. 3ence there is
sco!e for financial and other moti$ations to be used at local le$els.
(s staffing needs &ill $ary &ith the !roducti$ity of the &orkforce 1and the industrial
!eace achie$ed2 so good !ersonnel !olicies are desirable. The latter can de!end u!on
other factors 1like en$ironment' &elfare' em!loyee benefits' etc.2 but unless the &age
!acket is acce!ted as Ifair and %ustI there &ill be no moti$ation.
3ence &hile the technicalities of !ayment and other systems may be the concern of
others' the outcome of them is a matter of great concern to human resource management.
Increasingly the influence of beha$ioral science disco$eries are becoming im!ortant not
merely because of the &idely9ackno&ledged limitations of money as a moti$ator' but
because of the changing mi/ and nature of tasks 1e.g. more ser$ice and !rofessional %obs
and far fe&er unskilled and re!etiti$e !roduction %obs2.
1CA
The former demand better9educated' mobile and multi9skilled em!loyees much more
likely to be influenced by things like %ob satisfaction' in$ol$ement' !artici!ation' etc. than
the economically de!endent em!loyees of yesteryear.
3ence human resource management must act as a source of information about and a
source of ins!iration for the a!!lication of the findings of beha$ioral science. It may be a
matter of dra&ing the attention of senior managers to &hat is being achie$ed else&here
and the gradual education of middle managers to ne& !oints of $ie& on %ob design' &ork
organi8ation and &orker autonomy.
Employee evaluation
(n organi8ation needs constantly to take stock of its &orkforce and to assess its
!erformance in e/isting %obs for three reasons:
To im!ro$e organi8ational !erformance $ia im!ro$ing the !erformance of
indi$idual contributors 1should be an automatic !rocess in the case of good
managers' but 1about annually2 t&o key ,uestions should be !osed:
o )hat has been done to im!ro$e the !erformance of a !erson last yearN
o (nd &hat can be done to im!ro$e his or her !erformance in the year to
comeN2.
To identify !otential' i.e. to recogni8e e/isting talent and to use that to fill
$acancies higher in the organi8ation or to transfer indi$iduals into %obs &here
better use can be made of their abilities or de$elo!ing skills.
To !ro$ide an e,uitable method of linking !ayment to !erformance &here there
are no numerical criteria 1often this salary !erformance re$ie& takes !lace about
three months later and is ke!t ,uite se!arate from 1. and -. but is based on the
same assessment2.
4n9the9s!ot managers and su!er$isors' not 3R staffs' carry out e$aluations. The
!ersonnel role is usually that of:
(d$ising to! management of the !rinci!les and ob%ecti$es of an e$aluation
system and designing it for !articular organi8ations and en$ironments.
Fe$elo!ing systems a!!ro!riately in consultation &ith managers' su!er$isors and
staff re!resentati$es. Securing the in$ol$ement and coo!eration of a!!raisers and
those to be a!!raised.
(ssistance in the setting of ob%ecti$e standards of e$aluation D assessment' for
e/am!le:
o Fefining targets for achie$ement7
o E/!laining ho& to ,uantify and agree ob%ecti$es7
o Introducing self9assessment
o Eliminating com!le/ity and du!lication.
.ublici8ing the !ur!oses of the e/ercise and e/!laining to staff ho& the system
&ill be used.
4rgani8ing and establishing the necessary training of managers and su!er$isors
&ho &ill carry out the actual e$aluationsD a!!raisals. *ot only training in
1CB
!rinci!les and !rocedures but also in the human relations skills necessary. 1ack
of confidence in their o&n ability to handle situations of !oor !erformance is the
main &eakness of assessors.2
Monitoring the scheme 9 ensuring it does not fall into disuse' follo&ing u! on
trainingD%ob e/change etc. recommendations' reminding managers of their
res!onsibilities.
+ull9scale !eriodic re$ie&s should be a standard feature of schemes since resistance to
e$aluation D a!!raisal schemes is common and the tem!tation to &ater do&n or render
schemes ineffectual is e$er !resent 1managers resent the time taken if nothing else2.
Basically an e$aluation D a!!raisal scheme is a formali8ation of &hat is done in a more
casual manner any&ay 1e.g. if there is a $acancy' discussion about internal mo$es and
internal attem!ts to !ut s,uare !egs into Is,uarer holesI are both the results of casual
e$aluation2. Most managers a!!ro$e merit !ayment and that too calls for e$aluation.
Made a standard routine task' it aids the de$elo!ment of talent' &arns the inefficient or
uncaring and can be an effecti$e form of moti$ation.
Industrial relations
?ood industrial relations' &hile a recogni8able and legitimate ob%ecti$e for an
organi8ation' are difficult to define since a good system of industrial relations in$ol$es
com!le/ relationshi!s bet&een:
1a2 )orkers 1and their informal and formal grou!s' i. e. trade union' organi8ations and
their re!resentati$es27
1b2 Em!loyers 1and their managers and formal organi8ations like trade and !rofessional
associations27
1c2 The go$ernment and legislation and go$ernment agencies l and Iinde!endentI agencies
like the (d$isory Conciliation and (rbitration Ser$ice.
4$ersim!lified' &ork is a matter of managers gi$ing instructions and &orkers follo&ing
them 9 but 1and e$en under sla$ery &e recogni8e that different ImanagingI !roduces $ery
different results2 the $ariety of IformsI &hich ha$e e$ol$ed to regulate the conduct of
!arties 1i.e. la&s' custom and !ractice' obser$ances' agreements2 makes the gi$ing and
recei!t of instructions far from sim!le. T&o ty!es of IruleI ha$e e$ol$ed:
ISubstanti$eI' determining basic !ay and conditions of ser$ice 1&hat re&ards
&orkers should recei$e27
I.rocedural'I determining ho& &orkers should be treated and methods and
!rocedures.
Fetermining these rules are many common sense matters like:
11C
+inancial' !olicy and market constraints on the !arties 1e.g. some unions do not
ha$e the finance to su!!ort industrial action' some ha$e !olicies not to strike'
some em!loyers are more $ulnerable than others to industrial action' some &ill
not make changes unless &orker agreement is made first' and re&ards al&ays
ultimately reflect &hat the market &ill bear27
The technology of !roduction 1the effect of a strike in ne&s!a!er !roduction is
immediate 9it may be months before becoming effecti$e in shi!building27
The distribution of !o&er &ithin the community 9 that tends to $ary o$er time and
&ith economic conditions &orkers 1or unions2 dominating in times of full
em!loyment and em!loyers in times of recession.
Broadly in the )estern style economies the !arties 1&orkers and em!loyers2 are free to
make their o&n agreements and rules. This is called I$oluntarismI. But it does not mean
there is total noninterference by the go$ernment. That is necessary to:
.rotect the &eak 1hence minimum &age27
4utla& discrimination 1race or se/27
Fetermine minimum standards of safety' health' hygiene and e$en im!ortant
conditions of ser$ice7
To try to !re$ent the abuse of !o&er by either !arty.
;& managers responsibilities
The !ersonnel managerIs in$ol$ement in the system of industrial relations $aries from
organi8ation to organi8ation' but normally he or she is re,uired to !ro$ide se$en
identifiable functions' thus:
1. To kee! abreast of industrial la& 1legislation and !recedents2 and to ad$ise
managers about their res!onsibilities e.g. to obser$e re,uirements in res!ect of
em!loying disabled !ersons' not to discriminate' not to disclose Is!entI
con$ictions of em!loyees' to obser$e codes of !ractice etc. in relation to
disci!line and redundancy' and similarly to determine organi8ational !olicies 1in
con%unction &ith other managers2 rele$ant to legal and moral re,uirements 1see
also ;.2.
-. To conduct 1or assist in the conduct2 of either local negotiations 1&ithin the !lant2
or similarly to act as the em!loyerIs re!resentati$e in national negotiations. This
could be as a critic or ad$isor in res!ect of trade etc. association !olicies or as a
member of a trade association negotiating team. (greements could be in res!ect
of substanti$e or !rocedural matters. E$en if not directly in$ol$ed the !ersonnel
manager &ill ad$ise other managers and administrators of the outcome of
negotiations.
5. To ensure that agreements reached are inter!reted so as to make sense to those
&ho must o!erate them at the a!!ro!riate le$el &ithin the organi8ation 1this can
in$ol$e a lot of ne& learning at su!er$isory le$el and ne& !ay !rocedures and
ne& recording re,uirements in administration and e$en the teaching of ne&
em!loyment conce!ts < like stagger systems of &ork 9 at management le$el2.
111
;. To monitor the obser$ance of agreements and to !roduce !olicies that ensure that
agreements are follo&ed &ithin the organi8ation. (n e/am!le &ould be the !olicy
to be follo&ed on the a!!ointment of a ne& but e/!erienced recruit in relation to
the offered salary &here there is a choice of increments to be gi$en for
e/!erience' ability or ,ualification.
=. To correct the situations &hich go &rong. I+aceI is of some im!ortance in most
organi8ations and o!erating at a IremoteI staff le$el !ersonnel managers can
correct industrial relations errors made at local le$el &ithout occasioning any loss
of dignity 1face2 at the &orking le$el. I3uman resource managementI and the
obscurity of its reasoning can be blamed for matters &hich go &rong at !lant le$el
and for un&elcome changes' $ariations of comfortable IarrangementsI and
!ractices and un!o!ular inter!retation of agreements.
>. To !ro$ide the im!etus 1and often de$ise the machinery2 for the introduction of
%oint consultation and &orker !artici!ation in decision9making in the organi8ation.
+ormal agreement in res!ect of &orking conditions and beha$ior could ne$er
co$er e$ery situation likely to arise. Moreo$er the more demanding the task 1in
terms of the mental contribution by the &orker to its com!letion2 the more
highly<educated the &orkers need to be and the more they &ill &ant to be
consulted about and in$ol$ed in the details of &ork life. Matters like the rules for
a fle/itime system or for determining the correction of absenteeism and the
contents of %obs are three e/am!les of the sort of matters that may be solely
decided by management in some organi8ations but a matter for %oint consultation
1not negotiation2 in others &ith a more t&enty9first9century outlook and
!hiloso!hy. 3uman resource management is $ery in$ol$ed in !romoting and
originating ideas in this field.
@. To !ro$ide statistics and information about &orkforce numbers' costs' skills etc.
as rele$ant to negotiations 1i.e. the cost of !ay rises or com!romise !ro!osals'
effect on differentials and !ossible recruitmentDretention conse,uences of this or
&hether agreement needs to be kno&n instantly27 to maintain !ersonnel records of
training' e/!erience' achie$ements' ,ualifications' a&ards and !ossibly !ension
and other records7 to !roduce data of interest to management in res!ect of
!ersonnel matters like absentee figures and costs' statistics of sickness absence'
costs of &elfare and other em!loyee ser$ices' statements about de$elo!ment in
!olicies by other organi8ations' ideas for inno$ations7 to ad$ise u!on or o!erate
directly' grie$ance' redundancy' disci!linary.
Provision of employee services
(ttention to the mental and !hysical &ell9being of em!loyees is normal in many
organi8ations as a means of kee!ing good staff and attracting others.
The forms this &elfare can take are many and $aried' from loans to the needy to
counseling in res!ect of !ersonal !roblems.
(mong the acti$ities regarded as normal are:
11-
Schemes for occu!ational sick !ay' e/tended sick lea$e and access to the firmIs
medical ad$iser7
Schemes for berea$ement or other s!ecial lea$e7
The rehabilitation of in%uredDunfitD disabled em!loyees and tem!orary or
!ermanent mo$e to lighter &ork7
The maintenance of disablement statistics and registers 1there are com!licated
legal re,uirements in res!ect of ,uotas of disabled &orkers and a need for
IcertificatesI &here ,uota are not fulfilled and recruitment must take !lace27
.ro$ision of financial and other su!!ort for s!orts' social' hobbies' acti$ities of
many kinds &hich are &ork related7
.ro$ision of canteens and other catering facilities7
.ossibly assistance &ith financial and other aid to em!loyees in difficulty
1su!er$ision' maybe' of an em!loyee managed bene$olent fund or scheme27
.ro$ision of information handbooks'
Running of !re9retirement courses and similar fringe acti$ities7
Care for the &elfare as!ects of health and safety legislation and !ro$ision of first9
aid training.
The location of the health and safety function &ithin the organi8ation $aries. Commonly
a s!lit of res!onsibilities e/ists under &hich I!roductionI or IengineeringI management
cares for the !ro$ision of safe systems of &ork and safe !laces and machines etc.' but
3RM is res!onsible for administration' training and education in a&areness and
understanding of the la&' and for the alerting of all le$els to ne& re,uirements.
Employee education, training and development
In general' education is Imind !re!arationI and is carried out remote from the actual &ork
area' training is the systematic de$elo!ment of the attitude' kno&ledge' skill !attern
re,uired by a !erson to !erform a gi$en task or %ob ade,uately and de$elo!ment is Ithe
gro&th of the indi$idual in terms of ability' understanding and a&arenessI.
)ithin an organi8ation all three are necessary in order to:
Fe$elo! &orkers to undertake higher9grade tasks7
.ro$ide the con$entional training of ne& and young &orkers 1e.g. as a!!rentices'
clerks' etc.27
Raise efficiency and standards of !erformance7
Meet legislati$e re,uirements 1e.g. health and safety27
Inform !eo!le 1induction training' !re9retirement courses' etc.27
+rom time to time meet s!ecial needs arising from technical' legislati$e' and kno&ledge
need changes. Meeting these needs is achie$ed $ia the Itraining loo!I. 1Schematic
a$ailable in .F+ $ersion.2
The diagnosis of other than con$entional needs is com!le/ and often de!ends u!on the
intuition or !ersonal e/!erience of managers and needs re$ealed by deficiencies. Sources
of ins!iration include:
115
Common sense 9 it is often ob$ious that ne& machines' &ork systems' task
re,uirements and changes in %ob content &ill re,uire &orkers to be !re!ared7
Shortcomings re$ealed by statistics of out!ut !er head' !erformance indices' unit
costs' etc. and beha$ioral failures re$ealed by absentee figures' lateness' sickness
etc. records7
Recommendations of go$ernment and industry training organi8ations7
Ins!iration and inno$ations of indi$idual managers and su!er$isors7
+orecasts and !redictions about staffing needs7
Ins!irations !rom!ted by the technical !ress' training %ournals' re!orts of the
e/!erience of others7
The suggestions made by s!ecialist 1e.g. education and training officers' safety
engineers' &ork9study staff and management ser$ices !ersonnel2.
Fesigning training is far more than de$ising courses7 it can include acti$ities such as:
earning from obser$ation of trained &orkers7
Recei$ing coaching from seniors7
Fisco$ery as the result of &orking !arty' !ro%ect team membershi! or attendance
at meetings7
Kob s&a!s &ithin and &ithout the organi8ation7
Gndertaking !lanned reading' or follo& from the use of self<teaching te/ts and
$ideo ta!es7
earning $ia in$ol$ement in research' re!ort &riting and $isiting other &orks or
organi8ations.
So far as grou! training is concerned in addition to formal courses there are:
ectures and talks by senior or s!ecialist managers7
Fiscussion grou! 1conference and meeting2 acti$ities7
Briefing by senior staffs7
Role9!laying e/ercises and simulation of actual conditions7
Hideo and com!uter teaching acti$ities7
Case studies 1and discussion2 tests' ,ui88es' !anel IgamesI' grou! forums'
obser$ation e/ercises and ins!ection and re!orting techni,ues.
E$aluation of the effecti$eness of training is done to ensure that it is cost effecti$e' to
identify needs to modify or e/tend &hat is being !ro$ided' to re$eal ne& needs and
redefine !riorities and most of all to ensure that the ob%ecti$es of the training are being
met.
The latter may not be easy to ascertain &here results cannot be measured mathematically.
In the case of attitude and beha$ioral changes sought' leadershi! abilities' dri$e and
ambition fostered' etc.' achie$ement is a matter of the %udgment of senior staffs. E/act
$alidation might be im!ossible but unless on the &hole the %udgments are fa$orable the
coo!eration of managers in identifying needs' releasing !ersonnel and assisting in
training $entures &ill cease.
11;
In making their %udgments senior managers &ill ,uestion &hether the efforts e/!ended
ha$e !roduced:
More effecti$e' efficient' fle/ible em!loyees7
+aster results in making ne&comers kno&ledgeable and effecti$e than &ould
follo& from e/!erience7
More effecti$e or efficient use of machinery' e,ui!ment and &ork !rocedures7
+e&er re,uirements to im!lement redundancy 1by retraining27
+e&er accidents both !ersonal and to !ro!erty7
Im!ro$ements in the ,ualifications of staff and their ability to take on tougher
roles7
Better em!loyee loyalty to the organi8ation &ith more &illingness to inno$ate and
acce!t change.
*efomance Appaisal
Is the !rocess of obtaining' analy8ing and recording information about the relati$e
&orth of an em!loyee. The focus of the !erformance a!!raisal is measuring and
im!ro$ing the actual !erformance of the em!loyee and also the future !otential of the
em!loyee. Its aim is to measure &hat an em!loyee does.
(ccording to +li!!o' a !rominent !ersonality in the field of 3uman resources'
L!erformance a!!raisal is the systematic' !eriodic and an im!artial rating of an
em!loyee0s e/cellence in the matters !ertaining to his !resent %ob and his !otential for
a better %ob.L .erformance a!!raisal is a systematic &ay of re$ie&ing and assessing
the !erformance of an em!loyee during a gi$en !eriod of time and !lanning for his
future.
It is a !o&erful tool to calibrate' refine and re&ard the !erformance of the em!loyee.
It hel!s to analy8e his achie$ements and e$aluate his contribution to&ards the
achie$ements of the o$erall organi8ational goals.
By focusing the attention on !erformance' !erformance a!!raisal goes to the heart of
!ersonnel management and reflects the managementIs interest in the !rogress of the
em!loyees.
Objectives Of Performance appraisal:
To re$ie& the !erformance of the em!loyees o$er a gi$en !eriod of time.
To %udge the ga! bet&een the actual and the desired !erformance.
To hel! the management in e/ercising organi8ational control.
3el!s to strengthen the relationshi! and communication bet&een su!erior <
subordinates and management < em!loyees.
To diagnose the strengths and &eaknesses of the indi$iduals so as to identify
11=
the training and de$elo!ment needs of the future.
To !ro$ide feedback to the em!loyees regarding their !ast !erformance.
.ro$ide information to assist in the other !ersonal decisions in the
organi8ation.
.ro$ide clarity of the e/!ectations and res!onsibilities of the functions to be
!erformed by the em!loyees.
To %udge the effecti$eness of the other human resource functions of the
organi8ation such as recruitment' selection' training and de$elo!ment.
To reduce the grie$ances of the em!loyees.
$ie#ance .andling
( grie$ance is a sign of an em!loyeeIs discontentment &ith his %ob or his relationshi!
&ith his colleagues. ?rie$ances generally arise out of the day9to9day &orking relations in
an organi8ation. (n em!loyee or a trade union !rotests against an act or !olicy of the
management that they consider as $iolating em!loyeeIs rights.
4ne of the effecti$e &ays of minimi8ing and eliminating the source of an em!loyeeIs
grie$ance is by ha$ing an Qo!en door !olicyI. (n Qo!en door !olicyIfacilitates u!&ard
communication in the organi8ation &here em!loyees can &alk into a su!eriorsIcabin at
any time and e/!ress their grie$ances. The *ational Commission on abor suggested a
Model ?rie$ance .rocedure' &hich lays do&n the se,uence of ste!s to be taken
&hene$er a grie$ance is e/!ressed.
Conflict occurs &hen t&o or more !eo!le or !arties !ercei$e an incom!atibility in their
goals or e/!ectations. There are se$en methods for achie$ing reconciliation of conflict.
These methods are &in9lose' &ithdra&al and retreat from argument' smoothing and
!laying do&n the difference' arbitration' mediation' com!romise and !roblem sol$ing. 4f
all these methods Q!roblem9sol$ingImethod is most likely to bring about a &in9&in
situation.
Essential Pre requisites of a Grievance Procedure

E$ery organi8ation should ha$e a systematic grie$ance !rocedure in order to redress the
grie$ances effecti$ely. (s e/!lained abo$e' unattended grie$ances may culminate in the
form of $iolent conflicts later on. The grie$ance !rocedure' to be sound and effecti$e
should !ossess certain !re9re,uisites:

GaH 1a2 1onformity &ith statutory pro%isions, Fue consideration must be
gi$en to the !re$ailing legislation &hile designing the grie$ance handling
!rocedure.
GbH 1b2 :nambiguity, E$ery as!ect of the grie$ance handling !rocedure
should be clear and unambiguous. (ll em!loyees should kno& &hom to
a!!roach first &hen they ha$e a grie$ance' &hether the com!laint should be
&ritten or oral' the ma/imum time in &hich the redressal is assured' etc. The
11>
redressing official should also kno& the limits &ithin &hich he can take the
re,uired action.
GcH 1c2 /implicity, The grie$ance handling !rocedure should be sim!le and
short. If the !rocedure is com!licated it may discourage em!loyees and they
may fail to make use of it in a !ro!er manner.
GdH 1d2 6romptness, The grie$ance of the em!loyee should be !rom!tly
handled and necessary action must be taken immediately. This is good for
both the em!loyee and management' because if the &rong doer is !unished
late' it may affect the morale of other em!loyees as &ell.
GeH 1e2 !raining, The su!er$isors and the union re!resentati$es should be
!ro!erly trained in all as!ects of grie$ance handling beforehand or else it &ill
com!licate the !roblem.
GfH 1f2 Follo& up, The .ersonnel Fe!artment should kee! track of the
effecti$eness and the functioning of grie$ance handling !rocedure and make
necessary changes to im!ro$e it from time to time.

Ste!s in the ?rie$ance .rocedure

1a2 1a2 Em!loyee dissatisfaction or grie$ance should be identified by the
management if they are not e/!ressed. If they are $entilated' management has
to !rom!tly ackno&ledge them.
1b2 1b2 The management has to define the !roblem !ro!erly and
accurately after it is identifiedDackno&ledged.
1c2 1c2 Com!lete information should be collected from all the !arties
relating to the grie$ance. Information should be classified as facts' data'
o!inions' etc.
1d2 1d2 The information should be analy8ed' alternati$e solutions to the
!roblem should be de$elo!ed and the best solution should be selected.
1e2 1e2 The grie$ance should be redressed by im!lementing the solution.
1f2 1f2 Im!lementation of the solution must be follo&ed u! at e$ery
stage in order to ensure effecti$e and s!eedy im!lementation.
/ob e#aluation
/ob e#aluation is the !rocess of systematically determining a relati$e internal $alue of a
%ob in an organi8ation. In all cases the idea is to e$aluate the %ob' not the !erson doing it.
Kob e$aluation is the !rocess of determining the &orth of one %ob in relation to that of the
other %obs in a com!any so that a fair and e,uitable &age and salary system can be
established.
Kob e$aluation is a !ractical techni,ue' designed to enable trained and e/!erienced staff
to %udge the si8e of one %ob relati$e to others. It does not directly determine !ay le$els'
but &ill establish the basis for an internal ranking of %obs.
11@
The t&o most common methods of %ob e$aluation that ha$e been used are first' &hole %ob
ranking' &here %obs are taken as a &hole and ranked against each other. The second
method is one of a&arding !oints for $arious as!ects of the %ob. In the !oints system
$arious as!ects or !arts of the %ob such as education and e/!erience re,uired to !erform
the %ob are assessed and a !oints $alue a&arded 9 the higher the educational re,uirements
of the %ob the higher the !oints scored. The most &ell kno&n !oints scheme &as
introduced by 3ay management consultants in 1B=1. This scheme e$aluates %ob
res!onsibilities in the light of three ma%or factors 9 kno& ho&' !roblem sol$ing and
accountability.
Some Principles of 5ob 6valuation
Clearly defined and identifiable %obs must e/ist. These %obs &ill be accurately
described in an agreed %ob descri!tion.
(ll %obs in an organisation &ill be e$aluated using an agreed %ob e$aluation
scheme.
Kob e$aluators &ill need to gain a thorough understanding of the %ob
Kob e$aluation is concerned &ith %obs' not !eo!le. It is not the !erson that is being
e$aluated.
The %ob is assessed as if it &ere being carried out in a fully com!etent and
acce!table manner.
Kob e$aluation is based on %udgement and is not scientific. 3o&e$er if a!!lied
correctly it can enable ob%ecti$e %udgements to be made.
It is !ossible to make a %udgement about a %obIs contribution relati$e to other %obs
in an organisation.
The real test of the e$aluation results is their acce!tability to all !artici!ants.
Kob e$aluation can aid organisational !roblem sol$ing as it highlights du!lication
of tasks and ga!s bet&een %obs and functions
Job Evaluation Methods
There are three basic methods of %ob e$aluation: 112 ranking' 1-2 classification' 152 factor
com!arison. )hile many $ariations of these methods e/ist in !ractice' the three basic
a!!roaches are described here.
7an.ing Method
.erha!s the sim!lest method of %ob e$aluation is the ranking method. (ccording to this
method' %obs are arranged from highest to lo&est' in order of their $alue or merit to the
organi8ation. Kobs also can be arranged according to the relati$e difficulty in !erforming
them. The %obs are e/amined as a &hole rather than on the basis of im!ortant factors in
the %ob7 and the %ob at the to! of the list has the highest $alue and ob$iously the %ob at the
bottom of the list &ill ha$e the lo&est $alue.
11A
Kobs are usually ranked in each de!artment and then the de!artment rankings are
combined to de$elo! an organi8ational ranking. The follo&ing table is a hy!othetical
illustration of ranking of %obs.
Table: Aay of /obs accoding to the &an3ing Method
Rank Monthly salaries
1. (ccountant Rs 5'CCC
-. (ccounts clerk Rs 1'ACC
5. .urchase assistant Rs 1'@CC
;. Machine9o!erator Rs 1';CC
=. Ty!ist Rs BCC
>. 4ffice boy Rs >CC
The $ariation in !ayment of salaries de!ends on the $ariation of the nature of the %ob
!erformed by the em!loyees. The ranking method is sim!le to understand and !ractice
and it is best suited for a small organi8ation. Its sim!licity' ho&e$er' &orks to its
disad$antage in big organi8ations because rankings are difficult to de$elo! in a large'
com!le/ organi8ation. Moreo$er' this kind of ranking is highly sub%ecti$e in nature and
may offend many em!loyees. Therefore' a more scientific and fruitful &ay of %ob
e$aluation is called for.
0lassification Method
(ccording to this method' a !redetermined number of %ob grou!s or %ob classes are
established and %obs are assigned to these classifications. This method !laces grou!s of
%obs into %ob classes or %ob grades. Se!arate classes may include office' clerical'
managerial' !ersonnel' etc. +ollo&ing is a brief descri!tion of such a classification in an
office.
GaH Class I 9 E/ecuti$es: +urther classification under this category may be 4ffice
manager' Fe!uty office manager' 4ffice su!erintendent' Fe!artmental
su!er$isor' etc.
GbH Class II 9 Skilled &orkers: Gnder this category may come the .urchasing
assistant' Cashier' Recei!ts clerk' etc.
GcH Class III 9 Semiskilled &orkers: Gnder this category may come Stenoty!ists'
Machine9o!erators' S&itchboard o!erators' etc.
11B
GdH Class IH 9 Semiskilled &orkers: This category com!rises Faftaris' +ile clerks'
4ffice boys' etc.
The %ob classification method is less sub%ecti$e &hen com!ared to the earlier ranking
method. The system is $ery easy to understand and acce!table to almost all em!loyees
&ithout hesitation. 4ne strong !oint in fa$or of the method is that it takes into account all
the factors that a %ob com!rises. This system can be effecti$ely used for a $ariety of %obs.
The &eaknesses of the %ob classification method are:
E$en &hen the re,uirements of different %obs differ' they may be combined into a
single category' de!ending on the status a %ob carries.
It is difficult to &rite all9inclusi$e descri!tions of a grade.
The method o$ersim!lifies shar! differences bet&een different %obs and different
grades.
)hen indi$idual %ob descri!tions and grade descri!tions do not match &ell' the
e$aluators ha$e the tendency to classify the %ob using their sub%ecti$e %udgments.
Factor 0omparison Method
( more systematic and scientific method of %ob e$aluation is the factor com!arison
method. Though it is the most com!le/ method of all' it is consistent and a!!reciable.
Gnder this method' instead of ranking com!lete %obs' each %ob is ranked according to a
series of factors. These factors include mental effort' !hysical effort' skill needed'
su!er$isory res!onsibility' &orking conditions and other rele$ant factors 1for instance'
kno&9ho&' !roblem sol$ing abilities' accountability' etc.2. .ay &ill be assigned in this
method by com!aring the &eights of the factors re,uired for each %ob' i.e.' the !resent
&ages !aid for key %obs may be di$ided among the factors &eighed by im!ortance 1the
most im!ortant factor' for instance' mental effort' recei$es the highest &eight2. In other
&ords' &ages are assigned to the %ob in com!arison to its ranking on each %ob factor.
The ste!s in$ol$ed in factor com!arison method may be briefly stated thus:
Select key %obs 1say 1= to -C2' re!resenting &ageDsalary le$els across the
organi8ation. The selected %obs must re!resent as many de!artments as !ossible.
+ind the factors in terms of &hich the %obs are e$aluated 1such as skill' mental
effort' res!onsibility' !hysical effort' &orking conditions' etc.2.
Rank the selected %obs under each factor 1by each and e$ery member of the %ob
e$aluation committee2 inde!endently.
(ssign money $alue to each factor and determine the &age rates for each key %ob.
The &age rate for a %ob is a!!ortioned along the identified factors.
(ll other %obs are com!ared &ith the list of key %obs and &age rates are
determined.
(n e/am!le of ho& the factor com!arison method &orks is gi$en belo&:
1-C
Table: Meits and 0emeits of Facto "ompaison Method
Merits
0emeits
(nalytical and ob%ecti$e.
Reliable and $alid as each %ob is
com!ared &ith all other %obs in
terms of key factors.
Money $alues are assigned in a
fair &ay based on an agreed rank
order fi/ed by the %ob e$aluation
committee.
+le/ible as there is no u!!er
limitation on the rating of a factor.
Fifficult to understand' e/!lain and
o!erate.
Its use of the same criteria to assess
all %obs is ,uestionable as %obs differ
across and &ithin organi8ations.
Time consuming and costly.
Point method
This method is &idely used currently. 3ere' %obs are e/!ressed in terms of key factors.
.oints are assigned to each factor after !rioriti8ing each factor in the order of im!ortance.
The !oints are summed u! to determine the &age rate for the %ob. Kobs &ith similar !oint
totals are !laced in similar !ay grades. The !rocedure in$ol$ed may be e/!lained thus:
1a2 Select key %obs. Identify the factors common to all the identified %obs such as skill'
effort' res!onsibility' etc.
1b2 Fi$ide each ma%or factor into a number of sub factors. Each sub factor is defined
and e/!ressed clearly in the order of im!ortance' !referably along a scale.
The most fre,uent factors em!loyed in !oint systems are:
I. Skill 1key factor2: Education and training re,uired' BreadthDde!th of
e/!erience re,uired' Social skills re,uired' .roblem9sol$ing skills' Fegree of
discretionDuse of %udgment' Creati$e thinking7
II. Res!onsibilityD(ccountability: Breadth of res!onsibility' S!eciali8ed
res!onsibility' Com!le/ity of the &ork' Fegree of freedom to act' *umber and
nature of subordinate staff' E/tent of accountability for e,ui!mentD!lant'
E/tent of accountability for !roductDmaterials7
III. Effort: Mental demands of a %ob' .hysical demands of a %ob' Fegree of
!otential stress.
The educational re,uirements 1sub factor2 under the skill 1key factor2 may be e/!ressed
thus in the order of im!ortance.
1-1
2egree 2efine
1. (ble to carry out sim!le calculations7 3igh school educated
-. Foes all the clerical o!erations7 com!uter literate7 graduate
5 3andles mail' de$elo!s contacts' takes initiati$e and does &ork inde!endently7 !ost
graduate
(ssign !oint $alues to degrees after fi/ing a relati$e $alue for each key factor.
Table: *oint 1alues to Factos along a (cale
.oint $alues for Fegrees Total
+actor 1 - 5 ; =
Skill 1C -C 5C ;C =C 1=C
.hysical effort A 1> -; 5- ;C 1-C
Mental effort = 1C 1= -C -= @=
Res!onsibility @ 1; -1 -A 5= 1C=
)orking conditions > 1- 1A -; 5C BC
Ma/imum total !oints of all factors de!ending on their im!ortance to %ob Z =;C
1Bank 4fficer2
; +ind the ma/imum number of !oints assigned to each %ob 1after adding u! the !oint
$alues of all sub9factors of such a %ob2. This &ould hel! in finding the relati$e &orth of a
%ob. +or instance' the ma/imum !oints assigned to an officer0s %ob in a bank come to =;C.
The manager0s %ob' after adding u! key factors ] sub factors0 !oints' may be getting a
!oint $alue of' say >=C from the %ob e$aluation committee. This %ob is no& !riced at a
higher le$el.
= 4nce the &orth of a %ob in terms of total !oints is e/!ressed' the !oints are
con$erted into money $alues kee!ing in $ie& the hourlyDdaily &age rates. ( &age sur$ey'
usually' is undertaken to collect &age rates of certain key %obs in the organi8ation. et0s
e/!lain this:
1--
Table: "on#esion of /ob $ade *oints into Money 1alue
.oint range Faily &age rate 1Rs2 Kob grades of key bank officials
=CC9>CC 5CC9;CC 1 4fficer
>CC9@CC ;CC9=CC - (ccountant
@CC9ACC =CC9>CC 5 Manager I Scale
ACC9BCC >CC9@CC ; Manager II Scale
BCC91'CCC @CC9ACC = Manager III Scale
Meits and 0emeits
The !oint method is a su!erior and &idely used method of e$aluating %obs. It forces raters
to look into all keys factors and sub9factors of a %ob. .oint $alues are assigned to all
factors in a systematic &ay' eliminating bias at e$ery stage. It is reliable because raters
using similar criteria &ould get more or less similar ans&ers. "The methodology
underlying the a!!roach contributes to a minimum of rating error# 1Robbins' !.5>12. It
accounts for differences in &age rates for $arious %obs on the strength of %ob factors. Kobs
may change o$er time' but the rating scales established under the !oint method remain
unaffected.
4n the negati$e side' the !oint method is com!le/. .re!aring a manual for $arious %obs'
fi/ing $alues for key and sub9factors' establishing &age rates for different grades' etc.' is
a time consuming !rocess. (ccording to Fecen8o and Robbins' "the key criteria must be
carefully and clearly identified' degrees of factors ha$e to be agreed u!on in terms that
mean the same to all rates' the &eight of each criterion has to be established and !oint
$alues must be assigned to degrees#. This may be too ta/ing' es!ecially &hile e$aluating
managerial %obs &here the nature of &ork 1$aried' com!le/' no$el2 is such that it cannot
be e/!ressed in ,uantifiable numbers.
1-5
Unit 1I
1-;
P67
PERT Program Evaluation and Revie! Techni"ue#
.ERT is a $ariation on Critical .ath (nalysis that takes a slightly more ske!tical $ie& of
time estimates made for each !ro%ect stage. To use it' estimate the shortest !ossible time
each acti$ity &ill take' the most likely length of time' and the longest time that might be
taken if the acti$ity takes longer than e/!ected.
Gse the formula belo& to calculate the time to use for each !ro%ect stage:
shortest time ] ; / likely time ] longest time
99999999999999999999999999999999999999999999999999999999999
>
This hel!s to bias time estimates a&ay from the unrealistically short time9scales normally
assumed.
$ey points%
Critical .ath (nalysis is an effecti$e and !o&erful method of assessing:
)hat tasks must be carried out.
)here !arallel acti$ity can be !erformed.
The shortest time in &hich you can com!lete a !ro%ect.
Resources needed to e/ecute a !ro%ect.
The se,uence of acti$ities' scheduling and timings in$ol$ed.
Task !riorities.
The most efficient &ay of shortening time on urgent !ro%ects.
(n effecti$e Critical .ath (nalysis can make the difference bet&een success and failure
on com!le/ !ro%ects. It can be $ery useful for assessing the im!ortance of !roblems faced
during the im!lementation of the !lan.
.ERT is a $ariant of Critical .ath (nalysis that takes a more ske!tical $ie& of the time
needed to com!lete each !ro%ect stage.
Com!le/ !ro%ects re,uire a series of acti$ities' some of &hich must be !erformed
se,uentially and others that can be !erformed in !arallel &ith other acti$ities. This
collection of series and !arallel tasks can be modeled as a net&ork.
1-=
In 1B=@ the Critical .ath Method 1C.M2 &as de$elo!ed as a net&ork model for !ro%ect
management. C.M is a deterministic method that uses a fi/ed time estimate for each
acti$ity. )hile C.M is easy to understand and use' it does not consider the time
$ariations that can ha$e a great im!act on the com!letion time of a com!le/ !ro%ect.
The 6rogram *%aluation and 0e%ie& !echni"ue 1.ERT2 is a net&ork model that allo&s
for randomness in acti$ity com!letion times. .ERT &as de$elo!ed in the late 1B=CIs for
the G.S. *a$yIs .olaris !ro%ect ha$ing thousands of contractors. It has the !otential to
reduce both the time and cost re,uired to com!lete a !ro%ect.
The Net,o3 0iagam
In a !ro%ect' an acti$ity is a task that must be !erformed and an e$ent is a milestone
marking the com!letion of one or more acti$ities. Before an acti$ity can begin' all of its
!redecessor acti$ities must be com!leted. .ro%ect net&ork models re!resent acti$ities and
milestones by arcs and nodes. .ERT originally &as an acti%ity on arc net&ork' in &hich
the acti$ities are re!resented on the lines and milestones on the nodes. 4$er time' some
!eo!le began to use .ERT as an acti%ity on node net&ork. +or this discussion' &e &ill
use the original form of acti$ity on arc.
The .ERT chart may ha$e multi!le !ages &ith many sub9tasks. The follo&ing is a $ery
sim!le e/am!le of a .ERT diagram:
*'&T "hat
The milestones generally are numbered so that the ending node of an acti$ity has a higher
number than the beginning node. Incrementing the numbers by 1C allo&s for ne& ones to
be inserted &ithout modifying the numbering of the entire diagram. The acti$ities in the
abo$e diagram are labeled &ith letters along &ith the e/!ected time re,uired to com!lete
the acti$ity.
(teps in the *'&T *lanning *ocess
.ERT !lanning in$ol$es the follo&ing ste!s:
1. Identify the s!ecific acti$ities and milestones.
-. Fetermine the !ro!er se,uence of the acti$ities.
5. Construct a net&ork diagram.
1->
;. Estimate the time re,uired for each acti$ity.
=. Fetermine the critical path.
>. G!date the .ERT chart as the !ro%ect !rogresses.
67 Identify Acti#ities and Milestones
The acti$ities are the tasks re,uired to com!lete the !ro%ect. The milestones are the e$ents
marking the beginning and end of one or more acti$ities. It is hel!ful to list the tasks in a
table that in later ste!s can be e/!anded to include information on se,uence and duration.
87 0etemine Acti#ity (e)uence
This ste! may be combined &ith the acti$ity identification ste! since the acti$ity
se,uence is e$ident for some tasks. 4ther tasks may re,uire more analysis to determine
the e/act order in &hich they must be !erformed.
J7 "onstuct the Net,o3 0iagam
Gsing the acti$ity se,uence information' a net&ork diagram can be dra&n sho&ing the
se,uence of the serial and !arallel acti$ities. +or the original acti$ity9on9arc model' the
acti$ities are de!icted by arro&ed lines and milestones are de!icted by circles or
LbubblesL.
If done manually' se$eral drafts may be re,uired to correctly !ortray the relationshi!s
among acti$ities. Soft&are !ackages sim!lify this ste! by automatically con$erting
tabular acti$ity information into a net&ork diagram.
@7 'stimate Acti#ity Times
)eeks are a commonly used unit of time for acti$ity com!letion' but any consistent unit
of time can be used.
( distinguishing feature of .ERT is its ability to deal &ith uncertainty in acti$ity
com!letion times. +or each acti$ity' the model usually includes three time estimates:
Optimistic time 9 generally the shortest time in &hich the acti$ity can be
com!leted. It is common !ractice to s!ecify o!timistic times to be three standard
de$iations from the mean so that there is a!!ro/imately a 1S chance that the
acti$ity &ill be com!leted &ithin the o!timistic time.
Most li-ely time 9 the com!letion time ha$ing the highest !robability. *ote that
this time is different from the e#pected time.
6essimistic time 9 the longest time that an acti$ity might re,uire. Three standard
de$iations from the mean is commonly used for the !essimistic time.
1-@
.ERT assumes a beta !robability distribution for the time estimates. +or a beta
distribution' the e/!ected time for each acti$ity can be a!!ro/imated using the follo&ing
&eighted a$erage:
E/!ected time Z 1 4!timistic ] ; / Most likely ] .essimistic 2 D >
This e/!ected time may be dis!layed on the net&ork diagram.
To calculate the $ariance for each acti$ity com!letion time' if three standard de$iation
times &ere selected for the o!timistic and !essimistic times' then there are si/ standard
de$iations bet&een them' so the $ariance is gi$en by:
[ 1 .essimistic 9 4!timistic 2 D > \
-
C7 0etemine the "itical *ath
The critical !ath is determined by adding the times for the acti$ities in each se,uence and
determining the longest !ath in the !ro%ect. The critical !ath determines the total calendar
time re,uired for the !ro%ect. If acti$ities outside the critical !ath s!eed u! or slo& do&n
1&ithin limits2' the total !ro%ect time does not change. The amount of time that a non9
critical !ath acti$ity can be delayed &ithout delaying the !ro%ect is referred to as slac-
time.
If the critical !ath is not immediately ob$ious' it may be hel!ful to determine the
follo&ing four ,uantities for each acti$ity:
ES 9 Earliest Start time
E+ 9 Earliest +inish time
S 9 atest Start time
+ 9 atest +inish time
These times are calculated using the e/!ected time for the rele$ant acti$ities. The earliest
start and finish times of each acti$ity are determined by &orking for&ard through the
net&ork and determining the earliest time at &hich an acti$ity can start and finish
considering its !redecessor acti$ities. The latest start and finish times are the latest times
that an acti$ity can start and finish &ithout delaying the !ro%ect. S and + are found by
&orking back&ard through the net&ork. The difference in the latest and earliest finish of
each acti$ity is that acti$ityIs slack. The critical !ath then is the !ath through the net&ork
in &hich none of the acti$ities ha$e slack.
The $ariance in the !ro%ect com!letion time can be calculated by summing the $ariances
in the com!letion times of the acti$ities in the critical !ath. ?i$en this $ariance' one can
calculate the !robability that the !ro%ect &ill be com!leted by a certain date assuming a
normal !robability distribution for the critical !ath. The normal distribution assum!tion
1-A
holds if the number of acti$ities in the !ath is large enough for the central limit theorem
to be a!!lied.
Since the critical !ath determines the com!letion date of the !ro%ect' the !ro%ect can be
accelerated by adding the resources re,uired to decrease the time for the acti$ities in the
critical !ath. Such a shortening of the !ro%ect sometimes is referred to as pro)ect
crashing.
F7 Update as *oBect *ogesses
Make ad%ustments in the .ERT chart as the !ro%ect !rogresses. (s the !ro%ect unfolds' the
estimated times can be re!laced &ith actual times. In cases &here there are delays'
additional resources may be needed to stay on schedule and the .ERT chart may be
modified to reflect the ne& situation.
Benefits of *'&T
.ERT is useful because it !ro$ides the follo&ing information:
E/!ected !ro%ect com!letion time.
.robability of com!letion before a s!ecified date.
The critical !ath acti$ities that directly im!act the com!letion time.
The acti$ities that ha$e slack time and that can lend resources to critical !ath
acti$ities.
(cti$ity start and end dates.
5imitations
The follo&ing are some of .ERTIs &eaknesses:
The acti$ity time estimates are some&hat sub%ecti$e and de!end on %udgement. In
cases &here there is little e/!erience in !erforming an acti$ity' the numbers may
be only a guess. In other cases' if the !erson or grou! !erforming the acti$ity
estimates the time there may be bias in the estimate.
E$en if the acti$ity times are &ell9estimated' .ERT assumes a beta distribution for
these time estimates' but the actual distribution may be different.
E$en if the beta distribution assum!tion holds' .ERT assumes that the !robability
distribution of the !ro%ect com!letion time is the same as the that of the critical
1-B
!ath. Because other !aths can become the critical !ath if their associated acti$ities
are delayed' .ERT consistently underestimates the e/!ected !ro%ect com!letion
time.
The underestimation of the !ro%ect com!letion time due to alternate !aths becoming
critical is !erha!s the most serious of these issues. To o$ercome this limitation' Monte
Carlo simulations can be !erformed on the net&ork to eliminate this o!timistic bias in the
e/!ected !ro%ect com!letion time.
0ritical Path Analysis
and P67 0harts
Planning and Scheduling 0omple$ Projects
Related variants% &'& or &ctivity(on(&rc or &ctivity(on(&rro!
)iagrams

Critical .ath (nalysis and .ERT are !o&erful tools that hel! you to schedule and manage
com!le/ !ro%ects. They &ere de$elo!ed in the 1B=Cs to control large defense !ro%ects'
and ha$e been used routinely since then.
(s &ith ?antt Charts' Critical .ath (nalysis 1C.(2 or the Critical .ath Method 1C.M2
hel!s you to !lan all tasks that must be com!leted as !art of a !ro%ect. They act as the
basis both for !re!aration of a schedule' and of resource !lanning. Furing management of
a !ro%ect' they allo& you to monitor achie$ement of !ro%ect goals. They hel! you to see
&here remedial action needs to be taken to get a !ro%ect back on course.
)ithin a !ro%ect it is likely that you &ill dis!lay your final !ro%ect !lan as a ?antt Chart
1using Microsoft .ro%ect or other soft&are for !ro%ects of medium com!le/ity or an e/cel
s!readsheet for !ro%ects of lo& com!le/ity2.The benefit of using C.( &ithin the !lanning
!rocess is to hel! you de$elo! and test your !lan to ensure that it is robust. Critical .ath
(nalysis formally identifies tasks &hich must be com!leted on time for the &hole !ro%ect
to be com!leted on time. It also identifies &hich tasks can be delayed if resource needs to
be reallocated to catch u! on missed or o$errunning tasks. The disad$antage of C.(' if
you use it as the techni,ue by &hich your !ro%ect !lans are communicated and managed
against' is that the relation of tasks to time is not as immediately ob$ious as &ith ?antt
Charts. This can make them more difficult to understand.
15C
( further benefit of Critical .ath (nalysis is that it hel!s you to identify the minimum
length of time needed to com!lete a !ro%ect. )here you need to run an accelerated
!ro%ect' it hel!s you to identify &hich !ro%ect ste!s you should accelerate to com!lete the
!ro%ect &ithin the a$ailable time.
*o! to +se the Tool%
(s &ith ?antt Charts' the essential conce!t behind Critical .ath (nalysis is that you
cannot start some acti$ities until others are finished. These acti$ities need to be
com!leted in a se,uence' &ith each stage being more9or9less com!leted before the ne/t
stage can begin. These are Ise,uentialI acti$ities.
4ther acti$ities are not de!endent on com!letion of any other tasks. Pou can do these at
any time before or after a !articular stage is reached. These are non9de!endent or
I!arallelI tasks.
)ra!ing a ,ritical Path &nalysis ,hart
Gse the follo&ing ste!s to dra& a C.( Chart:
(tep 67 5ist all acti#ities in the plan
+or each acti$ity' sho& the earliest start date' estimated length of time it &ill take' and
&hether it is !arallel or se,uential. If tasks are se,uential' sho& &hich stage they de!end
on.
+or the !ro%ect e/am!le used here' you &ill end u! &ith the same task list as e/!lained in
the article on ?antt Charts 1&e &ill use the same e/am!le as &ith ?antt Charts to
com!are the t&o techni,ues2. The chart is re!eated in +igure 1 belo&:
Figue 67 Tas3 5ist: *lanning a custom!,itten compute poBect
Tas3 'aliest
stat
5ength Type 0ependent
on777
(. 3igh le$el analysis )eek C 1 &eek Se,uential
B. Selection of hard&are
!latform
)eek 1 1 day Se,uential (
C. Installation and
commissioning of hard&are
)eek
1.-
- &eeks .arallel B
F. Fetailed analysis of core
modules
)eek 1 - &eeks Se,uential (
151
E. Fetailed analysis of
su!!orting modules
)eek 5 - &eeks Se,uential F
+. .rogramming of core
modules
)eek 5 - &eeks Se,uential F
?. .rogramming of
su!!orting modules
)eek = 5 &eeks Se,uential E
3. Quality assurance of core
modules
)eek = 1 &eek Se,uential +
I. Quality assurance of
su!!orting modules
)eek A 1 &eek Se,uential ?
K.Core module training )eek > 1 day .arallel C'3
E. Fe$elo!ment and Q( of
accounting re!orting
)eek = 1 &eek .arallel E
. Fe$elo!ment and Q( of
management re!orting
)eek = 1 &eek .arallel E
M. Fe$elo!ment of
Management Information
System
)eek > 1 &eek Se,uential
*. Fetailed training )eek B 1 &eek Se,uential I' K' E' M
(tep 87 *lot the acti#ities as a cicle and ao, diagam
Critical .ath (nalyses are !resented using circle and arro& diagrams.
In these' circles sho& e$ents &ithin the !ro%ect' such as the start and finish of tasks. The
number sho&n in the left hand half of the circle allo&s you to identify each one easily.
Circles are sometimes kno&n as nodes.
(n arro& running bet&een t&o e$ent circles sho&s the acti$ity needed to com!lete that
task. ( descri!tion of the task is &ritten underneath the arro&. The length of the task is
sho&n abo$e it. By con$ention' all arro&s run left to right. (rro&s are also sometimes
called arcs.
(n e/am!le of a $ery sim!le diagram is sho&n belo&:
15-
This sho&s the start e$ent 1circle 12' and the com!letion of the I3igh e$el (nalysisI task
1circle -2. The arro& bet&een them sho&s the acti$ity of carrying out the 3igh e$el
(nalysis. This acti$ity should take 1 &eek.
)here one acti$ity cannot start until another has been com!leted' &e start the arro& for
the de!endent acti$ity at the com!letion e$ent circle of the !re$ious acti$ity. (n e/am!le
of this is sho&n belo&:
3ere the acti$ities of ISelect 3ard&areI and ICore Module (nalysisI cannot be started
until I3igh e$el (nalysisI has been com!leted. This diagram also brings out a number of
other im!ortant !oints:
)ithin Critical .ath (nalysis' &e refer to acti$ities by the numbers in the circles
at each end. +or e/am!le' the task ICore Module (nalysisI &ould be called
acti$ity - to 5. ISelect 3ard&areI &ould be acti$ity - to B.
(cti$ities are not dra&n to scale. In the diagram abo$e' acti$ities are 1 &eek long'
- &eeks long' and 1 day long. (rro&s in this case are all the same length.
In the e/am!le abo$e' you can see a second number in the to!' right hand
,uadrant of each circle. This sho&s the ealiest stat time for the follo&ing
acti$ity. It is con$entional to start at C. 3ere units are &hole &eeks.
( different case is sho&n belo&:
155
3ere acti$ity > to @ cannot start until the other four acti$ities 111 to >' = to >' ; to >' and A
to >2 ha$e been com!leted.
Click the link belo& for the full circle and arro& diagram for the com!uter !ro%ect &e are
using as an e/am!le.
+igure =: +ull Critical .ath Fiagram
This sho&s all the acti$ities that &ill take !lace as !art of the !ro%ect. *otice that each
e$ent circle also has a figure in the bottom' right hand ,uadrant. This sho&s the latest
finish time thatIs !ermissible for the !receding acti$ity if the !ro%ect is to be com!leted in
the minimum time !ossible. Pou can calculate this by starting at the last e$ent and
&orking back&ards.The latest finish time of the !receding e$ent and the earliest start
time of the follo&ing e$en &ill be the same for circles on the critical !ath.
Pou can see that e$ent M can start any time bet&een &eeks > and A. The timing of this
e$ent is not critical. E$ents 1 to -' - to 5' 5 to ;' ; to =' = to > and > to @ must be started
and com!leted on time if the !ro%ect is to be com!leted in 1C &eeks. This is the Icritical
!athI < these acti$ities must be $ery closely managed to ensure that acti$ities are
com!leted on time. If %obs on the critical !ath sli!' immediate action should be taken to
get the !ro%ect back on schedule. 4ther&ise com!letion of the &hole !ro%ect &ill sli!.
-,rash &ction-
Pou may find that you need to com!lete a !ro%ect earlier than your Critical .ath (nalysis
says is !ossible. In this case you need to re9!lan your !ro%ect.
Pou ha$e a number of o!tions and &ould need to assess the im!act of each on the
15;
!ro%ect0s cost' ,uality and time re,uired to com!lete it. +or e/am!le' you could increase
resource a$ailable for each !ro%ect acti$ity to bring do&n time s!ent on each but the
im!act of some of this &ould be insignificant and a more efficient &ay of doing this
&ould be to look only at acti$ities on the critical !ath.
(s an e/am!le' it may be necessary to com!lete the com!uter !ro%ect in +igure = in A
&eeks rather than 1C &eeks. In this case you could look at using t&o analysts in acti$ities
- to 5 and 5 to ;. This &ould shorten the !ro%ect by t&o &eeks' but may raise the !ro%ect
cost < doubling resources at any stage may only im!ro$e !roducti$ity by' say' =CS as
additional time may need to be s!ent getting the team members u! to s!eed on &hat is
re,uired' coordinating tasks s!lit bet&een them' integrating their contributions etc.
In some situations' shortening the original critical !ath of a !ro%ect can lead to a different
series of acti$ities becoming the critical !ath. +or e/am!le' if acti$ity ; to = &ere reduced
to 1 &eek' acti$ities ; to A and A to > &ould come onto the critical !ath.
(s &ith ?antt Charts' in !ractice !ro%ect managers use soft&are tools like Microsoft
.ro%ect to create C.( Charts. *ot only do these ease make them easier to dra&' they also
make modification of !lans easier and !ro$ide facilities for monitoring !rogress against
!lans.
15=
UNIT 1II
(tategic o institutional management
(tategic o institutional management is the conduct of drafting' im!lementing and
e$aluating cross9functional decisions that &ill enable an organi8ation to achie$e its long9
term ob%ecti$es. It is the !rocess of s!ecifying the organi8ationIs mission' $ision and
ob%ecti$es' de$elo!ing !olicies and !lans' often in terms of !ro%ects and !rograms' &hich
are designed to achie$e these ob%ecti$es' and then allocating resources to im!lement the
!olicies and !lans' !ro%ects and !rograms. ( balanced scorecard is often used to e$aluate
the o$erall !erformance of the business and its !rogress to&ards ob%ecti$es.
Strategic management is a le$el of managerial acti$ity under setting goals and o$er
Tactics. Strategic management !ro$ides o$erall direction to the enter!rise and is closely
related to the field of 4rgani8ation Studies. In the field of business administration it is
useful to talk about Lstrategic alignmentL bet&een the organi8ation and its en$ironment or
Lstrategic consistencyL. (ccording to (rieu 1-CC@2' Lthere is strategic consistency &hen
the actions of an organi8ation are consistent &ith the e/!ectations of management' and
these in turn are &ith the market and the conte/t.L
"Strategic management is an ongoing !rocess that e$aluates and controls the business and the
industries in &hich the com!any is in$ol$ed7 assesses its com!etitors and sets goals and strategies
to meet all e/isting and !otential com!etitors7 and then reassesses each strategy annually or
15>
,uarterly [i.e. regularly\ to determine ho& it has been im!lemented and &hether it has succeeded
or needs re!lacement by a ne& strategy to meet changed circumstances' ne& technology' ne&
com!etitors' a ne& economic en$ironment.' or a ne& social' financial' or !olitical en$ironment.#
Strategic Management 1 "n .ntrod#ction
Strategic Management is all about identification and descri!tion of the strategies that
managers can carry so as to achie$e better !erformance and a com!etiti$e ad$antage for
their organi8ation. (n organi8ation is said to ha$e com!etiti$e ad$antage if its
!rofitability is higher than the a$erage !rofitability for all com!anies in its industry.
Strategic Management is a &ay in &hich strategists set the ob%ecti$es and !roceed about
attaining them. It deals &ith making and im!lementing decisions about future direction of
an organi8ation. It hel!s us to identify the direction in &hich an organi8ation is mo$ing.
Strategic management is a continuous !rocess that e$aluates and controls the business
and the industries in &hich an organi8ation is in$ol$ed7 e$aluates its com!etitors and sets
goals and strategies to meet all e/isting and !otential com!etitors7 and then ree$aluates
strategies on a regular basis to determine ho& it has been im!lemented and &hether it
&as successful or does it needs re!lacement.
Strategic Management gi$es a broader !ers!ecti$e to the em!loyees of an organi8ation
and they can better understand ho& their %ob fits into the entire organi8ational !lan and
ho& it is co9related to other organi8ational members. The em!loyees become more
trust&orthy' more committed and more satisfied as they can co9relate themsel$es $ery
&ell &ith each organi8ational task. They can understand the reaction of en$ironmental
changes on the organi8ation and the !robable res!onse of the organi8ation &ith the hel!
of strategic management. Thus the em!loyees can %udge the im!act of such changes on
their o&n %ob and can effecti$ely face the changes.
MI((ION
( mission statement is a formal short &ritten statement of the !ur!ose of a com!any or
organi8ation. The mission statement should guide the actions of the organi8ation' s!ell
out its o$erall goal' !ro$ide a sense of direction' and guide decision9making. It !ro$ides
Lthe frame&ork or conte/t &ithin &hich the com!any0s strategies are formulated.L
Contents of Mission statement
Mission statements often contain the follo&ing:
.ur!ose and aim of the organi8ation
The organi8ationIs !rimary stakeholders: clients' stockholders' congregation' etc.
Res!onsibilities of the organi8ation to&ard these stakeholders
.roducts and ser$ices offered
15@
(ccording to 3ill' the mission statement consists of: 1. a statement containing the reason
for the e/istence of the organi8ation 1mission2 -. a statement of some desired future state
1$ision2 5. a statement of the key $alues the organi8ation is committed to ;. a statement of
ma%or goals
The mission statement can be used to resol$e differences bet&een business stakeholders.
Stakeholders include: em!loyees including managers and e/ecuti$es' stockholders' board
of directors' customers' su!!liers' distributors' creditors' go$ernments 1local' state'
federal' etc.2' unions' com!etitors' *?4Is' and the general !ublic. Stakeholders affect and
are affected by the organi8ationIs strategies. (ccording to Hern Mc?inis' a mission
should:
Fefine &hat the com!any is
Fefine &hat the com!any as!ires to be
imited to e/clude some $entures
Broad enough to allo& for creati$e gro&th
Fistinguish the com!any from all others
Ser$e as frame&ork to e$aluate current acti$ities
Stated clearly so that it is understood by all
Mission of the com!any communicates the firmas core ideology and $isionary goals. It
should contain the com!anyas core $alues' core !ur!ose and $isionary goals. )hile the
$isionary goals are selected the core $alues and !ur!ose of the firms should be
disco$ered. Halues and !ur!ose are in the com!any already' the mission %ust describes
them. In that case' the stakeholders are more likely to belie$e in com!anyas mission
$OA5(
Setting ?oals and 4b%ecti$es
The difference bet&een &here &e are 1current status2 and &here &e &ant to be 1$ision
and goals2 is &hat &e do 1target ob%ecti$es and action !lans2.e
(s this statement sho&s' setting goals and ob%ecti$es builds on the !re$ious ste!s of
$isioning and taking stock. ?oals are sim!ly a clearer statement of the $isions' s!ecifying
the accom!lishments to be achie$ed if the $ision is to become real. The target ob%ecti$es
are clearer statements of the s!ecific acti$ities re,uired to achie$e the goals' starting from
the current status.
(t this !oint' strategic !lanning begins to !roduce lots of ideas and action ste!s. (
common !ractice for kee!ing indi$idual &orkloads to a manageable le$el is to delegate
different to!ics to different teams. +or e/am!le' there could be a curriculum team' a
facilities team' a budgeting team' etc. ( useful tool for kee!ing track of ideas and seeing
ho& they relate to each other is the affinity diagram.
The Affinity 0iagam
15A
The affinity diagram is a general !lanning tool. It is a creati$e !rocess that hel!s you to
identify and gather large amounts of information' ideas' o!inions' or issues and organi8e
them in a relati$ely short amount of time.
( finished affinity diagram looks like the !icture belo&:
Theme Community In$ol$ement 4ngoing Tech Su!!ort
Idea Tech Gse Sur$ey 4ne !rofessionalDbuilding
Idea 4!en 3ouse Students as Tech Su!!ort
Idea Include Community
Members in Teams
Regular .rofessional
Fe$elo!ment Gsing Tech
The affinity diagram is used &hen:
Pou need to sift through large $olumes of information.
Pou &ant ne& !atterns of information to rise to the surface.
Issues seem too large or com!le/ to gras!.
*O5I"?
.olicy setting
Effecti$e !olicies !ro$ide the frame&ork for education in a district. This section !ro$ides
information on !olicy setting in relationshi! to technology and change im!lementation.
.olicy de$elo!ment
Clear technology !olicy statements can hel! eliminate confusion and !a$e the &ay for
instructional reform. Such statements guide district administrators in de$elo!ing
guidelines that allo& school !ersonnel to ac,uire and use technology in efficient and
effecti$e &ays. (s for any district !olicy' technology !olicies relate to basic issues:
The basic ideas' $alues' and beliefs at the core of the district0s reason for
e/istence7
Students and the instructional !rogram7
.ersonnel and administrati$e matters7 and
15B
+acilities' e,ui!ment' and materials.
This section !ro$ides guidance on !olicy de$elo!ment that incor!orates these
considerations.
.olicy Fe$elo!ment Ste!s
Gse the follo&ing ste!s for defining your !olicies.
(tep One: 0efine the Issue o *oblem
The !rocess of !olicy de$elo!ment begins &ith recogni8ing the need for &ritten !olicy.
4ften a board or su!erintendent faces a decision that &ould be easier to make if a !olicy
e/isted.
The board is not alone in identifying !olicy needs. .arents' students' teachers' local
ta/!ayers' the su!erintendent' the state or federal go$ernment' and !ressure grou!s are all
sources of !olicy issues and !roblems.
(tep T,o: $athe Necessay Infomation on the Issue
Sam!le !olicy language and analysis from your state association and *SB(
E/!erience from other districts
Education research
ocal in!ut
State association seminars
State or federal la&s and regulations
(tep Thee: (ecue &ecommendations fom (upeintendent
4nce facts are a$ailable' the board listens to recommendations for handling the !olicy
issue. The su!erintendent is often changed &ith recommending !olicy action' since
heDshe is the one res!onsible for carrying out the !olicy.
(tep Fou: 0iscuss and 0ebate at the Boad 5e#el Ginclude in!ut of affected !arties2
Is the content &ithin the sco!e of the board0s authorityN
Is it consistent &ith local' state' and federal la&N The G.S. and the state0s constitutionN
Foes it su!!ort the school district0s goals or ob%ecti$esN
1;C
Is it good educational 1!ersonnel' business2 !racticeN
Is it reasonableN 1(re any re,uirements or !rohibitions arbitrary' discriminatory or
ca!riciousN2
Foes it ade,uately co$er the sub%ectN
Is it limited to one !olicy to!icN
Is it consistent &ith board0s e/isting !oliciesN
Can it be administeredN Is it !racticalN 3o& much &ill it costN
(tep Fi#e: 0aft *olicy
(fter the board has reached consensus on !olicy content' the board0s !olicy &riter goes to
&ork. This !erson must be able to &rite clearly' directly' and succinctly. .om!osity'
$erbosity' educational %argon' and LlegaleseL should be a$oided unless necessary to meet
legal re,uirements. .olicy must be broadly stated &ith room for ad%ustment to fit s!ecial
circumstances.
(tep (i+: .old Fist &eading
4nce in &riting' the !olicy draft is !laced on the board0s agenda for a first reading' gi$ing
notice to e$eryone interested that the board has a s!ecific !olicy under consideration. (t
this time the board has the o!!ortunity for !reliminary discussion of the !ro!osed !olicy
and' if it chooses' may hold a !ublic hearing. This is recommended for im!ortant or
contro$ersial draft !olicies.
(tep (e#en: Ma3e &e#isions
Re$ise the !olicy based on the information gained form the ,uestions' comments and
suggestions obtained after the first reading.
(tep 'ight: .old (econd &eading
The !eriod bet&een the first and second reading allo&s time for all concerned !ersons to
ask ,uestions' make comments' and offer suggestions for changes and im!ro$ements. (
second !ublic hearing may also be held.
(tep Nine: Adopt the *olicy
(tep Ten: 0istibute to the *ublic
Seeing the !olicies are distributed as &idely as !ossible is one &ay to ensure
im!lementation.
1;1
(tep 'le#en: O#esee *olicy Implementation
.olicy o$ersight is a dynamic !rocess that includes an e$aluati$e com!onent. 4$ersight
is intended to make sure that the !olicy accom!lishes its goal. .olicy o$ersight can
!ro$ide guidance on &hether to continue or modify the !olicy and to determine future
courses of action.
(tep T,el#e: *olicy '#aluation and &e#ision o Modification
.olicies should be re$ie&ed on a regular basis as a !art of the board0s standard o!erating
!rinci!les. They can become out of date' unclear' or e$en contrary to the &ay in &hich
the school district is o!erating. )hen any of this occurs the !olicy needs modification or
elimination. The !olicy amendment !rocess is the same as the !olicy ado!tion !rocess.
The board sets !olicy and the su!erintendent im!lements the !olicy and manages the
schools &ithin the guidelines set forth in board !olicy. In the absence of !olicy' the
su!erintendent must use hisDher o&n %udgment
The Fifference
bet&een goals and ob%ecti$es
?oals are broad ob%ecti$es are narro&.
?oals are general intentions7 ob%ecti$es are !recise.
?oals are intangible7 ob%ecti$es are tangible.
?oals are abstract7 ob%ecti$es are concrete.
?oals canIt be $alidated as is7 ob%ecti$es can be $alidated.
(tategy
The &ord "strategy# is deri$ed from the ?reek &ord "stratbgos#7 stratus 1meaning army2
and "ago# 1meaning leadingDmo$ing2.
(tategy is an action that managers take to attain one or more of the organi8ation0s goals.
Strategy can also be defined as "( general direction set for the com!any and its $arious
com!onents to achie$e a desired state in the future. Strategy results from the detailed
strategic !lanning !rocess#.
( strategy is all about integrating organi8ational acti$ities and utili8ing and allocating the
scarce resources &ithin the organi8ational en$ironment so as to meet the !resent
ob%ecti$es. )hile !lanning a strategy it is essential to consider that decisions are not
taken in a $accum and that any act taken by a firm is likely to be met by a reaction from
those affected' com!etitors' customers' em!loyees or su!!liers.
1;-
Strategy can also be defined as kno&ledge of the goals' the uncertainty of e$ents and the
need to take into consideration the likely or actual beha$ior of others. Strategy is the
blue!rint of decisions in an organi8ation that sho&s its ob%ecti$es and goals' reduces the
key !olicies' and !lans for achie$ing these goals' and defines the business the com!any is
to carry on' the ty!e of economic and human organi8ation it &ants to be' and the
contribution it !lans to make to its shareholders' customers and society at large.
0eat#res of Strateg!
1. Strategy is Significant because it is not !ossible to foresee the future. )ithout a
!erfect foresight' the firms must be ready to deal &ith the uncertain e$ents &hich
constitute the business en$ironment.
-. Strategy deals &ith long term de$elo!ments rather than routine o!erations' i.e. it
deals &ith !robability of inno$ations or ne& !roducts' ne& methods of
!roductions' or ne& markets to be de$elo!ed in future.
5. Strategy is created to take into account the !robable beha$ior of customers and
com!etitors. Strategies dealing &ith em!loyees &ill !redict the em!loyee
beha$ior.
Strategy is a &ell defined roadma! of an organi8ation. It defines the o$erall mission'
$ision and direction of an organi8ation. The ob%ecti$e of a strategy is to ma/imi8e an
organi8ation0s strengths and to minimi8e the strengths of the com!etitors.
Strategy' in short' bridges the ga! bet&een "&here &e are# and "&here &e &ant to be#.
"omponents of a (tategy (tatement
he strategy statement of a firm sets the firm0s long9term strategic direction and broad
!olicy directions. It gi$es the firm a clear sense of direction and a blue!rint for the firm0s
acti$ities for the u!coming years. The main constituents of a strategic statement are as
follo&s:
67 (tategic Intent
(n organi8ation0s strategic intent is the !ur!ose that it e/ists and &hy it &ill
continue to e/ist' !ro$iding it maintains a com!etiti$e ad$antage. Strategic intent
gi$es a !icture about &hat an organi8ation must get into immediately in order to
achie$e the com!any0s $ision. It moti$ates the !eo!le. It clarifies the $ision of the
$ision of the com!any. Strategic intent hel!s management to em!hasi8e and
concentrate on the !riorities. Strategic intent is 'nothing but' the influencing of an
organi8ation0s resource !otential and core com!etencies to achie$e &hat at first
may seem to be unachie$able goals in the com!etiti$e en$ironment. ( &ell
e/!ressed strategic intent should guideDsteer the de$elo!ment of strategic intent or
the setting of goals and ob%ecti$es that re,uire that all of organi8ation0s
com!etencies be controlled to ma/imum $alue. Strategic intent includes directing
1;5
organi8ation0s attention on the need of &inning7 ins!iring !eo!le by telling them
that the targets are $aluable7 encouraging indi$idual and team !artici!ation as &ell
as contribution7 and utili8ing intent to direct allocation of resources. Strategic
intent differs from strategic fit in a &ay that &hile strategic fit deals &ith
harmoni8ing a$ailable resources and !otentials to the e/ternal en$ironment'
strategic intent em!hasi8es on building ne& resources and !otentials so as to
create and e/!loit future o!!ortunities.
87 Mission (tatement
Mission statement is the statement of the role by &hich an organi8ation intends to
ser$e it0s stakeholders. It describes &hy an organi8ation is o!erating and thus
!ro$ides a frame&ork &ithin &hich strategies are formulated. It describes &hat
the organi8ation does 1i.e.' !resent ca!abilities2' &ho all it ser$es 1i.e.'
stakeholders2 and &hat makes an organi8ation uni,ue 1i.e.' reason for e/istence2.
( mission statement differentiates an organi8ation from others by e/!laining its
broad sco!e of acti$ities' its !roducts' and technologies it uses to achie$e its goals
and ob%ecti$es. It talks about an organi8ation0s !resent 1i.e.' "about &here &e
are#2.+or instance' Micosoft<s mission is to hel! !eo!le and businesses
throughout the &orld to reali8e their full !otential. ;al!Mat<s mission is "To
gi$e ordinary folk the chance to buy the same thing as rich !eo!le.# Mission
statements al&ays e/ist at to! le$el of an organi8ation' but may also be made for
$arious organi8ational le$els. Chief e/ecuti$e !lays a significant role in
formulation of mission statement. 4nce the mission statement is formulated' it
ser$es the organi8ation in long run' but it may become ambiguous &ith
organi8ational gro&th and inno$ations. In today0s dynamic and com!etiti$e
en$ironment' mission may need to be redefined. 3o&e$er' care must be taken that
the redefined mission statement should ha$e original fundamentalsDcom!onents.
Mission statement has three main com!onents9a statement of mission or $ision of
the com!any' a statement of the core $alues that sha!e the acts and beha$iour of
the em!loyees' and a statement of the goals and ob%ecti$es.
Featues of a Mission
a. Mission must be feasible and attainable. It should be !ossible to achie$e
it.
b. Mission should be clea enough so that any action can be taken.
c. It should be inspiing for the management' staff and society at large.
d. It should be pecise enough' i.e.' it should be neither too broad nor too
narro&.
e. It should be uni)ue and distincti$e to lea$e an im!act in e$eryone0s mind.
f. It should be analytical'i.e.' it should analy8e the key com!onents of the
strategy.
g. It should be cedible' i.e.' all stakeholders should be able to belie$e it.
J7 1ision
( $ision statement identifies &here the organi8ation &ants or intends to be in
future or &here it should be to best meet the needs of the stakeholders. It
1;;
describes dreams and as!irations for future. +or instance' Micosoft<s #ision is
"to em!o&er !eo!le through great soft&are' any time' any !lace' or any de$ice.#
;al!Mat<s #ision is to become &orld&ide leader in retailing. ( $ision is the
!otential to $ie& things ahead of themsel$es. It ans&ers the ,uestion "&here &e
&ant to be#. It gi$es us a reminder about &hat &e attem!t to de$elo!. ( $ision
statement is for the organi8ation and it0s members' unlike the mission statement
&hich is for the customersDclients. It contributes in effecti$e decision making as
&ell as effecti$e business !lanning. It incor!orates a shared understanding about
the nature and aim of the organi8ation and utili8es this understanding to direct and
guide the organi8ation to&ards a better !ur!ose. It describes that on achie$ing the
mission' ho& the organi8ational future &ould a!!ear to be.
(n effecti$e $ision statement must ha$e follo&ing features9
a. It must be unambiguous.
b. It must be clea.
c. It must hamoni%e &ith organi8ation0s culture and $alues.
d. The dreams and as!irations must be ational/ealistic.
e. Hision statements should be shote so that they are easier to memori8e.
In order to reali8e the $ision' it must be dee!ly instilled in the organi8ation' being
o&ned and shared by e$eryone in$ol$ed in the organi8ation.
@7 $oals and obBecti#es
( goal is a desired future state or ob%ecti$e that an organi8ation tries to achie$e.
?oals s!ecify in !articular &hat must be done if an organi8ation is to attain
mission or $ision. ?oals make mission more !rominent and concrete. They co9
ordinate and integrate $arious functional and de!artmental areas in an
organi8ation. )ell made goals ha$e follo&ing features9
a. These are pecise and measuable.
b. These look after citical and significant issues.
c. These are ealistic and challenging.
d. These must be achie$ed &ithin a specific time frame.
e. These include both financial as ,ell as non!financial components.
4b%ecti$es are defined as goals that organi8ation &ants to achie$e o$er a !eriod of
time. These are the foundation of !lanning. .olicies are de$elo!ed in an
organi8ation so as to achie$e these ob%ecti$es. +ormulation of ob%ecti$es is the
task of to! le$el management. Effecti$e ob%ecti$es ha$e follo&ing features9
f. These are not single for an organi8ation' but multiple.
g. 4b%ecti$es should be both shot!tem as ,ell as longtem.
1;=
h. 4b%ecti$es must res!ond and react to changes in en$ironment' i.e.' they
must be fle+ible.
i. These must be feasible' ealistic and opeational.
(tategic 0ecisions
Strategic decisions are the decisions that are concerned &ith &hole en$ironment in &hich
the firm o!erates' the entire resources and the !eo!le &ho form the com!any and the
interface bet&een the t&o.
"haacteistics/Featues of (tategic 0ecisions
a. Strategic decisions ha$e ma%or resource !ro!ositions for an organi8ation. These
decisions may be concerned &ith !ossessing ne& resources' organi8ing others or
reallocating others.
b. Strategic decisions deal &ith harmoni8ing organi8ational resource ca!abilities
&ith the threats and o!!ortunities.
c. Strategic decisions deal &ith the range of organi8ational acti$ities. It is all about
&hat they &ant the organi8ation to be like and to be about.
d. Strategic decisions in$ol$e a change of ma%or kind since an organi8ation o!erates
in e$er9changing en$ironment.
e. Strategic decisions are com!le/ in nature.
f. Strategic decisions are at the to! most le$el' are uncertain as they deal &ith the
future' and in$ol$e a lot of risk.
g. Strategic decisions are different from administrati$e and o!erational decisions.
(dministrati$e decisions are routine decisions &hich hel! or rather facilitate
strategic decisions or o!erational decisions. 4!erational decisions are technical
decisions &hich hel! e/ecution of strategic decisions. To reduce cost is a strategic
decision &hich is achie$ed through o!erational decision of reducing the number
of em!loyees and ho& &e carry out these reductions &ill be administrati$e
decision.
The differences bet&een Strategic' (dministrati$e and 4!erational decisions can be
summari8ed as follo&s9
(tategic 0ecisions Administati#e 0ecisions Opeational 0ecisions
Strategic decisions are long9
term decisions.
(dministrati$e decisions
are taken daily.
4!erational decisions are
not fre,uently taken.
These are considered &here
The future !lanning is
concerned.
These are short9term based
Fecisions.
These are medium9!eriod
based decisions.
Strategic decisions are taken These are taken according These are taken in
1;>
in (ccordance &ith
organi8ational mission and
$ision.
to strategic and
o!erational Fecisions.
accordance &ith strategic
and administrati$e
decision.
These are related to o$erall
Counter !lanning of all
4rgani8ation.
These are related to
&orking of em!loyees in
an 4rgani8ation.
!roduction.
These deal &ith
organi8ational ?ro&th.
These are in &elfare of
em!loyees &orking in an
organi8ation.
!roduction and factory
gro&th.
Strategy is the direction and scope of an organisation o$er the long1term< &hich achie$es
advantage for the organisation through its configuration of reso#rces &ithin a
challenging environment' to meet the needs of mar9ets and to fulfil sta9e$older
e/!ectationsL.
In other &ords' strategy is about:
W )here is the business trying to get to in the long9term 1diectionH
W )hich markets should a business com!ete in and &hat kind of acti$ities are in$ol$ed in
such marketsN 1ma3ets7 scope2
W 3o& can the business !erform better than the com!etition in those marketsN
1ad#antage2N
W )hat resources 1skills' assets' finance' relationshi!s' technical com!etence' facilities2
are re,uired in order to be able to com!eteN 1esouces2N
W )hat e/ternal' en$ironmental factors affect the businessesI ability to com!eteN
1en#ionment2N
W )hat are the $alues and e/!ectations of those &ho ha$e !o&er in and around the
businessN 1sta3eholdesH
(tategy at 0iffeent 5e#els of a Business
Strategies e/ist at se$eral le$els in any organisation 9 ranging from the o$erall business
1or grou! of businesses2 through to indi$iduals &orking in it.
Corporate Strateg! 9 is concerned &ith the o$erall !ur!ose and sco!e of the business to
meet stakeholder e/!ectations. This is a crucial le$el since it is hea$ily influenced by
in$estors in the business and acts to guide strategic decision9making throughout the
business. Cor!orate strategy is often stated e/!licitly in a Lmission statementL.
1;@
(#siness )nit Strateg! 9 is concerned more &ith ho& a business com!etes successfully
in a !articular market. It concerns strategic decisions about choice of !roducts' meeting
needs of customers' gaining ad$antage o$er com!etitors' e/!loiting or creating ne&
o!!ortunities etc.
'perational Strateg! 9 is concerned &ith ho& each !art of the business is organised to
deli$er the cor!orate and business9unit le$el strategic direction. 4!erational strategy
therefore focuses on issues of resources' !rocesses' !eo!le etc.
.o, (tategy is Managed ! (tategic Management
In its broadest sense' strategic management is about taking Lstrategic decisionsL 9
decisions that ans&er the ,uestions abo$e.
In !ractice' a thorough strategic management !rocess has three main com!onents' sho&n
in the figure belo&:
(tategic Analysis
This is all about the analysing the strength of businessesI !osition and understanding the
im!ortant e/ternal factors that may influence that !osition. The !rocess of Strategic
(nalysis can be assisted by a number of tools' including:

(tategic "hoice
This !rocess in$ol$es understanding the nature of stakeholder e/!ectations 1the Lground
rulesL2' identifying strategic o!tions' and then e$aluating and selecting strategic o!tions.
1;A
(tategy Implementation
4ften the hardest !art. )hen a strategy has been analysed and selected' the task is then to
translate it into organisational action.
(;OT Analysis
0efinition:
S)4T is an abbre$iation for (tengths4 ;ea3nesses4 Oppotunities and Theats
S)4T analysis is an im!ortant tool for auditing the o$erall strategic !osition of a
business and its en$ironment.
4nce key strategic issues ha$e been identified' they feed into business ob%ecti$es'
!articularly marketing ob%ecti$es. S)4T analysis can be used in con%unction &ith other
tools for audit and analysis' such as .EST analysis and .orterIs +i$e9+orces analysis. It is
also a $ery !o!ular tool &ith business and marketing students because it is ,uick and easy
to learn.
The 2ey 0istinction ! Intenal and '+tenal Issues
Strengt$s and wea9nesses are .nternal factors. +or e/am!le' a strength could be your
s!ecialist marketing e/!ertise. ( &eakness could be the lack of a ne& !roduct.
'pport#nities and t$reats are e=ternal factors. +or e/am!le' an o!!ortunity could be a
de$elo!ing distribution channel such as the Internet' or changing consumer lifestyles that
!otentially increase demand for a com!anyIs !roducts. ( threat could be a ne&
com!etitor in an im!ortant e/isting market or a technological change that makes e/isting
!roducts !otentially obsolete.
it is &orth !ointing out that S)4T analysis can be $ery sub%ecti$e 9 t&o !eo!le rarely
come9u! &ith the same $ersion of a S)4T analysis e$en &hen gi$en the same
information about the same business and its en$ironment. (ccordingly' S)4T analysis is
best used as a guide and not a !rescri!tion. (dding and &eighting criteria to each factor
increases the $alidity of the analysis.
Aeas to "onside
Some of the key areas to consider &hen identifying and e$aluating Strengths'
)eaknesses' 4!!ortunities and Threats are listed in the e/am!le S)4T analysis belo&:
1;B
.rogrammers
Traditional .ro%ect Management a!!roaches tend to look at a !ro%ect as a discrete entity
ha$ing its o&n set of resources 1the budget and !ro%ect team2 and !roducing its o&n set of
deli$erables that deli$er benefit to the organisation. In a com!le/ organisation such as a
college or uni$ersity rarely is any !ro%ect com!letely self9contained. E$en a relati$ely
sim!le IT a!!lication is likely to re,uire interfaces to other systems and most of our
acti$ities im!act on a di$erse range of stakeholder grou!s. arge organisations such as
ours also tend to ha$e hundreds of indi$idual !ro%ects running at the same time and many
find themsel$es at the mercy of inter9de!artmental com!etition for resources. The
!rinci!les behind .rogramme Management &ill hel! you to manage in this com!le/
en$ironment.
.rogramme Management is a means of organising a range of !ro%ects. Kust to make
matters confusing you &ill often see .rogramme Management described as a means of
organising a !ortfolio of !ro%ects. KISC info*et uses the term .ortfolio Management to
describe the ne/t stage u! the hierarchy i.e. managing a !ortfolio of !rogrammes. 4ur
brand describes ho& !ro%ects' !rogrammes and !ortfolios interrelate.
.rogramme Management enables resources to be shared across !ro%ects' thus reducing
the !roblems faced by indi$idual .ro%ect Managers and recognises the de!endencies that
e/ist bet&een !ro%ects. It !ro$ides a frame&ork for senior management engagement and'
&ith a focus on benefits' can deli$er a sum greater than the out!uts of indi$idual !ro%ects.
.rogramme Management relates also to the !rocess of business change 9 you can find
further discussion in our Change Management infoEit.
.rogramme Management is normally a to!9do&n a!!roach. ( !rogramme should take
for&ard the strategy of the organisation. It should be formed around a single strategic
1=C
ob%ecti$e of the organisation 1e$en though it may ha$e benefits for another2. (ligning the
!rogramme &ith a single main ob%ecti$e should hel! to ensure that it is !ossible to
identify a single o&ner 9 this is considered further under Eey Roles.
(s an e/am!le' to achie$e a strategic ob%ecti$e of offering Halue for Money' !ro%ects may
be started to:
im!lement a ne& information system to increase efficiency in administration
set u! a ne& team to co9ordinate Business and Community Engagement acti$ities
build a ne& library to re!lace an e/isting outdated and inade,uate library s!ace
These seemingly unconnected !ro%ects can all contribute to the strategic aim of the
!rogramme.
(lternati$ely &hen adding a ne& building to a cam!us there are likely to be !ro%ects that
ha$e a clearer relationshi!:
clearing the site' &hich may include some demolition
infrastructure 1road&ays' !ath&ays' ser$ices2
construction
furniture and e,ui!ment
It is !ossible to call these either a !rogramme or a single !ro%ect and for all !ractical
!ur!oses it may not matter as long as e$eryone is in agreement about the terminology.
3o&e$er' as a general rule' !rogrammes are about co9ordinating and organising.
.rogrammes are generally more com!le/ than !ro%ects' are concerned &ith longer
timescales and ha$e a &ider sco!e. ( !rogramme has focus on achie$ement of benefits
&hereas !ro%ects focus on out!uts.
( !ro%ect to im!lement a ne& HE might ha$e a technical and !rocurement focus' ending
&ith the hando$er of a &orking system. ( !rogramme to im!lement a ne& HE &ill
include both that !ro%ect and ongoing !ro%ects to de$elo! skills' content' inno$ation and
to handle any change in &orking !ractices.
*oBects #esus *ogammes
*oBects Featue *ogammes Featue
4ut!uts
Closely bounded and sco!ed
deli$erables
Benefits after closure
4utcomes
)ider strategic benefits
Com!le/ relationshi!s
Benefits during and after
Benefits management
Transition to a ne& state
1=1
(;OT is an aconym fo (tengths4 ;ea3nesses4 Oppotunities and Theats. By
definition' Strengths 1S2 and )eaknesses 1)2 are considered to be internal factors o$er
&hich you ha$e some measure of control. (lso' by definition' 4!!ortunities 142 and
Threats 1T2 are considered to be e/ternal factors o$er &hich you ha$e essentially no
control.
(;OT Analysis is the most reno&ned tool for audit and analysis of the o$erall strategic
!osition of the business and its en$ironment. Its key !ur!ose is to identify the strategies
that &ill create a firm s!ecific business model that &ill best align an organi8ation0s
resources and ca!abilities to the re,uirements of the en$ironment in &hich the firm
o!erates. In other &ords' it is the foundation for e$aluating the internal !otential and
limitations and the !robableDlikely o!!ortunities and threats from the e/ternal
en$ironment. It $ie&s all !ositi$e and negati$e factors inside and outside the firm that
affect the success. ( consistent study of the en$ironment in &hich the firm o!erates hel!s
in forecastingD!redicting the changing trends and also hel!s in including them in the
decision9making !rocess of the organi8ation.
(n o$er$ie& of the four factors 1Strengths' )eaknesses' 4!!ortunities and Threats2 is
gi$en belo&9
1. (tengths! Strengths are the ,ualities that enable us to accom!lish the
organi8ation0s mission. These are the basis on &hich continued success can be
made and continuedDsustained. Strengths can be either tangible or intangible.
These are &hat you are &ell9$ersed in or &hat you ha$e e/!ertise in' the traits and
,ualities your em!loyees !ossess 1indi$idually and as a team2 and the distinct
features that gi$e your organi8ation its consistency. Strengths are the beneficial
as!ects of the organi8ation or the ca!abilities of an organi8ation' &hich includes
human com!etencies' !rocess ca!abilities' financial resources' !roducts and
ser$ices' customer good&ill and brand loyalty. E/am!les of organi8ational
strengths are huge financial resources' broad !roduct line' no debt' committed
em!loyees' etc.
-. ;ea3nesses! )eaknesses are the ,ualities that !re$ent us from accom!lishing our
mission and achie$ing our full !otential. These &eaknesses deteriorate influences
on the organi8ational success and gro&th. )eaknesses are the factors &hich do
not meet the standards &e feel they should meet. )eaknesses in an organi8ation
may be de!reciating machinery' insufficient research and de$elo!ment facilities'
narro& !roduct range' !oor decision9making' etc. )eaknesses are controllable.
They must be minimi8ed and eliminated. +or instance 9 to o$ercome obsolete
machinery' ne& machinery can be !urchased. 4ther e/am!les of organi8ational
&eaknesses are huge debts' high em!loyee turno$er' com!le/ decision making
!rocess' narro& !roduct range' large &astage of ra& materials' etc.
5. Oppotunities! 4!!ortunities are !resented by the en$ironment &ithin &hich our
organi8ation o!erates. These arise &hen an organi8ation can take benefit of
1=-
conditions in its en$ironment to !lan and e/ecute strategies that enable it to
become more !rofitable. 4rgani8ations can gain com!etiti$e ad$antage by
making use of o!!ortunities. 4rgani8ation should be careful and recogni8e the
o!!ortunities and gras! them &hene$er they arise. Selecting the targets that &ill
best ser$e the clients &hile getting desired results is a difficult task. 4!!ortunities
may arise from market' com!etition' industryDgo$ernment and technology.
Increasing demand for telecommunications accom!anied by deregulation is a
great o!!ortunity for ne& firms to enter telecom sector and com!ete &ith e/isting
firms for re$enue.
;. Theats! Threats arise &hen conditions in e/ternal en$ironment %eo!ardi8e the
reliability and !rofitability of the organi8ation0s business. They com!ound the
$ulnerability &hen they relate to the &eaknesses. Threats are uncontrollable.
)hen a threat comes' the stability and sur$i$al can be at stake. E/am!les of
threats are 9 unrest among em!loyees7 e$er changing technology7 increasing
com!etition leading to e/cess ca!acity' !rice &ars and reducing industry !rofits7
etc.
"dvantages of S>'T "nal!sis
S)4T (nalysis is instrumental in strategy formulation and selection. It is a strong tool'
but it in$ol$es a great sub%ecti$e element. It is best &hen used as a guide' and not as a
!rescri!tion. Successful businesses build on their strengths' correct their &eakness and
!rotect against internal &eaknesses and e/ternal threats. They also kee! a &atch on their
o$erall business en$ironment and recogni8e and e/!loit ne& o!!ortunities faster than its
com!etitors.
S)4T (nalysis hel!s in strategic !lanning in follo&ing manner9
a. It is a source of information for strategic !lanning.
b. Builds organi8ation0s strengths.
c. Re$erse its &eaknesses.
d. Ma/imi8e its res!onse to o!!ortunities.
e. 4$ercome organi8ation0s threats.
f. It hel!s in identifying core com!etencies of the firm.
g. It hel!s in setting of ob%ecti$es for strategic !lanning.
h. It hel!s in kno&ing !ast' !resent and future so that by using !ast and current data'
future !lans can be chalked out.
S)4T (nalysis !ro$ide information that hel!s in synchroni8ing the firm0s resources and
ca!abilities &ith the com!etiti$e en$ironment in &hich the firm o!erates.
(;OT ANA5?(I( F&AM';O&2
1=5
Limitations of S>'T "nal!sis
S)4T (nalysis is not free from its limitations. It may cause organi8ations to $ie&
circumstances as $ery sim!le because of &hich the organi8ations might o$erlook certain
key strategic contact &hich may occur. Moreo$er' categori8ing as!ects as strengths'
&eaknesses' o!!ortunities and threats might be $ery sub%ecti$e as there is great degree of
uncertainty in market. S)4T (nalysis does stress u!on the significance of these four
as!ects' but it does not tell ho& an organi8ation can identify these as!ects for itself.
There are certain limitations of S)4T (nalysis &hich are not in control of management.
These include9
a. .rice increase7
b. In!utsDra& materials7
c. ?o$ernment legislation7
d. Economic en$ironment7
e. Searching a ne& market for the !roduct &hich is not ha$ing o$erseas market due
to im!ort restrictions7 etc.
Internal limitations may include9
a. Insufficient research and de$elo!ment facilities7
b. +aulty !roducts due to !oor ,uality control7
c. .oor industrial relations7
d. ack of skilled and efficient labour7 etc
"opoate *lanning
1=;
The !rocess of dra&ing u! detailed action !lans to achie$e an organi8ationIs goals
and ob%ecti$es' taking into account the resources of the organi8ation and the
en$ironment &ithin &hich it o!erates. Cor!orate !lanning re!resents a formal'
structured a!!roach to achie$ing ob%ecti$es and to im!lementing the cor!orate
strategy of an organi8ation. It has traditionally been seen as the res!onsibility of
senior management. The use of the term became !redominant during the 1B>Cs
but has no& been largely su!erseded by the conce!t of strategic management.
Cor!orate !lanning often ends &ith a hastily !re!ared business !lan' !re!ared to
satisfy debt or e,uity funding sources. )hile a !lan !re!ared in such a &ay may
meet itIs immediate ob%ecti$es' it is near &orthless as a sound o!erations !lanning
tool. )hat is real cor!orate !lanning and ho& is it doneN
( cor!orate !lanning !rocess is described belo&. It is not the only $iable method
of cor!orate !lanning. But it does ser$e to outline the ste!s necessary to a good
cor!orate !lan. The key to success here' is not only the !lanning !rocess' but also
the successful im!lementation of the !lan. It must be su!!orted' monitored' and
modified &here necessary in order to be effecti$e.
;hat "opoate *lanning is NOT:
The creation and !roduction of a business !lan
( manufacturing or !roduction !lan
( !rogram ?antt chart or !rogram schedule
( budget created e/clusi$ely from the to!9do&n
( true cor!orate !lan includes all of the abo$e. But as the follo&ing !rocess e/am!le
illustrates' it is a se,uential !rocess' it is a com!rehensi$e !rocess and it is an ongoing
!rocess &hich needs to be managed.
;hat "opoate *lanning Is
$ase . 1 Strategic lanning
The Strategic !lanning !hase begins the cor!orate !lanning !rocess. This is the
!lanning !hase in &hich all management come to an agreement as to the mission
statement of the com!any. Then more detailed strategic !lans are created &hich deal
&ith market targets' !roduct de$elo!ment issues and com!etiti$e issues. Cor!orate
strengths and &eaknesses are discussed and !lans are made to shore u! &eaknesses
and to continue to strengthen com!etiti$e strengths. The customer recei$es a good bit
of focus and definition during this !hase as &ell.
4nce the cor!orate strategic !lan is com!lete' the de!artment strategic !lanning can
begin. Fe!artment management can no& &ork %ointly to !re!are their best
im!lementation of the cor!orate strategic !lan &ithin their o&n de!artments. This
!lanning !rocess can &ork $ery ra!idly into o!erations !lanning at the de!artment
le$el.
1==
$ase .. 1 'perations lanning
This !hase begins &ith management setting ob%ecti$es &ithin their indi$idual
de!artments &hich &ould ensure that the com!any can meet the strategic ob%ecti$es
set out for the year. Then' &ith the assistance of a financial modeler' a cor!orate
o!erations !lan is !re!ared &hich &ill integrate and orchestrate all of the resources
needed to meet the indi$idual de!artment ob%ecti$es.
$ase ... 1 0eedbac9 and Control
*o !lanning is e$er com!lete unless it !uts measurable standards into effect' and then
com!ares those standards against actual !erformance and acti$ely re$ie&s and
manages the $ariances accordingly. Standards measurement includes budget to actual
e/!enditure com!arisons on a monthly basis' milestone !erformance measurements'
market research results' ,uestioning and inter$ie&ing.
These !hases must all be done to some degree' and they must be com!leted in the
order gi$en to ma/imi8e their im!act to the com!any.
&egading Outside Assistance :
It is not al&ays necessary to contract &ith a cor!orate !lanning consultant to
accom!lish this !rocess. (lternati$ely' it can be $ery beneficial to em!loy outside
counsel in de$elo!ing your cor!orate !lan. It is most im!ortant that a !rocess is in
!lace and is being continually im!ro$ed u!on. 3o& you get the !rocess going and
ho& it is directed is entirely at the discretion of cor!orate management.
( good cor!orate !lanning consultant can !ro$ide a frame&ork or structure' o$ersight'
or management of !art or all of the !rocess. The com!rehensi$e modeling of the
cor!orate !lan is often best left to a consultant &ho has the soft&are tools to !re!are a
com!rehensi$e cor!orate o!erating !lan and model the financial im!act of the !lan for
the ne/t t&o years. 3a$ing the tools a$ailable &ill sa$e an enormous amount of time
for an internal financial analyst.
'#ey "ompany is 0iffeent:
Cor!orate !lanning must be a !rocess !ersonali8ed to the com!any. I ha$e ne$er been
able to recommend the same tem!late for e$ery client &ith &hom I ha$e &orked.
Cor!orate cultures and !ersonalities $ary considerably. Cor!orate strengths and
&eaknesses $ary considerably. (ccordingly' the !lanning !rocess and its
im!lementation must $ary as &ell.
In summary' a com!any &ithout a com!rehensi$e cor!orate !lan is &andering
aimlessly. It is im!erati$e that the com!any ha$e a !lan in !lace' !articularly if the
com!any is gro&ing or mo$ing onto another field of endea$or. Regarding the
im!lementation !rocess' *ike said it best in their ad$ertising cam!aign of some years
ago' LKust Fo ItL. FonIt &ait. Fo it no&. Stockholders &ant to see a management
team &ho has $ision and &ho kno&s ho& to im!lement and control this $ision.
1=>
.rocess of Cor!orate .lanning
*stablis$ing Mission and 'b?ectives
1. Cor!orate !lanning is an im!ortant and $ital business !rocess. Gnder this' the
organi8ationIs to! management sits do&n to formulate !olicies and strategies and
communicate them do&n&ard for im!lementation.
This !rocess of cor!orate !lanning entails !re!aring the com!anyIs mission' goals
and ob%ecti$es. (ny organi8ationIs mission statement clearly elucidates its !ur!ose of
e/istence. Through this' the organi8ation !ro%ects a cor!orate image to the customers
and !ro$ides direction for the em!loyees.
4nce the mission statement is !re!ared' the organi8ation ne/t chalks out its
ob%ecti$es. These are tangible and measurable targets the organi8ation is aiming to
achie$e. )ith these measurable targets' the organi8ation can monitor gro&th and
make necessary corrections.
Sit#ation "nal!sis
-. (fter the establishment of ob%ecti$es' the organi8ation de$ises a !lan to reach
those in accordance to its current situation. The changes in the en$ironment !ro$ide
ne&er &ays to reach them. The organi8ation conducts an en$ironmental scan to
assess a$ailable o!!ortunities and identify its limitations and ca!abilities.
T&o ty!es of en$ironmental analysis are usually conducted by organi8ations: e/ternal
and internal. E/ternal analysis com!rises macro and micro as!ects.
Macro en$ironment analysis consists of analy8ing !olitical' economic' social and
technological as!ects. Micro en$ironment analysis is the study of the industry in
&hich the firm o!erates or is considering o!erating in.
Internal analysis is analy8ing the organi8ationIs culture' structure' image' ca!acity'
resources and access of key staff. (lso the organi8ationIs !osition on the e/!erience
cur$e is calculated. The o!erational efficiency and ca!acity are measured. The firmIs
!atents' market share' finances and contracts are studied.
)ith the e/ternal and internal analysis' the organi8ation can conduct a S)4T
analysis. This is analy8ing the strengths and &eaknesses 1internal en$ironment
analysis2 and analy8ing the o!!ortunities and threats 1e/ternal en$ironment analysis2.
Strateg! 0orm#lation and .mplementation
5. (fter analysis of the firm and the en$ironment in &hich it o!erates' the strategies
are then formulated. Three generic strategies that are considered &hile formulating
strategy are cost leadershi!' differentiation and focus. 4nly one of the three should be
used for any !roduct.
1=@
Then the formulated strategy is im!lemented. It is then translated into elaborate
!olicies for e$eryone in the organi8ation to understand. The functional areas for
&hich !olicies are made are marketing' R6F 1research and de$elo!ment2'
!rocurement' !roduction' 3R 13uman Resources2 and IS 1Information Systems2.
Control
;. The im!lemented strategies are continuously considered and a!!raised.
Modifications are made from time to time to a$oid de$iations on the !lan. The
standards of !erformance are set' !erformance is monitored and necessary action is
taken to guarantee success.
'n#ionmental (canning
'n#ionmental scanning is a !rocess of gathering' analy8ing' and dis!ensing
information for tactical or strategic !ur!oses. The en$ironmental scanning !rocess entails
obtaining both factual and sub%ecti$e information on the business en$ironments in &hich
a com!any is o!erating or considering entering.
There are three &ays of scanning the business en$ironment:
(d9hoc scanning 9 Short term' infre,uent e/aminations usually initiated by a
crisis
Regular scanning 9 Studies done on a regular schedule 1e.g. once a year2
Continuous scanning 1also called continuous learning2 9 continuous structured
data collection and !rocessing on a broad range of en$ironmental factors
Most commentators feel that in todayIs turbulent business en$ironment the best scanning
method a$ailable is continuous scanning because this allo&s the firm to act ,uickly' take
ad$antage of o!!ortunities before com!etitors do and res!ond to en$ironmental threats
before significant damage is done.
Macro en$ironment
En$ironmental scanning usually refers %ust to the macro en$ironment' but it can also
include industry' com!etitor analysis' marketing research 1consumer analysis2' ne&
!roduct de$elo!ment 1!roduct inno$ations2 or the com!anyIs internal en$ironment.
Macro en$ironmental scanning in$ol$es analysing:
6conomy
?F. !er ca!ita
economic gro&th
unem!loyment\\ rate
inflation\\ rate
consumer and in$estor confidence
1=A
in$entory le$els
currency e/change rates
merchandise trade balance
financial and !olitical health of trading !artners
balance of !ayments
future trends
Government
!olitical climate 9 amount of go$ernment acti$ity
!olitical stability and risk
go$ernment debt
budget deficit or sur!lus
cor!orate and !ersonal ta/ rates
!ayroll ta/es
im!ort tariffs and ,uotas
e/!ort restrictions
restrictions on international financial flo&s
2egal
minimum &age la&s
en$ironmental !rotection la&s
&orker safety la&s
union la&s
co!yright and !atent la&s
anti9 mono!oly la&s
Sunday closing la&s
munici!al licences
la&s that fa$our business in$estment
echnology
efficiency of infrastructure' including: roads' !orts' air!orts' rolling stock'
hos!itals' education' healthcare' communication' etc.
industrial !roducti$ity
ne& manufacturing !rocesses
ne& !roducts and ser$ices of com!etitors
ne& !roducts and ser$ices of su!!ly chain !artners
any ne& technology that could im!act the com!any
cost and accessibility of electrical !o&er
6cology
ecological concerns that affect the firms !roduction !rocesses
ecological concerns that affect customersI buying habits
ecological concerns that affect customersI !erce!tion of the com!any or !roduct
1=B
Socio'cultural
demogra!hic factors such as:
o !o!ulation si8e and distribution
o age distribution
o education le$els
o income le$els
o ethnic origins
o religious affiliations
attitudes to&ards:
o materialism' ca!italism' free enter!rise
o indi$idualism' role of family' role of go$ernment' collecti$ism
o role of church and religion
o consumerism
o en$ironmentalism
o im!ortance of &ork' !ride of accom!lishment
cultural structures including:
o diet and nutrition
o housing conditions
Potential suppliers
abour su!!ly
o ,uantity of labour a$ailable
o ,uality of labour a$ailable
o stability of labour su!!ly
o &age e/!ectations
o em!loyee turn9o$er rate
o strikes and labour relations
o educational facilities
Material su!!liers
o ,uality' ,uantity' !rice' and stability of material in!uts
o deli$ery delays
o !ro/imity of bulky or hea$y material in!uts
o le$el of com!etition among su!!liers
Ser$ice !ro$iders
o ,uantity' ,uality' !rice' and stability of ser$ice facilitators
o s!ecial re,uirements
Sta.eholders
obbyists
Shareholders
Em!loyees
.artners
Scanning these macro en$ironmental $ariables for threats and o!!ortunities re,uires that
each issue be rated on t&o dimensions. It must be rated on its !otential im!act on the
1>C
com!any' and rated on its likeliness of occurrence. Multi!lying the !otential im!act
!arameter by the likeliness of occurrence !arameter gi$es a good indication of its
im!ortance to the firm.
1alue chain analysis
Halue Chain (nalysis describes the acti$ities that take !lace in a business and relates
them to an analysis of the com!etiti$e strength of the business. Influential &ork by
Michael .orter suggested that the acti$ities of a business could be grou!ed under t&o
headings:
112 *imay Acti#ities 9 those that are directly concerned &ith creating and deli$ering a
!roduct 1e.g. com!onent assembly27 and
1-2 (uppot Acti#ities' &hich &hilst they are not directly in$ol$ed in !roduction' may
increase effecti$eness or efficiency 1e.g. human resource management2. It is rare for a
business to undertake all !rimary and su!!ort acti$ities.
Halue Chain (nalysis is one &ay of identifying &hich acti$ities are best undertaken by a
business and &hich are best !ro$ided by others 1Lout sourcedL2.
5in3ing 1alue "hain Analysis to "ompetiti#e Ad#antage
)hat acti$ities a business undertakes is directly linked to achie$ing com!etiti$e
ad$antage. +or e/am!le' a business &hich &ishes to out!erform its com!etitors through
diffeentiating itself through higher ,uality &ill ha$e to !erform its $alue chain acti$ities
better than the o!!osition. By contrast' a strategy based on seeking cost leadeship &ill
re,uire a reduction in the costs associated &ith the $alue chain acti$ities' or a reduction in
the total amount of resources used.
*imay Acti#ities
.rimary $alue chain acti$ities include:
*imay
Acti#ity
0esciption
.nbo#nd
logistics
(ll those acti$ities concerned &ith recei$ing and storing e/ternally
sourced materials
'perations The manufacture of !roducts and ser$ices 9 the &ay in &hich resource
inputs 1e.g. materials2 are con$erted to outputs 1e.g. !roducts2
'#tbo#nd
logistics
(ll those acti$ities associated &ith getting finished goods and ser$ices to
buyers
1>1
Mar9eting and
sales
Essentially an information acti$ity 9 informing buyers and consumers
about !roducts and ser$ices 1benefits' use' !rice etc.2
Service (ll those acti$ities associated &ith maintaining !roduct !erformance
after the !roduct has been sold

(uppot Acti#ities
Su!!ort acti$ities include:
(econday
Acti#ity
0esciption
roc#rement This concerns ho& resources are ac,uired for a business 1e.g. sourcing
and negotiating &ith materials su!!liers2
;#man
&eso#rce
Management
Those acti$ities concerned &ith recruiting' de$elo!ing' moti$ating and
re&arding the &orkforce of a business
Tec$nolog!
Development
(cti$ities concerned &ith managing information !rocessing and the
de$elo!ment and !rotection of Lkno&ledgeL in a business
.nfrastr#ct#re Concerned &ith a &ide range of su!!ort systems and functions such as
finance' !lanning' ,uality control and general senior management

(teps in 1alue "hain Analysis
Halue chain analysis can be broken do&n into a three se,uential ste!s:
112 Break do&n a marketDorganisation into its key acti$ities under each of the ma%or
headings in the model7
1-2 (ssess the !otential for adding $alue $ia cost ad$antage or differentiation' or identify
current acti$ities &here a business a!!ears to be at a com!etiti$e disad$antage7
152 Fetermine strategies built around focusing on acti$ities &here com!etiti$e ad$antage
can be sustained

1>-

1>5
UNIT 1III
1>;
Basic concepts of MI(

The MIS is an arrangement of data !rocessing and information systems in an orderly
manner to su!!ort the management in achie$ing the business ob%ecti$es. The MIS
boundaries cross the limits of the organi8ation and dra& the data from the source e/ternal
to the organi8ation. MIS follo&s a generali8ed model of a system as sti!ulated into the
theory and !erforms on the !rinci!le of feedback and control. It &orks on the !rinci!le of
control by e/ce!tion.

MIS is designed to !ro$ide the information &hich is e/ce!tional in nature form the !oint
of $ie& of business. The e/ce!tions could be abnormal e$ents' sur!rising de$elo!ments'
shocking ne&s' or something that &as not consistent &ith the e/ce!tions. The MIS must
catch all such !oints and re!orts then to the concerned management. It must' therefore'
recogni8e all such !ossible !oints and !ro$ide a measure for com!arison &ith the actual
!erformance. Gnless such a feature is included' the MIS &ill be su!!lying merely data
and not information.

The MIS' initially' concentrates on the ,uality of in!ut satisfying the !arameters' $i8.'
im!artiality' $alidity' reliability' consistency and age. ( large amount of system effort is
s!ent in this area to ensure the ,uality of the in!ut.

The MIS !ro$ides a system for data !rocessing and data analysis. It uses a number of
a!!lications and business models' o!erational research models and a!!lications and
business models' o!erational research models and a!!lication !ackages to !roduce the
information. The MIS has a !ro$ision to dis!lay the information and also !rint it in a
re!ort format. It also !ro$ides a facility to store the intermediate results' &hich are used
in a number of other systems. The MIS is a combination of the deterministic and the
closed systems' and the !robabilistic and the o!en systems.

By nature' the MIS is an o!en system interfacing continuously &ith the internal and the
e/ternal en$ironment and is self organi8ing to meet the e$er increasing and changing
information needs of the organi8ation.
'nd use computing
End Gser Com!uting 1EGC2 is a grou! of a!!roaches to com!uting that aim at better
integrating end users into the com!uting en$ironment or that attem!t to reali8e the
!otential for high9end com!uting to !erform in a trust&orthy manner in !roblem sol$ing
of the highest order.
The 'U" &anges section describes t&o ty!es of a!!roaches that are at different ends of a
s!ectrum. ( sim!le e/am!le of these t&o e/tremes can use the SQ conte/t.
1>=
The first a!!roach &ould ha$e canned ,ueries and re!orts that for the most !art &ould be
in$oked &ith buttons andDor sim!le commands. In this a!!roach' a com!uting grou!
&ould kee! these canned routines u! to date through the normal
de$elo!mentDmaintenance methods.
+or the second a!!roach' SQ administration &ould allo& for end9user in$ol$ement at
se$eral le$els including administration itself. Gsers &ould also define ,ueries though the
su!!orting mechanism may be constrained in order to reduce the likelihood of run9a&ay
conditions that &ould ha$e negati$e influence on other users. )e see this already in some
business intelligence methods &hich build SQ' including ne& databases' on the fly.
Rules might hel! dam!en effects that can occur &ith the o!en9ended en$ironment. The
!rocess &ould e/!ect' and accommodate' the !ossibility of long run times' inconclusi$e
results and such. These ty!es of unkno&ns are undecidable Ibefore the factI7 the need to
do Iafter the factI e$aluation of results is a !rime factor of many higher9order
com!utational situations but cannot 1&ill not2 be tolerated by an end user in the normal
!roduction mode.
Mateials e)uiements planning GM&*H
Introduction
Materials re,uirements !lanning' referred to by the initials MR.' is a techni,ue &hich
assists a com!any in the detailed !lanning of its !roduction. Recall here that the master
!roduction schedule sets out an aggregate !lan for !roduction. MR. translates that
aggregate !lan into an e/tremely detailed !lan
'+ample
The !roduction manager at (ldershot Manufacturing &ishes to de$elo! a materials
re,uirements !lan for !roducing chairs o$er an A &eek !eriod. She estimates that the lead
time bet&een releasing an order to the sho! floor and !roducing a finished chair is -
&eeks. The com!any currently has ->C chairs in stock and no safety stock 1safety stock is
stock held in reser$e to meet customer demand if necessary2. The forecast customer
demand is for 1=C chairs in &eek 1' @C in &eek 5' 1@= in &eek =' BC in &eek @ and >C in
&eek A.
It hel!s to understand &hat is going on if &e &rite out' o$er time' the demand for chairs
as belo&.
)eek 1 - 5 ; = > @ A
Femand 1=C C @C C 1@= C BC >C
4n9hand at end of &eek 11C
4rder N N N N N N N N
3ere &e ha$e sho&n the demand in each of the eight &eeks' initially &e ha$e ->C chairs
a$ailable so if these are used to meet the demand of 1=C in &eek 1 &e ha$e ->C91=C Z
11C left on9hand 1i.e. in stock2 at the end of the &eek. .lainly &e &ill need to order some
1>>
more chairs in order to meet all of the forecast future demand o$er the A &eek !lanning
!eriod.
Conce!tually therefore &e face t&o related decisions about ordering:
timing 9 &hen to order
,uantity 9 ho& much to order
Pou can think of asking yourself the ,uestion' in each and e$ery !eriod' s$o#ld . order
in t$is period and if so $ow m#c$@
+or the moment su!!ose &e order nothing in &eek 1' nothing in &eek -' etc. The
situation by the time &e reach the end of &eek = &ill be as belo&:
)eek 1 - 5 ; = > @ A
4n9hand at end of &eek 11C 11C ;C ;C 915=
If &e are to a$oid a stockout in &eek = &e !lainly need to order at least 15= chairs. *o&
&e kno& that the lead time bet&een ordering a chair and recei$ing it is - &eeks.
Therefore to a$oid a stockout in &eek = &e must ha$e ordered 15= chairs either in &eek
5' or in any &eek before &eek 5. In other &ords ordering
15= chairs in &eek 1' or
15= chairs in &eek -' or
15= chairs in &eek 5'
&ould each ensure that &e ha$e sufficient chairs a$ailable to meet forecast demand in
&eek =.
If &e order these chairs earlier than &eek 5 &e &ill be carrying e/tra in$entory 1stock2
for a number of !eriods and' as &e kno&' carrying stock costs money. It &ould seem
a!!ro!riate therefore to order 15= chairs in &eek 5. This &ill gi$e:
)eek 1 - 5 ; = > @ A
4n9hand at end of &eek 11C 11C ;C ;C C
4rder C C 15= N N N N N
Continuing on in the same manner &e get:
)eek 1 - 5 ; = > @ A
1>@
4n9hand at end of &eek 11C 11C ;C ;C C C 9BC
4rder C C 15= N N N N N
Re,uiring an order of BC chairs in &eek = and gi$ing:
)eek 1 - 5 ; = > @ A
4n9hand at end of &eek 11C 11C ;C ;C C C C
4rder C C 15= C BC N N N
Continuing aga in &e get:
)eek 1 - 5 ; = > @ A
4n9hand at end of &eek 11C 11C ;C ;C C C C 9>C
4rder C C 15= C BC N N N
Re,uiring an order of >C chairs in &eek > and gi$ing:
)eek 1 - 5 ; = > @ A
4n9hand at end of &eek 11C 11C ;C ;C C C C C
4rder C C 15= C BC >C N N
Fecisions
et us be clear about &hat &e ha$e done here &ith res!ect to our t&o decisions of:
timing 9 &hen to order
,uantity 9 ho& much to order
)ith res!ect to the timing decision &e al&ays ordered as late as possible' but ne$er
!lanned a stockout. This is a dri$ing !rinci!le in MR.' ne$er order before you need to'
ne$er !lan to stockout.
)ith res!ect to the ,uantity decision &e al&ays ordered as little as possible' i.e. %ust
enough to a$oid a stockout. This is kno&n as the lot for lot rule' sometimes called + or
; or rule. This ,uantity decision rule can be $aried in MR. and some other rules
are:
fi/ed order ,uantity rule 1sometimes called +4Q or +42 9 the ,uantity ordered is
an integer multi!le of the same fi/ed amount each time an order is made
fi/ed !eriod re,uirements rule 1sometimes called +.R2 9 the ,uantity ordered
should be enough for a fi/ed number of !eriods
1>A
To illustrate the +.R rule su!!ose that &e decide to order enough for 5 &eeks &hen &e
make an order. The situation at the end of &eek = is 1from abo$e2 re!eated belo&:
)eek 1 - 5 ; = > @ A
4n9hand at end of &eek 11C 11C ;C ;C 915=
To decide the +.R order ,uantity &e continue this table until &eek @. The ,uantity
ordered must then be %ust sufficient to co$er &eeks = to @ 1i.e. to co$er 5 &eeks as
re,uired for a 5 &eek +.R2. This is done belo&:
)eek 1 - 5 ; = > @ A
4n9hand at end of &eek 11C 11C ;C ;C 915= 915= 9--=
3ence the 5 &eek +.R order is --= units in &eek 5' gi$ing the situation belo&:
)eek 1 - 5 ; = > @ A
4n9hand at end of &eek 11C 11C ;C ;C BC BC C 9>C
4rder C C --= N N N N N
.lainly &e need some order in &eek > to co$er the stockout in &eek A. (s &e are at the
end of the !lanning !eriod &e usually order %ust sufficient 1i.e. re$ert to the + rule2 and
order >C in &eek > to gi$e:
)eek 1 - 5 ; = > @ A
4n9hand at end of &eek 11C 11C ;C ;C BC BC C C
4rder C C --= C C >C N N
*ote here that &ith the +.R rule a!!lied to co$er ! !eriods you make 1at most2 one order
e$ery ! !eriods 1ignoring any order necessary at the end of the !lanning !eriod2.
Choice of lot si8e rule
3o& then are &e to choose bet&een different lot si8e rules 1+' +.R and +4Q2. )e
could' of course' redo our calculations &ith different lot si8e rules 1e.g. a +4Q ordering
multi!les of 1CC each time2. )e &ould see their different effects but &ould still ha$e to
choose bet&een them.
1>B
/IT G/ust in TimeH
Kust9in9time 1KIT2 and MR. are t&o different systems for controlling !roduction. It is
often said that:
MR. Z a I.ushI system
KIT Z a I.ullI system
Really this is an incorrect analysis 9 MR. is a system based on fulfilling predicted usage
in a set time !eriod. This can be seen in the e/am!le considered abo$e. )e ne$er stocked
out.
KIT is a system based on actual usage 9 !arts of the !roduction system are LlinkedL
together $ia the use of EanbanIs as the system runs.
It is this linkage that is the distinguishing difference bet&een MR. and KIT 9 KIT is a
dynamic linked system' MR. is not. This im!lies that KIT can be used &hen lead times
are short' MR. is more a!!ro!riate &hen lead times are long.
In addition MR. is much better suited for com!uterised im!lementation then KIT.
Consider' for e/am!le' the large number of finished !roducts 1;'=CC2 and ra& materials
115'=CC2 mentioned in the ICI e/am!le considered abo$e. Fo you relish the idea of
controlling that factory $ia a KIT system' or &ould you !refer a com!uterised MR.
systemN
Total Auality Management GTAMH
TQM is a set of management !ractices throughout the organi8ation' geared to ensure the
organi8ation consistently meets or e/ceeds customer re,uirements. TQM !laces strong
focus on !rocess measurement and controls as means of continuous im!ro$ement.
Basic Principles of Total Qality Manage!ent "TQM#
The basic !rinci!les for the Total Quality Management 1TQM2 !hiloso!hy of doing
business are to satisfy the customer' satisfy the su!!lier' and continuously im!ro$e the
business !rocesses.
Questions you may ha$e include:
3o& do you satisfy the customerN
)hy should you satisfy the su!!lierN
)hat is continuous im!ro$ementN
1@C
@. /atisfy the customer
The first and ma%or TQM !rinci!le is to satisfy the customer99the !erson &ho !ays for the
!roduct or ser$ice. Customers &ant to get their moneyIs &orth from a !roduct or ser$ice
they !urchase.
Gsers
If the user of the !roduct is different than the !urchaser' then both the user and customer
must be satisfied' although the !erson &ho !ays gets !riority.
Com!any !hiloso!hy
( com!any that seeks to satisfy the customer by !ro$iding them $alue for &hat they buy
and the ,uality they e/!ect &ill get more re!eat business' referral business' and reduced
com!laints and ser$ice e/!enses.
Some to! com!anies not only !ro$ide ,uality !roducts' but they also gi$e e/tra ser$ice to
make their customers feel im!ortant and $alued.
Internal customers
)ithin a com!any' a &orker !ro$ides a !roduct or ser$ice to his or her su!er$isors. If the
!erson has any influence on the &ages the &orker recei$es' that !erson can be thought of
as an internal customer. ( &orker should ha$e the mind9set of satisfying internal
customers in order to kee! his or her %ob and to get a raise or !romotion.
Chain of customers
4ften in a com!any' there is a chain of customers' 9each im!ro$ing a !roduct and !assing
it along until it is finally sold to the e/ternal customer. Each &orker must not only seek to
satisfy the immediate internal customer' but he or she must look u! the chain to try to
satisfy the ultimate customer.
+. /atisfy the supplier
( second TQM !rinci!le is to satisfy the su!!lier' &hich is the !erson or organi8ation
from &hom you are !urchasing goods or ser$ices.
E/ternal su!!liers
( com!any must look to satisfy their e/ternal su!!liers by !ro$iding them &ith clear
instructions and re,uirements and then !aying them fairly and on time.
1@1
It is only in the com!anyIs best interest that its su!!liers !ro$ide it &ith ,uality goods or
ser$ices' if the com!any ho!es to !ro$ide ,uality goods or ser$ices to its e/ternal
customers.
Internal su!!liers
( su!er$isor must try to kee! his or her &orkers ha!!y and !roducti$e by !ro$iding good
task instructions' the tools they need to do their %ob and good &orking conditions. The
su!er$isor must also re&ard the &orkers &ith !raise and good !ay.
?et better &ork
The reason to do this is to get more !roducti$ity out of the &orkers' as &ell as to kee! the
good &orkers. (n effecti$e su!er$isor &ith a good team of &orkers &ill certainly satisfy
his or her internal customers.
Em!o&er &orkers
4ne area of satisfying the internal su!!ler is by em!o&ering the &orkers. This means to
allo& them to make decisions on things that they can control. This not only takes the
burden off the su!er$isor' but it also moti$ates these internal su!!liers to do better &ork.
3. Contin#o#s improvement
The third !rinci!le of TQM is continuous im!ro$ement. Pou can ne$er be satisfied &ith
the method used' because there al&ays can be im!ro$ements. Certainly' the com!etition
is im!ro$ing' so it is $ery necessary to stri$e to kee! ahead of the game.
)orking smarter' not harder
Some com!anies ha$e tried to im!ro$e by making em!loyees &ork harder. This may be
counter9!roducti$e' es!ecially if the !rocess itself is fla&ed. +or e/am!le' trying to
increase &orker out!ut on a defecti$e machine may result in more defecti$e !arts.
E/amining the source of !roblems and delays and then im!ro$ing them is &hat is needed.
4ften the !rocess has bottlenecks that are the real cause of the !roblem. These must be
remo$ed.
)orker suggestions
)orkers are often a source of continuous im!ro$ements. They can !ro$ide suggestions
on ho& to im!ro$e a !rocess and eliminate &aste or unnecessary &ork.
1@-
Quality methods
There are also many ,uality methods' such as %ust9in9time !roduction' $ariability
reduction' and !oka9yoke that can im!ro$e !rocesses and reduce &aste.
S#mmar!
The !rinci!les of Total Quality Management are to seek to satisfy the e/ternal customer
&ith ,uality goods and ser$ices' as &ell as your com!any internal customers7 to satisfy
your e/ternal and internal su!!liers7 and to continuously im!ro$e !rocesses by &orking
smarter and using s!ecial ,uality methods.
Si$ Sigma
Si/ Sigma at many organi8ations sim!ly means a measure of ,uality that stri$es for near
!erfection. Si/ Sigma is a disci!lined' data9dri$en a!!roach and methodology for
eliminating defects 1dri$ing to&ards si/ standard de$iations bet&een the mean and the
nearest s!ecification limit2 in any !rocess 99 from manufacturing to transactional and
from !roduct to ser$ice.
The statistical re!resentation of Si/ Sigma describes ,uantitati$ely ho& a !rocess is
!erforming. To achie$e Si/ Sigma' a !rocess must not !roduce more than 5.; defects !er
million o!!ortunities. ( Si/ Sigma defect is defined as anything outside of customer
s!ecifications. ( Si/ Sigma o!!ortunity is then the total ,uantity of chances for a defect.
.rocess sigma can easily be calculated using a Si/ Sigma calculator.
The fundamental ob%ecti$e of the Si/ Sigma methodology is the im!lementation of a
measurement9based strategy that focuses on !rocess im!ro$ement and $ariation reduction
through the a!!lication of Si/ Sigma im!ro$ement !ro%ects. This is accom!lished
through the use of t&o Si/ Sigma sub9methodologies: FM(IC and FM(FH. The Si/
Sigma FM(IC !rocess 1define' measure' analy8e' im!ro$e' control2 is an im!ro$ement
system for e/isting !rocesses falling belo& s!ecification and looking for incremental
im!ro$ement. The Si/ Sigma FM(FH !rocess 1define' measure' analy8e' design' $erify2
is an im!ro$ement system used to de$elo! ne& !rocesses or !roducts at Si/ Sigma
,uality le$els. It can also be em!loyed if a current !rocess re,uires more than %ust
incremental im!ro$ement. Both Si/ Sigma !rocesses are e/ecuted by Si/ Sigma ?reen
Belts and Si/ Sigma Black Belts' and are o$erseen by Si/ Sigm Master Black Belts.
(ccording to the Si/ Sigma (cademy' Black Belts sa$e com!anies a!!ro/imately
X-5C'CCC !er !ro%ect and can com!lete four to > !ro%ects !er year. ?eneral Electric' one
of the most successful com!anies im!lementing Si/ Sigma' has estimated benefits on the
order of X1C billion during the first fi$e years of im!lementation. ?E first began Si/
Sigma in 1BB= after Motorola and (llied Signal bla8ed the Si/ Sigma trail. Since then'
thousands of com!anies around the &orld ha$e disco$ered the far reaching benefits of
Si/ Sigma.
1@5
"apability Matuity Model "MM
The Ca!ability Maturity Model is an organi8ational model that describes = e$olutionary stages 1le$els2
in &hich an organi8ation manages its !rocesses.
"MM describes = e$olutionary stages in &hich an organi8ation manages its !rocesses. The thought
behind the Ca!ability Maturity Model' originally de$elo!ed for soft&are de$elo!ment' is that an
organi8ation should be able to absorb and carry its soft&are a!!lications. The model also !ro$ides s!ecific
ste!s and acti$ities to get from one le$el to the ne/t.
The = stages of the Ca!ability Maturity Model are:
1. Initial 1!rocesses are ad9hoc' chaotic' or actually fe& !rocesses are defined2
-. &epeatable 1basic !rocesses are established and there is a le$el of disci!line to stick to these !rocesses2
5. 0efined 1all !rocesses are defined' documented' standardi8ed and integrated into each other2
;. Managed 1!rocesses are measured by collecting detailed data on the !rocesses and their ,uality2
=. Optimi%ing 1continuous !rocess im!ro$ement is ado!ted and in !lace by ,uantitati$e feedback and
from !iloting ne& ideas ands technologies2

The Ca!ability Maturity Model is useful not only for soft&are de$elo!ment' but also for describing
e$olutionary le$els of organi8ations in general and in order to describe the le$el of Halue Based
Management that an organi8ation has reali8ed or &ants to aim for.
(upply chain management G("MH
(upply chain management G("MH is the management of a net&ork of interconnected
businesses in$ol$ed in the ultimate !ro$ision of !roduct and ser$ice !ackages re,uired by
end customers 13arland' 1BB>2. Su!!ly Chain Management s!ans all mo$ement and
storage of ra& materials' &ork9in9!rocess in$entory' and finished goods from !oint of
origin to !oint of consum!tion 1su!!ly chain2.
(nother definition is !ro$ided by the (.ICS Fictionary &hen it defines SCM as the
Ldesign' !lanning' e/ecution' control' and monitoring of su!!ly chain acti$ities &ith the
ob%ecti$e of creating net $alue' building a com!etiti$e infrastructure' le$eraging
&orld&ide logistics' synchroni8ing su!!ly &ith demand' and measuring !erformance
globally.L
1@;
(s defined by the &orld famous' Institute of Su!!ly Management Inc.' GS(' Su!!ly
Chain Management is the design and management of seamless' $alue added !rocess
across organi8ational boundaries to meet the real needs of the end customer.
Su!!ly Chain Management is the !rocess of !lanning' im!lementing and controlling the
o!erations of the su!!ly chain &ith the !ur!ose of satisfying the customerIs re,uirement
as efficiently as !ossible. Su!!ly Chain s!ans all mo$ement and storage of ra& materials'
)ork9in9!rocess' in$entory and finished goods from the !oint of origin to the !oint of
consum!tion.
he de$elo!ment and integration of !eo!le and technological resources are critical to
successful supply chain integation7 (s the cor!orations stri$e to focus on core
com!etencies and become more fle/ible' they ha$e reduced their o&nershi! of ra&
materials sources. These functions are increasingly being outsourced to other
cor!orations that can !erform the acti$ities better or more cost effecti$ely. The effect has
been to increase the number of com!anies in$ol$ed in satisfying consumer demand &hile
reducing the management control on daily logistics o!erations. ess control and more
su!!ly chain !artners led to the creation of Su!!ly Chain management conce!ts. The
!ur!ose of Su!!ly chain management is to im!ro$e trust and collaboration among
su!!ly chain !artners thus im!ro$ing in$entory $isibility and im!ro$ing in$entory
$elocity.
?oals an
d 4b%ecti$es
1@=
'&*
ER.' &hich is an abbre$iation for Enter!rise Resource .lanning' is !rinci!ally an
integration of business management !ractices and modern technology. Information
Technology 1IT2 integrates &ith the core business !rocesses of a cor!orate house to
streamline and accom!lish s!ecific business ob%ecti$es. Conse,uently' ER. is an
amalgamation of three most im!ortant com!onents7 Business Management .ractices'
Information Technology and S!ecific Business 4b%ecti$es.
In sim!ler &ords' an ER. is a massi$e soft&are architecture that su!!orts the streaming
and distribution of geogra!hically scattered enter!rise &ide information across all the
functional units of a business house. It !ro$ides the business management e/ecuti$es
&ith a com!rehensi$e o$er$ie& of the com!lete business e/ecution &hich in turn
influences their decisions in a !roducti$e &ay. (t the core of ER. is a &ell managed
centrali8ed data re!ository &hich ac,uires information from and su!!ly information into
the fragmented a!!lications o!erating on a uni$ersal com!uting !latform.
Information in large business organi8ations is accumulated on $arious ser$ers across
many functional units and sometimes se!arated by geogra!hical boundaries. Such
information islands can !ossibly ser$ice indi$idual organi8ational units but fail to
enhance enter!rise &ide !erformance' s!eed and com!etence.
The term ER. originally referred to the &ay a large organi8ation !lanned to use its
organi8ational &ide resources. +ormerly' ER. systems &ere used in larger and more
industrial ty!es of com!anies. 3o&e$er' the use of ER. has changed radically o$er a
!eriod of fe& years. Today the term can be a!!lied to any ty!e of com!any' o!erating in
any kind of field and of any magnitude.
The Ideal '&* (ystem
(n ER. system &ould ,ualify as the best model for enter!rise &ide solution architecture'
if it chains all the belo& organi8ational !rocesses together &ith a central database
re!ository and a fused com!uting !latform.
Manufacturing
Engineering' resource 6 ca!acity !lanning' material !lanning' &orkflo&
management' sho! floor management' ,uality control' bills of material'
manufacturing !rocess' etc.
+inancials
(ccounts !ayable' accounts recei$able' fi/ed assets' general ledger' cash
management' and billing 1contractDser$ice2
3uman Resources
Recruitment' benefits' com!ensations' training' !ayroll' time and attendance'
labour rules' !eo!le management
Su!!ly Chain Management
In$entory management' su!!ly chain !lanning' su!!lier scheduling' claim
1@>
!rocessing' sales order administration' !rocurement !lanning' trans!ortation and
distribution
.ro%ects
Costing' billing' acti$ity management' time and e/!ense
Customer Relationshi! Management
Sales and marketing' ser$ice' commissions' customer contact and after sales
su!!ort
Fata )arehouse
?enerally' this is an information storehouse that can be accessed by organi8ations'
customers' su!!liers and em!loyees for their learning and orientation
Performance management
!erformance management includes acti$ities to ensure that goals are consistently being
met in an effecti$e and efficient manner. .erformance management can focus on
!erformance of the organi8ation' a de!artment' !rocesses to build a !roduct or ser$ice'
em!loyees' etc. Information in this to!ic &ill gi$e you some sense of the o$erall acti$ities
in$ol$ed in !erformance management. Then you might enhance your understanding by
re$ie&ing closely related library to!ics referenced from the sidebar.
(enefits
Managing em!loyee or system !erformance facilitates the effecti$e deli$ery of strategic
and o!erational goals. There is a clear and immediate correlation bet&een using
!erformance management !rograms or soft&are and im!ro$ed business and
organi8ational results.
+or em!loyee !erformance management' using integrated soft&are' rather than a
s!readsheet based recording system' may deli$er a significant return on in$estment
through a range of direct and indirect sales benefits' o!erational efficiency benefits and
by unlocking the latent !otential in e$ery em!loyees &ork day i.e. the time they s!end
not actually doing their %ob. Benefits may include :
Firect financial gains
?ro& sales
Reduce costs
Sto! !ro%ect o$erruns
(ligns the organi8ation directly behind the CE4Is goals
Fecreases the time it takes to create strategic or o!erational changes by
communicating the changes through a ne& set of goals
Moti$ated &orkforce
4!timi8es incenti$e !lans to s!ecific goals for o$er achie$ement' not %ust business
as usual
1@@
Im!ro$es em!loyee engagement because e$eryone understands ho& they are
directly contributing to the organisations high le$el goals
Create trans!arency in achie$ement of goals
3igh confidence in bonus !ayment !rocess
.rofessional de$elo!ment !rograms are better aligned directly to achie$ing
business le$al goals
Im!ro$ed management control
+le/ible' res!onsi$e to management needs
Fis!lays data relationshi!s
3el!s audit D com!ly &ith legislati$e re,uirements
Sim!lifies communication of strategic goals scenario !lanning
.ro$ides &ell documented and communicated !rocess documentation
B*O
1@A
Bsiness Process $tsorcing
Business !rocess outsourcing 1B.42 is the act of gi$ing a third9!arty the res!onsibility of
running &hat &ould other&ise be an internal system or ser$ice. +or instance' an
insurance com!any might outsource their claims !rocessing !rogram or a bank might
outsource their loan !rocessing system. 4ther common e/am!les of B.4 are call centres
and !ayroll outsourcing.
Ty!ically' com!anies that are looking at business !rocess outsourcing are ho!ing to
achie$e cost sa$ings by handing the &ork to a third9!arty that can take ad$antage of
economies of scale by doing the same &ork for many com!anies. 4r !erha!s the cost
sa$ings can be achie$ed because labor costs are lo&er due to different costs of li$ing in
different countries.
In e/change for the !otential cost sa$ings' the com!any in ,uestion must relin,uish
control o$er an as!ect of their business &hich e/!lains &hy business !rocess outsourcing
is often reser$ed for non9critical' non9core ty!e of &ork.
Business *ocess eengineeing
Business !rocess reengineering 1B.R2 is the analysis and redesign of &orkflo& &ithin
and bet&een enter!rises. B.R reached its heyday in the early 1BBCIs &hen Michael
3ammer and Kames Cham!y !ublished their best9selling book' LReengineering the
Cor!orationL. The authors !romoted the idea that sometimes radical redesign and
reorgani8ation of an enter!rise 1&i!ing the slate clean2 &as necessary to lo&er costs and
increase ,uality of ser$ice and that information technology &as the key enabler for that
radical change. 3ammer and Cham!y felt that the design of &orkflo& in most large
cor!orations &as based on assum!tions about technology' !eo!le' and organi8ational
goals that &ere no longer $alid. They suggested se$en !rinci!les of reengineering to
streamline the &ork !rocess and thereby achie$e significant le$els of im!ro$ement in
,uality' time management' and cost:
1. 4rgani8e around outcomes' not tasks.
-. Identify all the !rocesses in an organi8ation and !rioriti8e them in order of redesign
urgency.
5. Integrate information !rocessing &ork into the real &ork that !roduces the information.
;. Treat geogra!hically dis!ersed resources as though they &ere centrali8ed.
=. ink !arallel acti$ities in the &orkflo& instead of %ust integrating their results.
>. .ut the decision !oint &here the &ork is !erformed' and build control into the !rocess.
@. Ca!ture information once and at the source.
1@B
-enchmar.
a benchma3 is the act of running a com!uter !rogram a set of !rograms' or other
o!erations' in order to assess the relati$e pefomance of an ob%ect' normally by running
a number of standard tests and trials against it. The term IbenchmarkI is also mostly
utili8ed for the !ur!oses of elaborately9designed benchmarking !rograms themsel$es.
Benchmarking is usually associated &ith assessing !erformance characteristics of
com!uter hard&are' for e/am!le' the floating !oint o!eration !erformance of a C.G but
there are circumstances &hen the techni,ue is also a!!licable to soft&are. Soft&are
benchmarks are' for e/am!le' run against com!ilers or database management systems.
(nother ty!e of test !rogram' namely test suites or $alidation suites' are intended to
assess the coectness of soft&are.
Balanced (coe cad
The balanced scorecard is a strategic !lanning and management system that is used
e/tensi$ely in business and industry' go$ernment' and non!rofit organi8ations &orld&ide
to align business acti$ities to the $ision and strategy of the organi8ation' im!ro$e internal
and e/ternal communications' and monitor organi8ation !erformance against strategic
goals. It &as originated by Frs. Robert Ea!lan 13ar$ard Business School2 and Fa$id
*orton as a !erformance measurement frame&ork that added strategic non9financial
!erformance measures to traditional financial metrics to gi$e managers and e/ecuti$es a
more IbalancedI $ie& of organi8ational !erformance. )hile the !hrase balanced
scorecard &as coined in the early 1BBCs' the roots of the this ty!e of a!!roach are dee!'
and include the !ioneering &ork of ?eneral Electric on !erformance measurement
re!orting in the 1B=C0s and the &ork of +rench !rocess engineers 1&ho created the
1AC
!ableau de 8ord < literally' a LdashboardL of !erformance measures2 in the early !art of
the -Cth century.
The balanced scorecard has e$ol$ed from its early use as a sim!le !erformance
measurement frame&ork to a full strategic !lanning and management system. The "ne&#
balanced scorecard transforms an organi8ation0s strategic !lan from an attracti$e but
!assi$e document into the Lmarching ordersL for the organi8ation on a daily basis. It
!ro$ides a frame&ork that not only !ro$ides !erformance measurements' but hel!s
!lanners identify &hat should be done and measured. It enables e/ecuti$es to truly
e/ecute their strategies.
This ne& a!!roach to strategic management &as first detailed in a series of articles and
books by Frs. Ea!lan and *orton. Recogni8ing some of the &eaknesses and $agueness
of !re$ious management a!!roaches' the balanced scorecard a!!roach !ro$ides a clear
!rescri!tion as to &hat com!anies should measure in order to IbalanceI the financial
!ers!ecti$e. The balanced scorecard is a management system 1not only a measurement
system2 that enables organi8ations to clarify their $ision and strategy and translate them
into action. It !ro$ides feedback around both the internal business !rocesses and e/ternal
outcomes in order to continuously im!ro$e strategic !erformance and results. )hen fully
de!loyed' the balanced scorecard transforms strategic !lanning from an academic
e/ercise into the ner$e center of an enter!rise.
Ea!lan and *orton describe the inno$ation of the balanced scorecard as follo&s:
LThe balanced scorecard retains traditional financial measures. But financial measures
tell the story of !ast e$ents' an ade,uate story for industrial age com!anies for &hich
in$estments in long9term ca!abilities and customer relationshi!s &ere not critical for
success. These financial measures are inade,uate' ho&e$er' for guiding and e$aluating
the %ourney that information age com!anies must make to create future $alue through
in$estment in customers' su!!liers' em!loyees' !rocesses' technology' and inno$ation.L
1A1
1A-
UNIT ;I(' AU'(TION(
1A5
UNIT I
1. E/!lain in detail 3enry fayol !rinci!les of management
-. )rite the differences bet&een (dministration and Management
5. E/!lain in detail the definitions of management
;. 3o& management conce!ts hel!s Business organi8ation. Kustify Pour ans&er
=. E/!lain the e$els of Management
UNIT II
1. Fefine organi8ation &ith its !rinci!les
-. )hat is s!an of control' e/!lain its t&o systems
5. E/!lain ad$antages and disad$antages of +unctional organi8ation
;. 3o& centrali8ation and decentrali8ation of organi8ations are formed in organi8ation
=. E/!lain all structures of 4rgani8ation
UNIT III
1. )hat is .lant ay outN E/!lain its ty!es &ith ad$antages and disad$antages
2. E/!lain the method study &ith its ty!es
3. )hat is method study
4. )hat is &ork measurement
5. E/!lain the Feming0s contribution to ,uality
UNIT I1
1. E/!lain the ob%ecti$es and need of in$entory management
-. E/!lain the in$entory management techni,ues
5. 3o& stores management is done in organi8ations
;. E/!lain in detail the functions of management
=. )hat is marketing mi/ and strategies based on !roduct life cycle
>. E/!lain the channels of distribution
UNIT 1
1. E/!lain the conce!ts of 3RM
-. )rite the differences bet&een 3RM and !ersonnel management
5. E/!lain all functions of 3RM
;. E/!lain the grie$ance handling !rocedure of your ogransation
=. )hat are strategies follo&ed to fi/ the &ages and salary.
UNIT 1I
1A;
1. )hat is net&ork analysis' &hat are the !resent methods follo&ed
-. E/!lain about ?antt charts
5. Is there any difference bet&een .ERT and C.M
;. E/!lain about !ro%ect crashing
UNIT 1II
1. E/!lain about en$ironmental scanning in detail
-. )hat is meant by S)4T analysis &rite in detail
5. )rite the ste!s in strategy formulation and im!lementation
;. )hat are the elements of cor!orate analysis
=. )rite about Mission' ?oals' 4b%ecti$es' .olicy' .rograms
UNIT 1III
1. )rite about MIS and ho& it hel!s the organi8ation in taking decisions
-. )hat are the !resent de$elo!ment in ER.
5. E/!lain KIT' MR.
;. Fo &e really get less defects if &e follo& Si/ Sigma !rocedure
=. )hat is Total Quality Management
>. )hat is B.4' &hat are the ad$antages of it
1A=
OB/'"TI1' AU'(TION(
ObBecti#e type Auestions
1A>
67 ;hich of the follo,ing efes to a diecti#e ,itten to guide pesonnel
depatment in fulfilling its obBecti#es o functionsK
a7 *esonnel policy
b. Recruitment !olicy
c. )orking .olicy
d. Training !olicy
87 =(pecifying the e)uiements on the pat of pesons doing the Bob= is called
a. Kob Rotation
b7 /ob Analysis
c. Kob data
d. %ob enrichment
J7 0e#eloping ogani%ational cultue and management style is the function of
a7 .uman &esouce Management
b. Materials Management
c. +inance Management
d. Marketing Management
@7 ;hich of the follo,ing is pedominantly a .& functionK
a7 suppoting
b. ine
c. ine and su!!orting
d. recreation
C7 5abou Management is the 3ey issue fo
a. 3RM
b7 *esonnel - I&
c. Training and Fe$elo!ment
d. 3RF
F7 The guide to management action in .&M is
a. Com!etitor
b7 custome
c. Banker
d. o&ner
97 .uman esouce Management is
a. 4!eration9dri$en !rocess
b7 (tategy!di#en *ocess
c. Tactical Fri$en !rocess
d. Market9dri$en !rocess
L7 ;hich of the follo,ing manages pefom both line and staff functionsK
a. Marketing manager
b. +inance Manager
c7 *esonnel Manage
d. ogistics Manager
M7 &ational method of assessing e)uiements of human esouces at diffeent
le#els in the ogani%ation is called
a. Man!o&er Resources
b7 Manpo,e planning
c. Man!o&er statistics
d. man!o&er rationing
1A@
6:7 ;hich of the follo,ing is a negati#e function
a. Recruitment
b7 (election
c. .erformance a!!raisal
d. Training
667 Aptitude tests fom a pat of
a. (!!raisal
b. Training
c7 (election
d. negotiation
687 ;hich of the follo,ing efes to the method of assessment to pedict ,ho
,ould be successful on BobK
a. Brainstorming
b. Score cards
c7 Aptitude tests
d. (ttitude tests
6J7 ;hich of the follo,ing cannot be assessed though goup discussionsK
a. Communication skills
b. eadershi! skills
c. (bility to con$ince
d7 "onduct and chaacte
6@7 The numbe of employees lea#ing the ogani%ation is efeed as
a. Induction
b. In$entory
c7 5abou Tuno#e
d. turno$er
6C7 &edundancy esults in
a. Induction of em!loyees
b7 (epaation of employees
c. Retention of em!loyees
d. a!!raisal of em!loyees
6F7 ;hich of the follo,ing in#ol#es po#iding the ogani%ations pofile4 business4
its depatments4 thei Bobs to ne, employeesK
a7 Oientation
b. Enlightenment
c. Training
d. Fe$elo!ment
697 A pocess designed to maintain o impo#e cuent Bob pefomance
a. Fe$elo!mental !rogram
b7 Taining *ogam
c. 4rientation !rogram
d. Recreational !rogram
6L7 ;hich of the follo,ing facilitates employees ,o3ing on seies of Bobs
theeby leaning a boad #aiety of s3ills is
a. Skill training
b. Kob Training
c7 /ob &otation
1AA
d. %ob analysis
6M7 &ole playing helps in enhancing
a. istening skills
b. )riting skills
c. 4bser$ation skills
d7 Intepesonal s3ills
8:7 "onfeences and seminas fom a pat of
a7 Off the Bob taining
b. 4nline training
c. Multi skill training
d. E/!eriential learning
867 ;hich of the follo,ing efe to inteacti#e e+ecises pacticed in moc3
situationsK
a. Conferences
b. Team Fiscussions
c. Case study
d7 (imulation '+ecises
887 '+peiential leaning is a pat of
a7 on!the!Bob taining
b. off9the9%ob training
c. .ersonal Training
d. Both on9the9%ob and off9the9%ob training
8J7 Taining the employees selected to ,o3 in shop floo in the factoy itself is
a. .ro%ect Training
b7 Appentice Taining
c. .rofessional Training
d. Quality circle
8@7 The pocess of familiai%ing ne, employees ,ith #ision4 mission and goals of
ogani%ation is called
a7 induction
b. attrition
c. se!aration
d. recruitment
8C7 Taining needs ae assessed ,hen
a. %ob is !erformed &ell
b7 gap e+ists bet,een actual and standad pefomance of a Bob
c. non e/istence of %ob standards
d. em!loyees &ant to earn more
8F7 Ad#ancement of an employee to a Bob ,ith highe authoity and
esponsibility is
a. Se!aration
b7 *omotion
c. Femotion
d. *egotiation
897 0emotion esults in
a. 3igh (uthority and res!onsibilities
b. 3igh salary
1AB
c7 5o,e authoity and salay
d. o&er salary
8L7 Temination of employment is also efeed as
a7 (epaation
b. Induction
c. 4rientation
d. Recruitment
8M7 ;age and salay administation is done though
a. Kob descri!tion
b. Kob induction
c. Both %ob descri!tion and %ob induction
d7 /ob e#aluation
J:7 '(O* fom a pat of
a. 3ousing Incenti$e
b7 Financial Incenti#e
c. Hehicle Incenti$e
d. *on9financial incenti$e
J67 ;ages paid on basis of units poduced is
a. standard &age system
b7 *iece ,age system
c. Fifferential !iece &age system
d. Gnit9&ages
J87 Magnitude of diffeence in ,ages is
a7 ;age diffeential
b. Com!ensation
c. )age re$ision
d. Minimum &age
JJ7 Minimum ;ages Act po#ides
a. 4rgani8ationIs .olicy
b7 (tatutoy Nom
c. 4bligatory *orm
d. +reedom to !ay minimum &ages
J@7 ;hich of the follo,ing implies pefomance appaisal done by self by an
employeeK
a. Self9e$aluation
b. Self9%udgment
c7 (elf!appaisal
d. Self9analysis
JC7 ;hich of the follo,ing is #ie,ed as e,ad fo bette se#ices one has
endeed on a paticula BobK
a7 *omotion
b. Femotion
c. (ttrition
d. transfer
JF7 The pocess of e#aluating the pefomance o accomplishments of an
employee is called
a. .erformance re$ie&
1BC
b. .erformance (ssessment
c7 *efomance appaisal
d. .erformance Management
J97 ;hich of the follo,ing is an e+ample fo non!analytical method of Bob
e#aluationK
a7 &an3ing method
b. Merit rating
c. +actor com!arison method
d. .oint rating method
JL7 The financial implication of high labou tuno#e is
a. oss of out!ut
b. Gnder utili8ation of e,ui!ment
c7 Additional o#etime costs
d. o& em!loyee morale
JM7 Identifying the caee plans of 3ey position in an ogani%ation is a pat of
a. E/it Strategy
b7 (uccession (tategy
c. Recruitment Strategy
d. Rede!loyment Strategy
@:7 "onsultation - Auality "icles fom a pat of
a. +inancial Incenti$es
b7 Non!Financial Incenti#es
d. ?rie$ance handling
@67 In ,hich of the follo,ing enactments4 the *ocedue fo handling Industial
disputes ae clealy laid do,nK
a7 Industial 0ispute Act4 6M@9
b. )orkmenIs Com!ensation (ct' 1B-5
c. Em!loyeesI State Insurance (ct'1B;A
d. Industrial Fis!utes (ct' 1B;A
@87 In ,hich of the follo,ing4 (3ill4 effot4 esponsibility and Bob conditions ae
,idely accepted factosK
a. +actor Com!arison Method
b. Ranking Method
c7 *oint &ating method
d. Kob classification method
@J7 Actual pefomance based on esults is consideed fo e#aluation in
a. Essay Method
b. +orced Fistribution Method
c7 MBO
d. *arrati$e method
@@7 ;hich of the follo,ing in#ol#es moti#ational climate at all le#els by taining4
counseling and delegationK
a. *egati$e reinforcement
b7 *ositi#e einfocement
c. *eutral reinforcement
d. inear reinforcement
1B1
@C7 The techni)ue of assessing systematically the elati#e ,oth of each Bob is
called
a. Kob descri!tion
b. Kob enrichment
c7 /ob e#aluation
d. Kob rotation
@F7 Inceased esponsibility fo planning and self e#aluation is a pat of
a. Kob rotation
b. Kob security
c7 /ob enichment
d. Quality circles
@97 ;hich of the follo,ing is a natual choice fo most of the 3no,ledge!based
ogani%ationsK
a. Consultation
b7 Fle+i time
c. Kob enlargement
@L7 Final stage in gie#ance handling is
a. Conference &ith middle management
b. Conference &ith Gnion
c7 Abitation
d. se!aration
@M7 To see India polio fee by end of 8:6C is an e+ample of
a7 Mission
b. ?oal
c. .lan
d. strategy
C:7 "omplaint ,hen ignoed ta3es the fom of
a. Fissatisfaction
b7 $ie#ance
c. Concern
d. Fis!ute
C67 MBO ,as coined by
a. +li!!o
b7 *ete 0uc3e
c. MB (threya
d. Fouglas Mc?regor
C87 ;hich of the follo,ing implies the NO#eall obBecti#eN o No#e all goalN of a
fimK
a. .olicy
b. Hision
c7 Mission
d. Strategy
CJ7 The boad guideline set by Top Management fo ma3ing decisions is called
a. 4b%ecti$e
b7 (tategy
c. .olicy
1B-
d. ?oal
C@7 The logical se)uence of opeations to be pefomed in a gi#en poBect efes
to
a7 *ogamme
b. Strategy
c. .lan
d. Mission
CC7 The management=s decision to con#et one of thei manufactuing unit to
'+pot Oiented Unit G'OUH foms an e+ample of
a. Hision
b7 "opoate planning
c. 4b%ecti$e
d. !olicy
CF7 The *ocess of identifying oppotunities to achie#e futhe go,th ,ithin the
companyNs cuent businesses is called
a7 Intensi#e go,th
b. Fi$ersification gro&th
c. ?ro&th through (c,uisition
d. E/tensi$e gro&th
C97 "handana Bos 4 a leading etaile in te+tile business4 adds Be,elley section
also to its business7 This is an e+ample fo
a. Concentric di$ersification
b. Conglomerate di$ersification
c7 hoi%ontal di#esification
d. $ertical di$ersification
CL7 (;OT analysis is analysis of
a. Strong' &in' 4!!ortunities' Team &ork
b. Strengths' &eakness' offers 6 Threats
c7 (tengths4 ,ea3ness4 oppotunities - Theats
d. Strengths' &eakness' offers 6 Team &ork
CM7 The stategy of penetating into the e+isting ma3ets ,ith cuent poduct is
a. Intensi$e !enetration strategy
b7 Ma3et penetating stategy
c. Current !enetrating strategy
d. Com!etition !enetrating strategy
F:7 "oncentic and conglomeate di#esification fom a pat of
a. Integrati$e gro&th
b7 0i#esification go,th
c. 3ori8ontal gro&th
d. inear gro&th
F67 (BU efes to
a. Soft&are Business Gnit
b. Solutions Business Gnit
c. Systematic Business Gnit
d7 (tategic Business Unit
F87 The pocess of de#eloping 010 playes fom 1"& in 3eeping #ie, of the
technology tends is an e+ample of
1B5
a. Market Fe$elo!ment Strategy
b7 *oduct 0e#elopment (tategy
c. di$ersification strategy
d. ac,uisition strategy
FJ7 Identifying oppotunities to de#elop o ac)uie business elated to companys
cuent businesses is
a7 Integati#e go,th
b. Intensi$e gro&th
d. inear gro&th
F@7 0isin#estment fom *(U=s by $o#enment is an e+ample fo
a. Strength 9 Threat Strategy
b7 Theat!;ea3ness stategy
c. Strength94!!ortunity strategy
d. )in9ose strategy
FC7 5egally ta3ing o#e business of competitos is
a. Hertical Strategy
b. Fo&nsi8ing strategy
c. Back&ard Integration strategy
d7 .oi%ontal Integation stategy
FF7 To identify and undestand ne, oppotunities in ,hich the company can
pefom pofitably is
a. En$ironmental outlook
b7 'n#ionmental scanning
c. En$ironmental scouting
d. En$ironmental analysis
F97 ;hich of the follo,ing foms a pat of e+tenal en#ionmental analysisK
a. Strengths
b. 4!!ortunities
c. &eakness
d7 Oppotunities - Theats
FL7 A challenge posed by an unfa#oable tend
a. 4!!ortunity
b. )eakness
c7 Theat
d. Strength
FM7 ;hich of the follo,ing is a stategy that aims at optimising stengths and
,ea3nessesK
a7 (tength Theat (tategy
b. Strength 4!!ortunity Strategy
c. Threat9)eakness strategy
d. Strength9&eakness strategy
9:7 (ingle Business Unit planned independently fom est of company is
a. E4G
b7 (BU
c. M4G
d. +4G
1B;
967 "opoate plannes ae called as
a7 (tategists
b. Hisionaries
c. Moti$ators
d. .lanners
987 The pocess of analy%ing the fim=s intenal stength and ,ea3ness is
a7 Intenal analysis
b. Internal !rocessing
c. Internal re$ie&
d. Internal !erformance
9J7 ;hen a company finds its poduct!,ise pefomance is not e#en the best
suited4 the stategy is
a. E/!ansion
b. Retrenchment
c. Stability
d7 "ombination stategy
9@7 ;almat poposes an alliance ,ith Bhati $oup7 ;hat is this alliance
calledK
a7 *oduct!se#ice alliance
b. ogistic alliance
c. organi8ational alliance
d. Combinations
9C7 Fo ,hich of the follo,ing4 Outsoucing is an e+ampleK
a. E/!ansion
b7 "ombination
c. Retrenchment
d. Combination
9F7 ;hich of the follo,ing is a tool that aids fo copoate stategy e#aluation
and contolK
a. MIS
b7 MI( - MBO
c. 3RIS
d. CRM
997 Most fa#oued stategy fo pogessi#e fim is
a. Threat9&eakness strategy
b. Strength Threat strategy
c7 (tength Oppotunity stategy
9L7 The alliances the copoate choose to de#elop ,ith the membes of thei
stategic goups ae called
a7 (tategic alliance
b. 4rgani8ational alliance
c. Strategic shift
d. Strategic combination
9M7 T,o o moe companies coming to pomote thei poducts - se#ices fom
a. .romotional alliance
b. ogistic alliance
1B=
c7 Ad#etisement alliance
d. Fistribution alliance
L:7 The couse of action desied to achie#e the obBecti#e of the entepise is
a7 (tategy
b. Mission
c. 4b%ecti$e
d. schedule
L67 0uing initial stages of poduct life cycle4 ,hich of the follo,ing stategy is
pefeedK
a. Stability
b7 '+pansion
c. Retrenchment
d. Combination
L87 ;hich of the follo,ing stategies the company is said to pusue ,hen it
po#ides N'mployee stoc3 optionsN ae offeedK
a. Fifferentiation
b. Retrenchment
c7 &etention
d. e/!ansion
LJ7 ;hy mission statements ae communicated do,n the cades in the
oganisationK
a. to communicate do&n the cadres in the organisation
b7 to de#elop shaed #ision
c. to moti$ate all in the organi8ation
d. to coordinate &ork around
L@7 ;hich of the follo,ing ensues stategic allocation of esouces in
ogani%ationsK
a. schedules
b7 budgets
c. rules
d. !olicies
LC7 "ompanies ha#ing alliance ,ith $ATI fo tanspotation of goods ae said to
ha#e
a. .roduct alliance
b. .ricing collaboration
c7 5ogistic alliance
d. !ricing alliance
LF7 ;hich of the follo,ing stategies means gaining moe ma3et shae ,ith the
cuent poducts in the cuent ma3etsK
a. market e/!loration strategy
b7 ma3et penetation stategy
c. market e/!ansion strategy
d. market integration strategy
L97 The pocess of (tategic Management begins ,ith
a. Mission
b. ?oal
c7 Mission and $oal
1B>
d. Either Mission or ?oal
LL7 ;hich of the follo,ing e+plains the basic eason fo the e+istence of an
ogani%ationK
a7 mission
b. shared $ision
c. goal
d. strategy
LM7 ;hich of the follo,ing is an opeational tool to achie#e the goals set though
missionK
a. !lan
b. goal
c7 stategy
d. schedule
M:7 ;hich of the follo,ing implies the pocess of educing the opeations of the
unpofitable businessK
a. outsourcing
b7 do,nsi%ing
c. closing
d. &inding u!
M67 ;hich of the follo,ing imply oppotunitiesK
a. &eaknesses
b7 theats
c. strengths
d. infrastructure
M87 In ,hich of the follo,ing cases4 e+pansion stategy is follo,edK
a. in the early stages of !roduct life cycle
b. &hen there is cut throat com!etition
c7 ,hen thee is competition and the poduct is in ealy stages of poduct
life cycle
d. &hen you &ant to make more !rofits
MJ7 ;hich of the follo,ing is a tool fo coodination and timing of diffeent
suppoting pogammes in a comple+ poBectK
a7 *'&T/"*M
b. ?ERTDC.M
c. C.M
d. .ERT
M@7 ;hich of the follo,ing e#aluates systematically the company=s intenal
factosK
a7 stategic ad#antage pofile
b. strategic !rofile
c. ad$antage !rofile
d. strategic !rofile ad$antage
MC7 An alliance is said to be successful ,hen it can pomote moe sales at D D D D
D D D cost7
a7 lo,e
b. linear
c. hori8ontal
1B@
d. same
MF7 ;hich of the follo,ing is not one as suggested by Michael *oteK
a. 4$erall cost leadershi!
b7 o#eall pofit leadeship
c. differentiation
d. +ocus
M97 The ,ide fluctuations in the foeign cuency e+change ate imply
a. e/change risk
b. fluctuation risk
c7 financial is3
d. technical risk
ML7 ;hich of the follo,ing fom the basis fo the most desiable stategy fo a
business unitK
a. strengths and &eaknesses
b7 stengths and oppotunities
c. strategies and threats
d. strategies and o!!ortunities
MM7 ;hich of the follo,ing is the stating point fo stategic management
pocessK
a7 mission and goals
b. allocation of resources
c. mission and strategies
d. mission and resources
6::7 The minimum slac3 ,ill al,ays be
a. !ositi$e
b7 negati#e
c. linear
d. four
6:67 *'&T - "*M po#ide
a. ogical !icture layout 6 com!le/ !ro%ect se,uence
b7 Identifying the citical acti#ities - e#ents
c. Basis for &orking time' cost 6 resources
d. an o!timal rate of return on in$estment
6:87 ;hich of the follo,ing is not the limitations of $antt=s ba chatK
a. Interde!endencies
b. .ro%ect !rogress
c. Gncertainties
d7 coodination
6:J7 ;hich of the follo,ing is not an intenal stategy #aiationK
a. e/!ansion
b. retrenchment
c. stability
d7 budgeting
6:@7 In net,o3 analysis the o#eall obBecti#e is
a7 To minimi%e o#eall time spent
b. To ma/imi8e o$erall return on ca!ital
c. To neutrali8e o$erall time s!ent
1BA
d. To co$er e$ery acti$ity at any cost
6:C7 ;hich of the follo,ing denotes a set of acti#ities ,ith specific goal fo
a specific peiod of timeK
a. Schedule
b7 *oBect
c. (cti$ity
d. critical !arth
6:F7 ;hich of the follo,ing denotes numbe of techni)ues fo planning -
contol of comple+ poBects
a7 Net,o3 analysis
b. (cti$ity analysis
c. .ro%ect analysis
d. .lanning analysis
6:97 *'&T efes to
a. .rogramme Escalation Re$ie& Tool
b7 *ogamme '#aluation &e#ie, Techni)ue
c. .ro%ect E$aluation Re$ised Tool
d. .ro%ect E$aluation Reasoning Techni,ue
6:L7 5in3 bet,een $antt chat - *'&T/"*M net,o3 is
a7 Milestone chat
b. ogical Chart
c. *et&ork Chart
d. (cti$ity chart
6:M7 In *'&T4 dummy acti#ity epesents
a. de!endence
b7 logical dependence
c. inde!endence among %obs
d. logical inde!endence among %obs
66:7 ;hich of the follo,ing does not consume esoucesK
a. (cti$ity
b. E$ent
c. Fummy acti$ity
d7 0angle
6667 "*M in#ol#es a tadeoff bet,een
a. Cost
b. Time
c7 "ost - Time
d. Cost' time and ,uality
6687 The tas3 o Bob in a pogam is epesented by
a. E$ent
b7 Acti#ity
c. *et&ork
d. Fotted e$ent
66J7 (tat o end of acti#ity is called
a7 '#ent
b. (cti$ity
c. e$ent and acti$ity
1BB
d. critical !ath
66@7 ;hich of the follo,ing is e#ent oientedK
a7 *'&T
b. C.M
c. .ERT and C.M
d. C..M
66C7 "*M is
a. 4!timistic
b. !robalistic
c7 0eteministic
d. o!timistic and !robabilistic
66F7 In *'&T acti#ity is epesented by
a7 Ao,
b. Circle
c. Fotted arro&
d. Fotted circle
6697 In *'&T4 the e#ent is epesented by
a. (rro&
b7 "icle
c. Fotted arro&
d. Elli!se
66L7 In optimistic time estimate the time ta3en by acti#ity is
a. Ma/imum
b7 Minimum
c. *o consum!tion of time
d. Either ma/imum or minimum
11B. A#eage time estimate GteH is
a.
b.
c7
d.
68:7 Negati#e float occus
a. )hen Ts is less than Total !ro%ect time
b7 ;hen Ts is geate than total poBect time
c. )hen TsZTotal !ro%ect time
d. )hen Ts ] total !ro%ect time
6867 *ositi#e float occus ,hen
a. Ts is less than poBect time
b. )hen Ts is greater than total !ro%ect time
6887 (uch e#ents left untied to o#eall net,o3 ae called
a. .rototy!e
-CC
b. Se,uence
c7 0angles
d. dro!s
68J7 Time ta3en to delay a paticula e#ent ,ithout affecting the poBect
completion time
a. Fe$iation
b. Succession
c7 slac3
d. critical !ath
68@7 Float epesents
a7 Unde utili%ed esouces
b. 4$er utili8ed resources
c. 4!timally utili8ed resources
d. Sub9o!timally utili8ed resources
68C7 ;hich of the follo,ing Nomal de#iateK
a7
b.
c.
d.
68F7 *ath ,hich contains all e#ent ,ith %eo o minimum slac3 is
a7 "itical path
b. Succession or e$ent
c. Critical slack
d. E$ent slack
6897 In Beta distibution4 standad de#iation is e)ual to
a7
b.
c.
d.
68L7 /IT system is sometimes efeed to adapting
a. inear system
b7 5ean *oduction system
c. TQM
d. *onlinear system
68M7 'OA is the ode )uantity that
a. Ma/imi8es total annual carrying cost
b. E,uates total cost
c. Multi!lies total annual carrying cost
d7 Minimi%es total annual caying cost
6J:7 If the effot on a non!citical acti#ity is to be educed4 it may esult in
-C1
a7 its duation and time
b. its number of acti$ities
c. its number of e$ents
d. its number of critical acti$ities
6J67 /ust in time concept eliminates
a. 4!erations
b7 In#entoy
c. Man !o&er
d. )I.
6J87 2anban is
a7 Infomation as to ,hat has to be done
b. 4$er !roduction
c. In$entory control
d. (utomation
6JJ7 'OA is
a. E,ual order ,uantity
b. Estimated o$erall ,uantity
c7 'conomic ode )uantity
d. E,uilibrium o!en ,uantity
6J@7 ;hich of the follo,ing indicates time by ,hich an acti#ity can
e+pandK
a. total float
b7 fee float
c. inde!endent float
d. negati$e float
6JC7 A pogamme is also called
a. %ob
b. !ro%ect
c. e$ent
d7 net,o3
6JF7 TAM ,as fist coined by
a. Toyota .roduction System
b7 U( Na#al Ai (ystems "ommand
c. ?eneral Electric
d. ?eneral Motors
6J97 (i+ sigma pactice ,as fist de#eloped by
a. ?eneral Motors
b. ?eneral Electric
c7 Motoola
d. *okia
6JL7 In (i+ sigma methodology4 0MAI" is to impo#e
a. *e& Business !rocess
b7 '+isting business pocess
c. *e& Business !rocess and E/isting business !rocess
d. Either *e& Business !rocess or E/isting business !rocess
6JM7 ;hich of the follo,ing is a dynamic lin3ed systemK
a7 /IT
-C-
b. MR.
c. E4Q
d. E(*B(*
6@:7 /i3oda is
a. )orkers obser$ation of the machines
b. Machine monitoring
c7 *o#iding machines ,ith autonomous capability to use Budgment
d. )orker monitoring
6@67 (i+ sigma pocess can ha#e ma+imum defects of
a. 5.; defects !er hundred
b. 5.; defects !er trillion
c7 J7@ defects pe million
d. 5.; defects !er thousand
6@87 (i+ sigma is egisteed tadema3 of
a. ?E
b. Bank of (merica
c. 3oney&ell International
d7 Motoola
6@J7 (i+ sigma methodology is accomplished though the use of
a. FM(IC
b. FM(FH
c7 0MAI" and 0MA01
d. FM(IC minus FM(FH
6@@7 Non!"onfomity of poduct o se#ice to its specifications is
a7 0efect
b. Quality
c. Fesign
d. Im!lementation
6@C7 ;hich of the follo,ing signify the scope4 boundaies and intent of
each 3ey pocess aeaK
a. 4rigins
b. .ro%ects
c7 $oals
d. 4rgins and !ro%ects
6@F7 ;hich of the follo,ing descibe elements of infastuctue and
pactice fo effecti#e implementationK
a7 2ey pactices
b. ?oals
c. Timelines
d. ?oals aand Timelines
6@97 In (i+ sigma methodology4 0MA01 is used fo
a7 Ne, pocess designs
b. E/isting !rocess designs
c. *e& !rocess designs and E/isting !rocess designs
d. Either *e& !rocess designs or E/isting !rocess designs
6@L7 "apability Matuity Model implies
-C5
a7 Instuctions an ogani%ation can follo, to gain bette contol o#e its
soft,ae
b. Instructions to frame 3R !olicy in soft&are organi8ations
c. .rocess for effecti$e utili8ation of soft&are
d. !roducts &ith effecti$e ,uality
6@M7 ;hich of the follo,ing identifies cluste of elated acti#ities achie#e a
set of goals7
a7 2ey pocess aeas
b. 4rigins
c. Timelines
d. Schedules
6C:7 ;hich of the follo,ing ogani%ations teat change management as an
odinay business pocess in odely ,ayK
a. Maturity le$el -
b. Maturity le$el 5
c. Maturity le$el ;
d7 Matuity le#el C
6C67 ;hich of the follo,ing is the basis fo pocess capability studyK
a. .rocess &ith multi!le errors
b7 If one has si+ standad de#iations bet,een mean of a pocess and
neaest specification limit thee ,ill be pactically %eo eos
c. .rocess &ith minimum errors
d. !rocess &ith ma/imum errors
6C87 "MM an3s soft,ae de#elopment ogani%ation in a hieachy of
a. T&o le$els
b. Three le$els
c. +our le$els
d7 Fi#e le#els
6CJ7 "MMI is
a. Ca!ability Maturity Model Im!ro$ement
b7 "apability Matuity Model Integation
c. Ca!ability Maturity Model Initiali8ation
d. Ca!ability Maturity Model Initiator
6C@7 ;hich of the follo,ing ogani%ations teat change management as an
odinay business pocess in odely ,ayK
a. Maturity le$el -
b. Maturity le$el 5
c. Maturity le$el ;
d7 Matuity le#el C
6CC7 The pocess of planning and management of soucing4 pocuement4
con#esion and logistics acti#ities is called
a7 (upply "hain Management
b. In$entory Management
c. ogistics Management
d. Sourcing management
6CF7 *oduction decisions and scheduling acti#ities of ("M ae gouped
unde
-C;
a. 4!erational acti$ity
b7 Tactical Acti#ity
c. Strategic (cti$ity
d. 4!erational and tactical acti$ities
6C97 Inbound and outbound logistics fom
a7 Opeational acti#ity
b. Tactical (cti$ity
c. Strategic (cti$ity
d. Both Tactical (cti$ity and Strategic (cti$ity
6CL7 The maBo concen of "&M is
a7 &elationship bet,een ogani%ation and customes
b. Relationshi! bet&een organi8ation and consumers
c. Relationshi! bet&een different customers
d. *one
6CM7 Infomation technology infastuctue fo ("M is gouped unde
a. 4!erational acti$ity
b. Tactical (cti$ity
c7 (tategic Acti#ity
d. Both 4!erational acti$ity and Tactical (cti$ity
6F:7 '&* is
a. Economic resource !lanning
b7 'ntepise esouce planning
c. Emerging resource !lanning
d. Emerging economic !lanning
6F67 (upply soucing and negotiations ae the functions of
a. CRM
b. .roduction .lanning
c7 *ocuement
d. B.4
6F87 In physical distibution the final destination of ma3eting channel is
a. Ser$ice .ro$ider
b. Manufacturer
c7 "ustome
d. Both Ser$ice .ro$ider and Manufacturer
6FJ7 2ey ingedient of '&* system is
a. Multi!le database
b. Fi$ersified database
c7 Unified database
d. modular base
6F@7 The pocess of e+tending o changing system ,o3 by ,iting ne,
use inteface and undelying code is
a. Consulting
b. Im!lementation
c7 "ustomi%ation
d. customer beha$iour
6FC7 The discipline ,ithin systems management that focuses on monitoing
- managing pefomance
-C=
a. .erformance im!ro$ement
b7 Application pefomance management
c. Both .erformance im!ro$ement and (!!lication !erformance
management
d. Either .erformance im!ro$ement or (!!lication !erformance
management
6FF7 Focuses on ceating methodical - pedictable ,ays to impo#e
business esults
a. (.M
b. B.M
c7 O*M
d. B.R
6F97 M&* is
a7 Mateial e)uiement *lanning
b. Manufacturing re,uirement !lanning
c. Multi!le resource !lanning
d. .erformance analysis
6FL7 Initial '&* implementation is the esponsibility of
a7 "onsulting team
b. Customi8ation team
c. Su!!ort team
d. Customi8ation team and Su!!ort team
6FM7 The pocess ,hee a manage inte#enes to gi#e feed bac3 - adBust
pefomance
a. .erformance !lanning
b7 *efomance coaching
d. .erformaance analysis
69:7 The pocess of assessing pogess in achie#ing pedetemined goals is
a7 *efomance management
b. (ssessment
c. Both .erformance management and (ssessment
d. Either .erformance management or (ssessment
6967 0ecision to sub contact some o all non coe pocesses
a. B.R
b7 B*O
c. (.M
d. B.(
6987 Impo#ements by means of ele#ating efficiency - effecti#eness of
pocesses
a7 B*&
b. B.4
c. ITES
d. MB4
69J7 *ocess of compaing ogani%ations opeations - intenal pocesses
against othe ogani%ations in/outside industy
a. TQM
-C>
b7 Benchma3ing
c. Both TQM and Benchmarking
d. Either TQM or Benchmarking
69@7 B*O contacted outside a company=s o,n county
a7 Offshoe outsoucing
b. 4nshore outsourcing
c. 4ffshore outsourcing and 4nshore outsourcing
d. Either 4ffshore outsourcing or 4nshore outsourcing
69C7 Balanced scoecad ,as de#eloped by
a. Robert Ea!lan
b. Fa$id *orton
c7 &obet 2aplan - 0a#id Noton
d. 3erald Eoont8
69F7 ;hich of the follo,ing efes to a diecti#e ,itten to guide pesonnel
depatment in fulfilling its obBecti#es o functionsK
a7 *esonnel policy
b. Recruitment !olicy
c. )orking .olicy
d. Training !olicy
6997 =(pecifying the e)uiements on the pat of pesons doing the Bob= is
called
a. Kob Rotation
b7 /ob Analysis
c. Kob data
d. %ob enrichment
69L7 0e#eloping ogani%ational cultue and management style is the
function of
a7 .uman &esouce Management
b. Materials Management
c. +inance Management
d. Marketing Management
69M7 ;hich of the follo,ing is pedominantly a .& functionK
a7 suppoting
b. ine
c. ine and su!!orting
d. recreation
6L:7 5abou Management is the 3ey issue fo
a. 3RM
b7 *esonnel - I&
c. Training and Fe$elo!ment
d. 3RF
6L67 The guide to management action in .&M is
a. Com!etitor
b7 custome
-C@
c. Banker
d. o&ner
6L87 .uman esouce Management is
a. 4!eration9dri$en !rocess
b7 (tategy!di#en *ocess
c. Tactical Fri$en !rocess
d. Market9dri$en !rocess
6LJ7 ;hich of the follo,ing manages pefom both line and staff
functionsK
a. Marketing manager
b. +inance Manager
c7 *esonnel Manage
d. ogistics Manager
6L@7 &ational method of assessing e)uiements of human esouces at
diffeent le#els in the ogani%ation is called
a. Man!o&er Resources
b7 Manpo,e planning
c. Man!o&er statistics
d. man!o&er rationing
6LC7 ;hich of the follo,ing is a negati#e function
a. Recruitment
b7 (election
d. Training
6LF7 Aptitude tests fom a pat of
a. (!!raisal
b. Training
c7 (election
d. negotiation
6L97 ;hich of the follo,ing efes to the method of assessment to pedict
,ho ,ould be successful on BobK
a. Brainstorming
b. Score cards
c7 Aptitude tests
d. (ttitude tests
6LL7 ;hich of the follo,ing cannot be assessed though goup discussionsK
a. Communication skills
b. eadershi! skills
c. (bility to con$ince
d7 "onduct and chaacte
6LM7 The numbe of employees lea#ing the ogani%ation is efeed as
a. Induction
b. In$entory
c7 5abou Tuno#e
d. turno$er
6M:7 &edundancy esults in
a. Induction of em!loyees
-CA
b7 (epaation of employees
c. Retention of em!loyees
d. a!!raisal of em!loyees
6M67 ;hich of the follo,ing in#ol#es po#iding the ogani%ations pofile4
business4 its depatments4 thei Bobs to ne, employeesK
a7 Oientation
b. Enlightenment
c. Training
d. Fe$elo!ment
6M87 A pocess designed to maintain o impo#e cuent Bob pefomance
a. Fe$elo!mental !rogram
b7 Taining *ogam
c. 4rientation !rogram
d. Recreational !rogram
6MJ7 ;hich of the follo,ing facilitates employees ,o3ing on seies of Bobs
a. Skill training
b. Kob Training
c7 /ob &otation
d. %ob analysis
6M@7 &ole playing helps in enhancing
a. istening skills
b. )riting skills
6MC7 "onfeences and seminas fom a pat of
b. 4nline training
6MF7 ;hich of the follo,ing efe to inteacti#e e+ecises pacticed in moc3
situationsK
a. Conferences
b. Team Fiscussions
c. Case study
6M97 '+peiential leaning is a pat of
6ML7 Taining the employees selected to ,o3 in shop floo in the factoy
itself is
a. .ro%ect Training
d. Quality circle
-CB
6MM7 The pocess of familiai%ing ne, employees ,ith #ision4 mission and
goals of ogani%ation is called
a7 induction
b. attrition
c. se!aration
d. recruitment
8::7 Taining needs ae assessed ,hen
8:67 Ad#ancement of an employee to a Bob ,ith highe authoity and
esponsibility is
a. Se!aration
b7 *omotion
c. Femotion
d. *egotiation
8:87 0emotion esults in
b. 3igh salary
d. o&er salary
8:J7 Temination of employment is also efeed as
a7 (epaation
b. Induction
c. 4rientation
d. Recruitment
8:@7 ;age and salay administation is done though
a. Kob descri!tion
b. Kob induction
d7 /ob e#aluation
8:C7 '(O* fom a pat of
8:F7 ;ages paid on basis of units poduced is
d. Gnit9&ages
8:97 Magnitude of diffeence in ,ages is
a7 ;age diffeential
b. Com!ensation
c. )age re$ision
d. Minimum &age
-1C
8:L7 Minimum ;ages Act po#ides
b7 (tatutoy Nom
c. 4bligatory *orm
8:M7 ;hich of the follo,ing implies pefomance appaisal done by self by
an employeeK
a. Self9e$aluation
b. Self9%udgment
c7 (elf!appaisal
d. Self9analysis
86:7 ;hich of the follo,ing is #ie,ed as e,ad fo bette se#ices one has
a7 *omotion
b. Femotion
c. (ttrition
d. transfer
8667 The pocess of e#aluating the pefomance o accomplishments of an
employee is called
8687 ;hich of the follo,ing is an e+ample fo non!analytical method of Bob
e#aluationK
a7 &an3ing method
b. Merit rating
86J7 The financial implication of high labou tuno#e is
a. oss of out!ut
86@7 Identifying the caee plans of 3ey position in an ogani%ation is a
pat of
a. E/it Strategy
86C7 "onsultation - Auality "icles fom a pat of
86F7 In ,hich of the follo,ing enactments4 the *ocedue fo handling
Industial disputes ae clealy laid do,nK
-11
8697 In ,hich of the follo,ing4 (3ill4 effot4 esponsibility and Bob
conditions ae ,idely accepted factosK
b. Ranking Method
86L7 Actual pefomance based on esults is consideed fo e#aluation in
a. Essay Method
c7 MBO
d. *arrati$e method
86M7 ;hich of the follo,ing in#ol#es moti#ational climate at all le#els by
taining4 counseling and delegationK
88:7 The techni)ue of assessing systematically the elati#e ,oth of each
Bob is called
a. Kob descri!tion
b. Kob enrichment
c7 /ob e#aluation
d. Kob rotation
8867 Inceased esponsibility fo planning and self e#aluation is a pat of
a. Kob rotation
b. Kob security
c7 /ob enichment
d. Quality circles
8887 ;hich of the follo,ing is a natual choice fo most of the 3no,ledge!
based ogani%ationsK
a. Consultation
b7 Fle+i time
c. Kob enlargement
88J7 Final stage in gie#ance handling is
c7 Abitation
d. se!aration
88@7 To see India polio fee by end of 8:6C is an e+ample of
a7 Mission
b. ?oal
c. .lan
-1-
d. strategy
88C7 "omplaint ,hen ignoed ta3es the fom of
a. Fissatisfaction
b7 $ie#ance
c. Concern
d. Fis!ute
88F7 MBO ,as coined by
a. +li!!o
b7 *ete 0uc3e
c. MB (threya
d. Fouglas Mc?regor
8897 ;hich of the follo,ing implies the NO#eall obBecti#eN o No#e all
goalN of a fimK
a. .olicy
b. Hision
c7 Mission
d. Strategy
88L7 The boad guideline set by Top Management fo ma3ing decisions is
called
a. 4b%ecti$e
b7 (tategy
c. .olicy
d. ?oal
88M7 The logical se)uence of opeations to be pefomed in a gi#en poBect
efes to
a7 *ogamme
b. Strategy
c. .lan
d. Mission
8J:7 The management=s decision to con#et one of thei manufactuing
unit to '+pot Oiented Unit G'OUH foms an e+ample of
a. Hision
b7 "opoate planning
c. 4b%ecti$e
d. !olicy
8J67 The *ocess of identifying oppotunities to achie#e futhe go,th
,ithin the companyNs cuent businesses is called
a7 Intensi#e go,th
d. E/tensi$e gro&th
8J87 "handana Bos 4 a leading etaile in te+tile business4 adds Be,elley
section also to its business7 This is an e+ample fo
-15
8JJ7 (;OT analysis is analysis of
8J@7 The stategy of penetating into the e+isting ma3ets ,ith cuent
poduct is
8JC7 "oncentic and conglomeate di#esification fom a pat of
d. inear gro&th
8JF7 (BU efes to
8J97 The pocess of de#eloping 010 playes fom 1"& in 3eeping #ie, of
the technology tends is an e+ample of
8JL7 Identifying oppotunities to de#elop o ac)uie business elated to
companys cuent businesses is
a7 Integati#e go,th
b. Intensi$e gro&th
d. inear gro&th
8JM7 0isin#estment fom *(U=s by $o#enment is an e+ample fo
d. )in9ose strategy
8@:7 5egally ta3ing o#e business of competitos is
8@67 To identify and undestand ne, oppotunities in ,hich the company
can pefom pofitably is
-1;
8@87 ;hich of the follo,ing foms a pat of e+tenal en#ionmental
analysisK
a. Strengths
b. 4!!ortunities
c. &eakness
8@J7 A challenge posed by an unfa#oable tend
a. 4!!ortunity
b. )eakness
c7 Theat
d. Strength
8@@7 ;hich of the follo,ing is a stategy that aims at optimising stengths
and ,ea3nessesK
8@C7 (ingle Business Unit planned independently fom est of company is
a. E4G
b7 (BU
c. M4G
d. +4G
8@F7 "opoate plannes ae called as
a7 (tategists
b. Hisionaries
c. Moti$ators
d. .lanners
8@97 The pocess of analy%ing the fim=s intenal stength and ,ea3ness is
a7 Intenal analysis
c. Internal re$ie&
8@L7 ;hen a company finds its poduct!,ise pefomance is not e#en the
best suited4 the stategy is
a. E/!ansion
b. Retrenchment
c. Stability
8@M7 ;almat poposes an alliance ,ith Bhati $oup7 ;hat is this
alliance calledK
b. ogistic alliance
d. Combinations
8C:7 Fo ,hich of the follo,ing4 Outsoucing is an e+ampleK
-1=
a. E/!ansion
b7 "ombination
c. Retrenchment
d. Combination
8C67 ;hich of the follo,ing is a tool that aids fo copoate stategy
e#aluation and contolK
a. MIS
b7 MI( - MBO
c. 3RIS
d. CRM
8C87 Most fa#oued stategy fo pogessi#e fim is
8CJ7 The alliances the copoate choose to de#elop ,ith the membes of
thei stategic goups ae called
c. Strategic shift
8C@7 T,o o moe companies coming to pomote thei poducts - se#ices
fom
b. ogistic alliance
8CC7 The couse of action desied to achie#e the obBecti#e of the entepise
is
a7 (tategy
b. Mission
c. 4b%ecti$e
d. schedule
8CF7 0uing initial stages of poduct life cycle4 ,hich of the follo,ing
stategy is pefeedK
a. Stability
b7 '+pansion
c. Retrenchment
d. Combination
8C97 ;hich of the follo,ing stategies the company is said to pusue ,hen
it po#ides N'mployee stoc3 optionsN ae offeedK
a. Fifferentiation
b. Retrenchment
c7 &etention
d. e/!ansion
8CL7 ;hy mission statements ae communicated do,n the cades in the
oganisationK
-1>
8CM7 ;hich of the follo,ing ensues stategic allocation of esouces in
ogani%ationsK
a. schedules
b7 budgets
c. rules
d. !olicies
8F:7 "ompanies ha#ing alliance ,ith $ATI fo tanspotation of goods ae
said to ha#e
a. .roduct alliance
d. !ricing alliance
8F67 ;hich of the follo,ing stategies means gaining moe ma3et shae
,ith the cuent poducts in the cuent ma3etsK
8F87 The pocess of (tategic Management begins ,ith
a. Mission
b. ?oal
c7 Mission and $oal
8FJ7 ;hich of the follo,ing e+plains the basic eason fo the e+istence of
an ogani%ationK
a7 mission
b. shared $ision
c. goal
d. strategy
8F@7 ;hich of the follo,ing is an opeational tool to achie#e the goals set
though missionK
a. !lan
b. goal
c7 stategy
d. schedule
8FC7 ;hich of the follo,ing implies the pocess of educing the opeations
of the unpofitable businessK
a. outsourcing
b7 do,nsi%ing
c. closing
d. &inding u!
8FF7 ;hich of the follo,ing imply oppotunitiesK
a. &eaknesses
-1@
b7 theats
c. strengths
d. infrastructure
8F97 In ,hich of the follo,ing cases4 e+pansion stategy is follo,edK
life cycle
8FL7 ;hich of the follo,ing is a tool fo coodination and timing of
diffeent suppoting pogammes in a comple+ poBectK
a7 *'&T/"*M
b. ?ERTDC.M
c. C.M
d. .ERT
8FM7 ;hich of the follo,ing e#aluates systematically the company=s
intenal factosK
89:7 An alliance is said to be successful ,hen it can pomote moe sales at
D D D D D D D cost7
a7 lo,e
b. linear
c. hori8ontal
d. same
8967 ;hich of the follo,ing is not one as suggested by Michael *oteK
c. differentiation
d. +ocus
8987 The ,ide fluctuations in the foeign cuency e+change ate imply
a. e/change risk
b. fluctuation risk
c7 financial is3
d. technical risk
89J7 ;hich of the follo,ing fom the basis fo the most desiable stategy
fo a business unitK
89@7 ;hich of the follo,ing is the stating point fo stategic management
pocessK
-1A
89C7 The minimum slac3 ,ill al,ays be
a. !ositi$e
b7 negati#e
c. linear
d. four
89F7 *'&T - "*M po#ide
8997 ;hich of the follo,ing is not the limitations of $antt=s ba chatK
b. .ro%ect !rogress
c. Gncertainties
d7 coodination
89L7 ;hich of the follo,ing is not an intenal stategy #aiationK
a. e/!ansion
b. retrenchment
c. stability
d7 budgeting
89M7 In net,o3 analysis the o#eall obBecti#e is
8L:7 ;hich of the follo,ing denotes a set of acti#ities ,ith specific goal fo
a. Schedule
b7 *oBect
c. (cti$ity
d. critical !arth
8L67 ;hich of the follo,ing denotes numbe of techni)ues fo planning -
a7 Net,o3 analysis
c. .ro%ect analysis
8L87 *'&T efes to
8LJ7 5in3 bet,een $antt chat - *'&T/"*M net,o3 is
a7 Milestone chat
b. ogical Chart
-1B
c. *et&ork Chart
d. (cti$ity chart
8L@7 In *'&T4 dummy acti#ity epesents
a. de!endence
8LC7 ;hich of the follo,ing does not consume esoucesK
a. (cti$ity
b. E$ent
c. Fummy acti$ity
d7 0angle
8LF7 "*M in#ol#es a tadeoff bet,een
a. Cost
b. Time
c7 "ost - Time
d. Cost' time and ,uality
8L97 The tas3 o Bob in a pogam is epesented by
a. E$ent
b7 Acti#ity
c. *et&ork
d. Fotted e$ent
8LL7 (tat o end of acti#ity is called
a7 '#ent
b. (cti$ity
c. e$ent and acti$ity
d. critical !ath
8LM7 ;hich of the follo,ing is e#ent oientedK
a7 *'&T
b. C.M
c. .ERT and C.M
d. C..M
8M:7 "*M is
a. 4!timistic
b. !robalistic
c7 0eteministic
d. o!timistic and !robabilistic
8M67 In *'&T acti#ity is epesented by
a7 Ao,
b. Circle
c. Fotted arro&
d. Fotted circle
8M87 In *'&T4 the e#ent is epesented by
a. (rro&
b7 "icle
c. Fotted arro&
d. Elli!se
--C
8MJ7 In optimistic time estimate the time ta3en by acti#ity is
a. Ma/imum
b7 Minimum
c. *o consum!tion of time
d. Either ma/imum or minimum
-B;. A#eage time estimate GteH is
a.
b.
c7
d.
8MC7 Negati#e float occus
a. )hen Ts is less than Total !ro%ect time
b7 ;hen Ts is geate than total poBect time
8MF7 *ositi#e float occus ,hen
a. Ts is less than poBect time
b. )hen Ts is greater than total !ro%ect time
8M97 (uch e#ents left untied to o#eall net,o3 ae called
a. .rototy!e
b. Se,uence
c7 0angles
d. dro!s
8ML7 Time ta3en to delay a paticula e#ent ,ithout affecting the poBect
completion time
a. Fe$iation
b. Succession
c7 slac3
d. critical !ath
8MM7 Float epesents
a7 Unde utili%ed esouces
b. 4$er utili8ed resources
c. 4!timally utili8ed resources
d. Sub9o!timally utili8ed resources
J::7 ;hich of the follo,ing Nomal de#iateK
a7
b.
c.
--1
d.
J:67 *ath ,hich contains all e#ent ,ith %eo o minimum slac3 is
a7 "itical path
b. Succession or e$ent
c. Critical slack
d. E$ent slack
J:87 In Beta distibution4 standad de#iation is e)ual to
a7
b.
c.
d.
J:J7 /IT system is sometimes efeed to adapting
a. inear system
b7 5ean *oduction system
c. TQM
d. *onlinear system
J:@7 'OA is the ode )uantity that
a. Ma/imi8es total annual carrying cost
b. E,uates total cost
c. Multi!lies total annual carrying cost
d7 Minimi%es total annual caying cost
J:C7 If the effot on a non!citical acti#ity is to be educed4 it may esult in
a7 its duation and time
b. its number of acti$ities
c. its number of e$ents
d. its number of critical acti$ities
J:F7 /ust in time concept eliminates
a. 4!erations
b7 In#entoy
c. Man !o&er
d. )I.
J:97 2anban is
a7 Infomation as to ,hat has to be done
b. 4$er !roduction
c. In$entory control
d. (utomation
J:L7 'OA is
a. E,ual order ,uantity
b. Estimated o$erall ,uantity
c7 'conomic ode )uantity
d. E,uilibrium o!en ,uantity
---
J:M7 ;hich of the follo,ing indicates time by ,hich an acti#ity can
e+pandK
a. total float
b7 fee float
c. inde!endent float
d. negati$e float
J6:7 A pogamme is also called
a. %ob
b. !ro%ect
c. e$ent
d7 net,o3
J667 TAM ,as fist coined by
a. Toyota .roduction System
b7 U( Na#al Ai (ystems "ommand
c. ?eneral Electric
d. ?eneral Motors
J687 (i+ sigma pactice ,as fist de#eloped by
a. ?eneral Motors
b. ?eneral Electric
c7 Motoola
d. *okia
J6J7 In (i+ sigma methodology4 0MAI" is to impo#e
a. *e& Business !rocess
b7 '+isting business pocess
c. *e& Business !rocess and E/isting business !rocess
d. Either *e& Business !rocess or E/isting business !rocess
J6@7 ;hich of the follo,ing is a dynamic lin3ed systemK
a7 /IT
b. MR.
c. E4Q
d. E(*B(*
J6C7 /i3oda is
a. )orkers obser$ation of the machines
b. Machine monitoring
c7 *o#iding machines ,ith autonomous capability to use Budgment
d. )orker monitoring
J6F7 (i+ sigma pocess can ha#e ma+imum defects of
a. 5.; defects !er hundred
b. 5.; defects !er trillion
c7 J7@ defects pe million
d. 5.; defects !er thousand
J697 (i+ sigma is egisteed tadema3 of
a. ?E
b. Bank of (merica
c. 3oney&ell International
d7 Motoola
J6L7 (i+ sigma methodology is accomplished though the use of
--5
a. FM(IC
b. FM(FH
c7 0MAI" and 0MA01
d. FM(IC minus FM(FH
J6M7 Non!"onfomity of poduct o se#ice to its specifications is
a7 0efect
b. Quality
c. Fesign
d. Im!lementation
J8:7 ;hich of the follo,ing signify the scope4 boundaies and intent of
each 3ey pocess aeaK
a. 4rigins
b. .ro%ects
c7 $oals
d. 4rgins and !ro%ects
J867 ;hich of the follo,ing facilitates employees ,o3ing on seies of Bobs
a. Skill training
b. Kob Training
c7 /ob &otation
d. %ob analysis
J887 &ole playing helps in enhancing
a. istening skills
b. )riting skills
J8J7 "onfeences and seminas fom a pat of
b. 4nline training
J8@7 ;hich of the follo,ing efe to inteacti#e e+ecises pacticed in moc3
situationsK
a. Conferences
b. Team Fiscussions
c. Case study
J8C7 '+peiential leaning is a pat of
J8F7 Taining the employees selected to ,o3 in shop floo in the factoy
itself is
a. .ro%ect Training
--;
d. Quality circle
J897 The pocess of familiai%ing ne, employees ,ith #ision4 mission and
goals of ogani%ation is called
a7 induction
b. attrition
c. se!aration
d. recruitment
J8L7 Taining needs ae assessed ,hen
J8M7 Ad#ancement of an employee to a Bob ,ith highe authoity and
esponsibility is
a. Se!aration
b7 *omotion
c. Femotion
d. *egotiation
JJ:7 0emotion esults in
b. 3igh salary
d. o&er salary
JJ67 Temination of employment is also efeed as
a7 (epaation
b. Induction
c. 4rientation
d. Recruitment
JJ87 ;age and salay administation is done though
a. Kob descri!tion
b. Kob induction
d7 /ob e#aluation
JJJ7 '(O* fom a pat of
JJ@7 ;ages paid on basis of units poduced is
d. Gnit9&ages
JJC7 Magnitude of diffeence in ,ages is
a7 ;age diffeential
b. Com!ensation
c. )age re$ision
--=
d. Minimum &age
JJF7 Minimum ;ages Act po#ides
b7 (tatutoy Nom
c. 4bligatory *orm
JJ97 ;hich of the follo,ing implies pefomance appaisal done by self by
an employeeK
a. Self9e$aluation
b. Self9%udgment
c7 (elf!appaisal
d. Self9analysis
JJL7 ;hich of the follo,ing is #ie,ed as e,ad fo bette se#ices one has
a7 *omotion
b. Femotion
c. (ttrition
d. transfer
JJM7 The pocess of e#aluating the pefomance o accomplishments of an
employee is called
J@:7 ;hich of the follo,ing is an e+ample fo non!analytical method of Bob
e#aluationK
a7 &an3ing method
b. Merit rating
J@67 The financial implication of high labou tuno#e is
a. oss of out!ut
J@87 Identifying the caee plans of 3ey position in an ogani%ation is a
pat of
a. E/it Strategy
J@J7 "onsultation - Auality "icles fom a pat of
-->
J@@7 In ,hich of the follo,ing enactments4 the *ocedue fo handling
Industial disputes ae clealy laid do,nK
J@C7 In ,hich of the follo,ing4 (3ill4 effot4 esponsibility and Bob
conditions ae ,idely accepted factosK
b. Ranking Method
J@F7 Actual pefomance based on esults is consideed fo e#aluation in
a. Essay Method
c7 MBO
d. *arrati$e method
J@97 ;hich of the follo,ing in#ol#es moti#ational climate at all le#els by
taining4 counseling and delegationK
J@L7 The techni)ue of assessing systematically the elati#e ,oth of each
Bob is called
a. Kob descri!tion
b. Kob enrichment
c7 /ob e#aluation
d. Kob rotation
J@M7 Inceased esponsibility fo planning and self e#aluation is a pat of
a. Kob rotation
b. Kob security
c7 /ob enichment
d. Quality circles
JC:7 ;hich of the follo,ing is a natual choice fo most of the 3no,ledge!
based ogani%ationsK
a. Consultation
b7 Fle+i time
c. Kob enlargement
JC67 Final stage in gie#ance handling is
c7 Abitation
d. se!aration
JC87 To see India polio fee by end of 8:6C is an e+ample of
a7 Mission
--@
b. ?oal
c. .lan
d. strategy
JCJ7 "omplaint ,hen ignoed ta3es the fom of
a. Fissatisfaction
b7 $ie#ance
c. Concern
d. Fis!ute
JC@7 MBO ,as coined by
a. +li!!o
b7 *ete 0uc3e
c. MB (threya
d. Fouglas Mc?regor
JCC7 ;hich of the follo,ing implies the NO#eall obBecti#eN o No#e all
goalN of a fimK
a. .olicy
b. Hision
c7 Mission
d. Strategy
JCF7 The boad guideline set by Top Management fo ma3ing decisions is
called
a. 4b%ecti$e
b7 (tategy
c. .olicy
d. ?oal
JC97 The logical se)uence of opeations to be pefomed in a gi#en poBect
efes to
a7 *ogamme
b. Strategy
c. .lan
d. Mission
JCL7 The management=s decision to con#et one of thei manufactuing
unit to '+pot Oiented Unit G'OUH foms an e+ample of
a. Hision
b7 "opoate planning
c. 4b%ecti$e
d. !olicy
JCM7 The *ocess of identifying oppotunities to achie#e futhe go,th
,ithin the companyNs cuent businesses is called
a7 Intensi#e go,th
d. E/tensi$e gro&th
JF:7 "handana Bos 4 a leading etaile in te+tile business4 adds Be,elley
section also to its business7 This is an e+ample fo
--A
JF67 (;OT analysis is analysis of
JF87 The stategy of penetating into the e+isting ma3ets ,ith cuent
poduct is
JFJ7 "oncentic and conglomeate di#esification fom a pat of
d. inear gro&th
JF@7 (BU efes to
JFC7 The pocess of de#eloping 010 playes fom 1"& in 3eeping #ie, of
the technology tends is an e+ample of
JFF7 Identifying oppotunities to de#elop o ac)uie business elated to
companys cuent businesses is
a7 Integati#e go,th
b. Intensi$e gro&th
d. inear gro&th
JF97 0isin#estment fom *(U=s by $o#enment is an e+ample fo
d. )in9ose strategy
JFL7 5egally ta3ing o#e business of competitos is
JFM7 To identify and undestand ne, oppotunities in ,hich the company
can pefom pofitably is
--B
J9:7 ;hich of the follo,ing foms a pat of e+tenal en#ionmental
analysisK
a. Strengths
b. 4!!ortunities
c. &eakness
J967 A challenge posed by an unfa#oable tend
a. 4!!ortunity
b. )eakness
c7 Theat
d. Strength
J987 ;hich of the follo,ing is a stategy that aims at optimising stengths
and ,ea3nessesK
J9J7 (ingle Business Unit planned independently fom est of company is
a. E4G
b7 (BU
c. M4G
d. +4G
J9@7 "opoate plannes ae called as
a7 (tategists
b. Hisionaries
c. Moti$ators
d. .lanners
J9C7 The pocess of analy%ing the fim=s intenal stength and ,ea3ness is
a7 Intenal analysis
c. Internal re$ie&
J9F7 ;hen a company finds its poduct!,ise pefomance is not e#en the
best suited4 the stategy is
a. E/!ansion
b. Retrenchment
c. Stability
J997 ;almat poposes an alliance ,ith Bhati $oup7 ;hat is this
alliance calledK
b. ogistic alliance
-5C
d. Combinations
J9L7 Fo ,hich of the follo,ing4 Outsoucing is an e+ampleK
a. E/!ansion
b7 "ombination
c. Retrenchment
d. Combination
J9M7 ;hich of the follo,ing is a tool that aids fo copoate stategy
e#aluation and contolK
a. MIS
b7 MI( - MBO
c. 3RIS
d. CRM
JL:7 Most fa#oued stategy fo pogessi#e fim is
JL67 The alliances the copoate choose to de#elop ,ith the membes of
thei stategic goups ae called
c. Strategic shift
JL87 T,o o moe companies coming to pomote thei poducts - se#ices
fom
b. ogistic alliance
JLJ7 The couse of action desied to achie#e the obBecti#e of the entepise
is
a7 (tategy
b. Mission
c. 4b%ecti$e
d. schedule
JL@7 0uing initial stages of poduct life cycle4 ,hich of the follo,ing
stategy is pefeedK
a. Stability
b7 '+pansion
c. Retrenchment
d. Combination
JLC7 ;hich of the follo,ing stategies the company is said to pusue ,hen
it po#ides N'mployee stoc3 optionsN ae offeedK
a. Fifferentiation
b. Retrenchment
c7 &etention
d. e/!ansion
-51
JLF7 ;hy mission statements ae communicated do,n the cades in the
oganisationK
JL97 ;hich of the follo,ing ensues stategic allocation of esouces in
ogani%ationsK
a. schedules
b7 budgets
c. rules
d. !olicies
JLL7 "ompanies ha#ing alliance ,ith $ATI fo tanspotation of goods ae
said to ha#e
a. .roduct alliance
d. !ricing alliance
JLM7 ;hich of the follo,ing stategies means gaining moe ma3et shae
,ith the cuent poducts in the cuent ma3etsK
JM:7 The pocess of (tategic Management begins ,ith
a. Mission
b. ?oal
c7 Mission and $oal
JM67 ;hich of the follo,ing e+plains the basic eason fo the e+istence of
an ogani%ationK
a7 mission
b. shared $ision
c. goal
d. strategy
JM87 ;hich of the follo,ing is an opeational tool to achie#e the goals set
though missionK
a. !lan
b. goal
c7 stategy
d. schedule
JMJ7 ;hich of the follo,ing implies the pocess of educing the opeations
of the unpofitable businessK
a. outsourcing
b7 do,nsi%ing
c. closing
d. &inding u!
-5-
JM@7 ;hich of the follo,ing imply oppotunitiesK
a. &eaknesses
b7 theats
c. strengths
d. infrastructure
JMC7 In ,hich of the follo,ing cases4 e+pansion stategy is follo,edK
life cycle
JMF7 ;hich of the follo,ing is a tool fo coodination and timing of
diffeent suppoting pogammes in a comple+ poBectK
a7 *'&T/"*M
b. ?ERTDC.M
c. C.M
d. .ERT
JM97 ;hich of the follo,ing e#aluates systematically the company=s
intenal factosK
JML7 An alliance is said to be successful ,hen it can pomote moe sales at
D D D D D D D cost7
a7 lo,e
b. linear
c. hori8ontal
d. same
JMM7 ;hich of the follo,ing is not one as suggested by Michael *oteK
c. differentiation
d. +ocus
@::7 The ,ide fluctuations in the foeign cuency e+change ate imply
a. e/change risk
b. fluctuation risk
c7 financial is3
d. technical risk
@:67 ;hich of the follo,ing fom the basis fo the most desiable stategy
fo a business unitK
@:87 ;hich of the follo,ing is the stating point fo stategic management
pocessK
-55
@:J7 The minimum slac3 ,ill al,ays be
a. !ositi$e
b7 negati#e
c. linear
d. four
@:@7 *'&T - "*M po#ide
@:C7 ;hich of the follo,ing is not the limitations of $antt=s ba chatK
b. .ro%ect !rogress
c. Gncertainties
d7 coodination
@:F7 ;hich of the follo,ing is not an intenal stategy #aiationK
a. e/!ansion
b. retrenchment
c. stability
d7 budgeting
@:97 In net,o3 analysis the o#eall obBecti#e is
@:L7 ;hich of the follo,ing denotes a set of acti#ities ,ith specific goal fo
a. Schedule
b7 *oBect
c. (cti$ity
d. critical !arth
@:M7 ;hich of the follo,ing denotes numbe of techni)ues fo planning -
a7 Net,o3 analysis
c. .ro%ect analysis
@6:7 *'&T efes to
@667 5in3 bet,een $antt chat - *'&T/"*M net,o3 is
-5;
a7 Milestone chat
b. ogical Chart
c. *et&ork Chart
d. (cti$ity chart
@687 In *'&T4 dummy acti#ity epesents
a. de!endence
-5=
-5>

Unit - I: Cmrit Redefining Quality

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CMRIT Redefining Quality

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