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Principles of Management
Principles of Management
waiting to be repaired. average number of machines waiting to be repaired plus being repaired, and
CHAPTER, 19
average time of waiting machine in the queue to be repaired
5. The breakdown rate of the machines in a workshop is 5 per hour and follows a Poisson distribution. Principles of Management
Tiwo mcchanics are employed to repair the machines. The services rate of the mechanics is 5 machines
per hour and also follows the Poisson distribution. Find the utilization of mechanics, probability
of the mechanics renmaining idle, average number of the machines waiting in queue to be repaired,
average number of machines in the systenn, the average time of the machine waiting in the queue
and average time of the machine waiting in the system.
6. The arival rate otf customer at a cinema hall booking counter is 600 per day. The cinema hall has
three parallel counters for ticket booking. The service rate of individual counter is 300 customers
per day. The arrival rate and service rate follow the Poisson distribution. At a point in time, the
maximum number of customers permitted in the system is 30. Find the probability that the booking
19.1 INTRODUCTION
clerk remaining idle, average number ofcustomers in the queue, average number of the customers in
the system, the average waiting time for customer in the queue and average waiting time of the Management is a very broad term and defined in a number of ways. But, all the definitions
customer in the system. focus on the effective and efficient utilization of resources to achieve the goal. Management is
the process of using organizational resources to achieve the organization's goals by planning,
organizing, leading and controlling. In a simple way, management can be defined as an art and
REFERENCES AND FURTHER READ NGS science used to get the work done. Some more definitions of management are given below:
.Albright. S. Christian, and Wayne Winston (2005), Essentials of Practical Management Science Management is the coordination of all resources through the process of planning,
(Mason. OH: Cengage). organizing, directing and controlling in order to attain stated objectives.
2. Gross, D. and Harris. C. M. (1997). Fundamentals of Queueing Theory (New York, NY: Wiley). -Henry L. Sisk
3. Hall. Randolph W. (199). Queueing Methods for Services and Manufacturing (Englewood Cliffs,
NJ: Prentice-Hall).
Management is the art and science of organizing and directing human cfforts applied to
4. Hiller. F. S. and Lieberman, G. J. (2001), Introduction to Operations Research, 7h edition (New Delhi:
control the forces and utilize the materials of nature for the benefit of man.
Mc-Graw Hill).
5. Paneerselvam, R. (201 1), Operations -ASME
Research, 2nd edition (New Delhi: Prentice-Hall).
6. Prabhu, N. (1997), Foundations
U. of Queueing Theory (Boston, MA: Kluwer Academic Publishers).
7. Sharma, J. K. (2007), Operations Research: Theory & Applications, 3 edition (New Delhi: Macmillan Management is the art of knowing what you want to do and then seeing that it is done
India Ltd). in the best and cheapest way.
Verma, A. (2008), Operations Research, 4 edition (Ncw Delhi: Kataria & Sons). -F. W. Taylor
Personnel
19.2 CLASSICAL SCHOOL OF MANAGEMENT
Classical management theory was developed during the Industrial Revolution. In those
Figure 19-1: Scope of management days,
managers were searching the way how to train employees or deal with increased labour
432 Industrial Engineering and Management
Principles of Managerment 433
3. The
Classical scicntific school. emphasis on productivity and by extension
exploit both the workers and customers. profitability led some managers to
on
Seientifie management is devoted to determine the best 19.2.2 Classical Administrative School
way to do a job using scientific methods.
Frederick W. Taylor. known as the father of scientific
the tield. Using his principles of scientific management, was the major contributor in Scientific management concentrates on only increasing the
management, Taylor was able to define the "one best administrative approach to management concentrates on the totalproductivity, but thc classical
way for doing each job.
on the organization. The emphasis is
development of managerial principles rather than work methods. The main contributors
Frank B. Gilbreth and Lillian M. Gilbreth were
inspired by Taylor's work and procecded to theclassical administrative theory include Max
Weber, Henri Fayol, Mary Parker Follett and
to study and develop their own methods of scientific Chester Barnard. These theorists studied the
focuscd on increasing worker management. Frank and Lillian Gilbreth flow of information within an
productivity through the reduction of wasted hand and body emphasized the importance of understanding how
and organization
motions. They
experimented with tools and equipment to optimize work performance and
an
organization operated.
developed the micromotion study to analyse the worker's motions and (A) Max Weber's Bureaucracy
optimize performance.
They labciled 17 basic motion elements called therbligs' in order to climinate In the late1800s, Max Weber disliked that many European
waste
Therbligs is guidelines devised by Taylor and others to improve production motionsare
organizations were being managcd on
efficiency
a personal family basis and that employees were loyal to individual supervisors rather than the
still used in today's
organizations. The therblig is used in the study of motion economy in the organization. He believed that organizations should be managed impersonally and that a formal
workplace. A workplace task is analysed by recording cach of the organizational structure, where specific rules were followed,
with the results used for therblig units for a process, theory of bureaucracy that is explained below.
was important. Max Weber gave the
optimization of manual labour by eliminating unneeded movements.
A basic motion clement is one of a set of
fundamental motions required for a worker to Characteristics of Bureaucracy
manual operation or task. The set consists of 17 perform a
elemcnts, each describing a standardized activity.
The detail 1. A well-defined hierarchy: All positions within a bureaucracy are structured in a way that
of therbligs has been already discussed in Chapter 11 (Work Study and Ergonomics).
permits the higher positions to supervise and control the lower positions. There should
Taylor's Four Basic Principles of Scientific Management be a clear chain of command, control and order
throughout the organization.
(a) Development of a true science of 2. Division of labour and specialization: All
management so that the best method for performing responsibilities, specialties
and expertisec
each task could be determined. should be divided among the employees. One should not be a
jack of all trades.
(b) Scientific selection of workers Rules and regulations: There should be a practicc to follow standard rules and
so that cach worker could be
given responsibility for the tions in the whole
regula-
task for which he/she was best suited. organization.
4. Impersonal relationships between managers and employees: Managers should maintain
(c) Putting a right worker in the right job is not enough; system
a of financial inccntives is
an impersonal
also needed to motivate the workers. relationship with employees so that favouritism and personal prejudice
(d) The functional division of labour between do not influence their decisions.
management and workers improves the S.
productivity and intimates friendly cooperation betwecn management and labour. Competence: Competence of the employees should
in hiring, job assignments and
be the basis for all decisions made
promotions to
foster an ability
and merit the as primary
Drawback of characteristics of a bureaucratic organization, not the relationship or acquaintance with
Taylor's Scientific Management the employees.
The following are the drawbacks of Taylor's scientific
management: 6. Records: A bureaucracy needs to maintain records of all its activities.
1. Taylor was able to increase the
productivity and pay in ä number of instances, but (B) Henri Fayol's 14 Principles of Management
workers and unions began to oppose his
approach
because feared that they working
harder or faster would exhaust whatever work available Henri Fayol, a French mining engineer, developed 14 principles of management based
was
causing layolts. on his
management experiences. These principles are described as follows.
434 IndustrialEngineeringand Management
Principles of Management 435
1. Division of work: Division of work and specialization improvcs the productivity with
the same ellort. accomplish its goals. Barnard felt that it was
particularly important for managers to develop a
2. Authority and responsibility: Authority is the right to give orders and the power to exact sense of common purpose which
with
greatly the willingness to cooperate. He is credited
encourages
obedience. Authority creates responsibility for getting the work completed. developing the acceptance theory of management, which emphasizes the willingness of
3. Discipline: Obedience, respect and proper behaviour within an organization are employees accept that managers have legitimate authority to act.
to
absolutely esscntial.
4. Unity of command: An cmployce should receive orders from only one superior. 19.3 SYSTEMS APPROACH
5. Unity of direction: Organizational activities must have one central authority and one
plan of action. During the 1960s,researchers began to analyse organizations from a systems
on the physical sciences. The perspective based
systems approach to management propounds that organizations
6.
Subordination of
individual to general interest: The interests of one employee
interest are not self-contained, but
they rely on and are affected by factors in their external environment.
or group employces are subordinate to the interests and goals of the organization.
of A system is a set of interrelated and
7.
Remuneration of personnel: Salaries -the
price of services rendered by employees interdependent parts arranged in a manner that produces a
unified whole. The two basic types of systems are open system and closed
should be fair and should provide satisfaction to both the employee and the employer. system.
A closed system is not influenced
8. Centralization: The objective of centralization is the best utilization of personnel. The by and does not interact with its environment. An open system
interacts with its environment. Using the systems
degree of centralization varies according to the dynamics of each organization.
as a body with
approach, managers evision an organization
9. A of that is, scalar chain, exists from the highest many interdependent parts, cach of which is important for the
Scalar chain: chain authority, entire organization. Managers coordinate the work activities of well-being of the
organizational authority to the lowest ranks. various parts of the
10. order for materials and personnel is essential. Right materials realizing that decisions and actions taken in one organizational area will affect other organization,
Order: An organizational
and right cmployees are necessary for cach organizational function and
arcas.
as consultants, other experiments were included to look at redesigning jobs, make changes in
3. Staffing
workday and workweck length, introduce rest periods and introduce individual versus group
Directing
wage plans. It was observed that there is no effect of change in illumination of light on worker's 5. Controlling
productivity.significantly. The main factors of consistant productivity was manager's attention
towards the workers.
The researehers concluded that social norms or group standards were key determinants Planning
of individual work behaviour. Athough enticized on procedures, analyses of findings and
conclusions. the Hawthorne studies stimulated interest in the human behaviour in organizational
Planning is a preparation or preproduction phase. In other words, it outlines what is to be done,
when it is to be done, how it is to be done and
In
why it is to be done. Planning involves problem-
setings. the present context, the behavioural approach assists managers in designing jobs that
motivate workers, in working with employee teams and in facilitating the flow of communication
solving and decision-making. Whenever there is a problem, the manager should know how to
solve it and what are the alternatives? The main
within organizations. part of planning consists of setting goals and
schedules of activities.
decisions are taken by line managers are implemented in the same way. manager
Marketing
manager
Finance
manager
3 Inadequate communication: The policies and strategies which are framed by the top
authority end.carried
ane out in the way. This leaves
same scope for communication from
no
Plant Mar Chief
the other The complaints and suggestions of lower authority not communicated
back to the top authonty. So there is one way communication.
are
supervisor supervisor assistant
Lack of co-ordination: Whatever decisions are taken by the line officials, in certain
situations wrong decisions, are carried down and implemented in the same way. Foreman Salesman Accountant
Therefore. the degree of efiective co-ordination is less.
Authority leadership: The line officials havetendency to misusetheir authority positions.
Figure 20-1: Structure of line and staff organization
This leads to autocratic leadership and monopoly in the concern.
20.10.2 Line and Staff Organization 2. Expert advice: The line and staff organization facilitates expert advice to the line
executive at the time of need. The planning and investigation, which is related to
Line and statforganization is an extended form of line organization and it is more complex than line
different matters, can be done by the staff specialist and line officers can concentrate on
organization. According to this administrative organization, specialized and supportive activities
are attached to the line of command by appointing staff supervisors and staff specialists who are execution of plans.
3. Beneft of specialization: Line and staff through division of the whole concern into two
attached to the line authority. The power of command always remains with the line executives, and
types of authority divides the enterprise into parts and functional areas. This way every
stafî supervisors guide, advice and counsel the line executives. Personal Secretary to the Managing
officer or official can concentrate in its own area.
Director isa There are following characteristics of line and
staff official. staff organization:
I. There are two types of staff: (a) Staff Assistants- P.A. to Managing Director, Secretary
4. Better co-ordination: Line and staff organization through specialization is able
to provide better decision-making and concentration remains in few hands. This
to Marketing Manager. (b) Staff Supervisor-Operation Control Manager, Quality in work every official is concentrating in
feature helps in bringing co-ordination as
1. The entire organizational activities are divided into specific functions such as operations,
to give orders so as to achieve the organizational
objectives. Authority must be well defined.
All people who have the authority should know what is the scope of their authority and they
finance, marketing and personal relations. shouldn't misuse it. Authority is the right to give commands, orders and get the things done.
2. A complex form of administrative organization compared to the other two. The top-level management has greater authority. Authority always flows from top to bottom.
Three authorities exist-Line, staff and function. It explains how a superior gets work done from his subordinate by clearly explaining what is
Each functional area is put under the charge of functional specialists and he has got the
expected of him and how he should go about it. Authornty should be accompanied with an equal
authority to give all decisions regarding the function whenever the function is performed
amount of responsibility. Delegating the authority to someone else does not imply escaping from
throughout the enterprise.
accountability.
5. The principle of unity of command does not apply to such organization as it is present
in the line organization. Responsibility: It is the duty of a person to complete the task assigned to him. A person who is
given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks
Merits of Functional Organization for which he was held responsible are not completed then he should not give explanations or
1. Specialization: Better division oflabour takes place, which results in specialization of excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among
function and its consequent benefit. the person. Responsibility flows from bottom to top. The middle- and lowerlevel management
hold more responsibility. The person held responsible for a job is answerable for it.
2. Effective control: Management control is simplified as the mental functions are separated
from manual functions. Checks and balances keep the authority within certain limits. Accountability: It means giving explanations for any variance in the actual performance from
Specialists may be asked to judge the performance of various sections. the expectations set. Accountability cannot be delegated. For example, if 'A' is given a task with
3. Eficiency: Greater efficiency is achieved because ofevery function performing a limited sufficient authority, and 'A' delegates this task to B and asks him to ensure that task is done well.
number of functions.
Firm's Ownership. Organizational Design and Structure 465
464 Industrial Engineering and Management
Table 20-2: Differences between authority and responsibility (b) own property
(C)sueand be sued
Authority Responsibility (d) all the above
It is the legal right of a person to command his It is the obligation of subordinate to perfom the
5. Cooperatives are
subordinates. work assigned to him.
(a) cither market focused
Authority is attached to the position of a superior Responsibility arises out of superior-subordinate
relationship in which subordinate agrees to carry b) just another form of a corporation
in concern.
out duties given to him. (c) going to pay both state and federal taxes
Authority can be delegated by a superiortoa Responsibility cannot be shifted and is absolute (d) none of these
subordinate 6. In limited liability,
It flows from top to bottom. It flows from bottom to top.
(a) all shareholders must hold a minimum of 20 shares in a company.
(b) all shareholders are equally responsible for all the debts of the company.
(c) the responsibility of shareholders for the debts of a company is limited to the number of debentures
they hold in the company.
SUMMARY (d) the responsibility of shareholders for the debts of a company is limited to the amount they agreed
to pay for the shares when they bought them.
In this chapter, we have discussed about difierent types of firm's ownerships, their characteristics,
merits and demerits. These firm's ownerships are sole partnership, 7. Which of the following is an advantage of a partnership?
cooperative society, (a) The partnership usually consists of up to 50 people.
partnerships, corporation, joint Hindu family business, joint stock company, multinational
company, etc. Finally, we have classificd the organization based on administrative structure and (b) Shares can be issued to the general public.
discussed their advantages and limitations. (c) The owners of such enterprises do not need to publish their accounts.
(d) All the above
MULTIPLE-CHOICE QUESTIONS 8. Which of the following describes a holding company form of business organization?
(a) A company that controls more than 33 per cent of the cquity of another company.
1. Which of the following is NOT one of the three major categories of firm ownership?
(6) A company that usually acts as a market leader in an industry.
(a) sole proprietorshipP
(c) A single company that organizes its activity into a matrix format
(b) partnership
(d) A
company that oten exists only to hold over 50 per cent of the cquity of a group of subsidiary
(C) corporation
companiCs.
(d) mutual agreement
9. A major difference between a public limited company and
2. One of the main advantages of sole proprietorship is
a
private limited company is
(a) The public limited company has limited liability.
(a) unlimited liability (b) The public limited company has a limited number of shareholder.
(b) personal time commitment (c) The public limited company can sell shares on the open market.
(c) relative freedom from government regulation (d) The public limited company has shareholders.
(d) limited managerial expertise