Competitive Challenge for

Manufacturing
 Competitive Challenges
• Decline in the Productivity/ industrial output
• Rising cost of energy/other inputs
• Govt. Regulation, taxes, tariff structure
• Investment in R & D as percentage of GNP
• Ratio of investment in new capital eqpt. to
corporate cash flow has decreased
• Management’s Role:
- Measuring Productivity (short term,
medium term & long term)
- Over emphasis on R.O.I
 Competitive Challenges (Cont’d)
• Modern Management Approaches – Role
• Examples:
- Organizational Control Theory
- Financial Portfolio
- Marketing Concept
• Implications of Management Approaches
- Emphasis on Analytical detachment & strategic
elegance rather than hands on experience/ line
management
 Competitive Challenges (Cont’d)
• Negative Role of Organization & Control
Theory:
- Decentralized Profit Center based
Organization
- Financial Measure of Managerial
Performance
- The Marketing Concept
 Decentralized Profit Center based Organization

• Highly flexible (Responsive to market)

• Less useful for major product/ process change

• Result in ‘fast track’ career path psychology (based on

quick financial results)

• Fast career track expectations (lack of in depth shop

floor experience)

• Perceived immunity from facing the long term

consequences of decision making
Financial Measure of Managerial Performance

• Over emphasis on R.O.I.

(Decreasing investment, not adequate
spending on equipment or maintenance,
delay in equipment replenishment)
• Pressure from financial community and
from investment fund managers.
• Approach to developing, evaluating and
rewarding managers
 Impact of New Management
Practices/ Philosophies
• Top executive had to be a ‘Skilled
Strategist’
• Oversee the complex processes &
systems involved in managing large
organizations (Resource allocation,
personnel assignment, compensation &
control)
• Quickness & decisiveness
Concept of Corporate Portfolios
• Over emphasis on financial and legally oriented
issues because of C.E.O.’s background in the
same areas.
• Reduced corporate riskiness (play-safe attitude)
• A basic fallacy – No need to invest, build or
develop anything yourself – Given capital and
good financial management, anything of value
can be bought.
• A general lack of commitment towards ones
workers, customers, suppliers & fellow
managers.
 The ‘Marketing Concept’
• Imitative versus innovative designs
• Technology versus market driven
innovation
• Combination of ‘Marketing Concept’ with
quick results. R.O.I. can be dangerous.
• Most product innovations are ‘Technology
Driven’
Investment in Process Development

Deteriorated due to the belief that

advances in process technology can be
appropriate through equipment purchase
rather than through equipment design and
skill development