FOREST INDUSTRY MANAGEMENT

TOPIC 3
MANAGEMENT PROCESS
 CONTENTS

 INTRODUCTION

 MANAGEMENT FUNCTIONS

 ORGANIZATION'S ENVIRONMENT
 INTRODUCTION
 The literature has various opinions on the number of
basic functions of management.

 However, most of the literature sets out the

management functions divided into 4 basic functions:
i. Planning
ii. Organizing
iii. Leadership
iv. Controls

 These functions are closely interrelated to create a

continuous management process.
Does the management’s function have
similarities or differences with the
organization's function?
Organization functions Management functions

Organization functions planning, organizing,

production, marketing, leadership and controlling
finance and personnel activities
activities
 If a manager fails to perform both of these functions,
then it is a manager who fails to act as a manager.
 A manager may be involved with only one organizational
function but he is involved with all management
functions.
Example:
Financial manager involved with financial
function. He will plan, organize, lead, direct and control
financial activities to be effective and efficient.
 MANAGEMENT FUNCTIONS

There are 4 specific management functions that are:

1. Planning
Plans are needed to bring an organization where it
starts /current situation to where it wants to grow in the
future.
The organization will set what is to be achieved and how
to achieve that goal.
Among the importance of planning is:
• Providing clear goals for employees
• Providing direction and guidance to organizations in
achieving goals
 • Understand the environment that is a threat to
organizations such as politics, competitors,
technology and so on
• Enable the provision of alternative measures from
the original plan in the event of any changes to the
environment, and
• Minimize risk and design uncertainty.
 Planning is carried out at every stage in an organization.
 The top managers are involved in long-term strategic
planning, middle managers are involved in short-term
tactical plans
 Lower managers are focused on daily operations
planning.
2. Organizing
 Organizing is defined as an association between
individuals within the organization, its tasks and
activities so that all organizational resources are
coordinated and coordinated to achieve organizational
goals.
 Managers will perform the function of organizing when
they divide the tasks to run and form a structure for an
assignment to be resolved.
 It also involves the preparation and set of tasks,
power and physical resources available to
employees in the organization so that they can
perform their duties efficiently, effectively and
successfully.

 Organizing is required when it involve with large

tasks. This task should be divided into small tasks
to be performed by a few individuals to ensure the
task will successfully completed.
 The task requires diverse skills. Therefore, every
task needs to be organized to be segregated to a
specific individual. Hence organizing is very
important to ensure the task is done efficiently and
can be perfectly complete.
3. Leadership
 Leadership refers to the management function that
uses influence to motivate employees towards the
achievement of organizational goals.

 It also refers to creating a shared culture and value,

disseminate information about an organization's
goals to all members through communication
processes, and instilling in the spirit of worker work
towards the higher performance.
 Effective leadership is one of the key elements in
the success of an organization. A good plan cannot
be implemented successfully if an organization does
not have a good leader and the goal cannot be
achieved.

 And virtually anyone can learn to be an effective

leader. Leaders are made, not born. 
4. Controlling
 This function refers to organizational performance
measurements by comparing actual organizational
performance with predefined standards. If there is a
difference, then corrective actions need to be taken.
 There are four main steps in controlling:-
a) Setting-up standard
• The standards need to be set during the planning
stage.
• The set of standards should be in line with the organization's
capabilities and have measurable features in terms of
quality, quantity, time, cost and so on.
b) Measurement of performance
• The designed plan will be implemented and its
performance will need to be monitored to determine
the effectiveness of the planning.

c) Comparison the performance and standard

• Once the performance evaluation is achieved, it should
be compared to the standards set at the beginning of
the plan.
• Differences or variations will be obtained at this stage. If
the performance does not reach the set standard, then
the next step will be taken.
• Any differences will be reviewed and improved.
d) Correction action
• Controlling always misinterpreted activity to find
fault and to punish anyone who responsible.

• This step involves research on the cause of

differences and why the current performance does
not meet the prescribed standards.

• The main purpose of controlling is to determine the

plan was executed will achieve the goals of the
organization.
 ORGANIZATIONAL
GOALS

The process of function management

 ORGANIZATION’S ENVIRONMENT

 During the planning stage, the management should understand

and take into account an organization's environment.
 Environmental changes within an organization can give
opportunities or otherwise threaten for the organizational
performance and development.
 The organization's environment is divided into two types i.e.
internal and external environment.
1. Internal environment
• The factors to form an organization such as owners, managers,
employees and board members (for corporate companies).
a) Owners:
• Various levels of influence and authority within an organization.
• In Malaysia, many small business entities are fully owned by the
owners and they have the power to control the overall aspects of the
firm.
 • This owner is the sole manager and must carry out management tasks.
• As organizations develop and become more complex, owners will usually
bring additional managers to assist in management affairs.
• For corporate firms, owners are usually comprised of shareholders and
they are separate from individuals who control / manage the firm.

b. Managers
• Play an important role in an organization and their willingness to manage
the organization either for success or failure of the organization.

c. The Board of Directors

• In a corporate company, these group have important role to represent the
shareholders as shareholders are the real owners of the company.
• The Board must ensure that the organization is well managed to increase
returns to shareholders.
2. External environment
 Outside factors of the organization that may affect the actions of
the manager.
 The external environment is divided into two i.e. general environment
and specific task environment.
i) General environment
• also known as the macro environment.
• It is divided into an external force that influences organizational
performance indirectly such as economic, technological, cultural,
political and legal powers.
• The influence of the general environment on the organization
cannot be seen clearly but its effect is likely to affect the
organization's operations.
a) Economy
• An economy is a branch of social science that studies how people
produce, distribute, buy and use various products and services.
• Wage rates, interest rates, economic conditions and
unemployment rates are examples of economic indicators that
affect organizational operations.
 For example, high wage rates will force the organization to think
whether to continue using labor-intensive methods of production or
not.
• These economic indicators vary from time to time.
• The management allocates a lot of time and resources to predict
the state of the economy and its change. This is because the
circumstances and patterns of economic development are a critical
factor in the success of an organization.
b. Politics
• Political power covers the general stability of a country in which the
organization operates. The political and legal powers of a country
influence the way in which the organization is managed.
• Managers should be able to predict major changes in politics to
manage the organization efficiently and to comply with the laws of
the country.

c. Technology
• Technology can be defined as a transformation process that converts
organizational input into output.
• It is a combination of knowledge, tools, techniques and actions used
to transform ideas, information and materials into final output.
• The technology level of the country will determine the output to be
produced, the tools to be used and how operations management is
carried out.
d. environment
• The environmental situation in which the organization operates
also gives some pressure to the organization.
• Environmental pollution and global warming symptoms are
among the hotter issues being discussed now.

• Organizational activities that often bring problems to the

environment are now the focus of governments, environmental
associations and consumers.
• Organizations are now encouraged to take into account issues
of environmental preservation and conservation in their
operations.
e. Social
• The community within organizational environment will influence in
a variety of ways.
• Society plays a role as consumers, suppliers, workers, and the
public.
• In particular, society affects the organization from a demographic
and cultural perspective.
i. Demographics
• Demographics refer to the characteristics of a workgroup,
organization, particular market or population of a country.
• Demographic changes will force organizations to change their
strategies, especially marketing strategies and human resource
management.
For example, the high rate of baby girl born compared to the male baby
signals that the future labor force is a lot of women.
 
ii. Culture
• Culture is a shared feature and values that distinguish one
group of people from one another.
• Among the shared features include language, religion and
belief.
• Managers need to understand the cultural differences and value
systems between one group and another as it will affect the
various actions of the manager.
ii. Specific environment
• Also known as industrial environment that refers to external
stakeholders that directly affect the performance of the
organization. They are the customers, suppliers, governments,
competitors and impeller groups.
• Elements in this external environment affect the organization
directly either for the growth and success of the organization.
Different organizations have different, specific environments.
a) Customer
• Is a buyer/user of an organization.
• To succeed, organizations need to ensure they have loyal users
and customers.
• Marketing programs and customer relationships need to be
intensified, then customers do not switch to using competitor
products.
• Client actions such as boycotting an organization's output has a
huge impact on the organization involved.
b) Supplier
• It is a party that supplies raw materials as well as labor to the
organization. If the supply is reduced, the organization will face
difficulties in its operations.
• To address the problem, there are organizations that issue their
own raw materials. Organizations can use technology-based
production methods to address labor supply problems.

c) Competitors
• Consists of other organizations that are in the same industry
(direct competitors) or in other industries (indirect competitors).
• Managers should examine the competitor's pursuit to take
appropriate steps especially if it will affect the effectiveness of
an organization's plan.
d) Government
• The government affects the organization through its laws.
• Government incentives through incentives will help
organizations develop their operations.
• The government can also prevent the development of a
business if it is of the opinion that the operation is to enable
other stakeholders.

e) Impeller group
• Impeller groups such as consumer associations, non-
governmental organizations and so on can also influence the
management of an organization through their
movements/actions.
• All parties within the organization whether at the subordinate
level or the top should take note to understand and manage the
specific environment. This is because the specific environment
is no less important than the general environment.
 
• Specific environments are important in determining
organizational planning, structure, human resource
management and decision control. However, observing the
environment can be difficult as managers also have other
routine tasks.
 
• As such, most organizations create a special department that
shares as observers who are following the changing
environment. It is known by various names such as marketing
research department, strategic planning or public affairs.
THANK YOU