meljun cortes's - principles of management

8/9/2019 MELJUN CORTES's - Principles of Management

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Management: Definitions,Management: Definitions,

Roles & SkillsRoles & Skills

Principles of Management

ELJUN P. CORTES,MBA,MP


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Management: Definitions Management is the process of designing and

maintaining an environment in which individuals,working together in groups, efficiently accomplishselected aim(s) viz. to create a surplus(s). .Weihrich & Koontz

Management is not an absolute; rather it is sociallyand culturally determined. Across all cultures and inall societies, people coming together to performcertain collective acts encounter common problems

having to do with establishing direction, coordinationand motivation. Culture affects how these problemsare perceived and resolved. The Art of JapaneseManagement by R. Pascale & A. Athos .



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Management: Definition ctd. Applies to and through any kind of organization

Applies to Managers at all levels Concerned with Doing the right things right at all times:

1. Effectiveness: Achievement of objectives (Right Things);

2. Efficiency: Achieving those objectives with least amount/

sacrifice of resources (Things Right);3. Continuous Improvement: in creating increasing surplus

(at all times);

Improve or die = survival of the fittest

what gets measured, gets managed and improved e.g.Productivity=Output / Input ratio

Collective, cohesive and consistent human effort towardsaccomplishing a common objective.



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Additionally, Managers need to factor in external

environmental forces:

Organization

Economic

Political Regulatory

Societal

Technological

Globalization

For maximum benefit to the organization

Management: Definition ctd.



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Management - what managers do: Fredrick Taylors path-breaking scientific approach Henri Fayols classical definition offunctions, now

modified to: Plan -- Organize -- Lead(Command&Coordinate) -- Control

Mintzbergs map of managerial roles:

Interpersonal + Informational + Decisional Katzs interpretation ofskills:

Technical / Human / Conceptual

Management get things done through others:

Leadership: The ability to influence a group towardsachievement of goals. Motivation: The willingness to exert high level of effort

towards goals Communication:The transference and understanding of

meaning

Management: Roles & Skills

MELJUN P. CORTES,MBA,MPA


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Management: roles & skills ctd.Managerial Roles (Mintzberg)

Role Description ExamplesInterpersonalFigurehead symbolic head; required to show Ceremonial,

face in social & legal conditions. Civic etc.Leader Motivating & directing subordinates project plan

Liaison Networking outside for information Industry -& favours group meets

InformationalMonitor nerve centre and interpretator ReportsDisseminator networking within the organization Meetings etc.Spokesperson Transmit intent to outsiders; expert Board Meets

DecisionalEntrepreneur Opportunity finding& reacting Strategy PlanTrouble shooter Handling unexpected disturbance ContingencyResource allocator Initiating/approving changes BudgetingNegotiator Getting best deal for Organization Contracts


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Managerial Skills(Katz & others)

Technical Skills:

Application of specialized

knowledge or expertise

acquired though formal

training & its use.

Human Skills:

Ability to work with people,

understand and motivate

groups & individuals. Conceptual Skills:

Mental ability to recognize,

analyze, diagnose and think

through complex situations.

Skills Needed

Board

Exec.

Mgr.

Supr.

HUMAN

Concep

tual

Technical

Management: roles & skills



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Evolution of Management

Management, as a concept as we know it today, isassociated with mass consumption leading to

production of standardized goods in large volumes;

Prior to the Industrial Revolution, man made

devices were in use in sizeable numbers but often

one of a kind and crafted rather than manufactured

e.g watches and clocks. However, many of the

supportive processes can be traced to early roots:logistics, scheduling e.g. boat building; automation

(use of m/cs) e.g. printing;

The advent of the management as a science can

therefore be traced to late 18th /early 19th century.MELJUN P. CORTES,MBA,MPA


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Elements of modern management, with a focus on man i.e.HR concepts first began to appear in the West around the sametime:

as a reaction to the harsh behaviourof autocratic businessmenlike Henry Ford. It evolved through (labour) Welfare, IndustrialRelations, Personnel Management to its current form. (Marxismwas becoming a recognizable philosophy in Europe!); as a need to utilize human resource betterdue the adversesupply-demand situation. Employment in the industry hadovertaken agricultural labour. This was aggravated in Europe, byWW I.

In the 20s, Rationalization & Efficiencywere the buzz-words (Taylor, Fayol etc.), calling for a scientific approach to

selection and work allocation the corner-stones of modernproduction management:

Standardization of parts and work elements resulted in ability

to make work repetitive for individuals (do-ers)

Evolution of Management ctd



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End of WW II brought in an era of un-sated demand, resulting in a

boom for production activity more of everything was required.Quantity backed by efficiencywere the guiding principles: an era ofOptimization driven by suppliers choice rather than customerswants. However, some people notably Japan restarted their devastated

economy with different orientation: Quality. The key was trueeconomy of all resources with the customer as the focal point sincethey did not have the luxury of a surplus funded, hungry market.

By the late 60s, demand tended to slow down and the growing

competition gave customers greater choice quality as an important

buying criterion emerged. OPEC crisis in mid-70s turned the world around on its head! Energy

the prime mover of industrial world became very expensive. The

demand boom faded with customers demanding quality and lower

prices and better service.




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First inventions of mass production were linked to textilemanufacturing (Spinning Jenny/ Hargreaves) which combined withuse of water power (Arkwright), made a powerful social impact in thelate 1700s; Watts steam engine completely revolutionized harnessingof mechanical power for production (first to use were cotton mills) andtransport;

Poor Reliability of early machines led to the creation of machine tools the Lathe (Maudslay) in 1790, with which to turnout parts to closertolerances and fit. This led to creation of interchangeable parts andthe first uses were in manufacture of muskets and pistols!

These were the triggers for mass production: mechanicalpower &

interchangeable parts; leading to production moving away from homesand craft-shops to work-shops/factories.

By 1900 (in the West), nearly everything was being produced by the

factory system.




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Division of Labour: under this principle, work could be

organized/grouped into a set of specific, related tasks which wererepetitive in nature. Man could be trained to perform this set of tasksonly, so that efficiencyof task performance was maximized.

When extended throughout the organization, this took the formofSpecialization - with the organization benefiting from themaximum use of specialist skills. Both economically and undersupply-shortage conditions, this worked well. Much of this was an extension of trade/craft skill-groupsorganization (guilds) which was the hallmark of pre-industrialproduction.

Till the end of the 30s, these fundamentals were refined,polished(e.g. Organization structures) and extended ( e.g. work-measurements) in a relentless focus on efficiency.

With WW II, a furtherneed for reliabilitygave birth to theprinciples of sampling & inspection statistical methods were

introduced to regulate quality of output.




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Evolution of Management ctd This brought to the forefront the philosophy and practice ofTotal Qualityas the guiding force for manufacturing later tospread into management of operations and enterprises:

Central to this theme is the dominance of the Customer;Customers were any person or person receiving goods and/orservices internal or external; Quality was redefined as fitness for use elevated from the

narrow confines of conformance to specifications;Continuous improvementwas the key to continuity andsuccess against demands of customer and competition;importantly, everybody could contribute quality is every- bodysbusiness;

Particularly, for production, quality means best products at leastcost reduced waste of all resources, spawning a host of(linked) programs to conserve time, money & effort:

Just in Time, SMED/OTED; Lean manufacturing; Q-circles/Kaizen/6-sigma;

5-S, TPM, DoE; MELJUN P. CORTES,MBA,MPA


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Principles of ManagementPrinciples of Management

22

Management: A SystemsManagement: A Systems

ApproachApproach



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Systems approach to Management

Organization as a System receives Input, transforms it

through a Process for Output and Operates in an

Environment (economic, regulatory and other forces)

Transformation

process

input output

Feedback (Reenergizing the system)

ENVIRONMENT

System Boundary


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Systems approach to Management ctd.

Systems Concepts System Boundaries and Subsystems

> Systems often consist of numerous subsystems.

> Each subsystem has elements, interactions with

other subsystems, and objectives.> Subsystems perform specialized tasks for the

overall system.

Subsystem Interfaces and Interface

Problems

Sub-System 2 Sub-System 3Sub-System 1


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Systems approach to Management ctd.Outputs and Inputs

Systems produce Outputs from Inputs i.e. theInputs are converted to Outputs.

Outputs of one subsystem become inputs toanother subsystem.

Outputs must adhere to standards to be usefulor acceptable to the next subsystem.

System Environment Environment consists of people, organizations

and other systems that supply data to or that

receive data from the system

Managers at different levels perceive

Environment differentlyMELJUN P. CORTES,MBA,MPA


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Systems approach to Management ctd.Inputs: 5 Ms of Management

Inputs or the resources managers deal with are: Man: human resources, both inside and connected with an

organization; Materials: goods (hard & software, processed or semi-

finished) and services required to create the sellable end

product; Machines: technology and expertise deployed towards the

transformation process; Methods: systems, procedures and processes seamlessly

put together for the transformation; Measurement: score-keeping and in-process monitoring

continuously with due feedback to keep on-course on time.

Moneyis required for generating all theses Ms managers need to acquire, deploy, generate anddistribute money as a primary need for business!


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Stake: Something wagered or risked;

an interest in an enterprise with contingent gain or loss Webster s dictionary

Holders who have stake in Business:

Shareholders: are the owners. They have put in their money in the enterprise, expecting better returns from it thanfrom other ventures;

Society: includes the State, provincial and local governments for the improvement of quality of life of its citizens;

Output for Stake-holders in Business:



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Suppliers: continuity of their enterprise depends on the success of the customer enterprise;

Customers: require the goods and services provided by the enterprise, better than than those from its competitors. The enterprise is, in turn, a supplier to its customers;

Employees: livelihood depends on the progress and success of the employing enterprise;

There is a freedom of choice (for association) between each of these stake-holders and the enterprise in the longer term:

But they sink or swim together in the shorter term

Length of term definition varies with individuals!

Output for Stake-holders in Business ctd.


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by the process of

Planning

+ Organizing

+ Staffing

+ Leading

+ Controlling

to accomplish certain pre-determined, (asderived from stakeholder needs) goals or

objectives


Management as a system transforms inputs:



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Inputs(Goal

Oriented)

Outputs(External

ToOrgnzn.)

Planning

Organizing

Staffing

Leading

Controlling

Product/Services,

Profits, Customer &

Societal satisfaction,

Other Long-term Goals

Man, Machine

Material,

Method,

Measurement

Stake holder Feedback (reenergizing the system)

EXTERNAL ENVIRONMENT(Opportunities, Constraints)

Stakeholders

Shareholders;

Society; Customers;

Employees; Suppliers



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Principles of ManagementPrinciples of Management

33

Management ProcessManagement Process

First Step: PlanningFirst Step: Planning



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PlanningPlanning

Planning involves selecting objectives orgoals and the course of actions toachieve them: Provides the bridge to take us from where

we are to where we want to go;

Is a rational approach to achieving pre-selected objectives - based on innovation,knowledge and purpose;

Decision making in choosing the best fromalternative courses of action and is integralto planning;


Pl f d ti fPl f d ti f


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Plans as foundation ofPlans as foundation of

ManagementManagement

Plans

What kind ofresourcesneeded?

What kind of people

& org. structureto have?

How to lead themto reach planned

goals?

How to control incase of deviationfrom plan ?

The primacy of


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Types of PlansTypes of Plans

Mission / PurposeMission / PurposeTheThe basic functionbasic function or reason foror reason for

existence of an enterprise/ organizationexistence of an enterprise/ organization

Case in point:Case in point: MissionMission of Indiraof Indira

InstituteInstitute

To train our students to become the bestTo train our students to become the best

business minds and entrepreneurs today,business minds and entrepreneurs today,who will lead their companies successfullywho will lead their companies successfully

into the future tomorrow , locally, nationallyinto the future tomorrow , locally, nationally

and globally.and globally.MELJUN P. CORTES,MBA,MPA


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Type of Plans (Contd)Type of Plans (Contd)

Objectives/ GoalsObjectives/ GoalsTheThe endend towards which activity of antowards which activity of an

organization is aimed, e.g.organization is aimed, e.g. For a Business enterprise profit, surplus creation;For a Business enterprise profit, surplus creation; For a Management Institute: The number ofFor a Management Institute: The number of

employable/useful trainees;employable/useful trainees;

StrategiesStrategies Determination of the long term objectives andDetermination of the long term objectives and

adoption of a course of actionadoption of a course of action

Gives a frame work for linked action-plans,Gives a frame work for linked action-plans,communicated systematically to guide thinkingcommunicated systematically to guide thinkingand actions.and actions.


f l ( d)T f Pl ( td)


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Types of Plans (contd)Types of Plans (contd)

PoliciesPolicies

Plans that are general directional statements (orPlans that are general directional statements (orunderstandings) that guide/help in decision making:understandings) that guide/help in decision making: Repeat decisions taken reflexively;Repeat decisions taken reflexively;

Delegation of tasks without loss of control.Delegation of tasks without loss of control.

Some discretion is permissible depending onSome discretion is permissible depending oncircumstances thus encouragingcircumstances thus encouraging initiative withininitiative within

limitslimits and situational adjustments;and situational adjustments;

Issues with PolicyIssues with Policy

Seldom documented in writingSeldom documented in writing Subject to interpretationsSubject to interpretations


f l ( d)


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Types of Plans (contd)Types of Plans (contd) ProceduresProcedures

Plans that are chronological sequences ofPlans that are chronological sequences ofrequired actions: task-oriented in nature;required actions: task-oriented in nature;

Cuts across department boundaries (sub-Cuts across department boundaries (sub-systems) in an organization: e.g. customersystems) in an organization: e.g. customercomplaint handling procedure;complaint handling procedure;

Procedures and policies are inter related:Procedures and policies are inter related:e.g. authorization for paid leavee.g. authorization for paid leave PolicyPolicy governs quota, responsible authority etc.governs quota, responsible authority etc. ProcedureProcedure governs application, grant and record-keeping.governs application, grant and record-keeping.

RulesRules Specific actions or non-actions allowingSpecific actions or non-actions allowing nono

discretiondiscretion Caution:Caution: rules (and procedures too) limit initiativerules (and procedures too) limit initiative!!


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Types of Plans (contd)Types of Plans (contd) ProgramsPrograms

Action plans (mainly non-routine or for changedAction plans (mainly non-routine or for changedactivities) including, task assignments, steps toactivities) including, task assignments, steps to

be taken, resources to be deployed etc. tobe taken, resources to be deployed etc. to

achieve a (new/renewed) goal;achieve a (new/renewed) goal;

Primary program mayPrimary program may requirerequire supporting programs,supporting programs,spreading across the enterprise;spreading across the enterprise;

Perfect coordination between supporting & primaryPerfect coordination between supporting & primary

programs essential to avoid delays, unnecessary costsprograms essential to avoid delays, unnecessary costs

and expected roll-out.and expected roll-out.

Programs are a complex of (sub)goals, policies,Programs are a complex of (sub)goals, policies,

rules and other elements necessary for therules and other elements necessary for the

course of action e.g. obtaining ISO certification.course of action e.g. obtaining ISO certification.


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Types of Plans (contd)Types of Plans (contd)

BudgetsBudgets A statement of expected results expressed inA statement of expected results expressed in

Numerical termsNumerical terms e.g. financial operatinge.g. financial operating

budget = profit plan;budget = profit plan;

Budgets enforce precision in thinking:Budgets enforce precision in thinking: Making a budget is planning by itself;Making a budget is planning by itself;

Encourages innovation a different way to workEncourages innovation a different way to work

Budgets serve for Control:Budgets serve for Control:

Enforces discipline in execution of plans;Enforces discipline in execution of plans; Instills cost consciousness;Instills cost consciousness;

Makes people (constantly) plan!Makes people (constantly) plan!



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Steps in PlanningSteps in Planning

Being aware ofchallenges

Market, Customers

wants, Competition,Own strengths& weakness

Setting Goals/Objectives

What to accomplish

& when

Planning premises

Internal & external

Environment/conditions

Identifyingalternatives

Comparing &choosing analternative

Decision

making

Budgeting(Numberizing Plans)

e.g., Sales budget

Operational Expensebudget,

FormulatingSupporting

plans

e.g., plan to buy

Equipment, recruit & trainEmployees, develop product


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The Planning ProcessThe Planning Process Planning Period:Planning Period:

Short range plans e.g. material procurement plan in aShort range plans e.g. material procurement plan in afactoryfactory

Long range plans e.g. product development plan,Long range plans e.g. product development plan,plant/production facility installation;plant/production facility installation;

Urgent drives out the Important mismatch betweenUrgent drives out the Important mismatch between

short & long term plans!short & long term plans! Planning horizon must allow for actions to run theirPlanning horizon must allow for actions to run their

course requiring commitments:course requiring commitments:Thus decisions today are key to good plans;Thus decisions today are key to good plans;

Long-term plans reap benefits of good short-term plans.Long-term plans reap benefits of good short-term plans.



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Steps in PlanningSteps in Planning

Being aware ofOpportunity

Considering, Market,

Competition, Customerswants, Own strengths&weakness


What to accomplish

& when

bjective = Important end towards which activitiesare directed; therefore needs verification at the enof the plan period.


Hi h f Obj ti & OHierarchy of Objectives& Org


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Hierarchy of Objectives& Org.Hierarchy of Objectives& Org.

LevelsLevels

Mission

OverallObjectives &Key result areas.

Divisional objectives

Departmental objectives

Individual objectives

Board ofDirectors

CEO

DivisionHead

Product X

DivisionHead

Product Y

Sales & MktgDept

Production Dept

Sales Manager A Sales Manager B

Objectives set end results they need to be supportedby a hierarchy of sub-objectives, duly networked

through the organization to avoid discord and wastedeffort.


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The Organizational Objectives isThe Organizational Objectives isdeployeddeployed into the objectives of :into the objectives of : DivisionsDivisions DepartmentsDepartments IndividualIndividual

objectives;objectives;

The cascade principle: seamless flow;The cascade principle: seamless flow; Mutual support & interlocking of goals isMutual support & interlocking of goals is

essentialessential

Managers must ensure that the componentsManagers must ensure that the componentsof the network fit each other;of the network fit each other;

Departments/divisions can be blind-sided.Departments/divisions can be blind-sided.

Hierarchy of Objectives& Org. Levels Hierarchy of Objectives& Org. Levels

ctd.ctd.


Hi h f Obj ti & O L lHi h f Obj ti & O L l


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Hierarchy of Objectives& Org. LevelsHierarchy of Objectives& Org. Levels

ctd.ctd.

Mission

OverallObjectives &Key result areas.

Divisional objectives

Departmental objectives

Individual objectives

While setting Objectives, ideally, Top Managementshould get information / buy-in from lower levels to

set realistic goals for a good result.

Top-downApproach

Bottom-upResponse:The result


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Key Result Areas (KRA)Key Result Areas (KRA) Are areas in which performance is essential forAre areas in which performance is essential for

the success of an enterprisethe success of an enterprise Examples of generic KRAs:Examples of generic KRAs:

Market shareMarket share

Return on Investment (ROI)Return on Investment (ROI)

Service levelService level

Customer satisfactionCustomer satisfaction

Peter Drucker recommends: Market standing,Peter Drucker recommends: Market standing,

innovation, productivity, physical & financialinnovation, productivity, physical & financialresource, profitability, managerial performanceresource, profitability, managerial performance

& development, worker performance & attitude& development, worker performance & attitude

and public responsibility.and public responsibility.


Management By ObjectivesManagement By Objectives


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Management By ObjectivesManagement By Objectives(MBO)(MBO)

A comprehensive managerial system that integrates manyA comprehensive managerial system that integrates many

key managerial activities in a systematic manner and that iskey managerial activities in a systematic manner and that is

consciously directed towards the effective and efficientconsciously directed towards the effective and efficient

achievement of organizations and individual objectives:achievement of organizations and individual objectives:

Set-out bySet-out by Peter DruckerPeter Druckerin 1954;in 1954;

Integrated to personal performance appraisal byIntegrated to personal performance appraisal by Douglas McGregorDouglas McGregor

in 1957;in 1957; Has formed the basis for many theories on motivation;Has formed the basis for many theories on motivation;

Has been criticized for introducing a short-term focus andHas been criticized for introducing a short-term focus and

undesirable behaviour;undesirable behaviour;

Currently viewed as a way of managing not a specific tool.Currently viewed as a way of managing not a specific tool.



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MBO (contd)MBO (contd)

Managing the MBO way involves:Managing the MBO way involves: Identifying clearly defined KRAsIdentifying clearly defined KRAs

Setting verifiable measurement of KRAsSetting verifiable measurement of KRAs

Facilitating self-direction, accountability &Facilitating self-direction, accountability &

commitment by subordinatescommitment by subordinates

Motivation of subordinates to achieve andMotivation of subordinates to achieve and

exceed set targetsexceed set targets

Emphasis on performance rather than onEmphasis on performance rather than onpersonalitypersonality


Guidelines for settingGuidelines for setting


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Guidelines for settingGuidelines for settingObjectivesObjectives

Clear & VerifiableClear & Verifiable Clarity scores over precision approximately rightClarity scores over precision approximately right

over accurately wrong!over accurately wrong!

Expressed in Quantitative termsExpressed in Quantitative terms FiguresFigures

PercentagePercentage

Time frame (by which date)Time frame (by which date)

Should cover main deliverables of the job/ functionShould cover main deliverables of the job/ function

Challenging yet reasonable: S.M.A.R.TChallenging yet reasonable: S.M.A.R.T


Guidelines for setting ObjectivesGuidelines for setting Objectives


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Guidelines for setting ObjectivesGuidelines for setting Objectives

(Contd)(Contd) Identification of assumptions underlying theIdentification of assumptions underlying the

objectivesobjectives Consistency of:Consistency of:

objectives with those of superiors, Organization &objectives with those of superiors, Organization &other departmentsother departments

Short time action-plans with Long-term objectivesShort time action-plans with Long-term objectives

Inclusion of personal growth, development andInclusion of personal growth, development andimprovement targetsimprovement targets

Ensuring availability of and access to neededEnsuring availability of and access to neededresourcesresources

Documentation and communication ofDocumentation and communication ofobjectives to concerned personsobjectives to concerned persons


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Benefits of MBOBenefits of MBO

Result oriented planning of goals, resources,Result oriented planning of goals, resources,

organizationorganization

Setting of standards for ControlSetting of standards for Control

Decentralization of Management andDecentralization of Management and

clarification of Organizational roles &clarification of Organizational roles &

responsibilities:responsibilities:

Accountabilty & commitment of employeesAccountabilty & commitment of employees

Enables timely corrective actions (as required)Enables timely corrective actions (as required)


W k f MBO


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Weaknesses of MBOWeaknesses of MBO Emphasis on:Emphasis on:

short term at the expense of long termshort term at the expense of long term

Results over ProcessResults over Process

Individual over collective effortIndividual over collective effort

Failure to grasp and deploy the concept ofFailure to grasp and deploy the concept of

seamless cascadeseamless cascade

Difficulty in setting agreed, harmonizedDifficulty in setting agreed, harmonized

goalsgoals

Danger of inflexibilityDanger of inflexibility


ann ng rem sesann ng rem ses


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ann ng rem sesann ng rem sesStrategiesStrategies


What to accomplish

& when

Planning premises

Internal & externalenvironment

Identifyingalternatives


Decision

making

Strategic Planning ProcessStrategic Planning Process

trategytrategy= determination of the purpose / the basic long-teobjectives; the adoption of courses of action andallocation of resources required to achieve the ai


Planning Premises & StrategiesPlanning Premises & Strategies


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Planning Premises & StrategiesPlanning Premises & Strategiesctd.

Stakeholder

Wishes &Shareholderdemands

ManagementOrientation

EnterpriseProfile

Purpose &Major objectives

of enterprise

CurrentExternalsituation

Currentresourcesituation

ForecastExternalsituation

ExternalOpportunity& Threat

InternalStrengths &Weakness

Key success factors &Alternative Strategies

Strategicchoice

The Strategic Planning ProcessMELJUN P. CORTES,MBA,MPA

Pl i P iPl i P i


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Planning PremisesPlanning Premises

Porters Five Forces : anModel for analysis of the

Externals environment.ELJUN P. CORTES,MBA,MPA

Planning Premises: forecast ofPlanning Premises: forecast of


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Planning Premises: forecast ofPlanning Premises: forecast of

demanddemand Estimate ofEstimate offuture demandfuture demandis made byis made by

qualitative methods, time-series methodsqualitative methods, time-series methodsand/or causal methods:and/or causal methods: QualitativeQualitative relies on judgement of experts torelies on judgement of experts to

translate to quantities;translate to quantities; Time-seriesTime-series statistically interpolate demand onstatistically interpolate demand on

historical data;historical data; Causal methodCausal method seek co-relation on cause andseek co-relation on cause and

effect basis between two (or more) variables toeffect basis between two (or more) variables toquantify demand;quantify demand;

However, all forecasting methods are limited by:However, all forecasting methods are limited by: Handling of un-quantifiable factors e.g. national prideHandling of un-quantifiable factors e.g. national pride Unrealistic assumptions fuelled by a desire to succeedUnrealistic assumptions fuelled by a desire to succeed Excessive data required (often unobtainable) to makeExcessive data required (often unobtainable) to make

accurate forecastsaccurate forecasts Uncertainty with environmental changes: Technology,Uncertainty with environmental changes: Technology,ELJUN P. CORTES,MBA,MPA


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Generic Strategy: BCG MatrixGeneric Strategy: BCG Matrix


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Generic Strategy: BCG MatrixGeneric Strategy: BCG MatrixRed: Marketing PerspectiveRed: Marketing Perspective; Blue: Financial Perspective; Blue: Financial Perspective

Cash Source

Cash

Use

Hi

Hi Lo

Lo

Marke

tGro

wthrate

Relative Market Share

Hi

Hi Lo

Lo

STAR

Hold

???

Build

Cash Cow

Harvest

DOGS

Divest

P ann ng Prem ses & Strateg esann ng rem ses trateg es


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P ann ng Prem ses & Strateg esann ng rem ses trateg es ctd.

ecision Making = is the core of the planning process; a pla

does not come into being unless a decision i.e. certaincommitments of resources, managerial time and moneyare made and risks are taken.aution: A Plan is not intentions and should not suffer fro

Analysis Paralysis.


Decision

making

Budgeting( Numberizing Plans)

Say, Sales budgetOperational Expense

budget,Capital expenditurebudget

FormulatingSupporting

plans

Say, plan to buyEquipment, recruit & train

Employees, develop productetc

Deployment (MBO etc.)



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Decision making is a rational choiceDecision making is a rational choice

process, bounded by:process, bounded by: Limitations: time, information and logic;Limitations: time, information and logic;

Behaviour: Risk averseness and biases.Behaviour: Risk averseness and biases.

A key step in the process is to identifyA key step in the process is to identify

those limiting factors, road-blocks to eachthose limiting factors, road-blocks to each

effective (right thing) alternative theneffective (right thing) alternative then

finding a solution with least sacrifice offinding a solution with least sacrifice of

resources (thing right):resources (thing right): Factors: quantitative, qualitative/intangible;Factors: quantitative, qualitative/intangible;

Finding solutions:Finding solutions: marginal analyses benefits with incremental inputs;marginal analyses benefits with incremental inputs;

cost-effectiveness assessment of benefits over costs.cost-effectiveness assessment of benefits over costs.

Decision MakingDecision Making

D i i M ki tdDecision Making ctd


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Decision Makingctd.Decision Makingctd.

How to selectAmongst the

Alternatives ?

Experience: good teacher and useful when

routine/repeat situations arise under similarcircumstances. Without due analysis of theconditions, mistakes tend to repeat or a poorfit results.

Research & analysis: the approach is in at firs

understanding the problem (half the solution!then finding relations between various factorswhich hinder or foster goal attainment. This isstructured, analytical approach quantitative orotherwise.

Experimentation: arguably, the best techniquto use, particularly when either experience orrationale is lacking/limited. However is expensiand success/failures are magnified, results arsubject to interpretational errors.


Decision Making ctdDecision Making ctd


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Decision Makingctd.Decision Makingctd. Decision making takes place under varyingDecision making takes place under varying

degrees of uncertain conditions and risks.degrees of uncertain conditions and risks.

Techniques used to aid the process are:Techniques used to aid the process are: Risk analysis:Risk analysis: every decision is based on interactionsevery decision is based on interactions

amongst different factors/variables each of whichamongst different factors/variables each of which

have their own probabilities (towards success).have their own probabilities (towards success).

Analysis of these probabilities yield a risk profile forAnalysis of these probabilities yield a risk profile foreach alternative path. In the absence of definedeach alternative path. In the absence of defined

probabilities, estimates can be used.probabilities, estimates can be used.

Decision trees:Decision trees: the outcome (measure pre-decidedthe outcome (measure pre-decided

e.g. cost or time) of every step in the decision ise.g. cost or time) of every step in the decision ischarted and a course selected on the most favourablecharted and a course selected on the most favourable

outcome. Very much like making a trip, navigating byoutcome. Very much like making a trip, navigating by

using a road-mapusing a road-map (refer example in W & K, Management (refer example in W & K, Management a global perspective/10a global perspective/10thth edn. Pg. 209)edn. Pg. 209)


Decision Making ctdDecision Making ctd


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Decision Makingctd.Decision Makingctd.

Flow Charts:Flow Charts: as a process-guide to taking a decision andas a process-guide to taking a decision and

helps as a check-list of key variables, the sequence inhelps as a check-list of key variables, the sequence in

which they fall and the interrelations. Key to making awhich they fall and the interrelations. Key to making a

choice or re-examining the path taken are also indicatedchoice or re-examining the path taken are also indicated

as risk-reduction devices.as risk-reduction devices.

(refer example in W & K, Management a global perspective/10(refer example in W & K, Management a global perspective/10thth edn. Figure 8-5)edn. Figure 8-5)

Decision Support Systems:Decision Support Systems: a wide variety of (proprietary)a wide variety of (proprietary)

computer based programs are available for managers tocomputer based programs are available for managers to

use their time more effectively for decision making ofuse their time more effectively for decision making of

semi-structured tasks by providing alternativesemi-structured tasks by providing alternative

evaluations. They focus on the process of decisionevaluations. They focus on the process of decision

making, taking data provide by the managementmaking, taking data provide by the management

information systems in enterprises.information systems in enterprises.



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Principles of Management4

Management Process:

Organizing for results

Nature of OrganizingNature of Organizing


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Nature of OrganizingNature of Organizing OrganizingOrganizing may be broadly defined as:may be broadly defined as:

1.1. The identification and classification of requiredThe identification and classification of requiredactivities;activities;

2.2. The grouping of those activities towardsThe grouping of those activities towards

attaining their set objectives;attaining their set objectives;

3.3.

The assignment of those groupings to aThe assignment of those groupings to a

responsible manager, duly empowered;responsible manager, duly empowered;

4.4. The provision for coordination among, withinThe provision for coordination among, within

and across the groups in the organization.and across the groups in the organization.

Organization structuresOrganization structures

are designed to:are designed to:

Clarify tasks & responsibilities,Clarify tasks & responsibilities,

Remove obstacles,Remove obstacles,

Furnish decision making & communicationFurnish decision making & communication

networknetwork

Nature of Organizing ctd.Nature of Organizing ctd.


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Nature of Organizing ctd.Nature of Organizing ctd.The Business OrganizationModel: ValueChain (Porter,1985)

Margin

Margin

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

InboundLogistics

OperationsOutboundLogistics

Marketing& Sales

Service

Sup

portActivities

Primary Activities

argin reflects the reward for the risks run by the company.

All activities together need to generate value greater



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Inbound Logistics:relate to receiving, storingand disseminating inputs;

Operations:associated with transformation ofinputs into final product form;

Outbound Logistics:relate to collecting,storing and physically distributing theproducts to buyers;

Marketing & Sales:relate to advertising,Promotion, sales, distribution-channelselection & management and Pricing;

Service:associated with enhancement or

The Value Chain: Primary Activities




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Nature of Organizing ctd.g g

Procurement: relates to the function ofpurchasing inputs used across the firmsprimary and support activities;

Technology Development: relates to know-how,processes & procedures, technologyembodied in the product design and delivery.Most activities have their own sub-set oftechnology;

Human Resource Management: directed atrecruiting, training, developing andcompensating all personnel;

The Value Chain: Support Activities


N t f O i i tdNature of Organizing ctd


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Most practicing mangers would translate thisMost practicing mangers would translate this

value chain to imply an organization as:value chain to imply an organization as: a formalized, intentional structure of roles anda formalized, intentional structure of roles andpositionspositionsThus formal organization implies the intentionalThus formal organization implies the intentional

structure of roles in an enterprise.structure of roles in an enterprise.

However, in an enterprise informal organization willHowever, in an enterprise informal organization willform, not necessarily bad and is:form, not necessarily bad and is:

a network of personal and social relations nota network of personal and social relations notestablished or required by formal organizationsestablished or required by formal organizations

but arising spontaneously as people associatebut arising spontaneously as people associatewith each other.with each other.



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Hierarchical levels

Span of contro

The building block of an organizationis the Department: a group charged

with independent task & responsibili

##

#

#

#

# Office Bridge Team

$ $ $

$ Car poolMELJUN P. CORTES,MBA,MPA



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Grouping activities & people intoGrouping activities & people into departmentsdepartments

makes it conceptually possible to expandmakes it conceptually possible to expandorganizations to an infinite degree.organizations to an infinite degree.

Different patterns have been successfully usedDifferent patterns have been successfully used

to group activities:to group activities: By simple nos. is a simple method works well for theBy simple nos. is a simple method works well for the

lowest levels where work is routine, uniform and non-lowest levels where work is routine, uniform and non-

specialized; time-grouping is an extension of thisspecialized; time-grouping is an extension of this

method where shift-working is required;method where shift-working is required;

By enterpriseBy enterprise functionsfunctions embodies what enterprises embodies what enterprisestypically do e.g. Production, Engineering, Sales etc.typically do e.g. Production, Engineering, Sales etc.

This method, defined by F.W.Taylor, is arguably theThis method, defined by F.W.Taylor, is arguably the

most prevalent method still used.most prevalent method still used.

g gg gDepartmentationDepartmentation


Departmentation ctdDepartmentation ctd


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By territory or geography is very common when theBy territory or geography is very common when the

geographical spread is wide. It was a device introduced to speedgeographical spread is wide. It was a device introduced to speed

up management in similar units for easy and swift communicationup management in similar units for easy and swift communication

e.g. Sales: N/E/W/S; Fire Brigade: Camp, Hinjewadi, Aundh etc.e.g. Sales: N/E/W/S; Fire Brigade: Camp, Hinjewadi, Aundh etc. By Customer/Account orientation reflecting the primary interestBy Customer/Account orientation reflecting the primary interest

in nature of markets/business/customer e.g. Banks: Institutionalin nature of markets/business/customer e.g. Banks: Institutional

banking, Small Savings etc.banking, Small Savings etc.

By Process groups encountered primarily in specialized/By Process groups encountered primarily in specialized/

manufacturing operations where processes are vital e.g.manufacturing operations where processes are vital e.g.Advertising: Copy-writing, Creative etc.; Manufacturing: SteelAdvertising: Copy-writing, Creative etc.; Manufacturing: Steel

Melting, Wire-drawing etc.Melting, Wire-drawing etc.

By Product Lines has evolved with enterprises becoming multi-By Product Lines has evolved with enterprises becoming multi-

line with function needing adaptation/integration to suit specificline with function needing adaptation/integration to suit specific

products e.g. Tata Motors: Passenger Vehicles / Commercialproducts e.g. Tata Motors: Passenger Vehicles / Commercialvehiclesvehicles

Departmentation ctd.Departmentation ctd.

Departmentation ctdDepartmentation ctd


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By grid control in essence combining theBy grid control in essence combining the

functional and the product-line patterns to bestfunctional and the product-line patterns to best

effect. Functional excellence is not subjugated toeffect. Functional excellence is not subjugated toOperational ease.Operational ease. In projects, thisIn projects, this

serves to bring together the diversity of skillsserves to bring together the diversity of skills

required into one team.required into one team.

TheThe

SS

trategictrategic

BB

usinessusiness

UU

nit: companies today arenit: companies today are

organizing themselves asorganizing themselves as companies within acompanies within a

companycompanyto allow for maximum flexibility andto allow for maximum flexibility and

freedom of operations, especially when thefreedom of operations, especially when the

products/businesses are unconnected e.g. Generalproducts/businesses are unconnected e.g. General

Electric. Generally, SBUs have:Electric. Generally, SBUs have:Their own Missions, Goals and Strategies;Their own Missions, Goals and Strategies;

Distinct and definable set of competitors;Distinct and definable set of competitors;

Deploy and manage resources in key areas;Deploy and manage resources in key areas;

A reasonable size.A reasonable size.

Departmentation ctd.Departmentation ctd.


Departmentation ctd


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C.E.O

Finance Qual. HRM BU 1 BU 2

I.R.M

Recr.

T&D

G/H.R

Plant 1

G/H.R

Ind.

Sin.

I.S.O

Departmentation ctd.Example of Grid Control & S.B.Us



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Span-of-Management ctdSpan-of-Management ctd


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Levels,Levels,per se,per se, are not desireable:are not desireable:

They are expensive as they increase, bothThey are expensive as they increase, bothinfrastructure costs and staffing tends to increase;infrastructure costs and staffing tends to increase;

Real work is accomplished at the gemba (Real work is accomplished at the gemba (Japanese:Japanese:

workplaceworkplace) where the actual value-) where the actual value-

addition/transformation takes place. The contribution ofaddition/transformation takes place. The contribution of

levels on top are not directly co- relatable, thus bestlevels on top are not directly co- relatable, thus best

avoided;avoided;

Communication become complicated omissions,Communication become complicated omissions,

filterations and misinterpretations lead to wasted andfilterations and misinterpretations lead to wasted and

misdirected effort;misdirected effort; Planning and control become tortuous, requiringPlanning and control become tortuous, requiring

complicated coordination and alignment between levels.complicated coordination and alignment between levels.

Studies reveal that between 8 to 10 people at higherStudies reveal that between 8 to 10 people at higher

Span-of-Management ctd.Span of Management ctd.

meljun cortes's - principles of management

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