Principle of Management Sem 2

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UNIT-2

EMERGING ISSUES IN MANAGEMENT

PROFESSIONALISATION OF MANAGEMENT IN INDIA:

The survival and growth of the organization depends largely on the competence and character of

its management. Management is the dynamic life-giving element in every organization without

management the resources of production remain a resource and can never become output.

Survival of the organization depends on the quality of management because sound management

helps to achieve group goals, optimum utilization of resources, fulfillment of social obligation,

economic growth and meets the challenge of change. In short, management is dynamic and

indispensable aspect of modern civilization. According to P.F. Drucker it is a creative factor of

production without which all other factors like capital, labour etc will be latent.

THEORETICAL APPLIED APPROACHES OF MANAGEMENTClassical approach: It focuses attention on universal application of principles of and functions

of management. This approach offers a mechanistic frame work that undermines the role of

human factor. It supports the entrepreneur for increasing production and profit. In contrast the

cooperatives are formed for the benefits of its members with service motive and not with profit

motive. Hence, the classic approach is subject to the limitation of member/citizen oriented

approach

Behavioral (Neo-classical) approach: The classical approach is focused on the jobs; the

behavioral approach stressed the individual performing the jobs. It attaches much importance to

human element and recognizes the quality of manager and leader. The neo-classical theory is

said to have a short-sighted perspective and fails to recognize the creative role of conflict.

Managing conflict is the major area in the cooperatives sector and it is mainly due to government

and political interference in cooperatives. Cooperative seems to be member oriented but to a

certain extent it is party (political) and government based.

System approach: In system approach each sub-system derives strength by its association and

interaction with other sub-system. As a result the collective outcome is more than the sum total

of individual contribution. This theory to a certain extent covers the methods and functioning of

cooperatives. Hence, the system approach of management may fit in to the cooperative system of

management and at the same time, theory is more complex and difficult to understand and adopt

in cooperative sector, because neither the management nor the paid executives are professional.

In the present competitive environment, the third sector organization like cooperatives needs to

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be professionalized and it becomes very essential after adoption of the policy of liberalization,

globalization and privatization.

CHALLENGES AGAINST PROFESSIONALISATION OF

MANAGEMENT IN INDIA:

The cooperative sector due to lack of professional approach faces the crisis of identity and

struggles a lot for its survival and growth. In India no cooperative is an exception to these

problems, whether be it credit, non-credit or processing cooperatives. The credit cooperatives,

particularly the cooperative banking sector is unable to cope up with the recent banking sector

reforms. The only solution to make the cooperative sector viable, effective, efficient and

transparent is brining professional approach through proper training and development. This

professional approach will certainly bring Paradigm Shift in the functioning of cooperatives

and replace the traditional system of management by modern system of management and it is

need of the hour.

MEMBER ORIENTED APPROACHThe management of cooperatives is user oriented, member oriented, development oriented with

concern for community. The strength of cooperative is shared values amongst members which

includes non-material aspects of cooperatives as social entity with meta-economic goals of

society, loyalty and group self-help are essentially human value inputs of management. While

promoting the value and fostering normative character, a cooperative being a market player has

to evolve management strategies to counter the challenges of the market. The management of

cooperatives is unique because of the value base and principles upon which the edifice of the

cooperatives is built.

CREATIVITY AND INNOVATION:

MEANING OF CREATIVITY: Creativity is the driving force behind new knowledge creation

and the generation of innovative outputs. Businesses that are able to effectively source and

absorb knowledge and information are more likely to apply it creatively.

MEANING OF INNOVATION:

Theprocessby which an idea or invention is translated into a good or servicefor which people

willpay, or something thatresultsfrom this process.

ROLE OF CREATIVITY:

Creativity

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The globalizational effects of technological and economic development experienced in recent

decades are significant. The intensity of innovation has not decreased, even in times of worldeconomic recession. On the contrary: in this area immense growth has been seen.

The growth of competition has lead to the revaluation of the human factor. The creative human

has come into central focus.

The notion of creative human is interpreted in a wider sense today. Not only artists, or

researchers with significant innovations belong to this category, but also professionals who

execute and develop everyday activities.

Many notions exist about the most important traits and characteristics of creative personnel.

According to some, creativity is defined above all by talent, or abilities that we are born with.

Another approach highlights the role of personality traits, while the stress on adequatemotivation is also recognized.

Them contribute creativity to many factors, and admit that different combinations of theseelements lead to the creation of similar creative abilities.

Through creative ability it is possible to find new and novel ideas to solve problems. The

creative person is characterized by a healthy combination of three factors:

The development of abilities is principally executed within the educational system in the

framework of educational programs.

Motivation originates from the environment, and awakens ambitions.

Creativity is perhaps the most valuable personal trait, although it is difficult to measure it can bedeveloped by the development of certain cognitive factors (for example: association, abstraction,

combination or intuitive abilities etc.).

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The Renzulli model

The elements of creativity

The elements of creativity are the following:

1. creative process2. product of creativity: the creation3. creative person

4. creative environment

The creative process

According to FindlayLumdsen the creative process could involve the clarified, or simplifieddefinition of a previously ambiguous problem, a new solution to a problem (task), or

combination of the two.

In the view of MacKinnon creativity incorporates a new answer or idea.

In contract Perkins defines creativity as a search process; the path to the most adequate solution.

Product of creativity: the creation

The creation is the innovation that is a direct result of the creative process.

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In a narrow sense, only those products which are new on a world class level are termed

innovations.

In a broader definition, creativity can be considered as all intellectual and physical products,

which are born out of innovative problem solving. During this process those suggestions and

solutions which are new or novel in the given time and location are considered to be.

Creative person

The essence of the creative process is the creative person. This person is the intellectual source

of the innovation embodying the essence of creativity, an active player in the process and the

creator.

Creative environment

This is the environment of the creative person, where the innovation comes into existence.

In a narrow sense only those factors which influence the innovational human activity are

involved.

By a broader definition it incorporates the workplace characteristics, and if extended further, the

national and international factors influencing creation also be planed in this category. The

informational, legal, technicaleconomical, personal etc. conditions must all be taken intoconsideration.

Creative thinking

The solution for various tasks require different thinking processes, or mentalities. In the view ofRawlinson, only two basic thinking processes exist: analytical and creative. Their characteristics

are described in table 1.

Table 1

The two types of thinking processes and their characteristics

Analytical Creative

Logic Imagination

One (few) answer(s) Numerous possible answers or ideas

Convergent (one main line of thought) Divergent (branching lines of thought)

Vertical Horizontal

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There are significant differences between the creative and analytical types of thinking. In

practice, however, the two are employed in a combination and complement each other.

Analytical thinking results in one or only a few solutions, whereas creative thinking provides

numerous ideas which are rich in variations.

During the analytical method, the problem is recognized, examined in detail and solutions aredeveloped in a limited area, by thorough and precise means. In contrast creative thinking

involves the search for solution, on the widest scale possible. This requires the collection of

ideas, even the most surprising possibilities which could aid the solution of the task.

Examination of the traits of creative thinking shows that there is a clear need for logical thinking,

some analysis mechanisms, and some systematic method for narrowing down the possible

answers.

In contrast the few solutions born out of analytical thinking may only be expanded by a creative

process. The advantages of a different thinking method can be seen in the recognition of solutionvariants and the exponential growth in the number of solutions.

Figure 2

Analytical and creative thinking

The result of focused analytical thinking may provide the starting point for the creative thinkingprocesses. The solutions produced in this manner can be worked out further, but this requires a

change back to the analytical approach again.

Such a differentiation of the two types of thinking is only acceptable theoretically. Both types of

thinking process can be found in all of us. The question is, which dominates?

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Creative techniques employed in innovational planning steps

Process element Most adequate creative method

1. Creation of innovational

information base

For needs analysis: the professional knowledge of

specialists in the field, innovationresearch,

specialist involvement, teamwork. Developinginformation technology: professional field

knowledge

2. Position analysis Professional methods of diagnostics in the

framework of personal and teamwork, andinvolvement of specialists

3. Creation of forecasts Solution and creative methods suited for forecasting

(for example: Delphi method)

4. Definition ofrequirements and

objectives related to task

identification

To set valid innovational standard: decisionpreparation through personal and collective

methods

5. Preliminary qualitativeappraisal of project

potential needs

Appraisal of condition system through indirectmethods (research of intellectual products,

employment of professional experience,

involvement of specialists), using team work

6, Preliminary qualitativeappraisal of expected

results

Professional methods of given (market, technical,economic) areas

7. Selection, ranking andappraisal of efficiency of

project suggestions

Employing professional methods of efficiencyappraisal and comparison. For preliminary selection

and ranking: adequate execution of personal and

group ranking methods. Application andqualification of solutions according to ranking and

lockout criteria in specialist work.

8. Preparation of plan

concept

Application of professional methods in given

specialist fields and collective establishment ofconcept through direct and group creation

9. Working out

development and

investment action plans

Consideration of projectseligible for the action plans

After personal preparation, identification of relatedinnovation projects by teamwork

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Planning development

and investment sources for

planperiod

Personal and collective consideration of conditionsystem satisfying professional aspects

Planning execution form Appraisal of executive forms through personal and

collective creative processes. Specification of givenproject terms by professional and collective aspects

mainly through personal work

Selecting optimal

investment variant for each

project

Teamwork according to optimum search solution

Detailed appraisal ofproject potential needs

The use of strictly professional (direct) methods

Further examination of

expected results

Expression of realization in numeric values requires

cooperation between professional areas, while it is

based on mainly personal work

Numeric appraisal of

expected results

Known methods of economic calculations are

generally indirect creative methods

Complex project

appraisal, project ranking

Qualification according to innovational strategy is

undertaken by few professionals taking intoconsideration the characteristics of developed

projects

Selection of a project,

executable in planperiod

Decision of top executives based on a prepared

study

JAPANESE AND AMERICAN MANAGEMENT:

American Versus Japanese Management Model

Every country is different from other. There management, food, way of living and standards are

all different. In some countries government is very influencing while in other they are not muchbother.

Such two different countries are America and Japan.

They have different cultures and management systems as a by-product of culture manifests

unique characteristics in both the countries.

MAJOR DIFFERENCE

American are performance oriented unlike Japanese who are perfectionist.

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EFFORT EVALUATION

-Process versus Results:

This seems to be the key difference between Americans and Japanese.

Americans are more results oriented while Japanese focus on process improvements

.Once they learn how to do something, they work on small improvements

they evaluate effort not results. Because Americans are process averse, they depend onmanuals to tell what the results should be. The down side of the process focus is to kill

creativity. Overall, the two cultures should learn from each other, and become more like each

other. Neither completely process nor completely results focused.

TEAM WORK

The Japanese and Americans see two different meanings behind these words

In Japan team work means to help others, here it means functional maximization, that isto improve results.

This leads to a difference in the roles on the team. In Japan the team leader is alwaysasking team members to help more, here the team leader is responsible for results.

Americans are more inclined towards individual tasks performance..

CUSTOMER FIRST AND SHAREHOLDER LAST

The priority order of customers and suppliers is different for U.S. and Japanese business

America

1.Shareholder

2.Customer

3. Employee

Japan

1.Customer

2. Employee

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3. Supplier

4. Community

5. Country

6. Shareholder

Japanese firm is organized for the employee. It is a more human orientation

COMPARATIVEMANAGEMENT

Because of the success of Japanese companies in world markets,

Researchers have paid a special attention to the Japanese management style . As a result,

Many scholars compared the Japanese management system with the American and Europeansystem

MANAGEMENT INFORMATION SYSTEM:

CONCEPT:

MIS comprises of three elements viz., management, information and system. The concept of

MIS is better understood if each element of the term MIS is defined separately.

Management: A manager may be required to perform following activities in an

organization:

(i) Determination of organizational objectives and developing plans to achieve them.

(ii) Securing and organizing human beings and physical resources so as to achieve the laid down

objectives.

(iii) Exercising adequate controls over the functions performed at the lower level.

(iv) Monitoring the results to ensure that accomplishments are proceeding according to plans.

Thus, management comprises of the processes or activities that describe what manager do while

working in their organization. They in fact plan, organize, initiate, and control operations. In

other words, management refers to a set of functions and processes designed to initiate and co-ordinate group efforts in an organized setting directed towards promotion of certain interests,

preserving certain values and pursuing certain goals. It involves mobilization, combination,

allocation and utilization of physical, human and other needed resources in a judicious manner

by employing appropriate skills, approaches and techniques.

Information: Information is data that have been organized into a meaningful and useful context.

It has been defined by Davis and Olson - Information is data that has been processed into a form

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that is meaningful to the recipient and is of real or perceived value in current or progressive

decision. For example, data regarding sales by various salesmen can be merged to provide

information regarding total sales through sales personnel. This information is of vital importance

to a marketing manager who is trying to plan for future sales.

Information is the substance on which business decision are based. Therefore, the

quality of information determines the quality of action or decision. The management plays the

part of converting the information into action through the familiar process of decision-making.

Information has come to occupy a very important position in the survival of a business.

System: System may be defined as a composite entity consisting of a number of

elements which are interdependent and interacting, operating together for the

accomplishment of an objective. One can find many examples of a system. Human body is a

system, consisting of various parts such as head, heart, hands, legs and so on. The various body

parts are related by means of connecting networks of blood vessels and nerves. This system has a

main goal which we may call living. Thus, a system can be described by specifying its parts,

the way in which they are related, and the goals which they are expected to achieve. A businessis also a system where economic resources such as people, money, material, machines, etc. are

transformed by various organization processes (such as production, marketing, finance, etc.) into

goods and services.

Thus, MIS can be defined as a network of information that supports management

decision making. The role of MIS is to recognize information as a resource and then use it for

effective and timely achievement of organizational objectives.

Importance of Management Information System

MIS offers numerous advantages, some of which are listed below.

1. With the help of MIS, management remains informed on current trends and situations that are

relevant and critical to the business operations.

2. Adequate information can help the management in facing challenges prevailing in the business

environment more effectively and take timely decisions to overcome these challenges.

3. MIS can help the company to stay ahead of its competitors by taking advantage of various

available business opportunities.

MIS can be implemented in any type of organization irrespective of the size and nature of

business (though associated costs can be a limiting factor for small scale organizations).

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4. MIS helps in saving management time, as it avoids the need to go through each and every

aspect of business operations. Management can focus on core areas of business operations rather

than wasting time on analyzing irrelevant information.

5. MIS can be used for generating information at every level of the organization. With proper

MIS, information can be obtained for a process, department, division or a branch of a company.

Even though MIS may not be able to generate the desired results immediately, its importance in

overall business management should not be ignored. MIS should be developed in such a way that

it becomes an integral part of the organizations business activities.

MANAGEMENT BY OBJECTIVE:

Peter Drucker, (1954, The Practice of Management)

Is a systematic and organized approach that allows management to focus on achievable

goals and attain the best possible results from available resources

Aims to increase individual and organizational effectiveness by aligning organizational

goals and subordinate objectives

Clarifies and quantifies objectives to allow for monitoring, evaluation, and feedback

throughout the hierarchy of objectives

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MBO; CROSS SECTION

Vision

Mission

Tactical

Plans

Managementby

Objectives

Operational

Plans

Standing

Plans

Single-Use

Plans

TopManagers

Middle

Managers

First-Level

Managers

Single-use Plans are developed to achieve objectives that are not likely to be repeated in

the future. Single-use plans include both programs and projects.

Standing Plans are used to provide guidance for tasks performed repeatedly within the

organization. The primary standing plans are organizational policies, rules, and

procedures.

Operational Plans are used to identifies specific results to be accomplished within a

given short term time period. Contain detailed information used in the lower levels in an

organization.

MERITS OF MBO:

Improves employee motivation

Improves communication in the organisation

Flags up and highlights training needs required to achieve objectives Improves overall performance and efficiency

Attainment of goals can lead to the satisfaction of Maslows higher order needs

DEMERITS OF MBO:

May demotivate staff if targets are too high and unrealistic, also if imposed rather than

agreed

Requires the cooperation of all employees to succeed

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Can be bureaucratic and time consuming (meetings, feedback)

Can encourage short-term rather a more focused long-term growth

Objectives may go out of date and can restrict staff initiative and creativity

Setting targets for certain specialised employees may be difficult

PROCESS FOR MBO

Appraise

Performance

Corporate Strategic goals

Departmental goals

Individual goals

STEP 1: SET GOALS

STEP 4: APPRAISEOVERALL PERFORMANCE

Action Plans

Review Progress

&

Take Corrective Action

STEP 2: DEVELOP PLANS

STEP 3: REVIEW PROGRESS

Set Goals (The most difficult step) What are we trying to accomplish?

Develop Action Plans

What do we need to do to get there?

Groups and individuals

Review Progress

How are we doing?

Periodically (How Often?)

Does plan need to be tweaked?

Appraise Performance

Rewards?

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UNIT-5

INTRODUCTION TO STRATEGIC MANAGEMENT

DEFINITION:1.Strategic management is a field that deals with the major intended and emergent initiatives

taken by general managers on behalf of owners, involving utilization of resources, to enhance the

performance of firms in their external environments.

2.Strategic management is an ongoing process that evaluates and controls the business and the

industries in which the company is involved; assesses its competitors and sets goals and

strategies to meet all existing and potential competitors; and then reassesses each strategy

annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it

has succeeded or needs replacement by a new strategy to meet changed circumstances, new

technology, new competitors, a new economic environment., or a new social, financial, or

political environment.

FEATURES OF STRATEGIC MANAGEMENT:

1. Mission Statement

Every good strategic management plan begins with a concise mission statement. The

strategic management process revolves around aligning the day-to-day work activities with this

mission statement to achieve long-term success. The mission statement is a statement of the

organization's purpose and reason for existence. The mission statement should also state what it

is about this specific organization that sets it apart from others within the same industry. This

specific aspect is vital to creating and maintaining a sustainable competitive advantage.

2.GoalsStrategic long-term goals and objectives are another key feature of strategic management.

These goals are commonly created through the SMART goals model. SMART goals are goals

that are strategic in nature, reasonably measurable and attainable. SMART goals are also relevant

to the mission of the organization and must be achieved within a specific time frame.

3. Situation Analysis

The situation analysis feature of strategic management is used to determine the

organization's current situation while also analyzing the gap between where the organization is

now and where it wants to go. SWOT analysis, PEST analysis and gap analysis are all common

tools used for this process. The SWOT analysis analyzes the organization's strengths,

weaknesses, opportunities and threats while the PEST analysis analyzes political, economic,social and technological factors that may affect the organization. Gap analysis is used to

determine how much of a gap exists between the organization's current situation and its ideal

one.

4. Strategy Implementation

Strategic management typically begins with abstract concepts as determined at the

executive level of the organization before being disseminated throughout the organization for

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implementation at the functional and operational levels. Executives determine the mission

statement and long-term goals before working with managers and department heads to develop

policies and procedures designed to carry out the strategic plan. These policies and procedures

are then implemented by supervisors throughout the organization.

Difference Between Operational & Strategic Management:

1.Operations Management:

Operational management deals with the nitty-gritty basics of how a company operates, such

as keeping track of spending costs and cash flow as well as maintaining a supply line. Some of

the best managers have been those who have found ways to make the basic operations of a

company more efficient. Operational management requires knowledge of a constantly changing

variety of data and variables, and skillful and flexible planning is required.

2.Strategic Management:

Strategic management does not merely have to do with setting broad and lofty goals, but

works to establish a plan over the long term that will work toward those goals. This involves

taking into account such factors as competition and consumer demand. The most successfulbusiness visionaries have been able to establish very realistic pictures of the market and operate

within the constrictions that they were given by the market. Strategic management takes a great

deal of common sense.

STRATEGIC PLANNING FORMULATION PROCESS:

Strategy formulation refers to the process of choosing the most appropriate course of action for

the realization of organizational goals and objectives and thereby achieving the organizational

vision. The process of strategy formulation basically involves six main steps. Though these steps

do not follow a rigid chronological order, however they are very rational and can be easily

followed in this order.

1. Setting Organizations objectives - The key component of any strategy statement is to set the

long-term objectives of the organization. It is known that strategy is generally a medium for

realization of organizational objectives. Objectives stress the state of being there whereas

Strategy stresses upon the process of reaching there. Strategy includes both the fixation of

objectives as well the medium to be used to realize those objectives. Thus, strategy is a wider

term which believes in the manner of deployment of resources so as to achieve the objectives.

While fixing the organizational objectives, it is essential that the factors which influence the

selection of objectives must be analyzed before the selection of objectives. Once the objectives

and the factors influencing strategic decisions have been determined, it is easy to take strategic

decisions.

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2. Evaluating the Organizational Environment - The next step is to evaluate the general

economic and industrial environment in which the organization operates. This includes a review

of the organizations competitive position. It is essential to conduct a qualitative and quantitative

review of an organizations existing product line. The purpose of such a review is to make sure

that the factors important for competitive success in the market can be discovered so that the

management can identify their own strengths and weaknesses as well as their competitors

strengths and weaknesses.

After identifying its strengths and weaknesses, an organization must keep a track of

competitors moves and actions so as to discover probable opportunities of threats to its market

or supply sources.

3. Setting Quantitative Targets - In this step, an organization must practically fix the

quantitative target values for some of the organizational objectives. The idea behind this is to

compare with long term customers, so as to evaluate the contribution that might be made byvarious product zones or operating departments.

4. Aiming in context with the divisional plans - In this step, the contributions made by each

department or division or product category within the organization is identified and accordingly

strategic planning is done for each sub-unit. This requires a careful analysis of macroeconomic

trends.

5. Performance Analysis - Performance analysis includes discovering and analyzing the gap

between the planned or desired performance. A critical evaluation of the organizations past

performance, present condition and the desired future conditions must be done by theorganization. This critical evaluation identifies the degree of gap that persists between the actual

reality and the long-term aspirations of the organization. An attempt is made by the organization

to estimate its probable future condition if the current trends persist.

6.Choice of Strategy - This is the ultimate step in Strategy Formulation. The best course of action

is actually chosen after considering organizational goals, organizational strengths, potential and

limitations as well as the external opportunities.

SWOT ANALYSIS:

SWOT analysis is a method for analysing a business, its resources, and its environment.

SWOT is commonly used as part of strategic planning and looks at:

Internal strengths

Internal weaknesses

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Opportunities in the external environment

Threats in the external environment

SWOT can help management in a business discover:

What the business does better than the competition What competitors do better than the business

Whether the business is making the most of the opportunities available

How a business should respond to changes in its external environment

The result of the analysis is a matrix of positive and negative factors for management to address:

Positive factors Negative factors

Internal factors Strengths Weaknesses

External factors Opportunities Threats

The key point to remember about SWOT is that:

Strengths and weaknesses

Are internal to the business

Relate to the present situation

Opportunities and threats

Are external to the business

Relate to changes in the environment which will impact the business

Using SWOT analysis

There is no point producing a SWOT analysis unless it is auctioned ! SWOT analysis should be

more than a list - it is an analytical technique to support strategic decisions

Strategy should be devised around strengths and opportunities

The key words are match and convert:

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SWOT ANALYSIS EXAMPLE:

This SWOT analysis example is based on an imaginary situation. The scenario is based on a

business-to-business manufacturing company, who historically rely on distributors to take

their products to the end user market. The opportunity, and therefore the subject for the

SWOT analysis, is for the manufacturer to create a new company of its own to distribute its

products direct to certain end-user sectors, which are not being covered or developed by its

normal distributors.

Subject of SWOT analysis example: the creation of own distributor company to access new

end-user sectors not currently being developed.

Strengths:

* End-user sales control and direction.

* Right products, quality and reliability.* Superior product performance vs. competitors.

* Better product life and durability.

* Spare manufacturing capacity.

* Some staff have experience of end-user sector.

* Have customer lists.

* Direct delivery capability.

* Product innovations ongoing.

* Can serve from existing sites.

* Products have required accreditations.

* Processes and IT should cope.

* Management is committed and confident.

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Weaknesses:

* Customer lists not tested.

* Some gaps in range for certain sectors.

* We would be a small player.

* No direct marketing experience.

* We cannot supply end-users abroad.

* Need more sales people.

* Limited budget.

* No pilot or trial done yet.

* Don't have a detailed plan yet.

* Delivery-staff need training.

* Customer service staff need training.

* Processes and systems, etc

* Management cover insufficient.

Opportunities:

* Could develop new products.* Local competitors have poor products.

* Profit margins will be good.

* End-users respond to new ideas.

* Could extend to overseas.

* New specialist applications.

* Can surprise competitors.

* Support core business economies.

* Could seek better supplier deals.

Threats:

* Legislation could impact.* Environmental effects would favour larger competitors.

* Existing core business distribution risk.

* Market demand very seasonal.

* Retention of key staff critical.

* Could distract from core business.* Possible negative publicity.

* Vulnerable to reactive attack by major competitors.

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IDEA OF STRATEGY IMPLEMENTATION:

Organizations successful at strategy implementation effectively manage

six key supporting factors:

1. Action Planning

2. Organization Structure

3. Human Resources

4. The Annual Business Plan

5. Monitoring and Control

6. Linkage.

1. Action Planning

First, organizations successful at implementing strategy develop detailed action plans...

chronological lists of action steps (tactics) which add the necessary detail to their strategies. And

assign responsibility to a specific individual for accomplishing each of those action steps. Also,

they set a due date and estimate the resources required to accomplish each of their action steps.

Thus they translate their broad strategy statement into a number of specific work assignments.

2.Organizational Structure

Next, those successful at implementing strategy give thought to their organizational

structure. They ask if their intended strategy fits their current structure. And they ask a deeper

question as well... "Is the organization's current structure appropriate to the intended strategy?"

The reason the firm had been unable to develop those products was simple... they had

never organized to do so. Lacking the necessary commitment for new product development,

management didn't establish an R&D group. Rather, it assigned its manufacturing engineering

group the job of new product development... and hired two junior engineers for the task. Since

the primary function of the manufacturing engineering group was to keep the factory humming,

those engineers kept getting pulled off their "new product" projects and into the role of the

manufacturing support. Resultno new products.

3.Human Resource Factors

Organizations successful at strategy implementation consider the human resource factor

in making strategies happen. Further, they realize that the human resource issue is really a two

part story. First, consideration of human resources requires that management think about the

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organization's communication needs. That they articulate the strategies so that those charged

with developing the corresponding action steps (tactics) fully understand the strategy they're to

implement.

Second, managers successful at implementation are aware of the effects each new

strategy will have on their human resource needs. They ask themselves the questions... "How

much change does this strategy call for?" And, "How quickly must we provide for that change?"

And, "What are the human resource implications of our answers to those two questions?"

In answering these questions, they'll decide whether to allow time for employees to grow

through experience, to introduce training, or to hire new employees.

4.The Annual Business Plan

Organizations successful at implementation are aware of their need to fund their

intended strategies. And they begin to think about that necessary financial commitment early in

the planning process. First, they "ballpark" the financial requirements when they first develop

their strategy. Later when developing their action plans, they "firm up" that commitment. As aclient of ours explains, they "dollarize" their strategy. That way, they link their strategic plan to

their annual business plan (and their budget). And they eliminate the "surprises" they might

otherwise receive at budgeting time.

5.Monitoring & Control

Monitoring and controlling the plan includes a periodic look to see if you're on course. It

also includes consideration of options to get a strategy once derailed back on track. Those

options (listed in order of increasing seriousness) include changing the schedule, changing the

action steps (tactics), changing the strategy or (as a last resort) changing the objective. (For moreon this point, see "Monitoring Implementation of Your Strategic Plan.")

6.Linkage - The Foundation for Everything Else

Many organizations successfully establish the above five supporting factors. They

develop action plans, consider organizational structure, take a close look at their human resource

needs, fund their strategies through their annual business plan, and develop a plan to monitor and

control their strategies and tactics. And yet they still fail to successfully implement those

strategies and tactics. The reason, most often, is they lack linkage. Linkage is simply the tying

together of all the activities of the organization...to make sure that all of the organizational

resources are "rowing in the same direction."

SEVEN S MODEL:

The Seven Elements

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The McKinsey 7S model involves seven interdependent factors which are categorized as either

"hard" or "soft" elements:

Hard Elements Soft Elements

Strategy

Structure

Systems

Shared Values

Skills

Style

Staff

"Hard" elements are easier to define or identify and management can directly influence them:

These are strategy statements; organization charts and reporting lines; and formal processes and

IT systems.

"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and

more influenced by culture. However, these soft elements are as important as the hard elementsif the organization is going to be successful.

The way the model is presented in Figure 1 below depicts the interdependency of the elementsand indicates how a change in one affects all the others.

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Let's look at each of the elements specifically:

Strategy: the plan devised to maintain and build competitive advantage over the

competition.

Structure: the way the organization is structured and who reports to whom. Systems: the daily activities and procedures that staff members engage in to get the job

done.

Shared Values: called "super ordinate goals" when the model was first developed, these

are the core values of the company that are evidenced in the corporate culture and the

general work ethic.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the employees working for the company.

Strategy:

What is our strategy?

How do we intend to achieve our objectives?

How do we deal with competitive pressure? How are changes in customer demands dealt with?

How is strategy adjusted for environmental issues?

Structure:

How is the company/team divided?

What is the hierarchy?

How do the various departments coordinate activities?

How do the team members organize and align themselves?

Is decision making and controlling centralized or decentralized? Is this as it should be,

given what we're doing? Where are the lines of communication? Explicit and implicit?

Systems:

What are the main systems that run the organization? Consider financial and HR systems

as well as communications and document storage.

Where are the controls and how are they monitored and evaluated?

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What internal rules and processes does the team use to keep on track?

Shared Values:

What are the core values?

What is the corporate/team culture? How strong are the values?

What are the fundamental values that the company/team was built on?

Style:

How participative is the management/leadership style?

How effective is that leadership?

Do employees/team members tend to be competitive or cooperative?

Are there real teams functioning within the organization or are they just nominal groups?

Staff:

What positions or specializations are represented within the team?

What positions need to be filled?

Are there gaps in required competencies?

Skills:

What are the strongest skills represented within the company/team?

Are there any skills gaps? What is the company/team known for doing well?

Do the current employees/team members have the ability to do the job?

How are skills monitored and assessed?

UNIT-3

INTRODUCTION TO FUNCTIONAL MANAGEMENT

PRODUCTION MANAGEMENT

Define production management:Production management deals with the decision making related to productionprocess of that the resulting goods and service is produced according to specifications

in the amounts and at the scheduled demanded and at minimum cost Elwood Butta.

FUNCTIONS OF PRODUCTION MANAGEMENT:

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Aims Of Production Management:

Production is the functional area responsible for turning inputs into finished outputs through a

series of production processes. The Production Manager is responsible for making sure that rawmaterials are provided and made into finished goods effectively. He or she must make sure that

work is carried out smoothly, and must supervise procedures for making work more efficient andmore enjoyable.

Functions Of Production Management:

In a manufacturing company the production function may be split into five sub-functions:1. The production and planning department will set standards and targets for each section of

the production process. The quantity and quality of products coming off a production line will be

closely monitored. In businesses focusing on lean production, quality will be monitored by allemployees at every stage of production, rather than at the end as is the case for businesses using

a quality control approach.

2. The purchasing department will be responsible for providing the materials, components and

equipment required to keep the production process running smoothly. A vital aspect of this roleis ensuring stocks arrive on time and to the right quality.

3. The stores department will be responsible for stocking all the necessary tools, spares, raw

materials and equipment required to service the manufacturing process. Where sourcing is

unreliable, buffer stocks will need to be kept and the use of computerised stock control systemshelps keep stcoks at a minimal but necessary level for production to continue unhindered.

4. The design and technical support department will be responsible for researching new

products or modifications to existing ones, estimating costs for producing in different quantities

and by using different methods. It will also be responsible for the design and testing of newproduct processes and product types, together with the development of prototypes through to the

final product. The technical support department may also be responsible for work study and

suggestions as to how working practices can be improved.

5. The works department will be concerned with the manufacture of products. This will include

the maintenance of the production line and other necessary repairs. The works department mayalso have responsibility for quality control and inspection.

A key aspect of modern production is ensuring quality. The term quality means fitness for

purpose i.e. a product, process or service should do exactly what is expected of it.

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MARKETING MANAGEMENT

Meaning:

Marketing management is a business discipline which is focused on the practical

application ofmarketingtechniques and the management of a firm's marketing

resources and activities.

Rapidly emerging forces ofglobalizationhave compelled firms to market beyond the

borders of their home country makingInternational marketinghighly significant and an

integral part of a firm's marketing strategy.

To create an effective, cost-efficientMarketing management strategy, firms must

possess a detailed,objectiveunderstanding of their own business and themarketin

which they operate.[3]

In analyzing these issues, the discipline of marketing managementoften overlaps with the related discipline ofstrategic planning.

Marketing Managementpackages and clearly communicates the best strategic thinking tomeet the decision-making needs of knowledgeable executives managing real-world

businesses.

Designed to serve busy executives,Marketing Managementfocuses on strategicmarketing issues that marketing managers face every day

We will use the following definition of marketing management: Marketing

Management is the process allocating the resources of the organization toward

marketing activities.

Thus, a marketing manager is someone who is responsible for directing expenditures of

marketing funds. Related to the term management is the term strategy.

The Marketing Mix

(The 4 P's of Marketing)

The major marketing management decisions can be classified in one of the followingfour categories:

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Product Price Place (distribution) Promotion

These variables are known as the marketing mix or the 4 P's of marketing. They arethe variables that marketing managers can control in order to best satisfy customers inthe target market. The marketing mix is portrayed in the following diagram:

The Marketing Mix

Product Place

Target

Market

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Price Promotion

The firm attempts to generate a positive response in the target market by blendingthese four marketing mix variables in an optimal manner.

ProductThe product is the physical product or service offered to the consumer. In the case ofphysical products, it also refers to any services or conveniences that are part of theoffering.

Product decisions include aspects such as function, appearance, packaging, service,warranty, etc.

PricePricing decisions should take into account profit margins and the probable pricingresponse of competitors. Pricing includes not only the list price, but also discounts,financing, and other options such as leasing.

PlacePlace (or placement) decisions are those associated with channels of distribution thatserve as the means for getting the product to the target customers. The distributionsystem performs transactional, logistical, and facilitating functions.

Distribution decisions include market coverage, channel member selection, logistics,and levels of service.

PromotionPromotion decisions are those related to communicating and selling to potentialconsumers. Since these costs can be large in proportion to the product price, a break-even analysis should be performed when making promotion decisions. It is useful to

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know the value of a customer in order to determine whether additional customers areworth the cost of acquiring them.

Promotion decisions involve advertising, public relations, media types, etc.

A Summary Table of the Marketing Mix

The following table summarizes the marketing mix decisions, including a list of some ofthe aspects of each of the 4Ps.

Summary of Marketing Mix Decisions

Product Price Place Promotion

Functionality

Appearance

Quality

Packaging

Brand

Warranty

Service/Support

List price

Discounts

Allowances

Financing

Leasing options

Channel members

Channel motivation

Market coverage

Locations

Logistics

Service levels

Advertising

Personal selling

Public relations

Message

Media

Budget

FINANCIAL MANAGEMENT

Meaning of Financial Management

Financial Management means planning, organizing, directing and controlling thefinancial activities such as procurement and utilization of funds of the enterprise. Itmeans applying general management principles to financial resources of the enterprise.

It Concerns the acquisition, financing, and management of assets with some overallgoal in mind.

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Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and control of

financial resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.

2. To ensure adequate returns to the shareholders which will depend upon the earning

capacity, market price of the share, expectations of the shareholders.

3. To ensure optimum funds utilization. Once the funds are procured, they should be

utilized in maximum possible way at least cost.

4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that

adequate rate of return can be achieved.

5. To plan a sound capital structure-There should be sound and fair composition of capital

so that a balance is maintained between debt and equity capital.

Functions of Financial Management

1. Estimation of capital requirements: A finance manager has to make estimation with

regards to capital requirements of the company. This will depend upon expected costs

and profits and future programmes and policies of a concern. Estimations have to be

made in an adequate manner which increases earning capacity of enterprise.

2. Determination of capital composition: Once the estimation have been made, the

capital structure have to be decided. This involves short- term and long- term debt

equity analysis. This will depend upon the proportion of equity capital a company is

possessing and additional funds which have to be raised from outside parties.

3. Choice of sources of funds: For additional funds to be procured, a company has many

choices like-

a. Issue of shares and debentures

b. Loans to be taken from banks and financial institutions

c. Public deposits to be drawn like in form of bonds.

Choice of factor will depend on relative merits and demerits of each source and period

of financing.

4. Investment of funds: The finance manager has to decide to allocate funds into

profitable ventures so that there is safety on investment and regular returns is possible.5. Disposal of surplus: The net profits decision have to be made by the finance manager.

This can be done in two ways:

a. Dividend declaration - It includes identifying the rate of dividends and other

benefits like bonus.

b. Retained profits - The volume has to be decided which will depend upon

expansional, innovational, diversification plans of the company.

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6. Management of cash: Finance manager has to make decisions with regards to cash

management. Cash is required for many purposes like payment of wages and salaries,

payment of electricity and water bills, payment to creditors, meeting current liabilities,

maintainance of enough stock, purchase of raw materials, etc.

7. Financial controls: The finance manager has not only to plan, procure and utilize the

funds but he also has to exercise control over finances. This can be done through manytechniques like ratio analysis, financial forecasting, cost and profit control, etc.