Industrial Management & Smart Technologies, EC-501

BASICS OF
INDUSTRIAL MANAGEMENT
1UNIT

INTRODUCTION
The subject Industrial Management is deals with the managing affairs of the
industries. Managing an industries means making product at low cost by effective
utilization of men, machine and materials etc.
The terms management refers to the process of getting activities completed by
effectively with other people to accomplish the desired goals of organization

DEFINITION

BUSINESS:
The organized effort of individuals to produce and sell for a profit, the goods and
services that satisfy society's needs is called a business, then, is an organization which seeks
to make a profit through individuals working toward common goals.
The business activities are grouped into two categories i.e., Industry and Commerce

INDUSTRY:
It is the location where all the resources necessary for manufacturing and business
are placed. It is a place where the raw material is processed and converted into finished
product.

COMMERCE:
The activity of interchanging of goods (buying and selling) or product or
commodities between the customers in different countries or within the country is called
commerce it is a wing of business. And it is sub classified into Trade
TRADE:
The process of buying, selling, or exchanging commodities, at either wholesale or
retail, within a country or between countries is known as trade it is an essential part of
commerce. There are 2 types of trades (1) internal Trade (2) Foreign Trade or External
Trade or International Trade

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 Industrial Management & Smart Technologies, EC-501

(1) Internal Trade

If the exchanges of goods or product happens with in the country is called as Internal
Trade. It may be classified in to Whole sale trade or Retail Trade
(2) Foreign Trade
If the exchanges of goods or products happens globally or with other countries is called
foreign trade or External Trade or International trade. It may classified Import trade and
Export Trade

Difference Between Trade and Commerce

S.No Trade Commerce

Commerce means exchange of goods
Trade means the exchange of goods and services between the parties along
and services between two or more with the activities such as insurance,
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parties in consideration of money or transportation, warehousing,
money’s worth. advertising etc, that completes that
exchange
Link Between The Producer and
2 Link Between The Buyer and Seller
Consumer
3 Demand and Supply is from both sides Supply is depend on the demand

MANAGEMENT
The terms Management refers to the process of getting activities completed by
effectively with other people to accomplish the desired goals of organization by utilizing
available resources.

The management manages all the activities in the organization like identifies the
suitable person to carries out the various activities, purchasing machinery and raw
material, getting orders and finishing products on time etc.,

Need of Management
 Management is needed to assign the various duties to engineers, supervisors,
manpower etc.,
 Management is needed to awareness in staff members on objectives of the
organization to fulfill the goals

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 Industrial Management & Smart Technologies, EC-501

 Management is needed to avoid the confusion in sharing the work between the
workers
 Management is needed to take the important certain decisions and bring them into
implementation on various issues
 Management is needed to solve the conflicts within the organization due to various
reasons
 Without a strong manager an organization cannot be survive, the success of
organization is depends on the management

EVOLUTION OF MANAGEMENT
1) Pre scientific Management Period
2) Classical period (1900-1930) scientific management and administrative management
3) Non-classical period (1930 - 1960) Human relationship in the organization
4) Modern Period

LEVELS OF MANAGEMENT
There are three levels of management
1. Top level management
2. Medium level management
3. Lower level management
Top Level Management:
In this level consist of managing Directors (MD), Board of directors (BD), Owners,
General Managers(GM), chief Executives, Share Holders and Company Secretaries etc.,
Functions of the Top Level Management:
 To fix the goals and objectives
 To formulate the policies
 To design organization frame work
 To coordinating the resources available in the organization
 To control and provide over all leadership
Medium Level Management:
In this level includes all branch managers like production manager, marketing
manager, sales manager, financial manager etc., there are responsible for the Top level
managers and control the lower level managers

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 Industrial Management & Smart Technologies, EC-501

Functions of the Medium Level Management:

 Explaining and implementing the policies formed by top level management
 Preparing the organization setup in their respective department
 Motivating personal to achieve the higher productivity
 Co-ordinate with the other departments
 Gathering the information and reporting on performance to top level management
Lower Level Management:
In this level includes superintendent, supervisor, inspectors etc., if the lower
management is perfect then the efficiency of the entire organization will increase
Functions of the Lower Level Management:
 Decision making in critical situations.
 To extract the work from workers
 To ensure the specific work to the workers
 To evaluate the performance and report to the medium level management

FUNCTIONS OF MANAGEMENT

Planning

Controlling Organising

Coordinating Staffing

PLANNING:
 It is a pre preparation process. The planning function of management controls all
the planning that allows the organization to run smoothly.
 Planning involves defining a goal and determining the most effective course of
action needed to reach that goal.

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 Industrial Management & Smart Technologies, EC-501

 Typically, planning involves flexibility, as the planner must coordinate with all levels
of management and leadership in the organization.
 Planning also involves knowledge of the company’s resources and the future
objectives of the business.

ORGANIZING:
 The organizing function of leadership controls the overall structure of the company.
 The organizational structure is the foundation of a company; without this structure,
the day-to-day operation of the business becomes difficult and unsuccessful.
 Organizing involves designating tasks and responsibilities to employees with the
specific skill sets needed to complete the tasks.
 Organizing also involves developing the organizational structure and chain of
command within the company.
STAFFING:
 The staffing function of management controls all recruitment and personnel needs
of the organization.
 The main purpose of staffing is to hire the right people for the right jobs to achieve
the objectives of the organization.
 Staffing involves more than just recruitment; staffing also encompasses training and
development, performance appraisals, promotions and transfers.
 Without the staffing function, the business would fail because the business would
not be properly staffed to meet its goals.
COORDINATING:
 The coordinating function of leadership controls all the organizing, planning and
staffing activities of the company and ensures all activities function together for the
good of the organization.
 Coordinating typically takes place in meetings and other planning sessions with the
department heads of the company to ensure all departments are on the same page
in terms of objectives and goals.
 Coordinating involves communication, supervision and direction by management.

CONTROLLING:
 The controlling function of management is useful for ensuring all other functions of
the organization are in place and are operating successfully.
 Controlling involves establishing performance standards and monitoring the output
of employees to ensure each employee’s performance meets those standards.

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 Industrial Management & Smart Technologies, EC-501

 The controlling process often leads to the identification of situations and problems
that need to be addressed by creating new performance standards.
 The level of performance affects the success of all aspects of the organization

SCIENTIFIC MANAGEMENT
The term Scientific means systematic, analytical and objective approach. And
Management means getting the things done through others. F.W.Taylor is a first man to
advocate a scientific management and a science of doing. He realized that scientific
principles should be applied to the problems of management in order to increase output
and to eliminate the wastage.
1) Planning of the work in advance
2) Selecting the best man for identified jobs
3) Determining the standards, time required for the accomplishment of a given job
4) Standardizing of tools and equipment and right training for the use of the such tool
and machinery
5) Dividing the work
6) The scientific approach to all the problems in management
7) Eliminating unnecessary movements in and outside the workshop
8) Timing of job in its minutes possible points

PRINCIPLES OF MANAGEMENT BY HENRY FAYOL

1. Division of Work
 In practice, employees are specialized in different areas and they have different skills.
Different levels of expertise can be distinguished within the knowledge areas (from
generalist to specialist). Personal and professional developments support this.
 According to Henri Fayol specialization promotes efficiency of the workforce and
increases productivity. In addition, the specialization of the workforce increases
their accuracy and speed.
2. Authority and Responsibility
 In order to get things done in an organization, management has the authority to
give orders to the employees. With this authority comes responsibility.
 According to Henri Fayol, the accompanying power or authority gives the
management the right to give orders to the subordinates.
 The responsibility can be traced back from performance and it is therefore necessary
to make agreements about this.
 In other words, authority and responsibility go together and they are two sides of
the same coin.
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 Industrial Management & Smart Technologies, EC-501

3. Discipline
 It is often a part of the core values of a mission and vision in the form of good
conduct and respectful interactions. This management principle is essential and is
seen as the oil to make the engine of an organization run smoothly.
4. Unity of Command
 The management principle ‘Unity of command’ means that an individual employee
should receive orders from one manager and that the employee is answerable to
that manager.
 If tasks and related responsibilities are given to the employee by more than one
manager, this may lead to confusion which may lead to possible conflicts for
employees. By using this principle, the responsibility for mistakes can be established
more easily.
5. Unity of Direction
 It is all about focus and unity. All employees deliver the same activities that can be
linked to the same objectives.
 All activities must be carried out by one group that forms a team. These activities
must be described in a plan of action.
 The manager is ultimately responsible for this plan and he monitors the progress of
the defined and planned activities. Focus areas are the efforts made by the
employees and coordination.
6. Subordination of Individual Interest
 There are always all kinds of interests in an organization. In order to have an
organization function well, Henri Fayol indicated that personal interests are
subordinate to the interests of the organization (ethics).
 The primary focus is on the organizational objectives and not on those of the
individual. This applies to all levels of the entire organization, including the
managers.
7. Remuneration
 Motivation and productivity are close to one another as far as the smooth running
of an organization is concerned.
 The remuneration should be sufficient to keep employees motivated and
productive.

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 Industrial Management & Smart Technologies, EC-501

 There are two types of remuneration namely non-monetary (a compliment, more

responsibilities, credits) and monetary (compensation, bonus or other financial
compensation). Ultimately, it is about rewarding the efforts that have been made.
8. The Degree of Centralization
 Management and authority for decision-making process must be properly balanced
in an organization.
 This depends on the volume and size of an organization including its hierarchy.
 Centralization implies the concentration of decision making authority at the top
management (executive board) Sharing of authorities for the decision-making
process with lower levels (middle and lower management).
9. Scalar Chain
 Henri Fayol’s “hierarchy” management principle states that there should be a clear
line in the area of authority i.e., from top to bottom and all managers at all levels.
 This can be seen as a type of management structure. Each employee can contact a
manager or a superior in an emergency situation without challenging the hierarchy.
Especially, when it concerns reports about calamities to the immediate
managers/superiors.
10. Order
 Employees in an organization must have the right resources at their disposal so that
they can function properly in an organization.
 In addition to social order (responsibility of the managers) the work environment
must be safe, clean and tidy.
11. Equity
 The management principle of equity often occurs in the core values of an
organization. According to Henri Fayol, employees must be treated kindly and
equally.
 Employees must be in the right place in the organization to do things right.
Managers should supervise and monitor this process and they should treat
employees fairly and impartially.
12. Stability of Tenure of Personnel
 Deployment and managing of personnel and this should be in balance with the
service that is provided from the organization.
 Management strives to minimize employee turnover and to have the right staff in
the right place.

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 Industrial Management & Smart Technologies, EC-501

 Focus areas such as frequent change of position and sufficient development must be
managed well.
13. Initiative
 Henri Fayol argued that with this management principle employees should be
allowed to express new ideas.
 This encourages interest and involvement and creates added value for the company.
 Employee initiatives are a source of strength for the organization according to Henri
Fayol. This encourages the employees to be involved and interested.
14. Esprit de Corps
 The management principle ‘esprit de corps’ of the 14 principles of management
stands for striving for the involvement and unity of the employees.
 Managers are responsible for the development of morale in the workplace,
individually and in the area of communication.
 Esprit de corps contributes to the development of the culture and creates an
atmosphere of mutual trust and understanding.

MANAGEMENT, ADMINISTRATION AND ORGANISATION

Management:

Management refers to the process of getting activities completed by

effectively with other people to accomplish the desired goals of organization by utilizing
available resources. Management has to implement or execute the policies which are
formed by the Administration

Administration:

The administration of a company or institution is the group of people (from

owners to board of directors) who organize and supervise it. The main duty of
administration is to make the policies, goals, targets of the organization. It related to the
top level management

Organization:
The systematic arrangement of the resources of the attainment of the
objectives of the industry is called organization.

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 Industrial Management & Smart Technologies, EC-501

DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION

S.NO MANAGEMENT ADMINISTRATION
An organized way of managing
The process of administering an
people and things of a business
1 organization by a group of people is
organization is called the
known as the Administration.
Management.
Administration is a decision making
2 Management is an executing function
function
It is medium and low level
3 It is top level management
management
Administration is focusing on Making
Management is mainly focusing on
4 best possible allocation of limited
managing
resources
It consist of managerial persons with
It consist of owners and top officials of
5 specialized knowledge and who may
enterprise
be the employee
The main functions are Controlling The main functions are Planning and
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and motivating Organizing

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 Industrial Management & Smart Technologies, EC-501

IMPORTANT QUESTIONS
Short Answer Questions:
1. Define the following Terms
a. Business
b. Industry
c. Commerce
d. Trade
2. Define management and Need of management
3. Difference Between Trade and commerce
4. List out the functions of management
5. Levels of management
6. Define Administration and organization
Essay Answer Questions:
1. Functions of management
2. Explain the levels of management and there functions
3. F.W.Taylor Principles of management
4. 14 principles or Henry Fayol Administration and management principles
5. Explain the principles of scientific management
6. Difference Between Management and administration

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