ENGINEERING ECONOMICS

AND MANAGEMENT
(2140003)

1 Prepared By:
Prof. Endrick D. Contractor
Asst.Professor, Chemical Engineering Department
GCET
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Teaching and Examination Scheme:

Teaching Scheme Credits Examination Marks Total

L T P C Theory Marks Practical Marks Marks

ESE PA (M) PA (V) PA

(E) PA ALA ESE OEP (I)

3 0 0 3 70 20 10 0 0 0 100

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6 Reference Books:

1. Engineering Economics, R.Paneerselvam, PHI publication

2. Fundamentals of Management: Essential Concepts and Applications,
Pearson Education, Robbins S.P. and Decenzo David A.
3. Economics: Principles of Economics, N Gregory Mankiw, Cengage Learning
4. Principles and Practices of Management by L.M.Prasad
5. Principles of Management by Tripathy and Reddy
6. Modern Economic Theory, By Dr. K. K. Dewett & M. H. Navalur, S. Chand
Publications

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 Introduction to
Management

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 Management
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Definition:
 According to Peter F Drucker (Father of Modern Management),
“Management is a multi-purpose organ that manages business,
managers, workers & work.

Meaning:
 According to Theo Heimann, management has three different
meanings i.e.,
1. Management as a Noun: refers to a group of managers.
2. Management as a Process- refers to the functions of management
i.e., planning, organising, directing, controlling etc…
3. Management as a Discipline- refers to the subject of management.
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9 Nature and Characteristics of
Management
 Management is goal-oriented: Management is not an end in itself. It
is a means to achieve certain goals.
 Management is universal: Management is an essential element of
every organised activity irrespective of the size or type of activity.
 Management is an Integrative Force: The essence of management
lies in the coordination of individual efforts in to a team.
 Management is a Social Process: Management is done by people,
through people and for people. It is a social process because it is
concerned with interpersonal relations.
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 Nature and Characteristics of
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Management

 Management is multidisciplinary: Management has to deal with human behaviour

under dynamic conditions. Therefore, it depends upon wide knowledge derived
from several disciplines like engineering, sociology, psychology, economics,
anthropology, etc.
 Management is a continuous Process: Management is a dynamic and an on-going
process.
 Management is Intangible: Management is an unseen or invisible force. It cannot
be seen but its presence can be felt everywhere in the form of results.
 Management is an Art as well as Science: It contains a systematic body of
theoretical knowledge and it also involves the practical application of such
knowledge.

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11 Scope of Management

 Production Management:
(a) designing the product (b) location and layout of plant and building (c) planning and
control of factory operations (d) operation of purchase and storage of materials (e) repairs and
maintenance (f) inventory cost and quality control (g) research and development etc.

 Marketing Management:
Marketing involves following activities (a) Marketing research to determine the needs and
expectation of consumers (b) Planning and developing suitable products (c) Setting
appropriate prices (d) Selecting the right channel of distribution, and (e) Promotional activities
like advertising and salesmanship to communicate with the customers.

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 Scope of Management
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 Financial Management:
1. selecting the appropriate source of funds
2. 2.raising the required funds at the right time
3. 3.administration of earnings
4. 4.Estimating the volume of funds

 Personnel Management:
(a) Manpower planning (b) Recruitments, (c) Selection, (d) Training (e) Appraisal, (f)
Promotions and transfers, (g) Compensation, (h) Employee welfare services, and (i)
Personnel records and research, etc…

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Objectives of Management
1. Proper Utilization of Resources:
 The main objective of management is to use various resources of the
enterprise in a most economic way.
2. Improving Performance:
 Management should aim at improving the performance of each and every
factor of production.
3. Mobilizing Best Talent:
 The management should try to employ persons in various fields so that better
results are possible. The employment of specialists in various fields will be
increasing the efficiency of various factors of production.
4. Planning for Future:
 Another important objective of management is to prepare plans.
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14 Organization

 A consciously coordinated social unit composed of people having resources at

their command functioning on a continuous basis to achieve common goal or set
of goals.

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 Administration Management Organisation
15 It is the process of It is the process of It is the process of
determining the planning the work dividing the work
object to be as per objective into different tasks
achieved. & duties
It prepares the It execute the It organise the work
policies and policies
principles
It provides the It coordinate It delegate the
direction, guidance activities authority and fix
and leadership responsibility

It provides It follows the It is responsible for

guidance to administration management and
management and administration
organisation
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 Roles of Manager
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 It is of 3 types
1. Interpersonal Role
2. Informational Role
3. Decisional Role

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17 Interpersonal Role

 This role focuses on the manager and his relationships with the people in the
organisation and also with other organisations.
 It is of 3 types
1. Figurehead: As a figurehead he has to perform symbolic duties such as
providing awards to his staff , attending social function etc.
2. Leader: As a leader he motivates & inspires his employees and provide
guidance.
3. Liason: Coordinated the activities of his department with other department
and organisation etc.

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18 Informational Role

 This role focuses on collection and distribution of information for smooth functioning of
organisation.
 It is also of three types
1. Monitor: Exercise control over the organisational activities through collection of data.
2. Disseminator: He disseminates the relevant information, instruction from the top
management, outside agencies to the appropriate employees.
3. Spokes Person: He represent his work unit in different places

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19 Decisional Role
 These roles required decision making under different situations by the manager.
 It is of four types
1. Entrepreneurial: In this role the manager initiate changes and take calculated risk for the
growth & benefit of the organisation
2. Disturbance Handler: Handle disturbances and conflict within the organisation by taking
appropriate decision
3. Resource Allocator: It is the responsibility of the manager to allocate resources for the
growth of organisation
4. Negotiator: Negotiation with the customers, suppliers, trade union, external agencies etc.

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20 Types of Management
 It is of three types
1. Top Level Management: Strategic Managers
2. Middle Level Management: Tactical Managers
3. Lower Level Management: Operational Managers

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Top Level Management: Strategic
Managers

 They formulate the objectives of the enterprise.

 They prepare the strategic plans & policies.
 They appoint the executives of the middle level.
 They issue necessary instructions for the preparation of
departmental budget.
 They coordinate the activities of different department.
 They build and maintains the relation with the outside agencies.

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Middle Level Management: Tactical
Managers

 To interpret & explain the plans and policies formulated by top

management.
 To monitor & control the operating performance.
 To motivate & develop lower level management.
 They act as a bridge between the lower level & top level
management.

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 Lower Level Management: Operational
23 Managers

 They solve the problem of workers.

 To provide training to the workers.
 To plan & organise the activities of different groups.
 They communicate the problems of worker to higher
level management.
 They supervise & guide the subordinate.

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 Skill of Manager
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Technical Skills:
 Technical skills are the skills necessary to accomplish or understand
the specific kind of work being done in an organization.
Interpersonal Skills:
 Manager also needs interpersonal skills- the ability to communicate
with, understand and motivate both individuals and groups.
Conceptual Skills:
 Conceptual skills depend on the manager’s ability to think in the
abstract.

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 Skill of Manager
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Diagnostic Skills:
 Successful managers also possess diagnostic skills, or skills that enable a manager to
visualize the most appropriate response to a situation.

Communication Skills:
 Communication skills refer to the manager’s ability both to effectively convey ideas
and information to others and to effectively receive ideas and information from others.

Decision-Making Skills:
 Effective managers also have good decision making skills.

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26 Management Historic Times/
Management Principles

Contribution of Management by Management Experts

 Scientific Principle- F W Taylor
 Administrative Principle- Henri Fayol & Max Weber
 Abraham Maslow’s Hierarchy Needs

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27 F W Taylor (1856- 1915)

 Fredrick Winslow Taylor known as the father of Scientific Management.

 Fundamental principles of scientific approach are as follows:-
1. Replacing rules of thumb with science.
2. Achieving cooperation of human beings
3. Working for maximum output, rather than restricted output.
4. Developing all workers

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28 F W Taylor

 The mechanism of management to achieve efficiency productivity & profit adopted

by him are listed below.
1. Time Study: determine the minimum time to complete a job.
2. Work Study: best method to complete a job.
3. Functional Foremanship: It is based on specializations of functions performed at the
supervisory level.
4. Differential rate system: More productive workers to be paid at a higher rate than
others.
5. Routing System: Which specifies the sequence of activities to be performed for a
job.

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29
Henry Fayol (1841-1925)

 Fayol laid heavy emphasis on administrative efficiency & advocated

management has having the following main functions.
1. Planning
2. Organizing
3. Commanding
4. Coordinating
5. Controlling

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 Principles of Management
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The 14 Management Principles from Henri Fayol (1841-1925) are:

1. Division of Work. Specialization allows the individual to build up experience, and to

continuously improve his skills. Thereby he can be more productive.

2. Authority. The right to issue commands, along with which must go the balanced
responsibility for its function.

3. Discipline. Employees must obey, but this is two-sided: employees will only obey
orders if management play their part by providing good leadership.

4. Unity of Command. Each worker should have only one boss with no other conflicting
lines of command.

5. Unity of Direction. People engaged in the same kind of activities must have the
same objectives in a single plan.
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31 Principles of Management
6. Subordination of individual interest (to the general interest). Management must
see that the goals of the firms are always vital.

7. Remuneration. Payment is an important motivator for employees.

8. Centralization (or Decentralization). This is a matter of degree depending on the

condition of the business and the quality of its personnel.

9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction.

10. Order. The work place facility must be in proper order.

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32 Principles of Management
11.Equity. All the employees should be treated as equally as possible
12.Stability of Tenure of Personnel. Employees work better if job
security and career progress are assured to them.

13.Initiative. Allowing all personnel to show their initiative in some way is a

source of strength for the organization.

14.Esprit de Corps (French Word) . Organization should try to

promote team spirit and unity

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33 Max Weber (1864-1920)

 Max web developed a management theory that stressed the need for a strictly defined
organizational hierarchy governed by clearly defined regulations and lines of authority.

 This system of managing organization he labeled as Bureaucracy.

 The key features of bureaucracy are

1. Division of work: High degree of division of work at both the operative & administrative
level which leads to specialization.

2. Hierarchy of Authority: where subordinates have superiors.

3. Rules & Regulations: Clearly defined rules & regulation are applicable to all in the
organization.
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34 Max Weber

4. Impersonal Conduct: Decisions &b activities in the organization done

according to the rules & regulation without any personal considerations,
relation & emotion.
5. Appointment: Appointment done through fair selection based on merit &
competence.
6. Records: The administration of the organization done through an efficient
record keeping.

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Maslow’s Hierarchy of Needs

 Maslow defined a Hierarchy of Human Needs that stated the lower needs must be met
before an individual can strive to meet the higher needs.
 NEEDS: a lack of something required or desired.
 *Needs motivate us to act!

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 Maslow’s Hierarchy of Needs
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 How does the Hierarchy Work?
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 A person starts at the bottom of the hierarchy (pyramid) and will initially seek
to satisfy basic needs (e.g. food, shelter)
 Once these physiological needs have been satisfied, they are no longer a
motivator. the individual moves up to the next level
 Safety needs at work could include physical safety (e.g. protective clothing)
as well as protection against unemployment, loss of income through sickness
etc)
 Social needs recognise that most people want to belong to a group. These
would include the need for love and belonging (e.g. working with colleague
who support you at work, teamwork, communication)

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38 How does the Hierarchy Work?

 Esteem needs are about being given recognition for a job well done. They
reflect the fact that many people seek the esteem and respect of others. A
promotion at work might achieve this
 Self-actualisation is about how people think about themselves - this is often
measured by the extent of success and/or challenge at work
 Maslow's model has great potential appeal in the business world. The
message is clear - if management can find out which level each employee
has reached, then they can decide on suitable rewards.

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Thank you
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