Engineering

1
Management I
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What is an organisation?
3 Which of these would you
call an organisation?
A commercial A manufacturing
bank company
A sports team A shop
A school A Civil Service
A theatre department
A family A religion
A crowd
4 Definition

Organisations comprise two or

more people engaged in a
systematic and coordinated effort,
persistently over a period of time,
in pursuit goals which convert
resources into goods and/or
services which are needed by
consumers.
5 What is an organisation?

 they are composed of individuals and groups

 A social entity of varying size

 they exist in order to try achieve certain goals

 Consensus on goals and explicitness / specificity of goals
determine strength of organisation

 they involve specialisation, and require

rational co-ordination and control
 Specialisation and coordination depends on the size of
the organisation and the nature of the activities

 they have some degree of permanence

 Organisations are created with long-term objectives
6 Legal entity of organisations

For profit Not for profit

 Non-corporate  Service to community or
organisations improve circumstances
 Sole traders and for the “social good”
partnerships  Associations
 Corporate organisations  Trade associations
 Limited liability  Professional bodies
 Unlimited liability  Learned societies
 Clubs
 Charities
 Cooperatives
7 Exercise

 Choose an organization where you have

spent sufficient time in terms of training or
work.
 Identify whether the organization has:
 Goals which are long-term and reflect
permanence of the organization?
 Shared specific goal?
 A goal which reflects the strength of the
organsiation?
 A system of coordination and control?
 Specialist functions?
8 The organisation in its
environment
 Organisations do not exist in isolation.
They are part of the wider fabric of
society and are influenced by the
environment within they operate.
 Main features of the environment:
 Political
 Economic
 Social
 Technological
 Environment (Physical)
 Legal
 9 Organisations
Environment

Inputs Processes Products

and
services
Resources:
People
Quality right first time
Equipment / Prices – value for money
technology / On time In full & Error Free
tools delivery
Premises
10 PESTEL environment
 Political – These are all about how and to what
degree a government intervenes in the
economy.
 This can include – government policy, political
stability or instability in overseas markets, foreign
trade policy, tax policy, labour law, environmental
law, trade restrictions and so on.
 Political factors often have an impact on
organisations and how they do business.
 Organisations need to be able to respond to the
current and anticipated future legislation, and
adjust their marketing policy accordingly.
11 PESTEL environment
 Economic – Economic factors have a significant
impact on how an organisation does business and
also how profitable they are
 These factors include inflation rate, exchange rate,
interest rate and disposable income available to end
consumers.
 The economic factors can be further categorized into
micro-economic and macro-economic factors.
12 PESTEL environment

 Social – also known as socio-cultural factors

 factors affecting the supply of labour, such as
demographic changes in terms of the age profile
of the working population, numbers of people in
the job market, etc., and changing cultural norms
of behaviour and attitudes in society at large
which influence people's expectations and
behaviour at work
 These factors include – population growth, age
distribution, health consciousness, career attitudes
and so on. These factors are of particular interest
as they have a direct effect on how marketers
understand customers and what drives them.
13 PESTEL environment

 Technological – factors affecting the processes

of production, such as changes in computer
technology and communications, and the
implications of new manufacturing processes.
Stakeholders are looking for:
 New ways of producing goods and services
 New ways of distributing goods and services
 New ways of communicating with target markets
14 PESTEL environment

 Environmental – these factors have gained

significance owing to:
 increasing scarcity of raw materials,
 pollution targets,
 doing business as an ethical and sustainable
company,
 carbon footprint targets set by governments
 the rising concern regarding the environment
among the masses.

 Consumers today prefer to buy products from

businesses whose products and services are
environment-friendly and who are ethical and
socially responsible.
15 PESTEL environment

 Legal - an important part of the whole macro-

economic scenario and focus on issues like:
 product safety,
 consumer rights and laws,
 equal opportunities, and
 health and safety.
 Abiding to rules and regulations of the country of
operation
16 PESTEL

 Conduct a PESTEL analysis of your organization

and identify the different factors under each
element of PESTEL.
17 The business model

Revenue Streams
Key
competencies
Channels

Suppliers Customer
& Offerings & & market
partners value
segments
proposition
Customer
relationships
Key resources

Cost structure

Business model template (Osterwalder & Pigneur, 2010)

18 Business model

 The key suppliers & partners it utilises

 The key competencies that it possesses
 The key resources that it uses
 The offerings and value propositions that it provides
its customers
 The channels it utilises to make its offerings and
value proposition available to its customers
 The relationships it cultivates with its customers
 The customer and market segments it targets
 The revenue streams it generates
 The cost structure of its operations
19 Sources of competitive
advantage – strategic positions

 Low cost leadership

 Value proposition innovation (eg. quality,
differentiation, branding etc.)
 Speed / Flexibility
 Customer intimacy
20 Organisational goals

 The reason that the members of the

organisation are engaged in a
systematic effort is to achieve the
defined purpose
 It is a characteristic of all organisations
that they have purpose or an end. These
are more commonly called the
organisation's "goals" and/or objectives
 The purpose comes first and provides the
rationale for the activities
21 Characteristics of goals

 They provide the focus for action

 SMART (Specific / Measurable /
Achievable Realistic / Time-bound)
 Challenging
 Clear and relevant
 It includes a standard or target against
which achievement may be measured
 22 Types of organisational goals

A description of where the company

Vision wants to be in the future

Generalised statement of its main

Mission purpose

Organis
ation Goal
Long-term targets for the whole of
the organisational activities
purpose
Detailed and short-term target
Objectives forming guidelines for action in a
specified time span
23 Organisation purpose

 Why is the work / product / service important?

 This work / product / service should be purposeful
and meaningful
 What is the contribution to society?
 Is it meaningful for the employees, owners and
management
 Profitability / business growth are tacit reasons for
running an organization, but cannot be the key
purpose
 Avoid negative vested interests
24 Functions of goals
 Crucial element of strategic planning
 Crucial role in the review and measurement of
performance
 To provide guidelines for decision-making and justification
for actions taken, thereby reducing uncertainty in
decision-making
 To influence the structure of the organisation and help
determine the nature of technology employed
 To help to develop commitment of employees
 To act as a basis for the evaluation of change and the
development of the organisation
 To serve as a basis for the objectives and policies of the
organisation
25 Problems with goals

 Difficulties in formulation and the level of

involvement of employees
 Coping with change
 Goal conflicts – interpretation and
commitment
26 Business architecture - The
structure of organisations
 All organisations have rules and regulations,
formal or informal, written or oral
 All organisations have a structure – a
framework within which individual persons
can perform defined work roles
 All organisations have a recognised system
of authority which controls and delegates
tasks and duties within the organisation
 It is the framework around which the
organisation is built
 It forms the framework for information flows
27 Formal v/s informal structures

Formal Informal
structures structures
 Allocation and  Patterns of social
organisation of interaction within the
individual and group organisation
responsibilities in pursuit
of organisational goals
 created by
management to
define and formalise of
the inter-relationships
and interaction of
people at work
28 Formal structures

 Organisation charts - Grouping of tasks

and definition of responsibilities which
make up the jobs of individuals
 Organisation structure - Grouping of
tasks and responsibilities into units,
sections and departments with common
purposes and objectives
 Mechanisms required to facilitate
direction, coordination and control of
individuals, units and departments
 Organisation structures
29
Tall structures Flat structures Matrix structures
•Clear and distinct division of •More flexible •Project-based organisations
work between various levels working •Multi-disciplinary teams
•Strong, clear line authority environment •High flexibility to changing
•Greater needs
devolution of •Focus on objectives of
authority and project and coordination of
autonomy work
•Lower •Employment of specialist
administrative skills
costs •Centralisation of decision-
making w.r.t project
•Difficulty of deploying •Proliferation of •Confusion and conflict over
strategic objectives and the roles and authority and responsibility
possibility of confusion responsibilities •Dual management systems
•Communication problems •May not be may carry high
because of the distance suitable for large administrative costs
between top and bottom and complex
•Costly administration organisations in
•Rigidity and difficulty to terms of control
30 Exercise 1 – Understand your
organisation
 Consider your industrial training / previous experience
organization
 What is the organization purpose?
 Identify all the customer segments and the related
products / services offered
 What are the key customer requirements?
 Who are the competitors?
 What is the competitive advantage w.r.t competitors?
 What is the vision, mission and strategic objectives?
 What type of formal structure?
 What types of informal structures promoted by the
organization?
 Identify the key factors in their PESTEL environment
31 Exercise 2 – Analyse your
organisation
 Analyse their understanding
 Analyse the strength of the relationships which the
Section/Department has with external customers and
suppliers.
 Analyse their understanding of their PESTEL environment
 Analyse their commitment to productivity and quality
 Analyse the relevance of the competitive advantages
 Analyse their understanding of internal
supplier/customer relationships
 Analyse the long-term permanence of the organization
w.r.t organizational purpose, vision, mission
 Analyse the relevance of formal/informal to fulfil the
organizational goals
32
 Basics of planning, leading,
33 organising, controlling
34 Planning

 Planning is the process by which the organisation

/ department / section determines what is to be
done
 Process of systematic thought that precedes
actions, during which resources in hand are
matched againts known or predicted conditions
in order to achieve organisation goals
35 Planning process

 Forecasting – analysing known

information to predict future conditions
 Goal setting – determination, in the light
of forecasts and policies, of what the
organisations wishes to achieve in the
relevant time span
 Decision making – choosing between
different goals / courses of action,
problem-solving, conflict resolution,
prioritisation
36 Organising

 Management process for arranging work to be

done such that agreed plans are carried out
and achieved
 Allocation of resources – employees, finance,
raw materials
 Physical arrangement of working units and
relationships
37 Leading

 Ensuring employees are appropriately engaged

in working on activities to meet goals an plans
 Includes motivation and supervision
38 Controlling

 Monitoring and regulating performance to

ensure that it conforms to plans and goals of the
organsiation
 Control starts from the moment plans are put into
actions
 Continuous monitoring and review and not just
monitoring at the end
 Corrective action to overcome challenges and
ensure that actions conform to the expectation
of the planning process
 Management information is key
39 Management functions at
different hierarchical levels
TOP
MANAGEMENT

MIDDLE
PlANNIN DIRECTIN CONTOLLI
MANAGEMENT / ORGANISING
G G NG
SUPERVISORS

EMPLOYEES
40 Supervisors

 Supervisors – also known as first line of

management
 It takes place at the lowest level in the hierarchy
and directly responsible for the operation of
discrete tasks and non-managerial personnel.
 This level is sometimes referred to as the
"technical" level, being concerned primarily with
the undertaking of actual work processes.
41 Middle management

 It lies between senior management and first line

supervisors
 This level is responsible for the work of managers at
a lower level (supervisors or possibly other middle
managers) and/or a range of more senior
operational staff such as specialist technicians and
professionals.
 In some analyses this level is referred to as the
"organisational" level, being concerned with the
organisation and integration of work processes
across a broader range.
 It makes the linkage between operations and
strategies/policies and vice versa.
42 Top management

 It is responsible for the entire organisation, or

significant large parts of it.
 It is also responsible for the middle tier of
management.
 This level is often referred to as the "institutional"
or "corporate" level, being concerned more with
the organisation as a whole, its goals and its
relationship with its environment.
 Comparison of the different
43 levels – management functions
Supervisors Middle management Top management
Planning least emphasis on decision- Collaborate with top • Overall decisions on goals and
making and planning management in developing plans for the organisation as a
It works within a pre-determined operational plans whole
framework • It needs to work closely with
middle management in
developing operational plans
for the achievement of those
goals

Organising • It works within a framework
determined by top and middle
management
• limited scope for organising in
respect of resource allocation
and operational arrangements
• Organising people in getting
the work done
Detailed planning and
organising of work on a broad
level –allocating resources and
instituting overall structural
arrangements and relationships
• It controls the allocation of
resources
• considerable oversight of the
organisational arrangements at
lower levels

Leading High responsibility for the

detailed aspects of ensuring the
appropriate functioning of
working arrangements,
particularly in respect of staff
relationships and methods of
working

Control More constant function across the three levels, with each level of management needing to monitor and
review progress towards goals in relation to their responsibilities
 44 Comparison of the different
levels – management roles
Supervisors Middle Top management
management
Interperson leader role is central to • Ensuring smooth • Most important at this
supervisors, reflecting interactions between level
al role their greater departments • It reflects the greater
involvement in ensuring • Conflict management positional power and
the smooth operation weight often necessary
of staff relationships for such duties
Information • It is important at all levels, but most predominant at top management level
al role
Decisional Handling relations Decisions on resource allocation
between supervisors
role and workers and
between workers
 45 Comparison of the different
levels – management activities
Supervisors Middle management Top management
• Determination of objectives and
deciding upon appropriate courses
of action at the highest level –the
institutional level
The high level objectives become
the basis for determining objectives
at the next level down.
Ensure alignment between high-
level objectives and actions at
operational level
Issuing of instructions
development of schemes of work
Problem-solving
Work monitoring
Review of instructions
Technical troubleshooting
The inter-connections between the different levels draws attention to a necessary interdependence. In order for
the organisation to be successful in achieving its goals, it needs co-operation and successful achievement of
objectives at all levels in the structure. Successful senior management is dependent upon successful first line
management and vice versa.