Professional Documents
Culture Documents
Module I PDF
Module I PDF
Course Code: HS 16101
Course Coordinator: Mr. Dipayan Das
Text books
• Koontz, H. and Weihrich, H., Essentials of Management: An
International, Innovation and Leadership Perspective, 10th Ed.,
McGraw Hill, 2015.
• Levin, R. I. and Rubin, D. S., Statistical Management, 7th Ed.,
Prentice Hall India, 2011.
• Robbins, S. P.; Bergman, R.; Stagg, I. and Coutler M., Management,
7th Ed., Prentice Hall, 2015.
• Aswathapa, A. Organizational Behaviour, 2010.
Definition of Management
• Management controls the various activities in an organisation.
• Harold Koontz defined Management as “the process of designing and
maintaining an environment in which individuals, working together in
groups efficiently to accomplish selected aims”.
• Management of resources –
I. Human – managerial talent and labor
II. Financial – capital
III. Physical – raw materials, machines and offices
IV. Information – data for decision making
Example
Organization Human resource Financial resource Physical resource Information resource
Planning
&
Organizing
Decision
Inputs from environment making
Human resources Goals attained
Financial resources Efficiently
Physical resources Effectively
Information resources
Controlling Leading
Industrial Management vs. Production
Management
Industrial Management Production Management
Deals with the analysis, design and control of a productive system.
Deals with the concepts and techniques specific to the analysis and management
of a production activity.
Characteristics of Management
• Management is –
Universal
Dynamic
A group of managers
Purposeful
Goal oriented
Integrative function
Social process
Multifaceted discipline
Continuous process
A system of authority
A resource
Intangible
Management as an Art
• A manager applies his knowledge and skills to coordinate the efforts of
his people.
• Management seeks to achieve concrete practical results.
• Management is creative as it brings out new situations and converts it
into outputs.
• Mastery in management requires a sufficiently long experience in
managing.
Management as Science
• A systemized body of knowledge.
• Underlying principles and theories developed through continuous
observation, enquiry, experimentation and research.
• Uses tools and techniques in decision making and achieving goals.
Techniques of Scientific Management
• Work study
Method study or Motion study
Work measurement or Time study
• Scientific task planning
• Standardization and simplification
• Differential piece rate system
• Functional foremanship
Techniques of Scientific Management
• Work study
Method of investigating the work being carried out in an organisation.
• Scientific task planning
Method of determining the standard task for an average worker.
• Standardization
Method of producing maximum variety of products from the minimum variety (i.e
., standardized) of materials, parts, tools and processes.
• Simplification
Process of reducing the variety of products manufactured.
• Differential price rate system
Method of wage payment.
• Functional foremanship
Divide work according to specialization.
Levels and areas of management
Marketing
Finance
Operations
Human resources
Administration
Supply chain
Others
Management hierarchy
Top level management
• Board of Directors, MD, Owners, Chief executives
To analyse, evaluate and deal with the environmental factors.
To establish long term goals and broad policies of the company.
To appoint departmental and other key executives.
To represent the company to the outside world.
To coordinate the activities and efforts of different department.
Middle level management
• Department head, Branch manager, Sales head
To interpret and explain the policies framed by Top management.
To compile and issue detailed instructions regarding operations.
To integrate various parts of a department.
To motivate the lower level personnel to work for the organisation’s goals.
To train the lower level personnel .
Low level management
• Supervisor, Foreman, Superintendent
To play day to day activity within the goals lay down by higher authority.
To assign jobs to the workers and to make arrangement for their training and
development.
To evaluate and control workers and to maintain personal contact with them.
Importance of Management
• Achievement of group goals
• Optimum utilization of resources
• Economic growth
• Stability
• Human development
• Meet the challenge of change
Principles of Management
• Henry Fayol (1841 – 1925): Father of Management
• 14 principles of management
1. Division of work
2. Authority
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual interests to general interest
7. Remuneration
8. Centralization
9. Scalar chain
10. Order
11. Equity
12. Stability of tenure of personnel
13. Initiative
14. Esprit de corps
Principles of Management
1. Division of work
When employees are specialized, output can increase because they become
increasingly skilled and efficient.
2. Authority
Managers must have the authority to give orders, but they must also keep in
mind that with authority comes responsibility.
3. Discipline
Disciplines must be upheld in organisations, but methods for doing so can vary
.
4. Unity of command
Employees should have only one direct supervisor.
Principles of Management
5. Unity of direction
Teams with the same objective should work under the direction of one
manager, using one plan. This will ensure that action is properly coordinated.
6. Subordination of individual interests to the general interest
Interest of one employee should not be allowed to become more important
than those of the group.
7. Remuneration
Satisfaction of employees depend upon fair remuneration for everyone.
8. Centralization
The principle refers to how close employees are to the decisionmaking
process.
Principles of Management
9. Scalar chain
Employees should be aware of where they stand in organisation’s hierarchy.
10. Order
The workplace facilities must be clean and safe for employees.
11. Equity
Managers should be fair to the all staffs.
12. Stability of tenure of personnel
Managers should strive to minimize employee turnover.
13. Initiative
Employees should be given the necessary level of freedom to create and carry out
plans.
14. Esprit de corps
Organisations should strive to promote team spirit and unity.
Evolution of Management Theory
• Approaches to management theory
I. Classical approach IV. Systems approach
Scientific management Open systems
Administrative management Closed systems
Bureaucratic management V. Contingency approach
II. Behavioural approach VI. Contemporary and other approaches
Human relations Total Quality Management
Human resources Excellence approach
Behavioural science Indian management style
III. Quantitative approach Japanese management style
Operations research
Production and operations management
Classical approach
• Scientific management
Frank W. Tayor is the father of Scientific Management.
Management’s responsibility is in knowing what it wants the workers to do
and then seeing that they do it in the best and cheapest way.
It focuses on the best way to do a job.
Application of the scientific methods to work in order to determine the best
method for accomplishing each task (Method study).
Workers should scientifically selected based on their qualifications and
trained to perform their jobs in optimal manner (Functional foremanship).
Scientific development of performance standards and the implementation of
a payforperformance incentive plan based on work standard (Time study,
Differential price rate system).
Classical approach
• Administrative management
Henry Fayol developed the framework of administrative management.
It emphasizes the role of the manager and the functions of management.
Planning and decision making, Organizing, Leading, and Controlling.
14 principles of management.
• Bureaucratic management
Max Weber developed the concept of bureaucracy and a major contributor
to bureaucratic management.
It focuses on the ideal form of organization.
Division of labour and chain of command.
Disadvantages are – rejection of innovative ideas and poor customer service
.
Behavioural approach
• Human relations
Whenever employees are given attention, productivity is likely to change
irrespective working conditions.
An employee’s complaint frequently is a symptom of some underlying
problem on the job, at home or in the person’s past.
Establish and maintain an effective communication system; hire and retain
effective personnel; and motivate those personnel.
• Human resource
Employees want to do meaningful work, contribute, and participate in
decision making and leadership functions.
Job rotation, Job enlargement, Job enrichment.
• Behavioural science
Focuses on applying conceptual and analytical tools to the problem of
understanding and predicting behaviour of employees in the workplace.
Quantitative approach
• Operations research
Linear programming – An algebraic method to determine the optimal
allocation of resources; Inventory control theory; Goal programming; Queuing
models; Game theory; and Simulation
⁓ Specific identification and quantification of system goal/goals.
⁓ Specific identification and quantification of all variables that affect the
attainment of goal/goals.
⁓ Construct a mathematical model to represent the situation being studied.
⁓ Appropriate technique to derive the feasible optimal solution, and
implementation of solution.
Quantitative approach
• Example of operation research problem
Maximize the profit by producing 2 products A and B, where A requires 10, 6,
5 hr of processing on machine P, Q, R, respectively and B requires 7.5, 9, 13
hr on machine P, Q, R, respectively. The maximum weekly hr available for 3
machines P, Q, R are 75, 54, 65, respectively. Profit per unit of A and B are
Rs. 60 and Rs. 70, respectively.
x = no. of product A; y = no. of product B
Max. Z = 60x + 70y
P: 10x + 7.5y ≤ 75
Q: 6x + 9y ≤ 54
R: 5x + 13y ≤ 65
Quantitative approach
• Production and operations management
Emphasizes on the enhancement of productivity and quality of both the
manufacturing and service organisations.
Major areas are –
Capacity planning
Facilities location
Facilities layout
Materials requirement planning
Scheduling
Purchasing and inventory control
Quality control
JustInTime inventory system
Systems approach
• Open system
An open system interacts with its environments through giving and
receiving information.
It takes inputs from within and from outside the organisation, and its actions
will produce outputs that impact the internal environment and the environment
outside of the organisation.
More flexible compared to closed system.
Example: Marketing and HR departments require external information.
• Closed system
There is very little sharing between the various components of the
organisation and certainly little to no interaction with the environment outside
of the organisation.
Example: Research & Development department
Contingency approach
There is no one best way to manage.
It depends on the situation i.e., external environment, technology
, organisational characteristics, characteristics of the manager,
characteristics of the subordinates.
Contemporary approach TQM
• Total Quality Management
(TQM) Principles & Practices
Tools &
Techniques
A philosophy to
management that focuses on Leadership Quantitative Nonquantitative
managing the entire
organisation to deliver quality Customer
satisfaction
SPC ISO 9000
goods and services to customers
. Employee
Acceptance
Sampling
ISO 14000
involvement
Reliability Benchmarking
Continuous
improvement
Experimental Total
design productive
maintenance
Supplier
partnership
FMEA
Performance
measures QFD
Contemporary approach
• Excellence approach
It is a management approach which strives to achieve excellence in a fresh and
unconventional method. Example: Decentralization, Innovation,
Experimentation, Customer satisfaction.
• Indian management style
It is an attitude of detachment to the outcome and focused concentration on the
work in hand that paves the way for success.
• Japanese management style
It is a participative approach to management that brings in involvement and
commitment of employees of the organisation to contribute their best to
organisational goals.
Organisational Environment
Cultural
Social Legal
Political Economic
Demographic
Organisational Environment
• Economic factor
GDP
Interest rate
Inflation
Taxation Demographic factor
Age profile
Employment and wages paid to Gender profile
labors Income levels
Cost of production Education level
Production processes Occupation pattern
Prices of goods and services
Organisational Environment
• Technological factor
Computeraided designs
Computer controlled machines
Ecommerce Social factor
• Cultural factor
Harmful effects on society
Environmental pollutions
Language Competitive factor
Religion Price reduction
Heritage and values Product development
Advertising
• Legal and Political factors Packaging
Govt. rules and regulations Supply chain management
Govt. policies Incentives offered to retailers, wholesalers
Decision making
• The act of choosing one alternative among a set of alternatives.
• Decisions should be rational.
• Decision making includes recognizing and defining the nature of a
decision situation, identifying alternatives, choosing the best
alternative, and putting it into practice.
• Decisions may be taken to address problems as well as in situations of
opportunity.
Characteristics of decision making
• Decision making implies choice.
• Continuous activity.
• Based on relevant information.
• Goal oriented process.
• Relates to specific problem/opportunity.
• Time consuming activity.
• Needs effective communication.
• Responsible job.
Types of decision
• Programmed decisions
Structured
Relies on previously established criteria.
Applied to routine or frequent problems
• Nonprogrammed decisions
Unstructured, novel, and nonrecurring.
Applied to the problems which occur much less often.
Most of the decisions are made by the top managers.
Decision making process
Steps Details Example
Defining the decision situation Recognize the indication of a decision making situation. A plant manager sees that employee turnover has increased by 5%.
Creative alternatives are desired. More important the decision, more The plant manager can (1) increase wages, (2) increase benefits, (3) change
Identifying alternatives
alternatives should be generated. hiring standards
Determine the feasibility, satisfactoriness, and consequences for Increasing benefits may not be feasible. Increasing wages and changing hiring
Evaluating alternatives
each alternatives. standards may satisfy all conditions.
Consider the situational factors and choose the best alternative that Changing hiring standards will take an extended period of time to cut
Selecting the best alternative
fits the situation. employee turnover, so increase wages.
With the permission from corporate headquarters, the HR department
Converting decision into action Implement the chosen alternative.
establishes a new wage structure.
The plant manger notes that, six months later, employee turnover dropped to
Following up the action taken Take feedback regarding the decision made.
its previous level.
Decision making conditions
• Decision making under certainty
Management knows:
What the alternatives are.
What conditions are associated with each alternative.
There is little chance of making a bad decision.
• Decision making under risk
Risk of availability of alternatives, costs etc.
Chance of making bad decision.
Decisions are taken based on past experience, relevant information, estimation
of probability, mathematical modeling and simulations.
Decision making conditions
• Decision making under uncertainty
Management does not know:
What are the alternatives.
The risks associated with each alternatives.
Decisions are made based on past experience, intuition and own judgment.
Major chances of taking bad decisions.
Decision aids
• Mathematical techniques often used by the decisionmaker:
Decision tree
Decision matrices
Linear programming
Game theory
PERT (Program Evaluation and Review Technique)
CPM (Critical Path Method)
EOQ (Economic Order Quantity)
Breakeven point analysis
Decision Tree Example
• Decision tree for playing tennis
Decision Matrix Example
• Decision matrix for choosing car
Game Theory Example
PERT Example
CPM Example
Economic Order Quantity (EOQ)
Problems on EOQ
1. A company’s annual demand is 18000 units and price/unit is Rs. 4. If
ordering cost is Rs. 120/order and the inventory carrying cost is 12%
of unit purchase price. Determine the economic order quantity and
the number of orders to be placed.
2. A company makes bicycles. It produces 450 bicycles a month. It
buys the tires for bicycles from a supplier at a cost of Rs. 20/tire.
The company’s inventory carrying cost is estimated to be 15% of the
cost and the ordering cost is Rs. 550/order. Calculate the EOQ and
the total number of orders per year.
Breakeven Point Analysis
Problems on BEP Analysis
• A product can be produced by four process as given below. To
produce 100 units which process should be preferred.
Process Fixed cost (Rs.) Variable cost (Rs./unit)
A 20 3
B 50 1
C 10 4
D 30 2
Problems on BEP Analysis
• A company plans to set up a new workshop for the production of
mobile chargers. The fixed cost for the new workshop is Rs. 50,000/
and the variable cost is Rs. 75/ per unit. If the company decides to sell
its products at Rs. 120/ per unit, what is the breakeven quantity and
how many mobile chargers the company need to sell in order to earn a
profit of Rs. 20,000/.