Functions of Management

Planning
⮚ the management functions that involves anticipating future trends and
determining the best strategies and tactics to achieve organizational
objectives. (Nickels and others)
⮚ the selection and sequential ordering of tasks required to achieve an
organizational goal. (Aldag and Stearns)
⮚ deciding what will be done, who will do it, where, when, and how it
will be done, and the standards to which it will be done. (Cole and
Hamilton)
Planning at Various Management Level
1. Top Management Level
Strategic Planning
⮚ the process of determining the major goals of the
organization and the policies and strategies for
obtaining and using resources to achieve those goals.
2. Middle Management Level
Intermediate Planning
⮚ the process of determining the contributions that sub
– units can make with allocated resources.
3. Lower Management Level
Operational Planning
⮚ the process of determining how specific tasks can best
be accomplished on time with available resources.
The Planning Process
1. Setting organizational, divisional or unit goals.
Goals
⮚ precise statement of results sought, quantified in time
and magnitude, where possible.
2. Developing strategies or tactics to reach goals
Strategy
⮚ a course of action aimed at ensuring that the
organization will achieve its objectives.
3. Determining resources needed
 4. Setting standards
Standard
⮚ a quantitative or qualitative measuring device
designed to help monitor the performances of people,
capital goods or processes.
Types of Plans
1. Functional area plans
a. Marketing plan – written document or blueprint for
implementing and controlling an organization’s marketing
activities related to a particular marketing strategy.
b. Production plan – written document that states the quantity of
output a company must produce in broad terms and by
product family.
c. Financial plan – it is a document that summarizes the current
financial situation of the firm, analyzes financial needs, and
recommends a direction for financial activities.
d. Human Resource Management plan – it is a document that
indicates the human resource needs of a company detailed in
terms of quantity and quality and based on the requirements
of the company’s strategic plan.
2. Plans with time horizon
a. Short – range – plans – plans intended to cover a period of
less than one year.
b. Long – range – plans – plans covering a time span of more
than one year.
3. Plans according to frequency use
a. standing plans – used again and again and they focus on
managerial situations that recur repeatedly.
Policies
⮚ they are broad guidelines to aid managers at every
level in making decisions about recurring situations or
functions.
Procedures
⮚ they are plans that describe the exact series of action
to be taken in a given situation.
Rules
 ⮚ they are statements that either require or forbid a
certain action.
4. Single – use plans – specifically developed to implement courses of
action that are relatively unique and are unlikely to be repeated.
a. budget – a plan which sets forth the projected expenditure for
a certain activity and explains where the required funds will
come from. (Weston and Brigham)
b. Program – designed to coordinate a large set of activities.
c. Project – usually more limited in scope than a program and is
sometimes prepared to support a program.
Parts of the Various Functional Area Plans
1. The contents of the Marketing Plan
a. the executive summary – which presents an overall view of
the marketing project and its potential.
b. table of contents
c. situational analysis and target market
d. marketing objectives and goals
e. marketing strategies
f. marketing tactics
g. schedules and budgets
h. financial data and control.
2. The contents of the Production Plan
a. the amount of capacity the company must have
b. how many employees are required
c. how much material must be purchased
3. The contents of the Financial Plan
a. an analysis of the firm’s current financial condition as
indicated by an analysis of the most recent statements.
b. a sales forecast
c. the capital budget
d. the cash budget
e. a set of pro forma (or projected) financial statements
f. the external financing plan
4. Contents of the Human Resource Plan
a. personnel requirements of the company
b. plans for recruitment and selection
c. training plan
 d. retirement plan
Parts of the Strategic Plan
1. Company or corporate mission
2. Objectives or goals
3. Strategies
Making planning effective
1. Recognize the planning barriers.
2. Use of aids to planning
Planning Barriers
1. Manager’s inability to plan
2. Improper planning process
3. Lack of commitment to the planning process
4. Improper information
5. Focusing on the present at the expense of the future
6. Too much reliance on the planning department
7. Concentrating on only the controllable variables
Among the Aids to Planning that may be Used
1. Gather as much information as possible
2. Develop multiple sources of information
3. Involve others in the planning process

Organizing
⮚ a management function which refers to the structuring of resources
and activities to accomplish objectives in an efficient and effective
manner.
Structure
⮚ the arrangement or relationship of positions within an organization.
The Purpose of the Structure
1. It defines the relationships between tasks and authority for
individuals and departments.
 2. It defines formal reporting relationships, the number of levels in
the hierarchy of the organization, and the span of the control.
3. It defines the groupings of individuals into departments and
departments into organization.
4. It defines the system to effort coordination of effort in both
vertical (authority) and horizontal (task) direction.

⮚ when structing an organization, the engineer manager must be

concerned with the following:
1. Division of Labor – determining the scope of work and how
it is combined in a job.
2. Delegation of Authority – the process of assigning various
degrees of decision-making authority to subordinates.
3. Departmentation – the grouping of related jobs, activities, or
processes into major organizational sub-units.
4. Span of Control – the number of people who report directly
to a given manager.
5. Coordination – the linking of activities in the organization
that serves to achieve a common goal or objective.

Formal Organization

⮚ the structure that details line of responsibilities, authority and position.

⮚ the formal structure is described by management through:
1. Organization Chart – is a diagram of the organization’s official
positions and formal lines of authority.
2. Organizational Manual – provides written descriptions of
authority relationships, details the functions of major
organizational units and describes job procedures.
3. Policy Manual – describes personnel activities and company
policies.

Informal Organization

⮚ Vulnerable to expediency, manipulation and opportunism and its low

visibility makes it difficult for management to detect these pervesions,
and considerable harm can be done to the company.

Types of Organizational Structure

1. Functional Organization – this is a form of departmentalization in
which everyone engaged in one functional activity, such as
engineering or marketing, is grouped into one unit.
2. Product or Market Organization – this refers to the organization of a
company by divisions that brings together all those involved with a
certain type of product or customer.
3. Matrix Organization – an organizational structure in which each
employee reports to both a functional or division manager and to a
project or group manager.

Advantages of Functional Organization

1. The grouping of employees who perform a common task permit
economies of scale and efficient resource use.
2. Since the chain of command converges at the top of the
organization, decision-making is centralized, providing a unified
direction from the top.
3. Communication and coordination among employees within each
department are excellent.
4. The structure promotes high-quality technical problem-solving.
5. The organization is provided with in depth skill specialization and
development.
6. Employees are provided with career progress within functional
departments.
Disadvantages of Functional Organization
1. Communication and coordination between the departments are
often poor.
2. Decisions involving more than one department pile up at the top
management level and are often delayed.
3. Work specialization and division labor, which are stressed in a
functional organization, produce routine, non – motivating
employee tasks.
4. It is difficult to identify which section or group is responsible for
certain problems.
5. There is limited view of organizational goal by employers.
6. There is limited general management training for employees.
Advantages of Product or Market Organization
1. The organization is flexible and responsive to change.
 2. The organization provides a high concern for customer’s needs.
3. The organization provides excellent coordination across
functional departments.
4. There is easy pinpointing of responsibility for product problems.
5. There is emphasis on overall product and division goals.
6. The opportunity for the development of general management
skills is provided.
Disadvantages of Product or Market Organization
1. There is a high possibility of duplication of resources across
divisions.
2. There is less technical depth and specialization in divisions.
3. There is poor coordination across divisions.
4. There is less top management control.
5. There is competition for corporate resources.
Advantages of Matrix Organization
1. There is more efficient use of resources than the divisional
structure.
2. There is flexibility and adaptability to changing environment.
3. The development of both general and functional management
skills are present.
4. There is interdisciplinary cooperation and any expertise is
available to all divisions.
5. There are enlarged tasks for employees which motivate them
better.
Disadvantages of Matrix Organization
1. There is a frustration and confusion from dual chain of command.
2. There is high conflict between divisional and functional interest.
3. There are many meetings and more discussion than action.
4. There is a need for human relations training for key employees
and managers.
5. There is a tendency for power dominance by one side of the
matrix.
Types of Authority
1. Line Authority – a manager’s right to tell subordinates what to do and
then see that they do it.
 2. Staff Authority – a staff specialist’s right to give advice to a superior.
3. Functional Authority – a specialist’s right to oversee lower - level
personnel involved in that specialty, regardless of where the personnel
are in the organization.
Staff Officers may be classified into the following:
1. Personal Staff – those individuals assigned to a specific manager to
provide needed staff services.
2. Specialized Staff – those individuals providing needed staff services
for the whole organization.
Committee
⮚ a formal group of person’s formed for a specific purpose.
⮚ Committee may be classified as:
1. Ad Hoc Committee – one created for a short-term purpose
and have a limited life.
2. Standing Committee – it is a relatively permanent committee
that deals with issues on an ongoing basis.