ENGINEERING MANAGEMENT What Engineering Managers do?

What is Engineering?  Management of technical functions

 Management of (other) functions in a
The profession in which a knowledge of the
high-technology enterprise
mathematical and natural science gained by
study, and experience, and practice is applied Management
with judgments to develop ways to utilize,
Is the process of working with people and
economically, the materials and forces of nature
resources to accomplish organizational goals.
for the benefit of mankind (1979, US,
Good managers do those things both effectively
Engineering Societies)
and efficiently.
What is Management?
Effective
A set of activities (including planning, decision
 To be effective is to achieve
making, organizing, leading and control)
organizational goals.
directed at an organization’s resources (human,
 Accomplish tasks that help fulfill
financial, physical, and informational) with the
organizational objectives (make the
aim of achieving organizational goals in an
right decisions and successfully carry
efficient and effective manner.
them out to accomplish the
Management is …… organizational goal)
 Do those work activities that will help
 Getting things done through people.
the organization reach its goals.
 The process of achieving organizational
 “Doing the right things.”
goals by engaging in the four major
 Concern with ends (result) of
functions of planning and decision-
organizational goal achievement
making, organizing and staffing,
directing/ leading, and controlling Efficient
 Identifying a group of people whose job
 To be efficient is to achieve goals with
is to direct the effort and activities of
minimal waste of resources – that is, to
other people towards a common
make the best possible use of money,
organizational objective.
time, materials, and people.
 the performance of achieving desired
 Getting work done with a minimum
results by means of group effort
effort, expense, or waste (use of
consisting of utilizing resources, that
resources – people, money, raw
will determine the success and failure of
materials – wisely and cost effectively)
an organization.
 Getting the most output from the least
What is Engineering Management? amount of inputs
 “Doing things right.”
 Direct supervision of engineers and/or
 Concern with means (ways) of getting
the engineering function
things done.
 Application of quantitative methods and
engineering techniques to the practice
of management.
The Four Management Functions Four Different Levels of Managers

PLANNING TOP LEVEL

Is specifying the goals to be achieved and  Are the organization’s senior executives
deciding in advance the appropriate actions and are responsible for its overall
needed to achieve those goals. management.

Planning activities include: MIDDLE-LEVEL

 Analyze current situations.  Managers located in the middle layers

 Anticipate the future. of the organizational hierarchy,
 Determine objectives. reporting to the top-level executives.
 Decide on what actions to engage in
FRONTLINE
 Chose a business strategy.
 Determine resources to achieve goals.  Lower-level managers who supervise
the operational activities of the
ORGANIZING
organization.
Is assembling and coordinating the human,
TEAM LEADER
financial, physical, informational, and other
resources needed to achieve goals. Organizing  Employees who are responsible for
activities include attracting people to the facilitating successful team
organization, specifying job responsibilities, performance.
grouping jobs into work units, marshalling, and
allocating resources, and creating conditions so Managers need three Broad Skills
that people and things work together to achieve  Technical Skill
maximum success.  Conceptual and Decision Skills
LEADING  Interpersonal and Communication Skills

Leading is stimulating people to be high EVOLUTION OF MANAGEMENT

performers. It includes motivating and CLASSICAL APPROACHES
communicating with employees, individually
and in groups. Leaders maintain close day today Systematic Management
contact with people, guiding and inspiring them The systematic management approach
toward achieving team and organizational goals. attempted to build specific procedures and
Leading takes place in teams, departments, and processes into operations to ensure
divisions, as well as at the tops of large coordination of effort, will engage, choosing
organizations. corporate and business strategies, and
CONTROLLING determining the resources needed to achieve
the organization’s goals.
Is about monitoring performance and making
necessary changes in a timely manner, by These goals were achieved through.
controlling, managers make sure the  Careful definition of duties and
organization’s resources are being used as responsibilities.
planned and the organization is meeting its
goals for quality and safety.
  Standardized techniques for performing
these duties.
 Specific means of gathering, handling,
transmitting, and analyzing information.
 Cost accounting, wage, and production
control systems to facilitate internal
coordination and communications.
Scientific Management
This approach is advocated the application of
scientific methods to analyze work and to
determine how to complete production tasks
efficiently.
Taylor identified four principles of scientific
management.
1. Management should develop a precise,
scientific approach for each element of
one’s work to replace general
guidelines.
2. Management should scientifically
select, train, teach, and develop each
worker so that the right person hast the
right job.
3. Management should cooperate with
workers to ensure that jobs match plans
and principles.
4. Management should ensure an
appropriate division of work and
responsibility between managers and
workers.
BUREAUCRACY
A classical management approach emphasizing
a structured, form network of relationship
among specialized positions in the organization.
Characteristics of an Effective Bureaucracy
1. Division of labor – Tasks, assignments,
and authority are clearly specified.
2. Authority - A chain of command or
hierarchy is well established.
3. Qualifications – employees are selected
and promoted based on their
qualifications.
4. Ownership – Managers, not owners,
should run the organization.
5. Rules and Controls – impersonal rules
should be applied consistently and
fairly.
Administrative Management
The administrative management approach
emphasized the perspective of senior managers
within the organization and argued that
management was a profession and could be
taught.
Fayol’s 14 Principles of Management
1. Division of Work – Divide Work into
specialized tasks and assign
responsibilities to specific individuals.
2. Authority – delegate authority along
with responsibility.
3. Discipline – make expectations clear and
punish violations.
4. Unity of Command – each employee
should be assigned to only one
supervisor.
5. Unity of Direction – employees’ efforts
should be focused on achieving
organizational objectives.
6. Subordination of individual interest to
the general interest – the general
interest must be predominated.
7. Renumeration – systematically reward
efforts that support organization’s
direction.
8. Centralization – determine the relative
importance of superior and subordinate
roles.
9. Scalar Chain – keep communications
within the chain of command.
10. Order – orders job and materials so they
support the organization’s direction.
 11. Equity – fair discipline and order
enhance employee commitment.
12. Stability and tenure of personnel –
promote employee loyalty and
longevity.
13. Initiative – encourage employees to act
on their own in support of the
organization’s direction.
14. Esprit de Corps – promote a unity of
interests between employees and
management.
Human Relations
A classical management approach that
attempted to understand and explain how
human psychological and social processes
interact with the formal aspects of the work
situation to influence performance.
Hawthorne Effect
The researchers concluded that the workers
performed and reacted differently because the
researchers were observing them.
CONTEMPORARY APPROACHES
Sociotechnical Systems Theory
An approach to job design that attempts to
redesign tasks to optimize operation of a new
technology while preserving employees’
interpersonal relationships and other human
aspects of the work.
While research on sociotechnical systems
theory was a precursor to the total quality
management (TQM) movement, it also
promoted the use of teamwork and
semiautonomous work groups as important
factors for creating efficient production systems.
The researchers believed that workers should
be given the freedom to correct problems at
early stages of the production process rather
than after products were made, when errors
would create waste.
Organizational Behavior
A contemporary management approach that
studies and identifies management activities
that promote employee effectiveness by
examining the complex and dynamic nature of
individual, group, and organizational processes.
The revised perspective, known as
organizational behavior, studies and identifies
management activities that promote employee
effectiveness through an understanding of the
complex nature of individual, group, and
organizational processes. Organizational
behavior draws from a variety of disciplines,
including psychology and sociology, to explain
the behavior of people on the job.
Quantitative Management
A contemporary management approach that
emphasizes the application of quantitative
analysis to managerial decisions and problems.
Quantitative management helps a manager
decide by developing formal mathematical
models of the problem. Computers facilitated
the development of specific quantitative
methods. These include such techniques as
statistical decision theory, linear programming,
queuing theory, simulation, forecasting,
inventory modeling, network modeling and
breakeven analysis. Organizations apply these
techniques in many areas including production,
quality control, marketing, human resources,
finance, distribution, planning, and research and
development.
Systems Theory
A theory that an organization is a managed that
changes inputs into outputs.
ETHICS AND CORPORATE RESPONSIBILITIES
FIVE PERSPECTIVES OF ETHICS
The aim of ethics is to identify both the rules
that should govern people’s behavior and the
“goods” that are worth seeking. Ethical
decisions are guided by the underlying values of
the individual. Values are principles of conduct
such as caring, being honest, keeping promises,
pursuing excellence, showing loyalty, being fair,
acting with integrity, respecting others, and
being a responsible citizen.
An ethical issue is a situation, problem, or
opportunity in which an individual must choose
among several actions that must be evaluated
as morally right or wrong.
Business Ethics comprises the moral principles
and standards that guide behavior in the world
of business.
Moral Philosophy refers to the principles, rules,
and values people use in deciding what is right
or wrong. This seems to be a simple definition
but often becomes terribly complex and difficult
when facing real choices. How do you decide
what is right or wrong? Do you know what
criteria you apply and how you apply them?
Ethics scholars point to various major ethical
systems as guides.
We will consider five of these:
1. Universalism
2. Egoism
3. Utilitarianism
4. Relativism
5. Virtue ethics
These major ethical systems underlie personal
moral choices and ethical decisions in business.
Universalism
According to universalism, all people should
uphold certain values, such as honesty and
other values that society needs to function.
Universal values are principles so fundamental
to human existence that they are important in
all societies – for example, rules against murder,
deceit, torture, and oppression.
Egoism
According to egoism, individual self-interest is
the actual motive of all conscious action. “Doing
the right thing.” The focus of moral philosophy
is defined by egoism as “do the act that
promotes the greatest good for oneself.” If
everyone follows this system, according to its
proponents, the well-being of society should
increase.
Utilitarianism
Utilitarianism directly seeks the greatest good
for the greatest number of people.
Relativism
Relativism defines ethical behavior based on the
opinions and behaviors of relevant other
people.
Relativism acknowledges the existence of
different ethical viewpoints. For example,
norms, or standards of expected and acceptable
behavior, vary from one culture to another. A
recent study fund that the perceived
effectiveness of whistleblowing – telling others,
inside and outside the organization, about
wrongdoing – differs across cultures.
Virtue Ethics
Virtue Ethics is a perspective that goes beyond
the conventional rules of society by suggesting
that what is moral must also come from what a
mature person with good “moral character”
would deem right.
BUSINESS ETHICS
Business Ethics refers to the standard for
morally right and wrong conduct in business.
Law partially defines the conduct, but “legal”
and “ethical” aren’t necessarily the same.
3 Reasons why Business Ethics Matters
1. Business Ethics is an essential skill.
2. Business ethics drives employee
behavior.
3. Business ethics benefits the bottom
line.
Ethical Dilemmas
An ethical dilemma (ethical paradox or moral
dilemma) is a problem in which in the decision-
making process between two possible options,
neither of which is acceptable from an ethical
perspective. Although we face many ethical and
moral problems in our lives, most of them come
with relatively straightforward solutions.
Ethics and the Law
Ethics are rules of conduct. Laws are rules
developed by the governments to provide
balance in society and protection to its citizens.
Ethics comes form people’s awareness of what
is right and wrong. Laws are enforced by
government to their people.
The Ethical Climate influences employees
Ethics are not shaped only by laws and by
individual development and virtue. They also
may be influenced by the company’s work
environment. The ethical climate of an
organization refers to the process by which
decisions are evaluated and made on the basis
of right and wrong.
MANAGERS BEHAVIOR AND ETHICAL
DECISIONS
People often give in to what they perceive to be
the pressures or preferences of powerful others.
In the workplace, that means managers
influence their employees for good or for ill.
Managers formally and informally shape
employees’ behavior with money, approval,
good job assignments, a positive work
environment, and in many other ways.
Ethical Leadership
It’s been said that your reputation is your most
precious asset. Here’s a suggestion: set a goal
for yourself to be seen by others as both a
“moral person” and as a “moral manager”
someone who influences others to behave
ethically.
Ethical leader one who is both a moral person
and a moral manager influencing others to
behave ethically.
Ethics Codes
To make ethics code effective, apply the
following principles:
 Involve those who must live with the
code writing in it.
 Focus on real-life situations that
employees can relate to.
 Keep it short and simple, so it is easy to
understand and remember.
 Write about values and shared beliefs
that are important and that people can
believe in.
 Set the tone at the top, having
executives talk about and live up to the
statement.
Ethics Programs The ethical decision-making process

Corporate ethics programs commonly include

formal ethics codes articulating the company’s
expectations regarding ethics committees that
develop policies, evaluate actions, and
investigate violations: ethics communication
systems giving employees a means of reporting
problems or getting guidelines: ethics officers or
ombudspersons who investigate allegations and
provide education; ethics training programs:
and disciplinary processes for addressing
Outcomes of unethical decisions
unethical behavior.

Compliance-based ethics programs company

mechanisms typically designed by corporate
counsel to prevent, detect, and punish legal
violations.

Integrity-based ethics programs company

mechanisms designed to instill in people a
personal responsibility for ethical behavior.

Making ethical decisions takes three things:

1. Moral awareness – realizing the issue

has ethical implications. Ethics requires Courage.
2. Moral judgement – knowing what
Behaving ethically requires not just moral
actions are morally defensible.
awareness and moral judgement but also moral
3. Moral character - the strength and
character, including the courage to take actions
persistence to act in accordance with
consistent with your ethical decisions. Think
your ethics despite the challenges.
about how hard it can be to do the right thing.
The philosophe John Rawls created a thought
CORPORATE SOCIAL RESPONSIBILITY
experiment based in the “veil of ignorance.”
According to Caroll’s four part model of
Veil of ignorance a moral reasoning device
corporate social responsibility and Buchholtz,
designed to promote impartial decision making
2003, corporate social responsibility is defined
by denying decision makers access to potentially
as the economic, legal, ethical and discretionary
biasing information about who will benefit most
expectations that society has of organizations at
or least from the available options.
a given point in time.

The idea is that a business should give back to

the community and think about how its actions
will affect society and the environment. This has
a number of common advantages, including
increased community support, branding, and
costumer loyalty, lower costs, lower waste, and
improved employee productivity, engagement,
talent acquisition, and retention.
Four Levels of corporate social responsibility
1. Economic Responsibilities
Be profitable and do what is required by
global capitalism.
2. Legal Responsibilities
Obey the law and do what is required
by the global stakeholders.
3. Ethical Responsibilities
Be ethical and do what is expected by
global stakeholders.
4. Philanthropic Responsibilities
Be a good global corporate citizen and
do what is desired by the global
stakeholders.
A transcendent education has five goals that
balance self-interest with responsibility to
others:
1. Empathy
Feeling your decisions as potential
victims might feel them, to gain
wisdom.
2. Generativity
Learning how to give as well as take, to
others in the present as well as to
future generations.
3. Mutuality
Viewing success not merely as personal
gain, but a common victory.
4. Civil aspiration
Thinking not just in terms of “don’ts”
(lie, cheat, steal, kill) but also in terms
of positive contributions.
5. Intolerance of Ineffective Humanity
Speaking out against unethical actions.
Do business really have a social responsibility?
Social responsibility means that business, in
addition to maximizing shareholder value, must
act in a manner benefiting society, not just the
bottom line. Social responsibility has become
increasingly important to investors and
consumers who seek investments that not only
are profitable but also contribute to the welfare
of society and the environment.
Socially responsible companies should adopt
policies that promote the well-being of society
and the environment while lessening negative
impacts on them.
Companies can act in many ways, such as by
promoting volunteering, making changes that
benefits the environment, engaging in ethical
labor practices, and engaging in charitable
giving.
THE NATURAL ENVIRONMENT
Economic Activities has Environmental
Consequences
Environmental Activities
Are those activities that are based on the
production, distribution, exchange, and
consumption of goods and services. Economic
activities are carried out by human beings to
earn their income and to acquire wealth. For
example, a trader, and agriculturist, a
manufacturer, a doctor, a teacher, and laborers
working in a factor are all examples of economic
activities. These activities are performed by
people to earn their livelihood and to acquire
wealth.
The fundamental source of risk in modern
society are the excessive production of hazards
and ecologically unsustainable consumption of
natural resources. Risk has proliferated through
population explosion, industrial pollution, and
environmental degradation.
Industrial Pollution
Risks include air pollution, global warming,
ozone depletion, acid rain, toxic waste sites,
nuclear hazards, obsolete weapon arsenals,
industrial accidents, and hazardous products.

Development can be sustainable. The Planning Process

Ecocentric Management

Has as its goal the creation of sustainable

economic development and improvement of
quality of life worldwide for all organizational
stakeholders.

Sustainable Grow

Is the economic growth and development that

meet present needs without harming the needs
of the future generations.

What is Planning?

Planning is the conscious, systematic process of

making decisions about goals and activities that
an individual, group, work unit, or organization
will pursue in the future.

Step 1: Analyze the situation.

Life Cycle Analysis (LCA) Planners should gather, interpret, and

summarize all information relevant to the
A process of analyzing all inputs and outputs,
planning issue in question. They study past
through the entire “cradle-to-grave” life of a
events, examine current conditions, and try to
product, to determine total environmental
forecast future trends.
impact.
S – Specific
STRATEGIC PLANNING AND DECISION MAKING
M – Measurable
Strategic planning and decision-making are the
process of charting a course based on long-term A – Attainable
goals and a longer-term vision. By clarifying
R – Relevant
your company's big picture aims, you will have
the opportunity to align your shorter-term plans T – Time Bound
with this deeper, broader mission giving your
Step 2: Generate Alternative Goals and Plans
operations clarity and consistency.
Various types of Plans
Single-use plans are designed to achieve a set
of goals that are not likely to be repeated in the
future. A single-use plan is meant to solve one
problem and then be discarded.
Standing plans focus on ongoing activities
designed to achieve an enduring set of goals. It
contributes to coordinate in the business, as
they bring about consistency and unity.
Contingency plans specify actions to take when
a company’s initial plans have not worked well
or events in the external environment require a
sudden change. A business contingency plan
can mitigate risk and help you get back to
business as usual as quickly as possible.
Step 3: Evaluate Goals and Plans
Next managers evaluate the advantages,
disadvantages, and potential effects of each
alternative goal and plan. They must prioritize
the goals and even eliminate some of them.
Also, managers consider how well alternative
plans meet high priority goals, considering the
cost of each initiative and likely investment
return.
Step 4: Select Goals and Plans
Once managers have assessed the goals and
plans, they select the most appropriate and
feasible alternative. The evaluation
process identifies the priorities and trade-
offs among the goals and plans.
Step 5: Implement the Goals and Plans
Once managers have selected the goals and
plans, they must implement them. Proper
implementation is key to achieving goals.
Managers and employees must understand the
plan, Have the resources to implement it, and
be motivated to do so.
Step 6: Monitor and Control Performance
Monitoring and Controlling is essential without
it, you would never know whether your plan
is succeeding. Managers must continually
monitor the actual performance of their
work units against the unit’s goals and plans.
Three major types of Plans
Strategic
is a process in which an organization's leaders
define their vision for the future and identify
their organization's goals and objectives.
Tactical
translates broad strategic goals and plans into
specific goals and plans relevant to a particular
portion of the organization, often a
functional area such as marketing or human
resources.
Operational
identifies the specific procedures and processes
required at lower levels of the organization.
Tactical and Operational Planning support the
Strategy.
The organization’s strategic goals and plans
serve as the foundation for planning by middle-
level and frontline managers. shows that as
goals and plans move from the strategic level
to the tactical level and then to the operational
level, they become more specific and involve
shorter time periods.

Why is Alignment important?
To be fully effective, the organization’s strategic,
tactical, and operational goals and plans must
be aligned—that is, they must be consistent,
mutually supportive, and focused on
achieving the common purpose and direction.
Whole Foods Market, for example, links its
tactical and operational planning directly to
its strategic planning. The strategic goal of
Whole Foods is “to sell the highest-quality
products that also offer high value for our
customers.”
Strategic Planning Process
is the process of documenting and establishing
the direction of your small business—by
assessing both where you are and where you’re
going.
Strategic Management
Strategic management involves managers from
all parts of the organization in the formulation
and implementation of strategic goals and
strategies.
The Strategic Planning Process
Establish – First establish a Mission, Vision, and
Goals
Analyze External – Second, analyze external
opportunities and threats.
Analyze Internal – Third, analyze internal
strengths and weaknesses.
Conduct – fourth, conduct a SWOT analysis and
formulate strategy.
First establish a Mission, Vision, and Goals
Mission
The mission is a clear and concise expression of
the organization’s basic purpose. It describes
what the organization does, whom it does it for,
its basic good or service, and its values.
Vision
Points to the future; it provides a perspective on
where the organization is headed and what it
can become.
Goal
The goal of planning is to achieve specific goals.
It specifies a key line of action for achieving
objectives. All divisions of an organization’s
activities should be focused on the execution of
plans.
Second, analyze external opportunities and
threats.
Stakeholders
Are groups and individuals who affect and are
affected by achievement of the organization’s
mission, goals, and strategies.
Third, analyze internal strengths and
weaknesses.
Several Components of internal resource
Human Resource Assessment
Examines strengths and weaknesses of all
levels of managers and employees and focuses
on key human resources activities, including
recruitment, selection, placement, training,
labor (union) relationships, compensation,
promotion, appraisal, quality of work life, and
human resources planning.
Marketing Audit
Examines strengths and weaknesses of major
marketing activities and identifies markets, key
market segments, and the organization’s
competitive position (market share) within key
markets.
Financial Analysis
Operations Analysis
Other Internal Resource Analyses
How are resources and capabilities related?
Resources are a source of competitive
advantage only under all the following
circumstances:
 The resources are instrumental for
creating customer value.
 The resources are rare and not equally
available to all competitors.
 The resources are difficult to imitate.
 The resources are well organized.
Core Capability
 is something a company does especially
well relative to its competitors.
 a unique skill and/or knowledge an
organization possesses that gives it an
edge over competitors.
 a core capability typically refers to a set
of skills or expertise in some activity,
rather than physical or financial assets.
Benchmarking
 To assess and improve performance,
some companies use benchmarking, the
process of assessing how well one
company’s basic functions and skills
compare with those of another
company or set of companies.
 The goal of benchmarking is to
thoroughly understand the “best
practices” of other firms and to
undertake actions to achieve better
performance and lower costs.
Fourth, conduct a SWOT analysis and
formulate strategy.
What is SWOT?
is a framework used to evaluate a company's
competitive position and to develop strategic
planning. SWOT analysis assesses internal and
external factors, as well as current and future
potential.
Corporate Strategy
 Concentration
 Vertical Integration
 Related Diversification
 Unrelated Diversification
Business Strategy
It is major actions by which an organization
builds and strengthens its competitive
position in the marketplace.
What are the key components of Business
Strategy?
1. Vision and Objections
2. Core Values
3. SWOT (Strength, Weaknesses,
Opportunities, Threats)
4. Tactics and Operational Delivery
5. Resources and resource allocation
6. Measurements and analysis
How to build a Business Strategy?
1. Define your vision.
2. Setting your objective
3. Analyzing your business and your
marketplace
4. Defining your competitive advantage
5. Building a framework
Low-cost Strategy because they are unsure how much trouble will
be involved in solving the problems, they are
A strategy and organization uses to build
concerned about the consequences if they fail,
competitive advantage by being efficient and
and many management problems are so much
offering a standard, no-frills product.
more complex than routine tasks. For these
5 Differentiation Strategies reasons, managers may lack the insight,
courage, or will act.
1. Features
2. Marketing Tone What is Managerial?
3. Pricing
 Constantly face problems and
4. Quality
opportunities, ranging from simple and
5. Service
routine decisions to problems
Functional Strategy
 Relating to management or managers,
Strategies implemented by each functional area especially of a company or similar
of the organization to support the organization’s organization, Managerial means relating
business strategy. to the work of a manager.

Implement the Strategy What are Managerial Positions?

Strategic managers also must ensure that the
new strategies are implemented effectively and
efficiently. Recently corporations and strategy
consultants have been paying more attention to
implementation. They realize that clever
techniques and a good plan do not guarantee
success.
Strategy Implementation Involves Four Related
Steps
1. Define strategic tasks.
2. Assess organization capabilities.
3. Develop an implementation agenda.
4. Create an implementation plan.
Strategic Control System
a system designed to support managers in
evaluating the organization’s progress regarding
its strategy and, when discrepancies exist,
taking corrective action.
Managerial positions are roles where a person
oversees the job functions of another person or
a group of people. Managers also might oversee
the operation of a specific function within a
company.
Why is decision making so challenging?
Lack of structure is typical of managerial
decisions. Usually there is no automatic
procedure to follow. Problems are novel and
unstructured, leaving the decision maker
uncertain about how to proceed. In other
words, a manager’s decisions most often have
the characteristics of nonprogrammed
decisions.
Programmed Decisions
 Problem is frequent, repetitive, and
routine, with much certainty regarding
cause-and effect relationships.

Managerial Decision Making  Decision procedure depends on

policies, rules, and definite procedures.
Managers requiring months of analysis.
However, managers often ignore problems Nonprogrammed Decisions
  Problem is novel and unstructured, with
much uncertainty regarding cause-and-
effect relationships.
 Decision procedure needs creativity,
intuition, tolerance for ambiguity, and
creative problem solving.
Formal Decision Making has Six Stages
1. Identify and diagnose the problem.
The decision-making process begins
with recognition that a problem or
opportunity exists and must be
solved or should be pursued.
Typically, a manager realizes some
discrepancy between the current
state and a desired state (the way
things ought to be).
2. Generate alternative solutions.
The second stage of decision-
making links problem diagnosis to
the development of alternative
courses of action aimed at solving
the problem. Managers generate at
least some alternative solutions
based on past experiences.
3. Evaluate alternatives.
 The third stage of decision
making involves determining
the value or adequacy of the
alternatives that were
generated. In other words,
which solution will be the best?
 Obviously, alternatives should
be evaluated more carefully.
Fundamental to this process is
to predict the consequences
that will occur if the various
options are put into effect.
Managers should consider
several types of consequences.
They include quantitative
measures of success, such as
lower costs, higher sales, lower
employee turnover, and higher
profits.
4. Make the choice.
Maximizing
 is achieving the best
possible outcome, the one
that realizes the greatest
positive consequences and
the fewest negative
consequences, a decision
realizing the best possible
outcome. In oher words,
maximizing results in the
greatest benefit at the
lowest cost, with the largest
expected total return.t
Satisficing
 is choosing the first option
that is minimally
acceptable, although not
necessarily the best or
perfect, the choice appears
to meet a targeted goal or
criterion. When you
satisfice, you compare your
choice against your goal,
not against other options,
and you end your search for
alternatives at the first one
that is okay.
Optimizing
 means achieving the best
possible balance among
several goals. Perhaps, in
purchasing equipment, you
are interested in quality and
durability as well as price.
Instead of buying the
cheapest piece of
equipment that works, you
buy the one with the best
 combination of attributes,
even though some options
may be better on the price
criterion and others may
offer better quality and
durability.
5. Implement the decision.
 Determine how things will
look when the decision is
fully operational.
 Chronologically order,
perhaps with a flow
diagram, the steps
necessary to achieve a fully
operational decision.
 List the resources and
activities required to
implement each step.
 Estimate the time needed
for each step.
 Assign responsibility for
each step to specific
individuals.
6. Evaluate the decision.
 Implementation will require
more time, resources,
effort, or thought.
Human Nature erects barriers to good
decisions.
Vigilant and full execution of the six-stage
decision-making process is the exception rather
than the rule. But when managers use such
rational processes, better decisions result.
Managers who make sure they engage in these
processes are more effective.
Psychological Barriers
Decision makers are far from objective in the
way they gather, evaluate, and apply
information in making their choices. People
have biases that interfere with objective
rationality. Here are just a few of the many
documented subjective biases:
Illusion of Control
A belief that one can influence events even
when one has no control over what will happen.
Such over-confidence can lead to failure
because decision makers ignore risks and fail
to evaluate the odds of success objectively.
In addition, they may believe they can do no
wrong, or hold a general optimism about the
future that can lead them to believe they
are immune to risk and failure.
Framing Effects
Phrasing or presenting problems or decision
alternatives in a way that lets subjective
influences override objective facts. The choices
had equivalent chances of success; the way the
options were expressed determined the
managers’ choices. Managers may also frame a
problem as similar to problems they have
already handled, so they don’t search for
new alternatives.
Discounting the Future
In all these cases, avoiding short-term costs or
seeking short-term rewards yields problems in
the long term. Discounting the future partly
explains government budget deficits,
environmental destruction, and decaying urban
infrastructure.
Time Pressures
To make decisions quickly, many managers
rely on simple rule-of-thumb techniques that
have worked in the past and in so doing,
reduce the amount of time they spend
analyzing information relevant to the
decision. These strategies may speed up
decision making, but they reduce decision
quality.
Social Realities
Many decisions are made by a group
rather than by an individual manager. Even
the manager acting alone is account-able to
the boss and to others and must consider
the preferences and reactions of many
people. Important managerial decisions are
marked by conflict among interested parties.
Group makes many decisions.
Group Decision Making
Is a process in which multiple individual collect
ideas, analyze solutions or situations, consider
and evaluate alternative courses of action and
select which alternative is a solution.
Groups can Help.
 More information is available when
several people are making the decision.
 A greater number of perspectives on
the issues, or different approaches to
solving the problem, are available.
 Group discussion provides an
opportunity for intellectual stimulation.
 People who participate in a group
discussion are more likely to understand
why the decision was made.
 Group discussion typically leads to a
higher level of commitment to the
decision.
Groups can Hurt.
 Sometimes one group member
dominates the discussion.
 Satisficing is more likely with groups.
 Pressure to avoid disagreement can
lead to a phenomenon called
groupthink.
 Goal displacement often occurs in
groups.
Groups must be well Led.
Appropriate leadership style: The group leader
must try to keep process-related problems to
a minimum by ensuring that everyone has a
chance to participate, not allowing the group to
pressure individuals to conform, and keeping
everyone focused on the decision-making
objective.
Constructive use of disagreement and conflict:
Total and consistent agreement among group
members can be destructive, leading to
groupthink, uncreative solutions, and a waste
of the knowledge and diverse viewpoints that
individuals bring to the group.
Enhancement of creativity: To “get” creativity
out of other people, give creative efforts the
credit they are due, and don’t punish creative
failures.
ENTREPRENEURSHIP
Entrepreneurs differ from managers generally.
An entrepreneur is a manager but engages in
additional activities that not all managers do.
Traditionally, managers operate in a formal
management hierarchy with well-defined
authority and responsibility.
In contrast, entrepreneurs use networks of
contacts more than formal authority. And
although managers usually prefer to own
assets, entrepreneurs often rent or use assets
on a temporary basis. Some say that managers
often are slower to act and tend to avoid risk,
whereas entrepreneurs are quicker to act and
actively manage risk.
Entrepreneurship
the process by which enterprising individuals
initiate, manage, and assume the risks and
rewards associated with a business venture
Independent Entrepreneur
an individual who establishes a new
organization without the benefit of corporate
sponsorship
Intrapreneur
new venture creators working inside big
companies.
An entrepreneur’s organization may be small,
but it differs from a typical small business:
A small business has fewer than 100 employees,
is independently owned and operated, is not
dominant in its field, and is not characterized by
many innovative practices. Small business
owners tend not to manage particularly
aggressively, and they expect normal, moderate
sales, profits, and growth.
An entrepreneurial venture has growth and
high profitability as its primary objectives.
Entrepreneurs manage aggressively and develop
innovative strategies, practices, and products.
They and their financial backers usually seek
rapid growth, immediate and high profits, and
sometimes a quick sellout with large capital
gains.
MYTHS ABOUT ENTREPRENEURSHIP
Simply put, entrepreneurs generate new ideas
and turn them into business ventures. But
entrepreneurship is not simple, and it is
frequently misunderstood.
 Anyone can start a business.
 Entrepreneurs are gamblers.
 Entrepreneurs want the whole show to
themselves.
 Entrepreneurs are their own bosses and
independent.
 Entrepreneurs work harder than
managers in big firms.
 Entrepreneurs experience a great deal
of stress.
 Entrepreneurs are motivated solely by
the quest for the dollar.
 Entrepreneurs seek power and control
over other.
 If an entrepreneur is talented, then
success will happen quickly.
 Any entrepreneur with a goof idea can
raise venture capital.
 If an entrepreneur has enough start-up
capital, s/he can’t miss.
 Unless you attained a high score on
your SATs or GMATs, you’ll never be a
successful entrepreneur.
What does it take to succeed?
Successful entrepreneurs are innovators and
also have good knowledge and skills in
management, business, and networking.
What Business should you start?
The Idea
Many entrepreneurs and observers says that in
contemplating your business, you must start
with a great idea. A great product, a variable
market, good timing are essential ingredients in
any recipe for success.
The Opportunity
Entrepreneurs spot, create and exploit
opportunities in a variety of ways.
Entrepreneurial companies can explore domains
that big companies avoid and introduce goods
or services that capture the market because
they are simpler, cheaper, more accessible, or
more convenient.
6 Different examples or following possibilities
that you can use to spot an opportunity:
1. Technological discoveries
2. Demographic changes
3. Lifestyle and taste changes
4. Economic dislocations
5. Calamities
6. Government initiatives and rule changes
Franchises
One important type of opportunity is the
franchise. You may know intuitively what
franchising is, or at least you can name some
prominent franchises like, Jollibee, McDonalds
and many more.
Franchising is an entrepreneurial alliance
between two parties:
1. Franchisor
an innovator who has created at least
one successful store and seeks partners
to operate the same concept in other
local markets.
2. Franchisee
the operator of one or more stores
according to the terms of the alliance.
The next Frontiers
When a business magazine asked prominent
investors in new business to name the best
ideas for a new start up.
The Internet
The internet is a business frontier that
continues to expand. With internet commerce,
as with any start-up, entrepreneurs need sound
business models and practices.
5 Successful business models have proven
successful for e-commerce:
1. Transaction fee model - Companies
charge a fee for goods or services.
2. Advertising support model - Advertisers
pay the site operator to gain access to
the demographic group that visits the
operator’s site.
3. Intermediary model - A website brings
buyers and sellers together and charges
a commission for each sale.
4. Affiliate model - Sites pay commissions
to other sites to drive business to their
own sites.
5. Subscription model - The website
charges a monthly or annual fee for site
visits or access to site content.
Side Streets
Trial and error can also be useful in starting new
businesses. This method is risky, of course, and
should be done only if you can afford the risks.
But even if the original idea doesn’t work, you
may be able to capitalize on the side street
effect. as you head down a road, you come to
unknown places, and unexpected opportunities
begin to appear. And while you are looking,
prepare so you can act quickly and effectively
on any opportunity that presents itself.
Business Incubators
The need to provide a nurturing environment
for fledgling enterprises has led to a creation of
business incubators. Business incubators, often
located in industrial parks or abandoned
factories, are protected environments for new
small businesses.
 a documented strategy for a business
that highlights its goals and its plans for
achieving them. It outlines a company’s
go-to-market plan, financial projections,
market research, business purpose, and
mission statement.

Common Management Challenges  a formal planning step that focuses on

As an entrepreneur, you are likely to face
several common challenges that you should
understand before you face them, and then
manage effectively when the time comes.
the entire venture and describes all the
elements involved in starting it.
Business Plan serves several purposes:
 It helps determine the viability of your
enterprise.
 It guides you as you plan and organize.
 It helps you obtain financing.

Common Management Challenges

 You might not enjoy it.

 Survival is difficult.
 Growth creates a new challenge.
 It is hard to delegate.
 Misuse of funds
 Poor controls
 Mortality
 Going public
Opportunity Analysis
Planning
 It helps determine the viability of your
 the act or a process to develop a enterprise.
strategy to achieve desired objectives,
to solve problems, and to facilitate  It guides you as you plan and organize.
action.
 It helps you obtain financing.
 established a SMART goal for us to
Key Planning Elements
achieve a desired outcome.
 The People – The new organization’s
Business Plan
people should be energetic and have
 skills and expertise directly relevant to
the venture.
 The Opportunity – You need a
competitive advantage that can be
defended. The focus should be on
customers.
 The Competition – The plan must
identify current competitors and their
strengths and weaknesses, predict how
they will respond to the new venture,
indicate how the new venture will
respond to the competitors’ responses,
identify future potential competitors,
and consider how to collaborate with or
face off against actual or potential
competitors.
 The Context – The environment should
be favorable from regulatory and
economic perspectives. Such factors as
tax policies’, rules about raising capital,
interest rates, inflation, and exchange
rates will affect the viability of the video
new venture.
 Risk and Reward – The risk must be
understood and addressed as fully as
possible.
Selling the Plan
Your goal is to get investors to support the plan.
The elements of a great plan, as just described,
are essential. Also important is whom you
decide to try to convince to back your plan.
Non-Financial Resources
Legitimacy
people’s judgment of a company’s acceptance,
appropriateness, and desirability, generally
stemming from company goals and methods
that are consistent with societal values.
Networks
The entrepreneur is aided greatly by having a
strong network of people. Social capital being
part of a social network and having a good
reputation helps entrepreneurs gain access to
useful information, win trust and cooperation
from others, recruit employees, form successful
business alliances, receive funding from venture
capitalists, and become more successful.
Top Management Teams
is a group of senior leaders responsible for the
company's overall strategy and direction,
making key decisions to shape the future of the
business. They would be capable of identifying
time, resources, and actions for
implementation.
Advisory Boards
An advisory board is a group of experts who
lend their skills, guidance, and knowledge to an
organization (corporation, non-profit, or
association). In short, an advisory board serves
the purpose of its name to offer advice that
helps an organization grow and achieve its
goals.
Partners
is a business entity formed by two or more
individuals, or partners, each of whom
contributes something such as capital,
equipment, or skills. Partners can help one
another access capital, spread the workload,
share the risk, and share expertise.
Corporate Entrepreneurship
We define the term as the process by which
teams within an established company conceive
foster launch and manage a new business that is
distinct from the parent company but leverages
the parent’s assets, market position, capabilities
or other resources. It differs from corporate
venture capital, which predominantly pursues or established markets with new or
financial investments in external companies. existing goods or services.
• Independent Action
1. Build support for your ideas.
• Innovativeness
A manager with an idea to capitalize on
• Risk Taking
a market opportunity will need to get
• Proactiveness
others int the organization to buy in or
• Competitive Aggressiveness
sign on. In other words, you need to
build a network of allies who support ORGANIZING FOR ACTION
and will help implement the idea.
Fundamentals of Organizing
• Clearing Investments
• Make Cheerleaders We often begin to describe a firm’s structure by
• Horse Trading looking at its organization chart. The
2. Build intrapreneurship in your organization chart depicts the positions in the
organization. firm and the way they are arranged. The chart
Skunkworks provides a picture of the reporting structure
are project teams designated to (who reports to whom) and the various
produce a new product and Innovate activities that are carried out by different
product. A team is formed with a individuals.
specific goal within a specified
timeframe. EXHIBIT 7.1 A conventional organization chart.
Bootlegging
refers to informal efforts as opposed
to official job assignments in which
employees work to create new products
and processes of their own choosing
and initiative.
3. Managing Intrapreneurship is risky.
The most dangerous risk in
intrapreneurship is the risk of over
relying on a single project. Many
companies fail while awaiting the
completion of one large, innovative
project. The successful intrapreneurial
organization avoids over commitment
to a single project and relies on its Mechanistic Organization
entrepreneurial spirit to produce at
a formal structure intended to promote
least one winner from among several
internal efficiency.
projects.
4. Entrepreneurial Orientation Organic Structure
is the tendency of an organization to
an organizational form that emphasizes
engage in activities designed to identify
flexibility.
and
capitalize successfully on opportunities EXHIBIT 7.2 Comparison of Mechanistic and
to launch new ventures by entering new Organic Organizations.

Differentiation means the organization is
composed of many different units that work on
different kinds of tasks, using different skills and
work methods.
Integration means these differentiated units are
put back together so that work is coordinated
into an overall product.
Within an organization’s structure,
differentiation is created through division of
labor and job specialization. Division of labor
means the work of the organization is
subdivided into smaller tasks to be performed
by individuals and units throughout the
organization. Specialization means different
people or groups perform specific parts of the
larger task.
The specialized tasks in an organization cannot
be performed completely independently; they
require some degree of communication and
cooperation. Integration and its related concept,
coordination, refer to the procedures that link
the various parts of the organization to achieve
the organization’s overall mission.
The Vertical Structure
Four dimensions of a firm’s vertical structure
 Authority
 Span pf Control
 Delegation
 Centralization
1. Authority is Granted Formally and
Informally
At the most fundamental level, the functioning
of every organization depends on the use of
authority , the legitimate right to make
decisions and to tell other people what to do.
The structure of top management has several
components:
 Board of directors— In corporations,
the owners are the stockholders. But
because there are numerous
stockholders and these individuals
generally lack timely information, few
are directly involved in managing the
organization.
 Chief executive officer— The authority
officially vested in the board of directors
is assigned to a chief executive officer
(CEO), who occupies the top of the
organizational pyramid.
 Top management team— CEOs may
share their authority with other key
members of the top management team.
Division of labor - the assignment of different
tasks to different people or groups.
Specialization - a process in which different
individuals and units perform different tasks.
Coordination - the procedures that link the
various parts of an organization to achieve the
organization’s overall mission.
Authority - the legitimate right to make
decisions and to tell other people what to do.
2. Span of Control Determines a Manager’s
Authority
The number of people under a manager is an
important feature of an organization’s structure.
The number of subordinates who report directly
to an executive or supervisor is called the span
of control.
The optimal span of control maximizes
effectiveness by balancing two considerations:
Determines a Manager’s Authority
 1. It must be narrow enough to permit
managers to maintain control over
subordinates.
2. It must not be so narrow that it leads to
overcontrol and an excessive number of
managers overseeing a few
subordinates.
The optimal span of control depends on
several factors. The span should be wide under
the following conditions:
Through delegation, the organization also
receives payoffs. When managers can devote
more time to important managerial functions
while lower-level employees carry out
assignments, jobs are done more efficiently and
cost-effectively.

The work is clearly defined and unambiguous.

 Subordinates are highly trained and

have access to information.
 The manager is highly capable and
supportive.
 Jobs are similar, and performance
measures are comparable.
 Subordinates prefer autonomy to close
supervisory control.

3. Delegation is How Managers use other’s

Talents

As we recognize that authority in organizations

is spread out over various levels and spans of Decentralization Spreads Decision-Making
control, we see the importance of delegation, Power
the assignment of authority and responsibility
In a centralized organization, important
to a subordinate at a lower level.
decisions usually are made at the top. In
Responsibility means that a person is assigned a decentralized organizations, more decisions are
task that he or she is supposed to carry out. made at lower levels.

Authority means that the person has the power

and the right to make decisions, give orders,
draw on resources, and do whatever else is
necessary to fulfill the responsibility.

Accountability means the subordinate’s The Horizontal Structure

manager has the right to expect the subordinate
As the tasks of organizations become
to perform the job, and the right to take
increasingly complex, the organization
corrective action if the subordinate fails to do
inevitably must be subdivided—that is,
so.
departmentalized.
  Line departments are those that have
responsibility for the principal activities
of the firm.
 Staff departments are those that
provide specialized or professional skills
that support line departments.
Three basic approaches to departmentalization
• Functional
• Divisional
• Matrix
Functional Organizations Foster Efficient
Experts
In a functional organization , jobs (and
departments) are specialized and grouped
according to business functions and the skills
they require: production, marketing, human
resources, research and development, finance,
accounting, and so forth.
The Traditional functional approach to
departmentalization has several advantages.
1. Economies of scale can be realized.
2. Monitoring of the environment
3. Performance standards
4. Specialized training and in-depth skill
development
5. Free of administrative work
6. Decision making and lines of
communication.
Divisional Organizations Develop a Costumer
Focus
As organizations grow and become increasingly
diversified, their functional departments have
difficulty managing a wide variety of products,
customers, and geographic regions.
Organization can create a divisional structure
in several ways:
Product divisions - All functions that contribute
to a given product are organized under one
product manager.
Customer divisions—Divisions are built around
groups of customers. Pfizer recently replaced
divisions based on location with three based on
customer groups: primary care, specialty care,
and emerging markets.
Geographic divisions—Divisions are structured
around geographic regions. Geographic
distinctions include district, territory, region,
and country.
Matrix Organizations Try to be the Best of Both
Worlds
A matrix organization is a hybrid form of
organization in which functional and divisional
forms overlap. Managers and staff personnel
report to two bosses—a functional manager
and a divisional manager—creating a dual line
of command.
Matrix Survival Skill
To a large degree, problems can be avoided if
the key managers in the matrix learn the
behavioral skills demanded in the matrix
structure. These skills vary depending on the
manager’s job. The top executive must learn to
balance power and emphasis between the
product and functional orientations.
The Matrix Form Today
Recently the matrix form has been regaining
some of its popularity. Reasons for this
resurgence include pressures to consolidate
costs and be faster to market, creating a need
for better coordination across functions in the
business units, and a need for coordination
across countries for firms with global business
strategies.
Network Organizations are built on
Collaboration.
In contrast, a network organization is a
collection of independent, mostly single-
function firms that collaborate to produce a
good or service.
A very flexible version of the network
organization is the modular network —also
called the virtual corporation. It is composed of
temporary arrangements among members that
can be assembled and reassembled to meet a
changing competitive environment.
The role of managers shifts in a network from
that of command and control to more like that
of a broker. Broker/managers serve several
important boundary roles that aid network
integration and coordination:
Designer role. The broker serves as a network
architect who envisions a set of groups or firms
whose collective expertise could be focused on
a particular good or service.
Process engineering role. The broker serves as
a network cooperator who takes the initiative to
lay out the flow of resources and relationships
and makes certain that every-one shares the
same goals, standards, payments, and the like.
Nurturing role. The broker serves as a network
developer who nurtures and enhances the
network (like team building) to make certain the
relation-ships are healthy and mutually
beneficial.
Organizational Integration
Standardization Coordinates Work Through
Rules and Routines
Standardization constrains actions and A form of organizational that seek to maximize
integrates various units by regulating what internal efficiency.
people do. People often know how to act—and
Organic Structure
how to interact—because standard operating
procedures spell out what they should do. An organizational form that emphasizes
flexibility
Formalization
Organizing around core competencies
the presence of rules and regulations governing
how people in the organization interact.  Identify existing core competencies.
 Acquire/build core competencies
Plans Set a Common Direction
important for future.
Coordination by plan does not require the same  Invest in competencies so company
high degree of stability and routinization stays competitive.
required for coordination by standardization.  Extend competencies to find new
application and opportunities for
Mutual Adjustment Allows Flexible Coordination
future.
Coordination by mutual adjustment involves
Managing Resources for Competitive
feedback and discussions to jointly figure out
Advantage
how to approach problems and devise solutions
that are agreeable to everyone. 1. Accumulate the right resources.
2. Combine resources to produce
Coordination Requires Communication
capabilities.
To cope with high uncertainty and heavy 3. Leverage Resources.
information demands, managers can use the
Strategic Alliances
two general strategies:
A formal relationship created among
independent organization with the purpose of
joint pursuit of mutual goals.

Best Alliance

The best alliance are true partnerships that

meet these criteria:

1. Individual excellence: Both partners add

value, and their motives are positive
(pursue opportunity) rather than
negative (mask weaknesses).
Organizational Agility 2. Importance: both partners want the
relationship to work because it helps
The Responsive Organization
them meet long-term strategic
Mechanistic Organization objective.
 3. Interdependence: The partners need
each other; each helps the other reach
its goal.
4. Investment: The partners devote
financial and other resources to the
relationship.
5. Information: The partners communicate
openly about goals, technical data,
problem, and learn from each other.
6. Integration: The partners develop
shared ways of operating; they teach
each other and learn from each other.
7. Institutionalization: The relationship has
formal status with clear responsibilities.
8. Integrity: Both partners are trustworthy
and honorable
The Learning Organizations
An organization skilled at creating, acquiring
knowledge, and at modifying its behavior to
reflect new knowledge/insight.
Becoming a Leaning Organization
 Disciplined thinking
 Attention to details.
 Decisions based on data and evidence
rather than guesswork and
assumptions.
 Search for new knowledge and ways to
apply it.
 Review successes and failures to find
lessons.
 Benchmark-identify & adopt best
practices.
 Share ideas throughout organization.
The high involvement organization
A type of organization in which top
management ensures that there is consensus
about the direction in which the business is
heading.
Organizational Size and Agility
 Large organization tend to be less
organic and more bureaucratic.
 Jobs tend to become more specialized
in large organizations.
 With size comes greater complexity and
a need for increased control.
 Organization can still find ways to
remain agile despite these challenges.
The Case for Big
 Larger size helps create economies of
scale.
 Larger size helps develop economies of
scope.
 Economies in which materials and
processes employed in one product can
be used to make other related products
Larger organizations can have difficulty
managing relationships with customers
and among its own units .
 Large organizations are more difficult to
coordinate and control.
The Case for Small
Smaller organizations can:
 Move fast.
 Provide quality goods and services to
targeted market niches.
 inspire greater involvement from their
people.
 Being small can avoid diseconomies of
scale.
Being Big and Small
Downsizing
 The planned elimination of position or
jobs.
 Survivor's syndrome - Loss of
productivity and morale in employees
who remain after a downsizing.
Rightsizing Technology that produces goods and services in
low volume.
 A successful effort to achieve an
appropriate size at which the company Large Batch
performs most effectively.
Technologies that produce goods and services in
Costumer and the Responsive Organization high volume.

The point of structuring a responsive, agile Continues Process

organization lies in enabling it to meet and
A process that is highly automated and has a
exceed the expectations of its customers.
continues production flow.
Managers must stay focused in three key
Key features in Mass Customization
ingredients - the strategic triangle.

1. The company itself

2. Competition
3. The customer

Total Quality Management

An integrative approach to management that

supports the attainment of customer
satisfaction through a wide variety of tools and
techniques.

ISO 9001

 A series of quality standards Manufacturing

 Developed by committee under
Computer-Integrated Manufacturing (CIM)
international organization for
standardization. Use of computer-aided design and computer-
 To improve total quality in all business. aided manufacturing to sequence and optimize
 For the benefit of producers and several production processes.
consumers
Flexible Factories
ISO 9001 Eight Principles
Manufacturing plants with short production
1. Customer focus runs, are organized around products, Use
2. Leadership decentralized scheduling.
3. Involvement of people
4. Process approach
5. System approach to management Lean Manufacturing
6. Continual improvement
7. factual approach to decision making. operations that eliminate unnecessary steps in
8. Supplier relationship the production process and continually striving
for improvement.
Types of Technology Configuration
Organizing for Speed Time-based Competition
Small Batch (TBC)
Logistics

The movement of resources into the

organization (inbound) and products from the
organization (outbound).

Just in Time (JIT)

Manufactures in very small lots and delivers

them to the next stage in the process precisely
at the time needed.

Concurrent Engineering

A design approach in which all relevant

functions cooperate jointly in a maximum effort
aimed at producing high quality products that
meets customer needs.