STUDY UNIT 2: MANAGEMENT FUNCTIONS AND POLICY

FORMATION IN THE ROAD FREIGHT TRANSPORT INDUSTRY

 MANAGEMENT FUNCTIONS AND
POLICY FORMATION

• The manager can influence three variables in the

organisation:
• The people
• The work and the structure
• The systems and procedures

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 MANAGEMENT FUNCTIONS AND
POLICY FORMATION

• Peter Drucker takes up the theme of the universality of management and puts
forward seven tasks the modern manager must undertake.
• He must always manage by objectives which he himself has had a hand in
shaping.
• Management is becoming a far more risky occupation and all managers must
learn to handle risk analysis. This is difficult in transport where many of the
risk-inducing variables are controlled by political processes.
• All managers must be able to make strategic decisions concerning the future
of the organisation and how they can help further the objectives of the
organisation

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 MANAGEMENT FUNCTIONS AND POLICY
FORMATION (cont)
• Managers are responsible for setting up a team which can help to satisfy
the demands of the organisation.
• One of the biggest tasks facing all managers in the future will be the
handling and communicating of information.
• Traditionally, managers in transport companies have only been expected to
know one or two aspects of that company’s business but there is a growing
need to appreciate the business as a whole and the part that the manager
plays in the whole enterprise.
• More and more, transport managers can no longer rely on a knowledge of
their own particular mode. They will have to look at developments outside
their mode especially economic, political and social developments that
affect transport worldwide.
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 MANAGEMENT FUNCTIONS AND
POLICY FORMATION

• Therefore, management is the process of co-

ordinating all resources through planning,
organizing, staffing, direction, controlling,
innovation, representation and communication to
achieve stated objectives.

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 PLANNING

• Planning is generally regarded as one of the primary functions of

management because it is the first function that has to be
performed. Planning encompasses all the tasks of management;
the results of planning are plans which lay down the guidelines for
action within the organisation and serve as signposts for the
organisation’s progress towards the fulfillment of its objectives.
• Planning provides a better understanding of the organization and
its business and potential for improving effectiveness of services
provided 6
 PLANNING STAGES
• Collect, analyse and set down all the relevant facts which have a bearing
on the plan. This exercise enables the manager to have some certainty
about the objectives of his plan and its feasibility.
• Consider all the facts and work out the alternative courses of action which
will fulfill the objectives of the plan.
• Choose the best course of action in the light of all the facts gathered in 1
and considered in 2. It must be recognised that actions by one section of
an organisation will affect the actions of other sections. The best solution
for a section may not be the one that produces the best results for the
company as a whole.

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 ORGANISING

• In the context of management functions, organising is the

dividing of work into manageable tasks. This process includes
determining the specific activities necessary to accomplish the
objectives of the organisation, grouping the activities according
to some logical pattern, and then assigning these grouped
activities to the responsibility of a position or a person in the
organisation.

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 STAFFING

• The position highlighted in the organisation structures must be

filled with people with the required skill and qualifications to tackle
the tasks. This staffing is a continuous function of management
because people leave to take up appointments with other
companies, are promoted to other work groups, retire or are
dismissed. It is up to the manager to continually update the job
descriptions of the people working for him or her and to ensure that
these people are suited to the job they are doing.
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 DIRECTION

• Direction involves initiating the activities of a group as

these are developed from the plan, laying down the
order in which the tasks must be performed and to
what standard the end result should be achieved.
• It includes leadership

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 CONTROL

• It means laying out standards of performance and measuring

the actual performance against the standard. If there is any
variance from the standard, it is a management function to
take steps to investigate the variance and either correct the
performance to match the standard or set new standards if
the old ones prove inappropriate.
• There should be continuous feedback (collect relevant and
usable information).

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 INNOVATION

• Finding new areas of operation and integrating new

technologies are part of planning.
• In every business environment change is inevitable,
thus R&D should investigate and advise on new
methods of operating and transporting goods.
• Try new methods, develop better ways through
working teams.

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 REPRESENTATION

• All people working for an organisation represent that

organisation in some way. It is usual for top
management to represent the organisation to the
outside world through the media, the government and
other institutional bodies.

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 COMMUNICATION

• All the functions discussed so far are interlinked by

communication. It is through communication –
written, oral or electronic – that the manager
manages. The ability to communicate concisely and
understandably is at the heart of the management
job.

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 TRANSPORT MANAGEMENT

• Managing a transport fleet is somewhat different to

management of a number of other businesses. The main
difference stems from the need for a great deal of
delegation on the part of the management. The workforce,
especially the drivers or vehicle crews, spend a great deal
of their time away from the effective supervision of
management and have to show initiative, especially in
unplanned situations.
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 RESPONSIBILITIES OF MANAGEMENT
• Defining the job descriptions of the crew, checking competence
levels and selection of the crew.
• Defining vehicle specifications for the task in hand.
• Setting out authorisation levels and organisational requirements
of the crews.
• Setting performance targets and defining performance indicators.
• Understanding the health and safety risks involved in the
proposed journey and communicating these to the crews.

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The role of supervision is as follows:

• Setting out the instructions for the intended journey;

• Checking the availability of vehicles and crews;
• Checking the authorisation for the intended journey;
• Checking the authorisation of crews and vehicles;
• Monitoring performance and providing the first line of
feedback to the management;
• Ensuring that crew’s needs on the journey are
provided for;
• Reinforcing the needs for good driver behaviour.

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 CORPORATE PLANNING

All organisations, as with all managers, make future

plans as to which direction the organisation will follow.
The usual way of describing this type of activity in
business is to talk to corporate planning.

Corporate planning is defined by John Argenti as a

systematic approach to clarifying corporate objectives,
making strategic decisions and checking progress
towards the objectives.
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 THE NEED FOR PLANNING IN
TRANSPORT

In stable business environments, planning can be slow

and gradual. However, contemporary business
contexts are full of uncertainty, hence requiring
planning. Why planning?
• Technological change
• Complexity of business
• Increased competition
• To develop policies
• Regulatory changes
• Increased customer service requirements
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• Environmental laws
 TECHNOLOGICAL CHANGE

• The thrust of technology change affecting transport has led

to a speeding up of that very change. The main advances
in technology – jet aircraft, larger ships, quicker, more
comfortable trains, larger, more efficient trucks – have led
to the early obsolescence of other transport vehicles. New
machinery purchased by a competitor can bring gains in
productivity, advantages of reduced cost and a more
competitive price structure.
• Technology implementation requires proper planning and
adequate financial resources and skilled personnel
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 COMPLEXITY OF BUSINESS

• The faster pace of technological change and the trend

towards larger organisations has made the profitable
running of a business very complex.
• Specialised equipment e.g. vehicles that cannot
be used elsewhere
• Specialisation leads to increased labour
requirements
• Demands from external forces – gov’t, pressure
groups, society, trade unions
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 COMPETITION

Transport is a very diverse industry and it may not

be apparent where competition lies.

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 POLICY FORMATION
• A policy is a plan of action a plan of action agreed or chosen by a
business (Oxford Learners Dictionaries, 2020).
• Before drawing a plan of action, management must answer the question
“What business are we in?” It is of fundamental importance to define the
answer to this question before going on to make plans for the future.
• Until a company under- stands the business it is trying to run, it is
impossible to lay down guidelines on how to set targets for the future (i.e.
what business do we wish to be in in the future?) so that measurement
can be made of the organisation’s progress towards its goals.

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 OBJECTIVES OF A PLAN

THERE ARE 3 MAIN OBJECTIVES OF A CORPORATE

PLAN:

1. To enable the business to survive in a competitive

environment by introducing new methods of operation,
new services and new technologies before the old ones
become obsolete and uncompetitive.

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 OBJECTIVES OF A PLAN (cont)

2. To make a profit so that the various parts of the

system can be replaced as they become worn out
or obsolete, and to invest in new services. Profit in
many transport undertakings is difficult to define,
especially if it is looked at from a private business
point of view.
By profit is meant an excess of revenue over
expenditure no matter where the revenue comes
from.
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 OBJECTIVES OF A PLAN (cont)

3. One of the most important aspects of the process

is that the plan is not only a look into the future but
a guide to the direction of the company.

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 MAKING LONG-TERM PLANS

Corporate planning in transport organisations must be

based on satisfying customer needs.

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 THE PLAN

The factors which make up a detailed plan can be

summarised as follows:

1. What course of action the company is to take in

the light of all the research and forecasts which have
helped lay down the objectives and focused on the
direction in which the company should move.

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 THE PLAN (cont)

2. How the resources are to be obtained, utilised and

allocated during the life of the plan.

3. The responsibilities of each manager in relation to the

various aspects of the plan enabling each manager to
work towards common objectives with all the other
managers.

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 THE PLAN (cont)

4. A complete structure for the plan laying down when each

phase must be implemented and completed, which will provide
the guidance for management. This structure will help to co-
ordinate the activities of the various groups involved by setting
out what has to be completed before subsequent actions can
be undertaken. Some form of critical path analysis will help
with this co-ordination.

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 THE PLAN (cont)

5. A projection of the incidence of cost for each phase in

total and for each group. This is the basis of control,
allowing budgets to be agreed and published. Coupled
with a projection of revenue, standards can be set
against which to measure performance.

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 THE PLAN (cont)
The foregoing factors can be split into three distinct levels:

1. The strategic, which sets down the overall objectives of the

company and highlights new opportunities. This has to do
with the company’s place in the market.

2. The corporate sets out the use of resources within the

company.

3. The operations lays out in detail what each section of the

organisation must do to fulfil the organisation’s objectives.

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