Industrial Management and Entrepreneurship BME501

INDUSTRIAL MANAGEMENT AND ENTREPRENUERSHIP

Module 1
MANAGEMENT
Management is the art of getting things done through and with the people in formally
organized groups”…..Koontz H.

Management is the process of planning, organizing, actuating and controlling to determine

and accomplish the objectives by the use of people and resources”…..Terry G.

Nature & Characteristics of Management

• Critical element in the economic growth of the country.

• Essential in all organized effort, be it a business or any other activity.
• Dynamic and life giving element in every organization.
• A process, discipline, activity.
• Intangible, goal oriented & universal.

Scope of Management

• The scope is very wide.

• According to Her bison & Myers, it refers to three distinct ideas.
i) As an economic resource
ii) As a system of authority
iii) As a class or elite.

Importance of Management
• Optimum use of resources
• Effective leadership and motivation
• Establishes sound industrial relations
• Achievement of goals
• Change and growth
• Improve standard of living.

Functions of Management
• No consensus on the classification
• No similar terminology amongst the experts
• Luther Gullick: POSDCORB
P: planning
O: organizing
S: staffing
D: directing
CO: coordinating
R: reporting
B: budgeting
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Planning
The process of establishing goals and a suitable course of action for achieving
those goals.

Organizing
The process of engaging two or more people in working together in a structured
way to achieve a specific goal or set of goals.
Staffing
Selecting and training the individuals for specific job functions & charging them
with the associated responsibilities.

Directing
It is the process of influencing and motivating employees to perform essential tasks
in a n organization.

. CO: coordinating
The integration of the activities of the separate parts of an organization to
accomplish organizational goals

Reporting
Process of executives keeping the superiors and subordinates informed about what
is going on through records, research and inspection.

Budgeting
Formal quantitative statement of resources allocated for planned activities over
stipulated periods of time.

Functional areas of Management

Production, Marketing, Finance, Human Resources, Research & Development, Industrial

Engineering, MIS, Maintenance, Quality Engineering
.
Management as Art
• Uses the practical knowledge acquired in tackling problems.
• Combines human & nonhuman resources in a creative way to achieve results.
• A personalized activity
• Constant practice leads to good management

Management: Science as well as Art

• Art of management is as old as civilization.
• Science of management is young and developing
• Both are complementary & mutually supportive
• According to Peter Drucker:
“Every organization has the same resources to work with. It is the quality of management
that spells the difference between success and failure”.
• Ability to solve problems requires sound knowledge & constant practice
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Management as a Profession
➢ Essential features of profession:
1. Well defined body of knowledge
2. Formal education and training
3. Minimum qualification
4. Representative body
5. Service above self
6. Ethical code of conduct
7. Management has well defined body of knowledge, tools and techniques, research
& consultancy
8. Acquiring management education through formal training is possible
9. No representative body unlike for doctors, lawyers, etc
10. No universal code of conduct.
11. No regulatory body and code of conduct leads to neglection of service motto.
12. Not a recognized profession , but moving in that direction .
13. Some initiatives are: separation of ownership from management, state regulation
of business activities, proliferation of management institutions, etc.

Management & Administration

• Controversy over the meaning of the terms Management and Administration.

• Three schools of Thought- administration is broader than management, administration
is part of management, management and administration are identical.
• American School of thought: Administrators think, managers act; administration is a top
level activity, management is a lower level function. Proponents-Ordway Tead, Oliver
Sheldon, [Link].
• English School of thought: Management is rule making and rule enforcing body,
Administration is just an implementing agency. Proponents- [Link], Henry Fayol,
Kimball and Kimball.
• Newman, Harold Koontz, McFarland , Ernst Dale maintain that management and
administration are identical.

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Roles of Management
• Management roles refers to specific categories of managerial behavior.
• Mintzberg identifies ten management roles grouped under three major heads namely
– interpersonal roles( roles that involve people and other duties that are
ceremonial and symbolic in nature),
– informational roles( roles that involve receiving , collecting and disseminating
information)
– decisional roles (roles that revolve around making choices).
• According to Robert Katz, the following skills are required for managers job:
– Technical skills( knowledge and proficiency in a specialized field),
– Human skills( ability to work well with other people individually and in a
group),
– Conceptual skills( ability to think and to conceptualize about abstract and
complex situations).

Levels of Management

• Three levels exist in Management –

– first line managers( responsible for the overall direction and operations of an
organization),
– middle managers( translate the broad strategies into specific goals for
implementation)
– Top line managers (responsible for the production of goods and services).
▪ First line managers: foremen, white collar supervisors, Section heads.
▪ Second line managers: Functional heads and immediate subordinates.
▪ Top line managers: CEO, President, Chairman, MD, COO, CIO.

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Development of Management thought

Modern
managem
ent
approach
es

Early
management
approaches

Industrial

Adam
Smith
division of
labor

Venetian
business
enterprises
and their
management

• Management is as old as human civilization. Ex: Egyptian pyramids, Great Wall of

140 170 180 1900- Post
China.

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• During 1400’s: Venetian business enterprises and their management practices

• During 1776: Adam Smith described the advantages of division of labor and
specialization.
• Beginning of 18th century: Industrial Revolution resulted in the advent of machine
power, mass production and efficient transportation.
• Evolution of management thought can be studied in two broad categories:
• Early management approaches (Scientific management, administrative management
theory and human relations movement)
• Modern management approaches (behavioral, quantitative, systems and contingency
approaches).

Behavioral Approach

• Developed as a natural evolution to Hawthorne Experiments.

• Hawthorne studies stressed on emotional elements to explain human behavior and
performance.

• Behavioral approach emphasizes on scientific research as the basis for developing

theories about human behavior in the organizations that can be used to develop practical
guidelines for managers.
• Contributors: Abraham Maslow, Chris Argyris, etc
• Also called as Human Resources approach.
• Contributions:
• Individual motivation, group behavior
• Foundation to HRM
• Job enrichment
• MBO
• Positive reinforcement Limitations:
• Self actualizing view
• Compatibility of individual & organization
• Discounted the non human aspects of organization
• Best of managing is humanizing organizations

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Quantitative Approach
Features
➢ Offers quantitative aids to decision making, develops quantitative tools to assist
in providing products and services.
➢ Managerial Choices depend on criteria such as costs, revenues, ROI, etc
➢ Emphasis on computers and their assistance in decision making alternatives.
➢ Promotes holistic view of factors influencing decision making

➢ Eliminates subjective thinking in decision making

➢ Minimizes bias in decision making
➢ Aids in objective rational decision making.
Limitations:
➢ All variables influencing decision can’t be identified.
➢ Less importance to human relationships
➢ Decision quality depends on the data inputted to the computer.
Systems Approach

• Integrated approach to management problem solving and decision making

• Advocates: Chester Barnard, George Homans
• Key Concepts of this approach:
➢ System is a set of interdependent parts
➢ Concept of holism
➢ System can be open or closed
➢ System has a boundary
➢ Tries to solve problems by diagnosing them with in a frame work of inputs,
transformation processes, outputs and feed back
➢ Good balance between the needs of various functional parts of the enterprise
and goals of the firm as a whole.
➢ Conceptual frame work to understand organization is too abstract.
➢ Does not identify situational differences and factors

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Contingency Approach
Also termed as Situational approach
• Based on the premise that situations dictate managerial action
• Advocates: Selznic, Woodward, James Thompson
• Appropriate managerial action depends on the particular parameters of the situation
• Spells out the relationship of the organization to its environment
• Concerned with structural adaptations of organizations to its task environment.
• More pragmatic and action oriented. Integrates theory and practice in a systems
framework
• Advocates the managers to develop skills for situational analysis
Limitations:
➢ Paucity of literature & Complex
➢ Defies empirical testing
➢ Reactive
➢ Not holistic in nature

PLANNING
What is planning?
• Deciding in advance what to do, how to do it , when to do it and who to do it.
• A forecast for accomplishment.
• Predetermined course of action.
• To produce a scheme for future action and to bring about specified results at a
specified cost in a specified period of time.
Defined in to directions by management thinkers.
• Based on futurity
• As an intellectual function
Based on futurity:
• “Planning is a trap laid down to capture the future” (Allen)
• “Deciding in advance what is to be done in future” (Koontz)
• “Informed anticipation of future”( Haimann)
• Anticipatory decision making” (R L Ackoff)

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As an intelligence function:

“Planning is a thinking process, an organized foresight, a vision based on fact and experience
that is required for intelligent action”( Alford & Beatty)
“Deciding in advance what to do, how to do it, when to do it and who is to do it” (Koontz &
O’ Donnell)

Planning focuses on future and it involves all the activities that determine objectives for the
future and the appropriate means for achieving those

Objectives. Outcome of planning is a plan, which is a document that specifies the course of
action the organization will take.

Nature of Planning Provides basic foundation from which all future management functions
arise.
• Goal oriented
• All pervasive
• Intellectual exercise
• Continuous process
• Futuristic
• Integrated Process

Importance of Planning
• Provides direction
• Creates a unifying frame work
• Leads to economical utilization of resources
• Reduces the risks of uncertainty
• Facilitates decision making
• Encourages Innovation & Creativity
• Improves morale
• Facilitates control

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Types of Plans
• Long range Vs Short range
• Strategic Vs Operational
• Corporate Vs Functional
• Proactive Vs Reactive
• Standing Vs Single Use
Long range Vs Short range

Strategic Vs Operational

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Corporate Vs Functional
• Corporate Plan:
• A comprehensive plan that outlines the broad objectives of a company as a whole and
develops plans to achieve those objectives

• Holistic and Unified focus

• Focus on organizational performance
• Functional Plan:
• Is unit planning and deals with different departments in an isolated manner.
• Focus on departmental performance

Proactive Vs Reactive

• Proactive Planning: Managers challenge the future, anticipating future contingencies

and get ready with alternative routes for unforeseen circumstances
• Reactive Planning: Organizations react to events as and when they arise

Standing Vs Single Use Standing Plans

Developed for activities that recur regularly over a period of time
Ex: Objectives, Policies, Procedures, Methods, Rules
• Single Use plans
Developed to carry out a course of action that is not likely to be repeated in future
Ex: Programmers, Schedules, Projects, Budgets

Hierarchy of Plans
Purpos
e or
Objectiv

Strategy

Policies: Major or
Procedur
Rules
Programs: Major or minor and

Budgets: numberized programs

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Steps in Planning

Being Aware of Opportunity

Comparing alternatives in light of
In light of: goals sought
The Market
Which alternative will give us the
Competition best chance of meeting our goals at
What customer want the lowest cost and highest profit?
Our strengths
Our weaknesses

Choosing an Alternative
Setting objectives or Goals Selecting the course of action we will
Where we want to be and what pursue
we want to accomplish and
when

Formulating supporting plans

Such as plan to
Considering planning Buy equipment
premises Buy materials
In what environment – internal Hire and train workers
or external – will our plans Develop a new product
operator?

Numerizing plans by Marking

Budgets
Identifying Alternatives Develop such budgets as:
What are the most promising Volume and price of sales
alternatives to accomplishing Operating expenses
our objectives? Necessary for plans
Decision Making Expenditures for capital
• Essential part of management Equipment

• Taking conscious and sub conscious decisions is every day phenomenon

• Permeates all managerial functions
• Ex: In directing – determining the course, deciding the orders and instructions to be
given, providing dynamic leadership.
In controlling – laying down of performance standards, strategic control points, procedure for
control
Meaning of a Decision
• Choice between two or more alternatives
• Implies three things
• Choosing,
• Availability of alternatives,
• Having a purpose

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Types of Decisions
• Programmed & Non Programmed
• Major and Minor
• Individual and Group

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