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Management functions. Management of decision-making process.

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  1. Management functions. Management of decision-making process.

  2. The management process involves a wide variety of activities including planning, organizing, motivating, and controlling. These activities are the main functions of management.

  3. PLANNING Planningis the conscious, systematic process of making decisions about goals and activities that an individual, group, work unit, or organizations pursue in the future.

  4. PLANNING Types of planning • Strategic planning • Tactical • Operational planning

  5. PLANNING Strategic planning • Involves making decisions about the organization: long-term goals and strategies. • Have a strong external orientation and cover major portions of the organization. • Senior executives are responsible for the development and execution of the strategic plan

  6. PLANNING Tactical and operational planning Once the organization's strategic goals and plans are identified, they become the basis of planning undertaken by tactical and operational managers. Goals and plans become more specific and involve shorter periods of time as planning moves from the strategic level to the operational level. • Tactical planning translates broad strategic goals and plans into specific goals and plans that are relevant to a definite portion of the organization, often a functional area like marketing or human resources. Tactical plans focus on the major actions that a unit must take to fulfill its part of the strategic plan. • Operational planning identifies the specific procedures and processes required at lower levels of the organization. Operational managers usually develop plans for very short periods of time and focus on routine tasks such as production runs, delivery schedules, and human resources requirements.

  7. PLANNING The major components of the strategic management process are: • establishment of a mission and vision; • establishing strategic goals; • environmental analysis; • internal assessment; • formulation and analysis of strategies; • selecting the strategy alternative; • strategy implementation; • strategic control.

  8. PLANNING Establishing a mission and vision The mission is the basic purpose and values of the organiza­tion, as well as its scope of operations. It is a statement of the organization's reason to exist. The strategic visionmoves beyond the mission statement to provide a Perspective on where the company is headed and what the organization can be­come.

  9. PLANNING Establishing strategic goals Strategic goals are major targets or end results that relate to the long-term survival, value, and growth of the organization. Strategic managers usually establish goals that reflect both effectiveness (providing appropriate outputs! and efficiency (high ratio of outputs to inputs). Typical strategic goals include various measures of return to shareholders, profitability, quantity and quality of outputs, market share, productivity and contribution to society.

  10. PLANNING Environmental analysis • Industry and market analysis: major product lines and significant market segments in the industry. • Industry growth: growth rates for the entire industry, growth rates for key market segments, projected changes in patterns of growth, and the determinants of growth. • Industry forces: threat of new industry entrants, threat of substitutes, eco­nomic power of buyers, economic power of suppliers, and the internal industry rivalry. • Competitor analysis: major competitors and their market shares. Competitor analysis: goals, strategies, strengths, and weaknesses of each major competitor. • Competitor advantages: the degree to which industry competitors have • Political and regulatory analysis:the level of political activity that organizations and as­sociations-within the industry undertake. • Social analysis:current and potential social issues and their effects on the industry;consumer, environmental, and similar activist groups that attempt to influence the industry. • Human resources analysis: key labour needs, shortages, opportunities, and problems «fronting the industry. • Macroeconomic analysis: economic factors that affect supply, demand, growth, competition, and profitability within the industry. • Technological analysis: scientific or technical methods that affect the industry, particularly recent and potential innovations.

  11. PLANNING Internal analysis • Financial analysis examines financial strengths and weaknesses through financial statement such as a balance sheet and an income statement and compares trends to historical and industry figures. • Human resources assessment examines strengths and weaknesses of all levels of management and employees and focuses on key human resources activities, including recruitment selection, placement, training, labour (union) relationships, compensation, pp motion, appraisal, quality of work life, and human resources planning. • Marketing audit examines strengths and weaknesses of major marketing activities or identifies markets, key market segments, and the competitive position (mark share) of the organization within key markets, • Operations analysis examines the strengths and weaknesses of the manufacturing, production or service delivery activities of the organization. • Other internal resource analyses examine, as necessary and appropriate, the strengths and weaknesses other organizational activities, such as research and development (product ail process), management information systems, engineering and purchasing. • Core Competence. Without question, an effective internal analysis requires a clear grasp at understanding of a company's core competencies. A core competence is something a company does especially well relative to its competitors. • Benchmarkingis the process of assessing how well one company's basic functions and skills compare to those of some other company or set of compa­nies.

  12. PLANNING Formulation and analysis of strategies A strategy is a pattern of actions and resource allocations designed to achieve the goals of the organization.

  13. PLANNING LEVELS OF STRATEGIES • Corporate Strategy Corporate strategy identifies the set of businesses, markets, or industry in which the organization competes. The corporate strategy of an organization is sometimes called its business portfolio. • Business Strategy After the top management team and board make the corporate strategy decisions, executives must determine how they will compete in each business area. Business strategy defines the major actions by which an organization builds and strengthens its competitive position in the marketplace. • Functional Strategy The Final step in strategy formulation is to establish the major function strategies. Functional strategies are implemented by each functional area of organization to support the business strategy. The typical functional areas include production, marketing, research and development, finance and distribution.

  14. PLANNING Selecting the strategy alternative Main factors of choice of the strategy are: > purposes; > trend of the market; > competitive position of the firm; > risks;> experience of past strategies; > orientation to owners; > opportunities; > time factor.

  15. PLANNING Strategy implementation The basic components of strategy implementation are: • tactics (short-term strategy agreed to the general long-term plans of man­agement); • policy (general manual for actions and decision-making, which facilitates achievement of the purposes); • procedures (describe actions, which are necessary to be undertaken in a definite situation); rules (determine precisely, what should be done in a specific individual situation).

  16. PLANNING Strategic control A strategic control system is designed to support managers in evaluating organization's progress with its strategy and, when discrepancies exist, in taking corrective action. There are qualitative and quantitative indicators of strategy. • quantitative (market share, sales volume, expenses level, production efficiency, net profit, turnover rate of personnel, share price, etc.) • qualitative (ability to attract highly qualified managers, quality of service reducing of risk, etc.).

  17. ORGANIZING PROCESS An organization is a means of performing the tasks that are essential achieving an objective more easily. Organizing is the process of creating organization. Organizing is the activities involved in designing an appropriative organizational structure, assigning employee duties, and developing work relationships among people and among tasks. Organizing addresses questions such as: Who reports to whom? How are tasks linked together? Who responsible for the completion of tasks? Who coordinates this group of people?

  18. ORGANIZING PROCESS Reasons for Organizing Main reasons include achieving synergy, avoiding duplication of sources, establishing lines of authority and facilitating communication. • Achieving Synergy. One reason to form organizations is to achieve synergistic effects. Synergy is the ability of a whole system to equal more than sum of its parts. • Avoiding the Duplication of Resources. A second reason for organizing closely related to the first one, is to avoid duplicating resources. • Establishing Lines of Authority. A third reason for organizing is to establish lines of authority. As individuals are working, different questions at raised such as: "At what pace should everyone work?", "What happens if materials are defective?" To keep the work flowing someone must make decisions, answer these and other questions and tell others hat should be done specifically and when. • Facilitating Communication. Finally, organizing fosters better commu­nication. In large and even smaller companies, the number of people who must communicate may be formidable.

  19. ORGANIZING PROCESS There is no one best way to organize. However, any organizing effort typically involves several activities: grouping tasks into jobs, grouping jobs into departments, and determining authority and channels of communication. GROUPING TASKS INTO JOBS Job design is the process of grouping tasks into jobs. A job is a set of tasks common to more than one worker. In this grouping, the manager must de­cide how many tasks to include in a job and how complex these tasks should be. GROUPING JOBS INTO DEPARTMENTS Departmentalization means grouping related jobs to form an administrative unit—department, area, or center. A company's departmentalization serves for its specific purposes and may be unique to that organization, we have talked about four basic types of departmentalization: functional, customer, Product, and geographic. • DETERMINING AUTHORITY RELATIONSHIPS The third activity involved in organizing is determining authority relationships among employees. Usually these authority relationships flow down j organizational chart, from high positions such as president and vice preside down to the lower levels of the organization.

  20. MOTIVATION Jeremy Bentham’s “The Carrot and the Stick Approach” : • Possibly the essence of the traditional view of people at work can be best appreciated by a brief look at the work of this English philosopher, whose ideas were also developed in the early years of the Industrial Revolution, around 1800. Bentham’s view was that all people are self-interested and are motivated by the desire to avoid pain and find pleasure. Any worker will work only if the reward is big enough, or the punishment sufficiently unpleasant. This view - the ‘carrot and stick’ approach - was built into the philosophies of the age and is still to be found, especially in the older, more traditional sectors of industry.

  21. MOTIVATION Abraham Maslow’s “Need Hierarchy Theory” :

  22. MOTIVATION Frederick Herzberg’s motivation-hygiene theory : • Frederick has tried to modify Maslow’s need Hierarchy theory. His theory is also known as two-factor theory or Hygiene theory. He stated that there are certain satisfiers and dissatisfiers for employees at work. • He devised his theory on the question : “What do people want from their jobs ?” He asked people to describe in detail, such situations when they felt exceptionally good or exceptionally bad. From the responses that he received, he concluded that opposite of satisfaction is not dissatisfaction. Removing dissatisfying characteristics from a job does not necessarily make the job satisfying. He states that presence of certain factors in the organization is natural and the presence of the same does not lead to motivation. However, their nonpresence leads to demotivation. In similar manner there are certain factors, the absence of which causes no dissatisfaction, but their presence has motivational impact.


  24. Vroom’s Valence x Expectancy theory : The most widely accepted explanations of motivation has been propounded by Victor Vroom. His theory is commonly known as expectancy theory. The theory argues that the strength of a tendency to act in a specific way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual to make this simple, expectancy theory says that an employee can be motivated to perform better when their is a belief that the better performance will lead to good performance appraisal and that this shall result into realization of personal goal in form of some reward. Therefore an employee is : Motivation = Valence x Expectancy. • The theory focuses on three things : • Efforts and performance relationship • Performance and reward relationship • Rewards and personal goal relationship

  25. MOTIVATION McClelland’s Theory of Needs : David McClelland has developed a theory on three types of motivating needs : • Need for Power • Need for Affiliation • Need for Achievement Basically people for high need for power are inclined towards influence and control. They like to be at the center and are good orators. They are demanding in nature, forceful in manners and ambitious in life. They can be motivated to perform if they are given key positions or power positions. In the second category are the people who are social in nature. They try to affiliate themselves with individuals and groups. They are driven by love and faith. They like to build a friendly environment around themselves. Social recognition and affiliation with others provides them motivation. People in the third area are driven by the challenge of success and the fear of failure. Their need for achievement is moderate and they set for themselves moderately difficult tasks. They are analytical in nature and take calculated risks. Such people are motivated to perform when they see atleast some chances of success.

  26. Control as a function of management All the good planning efforts and brilliant ideas in the world do little if a firm has no system of management control. Control, therefore, is an essential part of effective organizational management. In today's dynamic, unpredictable global business world, control plays a more crucial role than ever before. Specifically, control helps an organization adapt to changing conditions, the magnification of errors, assists in dealing with increased complexity helps to minimize costs.

  27. Control as a function of management The control process consists of four basic steps: • establishing performance standards • measuring performance • comparing performance against standard • evaluation and corrective action.

  28. Control as a function of management • Establishing Performance Standards • The first step in the control process is to establish performance standards, targets set by management against which actual performance is compared at a future date. Ideally, performance standards will be closely related І organizational goals. Like goals and objectives, performance standards should be stated in very clear, easily measurable terms, and they should be realistic in given both the internal and competitive environment, in which the organization operates.

  29. Control as a function of management • Measuring Performance • The second step in the control process is measuring actual performance iii the context of the specific activities that management wishes to control. In most organizations, this assessment occurs continually. For example, if a company establishes as a performance standard a certain maximum acceptable product defect rate, managers must measure the rate continually to ensure that all products fall below it.

  30. Control as a function of management • Comparing Performance against Standards • The third step in the control process involves comparing measured act performance against the standards established in step one. Actual performance may match the performance standard exactly, or it may be higher or lower target. Management must decide how much deviation from standards will tolerated before considering a corrective action. • Managers should be constantly aware that unforeseen conditions that may influence control decisions could occur at any time.

  31. Control as a function of management • Evaluating Performance and Taking Corrective Action • In the final step of the control process, managers evaluate actual perform­ance relative to standards and then take the appropriate action. Performance evaluation calls not only for quantitative and diagnostic skills, but as already mentioned in the previous step, also for subjective yet crucial decision making. Before deciding how to respond to deviations between performance standards and actual performance, managers in charge of control must determine the reason(s) for the deviation.