Management Science Material

Unit-1
I ntroduction to Management
I ntroduction
Management as a discipline has attracted the attention of academicians and practitioners to a great
extent. The basis reason behind this phenomenon is the growing importance of management in day-to-
day life of people. In a broad perspective, management can be considered as the proper utilization of the
resources/people in an organization to accomplish desired objectives. The relationship between managers
and managed has changed as a compared to the older master-servant relationship making it more
complex. In order to satisfy his/her wants a person has to perform numerous activities. An individual
alone cannot perform all the necessary activities. Today, the study of management has become an
important facet of human life. In simple words, management means utilizing available resources in the
best possible manner and also for achieving well defined objectives.
Definitions:-
Management is the art of getting things done through and with people in formally organized groups
------------Harold Knootz
To manage is to forecast and plan, to organize, to command, to coordinate and control
--------------Henri Fayol
Management is concerned with the systematic organization of economic resources and its task is to
make these resources productive --------------Peter F Drucker
"Management is the art of getting things done through people".. Mary Parker Fallett,
Characteristics/ Salient Features (Nature of Management)
1. Management is a managerial process: Management is a process and not merely a body of
individuals. Those who perform this process are called managers. The managers exercise leadership by
assuming authority and direct others to act within the organization. Management process involves
planning, organizing, directing and unifying human efforts for the accomplishment of given tasks.
2. Management is a social process- Management takes place through people. The importance of
human factor in management cannot be ignored. A manager's job is to get the things done with the
support and cooperation of subordinates. It is this human element which gives management its special
character.
3. Management is action-based: Management is always for achieving certain objectives in terms of
sales, profit, etc. It is a result-oriented concept and not merely an abstract philosophy. It gives
importance to concrete performance through suitable actions. It is an action based activity.
4. Management involves achieving results through the efforts of others: Management is the art
of getting the things done through others. Managers are expected to guide and motivate subordinates
and get the expected performance from them. Management acts as an activating factor.
5. Management is a group activity: Management is not an isolated individual activity but it is a
collective activity or an activity of a group. It aims at using group efforts for achieving objectives.
Managers manage the groups and coordinate the activities of groups functioning in an organisation.
6. Management is intangible: Management is not directly visible but its presence is noticed in the
form of concrete results. Management is intangible. It is like invisible spirit, which guides and
motivates people working in a business unit. Management is like government, which functions but is
not visible in physical form.
7. Management is aided, not replaced by computers: The computer is an extremely powerful tool
of management. It helps a manager to widen his vision. The computer supplies ocean of information
for important decision-making. The computer has unbelievable data processing and feedback facilities.
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This has enabled the manager to conduct quick analysis towards making correct decisions. A computer
supports manager in his managerial work. However, it cannot replace managers in business. They
were required in the past, at present and also in future. Their existence is absolutely essential in the
management process.
8. Management is all pervasive: Management is comprehensive and covers all departments, activities
and employees. Managers operate at different levels but their functions are identical. This indicates
that management is a universal and all pervasive process.
9. Management is an art, science as well as a profession: Management is an art because certain
skills, essential for good management, are unique to individuals. Management is a science because it
has an organised body of knowledge. Management is also a profession because it is based on
advanced and cultivated knowledge.
10. Management aims at coordination of activities: Coordination is the essence of management. It
gives one clear direction to the whole organisation and brings unity and harmony in the whole business
unit. For such coordination, effective communication at all levels is essential.
11. Management is innovative: Management techniques are dynamic and innovative. They need to be
adjusted as per the requirements of the situations. Another manager need not repeat the decisions of
one manager. Similarly, a manager has to change his decisions under different situations.
12. Management has different operational levels: Every Organisation needs managers for managing
business activities. The manager's job is basically the same at all levels. The managers at the higher
levels have more important duties while managers at the lower levels have to perform routine
functions i.e., duties.
13. Management is different from ownership: Management is concerned with the management of
business activities. Managers are not the owners but they manage the business on behalf of the
owners. Separation of ownership and management is a special feature of modem business
organisation.
14. Management has vast scope: The scope of management is quite comprehensive. It covers all
aspects of business. The principles of management guide managers while managing various business
activities.
15. Management is dynamic: Business is influenced by changes in economic, social, political
technological and human resource. Management adjusts itself to the changing atmosphere making
suitable forecasts and changes in the policies. Hence, management is treated as a dynamic activity.
16. Management aims at achieving predetermined objectives: Management is a meaningful
activity. All organisations are essentially groups of individuals formed for achieving common objectives.
An Organisation exists for the attainment of specific objectives.

Significance/ I mportance of Management

1. Optimum Utilisation of resources: Management facilitates optimum utilisation of available human
and physical resources, which leads to progress and prosperity of a business enterprise. Even wastages
of all types are eliminated or minimized.
2. Competitive strength: Management develops competitive strength in an enterprise. This enables an
enterprise to develop and expand its assets and profits.
3. Cordial industrial relation: Management develops cordial industrial relations, ensures better life and
welfare to employees and raises their morale through suitable incentives.
4. Motivation of employees: It motivates employees to take more interest and initiatives in the work
assigned and contribute for raising productivity and profitability of the enterprise.
5. I ntroduction of new techniques: Management facilitates the introduction of new machines and
new methods in the conduct of business activities. It also brings useful technological developments
and innovations in the management of business activities.
6. Effective management: Society gets the benefits of efficient management in terms of industrial
development, justice to different social groups, consumer satisfaction and welfare and proper
discharge of social responsibilities.
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7. Expansion of business: Expansion, growth and diversification of a business unit are possible through
efficient management.
8. Brings stability and prosperity: Efficient management brings success, stability and prosperity to a
business enterprise through cooperation among employees.
9. Develops team spirit: Management develops team spirit and raises overall efficiency of a business
enterprise.
10. Ensures effective use of managers: Management ensures effective use of managers so that the
benefits of their experience, skills and maturity are available to the enterprise.
11. Ensures smooth functioning: Management ensures smooth, orderly and continues functioning of an
enterprise over a long period. It also raises the efficiency, productivity and profitability of an
enterprise.
12. Reduces turnover and absenteeism: Efficient management reduces labour turnover and
absenteeism and ensures continuity in the business activities and operations.
13. Creates sound organisation: A dynamic and progressive management guarantees development of
sound Organisation, which can face any situation - favorable or unfavorable with ease and confidence

Functions of Management

Planning
Organizing
Directing
Staffing
Controlling
POSDC

1. Planning: Planning is the primary function of management. It involves determination of a
course of action to achieve desired results/objectives. Planning is the starting point of
management process and all other functions of management are related to and dependent on
planning function. Planning is the key to success, stability and prosperity in business. It
acts as a tool for solving the problems of a business unit. Planning plays a pivotal role in business
management It helps to visualize the future problems and keeps management ready with
possible solutions.
2. Organizing:Organising is next to planning. It means to bring the resources (men, materials,
machines, money etc.) together and use them properly for achieving the objectives. Organisation
is a process as well as it is a structure. Organising means arranging ways and means for the
execution of a business plan. It provides suitable administrative structure and facilitates
execution of proposed plan. Organising involves different aspects such as departmentation, span
of control delegation of authority, establishment of superior-subordinate relationship and
provision of mechanism for co-ordination of various business activities.
3. Staffing: Staffing refers to manpower required for the execution of a business plan. Staffing, as
managerial function, involves recruitment, selection, appraisal, remuneration and
development of managerial personnel. The need of staffing arises in the initial period and
also from time to time for replacement and also along with the expansion and diversification of
business activities. Every business unit needs efficient, stable and cooperative staff for the
management of business activities. Manpower is the most important asset of a business unit. In
many organisations, manpower planning and development activities are entrusted to personnel
manager or HRD manager. 'Right man for the right job' is the basic principle in staffing.
4. Directing (Leading): Directing as a managerial function, deals with guiding and instructing
people to do the work in the right manner. Directing/leading is the responsibility of managers at
all levels. They have to work as leaders of their subordinates. Clear plans and sound organisation
set the stage but it requires a manager to direct and lead his men for achieving the objectives.
Directing function is quite comprehensive. It involves Directing as well as raising the morale of
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subordinates. It also involves communicating, leading and motivating. Leadership is essential on
the part of managers for achieving organisational objectives.
5. Controlling: Controlling is an important function of management. It is necessary in the case of
individuals and departments so as to avoid wrong actions and activities. Controlling involves
three broad aspects: (a) establishing standards of performance, (b) measuring work in progress
and interpreting results achieved, and (c) taking corrective actions, if required. Business plans do
not give positive results automatically. Managers have to exercise effective control in order to
bring success to a business plan. Control is closely linked with other managerial functions. It is
rightly treated as the soul of management process. It is true that without planning there will be
nothing to control It is equally true that without control planning will be only an academic
exercise Controlling is a continuous activity of a supervisory nature.

Hierarchical Levels of Management

Top management (including the members of the board of directors of the company-
responsible for strategic management).
Senior management (or upper management; normally, the heads of various departments-
responsible for operations management).
Middle management (responsible for operational management).
J unior or lower management (they include supervisors, team leaders or, foreman etc-
responsible for transaction control)

Historical Background of Management
The recorded use of organised management dates back to 5000 B.C. when the agricultural
revolution had taken place. These agricultural civilizations existed in India, China and Egypt According to
Peter Drucker these irrigation civilizations "were not only one of the great ages of technology, but it
represented also mankinds most productive age of social and political innovation". As the villages grew
and civilizations evolved, the managers too grew and evolved. They became the priests, the kings, the
ministers holding power and wealth in the society. Written documents found in the Sumerian civilization
which flourished some 5000 years ago, contains evidence of management control practices.

As early as 4000 B.C., the Egyptians were aware of the importance of planning, organising and
controlling. The huge pyramids of Egypt stand a mute testimony to the managerial and organizational
abilities of the ancient Egyptian civilization. One pyramid required 1,00,000 men working for 20 years,
covering 13 acres, using 2.3 million blocks, each weighing an average of 2.5 tons. To produce such a
monument required proper planning, work allocation, organising, directing, controlling and decision
making.

In the Grecian civilization we find the origin of the Scientific Method in the famous Socratic
discourses. The Romans who built a vast empire extending from Britain in the west to Syria in the east
ruled it for many years only because of their superior and advanced managerial abilities.

In ancient India Kautilya wrote his Arthashastra in about 321 B.C. the major theme of which was
political, social and economic management of the State. The study of administration of the cities of
Mohenjodaro and Harappa of the ancient Aryans in 2000 B. C., Buddha's order and the Sangha in 530 B.
C., provide evidence about the use of the principles of management.

During the 13th and 14th centuries AD the large trading houses of Italy needed a means of
keeping records of their business transactions. To satisfy their needs Luca Pacioli published a treatise in
1494 describing the Double Entry System of Book-keeping for the first time.

Management thought is an evolutionary concept. New theories and principles were suggested
along with new developments in the business field. The new thoughts supplemented the existing
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thoughts and theories. This is how developments are taking place continuously in regard to management
thoughts/theories. Management thinkers and thinkers from other fields such as economics, psychology,
sociology and mathematics have also made their contribution in the evolution of management thought.

Evolution of Management Thought

This evolution of management thought can be studied in the following flum broad stages

Period of management awakening
Scientific management period
Human relations period (Behavioral sciences period)
Modern management period

Period of management awakening: This was the period of the industrial revolutions, which paved the
way for large growth and diversification of business enterprises.
Certain pioneers challenged the traditional approaches to management with their new ideas an
approaches.
Robert Owen:-Robert Owen was the first person who spelled out the mostly neglected critical issues
relating to personal management, he believed that workers performance was influenced by a number of
factors such as the shop-floor working conditions. Working hours, housing facilities, training of workers
provision of canteen, rest places. Kind treatment and so on.
Charles Babbage:-He advocated the use of science and mathematics for investigations and accurate
data to run the factories which were at that time using traditional methods, opinions, and rules of thumb
for decision-making.
J ames Watt and Robinson Boulton:-Both of these were the sons of J ames Watt, who invented steam
engine. They used for the first time, several management techniques such as forecasting, market
research, planned machine layout, production planning, standardization parts, welfare of workers,
elaborate statistical records, and other in their factory

Scientific Management
F.W. Taylor is one of the founders (the other two are Max Weber and Henry Fayol) of classical
thought/classical theory of management. He suggested scientific approach to management also
called scientific management theory. F. W. Taylor (1856-1915) is rightly treated as the father of
scientific management. He suggested the principles of scientific management. His concept of scientific
management developed into a movement and dominated the industrial management for several decades
after him. His concepts and principles were refined and popularized by several of his followers, notable
among them being Henry Gantt, The Gilberths and Emerson.

Principle of Scientific Management:
According to Taylor, scientific management in its essence consists of a philosophy which results in a
combination of four important underlying principles of management. First, the development of a true
science, second, the scientific selection of the workers, third, their scientific education and development,
Froth, intimate co-operation between management and their men. The basic principles of Taylor
philosophy of scientific management are as noted below. These principles of scientific management are
most crucial aspects of scientific management

The development of 'One best way" of doing a job. This suggests the task of finding out the best
method for achieving the objectives of a given job. The standards are decided scientifically for
J obs and incentive wages were paid for all production above this standard. Here, job analysis and
standardization of tools, equipment, machinery, etc. are required.
Scientific selection of workers and their development through proper training.
Scientific approach by management. The management has to develop a true science in all fields
of work activity through scientific investigation and experiments.
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Close co-operation of managers and workers (labour management relations) for better results
and understandings.
Elimination of conflict between methods and men. The workers are likely to resist to new
methods. This can be avoided by providing them an opportunity to earn more wages.

Features of Scientific Management

1. Scientific task setting: F. W. Taylor suggested the introduction of standard task which
every worker is expected to complete within one day (working hours) the task is to be
calculated through careful scientific investigation. For this, work study (i.e. method study and
work measurement study) is essential. Taylor suggested time study, motion study, fatigue
study and rate-setting for the introduction of scientific task. Time study is the art of
observing and recording the time required to do each detailed element in an industrial
operation. Motion study refers to the study and analysis of the movements of an operator
while performing a job so that attempts can be made to remove useless/unwanted
movements from the process. Both the studies together help in determining the best method
of performing a job and the standard time allowed for it. This replaces the old rule-of-thumb
knowledge of the workers. The workload, the best method of performing the same and the
time within which it must be performed are suggested in this feature of scientific
management by Taylor.
2. Planning the task: For performing the task by every worker, Taylor suggested the need of
planning the production activity accurately. This idea of planning is Taylor's gift to the
science of management. Planning of task gives answers to the following questions. What has
to be done, how it is to be done, where the work shall be done and when the work shall be
done.
3. Scientific selection and training of workers: Taylor suggested the need of scientific
selection of workers for the plant/production activities. The procedure of selection must be
systematic so as to select the best and the most suitable persons for different types of jobs.
Correct placement of workers is equally important He also suggested the need of training of
workers so as to raise their ability or efficiency. Training is to be integrated with the
promotion policy. He also suggested differential piece wage plan for compensation payment
to workers. He also suggested the importance of cordial relations between management and
workers.
4. Standardization: Taylor suggested the importance of standardization of tools and
equipment, materials, conditions of work and speed of machines. This brings co-ordination in
different activities and all workers will be able to perform the task assigned easily. The
workers will have satisfactory working conditions for work due to such standardization.
5. Specialization: Taylor suggested specialization in the administrative and organizational
setup of the plant He suggested functional foremanship. Taylor recommended eight
functional foremen for different activities and functions. The foremen suggested by him are
like route clerk, instruction card clerk, speed boss etc. Such specialization is useful for raising
efficiency of the whole organisation.
6. Mental revolution: The techniques suggested by F. W. Taylor in his scientific management
are different as compared to traditional techniques and methods. Naturally, these techniques
can be used only when workers supervisors and managers accept them in theory and also in
practice For this, Mental revolution on their part is essential The success of scientific
management rests basically on the attitude of management and workers. They must give up
their old ideas and methods and must accept new scientific methods. For this, mental
revolution on the part of both is essential. Cooperation from workers and management for
the introduction of scientific management depends on this mental revolution.

Benefits / Advantages of Scientific Management

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Application and use of scientific methods.
Wide scope for specialization and accurate planning.
Minimum wastages of materials, time and money.
Cordial relations between workers and management.
Benefits to workers (higher wages and less burden of work), management (cost
reduction, better quality productions) and consumers (superior goods at lower
prices)

F. W. Taylors Contribution to the Development of Management Thought / Science

The contribution of F. W. Taylor to management thought is as explained below:

Emphasis on rational thinking: Taylor suggested rational thinking on the part of management for
raising efficiency and productivity. He wanted managements to replace old methods and techniques by
Modern methods which will raise productivity and offer benefits to all concerned parties. He was in favour
of progressive, scientific and rational thinking on the part of management on all managerial problems.
Such progressive outlook is essential for the introduction of new techniques and methods in the
Management.
I ntroduction of better methods and techniques of production: F. W. Taylor suggested the
importance of improved methods and techniques of production. Work-study techniques are his
contribution to management thought. He suggested new methods after systematic study and research.
Taylor recommended the use of new methods for raising overall efficiency and productivity.
Emphasis on planning and control of production: Taylor suggested the importance of production
planning and control for high production, superior quality production and also for low cost production. He
introduced the concept of production management in a systematic way.
I mportance of personnel and personnel department: Taylor suggested the importance of
manpower in management. He was in favour of progressive personnel policies for the creation of efficient
and satisfied labour force. He suggested the need of personnel department and its importance. He
favored incentive wage payment to workers.
I ndustrial fatigue and rest pauses: Taylor noted the nature of industrial fatigue and suggested the
introduction of suitable rest pauses for removing such fatigue of workers. He wanted to reduce the
burden of work on workers through the use of scientific methods.
Time and motion study: Taylor introduced new concepts like time study, motion study and work study
in the field of industrial management such concepts are for the introduction of new methods which will be
more quick, scientific and less troublesome to workers.

Contribution of Henry Fayols to Management Thought
Henry Fayol (1841-1925) is rightly treated as the father of modern theory of general and
industrial management. The credit of suggesting the basic principles of management in an orderly
manner goes to Henry Fayol. After obtaining an engineering degree, Henry Fayol, joined as chief
executive in a coal mining company. He developed his management principles and general management
theory and published them in the form of a book (in French) "General and Industrial Administration" in
1916. It was translated into English in 1930. In due course of time, Henry Fayol came to be recognised
as the founder of modern management theory. His analysis of management process acts as the
foundation of the whole management theory and the present super-structure of management has been
built on it.

Henry Fayol suggested important qualities of managers and stressed the need for raising such
qualities. He developed fourteen principles of management out of his practical experience. These
principles are universal in character and are applicable to all types of organisations. Each principle
suggested by him has specific meaning and significance. According to him, managers in all organisations
need to follow these principles/guidelines while managing the affairs of their business units. The
management principles suggested by him in 1916 are universally accepted by modern authorities on
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management and are treated as valid even to this day. This is because these principles are practical in
nature and also result-oriented. In fact, these principles are the outcome of his long experience as a
practicing manager. These basic principals are useful for effective management of business activities.
They are related to the basic components of management process such as planning, organizing, staffing,
leading, coordinating and controlling. He incorporated these principles in the management theory
suggested by him.The principles of management suggested by him are useful not only in
business/industrial enterprises but also in other organisations such as colleges, hospitals, charitable
institutions and government departments. Due to his contribution to management theory and principles,
Henry Fayol is rightly treated as the Father of Modern Management Thought. Fayol is the first
management thinker who provided the conceptual framework of the functions of management in his
book General and Industrial Management.

Henry Fayol also suggested 14 principles of management. These principles are:-

1) Division of work: Here the work is divided among the members of the group based employees
skills and talents. It also provides an opportunity to specialize in different problem areas.
2) Authority and responsibility:It refers to the right or power to give orders. It must also be
adequately supported by responsibility.
3) Discipline: Both the employer and employees should respect each other by observing the rules.
4) Unity of command: Employee should receive instructions from only one superior
5) Unity of direction: where the objectives are similar, the action plans should also be similar. In
other words, similar activities should be grouped together, placed under one manager and there
should be one action plan.
6) Subordination of personal interest to organizational interests: Group interests or goals of
organizations must prevail any time over the individual interests or personal goals.
7) Remuneration: The wages and salaries must be fair and bring out the best possible
commitment in the employer to achieve the organizational goals.
8) Centralization of authority: Authority is said to be centralized when decision-making powers
are retained at the top level, the degree of centralization or decentralization is determined by the
needs of the company.
9) Scalar chain: It shows how the authority flows from top to bottom.
10) Order: It means keeping the right man or right thing in the right place.
11) Equity: This implies that the dealings with employees should be so far and so open that they will
reinforce their commitment to the organization, be kind and fair to them.
12) Stability of tenure: This indicates avoiding frequent transfers of the employees much before
they settle in their jobs.
13) I nitiative: The staff should be encouraged to show initiative, within the limits of authority and
discipline.
14) Esprit de corps: This means team work; implying that there is unity in strength.

Benefits/ Advantages of Scientific Management

1. It improved working methods and brought enormous increase in the productivity.
2. It developed a rational approach to measure tasks and processes with a considerable degree of
accuracy.
3. Piece rate wage system was introduces and incentive systems were involved.
4. Physical working conditions for the employees underwent a sea change.
5. It laid the foundation for work study and other related techniques.
6. The scientific approach replaced the most widely prevalent traditional rule of thumb approach.
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Human Relations Period
Elton Mayo (1880-1949) is recommended as the Father of Human Relations School. He
introduced human relations approach to management thought. His contribution to the development of
management thought is unique and is also treated as human relations approach to management. It was
Mayo who led the team for conducting the study at Western Electric's Hawthorne Plant (1927-1932) to
evaluate the attributes and psychological reactions of workers in on-the-job situations. His associates
included J ohn Dewery, Kurt Lewin and others. Mayo and his associates came to the following
conclusions from their famous Hawthorne experiments:

The amount of work to be done by a worker is not determined by his physical capacity
but by the social norms.
Non-economic rewards play a significant role in influencing the behavior of the workers.
Generally the workers de not reacts as individuals, but as members of group.
Informal leaders play an important part in setting and enforcing the group norms.

Mayo discussed the factors that cause a change in human behavior. He concluded that the cause
of increase in the productivity of the workers is not a single factor like rest pauses or changing working
hours but a combination thease and several other factors such as less restrictive supervision, giving
autonomy to workers, allowing the formation of small cohesive groups of workers and so on. Today, as a
result of the efforts of Mayo and his associates, the managers in different organisations recognize that
workers' performance is related to psychological, sociological and physical factors. Thus, Hawthorne
Study was an important landmark to study the behavior of worker and his relationship to the job, his
fellow workers and the organisation. It proved that informal work groups and the opportunity to be heard
and participate in decision-making have an important impact on the productivity of the workers.

Mayo is one leading management thinker and also a leading advocate of neo-classical theory.
The concept of participative management style was suggested in the neo-classical theory. The human
relations approach suggested by Mayo has special importance in the present period. He rightly suggested
the importance of democratic leadership and participative management style for running business
activities efficiently. The role of people (workers) is clearly suggested by Mayo. He rightly suggested that
management is not a mechanical process but a study of people involved in the production activities.
Management will get positive response from its employees when their actions, sentiments and
expectations are given due attention.

Hawthorne Experiments:
Mayo is best known for his work on the project commonly referred to as the
Hawthorne Studies. They were conducted in the Hawthorne plant of Western Electric Company in
the USA between 1927 and 1932. It is said that Mayo applied psychological approach to
management for the first time. He used clinical and diagnostic methods. Mayo has drawn various
conclusions from these studies. The Hawthorne Studies have had a shattering impact on management
thinking. Mayo is regarded as revolutionary thinker because of his contribution to the management
thought in the recent period. The credit of humanization of management with a view to achieve common
interest of management and workers goes to Elton Mayo.

Some of the major findings of Hawthorne Studies we as noted below:

Employee's behavior is influenced by mental attitudes and emotions including prejudices.
The workers in a group develop a common psychological bond uniting them as a group in the
form of informal organisation.
In managing and motivating employee groups, human and social motivation plays greater role
then financial incentives.
Management must understand that a typical group behavior can dominate or even supersede
individual propensities and preferences.
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When workers are given special attention by management, the productivity is likely to increase
irrespective of actual changes in the working conditions.

Hawthorne Studies are primarily responsible for consideration of non-financial incentives in improving
productivity. Mayo pointed out that the organization is a social system and informal organisation is a
reality. The knowledge of human nature can solve many problems of management. He emphasized that
successful human relations approach can easily create harmony in an organisation, higher employee
satisfaction and great operational efficiency. Central to this approach was an increased understanding of
the individual worker with emphasis on motivation, needs, interpersonal relationships and group
dynamics Mayo believed that a factory is not only a workplace but also a social environment in which the
employees interact with each other. This gave rise to the concept of the 'social man' whose interaction
with others would determine the quality and quantity of the work produced.
Mayo developed his Human Relations Theory of Management on his Hawthorne experiments. He
introduced human relations approach to management and is rightly considered as one of the pioneers of
the Human Relations Theory of Management.

Features of Human Relations Approach

A business organisation is not merely a techno-economic system but also a social system and
involves human element.
An individual employee is motivated not merely by economic incentives but also by non-economic
incentives, psychological and social interests, needs and aspirations.
The informal groups in the organisation are more important than individuals and play an
important role in raising productivity.
In place of task-centered leadership, the employee-centered, humanistic, democratic and
participative style of leadership should be introduced as it is more effective / productive.
Employees are not necessarily inefficient or negative in their approach. They are capable of self-
direction and control.
Employees performance can be raised by meeting their social and psychological needs. Cordial
atmosphere at work place is also useful for raising productivity.
Management needs social skills along with technical skills in order to create a feeling (among the
employees) that they are a part and parcel of the organisation and not outsiders.
Employees need respect and positive feeling from the management. For this, employees should
be encouraged to participate and communicate freely their views and suggestions in the
concerned areas of decision-making.
The management has to secure willing cooperation of employees. The objective before the
management should be to secure cooperative effort of its employees. For this, employees should
be made happy and satisfied.

Modern Management Approach
Contributions to management thought/theory after 1960s are covered by modem management
theories. Modem theories are based on classical and neo-classical theories but consider the management
problems as they developed in the recent years. There are three streams under modern management
theory. These are:-

Quantitative / Mathematical Approach to Management,
Systems Approach to Management, and
Contingency Approach to Management.


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Systems Management School
A system is an organised entity i.e. a company or a business enterprise made up of parts
connected and directed to some purpose. Each system has an input, a process and an output. It acts as a
self-sufficient unit. Every system is interlinked with its subsystems. Any organisation is looked upon as an
artificial system, the internal parts of which work together to achieve established goals and the external
parts to achieve interplay with the environment including customers, the general public, suppliers and
government. The manager integrates available facilities to achieve a goal by means of systems that relate
activities required for the end result. The system serves as the media through which the manager
operates. An integrated system can be used purposefully for the conduct of production, marketing,
distribution and other activities relating to business in an orderly manner. A manager can conduct various
activities in an orderly manner with the help of the systems established. A system is a set of interrelated
and interdependent parts arranged in a manner that produces a unified whole. Almost anything can be
viewed as a system.

As per systems management school, an organisation is looked upon as an artificial system. Its
internal parts work together to achieve established goals and the external parts to achieve interplay with
the environment including customers, the general public, suppliers and government. The manager
integrates available facilities to achieve a goal by means of systems that relate activities required for the
end result. In this way, the systems management school helps in achieving the established goals of the
organisation.

It is possible to establish such systems management organisation in a business enterprise. For
these authorities, departments, etc. will be created. The work will be properly distributed and various
departments (sub-systems) will operate as per the work assigned under the project. The computer can
be used extensively for the execution of systems management Data processing work will become easy
and quick. Systems management enables a manager to work more efficiently because of easy availability
of information in different aspects of business.

Features Of Systems Approach to Management

1) Open or Closed Systems: Systems may be either open or dosed. An open system is one that is
dependent on the outside environment for survival e.g., human body as a system is composed of
many subsystems. This is an open system and it must depend on outside input and energy for
survival. A system is considered closed if it does not interact with the environment. Physical and
mechanical Systems are closed system because they are insulted from their external
environment. Traditional organisation theorists regarded organisations as closed systems while
according to the modern view organizations are open systems, always interacting with the
environment.
2) I nterdependent parts: A system is a set of interdependent parts which together form a unitary
whole that perform some function. An organisation is also a system which consists of four
interdependent parts viz., task, structure, people and technology.
3) Consideration of whole system: No part of the system can be precisely analyzed and under-
stood apart from the whole system. Conversely, the whole system cannot be exactly evaluated
without understanding all its parts. Each part is related to every other part. It means rather than
dealing separately with the various parts of one organisation, the systems approach attempts to
give the manager a way of looking at the organisation as a whole. For example, in order to
understand the operations of the finance or production or marketing departments, he must
understand the company as a whole. It is because activity of any one part of the company affects
the activity of every other part.
4) I nformation, energy and material: Generally, there are three basic inputs that enter the
processor of the system viz., information (technology), energy (motive power) and materials to
be transformed into goods. If the output is service, materials are not included in the inputs. If we
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have manufacturing company, output is goods or materials. If we have a consultancy firm,
output is information or advice. if we have a power generating company, output is energy.
5) Defined boundaries: Each system including an organisation has its own boundaries which
separate it from other system in the environment. For open systems the boundaries are
penetrable whereas for closed systems, they are not. The boundaries for closed systems are
rigid. In a business organisation, it has many boundary contacts or 'interfaces' with many
external system like creditors, suppliers, customers, government agencies etc. The system is
inside the boundary, the environment is outside the boundary'.
6) Synergy: Output of a system is always more than the combined output of its parts. This is called
'synergy. In organizational terms, synergy means when separate departments within an
organisation cooperate and interact, they become more productive than if they had acted in
isolation e.g., it is certainly more efficient for each department to deal with one secretarial
department than for each department to have a separate secretarial department of its own.
7) Feedback mechanism: A system can adopt and adjust itself to the changing environment
through the feedback mechanism. As operations of the system proceed information in feedback
to the appropriate people. This helps to assess the work and if need be, to get it corrected.
8) Multidisciplinary approach: Systems approach integrates and uses with profit ideas emerging
from different schools of thought. Management freely draws concepts and techniques from many
fields of study such as psychology, sociology, ecology, economics, mathematics, statistics,
operations research, systems analysis etc.

Contingency Management School/ Contingency Approach to Management/ Situational
Approach
A common deficiency of the classical, behavioral and quantitative schools is that they have stress
one aspect of the organisation at the cost of others. The classical approach emphasizes on 'task' while
behavioral approach emphasizes on 'people. The stress of quantitative approach is on 'mathematical
decision-making. However, it is difficult to understand precisely which aspect is most useful and
appropriate in a given practical situation.This brings the need to develop me broad conceptual framework
that can help a manager diagnose a problem and decide which tool or tools will best do the job. The
systems approach as well as contingency approach provides one integrated approach to management
problems. The contingency/situational approach is the second approach (the first being the systems
approach) whichattempts to integrate the various schools of management thought in an orderly manner.
The contingency management approach is similar to known leadership theory called situational leadership
theory. The contingency approach is applicable to leadership as well as to business management. This
situational management approach is relatively a new approach to management and is an extension of
systems approach. The basic theme of contingency approach is that organisations have to deal with
different situations in different ways. There is no single best way of managing applicable to all situations.
In order to be effective, the internal functioning of the organisation must be consistent with the needs
and demands of the external environment. In other words internal organisation should have the capacity
to face any type of external situation with confidence.

Features of the Contingency / Situational Approach

Management is entirely situational. The management has to use the measures/techniques as per
the situation from time to time.
Management should match its approach as per the requirements of the situation. The policies
and practices used should be suitable to environmental changes.
The success of management depends on its ability to cope up with its environment. Naturally, it
has to make special efforts to anticipate and comprehend the possible environmental changes.
Managers should realize that there is no one best way to manage. They have to use
management techniques as per the situation which they face.

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According to contingency approach, management principles and concepts of different schools have
no universal/general applicability under all situations. This means these schools have not suggested one
best method of doing things under all situations and at all times. The contingency approach has provided
a solution to this situation.

As per the contingency approach, the task of managers is to try to identify which technique or
method will be most suitable for achieving the management objectives under the available situation.
Managers have to develop a sort of situational sensitivity and practical selectivity in order to deal with
their managerial problems as they develop from time to time.

Contingency approach views are applicable in designing organizational structure and in deciding the
degree of decentralization in establishing communication and control systems and also in deciding
motivational and leadership approaches. In brief, the contingency approach is applicable to different
areas of organisation and management it is an attempt to integrate various viewpoints and to synthesize
various fragmented approaches to management.

Theories of Motivation

Abraham Maslows Need Hierarchy Theory :
Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943. This
theory is a classical depiction of human motivation. This theory is based on the assumption that there is a
hierarchy of five needs within each individual. The urgency of these needs varies. These five needs are as
follows-

1. Physiological needs- These are the basic needs of air, water, food, clothing and shelter. In
other words, physiological needs are the needs for basic amenities of life.
2. Safety needs- Safety needs include physical, environmental and emotional safety and
protection. For instance- J ob security, financial security, protection from animals, family security,
health security, etc.
3. Social needs- Social needs include the need for love, affection, care, belongingness, and
friendship.
4. Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect,
confidence, competence, achievement and freedom) and external esteem needs (recognition,
power, status, attention and admiration).
5. Self-actualization need- This include the urge to become what you are capable of becoming /
what you have the potential to become. It includes the need for growth and self-contentment. It
also includes desire for gaining more knowledge, social- service, creativity and being aesthetic.
The self- actualization needs are never fully satiable. As an individual grows psychologically,
opportunities keep cropping up to continue growing.

According to Maslow, individuals are motivated by unsatisfied needs. As each of these needs is
significantly satisfied, it drives and forces the next need to emerge. Maslow grouped the five needs into
two categories - Higher-order needs and Lower-order needs. The physiological and the safety needs
constituted the lower-order needs. These lower-order needs are mainly satisfied externally. The social,
esteem, and self-actualization needs constituted the higher-order needs. These higher-order needs are
generally satisfied internally, i.e., within an individual. Thus, we can conclude that during boom period,
the employees lower-order needs are significantly met.
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I mplications of Maslows Hierarchy of Needs Theory for Managers

As far as the physiological needs are concerned, the managers should give employees
appropriate salaries to purchase the basic necessities of life. Breaks and eating opportunities
should be given to employees.
As far as the safety needs are concerned, the managers should provide the employees job
security, safe and hygienic work environment, and retirement benefits so as to retain them.
As far as social needs are concerned, the management should encourage teamwork and organize
social events.
As far as esteem needs are concerned, the managers can appreciate and reward employees on
accomplishing and exceeding their targets. The management can give the deserved employee
higher job rank / position in the organization.
As far as self-actualization needs are concerned, the managers can give the employees
challenging jobs in which the employees skills and competencies are fully utilized. Moreover,
growth opportunities can be given to them so that they can reach the peak.
The managers must identify the need level at which the employee is existing and then those
needs can be utilized as push for motivation.

Limitations of Maslows Theory

It is essential to note that not all employees are governed by same set of needs. Different
individuals may be driven by different needs at same point of time. It is always the most
powerful unsatisfied need that motivates an individual.
The theory is not empirically supported.
The theory is not applicable in case of starving artist as even if the artists basic needs are not
satisfied, he will still strive for recognition and achievement.

Theory X and Theory Y of Douglas McGregor:

In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human
behaviour at work, or in other words, two different views of individuals (employees): one of which is
negative, called as Theory X and the other is positive, so called as Theory Y. According to McGregor, the
perception of managers on the nature of individuals is based on various assumptions.

Assumptions of Theory X

An average employee intrinsically does not like work and tries to escape it whenever
possible.
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Since the employee does not want to work, he must be persuaded, compelled, or warned
with punishment so as to achieve organizational goals. A close supervision is required on part
of managers. The managers adopt a more dictatorial style.
Many employees rank job security on top, and they have little or no aspiration/ ambition.
Employees generally dislike responsibilities.
Employees resist change.
An average employee needs formal direction.

Assumptions of Theory Y

Employees can perceive their job as relaxing and normal. They exercise their physical and
mental efforts in an inherent manner in their jobs.
Employees may not require only threat, external control and coercion to work, but they can
use self-direction and self-control if they are dedicated and sincere to achieve the
organizational objectives.
If the job is rewarding and satisfying, then it will result in employees loyalty and
commitment to organization.
An average employee can learn to admit and recognize the responsibility. In fact, he can
even learn to obtain responsibility.
The employees have skills and capabilities. Their logical capabilities should be fully utilized. In
other words, the creativity, resourcefulness and innovative potentiality of the employees can
be utilized to solve organizational problems.

Thus, we can say that Theory X presents a pessimistic view of employees nature and behavior at work,
while Theory Y presents an optimistic view of the employees nature and behaviour at work. If correlate it
with Maslows theory, we can say that Theory X is based on the assumption that the employees
emphasize on the physiological needs and the safety needs; while Theory X is based on the assumption
that the social needs, esteem needs and the self-actualization needs dominate the employees.

McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he encouraged cordial
team relations, responsible and stimulating jobs, and participation of all in decision-making process.

I mplications of Theory X and Theory Y

Quite a few organizations use Theory X today. Theory X encourages use of tight control and
supervision. It implies that employees are reluctant to organizational changes. Thus, it does not
encourage innovation.

Many organizations are using Theory Y techniques. Theory Y implies that the managers should
create and encourage a work environment which provides opportunities to employees to take
initiative and self-direction. Employees should be given opportunities to contribute to
organizational well-being. Theory Y encourages decentralization of authority, teamwork and
participative decision making in an organization. Theory Y searches and discovers the ways in
which an employee can make significant contributions in an organization. It harmonizes and
matches employees needs and aspirations with organizational needs and aspirations.

Herzbergs Two-Factor Theory of Motivation

I n 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the motivator-
hygiene theory. According to Herzberg, there are some job factors that result in satisfaction while there
are other job factors that prevent dissatisfaction. According to Herzberg, the opposite of Satisfaction is
No satisfaction and the opposite of Dissatisfaction is No Dissatisfaction.

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Herzberg classified these job factors into two categories-

Hygiene factors- Hygiene factors are those job factors which are essential for existence of motivation
at workplace. These do not lead to positive satisfaction for long-term. But if these factors are absent / if
these factors are non-existant at workplace, then they lead to dissatisfaction. In other words, hygiene
factors are those factors which when adequate/reasonable in a job, pacify the employees and do not
make them dissatisfied. These factors are extrinsic to work. Hygiene factors are also called as
dissatisfiers or maintenance factors as they are required to avoid dissatisfaction. These
factors describe the job environment/scenario. The hygiene factors symbolized the physiological needs
which the individuals wanted and expected to be fulfilled. Hygiene factors include:

Pay - The pay or salary structure should be appropriate and reasonable. It must be equal
and competitive to those in the same industry in the same domain.
Company Policies and administrative policies - The company policies should not be too
rigid. They should be fair and clear. It should include flexible working hours, dress code,
breaks, vacation, etc.
Fringe benefits - The employees should be offered health care plans (mediclaim), benefits
for the family members, employee help programmes, etc.
Physical Working conditions - The working conditions should be safe, clean and hygienic.
The work equipments should be updated and well-maintained.
Status - The employees status within the organization should be familiar and retained.
I nterpersonal relations - The relationship of the employees with his peers, superiors and
subordinates should be appropriate and acceptable. There should be no conflict or
humiliation element present.
J ob Security - The organization must provide job security to the employees.

Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as motivators.
The motivational factors yield positive satisfaction. These factors are inherent to work. These factors
motivate the employees for a superior performance. These factors are called satisfiers. These are factors
involved in performing the job. Employees find these factors intrinsically rewarding. The motivators
symbolized the psychological needs that were perceived as an additional benefit. Motivational factors
include:
Recognition - The employees should be praised and recognized for their accomplishments
by the managers.
Sense of achievement - The employees must have a sense of achievement. This depends
on the job. There must be a fruit of some sort in the job.
Growth and promotional opportunities - There must be growth and advancement
opportunities in an organization to motivate the employees to perform well.
Responsibility - The employees must hold themselves responsible for the work. The
managers should give them ownership of the work. They should minimize control but retain
accountability.
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Meaningfulness of the work - The work itself should be meaningful, interesting and
challenging for the employee to perform and to get motivated.

Limitations of Two-Factor Theory

1. The two factor theory is not free from limitations:
2. The two-factor theory overlooks situational variables.
3. Herzberg assumed a correlation between satisfaction and productivity. But the research
conducted by Herzberg stressed upon satisfaction and ignored productivity.
4. The theorys reliability is uncertain. Analysis has to be made by the raters. The raters may spoil
the findings by analyzing same response in different manner.
5. No comprehensive measure of satisfaction was used. An employee may find his job acceptable
despite the fact that he may hate/object part of his job.
6. The two factor theory is not free from bias as it is based on the natural reaction of employees
when they are enquired the sources of satisfaction and dissatisfaction at work. They will blame
dissatisfaction on the external factors such as salary structure, company policies and peer
relationship. Also, the employees will give credit to themselves for the satisfaction factor at work.
7. The theory ignores blue-collar workers. Despite these limitations, Herzbergs Two-Factor theory is
acceptable broadly.

I mplications of Two-Factor Theory
The Two-Factor theory implies that the managers must stress upon guaranteeing the
adequacy of the hygiene factors to avoid employee dissatisfaction. Also, the managers must make sure
that the work is stimulating and rewarding so that the employees are motivated to work and perform
harder and better. This theory emphasize upon job-enrichment so as to motivate the employees. The job
must utilize the employees skills and competencies to the maximum. Focusing on the motivational
factors can improve work-quality.

Decision Making:
I ntroduction:
Decision-making is an essential aspect of modern management. It is a primary function of
management. A manager's major job is sound/rational decision-making. He takes hundreds of decisions
consciously and subconsciously. Decision-making is the key part of manager's activities. Decisions are
important as they determine both managerial and organizational actions. A decision may be defined as "a
course of action which is consciously chosen from among a set of alternatives to achieve a desired
result." It represents a well-balanced judgment and a commitment to action

Definitions:

Decision making means to select a course of action from two or more alternatives. It is done to achieve a
specific objective or to solve a specific problem.

"Decision making is the process of identifying and selecting a course of action to solve a specific problem
-----J ames Stoner
"Decision making involves the selection of a course of action from among two or more possible
alternatives in order to arrive at a solution for a given problem."---------Trewartha and Newport.

Decision Making Process:

Defining / Identifying the managerial problem,
Analyzing the problem,
Developing alternative solutions,
Selecting the best solution out of the available alternatives,
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Converting the decision into action, and
Ensuring feedback for follow-up

1. I dentifying the Problem: Identification of the real problem before a business enterprise is the
first step in the process of decision-making. It is rightly said that a problem well-defined is a
problem half-solved. Information relevant to the problem should be gathered so that critical
analysis of the problem is possible. This is how the problem can be diagnosed. Clear distinction
should be made between the problem and the symptoms which may cloud the real issue. In
brief, the manager should search the 'critical factor' at work. It is the point at which the choice
applies. Similarly, while diagnosing the real problem the manager should consider causes and
find out whether they are controllable or uncontrollable.
2. Analyzing the Problem: After defining the problem, the next step in the decision-making
process is to analyze the problem in depth. This is necessary to classify the problem in order to
know who must take the decision and who must be informed about the decision taken.
3. Collecting Relevant Data: After defining the problem and analyzing its nature, the next step is
to obtain the relevant information/ data about it. There is information flood in the business world
due to new developments in the field of information technology. All available information should
be utilised fully for analysis of the problem. This brings clarity to all aspects of the problem.
4. Developing Alternative Solutions: After the problem has been defined, diagnosed on the
basis of relevant information, the manager has to determine available alternative courses of
action that could be used to solve the problem at hand. Only realistic alternatives should be
considered. It is equally important to take into account time and cost constraints and
psychological barriers that will restrict that number of alternatives. If necessary, group
participation techniques may be used while developing alternative solutions as depending on one
solution is undesirable.
5. Selecting the Best Solution: After preparing alternative solutions, the next step in the
decision-making process is to select an alternative that seems to be most rational for solving the
problem. The alternative thus selected must be communicated to those who are likely to be
affected by it. Acceptance of the decision by group members is always desirable and useful for its
effective implementation.
6. Converting Decision into Action: After the selection of the best decision, the next step is to
convert the selected decision into an effective action. Without such action, the decision will
remain merely a declaration of good intentions. Here, the manager has to convert 'his decision
into 'their decision' through his leadership. For this, the subordinates should be taken in
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confidence and they should be convinced about the correctness of the decision. Thereafter, the
manager has to take follow-up steps for the execution of decision taken.
7. Ensuring Feedback: Feedback is the last step in the decision-making process. Here, the
manager has to make built-in arrangements to ensure feedback for continuously testing actual
developments against the expectations. It is like checking the effectiveness of follow-up
measures. Feedback is possible in the form of organised information, reports and personal
observations. Feedback is necessary to decide whether the decision already taken should be
continued or be modified in the light of changed conditions.

Designing Organization Structure:
I ntroduction:
Organizational structure is used to develop how groups and individuals are arranged or
departmentalized to help meet an organization's goals. It defines a reporting structure, jobs,
compensation and responsibilities for each role. Designing an organizational structure requires
consideration of an organization's values, financial and business goals. It should allow for growth for the
organization and the ability to add additional jobs or departments.

The term organisation can be studied as a structure and also as a process. In a static sense,
organisation is a structure. A group of people functions within this structure and try to accomplish certain
objectives. Organisation is a structure for the conduct of business activities efficiently. I n the words of
Kast and Rosenzweig, "structure is the established pattern of relationships among the component
parts of the organisation". In this sense, Organisation structure refers to the network of relationships
among individuals and positions in an Organisation.

Principles of Organisation/ Organizing

1. Unity of Objectives: Objectives of the enterprise influence the Organisation structure and hence
the objectives of the enterprise should first be decided clearly and firmly. In addition, there should
be unity among the objectives decided. This gives clear direction to the whole Organisation and it
will be geared for the achievement of such objectives. The Organisation acts as a tool for achieving
the objectives. The objectives may be divided into departmental objectives and organizational
objectives. There should be unity of objectives as such unity gives one clear direction to the whole
Organisation. In addition, objectives should be made clear to all concerned persons so as to enable
them to do their best to achieve the objectives.
2. Division of Work and Specialization: Division of work leads to specialization. Every department
of an Organisation should be given specialized functions. This will raise the overall efficiency and
quality of work of an Organisation. At the same time, specialization and departmentation should not
have any adverse effect on the total integrated system. Coordination must be established among the
departments and activities. Specialization is necessary for raising the efficiency of the whole
Organisation structure. The functions given to each department should be preferably only of one
category. Employees should be assigned duties to different departments as per their qualifications,
qualities and so on.
3. Delegation of Authority: There should be proper delegation of authored in every Organisation,
particularly in large organisations. The basic idea behind delegation is to see that decision-making
power is placed at a proper place. Delegation should go to the lower levels of management.
Everyone should be given authority which is adequate to accomplish the task assigned to him.
Delegation is useful for getting the things done through others. A successful manager normally does
not perform the jobs by himself. He delegates the authority and responsibility to his subordinates.
He also motivates his subordinates and see that they take initiative, work efficiently and contribute
for achieving organizational objectives.
4. Coordination: Organisation involves division of work and departmentation. This naturally suggests
the need of proper coordination among the departments and efforts of people working in an
Organisation. Due to coordination one clear-cut direction is given to people/ departments and efforts
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will not be wasted or misdirected. Coordination also brings integration in the basic functions of
management. The principle of coordination is important as it facilitates achievement of overall
objectives of a business Organisation. It also brings unity of action in the Organisation. Coordination
will not be available automatically. For this, working relationships need to be established within the
Organisation.
5. Unity of Command: Unity of command principle suggests that each subordinate should have only
one superior whose command he has to obey. Dual subordination is undesirable as it leads to
confusion, disorder, uneasiness and indiscipline. An employee should not have more than one boss
to whom he has to report and also function as per his orders and instructions. Reporting to more
than one boss leads to confusion.
6. Flexibility: According to the principle of flexibility, the Organisation structure should be flexible and
not rigid. Such structure is adaptable to changing situations and permits expansion or replacement
without any serious dislocation and disruption. There should be an in-built arrangement to facilitate
growth and expansion of an enterprise.
7. Simplicity: The Organisation structure should be simple for clear understanding of employees. The
structure should be easy to manage. Internal communication will be easy due to simplicity of
Organisation. The Organisation structure should be simple as far as possible. The levels of
management should also be limited.
8. Span of Control: The span of control, as far as possible, should be small and fair. This means a
manager should not be asked to keep supervision on large number of subordinates. The span of
control should be narrow and manageable. It should be properly balanced.
9. Scalar Principle (Chain of Command): The principle of chain of command suggests that the line
of authority from the chief executive to the first line of superior should be clearly defined. The line of
authority should be properly defined so as to avoid any confusion as regards the line of authority.
This principle suggests that as far as possible, the chain of authority should be short and should not
be broken.
10. Exception Principle: The executives at the higher level are busy in important matters and have
limited time for the study of routine administrative matters. It is not desirable to take routine
matters to the top level managers frequently. Very crucial and exceptionally complex problems
should be referred to the top executives and routine matters should be dealt with by the junior
executives at the lower levels. Moreover, time of top executives is saved. They can use their time for
dealing with more important and complex problems.
11. Authority and Responsibility: Authority acts as a powerful tool by which a manager can achieve
a desired objective. Authority of every manager should be clearly defined. Moreover, it should be
adequate to discharge the responsibilities assigned. The superior should be held responsible for the
acts of his subordinates. He cannot run away from the responsibility simply by delegating authority
to his subordinates. In fact, the responsibility of the superior for the acts of his subordinates is
absolute.
12. Efficiency: The Organisation structure should enable the enterprise to function efficiently. This will
enable the enterprise to accomplish its objectives quickly and also at the lowest cost. For this, the
structure introduced should be suitable to the nature, size, activities etc. of the Organisation. A
suitable Organisation structure ensures full and purposeful utilisation of available human and
material resources and ensures efficiency.
13. Proper Balance: Proper balance is necessary in different aspects of the Organisation. This means
there should be reasonable balance in the size and functions of departments, centralization and
decentralization of the Organisation, span of control, chain of command and finally in between
human and material resources. This principle of balance suggests that the top management should
see that the vertical and horizontal dimensions of the Organisation are fairly balanced.
14. Separation of line and staff functions: Line functions should be separated from the staff
functions even when they are supplementary in character. Line functions are directly connected with
operations while staff functions are auxiliary to the line functions. These functions should be
coordinated when necessary but normally they should be kept separate.

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Types Of Organisation Structure

1) Line Organisation structure.
2) Functional Organisation structure.
3) Line and staff Organisation structure.
4) Committee and Matrix Organisation structure.

Line Organisation Structure: Line Organisation (also called Military/Scalar Organisation) is the oldest
and the simplest form of internal Organisation structure. It was first developed by the Roman army and
later adopted by armies all over the world. Factory owners also used line Organisation structure in its
purest form in the nineteenth century in England.

In the line Organisation, the line of authority moves directly from the top level to the lowest level
in a step-by-step manner. It is straight and vertical. The top-level management takes all major decisions
and issues directions for actual execution. The general manager, for example, issues order to various
departmental managers. Thereafter, the departmental manager issues instructions to works manager.
The works manager will issue instructions to foreman. In this manner, the orders and instructions will be
issued to the workers working at the lowest level. Thus authority moves downward and also step-by-
step. The responsibility, on the other hand, moves in the upward direction.


Advantages of Line Organisation Structure

Simplicity: Line Organisation structure is easy to understand and follow by superiors and
subordinates. It is simple and clear as regards authority and accountability.
Prompt decisions: Line Organisation facilitates prompt decision-making at all levels as the
authority given is clear and complete.
Discipline: It brings discipline in the Organisation due to unity of command, delegation of
authority and direct accountability.
Economical: Line Organisation is economical as experts are not appointed.
Attraction to talented persons: Line Organisation brings out talented workers and develops in
them quality of leadership. It offers opportunities of self-development to employees.
Quick communication, high efficiency, flexibility and high employee morale are some more
advantages of line Organisation structure.

Functional Organisation Structure: F.W.Taylor, founder of scientific management, conceived the
functional Organisation structure. According to him, it is unscientific to overload a foramen with the entire
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responsibility of running a department. He introduced a system of functional foremanship in his
Organisation. In his functional foremanship, there will be eight specialists' foremen who will be required
to guide, direct and control the work. Workers at the plant level will have to follow the instructions of all
these eight specialists called bosses.
In the functional Organisation suggested by F.W.Taylor, the job of management is divided
according to specialization. As a result, functional departments are created. For example, the personnel
department will look after the recruitment, selection, training, wage payment, etc. of all persons of the
Organisation. Similar will be the position of other departments like production, sales, etc. The scope of
work of the department is limited but the area of authority is unlimited.
In the functional Organisation structure, there will be separation of planning of work and
execution of the plan prepared. The basis of division is the function and naturally the Organisation
structure created will be called "Functional Organisation".
In the functional foremanship, there will be eight specialists/functional heads called bosses. Out
of eight bosses, four bosses will be at the planning level and the remaining four will be at the slop floor
level.


Line and Staff Organisation Structure
In the line and staff Organisation, line executives and staff (specialists) are combined together.
The line executives are 'doers' whereas staff refers to experts and act as 'thinkers'. The following chart
shows line and staff Organisation structure.
The line executives are concerned with the execution of plans and Policies. They do their best to
achieve the organizational objectives. The staff concentrates their attention on research and planning
activities. They are experts and conduct advisory functions.
Staff specialists are regarded as 'thinkers" while execution function is given to line executives
who are "doers". The staff is supportive to line. The staff specialists offer guidance and cooperation to
line executives for achieving organizational objectives. This reduces the burden of functions on the line
executives and raises overall efficiency of the Organisation. For avoiding the conflicts between line and
staff, there should be clear demarcation between the line and staff functions. This avoids overlapping of
functions and possible conflicts. In short, the line and staff functions are different but are supportive and
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can give positive results if adjusted properly i.e. by avoiding the conflicts. They suggest/recommend but
have no power to command the line executive. However, their advice is normally accepted because of
their status in the Organisation.


Matrix Organisation:
Matrix Organisation was introduced in USA in the early 1960's. It was used to solve management
problems in the Aerospace industry.
Matrix Organisation is a combination of two or more organisation structures. For example,
Functional Organisation and Project Organisation.
The organisation is divided into different functions, e.g. Purchase, Production, R & D, etc. Each
function has a Functional (Departmental) Manager, e.g. Purchase Manager, Production Manager, etc.
The organisation is also divided on the basis of projects e.g. Project A, Project B, etc. Each
project has a Project Manager e.g. Project A Manager, Project B Manager, etc.
The employee has to work under two authorities (bosses). The authority of the Functional
Manager flows downwards while the authority of the Project Manager flows across (side wards). So, the
authority flows downwards and across. Therefore, it is called "Matrix Organization".


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Unit-2
Operations Management
I ntroduction
Production and Operations management is defined as the design, operation and
improvement of the transformation process, which converts the various inputs into desired outputs of
products and services.
The term production and operations management is being increasingly replaced by the
simply operations management, as the production function relating to the manufacturing organizations
has become a part of operations. Operations management also highlights the increasing importance of
the service industry in the overall business environment.

Definitions
Operations management (OM) is a broad term which includes manufacturing as well as service
organizations.

Operations management (OM)is the management of transformations systems which convert inputs
into good and/or services. The inputs to the system are materials, labor equipments and capital

Operations management (OM) is the science and art of ensuring that goods and services are created
and delivered successfully to the customers.

Nature/ Principles of Operations Management

1. Understanding the needs of customers, measuring customer satisfaction and using that
information to develop new and improved goods and services.
2. Using information about customers, goods, services, operations, suppliers employees and costs
and finances to make better decisions.
3. Exploiting technology to design goods, services, manufacturing and service delivery processes
that respond rapidly and flexibly to customers requirements and to improve productivity.
4. Building quality into goods, services and processes and continually improving them to reduce
error, defects and waste and to improve responsiveness and business performance.
5. Ensuring that material flows and associated operational activities are coordinated across
hierarchical, organizational and functional boundaries.
6. Creating a high performance work place by developing the skills of employees and motivating
them through education, training, rewards, recognition, teamwork, empowerment and other
effective human resource practices.
7. Continually learning from co-workers, competitors, and customers and adapting the organization
to global and environmental changes.

Types of Operations Management

Continuous Process
Semi-continuous Process
Intermittent Process
Batch process
J ob shop

1. Continuous Process: The continuous process as the name suggests is the continuous in
nature. The set-up time for starting such processes is usually very long, and once started, they
continue for a long duration. The products produced by such a process are highly standardized
with almost no variety and are measured on a continuous basis (tonnes per day meter lengths
per day, etc.).
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2. Semi-continuous Process: Semi-continuous processes are assembly processes, which are
repetitive in nature. They produce high volume of output and the products produced have little
variety. For example automobiles, electronic items, white goods etc. these processes require
highly specialized machines, semi-skilled workers, and result in low cost per unit.
3. I ntermittent Process: It stop at regular intervals of time because the product requires
processing on a varieties, thus making the production process slow in comparison to the
continuous process.
4. Batch Process: This process is adopted when batches or lots of items are to be produced using
the same set of set machines in the same sequence. For example, in a Bakery, a batch of salted
biscuits may be made in the oven, followed by a batch of broad and so on. The equipment used
is the same in all the cases with the same processing steps, but clearing and adjustments of the
equipment may be required after each production run.
5. J ob shop:This process can handle a larger variety of products than the batch process. The
products may be so different from each other that their processing requirements may be varied
process, on different machines, in different sequences, and with different processing times. The
batches of items produced in the job shop may vary in size from large, comprising many units, to
very small, comprising a single unit. For example, in a restaurant every customer gives a different
order of dishes, which are prepared by different cooks using different utensils, ovens, etc, and
different recipes. J ob shop results in low volume of output at a given time and thus costlier
products compared to continuous processes.

Work Study
Work study investigates the work done in an organization and aims at finding the best and the
most efficient way of utilizing the available resources (man, material, money and machinery) to achieve
best possible quality work in minimum possible time.
Work study deals with the techniques of method study and work measurement, which are
employed to ensure the best possible use of human, machine and material resources in carrying out a
specified activity.

Benefits of Work Study

a. Work study directly leads to understand of the job process.
b. It determines the cost of the work performed
c. It saves, minimizes time since the unnecessary movements are eliminated
d. It enhances the productivity of the workers and machines.
e. It enables the worker to earn incentive.
f. It contributes to cost savings.
g. It enhances the employee morale.

Statistical Quality Control:Statistical quality control refers to the use of statistical methods in the
monitoring and maintaining of the quality of products and services.
The process of applying statistical principals to solve the problem of controlling the quality control
of a product or service is called statistical quality control.


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Control Chart
The control chart is a graph used to study how a process changes over time. Data are plotted in
time order. A control chart always has a central line for the average, an upper line for the upper control
limit (UCL) and a lower line for the lower control limit (LCL). These lines are determined from
historical data. By comparing current data to these lines, you can draw conclusions about whether the
process variation is consistent (in control) or is unpredictable (out of control, affected by special causes of
variation).
Control charts for variable data are used in pairs. The top chart monitors the average, or the
centering of the distribution of data from the process. The bottom chart monitors the range, or the width
of the distribution. If your data were shots in target practice, the average is where the shots are
clustering, and the range is how tightly they are clustered. Control charts for attribute data are used
singly.

When to Use a Control Chart

When controlling ongoing processes by finding and correcting problems as they occur.
When predicting the expected range of outcomes from a process.
When determining whether a process is stable (in statistical control).
When analyzing patterns of process variation from special causes (non-routine events) or
common causes (built into the process).
When determining whether your quality improvement project should aim to prevent specific
problems or to make fundamental changes to the process.

Control Chart Basic Procedure

Choose the appropriate control chart for your data.
Determine the appropriate time period for collecting and plotting data.
Collect data, construct your chart and analyze the data.
Look for out-of-control signals on the control chart. When one is identified, mark it on
the chart and investigate the cause. Document how you investigated, what you learned,
the cause and how it was corrected.

Out-of-control signals

A single point outside the control limits. In Figure 1, point sixteen is above the UCL (upper
control limit).
Two out of three successive points are on the same side of the centerline and farther than 2
from it. In Figure 1, point 4 sends that signal.
Four out of five successive points are on the same side of the centerline and farther than 1
from it. In Figure 1, point 11 sends that signal.
A run of eight in a row are on the same side of the centerline. Or 10 out of 11, 12 out of 14 or 16
out of 20. In Figure 1, point 21 is eighth in a row above the centerline.
Obvious consistent or persistent patterns that suggest something unusual about your data and
your process.
Continue to plot data as they are generated. As each new data point is plotted, check for new
out-of-control signals.
When you start a new control chart, the process may be out of control. If so, the control limits
calculated from the first 20 points are conditional limits. When you have at least 20 sequential
points from a period when the process is operating in control, recalculate control limits.


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Material Management
I ntroduction
Materials management plays a very vital role in controlling the costs and reducing the
wastage, particularly in a manufacturing industry. It is most often observed that around 60 to 70 percent
of the price we pay for goods and services is towards the cost of the materials. The rest is accounted for
wages, salaries, overheads and profits.

Definitions
Materials refer to inputs into the production process, most of which are embodied in the
finished goods being manufactured. It may be raw materials, work-in-progress, finished goods, spare
parts and components operating supplies such as lubricating oil, cleaning materials and others, required
for maintenance and repairs.
Materials Management is the process of planning, organizing, controlling the materials in a
given organization.

I nventory Control
I ntroduction
I nventory control means to monitor the stock of goods used for production, distribution and
captive (self) consumption.
For a specific time period, stocks of goods are placed at some particular location. Stock of goods
includes raw-materials, work in progress, finished goods, packaging, spares, components, consumable
items, etc.
I nventory Control means maintaining the inventory at a desired level. The desired-level keeps
on fluctuating as per the demand and supply of goods.

Definitions
"I nventory control is the process whereby the investment in materials and parts carried in
stocks is regulated, within pre-determined limits set in accordance with the inventory policy established
by the management."

Economic Order Quantity Model (EOQ)
Introduction
As the name suggests, Economic order quantity (EOQ) model is the method that provides
the company with an order quantity. This order quantity figure is where the record holding costs and
ordering costs are minimized. By using this model, the companies can minimize the costs associated with
the ordering and inventory holding. In 1913, Ford W. Harris developed this formula whereas R. H. Wilson
is given credit for the application and in-depth analysis on this model.


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Definitions
The economic order quantity (EOQ) is a model that is used to calculate the optimal quantity that can
be purchased or produced to minimize the cost of both the carrying inventory and the processing of
purchase orders or production set-ups.
Economic order quantity (EOQ) is that size of the order which gives maximum economy in
purchasing any material and ultimately contributes towards maintaining the materials at the optimum
level and at the minimum cost.
I n other words, the economic order quantity (EOQ) is the amount of inventory to be
ordered at one time for purposes of minimizing annual inventory cost.

Formula
Following is the formula for the economic order quantity (EOQ) model:

Where Q = optimal order quantity
D = units of annual demand
S = cost incurred to place a single order or setup
H = carrying cost per unit
This formula is derived from the following cost function:
Total cost = purchase cost + ordering cost + holding cost

ABC Analysis (Always Better Control)
ABC analysis is a method/ Technique of classifying items, events, or activities according to
their relative importance. It is frequently used in inventory management where it is used to classify
stock items into groups based on the total annual expenditure for, or total stockholding cost of, each
item. Organisations can concentrate more detailed attention on the high value/important items.
ABC analysis is that technique of material control in which we divide our material into three
categories and investment is done according to the value and nature of that categorys
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materials. After this, we control of material according to their level of investment. We need not to
control all the categories but we have to control those materials which are in a category.
The ABC approach states that, when reviewing inventory, a company should rate items from A to C,
basing its ratings on the following rules:

A-items are goods which annual consumption value is the highest. The top 70-80% of the
annual consumption value of the company typically accounts for only 10-20% of total inventory
items.
C-items are, on the contrary, items with the lowest consumption value. The lower 5% of the
annual consumption value typically accounts for 50% of total inventory items.
B-items are the interclass items, with a medium consumption value. Those 15-25% of annual
consumption value typically accounts for 30% of total inventory items.


Types of ABC Analysis
VED Analysis (Vital, Essential, Desirable)
HML Analysis (High, Medium, Low)
FSN Analysis (Fast, Slow moving and Non-moving)
SDE Analysis (Scarce, Difficult, Easy)

1. VED Analysis

Vital: items without which treatment comes to standstill: i.e. non- availability cannot be tolerated.
Essential: items whose non availability can be tolerated for 2-3 days, because similar or alternative
items are available.
Desirable: items whose non availability can be tolerated for a long period.

Although the proportion of vital, essential and desirable items varies from hospital to hospital depending
on the type and quantity of workload, on an average vital items are 10%, essential items are 40% and
desirable items make 50% of total items available.
Although not included in scientific VED analysis, in some public organizations which are static or
inefficiently managed, there is a peculiar category of U items which can be grouped as unnecessary.
These unnecessary items get purchased due to the following reasons.


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2. HML Analysis

The High, medium and Low (HML) classification follows the same procedure as is adopted in ABC
classification. Only difference is that in HML, the classification unit value is the criterion and not the
annual consumption value. The items of inventory should be listed in the descending order of unit value
and it is up to the management to fix limits for three categories. For examples, the management may
decide that all units with unit value of Rs. 2000 and above will be H items, Rs. 1000 to 2000 M items and
less than Rs. 1000 L items.
The HML analysis is useful for keeping control over consumption at departmental levels, for deciding the
frequency of physical verification, and for controlling purchases.

3. FSN Analysis:

F, S & N stand for Fast moving, Slow moving and Non-moving items.

Fast Moving (F) = Items that are frequently issued/used
Slow Moving (S) = Items that are issued/used less for certain period of time
Non-Moving (N) = Items that are not issued/used for more than certain duration

This type of classification helps to establish and organize proper warehouse layout by locating all the fast
moving items near the dispensing window to reduce the handling efforts. Also, attention of the
management is focused on the Non-Moving items to enable decision as to whether they are in needs in
the future or they can be salvaged or disposed. This will help to improve organizations capital utilization
and cash flow.

4. SDE Analysis:

Classification based on the Scarcity and lead time:

Scarce (S) = Items which are imported and require longer lead time
Difficult (D) = Items which require more than a fortnight but less than 6 months lead time.
Easily available (E) = Items which are easily available
This type of classification helps in reducing the lead time required at least in case of vital and essential
items. Ultimately, this will reduce stock-out costs in case of stock-outs.

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Unit-3
Functional Management
I ntroduction
Among various factors of production, which are used in organization, human resource is the most
important. This is because the efficient use of physical resources (i.e. land, machinery, materials)
ultimately depends on human factor is out to good use on Various operations. The most efficient
machinery in the world will not produce at an optimum level unless the people who operate the
machinery know how to make it perform at its best and most importantly, are motivated to make their
equipment produce efficiently.

HRM means to Select, Develop, Motivate and Maintain human resources, in the organization. It first
selects the right human resources or staff (i.e. managers and employees). It trains and develops them. It
motivates them by giving them recognition and rewards. It also provides them with the best working
conditions

Definitions

"The Process of analyzing and managing organizations human resources needs to ensure satisfaction of
its strategic objectives -Management Hellriegel/ Slocum

The policies and practices involved in carrying out the people or human resources aspects of a
management position, including recruiting, screening, training and appraising.
---------Human resource management Gray Dessler.

Human Resource Management (HRM) is the function within an organization that focuses on recruitment
of, management of, and providing direction for the people who work in the organization.

Human Resource Development HRD - Definition

According to American Society for Training and Development (ASTD),

"HRD is the integrated use of :-
Training and development,
Organizational development, and
Career development to improve individual, group and organizational
effectiveness."
The part of human resource management that specifically deals with training and
development of the employees.
Human resource development includestraining an individual after he/she is first hired, providing
opportunities to learn new skills, distributing resources that are beneficial for the employee'stasks, and
any other developmental activities.

Human Resource Development (HRD) is the framework for helping employees develop their personal and
organizational skills, knowledge, and abilities. Human Resource Development includes such opportunities
as employee training, employee career development, performance management and development,
coaching, mentoring, succession planning, key employee identification, tuition assistance, and
organization development


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Personal Management and Industrial Relations (PMI R)

Personnel management can be defined as obtaining, using and maintaining a satisfied workforce. It is
a significant part of management concerned with employees at work and with their relationship within
the organization.

According to Flippo,Personnel management is the planning, organizing, compensation, integration
and maintenance of people for the purpose of contributing to organizational, individual and societal
goals.

According to Brech, Personnel Management is that part which is primarily concerned with human
resource of organization.

Nature of Personnel Management

1. Personnel management includes the function of employment, development and compensation-
These functions are performed primarily by the personnel management in consultation with other
departments.
2. Personnel management is an extension to general management. It is concerned with promoting
and stimulating competent work force to make their fullest contribution to the concern.
3. Personnel management exist to advice and assist the line managers in personnel matters.
Therefore, personnel department is a staff department of an organization.
4. Personnel management lays emphasize on action rather than making lengthy schedules, plans,
work methods. The problems and grievances of people at work can be solved more effectively
through rationale personnel policies.
5. It is based on human orientation. It tries to help the workers to develop their potential fully to
the concern.
6. It also motivates the employees through its effective incentive plans so that the employees
provide fullest co-operation.
7. Personnel management deals with human resources of a concern. In context to human
resources, it manages both individual as well as blue- collar workers.

Role of Personnel Manager

Personnel manager is the head of personnel department. He performs both managerial and operative
functions of management. His role can be summarized as :
1. Personnel manager provides assistance to top management- The top management are the
people who decide and frame the primary policies of the concern. All kinds of policies related to
personnel or workforce can be framed out effectively by the personnel manager.
2. Headvices the line manager as a staff specialist- Personnel manager acts like a staff advisor
and assists the line managers in dealing with various personnel matters.
3. As a counsellor,- As a counsellor, personnel manager attends problems and grievances of
employees and guides them. He tries to solve them in best of his capacity.
4. Personnel manager acts as a mediator- He is a linking pin between management and workers.
5. He acts as a spokesman- Since he is in direct contact with the employees, he is required to act
as representative of organization in committees appointed by government. He represents
company in training programmes

I ndustrial Relations

Industrial relations has become one of the most delicate and complex problems of modern industrial
society. Industrial progress is impossible without cooperation of labors and harmonious relationships.
Therefore, it is in the interest of all to create and maintain good relations between employees (labor) and
employers (management).
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Definitions

The term Industrial Relations comprises of two terms: Industry and Relations. I ndustry
refers to any productive activity in which an individual (or a group of individuals) is (are)
engaged. By relations we mean the relationships that exist within the industry between the
employer and his workmen. The term industrial relations explains the relationship between employees
and management which stem directly or indirectly from union-employer relationship.

I ndustrial relations are the relationships between employees and employers within the
organizational settings. The field of industrial relations looks at the relationship between management
and workers, particularly groups of workers represented by a union. Industrial relations are basically the
interactions between employers, employees and the government, and the institutions and associations
through which such interactions are mediated.

I ndustrial Relation is a relation between employer and employees, employees and employers
and employees and trade unions.and the process by which people and their organizations interact
at the place of work to establish the terms and conditions of employment. - Industrial dispute Act 1947

Functions of HR Manager:

It has two types

Managerial functions

a. Planning
b. Organizing
c. Staffing
d. Directing
e. Controlling

Operative functions

Operative functions

Procurement Development Motivation & Compensation Maintenance Integration

J ob analysis Training J ob design Health Grievances
HR planning Executive Work-scheduling Safety Discipline
development
Recruitment Career planning Motivation Welfare Teams & teamwork
Selection HRD Strategies J ob evaluation Social security Collective bargaining
Placement Performance
appraisal Participation &
Induction Compensation Incentives & benefits empowerment
administration Trade unions &
employees associations
Internal mobility Industrial relations

Operative Functions

The operative functions of HRM are related to specific activities of personnel management, viz.,
employment, development, compensation, organizational and industrial relations. These functions are to
be performed in conjunction with managerial functions

Procurement function:The first operative function of personnel management is procurement. It is
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concerned with procuring and employing people who possess necessary skills, knowledge and aptitude.
Under its purview you have job analysis, man power planning, recruitment, selection, placement,
induction, and internal mobility.

J ob analysis: It is the process of collecting information relating to the operation and responsibilities
pertaining to a specific job.
Human resource planning: It is a process of determining and assuring that the organization will have
an adequate number of qualified persons, available at proper times, performing jobs which would meet
their needs and provide satisfaction for the individuals involved.
Recruitment: It is the process of searching for prospective employees and stimulating them to apply for
jobs in the organization.
Selection: It is the process of ascertaining qualification, experience, skill and knowledge of an applicant
with a view to applicant with a view to appraising his/her suitability to the job in question.
Placement: It is the process that ensures 360 degrees fit, matching the employees qualification,
experience, skills and interestwith the job on offer. It is the personnel managers responsibility to
position the right candidate at the right level.
I nduction and Orientation: Induction and orientation are the techniques by which a new employee is
rehabilitated in his surroundings and introduces to the practices, policies, and people.
I nternal Mobility: The movement of employees form one job to another through transfers and
promotions is called internal mobility. Some employees leave an organization due to various reasons
leading to resignation, retirement and even termination. These movement are known as external
mobility.

Development:It is the process of improving, moulding, changing and developing the skills,
knowledge, creative ability, attitude, values and commitment based on present and future requirement
both at the individuals and organizations level. This function includes.
Training: Training is a continuous process by which employees learn skills, knowledge, abilities and
attitudes to further organizational and personnel goals.
Executive development: It is a systematic process of developing managerial skills and capabilities
through appropriate programmers.
Career Planning and Development: It is the planning of ones career and implementation of career
plans by means of education, training, job search and acquisition of work experiences. It includes
succession planning which implies identifying developing and tracking key individuals for executive
positions.
Human Resource Development: HRD aims at developing the total organization. It creates a climate
that enables every employee to develop and use his capabilities in order to further oth individual and
organization goals.

Motivation and Compensation: It is a process which inspires to give their best to the organization
through the use of intrinsic (achievement, recognition, responsibility) and extrinsic (job design, work
scheduling, appraisal based incentives) rewards.
J ob design: Organizing tasks, and responsibilities towards having a productive unit of work is call job
design. The main purpose of job design is to integrate the needs of employees to suit the requirement of
an organization.
Work scheduling: Organizations must realize the importance of scheduling work to motivate employees
through job enrichment, shorter work, weeks flexi-time, work sharing work assignments. Work
scheduling is an attempt to structure work, incorporating the physical, physiological and behavioral
aspects of work.
Motivation: Combine forces that allow people to behave in certain ways is an integral aspect of
motivation. Managers generally try to motivate people through properly administrated rewards (monetary
and non-monetary).
J ob evaluation: Organizations formally determine the value of jobs through the process of job
evaluation. J ob evaluation is a systematic process of determining the relative worth of jobs in order to
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establish which jobs should be paid more than others within the organization.
Performance appraisal: After an employee has be selected for job has been trained to do it and has
worked on it for a period of time, his performance should be evaluated. It is a process of deciding how
many employed to do their jobs. It is a method of evaluating the behavior of employees at the work
place and normally includes both the quantitative and qualitative aspects of job performance .
Compensation administration: Compensation administration is the process of dividing how much an
employees should be paid. The important goals are design a low-cost pay plan that will attract, motivate
and retain competent employees-which is also perceives to be fair by these employees.
I ncentives and benefits: In addition to basic wage structure, most organizations now a days offer
incentive compensation based on actual performance. Unlike incentives, benefits and services are offered
to all employees as required by law including social security, insurance, workmens compensation, welfare
amenities

Maintenance:It aims at protecting and preserving the physical and psychological health of
employees through various welfare measures.
Health and safety: Managers at all levels are expected to know and enforce safety and health
standards throughout the organization. They must ensure a work environment that protects employees
from physical hazards, unhealthy conditions and unsafe acts of other personnel.
Employee welfare: It includes the services, amenities and facilities offered to employees within or
outside the establishment for their physical, psychological and social well-being. Housing, transportation,
education and recreation facilities are all includes in the employee welfare package.
Social security: Management provide social security to their employees in addition to fringe benefits. It
includes workmans compensation to those workers who are involved in accidents, maternity benefits to
woman employees, sickness benefits and medical benefits, disablement benefits/allowances, dependent
benefits and medical benefits, disablement benefits, retirement benefits like provident fund , pension
gratuity.

Integration function: This tries to integrate the goals of an organization with employee aspirations
through various employee-oriented programs like readdressing, like redressing grievances promptly,
instituting proper disciplinary measures, empowering people to decide things independently encouraging
a participative culture, offering constructive help to trade unions etc.
Grievance redressal: A grievance is any factor involving wages, hours or conditions of employment
that is used as a complaint against the employer. Constructive grievance handling depends first on the
managers ability to recognize, diagnose and correct the causes of potential employee dissatisfaction
before it covers into a formal grievance.
Discipline: It is the force that prompts an individual or a group to observe the rules, regulations and
procedures, which are deemed necessary for the attainment of an objective.
Teams and teamwork:self-managed teams have emerged as the most important formal groups in
todays organizations. They enhance employee involvement and have the potential to create positive
synergy by increasing worker interaction; they create camaraderie among team members. Teams have
inherent strengths which ultimately lead to organizational success at various levels.
Collective bargaining: It is a process of agreeing on a satisfactory labor contract between
management and union. The contract contains agreements about the conditions of employment such as
wages, hours, promotion and discipline; lay-off, benefits vacations rest pause and the grievance
procedure.
Employee participation and empowerment: Participation means sharing the decision-making power
with the lower ranks of an organization in an appropriate manner. When workers participate in
organizations decisions they are able to see big picture clearly and also how their actions would impact
the overall growth of the company. They can offer the feedback immediately based on their experiences
and improve the quality of decisions.
Trade unions and employees association: Trade union is an association either of employees or
employers or independent workers. It is a relatively permanent a body formed by workers with the
objective of countering exploitation and harassment. It strives towards providing economic and social
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benefits to the labor community.
I ndustrial Relations: Harmonious industrial relations between labor and management are essential to
achieve industrial growth and higher productivity.

Wage Payment
Payment for labor or services to a worker, especially remuneration on an hourly, daily, or weekly basis or
by the pieceWages" means compensation for labor or services rendered by an employee, whether the
amount is determined on a time, task, piece, commission or other basis of calculation

Time Wage System
Under this system, wages are paid on the basis of time spent on the job irrespective of the amount of
work done. The unit of time may be a day. A week, a fortnight or a month. In the past, daily wages have
been the most common basis and, therefore, it came to be known as the Day Wage System.

Piece Wage System
Under this system, remuneration is based on the amount of work done or output of a worker. One unit of
output is considered as one piece and a specific rate of wage is paid per piece. Greater id the number of
pieces produced by a worker, higher is his remuneration. Thus, a workman is paid in direct proportion to
his output. It is called payment by results.

J ob Evaluation

Definitions
J ob evaluation is a formal and systematic approach to analyzing jobs and categorizing them in regard
to their relative worth in an organization. J ob evaluations are usually based on compensation factors (skill
set needed to perform the job, working conditions and job duties) rather than on the employee.
J ob evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an
organization

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BENEFI TS OF J OB EVALUATI ON

It helps the management in establishing an objective rationale for acceptable wage-structure.
It takes into account many factors other than the skill difference.
It helps in skill match with job. It is helpful in the selection, training and promotion of
workers.
It establishes cordial labour relationship.
It helps in determining the rate of a new job.

J ob Evaluation Methods

There are 4 basic and traditional systems of job evaluation:

1. Ranking System
2. J ob Classification or Grading system
3. Factor Comparison System, and
4. Point System.

Ranking: The simplest and most common technique for job evaluation employs a system whereby
human resources associates or consultants rank jobs in an organization based on a single factor, such as
difficulty or education required to effectively perform the job. They then base compensation on ranking
order with the highest ranked position earning the highest pay. This least expensive method of job
evaluation works well for smaller businesses with tight budgets. Although this method can prove
effective, its analytical system does not reach deep enough to determine other things associated with job
evaluation, such as the value of the job to the individual organization or experiential competencies
necessary to properly perform the job.
Point Method: A more complex job evaluation technique, the point method, requires evaluators to
assign points to a number of compensation characteristics based on skill level, responsibility, effort
required and working conditions. They then assess the level to which each of these are present in the job
and assign points accordingly. The jobs with the highest points garner the highest pay with this popular
technique.
Factor Comparison: Factor comparison, a sophisticated, yet time-consuming method, utilizes the
techniques found in several job evaluation schemes. The first step in factor comparison involves
assessing each job based on characteristics used in the point method, but without assigning points. Next,
evaluators analyze their findings against the market rate of pay for the compensation factors ranked in
the first step. Finally, they establish external benchmark jobs that they use to compare to the job and its
compensable characteristics to determine rate of pay.
J ob Classification:The classification method requires that evaluators categorize jobs into groups with
relatively the same value to a business. The groups are commonly called grades. Evaluators categorize
the grades with similar compensation characteristics together. The characteristics may include level of
responsibility required, competencies required and physical exertion necessary to perform the job. Those
evaluating the positions may choose to include other characteristics, such as education or security
clearance levels required.

Merit Rating
I ntroduction
It is very well known that the workers differ in their abilities, skills, and knowledge and aptitudes.
By proper education and training these differences may become small. Yet these differences remain. It is
necessary for management to know these differences so as to identify special skills and growth potential
of their employees to occupy higher positions of responsibilities through promotions. It is also necessary
to know these differences so that each is paid according to his merits. Higher wages are paid to
employees who perform continuously better. In order to identify these differences, performance
evaluation is needed. This process of performance evaluation of workers is called merit rating.
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Definitions

Merit rating may be defined as a systematic, periodic and objective performance evaluation
of labour in order to recognize and reward their contributions to the organization, and also identify their
potential to hold higher level appointments and jobs.
Merit-rating is associated with performance appraisal of an employee. This is a systematic
approach for evaluating the performance of an employee on the job, which he performs. This is also
called as performance appraisal, personnel rating and employee evaluation.

Advantages of Merit Rating

Merit-rating plays very important role in the human resource administration of a firm. Its
advantages are:

Systematic evaluation of employees
Facilitates matching of job with individual.
Facilitates promotion related decisions.
Facilitates training related decisions.
Helpful in identifying weakness of the employees which may systematically be removed.
Provides base for guidance and counseling for the employees.
Develops healthy competition among workers to improve performance.
Serves as motivational tool for employees.
Provides objective basis for bonus, incentive wage, and salary related decisions.
Improves employee-employer relationship due to increased trust and confidence.
Sound base for negotiation with trade union

Methods of Merit Rating
Ranking Method:-This is the simplest method in which all the employees are compared with one
another. They are ranked in descending order from best to worst. This method has a serious limitation
that it is not diagnostic to point the specific areas of weakness and strength of a worker. The method is
highly subjective. The difference in rank does not provide the exact nature or quantum of merit-
differential. There are chances of personal bias of the rater.
Paired Comparison Method:-In this method, each member of the group is compared with remaining
other members of the group. Each judgment is recorded in terms of score. These scores are added up to
find the final ranking of each person.

Marketing Management
I ntroduction
Marketing is an essential function of a modern organization whether it deals in products or
services. Gone are th days when a good product was sold on its own. Marketing constitutes an essential
function of modern business organization. However customer is the king to decide what is good quality or
otherwise.

Definitions

Marketing is a social process by which individuals and groups obtain what they need and want through
creating, offering and freely exchanging products and services of value with others-----Philip Kotler

The aim marketing is to know and understand the customers requirements so well that the product or
services designed accordingly, are sold by themselves. Ideally marketing should prepare a customers
buy--------Peter F. Drucker

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Marketing is the process of determining consumer demand of a product or services motivating its sales
and distributing it into ultimate consumption---------------E.F.L. Brech

Functions of Marketing

The marketing process performs certain activities as the goods or services move from producer to
consumer. Every firm does not perform all these activities or jobs. However, any company that wants to
operate its marketing system successfully must carry them out. The following marketing tasks have been
recognized for a long time.
2. Selling: It is core of marketing. It is concerned with the persuasion of prospective buyers to actually
complete the purchase of an article. Setting pays an important part in realizing the ultimate aim of
earning profit. Selling is enhanced by means of personal selling, advertising, publicity and sales
promotion.
3. Buying: It involves what to buy, what quality, how much, from whom, when and at, what price. People
in business buy to increase sales or to decrease costs. Purchasing agents are much influenced by quality,
service and price. The products that the retailers buy for resale are determined by the need and
preferences of their customers.
4. Transportation: Transport is the physical means whereby goods are moved from the places where they
are produced to those they are needed for consumption. Transportation is essential from the
procurement of raw materials to the delivery of finished products to the customers places. Marketing
relies mainly on railroads, tracks, waterways, pipelines and air transport. The type of transportation is
chosen on several consideration such as suitability, speed and cost.
5. Storage: It involves the holding of goods in proper condition from the time they are produced until they
are needed by consumers (in case of finished products) or by the production department (in case of raw
materials and stores). Storing protects the goods from deterioration and helps in carrying over surplus for
feature consumption or use in production. Goods may be stored in various warehouses situated at
different places. Storing assumes greater importance when production is seasonal or consumption may
be seasonal. Retail firms are called stores.
6. Standardization and Grading: The other activities that facilitate marketing are standardization and
grading. Standardization means establishment of certain standards or specifications for products based
on intrinsic physical qualities of any commodity. This may involved quantity (weight or size) or it may
involve quality (colour, shape, appearance, material, taste, sweetness etc). Government may also set
some standards e.g., in case of agricultural products. A standard conveys a uniformity of the products.
Grading means classification of standardized products into certain well-defined classes or
groups. It involves the division of products into clauses made up of unit processing similar characteristics
of size and quality. Grading is very important for raw material (such as fruits and cerials), mining
products (such as coal, iron-ore and mangenese) and forest products (such as timber). Branded
consumer products may bear grade levels, A B C.

7. Financing: It involves the use of capital to meet financial requirements of the agencies dealing with
various activities of marketing. The services of providing the credit and money needed to meet the cost
of getting merchandise into the hands of the final user is commonly referred to as finance, function in
marketing. In marketing, finances are needed for working capital and fixed capital, which may be secured
from three sources onward capital, bank loans and advances, and trade credit (provided by the
manufactures to wholesaler and by the wholesaler to the retailers).

8. Risk Taking Risk means lose due to some unforeseen circumstances in future. Risk-bearing in marketing
refers to the financial risk inherent in the ownership of goods held for an anticipated demand, including
the possible losses due to a fall in price and the losses from spoilage, depreciation, obsolescence, fire and
floods or any other loss that may occur with the passage of time. From production of goods to its selling
stage, many risks are involved due to changes in marker conditions, natural causes and human factors.
Changes in fashions or interventions also cause risks. Legislative measures of the government may also
cause risks.
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9. Market I nformation: The only sound foundation, on which marketing decisions may be based, is
correct and timely market information. Right facts and information reduce the aforesaid risks and thereby
result in cost reduction. Business firms collect, analyze and interpret facts and information from internal
sources, such as records, sales people and findings of the market research department. They also seek
facts and information from external sources, such as business publications, government reports and
commercial research firms. Retailers need to know about sources of supply and also about customers
buying motives and buying habits. Manufacturers need to know about retailers and about advertising
media. Firms in both these groups need information about competitors activities and about their
markets. Even ultimate consumers need market information about availability of products, their quality
standards, their prices, and also about the after-sale service facility Common sources for consumers are
sales people, media advertisements, colleagues etc.

Marketing Strategies based on Product Life Cycle (PLC)

The Product Life Cycle (PLC) is used to map the lifespan of a product. There are generally four stages
in the life of a product. These four stages are the I ntroduction stage, the Growth stage, the
Maturity stage and the Decline stage. The following graph illustrates the four stages of the PLC:
One product's entire life cycle could be over in a few months. Another product could last for years. Also,
the Introduction stage may last much longer than the Growth stage and vice versa.

The Four Stages of the Product Life Cycle


The product life cycle is defined as the period that starts with the initial product design (research and
development) and ends with the withdrawal of the product from the marketplace. It is characterized by
specific stages, including research, development, introduction, maturity, decline, and finally obsolescence
as the product is removed from the market (discontinued). Each stage is often linked with changes in the
flows of raw materials, parts and distribution to markets as production (input costs) is adjusted to face
increasing competition. Conventionally, four main stages compose a product's life cycle:
1) I ntroduction: This stage mainly concerns the development of a new product, from the time is was
initially conceptualized to the point it is introduced on the market. The great majority of ideas do not
reach the promotion stage. The corporation having an innovative idea first will often have a period of
monopoly until competitors start to copy and/or improve the product (unless a patent is involved as it is
the case in industries such as pharmaceuticals). Generally, associated freight flows take place within
developed countries and/or close to markets where to product is likely to be adopted.
2) Growth: If the new product is successful (many are not), sales will start to grow and new competitors
will enter the market (by replicating the product or developing new features on their own), slowly eroding
the market share of the innovative firm. The product starts to be exported to other markets and
substantial efforts are made to improve its distribution since competition mainly takes place more on the
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innovative capabilities of the product than on its price. This phase tends to be associated by high levels of
profits and a fast diffusion of the product.
3) Maturity: At this stage, the product has been standardized, is widely available on the market and its
distribution is well established. Competition increasingly takes place over cost and a growing share of the
production is moved to low cost locations, particularly for labor intensive parts. Associated freight flows
are consequently modified to include a greater transnational dimension.
4) Decline: As the product is becoming obsolete, production essentially takes place in low costs locations.
Production and distribution economies are actively sought as profit margins decline. Eventually, the
product will be retired, an event that marks the end of its life cycle.

Conventionally, as a product went through its life cycle the least profitable functions were relocated to
lower costs locations, notably in developing countries. This dichotomy is being challenged since it is
becoming more common, even for high technology products, that the manufacturing of a new product
immediately takes place in a low labor cost location. Multinational corporations have global production
networks that enable them to efficiently allocate design, production and distribution according to global
factors of production. This also relies on outsourcing and subcontracting.

Channels of Distribution
I ntroduction

A channel of distribution or trade channel is defined as the path or route along which goods
move from producers or manufacturers to ultimate consumers or industrial users. In other
words, it is a distribution network through which producer puts his products in the market and passes it
to the actual users. This channel consists of: - producers, consumers or users and the various
middlemen like wholesalers, selling agents and retailers (dealers) who intervene between the
producers and consumers. Therefore, the channel serves to bridge the gap between the point of
production and the point of consumption thereby creating time, place and possession utilities.

Definitions

A channel of distribution or trade channel is defined as the path or route along which goods move from
producers or manufacturers to ultimate consumers or industrial users.

A distribution channel consists of the set of people and firms involved in the transfer of title to a product
as the product moves from producer to ultimate consumer or business user.

"A marketing or trade channel is a set of interdependent organizations involved in the process of
marketing a product or service available for use or consumption"


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These channels of distribution are broadly divided into four types:-

Producer-Customer: This is the simplest and shortest channel in which no middlemen is involved and
producers directly sell their products to the consumers. It is fast and economical channel of distribution.
Under it, the producer or entrepreneur performs all the marketing activities himself and has full control
over distribution. A producer may sell directly to consumers through door-to-door salesmen, direct mail or
through his own retail stores. Big firms adopt this channel to cut distribution costs and to sell industrial
products of high value. Small producers and producers of perishable commodities also sell directly to local
consumers.
Producer-Retailer-Customer: This channel of distribution involves only one middleman called
'retailer'. Under it, the producer sells his product to big retailers (or retailers who buy goods in large
quantities) who in turn sell to the ultimate consumers. This channel relieves the manufacturer from
burden of selling the goods himself and at the same time gives him control over the process of
distribution. This is often suited for distribution of consumer durables and products of high value.
Producer-Wholesaler-Retailer-Customer: This is the most common and traditional channel of
distribution. Under it, two middlemen i.e. wholesalers and retailers are involved. Here, the producer sells
his product to wholesalers, who in turn sell it to retailers. And retailers finally sell the product to the
ultimate consumers. This channel is suitable for the producers having limited finance, narrow product line
and who needed expert services and promotional support of wholesalers. This is mostly used for the
products with widely scattered market.
Producer-Agent-Wholesaler-Retailer-Customer: This is the longest channel of distribution in which
three middlemen are involved. This is used when the producer wants to be fully relieved of the problem
of distribution and thus hands over his entire output to the selling agents. The agents distribute the
product among a few wholesalers. Each wholesaler distribute the product among a number of retailers
who finally sell it to the ultimate consumers. This channel is suitable for wider distribution of various
industrial products.
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Unit-4
Project Management (PERT/ CPM)
I ntroduction
In the process of changing and economic development of country, project management plays an
important role. The importance of project management has come to relies only recently. Since the
introduction of planning in our country we have been investing large amount of money in projects related
to industry, minerals, power, transportation, irrigation and education etc. with a view to improve the
socio-economic conditions. These projects are designed with the aim of efficient management earning
adequate returns to improve for future developments with their own resources. It is observed that
number of projects have taken longer time to complete than was initially estimated, benefits from them
have been larger than originally planned and consequently the returns on capital have been smaller than
expected. I t was realized that these difficulties are mainly due to incomplete project planning
and analysis. Therefore, it is necessary to have scientific and systematic management in
project planning, development and implementation. This will ensure completion of project within
customers specifications in time and within budget.

Project Definitions

Project is a complex of non-routine activities that must be completed with a set amount of resources and
within a set time interval..Clifford Gray.

Project is a one time job that has defined starting and ending dates, clearly specified objective, or scope
of work to be performed a predefined budget and usually a temporary organization that is dismantled
once the project is completed..J ames P. Lewis.

Project Management
Project management is the art of creating the illusion that any outcome is the result of a
series of predetermined deliberate acts when in fact it was dumb luck.
Project management is involves the co-ordination of group activity wherein the manager,
plans, organizes, staffs, directs and control to achieve an objective with constraints on time, cost and
performance of the end product.
Project management is the discipline of defining and achieving targets while optimizing the
use of resources such as time, money, people, and space etc. It involves project planning and project
monitoring.
Project management is the art of directing and coordination human and material resources
throughout the life of a project by using modern management techniques to achieve predetermined
objectives of scope, cost, time, quality and participation satisfaction.

PERT (Program/ Project Evaluation Review Technique)
PERT is basically a method/tool for analyzing the tasks in completing a given project, especially
the tasks involved in completing a given project, especially the time needed to complete each task, and
identifying the minimum time needed to complete the total project.
PERT is a management technique in which we try to exercise logical disciplines in planning and
controlling projects. The PERT is a network techniques which uses a network diagram consisting of
events.
It is a tool to evaluate a given project/program and review the progress made in it from time to
time. PERT is concerned with estimating the time for different stages in such a program/project and find
out the critical path is that is which consumes the maximum resources.


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Merits of PERT
1. The critical path activities that directly impact the completion time.
2. The activities that have slack time and that can lend resources to critical path activities
3. Activity starts and end dates.
4. It draws attention of the management to the critical activities of the project.
5. It enables use of statistical analysis.
6. It makes possible a forward looking type of control.
7. It provides up to date information through frequent reporting, data processing and programme
analysis.
8. It helps in formulation a new schedule when the existing ones cannot meet the situation.
Limitations of PERT
1. It does not help in routine planning of the recurring events.
2. It does not lay any emphasis on the cost of a project. It lays emphasis only on time.
3. It does not consider the matter of resources required for various types of activities of a project.
CPM (Critical Path Method)
A critical path is a sequence of connected activities that lead from the beginning of
the project to the end project. The longest path in the network is called critical path.
Identifying the critical path is of great importance as it determines the duration of the entire project. If
any activity on the critical path is delayed, then the entire project will be delayed.
A primary objective of CPM/ PERTanalysis is to determine the minimum time required for
completion of the entire project. The minimum time required for completion is equal to the longest time
path or sequence of connected activities, through the network which describes the precedence
relationships of all projects activities. The longest time path is also referred to as the critical path.
A critical path method is project management tool, used to formulate a time frame for a
project in order to determine where potential delays are most likely to occur.
It assumes that the time required to complete an activity can be predicted fairly accurately.
Important factor, CPM involves a trade-off between costs and time. It involves determining an optimum
duration for the project, which is a minimum duration which involves the lowest overall costs.

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Advantages of CPM

1. Helpful for scheduling, monitoring, and controlling projects.
2. The activities and their outcomes can be shown as a network.
3. Displays dependencies to help scheduling.
4. Evaluates which activities can run parallel to each other.
5. Determines slack and float times.
6. Widely used in industry.
7. Can define multiple, equally critical paths.
8. It determines project duration, which minimized the sum of direct and indirect costs.

Disadvantages of CPM

1. It can be complicated and complexity increases for larger projects.
2. It does not handle the scheduling of personnel or the allocation of resources.
3. The critical path is not always clear and needs to be calculated carefully.
4. Estimating activity completion times can be difficult.


Partial list of PERT & CPM techniques in project management

1. Construction of project such as buildings, highways, houses or bridges.
2. Preparation of bids and proposals for large projects such as multipurpose projects.
3. Maintenance and planning of oil refineries, ship repairs and other such large operations.
4. Development of new weapon systems, new product and services.
5. Manufacture and assembly of large items such as aeroplanes or ships
6. Simple projects such as home re-modeling, housekeeping or painting and so on.


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Difference Between PERT and CPM

SL No PERT CPM
1 It is a probabilistic model It is a deterministic model
2 It is an event oriented It is an activity oriented
3
It is based on three time estimates (a) Optimistic
time (to), Pessimistic time (tP), Most likely time (tm).
Here, time estimates are based on
past/historical data
4
It is known for non-repetitive jobs like research and
development programs
It is used for repetitive jobs like
residential construction.
5 It does not deal with concept of crashing It deals with concept of crashing
6 It has nothing to do with cost of project It concentrates on time/cost trade off
7 It makes use of dummy activities It does not use dummy activities
8
PERT terminology includes network diagram, event,
slack, and so on.
CPM terminology involves arrow diagram,
nodes, and float.

Development of Network
Once the project is selected, the focus shifts to its implementation. This involves the completion
of numerous activities by employing resources like men, materials, machine, money and time. So that a
project on paper is translated into concrete reality. The activities of project have inter-relationships. For
proper planning, scheduling and control of the activities of a project, with their constraints on the
availability of resources, network techniques have been found quite useful. It is well accepted that the
present day projects are complex in nature, involving huge investments over a period of time and come
across multitude of problems. In order to accomplish the intended objectives as also to optimize use of
scarce resources, it has been felt that the network techniques facilities in planning, financing and
scheduling a project on scientific basis.
The network concept of project management has developed in an evolutionary way in many
years. Up to the end of 18
th
century, the decision making in general and project management in
particular was depended primarily on the managerial capabilities, experience, judgment and academic
background of the managers.

Project Crashing
The analysis and control of a project cost is an important function of project management. By
controlling the cost and duration of individual activities, total project cost and total project duration can
be controlled to strike a balance between the two and to optimize the project schedule. To cut down
the project duration, some activities on the critical path have to be expedited or crashed by
employing additional resources. The purpose of expediting may be to reach an optimum project
schedule or to complete the project in some specified duration.
The project manager is confronted with having to reduce the scheduled completion time of a
project to meet a deadline. Project duration can often be reduced by assigning more labor to project
activities, in the form of over time, and by assigning more resources, such as material, equipment, etc.
However, the additional labor and resources increase the project cost. So, the decision to reduce the
project duration must base on an analysis of the trade-off between time and cost.
Project crashing is a method for shortening the project duration by reducing the time of one or
more of the critical project activities to less than its normal activity time. The object crashing is to reduce
project duration while minimizing the cost of crashing.
For example, if a software development project takes 10 days for four system analysts and 30
programmers, the direct cost, in this case, involves the salaries paid for this staff for days. In case the
project has to complete within six days, more staff have to recruit at different levels or the present staff
have to work at two shifts, and more system analysts have to be employed, and thereby, the direct costs
increase steeply. Time factor plays a pivotal role in determining the quantum of direct costs. Direct costs
in normal time are lower than those in crash time.
Indirect costs are those costs that are determined per day. Some of the examples for indirect
costs are supervisory personal salaries, suppliers, rent, interest on borrowings, advertisement,
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depreciation, other fixed charges such as bonus to the staff, and so forth. The firm has to spend these
irrespective of its level of business. These costs are directly proportional to the number of days of the
duration of the project. If the project duration is reduced, the indirect cost also reduced. Indirect costs
per day are fixed. However, this assumption holds good only in the short run. In the long run, all cost are
variable. The more number of days in the project duration, the more is the total indirect cost.
In the above example of the software development project taking 10 days, the indirect costs
work out to Rs. 3,00,000 if the indirect cost per day amount to Rs. 30,000. Where the project is to
completed within six days by pumping additional inputs in terms of staff and systems, the indirect costs
will come down to Rs 1,80,000 (=6x Rs. 30,000 per day).

Normal Cost:-It is the cost that is incurred if the project is allowed to take its normal duration of time.
Crash Cost:-It is the cost incurred to reduce activity duration to its minimum.
Normal Time:-It is the time required for a project to be completed a normal cost under normal
circumstances.
Crash Time:-It is the possible time to which the duration of the project could be reduced by pumping
additional resources. There may be economic benefits in completing the project ahead of schedule.

Cost Slope:-It is the amount that has to be spent over and above the normal costs direct cost for
reducing the duration by one unit of time
Or
Cost slope is defined as the additional cost for reducing one unit of time, assuming a given rate of
increase in direct cost with decrease in one unit of time.

Crash Cost-Normal Cost
Cost Slope= -----------------------------
Normal Time-Crash Time

CC NC
= ---------
NT - CT
OBJ ECTI VE OF CRASHING
To reduce the scheduled completion time to reap the results of the project sooner.
As project continues over time, the teams consume indirect costs.
There may be direct financial penalties for not completing a project on time.


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Unit-5
Strategic Management
I ntroduction
The word strategy is derived from the Greek word stratgos; stratus (meaning army) and
ago (meaning leading/moving).
Strategy is an action that managers take to attain one or more of the organizations goals.
Strategy can also be defined as A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed
strategic planning process.
A strategy is all about integrating organizational activities and utilizing and allocating the scarce
resources within the organizational environment so as to meet the present objectives. While planning a
strategy it is essential to consider that decisions are not taken in a vaccum and that any act taken by a
firm is likely to be met by a reaction from those affected, competitors, customers, employees or
suppliers.

Features of Strategy

Strategy is Significant because it is not possible to foresee the future. Without a perfect foresight,
the firms must be ready to deal with the uncertain events which constitute the business
environment.
Strategy deals with long term developments rather than routine operations, i.e. it deals with
probability of innovations or new products, new methods of productions, or new markets to be
developed in future.
Strategy is created to take into account the probable behavior of customers and competitors.
Strategies dealing with employees will predict the employee behavior.

Definitions
Strategic Management is all about identification and description of the strategies that
managers can carry so as to achieve better performance and a competitive advantage for
their organization. An organization is said to have competitive advantage if its profitability is higher
than the average profitability for all companies in its industry.
The strategic management process means defining the organizations strategy. It is
also defined as the process by which managers make a choice of a set of strategies for the organization
that will enable it to achieve better performance.
Strategic management is a continuous process that appraises the business and industries in
which the organization is involved; appraises its competitors; and fixes goals to meet the entire present
and future competitors and then reassesses each strategy.
Strategic management consists of the analysis, decisions, and actions an organization
undertakes in order to create and sustain competitive advantages.
Strategic management is concerned with the analysis of strategic goals (vision, mission, and
strategic objectives) along with the analysis of the internal and external environment of the organization.

Strategic Management is a way in which strategists set the objectives and proceed about attaining
them. It deals with making and implementing decisions about future direction of an organization. It helps
us to identify the direction in which an organization is moving.

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Vision, Mission, Goal & Objectives
Vision and mission statements play an important role in strategy development by providing
vehicles to generate and screen strategic options. They also provide organizational identity and
understanding of business directions.

Vision
Dream or a picture to be achieved ultimately.Created by consensus.Forms mental image of
future to which people can align. Describes something possible, not necessarily predictable.Provides
direction and focus.Pulls people, who hold it, towards it.

A Vision Statement defines what your business will do and why it will exist tomorrow and it has
defined goals to be accomplished by a set date. A Vision Statement takes into account the current status
of the organization, and serves to point the direction of where the organization wishes to go.

Your Vision Statement is a marketing tool and a business development tool because it announces your
companys goals and purpose to your employees, suppliers, customers, vendors, and the media.

In concert with your Mission Statement, your Vision Statement will help you define the future success for
your business and what your business hopes to become.

Your goals will be identified by measuring the gap between where you are today (your Mission
Statement), and where you want to be tomorrow (your Vision Statement), and then defining strategies
(goals) to close that gap. When youve achieved your goal, its time to revisit your Vision Statement and
begin setting new goals.

Your Vision Statement must inspire and motivate staff, instill confidence, and represent your business by
articulating a common vision of the future.

For these reasons, a vision statement is essential for any small business.

If you have already created your Mission Statement then creating your Vision Statement will not be as
much work; it is likely that many elements of your Vision Statement will have been uncovered. That said
your Vision Statement will still require time, patience, guidance, research, a little sole searching and lots
of honesty just like your Mission Statement required.

Because it is so important it is recommended you have a coach or mentor work with you.

Vision Statements and Mission Statements should clearly and concisely convey the direction of the
organization.

Characteristics of a Good Vision Statement
There is no one formula to develop a vision. What matters is its appropriateness to UH Hilo and
the direction it sets for the institution. There are though some general principles that may be helpful to
us:

Be inspirational:-The vision statement is supposed to challenge, enthuse and inspire. Use powerful
words and vivid phrases to articulate the kind of institution you are trying to become. This is your chance
to lift your institution's gaze above the grind of day-to-day gripes and problems and to focus attention on
'the bigger picture' and the potential rewards that wait.
Be ambitious:-If you set your sights on being 'within the top 10' the chances are that the bestyou will
come is 10th. If your real aim is to hit the top 5, why not say so and go for broke? What targets you set
and how high you aim will, in them, also say something about you as an organization. Ambitious, perhaps
even audacious targets will help create the impression of an organization that is going places, that aims
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high and demands high standards from its staff and students in a way that comfortable, 'middle-of-the-
road' benchmarks will not.
Be realistic:-This may sound odd following on immediately from a call to 'Be ambitious', perhaps even
contradictory, but it is an important part of the balancing act that is required. For just as the purpose of
the vision is to inspire and enthuse, it is equally important that this ambition is tempered by an
underlying sense of realism. People need to believe that what is envisaged is actually achievable;
otherwise there is no reason for them to believe or buy in to it. It is perfectly possible to be both
ambitious and realistic and it is through successfully marrying these two forces that the best vision
statements will be formed. Stating that you will become 'ranked in the top 3 in the student satisfaction
league table within 5 years' may be both ambitious and realistic if you currently sit at number 7, but
sound far less convincing if you currently reside at number 57
Be creative:-Albert Einstein once said that 'imagination is more important than knowledge.' Of
course, there is nothing wrong with saying that you will 'deliver world-class learning and teaching
standards but it is probably a safe bet that at least a dozen other institutions will be saying the same
thing. J ust as a commercial company may need to think creatively in order to identify gaps in the market,
so too you may need to think imaginatively about what your vision is and how you describe it to help
stand out from the crowd.
Be descriptive:-Unlike with your mission statement, there is no pressure to pare your vision down to
the bone. Of course you want to be concise (indeed many of the best examples of memorable visions to
tend to be so), but there is no need to enforce an arbitrary limit on its length. Take as much space as you
need to get your vision across
Be clear:-As with your mission statement it pays to avoid jargon, keep sentences short and to the point
and use precise, uncluttered language. Otherwise you risk diluting or losing your message amongst the
background 'noise'
Be consistent:-Though bearing in mind their different purposes, there should still be an element of
continuity between your mission and vision statements, or at least some careful thought and discussion
given as to why this is not the case. At the same time, the vision need not be constrained by the current
remit of the mission. Perhaps the institution is keen to explore new areas in the future: to become the
region's conference venue of choice, for example, in which case this would need to be reflected in the
mission statement in due course.

Examples of Vision Statements

Peace - United Nations
There will be a personal computer on every desk running Microsoft software. [Short, simple,
unequivocal, memorable and long term] - Microsoft
Our vision is every book ever printed in any language all available in 60 seconds [Simple, clear, bold,
inspiring] - Amazon Kindle
GM's vision is to be the world leader in transportation products and related services. We will earn our
customers' enthusiasm through continuous improvement driven by the integrity, teamwork, and
innovation of GM people. [I t is not short, it is not simple, it is not memorable and contains too
many words open to interpretation of meaning] General Motors
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Mission
Statement of business.States the business reason for the organization's existence.
Does not state an outcome.Contains no time limit or measurement.Provides basis for decisions on
resource allocation and appropriate objectives.Defines current and future business in terms
of product, score, customer, reason, and market price.

A Vision Statement defines what your business will do and why it will exist tomorrow and it has defined
goals to be accomplished by a set date. A Vision Statement takes into account the current status of the
organization, and serves to point the direction of where the organization wishes to go.

Your Vision Statement is a marketing tool and a business development tool because it announces your
companys goals and purpose to your employees, suppliers, customers, vendors, and the media.

In concert with your Mission Statement, your Vision Statement will help you define the future success for
your business and what your business hopes to become.

Your goals will be identified by measuring the gap between where you are today (your Mission
Statement), and where you want to be tomorrow (your Vision Statement), and then defining strategies
(goals) to close that gap. When youve achieved your goal, its time to revisit your Vision Statement and
begin setting new goals.

Your Vision Statement must inspire and motivate staff, instill confidence, and represent your business by
articulating a common vision of the future.

For these reasons, a vision statement is essential for any small business.

Examples of Mission Statements

To organize the worlds information and make it universally accessible and useful Google
To give ordinary folk the chance to buy the same thing as rich people Wal-Mart
To contribute to society through the pursuit of education, learning, and research at the highest
international levels of excellence. - University of Cambridge

Characteristics of a Good Mission Statement

There are no hard and fast rules to developing a mission - what matters most is that is generally
beconsidered to be an accurate reflection and useful summary of UH Hilo and speaks to
ourstakeholders. What follows though are some general principles that we could bear-in-mind:

Make it as succinct as possible:-A mission statement should be as short and snappy aspossible -
preferably brief enough to be printed on the back of a business card. The detail whichunderpins it should
be mapped out elsewhere.
Make it memorable:-Obviously partially linked to the above, but try to make it something thatpeople
will be able to remember the key elements of, even if not the exact wording
Make it unique to you:-It's easy to fall into the 'motherhood and apple pie' trap with
genericstatements that could equally apply to any institution. Focus on what it is that you strive to
dodifferently: how you achieve excellence, why you value your staff or what it is about the quality ofthe
student experience that sets you apart from the rest.
Make it realistic:-Remember, your mission statement is supposed to be a summary of why youexist
and what you do. It is a description of the present, not a vision for the future. If it bearslittle or no
resemblance to the organization that your staff knows it will achieve little.
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Make sure it's current:-Though it is not something which should be changed regularly, neithershould it
be set in stone. Your institution's priorities and focus may change significantly overtime - perhaps in
response to a change of direction set by a new, or major changes instate/federal policy.

Goals
Results to be achieved.Describes ideal states to be achieved at some unidentified future
time. Defined consistent with and related directly to vision and mission. Guide everyday decisions
and actions. Do not necessarily deal with measurable results.

I t's like having a personal trainer or coach. They can help you achieve your goals
faster, give you expert insight into new ideas, be more strategic, and help you
avoid costly mistakes and delays.

Goal setting for yourself and your business is always important.

You might choose to set your goals and revise your vision at the beginning of a New Year Really anytime
is a good time to reflect on your business's progress and plan how you want your business to grow /
change.

Change is inevitable - so you might as well make it work for you.

Your future will start being better the moment you think about setting goals for yourself and your
business. Why? Because realizing the need is always half the battle as my dad might have said. It
makes sense to get some professional assistance to define and achieve your goals. Think of it as having a
personal trainer.

The best way to achieve your goals is to break the big goals into smaller achievements; this makes them
easier to attain and gives you small wins along the way. For example, if your goal is to get 100 new
clients in a year, make a smaller goal to contact 10 leads per week (if on average you get 2 new clients
for every 10 leads you call). Celebrate making each of the 10 calls and celebrate each new client.

Setting goals is one of the best ways to measure your progress and create clarity. Consider
the alternative drifting along without a plan.

Your goals must be meaningful
Your goals must be specific & measurable
Your goals must be flexible
Your goals must be challenging but realistic
Your goals must be yours and must align with your Core Values

Objectives
How-Actions and Results-to plan to achieve the desired results.Focuses on critical
organization issues and milestones. Describe activities to be accomplished to achieve goals. I dentify
dates when specific results are to be accomplished. Measurable in terms of whether or not they
are achieved. They may be changed when necessary for progress towards goals.

A measure of change in order to bring about the achievement of the goal. The attainment of each goal
may require a number of objectives to be.
There is often much confusion between goals and objectives. Whereas as a goal is a description of a
destination, an objective is a measure of the progress that is needed to get to the destination. The
following table serves to illustrate the difference between goals and objectives.


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Strategic Management Process
The strategic management process means defining the organizations strategy. It is also defined as the
process by which managers make a choice of a set of strategies for the organization that will enable it to
achieve better performance. Strategic management is a continuous process that appraises the business
and industries in which the organization is involved; appraises its competitors; and fixes goals to meet
the entire present and future competitors and then reassesses each strategy.

Strategic management process has following four steps:

Environmental Scanning:-Environmental scanning refers to a process of collecting, scrutinizing and
providing information for strategic purposes. It helps in analyzing the internal and external factors
influencing an organization. After executing the environmental analysis process, management should
evaluate it on a continuous basis and strive to improve it.
Strategy Formulation:-Strategy formulation is the process of deciding best course of action for
accomplishing organizational objectives and hence achieving organizational purpose. After conducting
environment scanning, managers formulate corporate, business and functional strategies.
Strategy I mplementation:-Strategy implementation implies making the strategy work as intended or
putting the organizations chosen strategy into action. Strategy implementation includes designing the
organizations structure, distributing resources, developing decision making process, and managing
human resources.
Strategy Evaluation:-Strategy evaluation is the final step of strategy management process. The key
strategy evaluation activities are: appraising internal and external factors that are the root of present
strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that
the organizational strategy as well as its implementation meets the organizational objectives.


Elements of corporate Planning Process
1) Communication Strategy:The development of a communication strategy is essential for the
effective development and implementation of a strategic plan. In the communications strategy,
you should determine who will be involved in the planning process, how they will be involved
and what is being communicated to whom on the staff.
2) Strategic Planning Task Force:The development of a core team of organizational leaders is
mandatory in the effective creation of a strategic plan. Each task force member should
represent a key business area or department of the organization to ensure the plan has
organization wide input and buy-in. The task force meets regularly with clearly defined
deliverables to be presented at each meeting.
3) Vision Statement:An organizations vision statement is simply their roadmap for the
future. the direction of the organization should be broad to include all areas of impact but
narrow enough to clearly define a path.
4) Mission Statement:An organizations mission is a definition of whom and what they are.
Often mission statements include core goals and values of the organization.
5) Values:Values are the organizations fundamental beliefs in how they operate. Values can
provide a guideline for management and staff for acceptable organizational behavior. Often
values relate to the organizations organizational culture.
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6) Goals:-Goals are broad based strategies needed to achieve your organizations mission.
7) Objectives:Objectives are specific, measurable, action oriented, realistic and time bound
strategies that achieve the organizations goals and vision.
8) Tasks:Tasks are specific actionable events that are assigned to individuals/departments to
achieve. They, too, should be specific, measurable and time bound.
9) I mplementation Strategy:Once the plan has been outlined, a tactical strategy is built that
prioritizes initiatives and aligns resources. The implementation strategy pulls all the plan pieces
together to ensure collectively there are no missing pieces and that the plan is feasible. As a
part of the implementation strategy, accountability measures are put in place to ensure
implementation takes place.
10) Monitoring of Strategic Plan:During implementation of a strategic plan, it is critical to
monitor the success and challenges of planning assumptions and initiatives. When evaluating
the successes of a plan, you must look objectively at the measurement criteria defined in our
goals and objectives. It may be necessary to retool the plan and its assumptions if elements of
the plan are off track.

Environmental Scanning
Environment literally means the surroundings external objects, influences or overall
circumstances under which someone or something exists.
In Business the environment in which an organization exists could be broadly divided into two parts:

A. The I nternal environment (Related the factors such as its personnel, physical facilities,
organization and functional means, which are generally controllable.
B. The External environment (Related the factors such as economic, socio cultural, Government
and legal, demographic, geo physical by and large beyond the control

The External environment includes all the factors outside the organization, which provide opportunities or
pose threats to the organization.
The internal environment refers to all the factors within an organization which imparts strengths or cause
weaknesses of a strategic nature. The environment in which an organization exists can, therefore, be
described in terms of the opportunities and threats operating in the external environment apart from the
strength and weaknesses existing in the internal environment.

I NTERNAL ENVI RONMENT:-There are a number of internal factors which influence the strategy and
other decisions. An outline of the important internal factors is given below:

Value system:-The value system of the founders and those at the helm of affairs has important bearing
on the choice of business, the mission and objectives of the organization, business policies and practices.
It is a widely acknowledges fact that the extent to which the value system is shared by all in the
organization is an important factor contributing to success.
Mission and Objectives:-The business domain of the company, priorities, direction of development,
business philosophy, business policy etc. is guided by the mission and objectives of the company.
Management Structure and Nature: the organizational structure, the composition of the board of
directors, extent of professionalization of management etc. are important factors influencing business
decisions.
I nternal Power Relationship:-Factors like the amount of support the top management enjoys from
lower levels and workers, shareholders and board of directors have important influence on the decisions
and their implementation. The relationship between the members of the Board of directors is also a
critical factor.
Human Resources:-The characteristics of the human resources like skill, quality, morale, commitment,
attitudes, etc. could contribute to the strength or weakness of an organization. Sometimes, organizations
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find it difficulties to carry out restructuring or modernization because of resistance by employees whereas
they are smoothly one in some others.
The involvement, initiative etc. of people at different levels may vary from organization to organization.
The organizational culture and overall environment have bearing on them. J ohn Towers, MD, Rover
group, observes that a J apanese company of 30,000 employees is 30,000 process improvers. In a
western company, it is 2,000 process improvers and 28,000 workers. And in an Indian
Company .?
Company Image and Brand Equity:-The image of the company matters while raising finance, forming
joint ventures or other alliances, soliciting marketing intermediaries, entering purchase or sale contracts,
launching new products etc. Brand equity is also relevant in several of these cases.

However, there are a number of other internal factors which contribute to business success/ failure or
influences the decision making. These are:-

Physical Assets and facilities like the production Capacity, technology, and efficiency of the
productive apparatus, logistics etc. are among the factors which influence the competitiveness
R & D and technological capabilities, among other things, determine the ability to innovate
and compete.
Marketing resources like the organization for marketing, quality of the marketing men, brand
equity; distribution network etc. has direct bearing on the marketing efficiency. They are
important also for brand extension, new product introduction etc.
Financial Factors like financial policies, financial position, and capital structure are also
important internal environment affecting business performance, strategies and decisions.

EXTERNAL ENVI RONMENT:
The external environment consists of two types of environment, viz micro environment and macro
environment. Recently the International environment comes under mega environment.

Micro Environment:
The Micro environment consists of the actors in the companys immediate environment, hat affect the
performance of the company. These include
Suppliers:those who supply the inputs like raw materials.
Marketing intermediaries:which are firms that aid the company in promoting, selling
and distributing its goods to final buyers.
Competitors:not only other firms of similar products but also all those who compete for
the discretionary income of the consumers.
Customers:Business is a create of customer; therefore monitoring the customer sensitivity
is a prerequisite for the business success.
Publicsis any group that has an actual or potential interest in or impact on an
organizations ability to achieve its interests. Media publics, citizens action publics and local
publics are some examples.

Macro Environment:
The Macro environment consists of the larger societal forces that affect all the actors in the companys
micro environment namely:
Demographic:population growth rate, age composition, sex composition, education level, caste and
creed, religion etc. All factors which relevant to business.
Economic:-economic condition, economic policies and the economic system are the important external
factors that constitute the economic environment of a business.
Natural:-geographical and ecological factors, such as natural resources endowments, weather and
climatic conditions, topographic factors, location aspects in the global context, ort facilities, etc., are all
relevant to business.
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Technological:the fast changing technologies also create problems for enterprises as they render
plants and products obsolete quickly. Product market matrix generally has a much shorter life today
than in the past. It is particularly so in the international marketing context.
Political:Political and Government environment has close relationship with the economic system and
economic policy. For example, the communist countries had a centrally planned economic system. In
most countries, apart from those laws that control investment and related matters, there are a number of
laws which regulate the conduct of business. These laws cover such matters as standards of product,
packaging, promotions etc.
Socio- Cultural:- socio cultural fabric is an important environment factor that should be analyzed
while formulating the business strategies. The cost of ignoring the customs, traditions, taboos, tastes and
preferences etc. of a people could be very high. The buying and consumption habits of the people, their
languages, beliefs, and values, customs and traditions, tastes and performances, education are all factors
that affect business.

Mega Environment:-
Mega environment mainly consist of International Environment which is very important from the point of
certain categories of business.
I mport and export dependency:
Industries directly depends on Imports or exports
Import competing Industries.
A boom in the export market or a relaxation of the protectionist policies may help the export
oriented industries.
A liberalization of imports may help some industries which use imported items, but may adversely
affect important competing industries.

World trade linkage:
Oil price hikes have seriously affected a number of economics. These hikes have increased the
cost of production and the prices of certain products like fertilizers, synthetic fabrics, etc. The
high oil price has led to an increase in the demand for automobile models that economies energy
consumption.
The oil crisis led to a reorientation of the government of Indias energy policy. Such development
affects the demand, consumption and investment pattern.

SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats



I nternal factorsThe strengths and weaknesses internal to the organization.
External factorsThe opportunities and threats presented by the external environment to the
organization.

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SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic position of the
business and its environment. Its key purpose is to identify the strategies that will create a firm specific
business model that will best align an organizations resources and capabilities to the requirements of the
environment in which the firm operates. In other words, it is the foundation for evaluating the internal
potential and limitations and the probable/likely opportunities and threats from the external environment.
It views all positive and negative factors inside and outside the firm that affect the success. A consistent
study of the environment in which the firm operates helps in forecasting/predicting the changing trends
and also helps in including them in the decision-making process of the organization.

An overview of the four factors (Strengths, Weaknesses, Opportunities and Threats) is given below-

Strengths:-Strengths are the qualities that enable us to accomplish the organizations mission. These
are the basis on which continued success can be made and continued/sustained. Strengths can be either
tangible or intangible. These are what you are well-versed in or what you have expertise in, the traits and
qualities your employees possess (individually and as a team) and the distinct features that give your
organization its consistency. Strengths are the beneficial aspects of the organization or the capabilities of
an organization, which includes human competencies, process capabilities, financial resources, products
and services, customer goodwill and brand loyalty. Examples of organizational strengths are huge
financial resources, broad product line, no debt, committed employees, etc.

Weaknesses:-Weaknesses are the qualities that prevent us from accomplishing our mission and
achieving our full potential. These weaknesses deteriorate influences on the organizational success and
growth. Weaknesses are the factors which do not meet the standards we feel they should meet.
Weaknesses in an organization may be depreciating machinery, insufficient research and development
facilities, narrow product range, poor decision-making, etc. Weaknesses are controllable. They must be
minimized and eliminated. For instance - to overcome obsolete machinery, new machinery can be
purchased. Other examples of organizational weaknesses are huge debts, high employee turnover,
complex decision making process, narrow product range, large wastage of raw materials, etc.

Opportunities:-Opportunities are presented by the environment within which our organization operates.
These arise when an organization can take benefit of conditions in its environment to plan and execute
strategies that enable it to become more profitable. Organizations can gain competitive advantage by
making use of opportunities. Organization should be careful and recognize the opportunities and grasp
them whenever they arise. Selecting the targets that will best serve the clients while getting desired
results is a difficult task. Opportunities may arise from market, competition, industry/government and
technology. Increasing demand for telecommunications accompanied by deregulation is a great
opportunity for new firms to enter telecom sector and compete with existing firms for revenue.

Threats:-Threats arise when conditions in external environment jeopardize the reliability and profitability
of the organizations business. They compound the vulnerability when they relate to the weaknesses.
Threats are uncontrollable. When a threat comes, the stability and survival can be at stake. Examples of
threats are - unrest among employees; ever changing technology; increasing competition leading to
excess capacity, price wars and reducing industry profits; etc.

Advantages of SWOT Analysis
SWOT Analysis is instrumental in strategy formulation and selection. It is a strong tool, but it involves a
great subjective element. It is best when used as a guide, and not as a prescription. Successful
businesses build on their strengths, correct their weakness and protect against internal weaknesses and
external threats. They also keep a watch on their overall business environment and recognize and exploit
new opportunities faster than its competitors.


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SWOT Analysis helps in strategic planning in following manner-

It is a source of information for strategic planning.
Builds organizations strengths.
Reverse its weaknesses.
Maximize its response to opportunities.
Overcome organizations threats.
It helps in identifying core competencies of the firm.
It helps in setting of objectives for strategic planning.
It helps in knowing past, present and future so that by using past and current data, future plans
can be chalked out.

Steps/ Stages in Strategy Formulation and I mplementation

Strategy formulation refers to the process of choosing the most appropriate course of action for the
realization of organizational goals and objectives and thereby achieving the organizational vision. The
process of strategy formulation basically involves six main steps. Though these steps do not
follow a rigid chronological order, however they are very rational and can be easily followed in this order.

1. Setting Organizations objectives:-The key component of any strategy statement is to set
the long-term objectives of the organization. It is known that strategy is generally a medium for
realization of organizational objectives. Objectives stress the state of being there whereas
Strategy stresses upon the process of reaching there. Strategy includes both the fixation of
objectives as well the medium to be used to realize those objectives. Thus, strategy is a wider
term which believes in the manner of deployment of resources so as to achieve the objectives.
While fixing the organizational objectives, it is essential that the factors which influence the
selection of objectives must be analyzed before the selection of objectives. Once the objectives
and the factors influencing strategic decisions have been determined, it is easy to take strategic
decisions.
2. Evaluating the Organizational Environment:-The next step is to evaluate the general
economic and industrial environment in which the organization operates. This includes a review
of the organizations competitive position. It is essential to conduct a qualitative and quantitative
review of an organizations existing product line. The purpose of such a review is to make sure
that the factors important for competitive success in the market can be discovered so that the
management can identify their own strengths and weaknesses as well as their competitors
strengths and weaknesses.
After identifying its strengths and weaknesses, an organization must keep a track of competitors
moves and actions so as to discover probable opportunities of threats to its market or supply
sources.
3. Setting Quantitative Targets:-In this step, an organization must practically fix the
quantitative target values for some of the organizational objectives. The idea behind this is to
compare with long term customers, so as to evaluate the contribution that might be made by
various product zones or operating departments.
4. Aiming in context with the divisional plans:-In this step, the contributions made by each
department or division or product category within the organization is identified and accordingly
strategic planning is done for each sub-unit. This requires a careful analysis of macroeconomic
trends.
5. Performance Analysis:-Performance analysis includes discovering and analyzing the gap
between the planned or desired performance. A critical evaluation of the organizations past
performance, present condition and the desired future conditions must be done by the
organization. This critical evaluation identifies the degree of gap that persists between the actual
reality and the long-term aspirations of the organization. An attempt is made by the organization
to estimate its probable future condition if the current trends persist.
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6. Choice of Strategy:-This is the ultimate step in Strategy Formulation. The best course of action
is actually chosen after considering organizational goals, organizational strengths, potential and
limitations as well as the external opportunities.

Following are the main steps in implementing a strategy:

Developing an organization having potential of carrying out strategy successfully.
Disbursement of abundant resources to strategy-essential activities.
Creating strategy-encouraging policies.
Employing best policies and programs for constant improvement.
Linking reward structure to accomplishment of results.
Making use of strategic leadership

Generic Strategies Alternatives

According to William F Glueck and Lawrence



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Unit-6
Management Ethics
I ntroduction
Together, these three terms; science, morality and human acts cam be considered as the
common basis that form the definition of Ethics. The definition of ethics may come in different
perspectives but they all deal with a science, a morality and human act.

Ethics is the investigation of life. Ethics can also be defined as; a practical science that deals
with the morality of human actions, a science of human acts that serves as reference to what is right
or what is wrong, a kind of scientific inquiry into the morality principles, a way of studying human
conduct from the stand point of what is called morality, a kind of science that lays down the principles of
the right living, a study about the rectitude of the human conduct, a practical science that guides humans
in actions as well as how humans live rightly and well, and it is a science that is normative and practical
and based upon reason which studies the human conduct as well as providing norms of its natural
honesty as well as integrity----According to the ancient Greek philosopher Socrates.

Ethics is a branch of social science. I t deals with moral principles and social values. I t
helps us to classify, what is good and what is bad? I t tells us to do good things and avoid
doing bad things.

So, ethics separate, good and bad, right and wrong, fair and unfair, moral and immoral and proper and
improper human action.I n short, ethics means a code of conduct. I t is like the 10
commandments of holy Bible. I t tells a person how to behave with another person.

So, the businessmen must give a regular supply of good quality goods and services at reasonable prices
to their consumers. They must avoid indulging in unfair trade practices like adulteration, promoting
misleading advertisements, cheating in weights and measures, black marketing, etc. They
must give fair wages and provide good working conditions to their workers. They must not exploit the
workers. They must encourage competition in the market. They must protect the interest of small
businessmen. They must avoid unfair competition. They must avoid monopolies. They must pay all their
taxes regularly to the government.

I n short, business ethics means to conduct business with a human touch in order to give
welfare to the society.

Business ethics is the study of business situations, activities, and decisions where issues of right and
wrong are addressed."---According to Raymond C. Baumhart,


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Features ofEthics in Business and Management


1) Code of conduct:-Business ethics is a code of conduct. It tells what to do and what not to do
for the welfare of the society. All businessmen must follow this code of conduct.
2) Based on moral and social values:-Business ethics is based on moral and social values. It
contains moral and social principles (rules) for doing business. This includes self-control,
consumer protection and welfare, service to society, fair treatment to social groups, not to exploit
others, etc.
3) Gives protection to social groups:-Business ethics give protection to different social groups
such as consumers, employees, small businessmen, government, shareholders, creditors, etc.
4) Provides basic framework:-Business ethics provide a basic framework for doing business. It
gives the social cultural, economic, legal and other limits of business. Business must be
conducted within these limits.
5) Voluntary:-Business ethics must be voluntary. The businessmen must accept business ethics on
their own. Business ethics must be like self-discipline. It must not be enforced by law.
6) Requires education and guidance:-Businessmen must be given proper education and
guidance before introducing business ethics. The businessmen must be motivated to use
business ethics. They must be informed about the advantages of using business ethics. Trade
Associations and Chambers of Commerce must also play an active role in this matter.
7) Relative Term:-Business ethics is a relative term. That is, it changes from one business to
another. It also changes from one country to another. What is considered as good in one country
may be taboo in another country.
8) New concept:-Business ethics is a newer concept. It is strictly followed only in developed
countries. It is not followed properly in poor and developing countries.
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Need or Importance of Ethics in Business and Management

1) Stop business malpractices:-Some unscrupulous businessmen do business malpractices by
indulging in unfair trade practices like black-marketing, artificial high pricing, adulteration,
cheating in weights and measures, selling of duplicate and harmful products, hoarding, etc.
These business malpractices are harmful to the consumers. Business ethics help to stop these
business malpractices.
2) I mprove customers' confidence:-Business ethics are needed to improve the customers'
confidence about the quality, quantity, price, etc. of the products. The customers have more trust
and confidence in the businessmen who follow ethical rules. They feel that such businessmen will
not cheat them.
3) Survival of business:-Business ethics are mandatory for the survival of business. The
businessmen who do not follow it will have short-term success, but they will fail in the long run.
This is because they can cheat a consumer only once. After that, the consumer will not buy
goods from that businessman. He will also tell others not to buy from that businessman. So this
will defame his image and provoke a negative publicity. This will result in failure of the business.
Therefore, if the businessmen do not follow ethical rules, he will fail in the market. So, it is
always better to follow appropriate code of conduct to survive in the market.
4) Safeguarding consumers' rights:-The consumer has many rights such as right to health and
safety, right to be informed, right to choose, right to be heard, right to redress, etc. But many
businessmen do not respect and protect these rights. Business ethics are must to safeguard
these rights of the consumers.
5) Protecting employees and shareholders:-Business ethics are required to protect the interest
of employees, shareholders, competitors, dealers, suppliers, etc. It protects them from
exploitation through unfair trade practices.
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6) Develops good relations:-Business ethics are important to develop good and friendly relations
between business and society. This will result in a regular supply of good quality goods and
services at low prices to the society. It will also result in profits for the businesses thereby
resulting in growth of economy.
7) Creates good image:-Business ethics create a good image for the business and businessmen.
If the businessmen follow all ethical rules, then they will be fully accepted and not criticised by
the society. The society will always support those businessmen who follow this necessary code of
conduct.
8) Smooth functioning:-If the business follows all the business ethics, then the employees,
shareholders, consumers, dealers and suppliers will all be happy. So they will give full
cooperation to the business. This will result in smooth functioning of the business. So, the
business will grow, expand and diversify easily and quickly. It will have more sales and more
profits.
9) Consumer movement:-Business ethics are gaining importance because of the growth of the
consumer movement. Today, the consumers are aware of their rights. Now they are more
organised and hence cannot be cheated easily. They take actions against those businessmen who
indulge in bad business practices. They boycott poor quality, harmful, high-priced and counterfeit
(duplicate) goods. Therefore, the only way to survive in business is to be honest and fair.
10) Consumer satisfaction:-Today, the consumer is the king of the market. Any business simply
cannot survive without the consumers. Therefore, the main aim or objective of business is
consumer satisfaction. If the consumer is not satisfied, then there will be no sales and thus no
profits too. Consumer will be satisfied only if the business follows all the business ethics, and
hence are highly needed.
11) I mportance of labour:-Labour, i.e. employees or workers play a very crucial role in the
success of a business. Therefore, business must use business ethics while dealing with the
employees. The business must give them proper wages and salaries and provide them with
better working conditions. There must be good relations between employer and employees. The
employees must also be given proper welfare facilities.
12) Healthy competition:-The business must use business ethics while dealing with the
competitors. They must have healthy competition with the competitors. They must not do cut-
throat competition. Similarly, they must give equal opportunities to small-scale business. They
must avoid monopoly. This is because a monopoly is harmful to the consumers

Rules or Principles ofEthics in Business and Management
Rules or principles of business ethics are the code of conduct for businessmen. It tells us how
businessmen should do business for social good. These principles are related to consumers,
employees, investors, local community and the society as a whole.

1) Avoid exploitation of consumers:-Don't cheat and exploit consumers by using bad
business practices such as artificial price rise and adulteration.
2) Avoid profiteering:-Don't indulge in unscrupulous activities like hoarding, black-marketing,
sale and use of banned or harmful goods, etc., for the sake of greed to earn exorbitant
profits.
3) Encourage healthy competition:-Don't destroy a healthy competitive atmosphere in the
market which offers certain benefits to the consumers. Do not engage in a cut-throat
competition. Avoid making attempts to malign and spoil the image of competitors by unfair
means.
4) Ensure accuracy:-Always check and verify the accuracy in weighing, packaging and quality
while supplying goods to the consumers.
5) Pay taxes regularly:-Pay taxes and other charges or duties to the government honestly
and regularly. Avoid bribing government officials and lobbying for special favours.
6) Get accounts audited:-Maintain accurate business records, accounts and make them
available to all authorised persons and authorities.
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7) Fair treatment to employees:-Pay fair wages or salaries, provide facilities and incentives
and give humane treatment to employees.
8) Keep investors informed:-Supply reliable information to shareholders and investors about
the financial position and important decisions of the company.
9) Avoid injustice and discrimination:-Avoid injustice and partiality to employees in
transfers and promotions. Avoid discrimination among them based on gender, race, religion,
language, nationality, etc.
10) No bribe and corruption:-Don't give expensive gifts, secret commissions, and kickbacks,
payoffs to politicians, bureaucrats, government officials and suppliers. Say no to bribe and
avoid corruption.
11) Discourage secret agreement:-Do not make a secret agreement with other businessmen
for controlling production, distribution, pricing or for any other activity, which is harmful to
the consumers.
12) Keep service before profit:-Accept the principle of "service first and profit next." The
customer or consumer is the most important part of any business. All business activities are
done for meeting his needs and for increasing his satisfaction and welfare.
13) Practice fair business:-Make your business fair, humane, efficient and dynamic. Give the
benefits of these qualities to the consumers.
14) Avoid monopoly:-Avoid forming private monopolies and concentration of economic power.
Monopolies are bad for consumers.
15) Fulfill customers expectations:-Adjust your business activities as per the demands,
needs and expectations of the customers.
16) Respect consumers rights:-Give full respect and honour to the basic rights of the
consumers.
17) Accept social responsibilities:-Honour responsibilities towards different social groups.
18) Satisfy consumers wants:-Find out and satisfy the wants of the consumers. Use the
available resources to produce good quality goods and services. Supply these goods and
services regularly to the consumers. Charge reasonable prices for the goods and services.
Give proper after-sales services. Do not produce goods and services, which are harmful to
the health and life of the consumers. Remember, the main objective of the business is to
satisfy the consumers wants.
19) Service motive:-Give more importance to service and consumer's satisfaction and less
importance to profit-maximization. Make profits by providing services to the consumers. Do
not make profits by exploiting the consumers.
20) Protect group interests:-Protect the interest of the group i.e. give employees better
wages and good working conditions, give shareholders better rate of dividend, give
consumers good quality goods and services at low prices, etc.
21) Optimum utilisation of resources:-Ensure better and optimum utilisation of natural and
human resources and minimise wastage of these resources. Use the resources to remove
poverty and to increase the standard of living of people.
22) I ntentions of business:-Use pure, legal and sacred means to do business. Do not use
illegal, unscrupulous and evil means to do business.
23) Follow Woodrow Wilson's rules:-According to the late American President Sir Thomas
Woodrow Wilson, there are four important principles of business ethics. These four rules are
as follows:-
a) Rule of publicity:-According to this principle, the business must tell the people what it
is going to do. It must not create doubts, misunderstanding, suspicion, secrets, etc.
b) Rule of equivalent price:-According to this principle, the customer must be given
proper value for their money. So the business must not sell below standard, outdated
and inferior (poor) goods for high prices.
c) Rule of conscience in business:-If the business is conducted properly, then it is
beneficial to the society. Otherwise, it is harmful to the society. Therefore, the
businessman must have a conscience, i.e. a morale sense of judging what is right and
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what is wrong. He must be very careful while taking business decisions because these
decisions affect the entire society.
d) Rule of spirit of service:-The business must give importance to the service motive.
That is, priority must be given to render service to human beings over profit.

Ethics in marketing
Marketing ethics is a set of moral conduct which deals with operation and regulation of
marketing activities. It is all about your personal behavior when you are dealing with people around you.
People around you mean your customers, suppliers, partners, employees, competitors, shareholders and
society as a whole.

Company ethics are involved in each and every department, but marketing department is the most
prominent one. Companies sell their products by using different marketing tactics and sometimes involve
unethical aspects in order to expand their business.

Marketing is chiefly comprised of four Ps i.e.,product, price, place and promotion. Here I will
discuss each of them with respect to ethical issues in marketing.

Product:-
Product is a tangible item which a company manufactures and sells to its target market. In some
way or the other, they tend to perform unethical acts to gain customers attraction and loyalty.
Companies copy others product which misleads the customers. And eventually they forget the
original version, which is ethically wrong.
Manufacturers use low quality materials for product design, which can harm customers.
Fake companies slightly change the products brand name or packaging so that customers do not
classify the difference and buy it at cheap prices.

Price:-
From the perspectives of ethical issues in marketing, price is the most important factor to
consider. Companies increase their revenues by selling unjustifiably. There are some ethical
issues with respect to price, which are given below:
Supplier sells identical goods and services at different prices to different customers, it is called
price discrimination. It may be the result of excessive product demand, high material cost or
customers affordability factor.
Pricing strategy in which marketers initially charge quite high prices for their products then lower
down prices over the time is called price skimming. The goal is to recover the cost and reap the
benefits before competitors enter with their low- priced products.
When a manufacturer of one country exports its product to another country at a lower price than
its production cost or the price which he charges in its home market is called price dumping. The
purpose of this act is to attract customers towards the products thus, making them habitual of
using your product.

Promotion:-

Advertising and promotion is a vast field of marketing, there are lots of thing which can be taken
unethical but are called marketing tactics. Some of the issues that are truly immoral are given
below:
Comparative advertising is unethical; when one a company compares their products with
competitors in order to capture their market. They compare prices, quality, quantity, features and
benefits to show that they are superior to others.
Some advertisements exaggerate products benefits and features while in actual, they are not like
that. This is an unethical as well as an illegal act.
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Celebrity endorsement in advertising is another ethical issue, when they play with the emotions
of public to sell their products and services.

Place:
Multinational companies sell their products with different prices at different countries in order to
make large money.
Climates differ according to geographical area, so one product that suits citizen of one country
may not go well with other citizens. It is unethical to be less concerned with respective to
geographic region.
Ethical behavior is a prominent factor for any business conduct. It is your right and just behavior
that brings in more customers, help you expand your business and reap long term benefits.
This is the role of marketer to make sure that everything goes with high ethical standards and
moral values. And these principles are being taught in professional studies. You should make
yourself ethically strong in marketing perspectives because this is extremely demanding in
todays competitive environment.
I would suggest you to acquire an online marketing degree. And you will be acquainted with
ethical side of marketing. It will be a fruitful decision for you, in terms of time, money and
efforts.
There are lots of accredited institutions which are providing online marketing degree; you can
select any appropriate one, to acquire degree in a most flexible way!

Ethics in HRM (Human Resource Management)
Human Resource Management is a business function that is concerned with managing relations
between groups of people in their capacity as employees, employers and managers.Inevitably, this
process may raise questions about what the respective responsibilities andrights of each party are in this
relationship, and about what constitutes fair treatment. Thesequestions are ethical in nature, and this
chapter will focus on debates about the ethical basisof human resource management.

Cash and Compensation Plans:-There are ethical issues pertaining to the salaries, executive
perquisites and the annual incentive plans etc. The HR manager is often under pressure to raise the band
of base salaries. There is increased pressure upon the HR function to pay out more incentives to the top
management and the justification for the same is put as the need to retain the latter. Further ethical
issues crop in HR when long term compensation and incentive plans are designed in consultation with the
CEO or an external consultant. While deciding upon the payout there is pressure on favouring the
interests of the top management in comparison to that of other employees and stakeholders.

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Race, gender and Disability:-In many organizations till recently the employees were differentiated on
the basis of their race, gender, origin and their disability. Not anymore ever since the evolution of laws
and a regulatory framework that has standardized employee behaviours towards each other. In good
organisations the only differentiating factor is performance! In addition the power of filing litigation has
made put organisations on the back foot. Managers are trained for aligning behaviour and avoiding
discriminatory practices.

Employment I ssues:-Human resource practitioners face bigger dilemmas in employee hiring. One
dilemma stems from the pressure of hiring someone who has been recommended by a friend, someone
from your family or a top executive.

Yet another dilemma arises when you have already hired someone and he/she is later found to have
presented fake documents. Two cases may arise and both are critical. In the first case the person has
been trained and the position is critical. In the second case the person has been highly appreciated for
his work during his short stint or he/she has a unique blend of skills with the right kind of attitude. Both
the situations are sufficiently dilemmatic to leave even a seasoned HR campaigner in a fix.

Privacy Issues:-Any person working with any organisation is an individual and has a personal side to
his existence which he demands should be respected and not intruded. The employee wants the
organisation to protect his/her personal life. This personal life may encompass things like his religious,
political and social beliefs etc. However certain situations may arise that mandate snooping behaviours on
the part of the employer. For example, mail scanning is one of the activities used to track the activities of
an employee who is believed to be engaged in activities that are not in the larger benefit of the
organisation.

Similarly there are ethical issues in HR that pertain to health and safety, restructuring and layoffs and
employee responsibilities. There is still a debate going on whether such activities are ethically permitted
or not. Layoffs, for example, are no more considered as unethical as they were thought of in the past.

Diversity:-Workplace diversity encompasses the various qualities, characteristics and experiences that
distinguish one worker from another. These characteristics can be differences in race, gender, age, social
status or other traits that make an individual unique. Treating a person differently because of these
differences poses an ethical issue that faces human resources. HR personnel implement policies that
promote diversity in the workplace and welcome the differences of the entire workforce.

Safety:-Employee safety is an issue facing human resources personnel. The department must prevent
and correct potentially dangerous situations. Human resources must promptly act on hazardous
conditions that present safety concerns in the workplace. The department is also responsible for
identifying potentially dangerous employees and ensuring they do not harm themselves or others within
the organization.

Protect the basic rights of the employees/workers.
Follow health, safety and environmental standards.
Continuously improvise the products, operations and production facilities to optimize the
resource consumption
Do not replicate the packaging style so as to mislead the consumers.
Indulge in truthful and reliable advertising.
Strictly adhere to the product safety standards.
Accept new ideas. Encourage feedback from both employees as well as customers.
Present factual information. Maintain accurate and true business records.
Treat everyone (employees, partners and customers) with respect and integrity.
The mission and vision of the company should be very clear to it.
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Do not get engaged in business relationships that lead to conflicts of interest. Discourage
black marketing, corruption and hoarding.
Meet all the commitments and obligations timely.
Encourage free and open competition. Do not ruin competitors image by fraudulent
practices.
The policies and procedures of the Company should be updated regularly.
Maintain confidentiality of personal data and proprietary records held by the company.
Do not accept child labour, forced labour or any other human right abuses

Ethics in Financial Management
Financial managers are faced with many challenging situations including ethical issues that may
surface from time to time. The human element usually takes over and clouds a persons judgment when
confronted with situations of an ethical nature. As a result, financial managers may make
decisions that could be disastrous to their careers and undermine the financial management
profession. Several managers get caught up in giving information and granting favors to friends,
families and others, in some cases for financial rewards. Sometimes situations occur where someone may
take on a task or have affiliations with certain groups of people that may be seen as conflicting with their
primary roles. For example, financial managers of one company may be seen associating with executives
of competing companies which could lead to the wrong conclusion. Although the association could be
innocent, it may be perceived as being unethical.

In todays business environment, companies are being encouraged to implement good governance
practices inclusive of the processes of transparency. As has been seen in the past, good governance
failed as the checks and balances were futile and accountability was lacking. The lack of good
governance transmits unethical behavior, and has been proven to be detrimental.

Financial managers always have to be alert as financial management and control is under
heavy scrutiny.
An accountant working in the public or private sector must remain impartial and loyal to ethical guidelines
when reviewing a company or individual's financial records for reporting purposes. An accountant
frequently encounters ethical issues regardless of the industry and must remain continually vigilant to
reduce the chances of outside forces manipulating financial records, which could lead to both ethical and
criminal violations.

This unit is about the important aspect of working in an ethical manner inrespect of accountancy and
taxation practice. It is important for three key reasons:

The level of confidence that the public has in accountancy and finance practices or functions
Your organisations probity and reputation
Your own professional reputation and legal liability

I t involves:

Acting with honesty and integrity
Exercising objectivity, fairness and due care
Respecting confidentiality
Adhering to professional values and codes of practice and behaving professionally
Maintaining your professional and technical competence.


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Ethics in Law
Ethical issues in criminal justice have been addressed on both a philosophical and historical level.
Ethical issues have existed in relation to government, policing and international politics for centuries. The
standard code of ethics that law enforcement personnel and public servants are asked to uphold can
often be translated subjectively by individuals, resulting in the possibility of ethically questionable
conduct. Ethical issues regarding brutality, corruption and off-duty behavior have become an increasing
challenge in criminal justice.

Corruption in criminal justice is a common theme in the media. Public servants, law enforcement and
military personnel may be put into positions where they are offered large payoffs to ignore illegal
conduct.

Using the same moral guidelines you already follow yourself, knowing the difference between right and
wrong, also goes for business. It will tell you what is right or wrong in any business situation.
Sometimes, however, what might be best for the company might seem morally wrong personally. For
example, buying cheaper goods from another country will help increase the companys profit margin,
however, that country legally allows children to work for low wages. At the end of the day, businesses
should be as ethically sound as they can when determining the greater good for all involved.

Companies that violate the more obvious ethical practices can result in huge consequences. J ust look at
what happened to Enron. Problems usually start off small, but build into bigger ones unless standards
are truly set and followed. With the pressure to achieve the numbers, bad decisions can be made. This
can be pressure on the customer service representative to wrongly fill an order, to senior management
falsifying the financial health of the company.

Some business ethics, however, are much more easily recognizable as being obviously ethically wrong.
To name a few:

Money lost to Fraud
Money lost to Embezzlement
Accuracy of books, records, and expense reports
Proper use of organizational assets
Protecting proprietary information
Discrimination
Lying
Over charging
Charging for work that was not necessary
Withholding needed information
Abusive or intimidating behavior toward others
Misreporting actual time or hours worked
False insurance claims
Kickbacks and bribery
Proper exercise of authority
Theft of business equipment and supplies
Trading or accepting goods for unauthorized favors
Moonlighting, which causes poorer work performance
Knowingly ignoring the health and safety of employees
Sexual harassment
Evading someones privacy

Using basic common sense, if you as manager always act with integrity, you will not violate business
laws or be associated with bad work ethics. This not only prevents any problems for you personally and
professionally, you will also be seen and known as a solid and trustworthy leader. Make it known that
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everyone is expected to adhere to the highest standards of business ethics and must understand that
anything less is totally unacceptable.

Standards regarding ethical behavior need to be developed, set, and communicated throughout the entire
company.

The legal department of a company takes charge of all legal matters of the company including labor
laws, contracts, and legal representation. They are the team who will get involved with any legal
troubles. You would have to take a course in business law to understand all of the ramifications
associated with the legal department; however, we will give a brief explanation of some of the most
known business laws faced by the legal department.

Basically, business law governs the rules of conduct of people and organizations in business, and is
meant to enforce justice and obligation. The major areas of business law are:

Antitrust:-which its laws ensure that competition remains fair by prohibiting companies from merging
with one another, or acquiring one another, to form monopolies. A monopoly exists when there is only
one supplier of some product or service, and can then charge whatever price it wants due to there is no
longer any competition.

Bankruptcy:which laws let a company that is having financial problems seek protection from the
demands of creditors. It explains bankruptcy code regulates liquidation, which means closing the
company and selling its assets to creditors, regulates reorganizations, which means a court supervised
restructuring of a company while its creditors wait for payment.

Business organization:which are the laws that govern the formation of a business.

Consumer protection and product liability:which are regulations regarding products, services, and
credit practices. Consumers should be able to assume that products will work and food is safe to eat,
which is FDA regulated. Also a company cannot knowingly sell a product that it believes will be unsafe or
harmful for its intended use.

Contracts:which are legally binding exchanges of promises or agreement between parties that the law
will enforce.

Employment:which are laws that regulate the hours and conditions under which people work, such as
child labor laws, sets minimum wage, and expands the rights of disabled people. You need to take all
discriminatory laws associated with employment very seriously. The Equal Employment Opportunity
Commission or the EEOC enforces these laws. The website is www.eeoc.gov.

I ntellectual property:which laws protect copyrights, trademarks, and patents.

Securities regulation:which is governed by the Securities and Exchange Commission (SEC). It
polices the financial markets regarding insider trading, stock price manipulation, improper financial
reporting, and improper and illegal practices at brokerage firms.

As manager, if you encounter any type of legal issue that you are not 100% aware of, or not comfortable
with, be sure to ask your boss or the legal department for help. This includes the signing of any legal
documentation. Always be careful on what you say and how you act. If you do get into some trouble,
contact an attorney right away. However, common sense should always prevail, and you will be all right
as long as you are ethically sound whenever any possible legal issues, such as discrimination or consumer
protection, occur.

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Unit-7
Business Communication
I ntroduction
Communication is the passing of information and understanding from one person to another. It is
a sharing of meaning and is the process by which managers reach others to manage their work. Since
managers work through others, all of their management acts pass through the bottle neck of
communication. One person can initiate the process but he cannot complete it, i.e., a communication is
complete only when other person receives it. The purpose of communication is to supply the information
necessary to those to whom it is conveyed for better job performance and cooperation, i.e., to develop
the skill and the will to work.

Communication is a two way traffic. Not only the management communicates the messages and
decisions to the subordinates but too communicated their problems, demands, reports of job
performance etc., to the management.

Definitions of communication

Communication is a meaningful exchange which necessitates that ideas and concepts are transferred and
behavioral change be brought about in the listener

The word communication means sharing of ideas, message and words expressed through a language
which is easily comprehendible to the listener.

Communication may be written or oral. Communication is made through communication symbol, i.e.,
language, pictures and actions (including body language).

Communication is the passing of information and understanding from one person to another.

The basic functions of management (Planning, Organizing, Staffing, Directing and
Controlling) cannot be performed well without effective communication. Business communication
involves constant flow of information. Feedback is integral part of business communication. Organizations
these days are verly large. It involves number of people. There are various levels of hierarchy in an
organization. Greater the number of levels, the more difficult is the job of managing the organization.

Communication here plays a very important role in process of directing and controlling the people in the
oragnization. Immediate feedback can be obtained and misunderstandings if any can be avoided. There
should be effective communication between superiors and subordinated in an organization, between
organization and society at large(for example between management and trade unions). It is essential for
success and growth of an organization. Communication gaps should not occur in any organization.

Business Communication is goal oriented. The rules, regulations and policies of a company have to
be communicated to people within and outside the organization. Business Communication is regulated by
certain rules and norms. In early times, business communication was limited to paper-work, telephone
calls etc. But now with advent of technology, we have cell phones, video conferencing, emails, satellite
communication to support business communication. Effective business communication helps in building
goodwill of an organization.

Business Communication can be of two types:

Oral Communication:-An oral communication can be formal or informal. Generally business
communication is a formal means of communication, like: meetings, interviews, group discussion,
speeches etc. An example of Informal business communication would be - Grapevine.

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Oral communication implies communication through mouth. It includes individuals conversing
with each other, be it direct conversation or telephonic conversation. Speeches, presentations,
discussions are all forms of oral communication. Oral communication is generally recommended when the
communication matter is of temporary kind or where a direct interaction is required. Face to face
communication (meetings, lectures, conferences, interviews, etc.) is significant so as to build a rapport
and trust.

Written Communication:-Written means of business communication includes - agenda, reports,
manuals etc.
Written communication has great significance in todays business world. It is an innovative activity of
the mind. Effective written communication is essential for preparing worthy promotional materials for
business development. Speech came before writing. But writing is more unique and formal than speech.
Effective writing involves careful choice of words, their organization in correct order in sentences
formation as well as cohesive composition of sentences. Also, writing is more valid and reliable than
speech. But while speech is spontaneous, writing causes delay and takes time as feedback is not
immediate.

Report Writing

A Report is a systematic, well organised document which defines and analyses a subject or problem.

A report gives an explanation of any circumstance. In todays corporate world, reports play a
crucial role. They are a strong base for planning and control in an organization, i.e., reports give
information which can be utilized by the management team in an organization for making plans and for
solving complex issues in the organization.

A report discusses a particular problem in detail. It brings significant and reliable information to the
limelight of top management in an organization. Hence, on the basis of such information, the
management can make strong decisions. Reports are required for judging the performances of various
departments in an organization.

An effective report can be written going through the following steps-

Determine the objective of the report, i.e., identify the problem.
Collect the required material (facts) for the report.
Study and examine the facts gathered.
Plan the facts for the report.
Prepare an outline for the report, i.e., draft the report.
Edit the drafted report.
Distribute the draft report to the advisory team and ask for feedback and recommendations.

The essentials of good/ effective report writing are as follows-

Know your objective, i.e., be focused.
Analyze the niche audience, i.e., make an analysis of the target audience, the purpose for which
audience requires the report, kind of data audience is looking for in the report, the implications of
report reading, etc.
Decide the length of report.
Disclose correct and true information in a report.
Discuss all sides of the problem reasonably and impartially. Include all relevant facts in a report.
Concentrate on the report structure and matter. Pre-decide the report writing style. Use vivid
structure of sentences.
The report should be neatly presented and should be carefully documented.
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Highlight and recap the main message in a report.
Encourage feedback on the report from the critics. The feedback, if negative, might be useful if
properly supported with reasons by the critics. The report can be modified based on such
feedback.
Use graphs, pie-charts, etc to show the numerical data records over years.
Decide on the margins on a report. Ideally, the top and the side margins should be the same
(minimum 1 inch broad), but the lower/bottom margins can be one and a half times as broad as
others.
Attempt to generate readers interest by making appropriate paragraphs, giving bold headings for
each paragraph, using bullets wherever required, etc.

Cross-Cultural Communication

The term cross-cultural implies interaction with persons of different cultural, ethnic, racial, gender,
sexual orientation, religious, and age and class backgrounds. Cross-cultural communication is a
process of exchanging, negotiating, and mediating one's cultural differences through language, non-
verbal gestures, and space relationships. It is also the process by which people express their openness
to an intercultural experience.

During the past decades the growth of globalisation, immigration and international tourism has involved
large numbers of people in cross-cultural interaction (also referred to as inter-cultural interaction or
international relations) whether they have liked it or not.

With liberalization of national economies and increasing pace of globalization,communication levels have
increased among individuals, groups and companies across communities, countries and continents.
People with different backgrounds, mindsets and cultures are interacting through conferences,
correspondence and nonverbal communication leading to more willing cooperation. Human civilization is
developing, progressing and moving forward at a much faster rate than ever before, removing age-old
disparities of race, religion and colour. The differences in culture occupy the central stage of emerging
global world where progress would largely depend upon how well managers and leaders are able to
communicate across varied cultures to achieve common goal of progress for all.

Cross-cultural communication refers to the capability of successfully forming, fostering, and
improving relationship with members of a culture different from ones own. Culture may differ from
region to region within or across the state or country.

Cross-cultural communication (also frequently referred to as intercultural communication, which is
also used in a different sense, though) is a field of study that looks at how people from differing cultural
backgrounds communicate, in similar and different ways among themselves, and how they endeavour to
communicate across cultures

Communication Problems

Poor or ineffective communication
People to conflict do not communicate
Distortion in the messages through third party
Media
Speakers
Listeners

Challenges to Business Communication

Misinterpretation of communication
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Inability to understand the others perspectives
Cultural barriers to effective communication
Language differences
Misinterpreted motives
Poor listening skills
Secrecy and deception
Inadequate information gathering/time constraints

Presentation Skills

A presentation is a means of communication which can be adapted to various speaking situations,
such as talking to a group, addressing a meeting or briefing a team. To be effective, step-by-step
preparation and the method and means of presenting the information should be carefully considered.

Presentation can be defined as a formal event characterized by teamwork and use of audio-visual aids.
The main purpose of presentation is to give information, to persuade the audience to act and to create
goodwill. A good presentation should have a good subject matter, should match with the objective,
should best fit the audience, and should be well organized.

Characteristics of a Good/ Effective Presentation

1) The presentation ideas should be well adapted to your audience. Relate your presentation
message/idea to the interests of the audience. A detailed audience analysis must be made before
the presentation, i.e., an analysis of the needs, age, educational background, language, and
culture of the target audience. Their body language instantly gives the speaker the required
feedback.
2) A good presentation should be concise and should be focused on the topic. It should not move
off-track.
3) A good presentation should have the potential to convey the required information.
4) The fear should be transformed into positive energy during the presentation. Be calm and relaxed
while giving a presentation. Before beginning, wait and develop an eye contact with the
audience. Focus on conveying your message well and use a positive body language.
5) To communicate the desired information, the speaker should use more of visual aids such as
transparencies, diagrams, pictures, charts, etc. Each transparency/slide should contain limited
and essential information only. No slide should be kept on for a longer time. Try facing the
audience, rather than the screen. The speaker should not block the view. Turn on the room lights
else the audience might fall asleep and loose interest. Organize all the visuals for making a logical
and sound presentation.
6) A good presentation must be planned. The speaker must plan how to begin the presentation,
what to speak in the middle of presentation and how to end the presentation without losing
audience interests at any point of time.
7) Rehearse and practice the presentation. This will help the speaker to be more confident and self-
assured. The more the speaker rehearses the better the presentation turns to be.
8) The speaker should encourage more questions from the audience. He should be honest enough
to answer those questions. If any biased question is put forth by the audience, rearticulate it
before answering.
9) Summarize the presentation at the end. Give final comments. Leave a positive impact upon the
audience.
10) The speaker must have a presentable appearance while giving a presentation. The speaker
should stand with feet far apart maintaining a good balance. He must use confident gestures. He
must use short and simple words.
11) Try to gain and maintain audience interest by using positive quotes, humour, or remarkable fact.
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12) The speaker must be affirmative and optimistic before giving presentation. He should ensure all
tools and equipments to be used in presentation are working well.
13) The speaker must state the objectives of the presentation at beginning of the presentation.

I nterview skills

An interview means a face to face interaction between the interviewer and the candidate/candidates so
as to obtain desired information from him/them. It can also be defined as a way of exchanging meanings
between individuals by using a common set of symbols. Interviews generally need a preparation. J ob
interviews seem frightening, even if the individual is well prepared. Interviews have a definite structure.
Clear communication should take place during an interview. All interviews have a definite purpose familiar
to the interviewer and the candidate/interviewee.

Congratulations, you have an interview! You have done well to get this far you are 90% of the
way to getting that job. The employer wants to meet you to find out more about you, to see if you will fit
in the organisation, whether you are committed and motivated and to find out more about your skills and
achievements.Now you need to prepare for the interview, because if you fail to prepare, you are
preparing to fail. Whoever makes the best impression at the interview gets the job!

Types of interviews

One-to-one
Panel
Group
Assessment Centre
Competency based
Telephone

There are several types of interview which you should be aware of. Often, the company will tell you what
to expect but here are some examples and you will probably experience one or more of these at some
point in your career.

One-to-one:-Probably easiest to cope with as it is less threatening
Probably easier to build rapport with the interviewer
Could be one of a series of interviews as different specialists take turns to assess you
Likely to be quite specific and focused as the interviewer could be directly involved in your future
work

Panel:-Probably more challenging that one-to-one
Could involve facing between three to six interviewers
Popular with large organisations

Group:-Consists of several applicants answering questions either individually or as part of the group
Could be given a topic to discuss as a group
Could be asked to make a presentation either as a group or individually

Competency based
Increasingly used by organisations which look at key skills and qualities such as communication,
problem solving and team work.
Questions based on providing examples of how you possess these skills and competencies
Could involve detailed and persistent questioning be prepared to be challenged


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Assessment Centre:-
Multi-disciplinary method of assessing applicants
Could involve up to two days of intensive interviewing, testing and exercises
Could expect to experience all the above types of interview

Before I nterview

Take a copy of your application form/CV with you in a folder, a pen and paper and the interview contact
number, just in case you are delayed and need to contact them.Make sure you arrive in plenty of time,
but not too early. About 10 minutes is perfect as this gives you time to freshen up, calm yourself,
perhaps with deep breathing exercises and to take the opportunity to get a feel of the place. Remember
your interview starts the moment you enter the building and anyone you speak to may feed back to the
interviewer.
Be pleasant to the receptionist and take time when waiting for your interview to note what is happening
around you. You should have turned off your mobile phone by now. Can you get a feel of the atmosphere
of the company? Your interview is not just about the company finding out about you it is a two-way
process as you should also be finding out about what it would be like to work there.When you are called
in for your interview take a deep breath and be C A L M. This is it!!

During the Interview
Give a firm but gentle handshake when you meet your interviewer(s), sit when invited to do so, make
direct eye contact and remember to smile. From the moment you meet, your communication with the
interviewer forms part of the decision-making as to whether to recruit you; in fact most decisions are
made within the first threeminutes! So, you need to be aware of both your verbal and non-verbal
communication skills.

Verbal communication

Show genuine interest in the position
Listen and answer the questions asked
Never argue a point
If you do not understand or hear a question, ask for it to be repeated
Do not interrupt

Non-verbal communication

Appearance and mannerisms are VERY important think of body language and facial expressions
Put your feet squarely on the floor or cross your legs at the ankle
Put anything you are carrying on the floor
Rest your hands in your lap
Nod your head to show you are listening
Do not fidget
Be serious but do not forget to smile
Tips for the I nterviewee

The interviewee should be dressed formally, and not casually. Have a pleasing appearance as the
candidates personality is a significant part of the communication.
Always carry an extra CV, a notepad to write on, a pen, and all essential things required in an
interview.
Practice, practice and practice in advance. Prepare and rehearse for the unexpected also.
Research a lot about the organization for which you are being interviewed. w
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As soon as the interview gets over, pen down the name of the interviewer, your strengths and
weaknesses, answers to questions raised by you during the interview and the feedback of the
interviewer.
Be punctual. Try reaching before time for the job interview.
Do not indulge in a fight or argument with the interviewer.
Answer the questions specifically, truly and undoubtedly.
Be courteous and sophisticated during an interview.
J ust be yourself. Do not boast about yourself. The interviewer is smart enough to judge the
candidates intelligence and aptness for the job.
Do not make negative statements or comments about your past employer.
Your body language should be positive during the interview, i.e., maintain an eye-to-eye contact
with the interviewer, sit in well balanced and confident posture, do not lean on the table, do not
yawn, smile when appropriate, etc.

Tips for the I nterviewer

The interviewer should be an active listener. He should not interrupt unnecessarily.
The interviewer should be considerate enough. Even if the interviewer does not agree with the
interviewee, he must respect the latters feelings.
The interviewer should be friendly and understanding. He should begin the interview in a friendly
manner, some friendly conversation and then show concern in family background, hobbies, etc.
This will make the interviewee more relaxed and comfortable.
The interviewer should restrain to the time allotted. He shouldnt indulge in arguments
unnecessarily. He should try to be precise.
The interviewer must be thoroughly prepared for the questions that are likely to be asked. He
should be a good planner.
The interviewer must focus attention on the interviewee. He should use positive gestures when
conducting the interview.
Encourage/invite questions from the interviewee. Ensure that the interviewee clarifies the
question he has. When selected a candidate should not feel he was not told about a certain
aspect of the job.
Avoid distraction in the interview area. Ensure that there is no or minimal distraction where the
interview is being conducted. A phone ringing all the time in the background can distract the
interviewer and interviewee.

Video Conferencing

Videoconferencing is the conduct of a videoconference (also known as a video conference or video
teleconference) by a set of telecommunication technologies which allow two or more locations to
communicate by simultaneous two-way video and audio transmissions. It has also been called 'visual
collaboration' and is a type of groupware.
Videoconferencing differs from videophone calls in that it's designed to serve a conference or
multiple locations rather than individuals. It is an intermediate form of video telephony, first deployed
commercially in the United States by AT&T Corporation during the early 1970s as part of their
development of Picture phone technology.
Conducting a conference between two or more participants at different sites by using computer
networks to transmit audio and video data. For example, a point-to-point (two-person) video
conferencing system works much like a video telephone. Each participant has a video camera,
microphone, and speakers mounted on his or her computer. As the two participants speak to one
another, their voices are carried over the network and delivered to the other's speakers, and whatever
images appear in front of the video camera appear in a window on the other participant's monitor.

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Multipoint videoconferencing allows three or more participants to sit in a virtual conference room and
communicate as if they were sitting right next to each other. Until the mid-90s, the hardware costs made
videoconferencing prohibitively expensive for most organizations, but that situation is changing rapidly.
Many analysts believe that videoconferencing will be one of the fastest-growing segments of the
computer industry in the latter half of the decade.

Videoconference Basics

Videoconferencing technology allows people at two or more locations to see and hear each other
at the same time. A two-site conference is called a point-to-point connection. When three or
more sites are participating it is a multi-point conference. In addition, it is often possible during
a conference to share Internet pages, library catalogs and demonstrate computer software.
Basic equipment at each site consists of a large screen video display, a small remotely controlled
camera, microphone, speakers, a Codec (signal processor) and, of course, a special phone line.

Getting Connected

If you can dial a phone, change stations on your television, or warm your coffee in the
microwave oven, you can initiate a point-to-point conference with another AAN member. You
simply dial the far site's 4-digit number to engage the call; similar to what you do when you use
the telephone.
Participation in a multi-point conference requires the assistance of staff at the Adirondack Area
Network (AANet). They will provide the bridge that is needed to connect three or more
participants.

Before the Conference

First of all, it's rude to waste people's time, so make sure you test your equipment in advance,
issue a clear agenda, and establishes set times to start and finish. Send participants a list of the
ground rules.
Ensure that your presentation materials are properly formatted. When you plan to use an elmo or
scan converter/laptop hookup consider the needs of the audience(s) at the far site(s) where your
material will be displayed. A good rule of thumb is to prepare your materials in the largest font
size that will fit on a
standard transparency or letter size page on your computer keeping in mind that 32pt should be
the smallest and 60pt the largest. Always test your document on your own video equipment
beforehand!
Arrive 10-15 minutes early to distribute materials, conduct a pre-conference briefing, and get
comfortable with the facility and technology.
Adjust the camera - use the zoom and pan camera controls. To show 1-2 people, show them
from the waist up, centered in the screen; to show a group, adjust the tilt so that the faces are
about 2/3 of the way up the screen. Set Presets on key people, groups and/or exhibits for
smooth transitions.
When presenting a formal conference dress conservatively. Wear plain clothes and accessories,
no plaids, prints, "hot" colors, busy ties or large shiny jewelry. Light blues or pastels are
preferred to white, which may glare. If wearing a white shirt or blouse, add a dark jacket to
reduce glare. Avoid all-light or all-dark clothing. They can "trick" the cameras automatic
brightness control. For everyday use and participating in EMS lectures, dress as you wish,
keeping in mind the above guidelines for the best showing.

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Unit-8

Contemporary Management Practice

MI S(Management I nformation System)
Management I nformation System (M.I .S.) is basically concerned with processing data into
information. This is then communicated to the various Departments in an organization for appropriate
decision-making.
Data collection involves the use of Information Technology (IT) comprising: computers and
telecommunications networks (E-Mail, Voice Mail, Internet, telephone, etc.)
Computers are important for more quantitative, than qualitative, data collection, storage and
retrieval; Special features are speed and accuracy, and storage of large amount of data.

The concept of MIS gives high regard to the individual and his ability to useinformation. An MIS
gives information through data analysis. While analyzing the data, it relies on many academic
disciplines. These include the theories, principles andconcepts from the Management Science,
Psychology and Human Behavior, making the MID more effective and useful. These academic
disciplines are used in designing the MIS, evolving the decision support tools for modeling and
decision making.

The Management Information System (MIS) is a concept of the last decade ortwo. It has been
understood and described in a number ways. It is also known as theInformation System, the
Information and Decision System, the Computer- basedinformation System.

The MIS has more than one definition, some of which are given below.

1. The MIS is defined as a system which provides information support for decision making in the
organization.
2. The MIS is defined as an integrated system of man and machine for providing the
information to support the operations, the management and the decision making function in
the organization.
3. The MIS is defined as a system based on the database of the organization evolved for the
purpose of providing information to the people in the organization.

MRP (Material Requirement Planning)
Success of an operation department of any organization is dependent upon an efficient
production plan. One of the key essential of a production plan is material and manufacturing planning
system. Material requirement planning plays a pivotal role in assembly-line production. Material
requirement planning is a system based approach, which organizes all required production material.

Material Requirements Planning (MRP) is a computer-based production planning and
inventory control system. MRP is concerned with both production scheduling and inventory
control. It isa material control system that attempts to keep adequate inventory levels to assure that
requiredmaterials are available when needed. MRP is applicable in situations of multiple items with
complexbills of materials. MRP is not useful for job shops or for continuous processes that are tightly
linked.

Material requirement planning is an information system for production planning based on inventory
management. The basic components of material planning are:

1. Material planning provides information that all the required raw material and products are
available for production.
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2. Material planning ensures that inventory level are maintained at its minimum levels. But also
ensures that material and product are available whenever production is scheduled, therefore,
helping in matching demand and supply.
3. Material planning provides information of production planning and scheduling but also provides
information around dispatch and stocking.

Objective of Material Requirement Planning
Material requirement planning is processed which production planning and inventory control system,
and its three objectives are as follows:

Ensure the availability of materials, components, and products for planned production and
forcustomer delivery.
Maintain the lowest possible level of inventory,
Plan manufacturing activities, delivery schedules, and purchasing activities.

Advantages and Disadvantages of an MRP system

MRP is a comprehensive system used for planning and scheduling materials requirement. It assists in
improving the materials handling capability of an organization. But it has certain disadvantages. Some of
the advantages and disadvantages of MRP have been discussed below

Advantages

Some of the key benefits that can be derived from using an MRP system are:
Reduced per unit cost of production thus enabling an organization to price its products
competitively
Low inventory levels, especially for in-process materials
Better response to market demand
Better customer service
Reduced set-up and tear-down costs
Comprehensive material tracking and optimized production scheduling
Improvement in capacity allocation and planning

Disadvantages

Following are the disadvantages of an MRP system:

High costs and technical complexities in implementation. In addition, organizations, which use an
MRP system need to spend considerable effort on installing necessary equipment (computers),
training personnel, modifying the software to serve their specific needs, validating, testing, and
eliminating possible errors, and maintaining the software.
The time required for planning and implementing an MRP system is generally very long.
Data entry and file maintenance requires considerable inputs in the form of training and
education of the personnel.
Dependence on forecast values and estimated lead-time can sometimes be misleading.

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J I T - J ust in Time

J ust in Time (J I T) production is a manufacturing philosophy which eliminates waste
associated with time, labour, and storage space. Basics of the concept are that the company
produces only what is needed, when it is needed and in the quantity that is needed. The company
produces only what the customer requests, to actual orders, not to forecast. J IT can also be defined as
producing the necessary units, with the required quality, in the necessary quantities, at the last safe
moment. It means that company can manage with their own resources and allocate them very easily.

It is a management philosophy which aims at eliminating waste from every aspect of manufacturing and
its related activities.

J I T is defined as A technique for the organisation of work-flows, to allow rapid, high quality, flexible
production whilst minimising manufacturing waste and stock levels.

J ust in Time (J I T) is a production and inventory control system in which materials are purchased and
units are produced only as needed to meet actual customer demand.

Benefits and problems

1. Reduced set up times in warehouse:-The Company in this case can focuses on other
processes that might need improvement.
2. I mproved flows of goods in/ through/ out warehouse:-Employees will be able to process
goods faster.
3. Employees who possess multi-skills are utilized more efficiently:-The company can use
workers in situations when they are needed, when there is a shortage of workers and a high
demand for a particular product.
4. Better consistency of scheduling and consistency of employee work hours:-If there is
no demand for a product at the time, workers dont have to be working. This can save the
company money by not having to pay workers for a job not completed or could have them focus
on other jobs around the warehouse that would not necessarily be done on a normal day.
5. I ncreased emphasis on supplier relationships:-Having a trusting supplier relationship is
important for the company because it is possible to rely on goods being there when they are
needed.
6. Supplies continue around the clock keeping workers productive and businesses
focused on turnover:-Employees will work hard to meet the company goals.

Total Quality Management (TQM)
I ntroduction

To understand the meaning of Total quality management, let us first know what does Quality
mean?

Quality refers to a parameter which decides the superiority or inferiority of a product or service. Quality
can be defined as an attribute which differentiates a product or service from its competitors. Quality plays
an essential role in every business. Business marketers need to emphasize on quality of their brands over
quantity to survive the cut throat competition.

Why would a customer come to you if your competitor is also offering the same product? The difference
has to be there in quality. Your brand needs to be superior for it to stand apart from the rest.



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Definitions

Total Quality Management (TQM) refers to management methods used to enhance quality and
productivity in business organizations. TQM is a comprehensive management approach that works
horizontally across an organization, involving all departments and employees and extending backward
and forward to include both suppliers and clients/customers.

It is an integrated and comprehensive system of planning and controlling all business functions so that
products or services are produced which meet or exceed customer expectations.

Total Quality management is defined as a continuous effort by the management as well as employees of
a particular organization to ensure long term customer loyalty and customer satisfaction.

To be successful implementing TQM, an organization must concentrate on the eight key
elements:

Ethics
Integrity
Trust
Training
Teamwork
Leadership
Recognition
Communication

Ethics:Ethics is the discipline concerned with good and bad in any situation. It is a two-faceted subject
represented by organizational and individual ethics. Organizational ethics establish a business code of
ethics that outlines guidelines that all employees are to adhere to in the performance of their work.
Individual ethics include personal rights or wrongs.

I ntegrityIntegrity implies honesty, morals, values, fairness, and adherence to the facts and sincerity.
The characteristic is what customers (internal or external) expect and deserve to receive. People see the
opposite of integrity as duplicity. TQM will not work in an atmosphere of duplicity.
Trust:Trust is a by-product of integrity and ethical conduct. Without trust, the framework of TQM
cannot be built. Trust fosters full participation of all members. It allows empowerment that encourages
pride ownership and it encourages commitment. It allows decision making at appropriate levels in the
organization, fosters individual risk-taking for continuous improvement and helps to ensure that
measurements focus on improvement of process and are not used to contend people. Trust is essential to
ensure customer satisfaction. So, trust builds the cooperative environment essential for TQM.
Training:Training is very important for employees to be highly productive. Supervisors are solely
responsible for implementing TQM within their departments, and teaching their employees the
philosophies of TQM. Training that employees require are interpersonal skills, the ability to function within
teams, problem solving, decision making, job management performance analysis and improvement,
business economics and technical skills. During the creation and formation of TQM, employees are
trained so that they can become effective employees for the company.
Teamwork:To become successful in business, teamwork is also a key element of TQM. With the use of
teams, the business will receive quicker and better solutions to problems. Teams also provide more
permanent improvements in processes and operations. In teams, people feel more comfortable bringing
up problems that may occur, and can get help from other workers to find a solution and put into place.
There are mainly three types of teams that TQM organizations adopt.



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Quality improvement teams or excellence teams (QI Ts)These are temporary teams with
the purpose of dealing with specific problems that often recur. These teams are set up for period
of three to twelve months.
Problem solving teams (PSTs)These are temporary teams to solve certain problems and
also to identify and overcome causes of problems. They generally last from one week to three
months.
Natural work teams (NWTs)These teams consist of small groups of skilled workers who
share tasks and responsibilities. These teams use concepts such as employee involvement teams,
self-managing teams and quality circles. These teams generally work for one to two hours a
week.

Leadership:It is possibly the most important element in TQM. It appears everywhere in organization.
Leadership in TQM requires the manager to provide an inspiring vision, make strategic directions that are
understood by all and to instill values that guide subordinates. For TQM to be successful in the business,
the supervisor must be committed in leading his employees. A supervisor must understand TQM, believe
in it and then demonstrate their belief and commitment through their daily practices of TQM. The
supervisor makes sure that strategies, philosophies, values and goals are transmitted down throughout
the organization to provide focus, clarity and direction. A key point is that TQM has to be introduced and
led by top management. Commitment and personal involvement is required from top management in
creating and deploying clear quality values and goals consistent with the objectives of the company and
in creating and deploying well defined systems, methods and performance measures for achieving those
goals.

Communication:It binds everything together. Starting from foundation to roof of the TQM house,
everything is bound by strong mortar of communication. It acts as a vital link between all elements of
TQM. Communication means a common understanding of ideas between the sender and the receiver.
The success of TQM demands communication with and among all the organization members, suppliers
and customers. Supervisors must keep open airways where employees can send and receive information
about the TQM process. Communication coupled with the sharing of correct information is vital. For
communication to be credible the message must be clear and receiver must interpret in the way the
sender intended.

Downward communication:This is the dominant form of communication in an organization.
Presentations and discussions basically do it. By this the supervisors are able to make the
employees clear about TQM.
Upward communication:By this the lower level of employees are able to provide suggestions
to upper management of the effects of TQM. As employees provide insight and constructive
criticism, supervisors must listen effectively to correct the situation that comes about through the
use of TQM. This forms a level of trust between supervisors and employees. This is also similar to
empowering communication, where supervisors keep open ears and listen to others.
Sideways communication:This type of communication is important because it breaks down
barriers between departments. It also allows dealing with customers and suppliers in a more
professional manner.

Recognition:Recognition is the last and final element in the entire system. It should be provided for
both suggestions and achievements for teams as well as individuals. Employees strive to receive
recognition for themselves and their teams. Detecting and recognizing contributors is the most important
job of a supervisor. As people are recognized, there can be huge changes in self-esteem, productivity,
quality and the amount of effort exhorted to the task at hand. Recognition comes in its best form when it
is immediately following an action that an employee has performed. Recognition comes in different ways,
places and time such as,

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WaysIt can be by way of personal letter from top management. Also by award banquets,
plaques, trophies etc.
Places Good performers can be recognized in front of departments, on performance boards
and also in front of top management.
Time Recognition can give at any time like in staff meeting, annual award banquets, etc.

Six-Sigma

The objective of Six Sigma quality is to reduce process output variation so that on a long term basis,
which is the customers aggregate experience with our process over time, this will result in no more than
3.4 defect parts per million (PPM) opportunities (or 3.4 defects per million opportunities DPMO). For a
process with only one specification limit (upper or lower), this results in six process standard deviations
between the mean of the process and the customers specification limit (hence, Six Sigma). For a process
with two specification limits (upper and lower), this translates to slightly more than six process standard
deviations between the mean and each specification limit such that the total defect rate corresponds to
equivalent of six process standard deviations.

Six Sigma is a data-based methodology to improve performance by reducing variability. It requires
thorough understanding of product and process knowledge and is completely driven by customer
expectations.

In other words, it is a methodology to achieve 3.4 defects per million opportunities. It can also be used to
bring breakthrough improvements in the process. It focuses on the bottom-line and is a proven
methodology for problem solving.

Goals of Six Sigma

To reduce variation
To reduce defects /rework
To improve yield /productivity
To enhance customer satisfaction
To improve the bottom-line
To improve top-line
Shortening cycle-time

Sigma Level Vs. Number of Defects

Sigma Level Number of defects per Million
2 Sigma 308537
3 Sigma 66807
4 Sigma 6210
5 Sigma 233
6 Sigma 3.4

Definitions
A quality discipline that focuses on product and service excellence to create a culture that
demands perfection (on target, every time!)

Six Sigma is a highlydisciplined process that helps us focus on developing and delivering near-perfect
productsand services.

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Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving
toward six standard deviations between the mean and the nearest specification limit) in any process
from manufacturing to transactional and from product to service.

There are two Six Sigma processes: Six Sigma DMAI C and Six Sigma DMADV, each term
derived from the major steps in the process.

Six Sigma DMAIC is a process that (defines measures, analyzes, improves, and controls) existing
processes that fall below the Six Sigma specification.

Six Sigma DMADV (defines measures, analyzes, designs, and verifies new processes or
product) that are trying to achieve Six Sigma quality.
All Six Sigma processes are executed by Six Sigma Green Belts or Six Sigma Black Belts, which are then
overseen by a Six Sigma Master Black Belts, terms created by Motorola

Evolution of Six Sigma

The need for process improvements and a continuous improvement methodology like Six Sigma came
into existence only due to

Rising customer expectations in terms of quality, delivery and cost,
Global competition - J apanese and Chinese threats,
Proven technique for quantum jumps in business results.

In the year 1980, Motorola started facing survival problems due fierce competition from J apanese
companies. The CEO of Motorola - Bob Galvin was determined to overcome the competition. He
challenged his organization to achieve a ten-fold improvement in performance over a period of five years.
To achieve the same, strong emphasis was given to training of employees and also performing global
benchmarking.

Bill Smith was a veteran engineer in Motorola and he wrote a research paper on product quality and its
performance after delivery to customer. In his report he discovered that the products with fewer non-
conformities (high quality) were the ones that performed well after delivery to the customer. It was
accepted by everyone but the challenge that came in front of Motorola executives was to develop a
solution to tackle this problem.

Mikel Harry having a doctorate from Arizona University worked with Bill Smith in developing a four-phase
problem solving approach - Measure, Analyze, Improve and Control. A few years later Bob Galvin
launched a long-term quality program called The Six Sigma Quality Program in Motorola.

Looking at the success of Motorola, many companies like Texas Instruments, Allied Signal etc started
using Six Sigma methodology to bring organization-wide improvements.

In 1990s J ack Welch launched Six Sigma in GE in a big way. He implemented Six Sigma in all areas and
ensured that the entire organization participates in the initiative. He changed the performance incentives
and made them based on individuals ability and enthusiasm to take part in Six Sigma initiatives. He
transformed GE to a state where Six Sigma had become the culture of the organization and not just a
methodology for brining organization-wide improvements.


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Capability Maturity Model (CMM)
I ntroduction
The Capability Maturity Model (CMM) is a methodology used to develop and refine an organization's
software development process. The model describes a five-level evolutionary path of increasingly
organized and systematically more mature processes. CMM was developed and is promoted by the
Software Engineering Institute (SEI), a research and development center sponsored by the U.S.
Department of Defense (DoD). SEI was founded in 1984 to address software engineering issues and, in a
broad sense, to advance software engineering methodologies. More specifically, SEI was established to
optimize the process of developing, acquiring, and maintaining heavily software-reliant systems for the
DoD. Because the processes involved are equally applicable to the software industry as a whole, SEI
advocates industry-wide adoption of the CMM.

Definitions
The Capability Maturity Model (CMM) is a methodology used to develop and refine an
organization's software development process.
The CMM is similar to I SO 9001, one of the ISO 9000 series of standards specified by the
International Organization for Standardization (ISO). The ISO 9000 standards specify an effective quality
system for manufacturing and service industries; ISO 9001 deals specifically with software development
and maintenance. The main difference between the two systems lies in their respective purposes: ISO
9001 specifies a minimal acceptable quality level for software processes, while the CMM establishes a
framework for continuous process improvement and is more explicit than the ISO standard in defining
the means to be employed to that end.
Capability Maturity Model (CMM) broadly refers to a process improvement approach that is
based on a process model. CMM also refers specifically to the first such model, developed by the
Software Engineering Institute (SEI) in the mid-1980s, as well as the family of process models that
followed. A process model is a structured collection of practices that describe the characteristics of
effective processes; the practices included are those proven by experience to be effective.

CMM's Five Maturity Levels of Software Processes

At the initial level, processes are disorganized, even chaotic. Success is likely to depend on
individual efforts, and is not considered to be repeatable, because processes would not be
sufficiently defined and documented to allow them to be replicated.
At the repeatable level, basic project management techniques are established, and successes
could be repeated, because the requisite processes would have been made established, defined,
and documented.
At the defined level, an organization has developed its own standard software process through
greater attention to documentation, standardization, and integration.
At the managed level, an organization monitors and controls its own processes through data
collection and analysis.
At the optimizing level, processes are constantly being improved through monitoring feedback
from current processes and introducing innovative processes to better serve the organization's
particular needs.


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Supply Chain Management (SCM)
I ntroduction
If you go to a Supermarket and pick up a few items of the shelf from electronics and white goods
or even clothes and look at the labels, chances are that you will find them having been manufactured in
China or Mexico. The coffee pods you buy to use for your everyday use comes from Africa. Computers
have been shipped out of South American Factories and Soft furnishings on the shelves are from India
and Hong Kong.

Global markets are expanding beyond borders and re-defining the way demand and supplies are
managed. Global companies are driven by markets across continents. In order to keep the cost of
manufacturing down, they are forced to keep looking to set up production centers where cost of raw
materials and labor is cheap. Sourcing of raw materials and vendors to supply the right quality, quantity
and at right price calls for dynamic procurement strategy spanning across countries.

With the above scenario you find companies procuring materials globally from various vendors to supply
raw materials to their factories situated in different continents. The finished goods out of these different
factory locations then pass through different chains of distribution network involving warehouses, exports
to different countries or local markets, distributors, retailers and finally to the end customer.

Definitions
SCM is the management of a network of all business processes and activities involving procurement of
raw materials, manufacturing and distribution management of Finished Goods. SCM is also called the art
of management of providing the Right Product, At the Right Time, Right Place and at the Right Cost to
the Customer.

Supply Chain definition is the movement of materials as they flow from their source to the end
customer. Supply Chain includes purchasing, manufacturing, warehousing, transportation, customer
service; demand planning, supply planning and Supply Chain management. It is made up of the people,
activities, information and resources involved in moving a product from its supplier to customer.

The management of the movement of goods and flow of information between an organization and its
suppliers and customers, to achieve strategic advantage. Supply chain management covers the processes
of managing materials, physical distribution, purchasing, information, and logistics.

Example of a Supply Chain

Raw materials Manufacturer Distribution Customer

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Supply Chain Benefits

Experience shows that the benefits of a well designed and implemented Supply Chain
Management strategy is substantial. Successfully implemented projects have provided benefits
such as:
Reduction of Transportation, Warehousing, and Distribution Costs
Lean Processing from Supplier to Customer
Reduced Direct and Indirect Labor Costs
Optimized Stock Levels
Increased Material Flow Velocity
Accurate J ob Costing and Scheduling
Streamlined Purchasing Control
Increased Decision Making Speed and Responsiveness to Demand Change
Increased Customer Service
Increased Inventory Availability, Customer Order Fill Rates, Accuracies and
Services
Reduced Operations Support Costs
Reduced Inventory Carrying Costs
Improved Productivity of Procurement Operations
Improved Quality of Products and Service

Supply Chain Challenges

Customer Trading Rules
Supplier Trading Rules
Inventory Service Level Balance
Multiple Sales Channels
New Geographic Markets
New Product Offerings
Postponement
Supplier Proliferation
Customization and Personalization
Uninterrupted Materials Visibility
Transportation Shortages
Regulatory Compliance
Fuel Volatility

ERP - Enterprise Resource Planning
I ntroduction
ERP is an acronym for Enterprise Resource Planning; a term that is used for business
management systems which are designed to integrate the data sources and processes of an entire
organization into a unified system. A key element is the use of a single database to store data for the
various system modules.
ERP systems utilize components of both computer software and hardware. Traditionally the software is
installed at the customer site, but many companies now offer hosted or 'cloud' ERP solutions to reduce
the up-front and technical costs.
Enterprise Resource Planning (ERP) has evolved from Material Requirements Planning (MRP) as a means
for covering all of the basic functions of an enterprise, in addition to production and inventory.


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Definitions
Enterprise Resource Planning An accounting oriented information system for identifying and planning
the enterprise-wide resources to make ship and account for customer orders.
An enterprise planning system is an integrated computer based application used to manage internal and
external resources, including tangible assets, financial resources, material and human resources.

Enterprise resource planning (ERP) is business management software that allows an organization to
use a system of integrated applications to manage the business. ERP software integrates all facets of an
operation, including development, manufacturing, sales and marketing.

Enterprise Resource Planning (ERP) is defined as an Integrated Computer based planning technique
used in Organizations and Enterprises for management and resource planning. Resources here mean
both internal and external resources of an organization. Various resources of an organization can include
financial resource, tangible resource, human resource and also various material requirements.
ERP can also be defined as an application and software architecture that facilitates Information flows
between various business functions inside and outside of an organization. It consolidates business
environment into a uniform system environment. Basically what ERP systems do is that it integrates and
automates processes within an entire organization regardless of the organizations behaviour.

ERP is a method for effective planning and control of all resources needed to take, make, ship and
account for customer orders in a manufacturing, distribution or service company.

ERP are used in various Industries and organizations like manufacturing, distribution, transportation,
education, healthcare, banking and others. ERP delivers a single database that contains all data for the
various software modules. It typically addresses areas such as:

1) Manufacturing resource planning: Engineering, bills of materials, scheduling, capacity,
workflow management, quality control, cost management, manufacturing process, manufacturing
projects and manufacturing flow.
2) Supply chain management: Order to cash, inventory, order entry, purchasing, product
configuration, supply chain planning, supplier scheduling, inspection of goods, claim processing
and commission calculation.
3) Financial management: General ledger, cash management, accounts payable, accounts
receivable, fixed assets.
4) Project management: Billing, time and expense, performance units, activity management.
5) Human resource management: Human resources, payroll, training, time and attendance,
roistering, benefits.


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Advantages of Enterprise Resource Planning (ERP):

1. Ease of Use.
2. General Purpose.
3. Totally Integrated System.
4. Readymade solutions for most of the Problems.
5. Integration of all functions already established.
6. Dependency on Human Resources eliminated.
7. Suppliers and customers can do online communication.

Performance Management
I ntroduction
Performance Management System (PMS) is developed for the human resource (HR) team
of any organization. At present, HR does the complete process of performance appraisals manually. In
the existing process, each employee has to fill the performance appraisal form and give back the hard
copy of the appraisal form to HR. The HR manually keeps track of form submission of each employee and
submits these forms to the managers for review. The managers then review each employee's form and
hand over the reviewed form back to HR.

This process is tedious in keeping track of each form submission, sending reminder mails in case of failed
submissions before the due date and keeping track of the managers review for each employee.

Performance management is the systematic process by which an agency involves its employees, as
individuals and members of a group, in improving organizational effectiveness in the accomplishment of
agency mission and goals.

Employee performance management includes:

Planning work and setting expectations,
Continually monitoring performance,
Developing the capacity to perform,
Periodically rating performance in a summary fashion, and
Rewarding good performance.
Definitions
Performance Management is both a strategic and an integrated approach to delivering successful
results in organizations by improving the performance and developing the capabilities of teams and
individuals.
Performance management is the systematic process by which an agency involves its employees, as
individuals and members of a group, in improving organizational effectiveness in the accomplishment of
agency mission and goals.
Performance management is the process of reviewing an employees performance during the
preceding year or cycle and deciding where he or she stands as far as their peers in the same band are
concerned.

Features:

Setting SMART goals for employees
Evaluate employee performance
Coach and train employees to improve their performance
Define competitive employee compensation plans
Promote right employees to critical positions
Provide feedback

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Benefits:

Highly affordable
No extra expenses
Automated system
Saves transaction time
Reporting and analysis tools
Speeds up the complete process

Business Process Outsourcing (BPO)
I ntroduction
BPO is the process of hiring another company to handle business activities for you.
BPO is distinct from information technology (IT) outsourcing, which focuses on hiring a third-party
company or service provider to do I T-related activities, such as application management and
application development, data center operations, or testing and quality assurance.

In the early days, BPO usually consisted of outsourcing processes such as payroll. Then it grew to include
employee benefits management. Now it encompasses a number of functions that are considered "non-
core" to the primary business strategy.

Now it is common for organizations to outsource financial and administration (F&A) processes, human
resources (HR) functions, call center and customer service activities and accounting and payroll.

Advantages of Business Process Outsourcing

Swiftness and Expertise:-Most of the times tasks are outsourced to vendors who specialize in their
field. The outsourced vendors also have specific equipment and technical expertise, most of the times
better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and
with better quality output
Concentrating on core process rather than the supporting ones:-Outsourcing the supporting
processes gives the organization more time to strengthen their core business process.
Risk-sharing:-One of the most crucial factors determining the outcome of a campaign is risk-analysis.
Outsourcing certain components of your business process helps the organization to shift certain
responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist, they plan your risk-
mitigating factors better.
Reduced Operational and Recruitment costs:-Outsourcing eludes the need to hire individuals in-
house; hence recruitment and operational costs can be minimized to a great extent. This is one of the
prime advantages of offshore outsourcing.

Disadvantages of Business Process Outsourcing

Risk of exposing confidential data:-When an organization outsources HR, Payroll and Recruitment
services, it involves a risk if exposing confidential company information to a third-party.
Synchronizing the deliverables:-In case you do not choose a right partner for outsourcing, some of
the common problem areas include stretched delivery time frames, sub-standard quality output and
inappropriate categorization of responsibilities. At times it is easier to regulate these factors inside an
organization rather than with an outsourced partner.
Hidden costs:-Although outsourcing most of the times is cost-effective at times the hidden costs
involved in signing a contract while signing a contract across international boundaries may pose a serious
threat.
Lack of customer focus:-An outsourced vendor may be catering to the expertise-needs of multiple
organizations at a time. In such situations vendors may lack complete focus on your organizations tasks.

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Business process reengineering (BPR)
I ntroduction
Reengineering is the fundamental rethinking and radical redesign of business processes to
achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality,
service and speed.
Business Process Reengineering involves the radical redesign of core business processes to
achieve dramatic improvements in productivity, cycle times and quality.
I n Business Process Reengineering, companies start with a blank sheet of paper and rethink existing
processes to deliver more value to the customer. They typically adopt a new value system that places
increased emphasis on customer needs. Companies reduce organizational layers and eliminate
unproductive activities in two key areas. First, they redesign functional organizations into cross-functional
teams. Second, they use technology to improve data dissemination and decision making.

Definitions
Business Process Reengineering involves changes in structures and in processes withinthe business
environment. The entire technological, human, and organizationaldimensions may be changed in BPR.
Business Process Reengineering is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary measures of performance such as
cost, quality, service and speed.
Business process reengineering (BPR) is a program that systemically breaks down the process a
business uses and starts over with new, more efficient methods -- basically a redesign or a reboot. A
business process is a collection of procedures, steps or activities the business uses to get the product
from development to the customer. Businesses use BPR for various reasons, including cutting costs and
improving overall production.

Benchmarking

Benchmarking is the process of measuring an organization's internal processes then identifying,
understanding, and adapting outstanding practices from other organizations considered to be best-in-
class.
Benchmarking is the process of gathering information about other companies in your industry to
compare your performance against and to use to set goals.
Benchmarking is the process of comparing one's business processes and performance metrics to
industry bests and/or best practices from other industries.

Most business processes are common throughout industries. For example; NASA has the same basic
Human Resources requirements for hiring and developing employees as does American Express. British
Telecom has the same Customer Satisfaction Survey process as Brooklyn Union Gas. These processes,
albeit from different industries, are all common and can be benchmarked very effectively. It's called
"getting out of the box".

Benchmarking is a continuous process by which an organization can measure and compare its own
processes with those of organizations that are leaders in a particular area.

Benchmarking--the process of establishing a standard of excellence and comparing a business function
or activity, a product, or an enterprise as a whole with that standard--will be used increasingly by
healthcare institutions to reduce expenses and simultaneously improve product and service quality.


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Balanced Scorecard
Balanced Scorecard is an integrated, organization-wide management system that drives, in an
aligned manner, the transformation, improvement and modernization efforts of all hierarchical levels
towardsthe accomplishment of organizations Strategy. For this reason, Balanced Scorecard is also known
as a Strategy Execution system. More precisely, Balanced Scorecard represents a framework for aligned
Strategic Planning and for the consistent management of the organizational and individual performance in
the execution of the Strategic Plan.
Balanced Scorecard is a communication tool that helps each employee better understand where the
Strategy drives the organization, what the plan is for reaching that destination and what their
departmental and individual measured contribution is to that convergent effort.

Definitions
A strategic planning and management system used to align business activities to the vision statement of
an organization
Balanced scorecard is a strategic planning and management system that is used extensively in
business and industry, government, and nonprofit organizations worldwide to align business activities to
the vision and strategy of the organization, improve internal and external communications, and monitor
organization performance against strategic goals
Balanced scorecard methodology is an analysis technique designed to translate an organization's
mission statement and overall business strategy into specific, quantifiable goals and to monitor the
organization's performance in terms of achieving these goals

The balanced scorecard originally came into being at the beginning of the 1990s as a tool for
implementing strategies in day to day business. Two Americans Robert S. Kaplan and David P.
Norton developed the idea. Translate strategy into action was their motto. Their approach could
not be simpler.
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