4. Additionally, Managers need to factor in external environment al forces: For maximum benefit to the organization Management : Definition …ctd. Organization Economic Political Regulatory Societal Technological Globalization
15. Systems approach to Management Organization as a System receives Input, transforms it through a Process for Output and Operates in an Environment ( economic, regulatory and other forces ) Transformation process input output Feedback (Reenergizing the system) ENVIRONMENT System Boundary
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22. Inputs (Goal Oriented) Outputs (External To Orgnzn.) Planning Organizing Staffing Leading Controlling Product/Services, Profits, Customer & Societal satisfaction, Other Long-term Goals Man, Machine Material, M ethod, Measurement Stake holder Feedback (reenergizing the system) EXTERNAL ENVIRONMENT (Opportunities, Constraints) Stakeholders Shareholders; Society; Customers; Employees; Suppliers Systems approach to Management …ctd.
25. Plans as foundation of Management The primacy of Planning Plans What kind of resources needed? What kind of people & org. structure to have? How to lead them to reach planned goals? How to control in case of deviation from plan ?
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32. Steps in Planning Being aware of challenges Market, Customer’s wants, Competition, Own strengths & weakness Setting Goals/ Objectives What to accomplish & when Planning premises Internal & external Environment/conditions Identifying alternatives Comparing & choosing an alternative Decision making Budgeting (Numberizing Plans) e.g., Sales budget Operational Expense budget, Capital expenditure budget Formulating Supporting plans e.g., plan to buy Equipment, recruit & train Employees, develop product etc
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34. Steps in Planning Being aware of Opportunity Considering, Market, Competition, Customer’s wants, Own strengths &weakness Setting Goals/ Objectives What to accomplish & when Objective = Important end towards which activities are directed; therefore needs verification at the end of the plan period.
35. Hierarchy of Objectives& Org. Levels Objectives set end results – they need to be supported by a hierarchy of sub-objectives, duly networked through the organization to avoid discord and wasted effort. Mission Overall Objectives & Key result areas. Divisional objectives Departmental objectives Individual objectives Board of Directors CEO Division Head Product X Division Head Product Y Sales & Mktg Dept Production Dept Sales Manager A Sales Manager B
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37. Hierarchy of Objectives& Org. Levels …ctd. While setting Objectives, ideally, Top Management should get information / ‘buy-in’ from lower levels to set realistic goals for a good result. Mission Overall Objectives & Key result areas. Divisional objectives Departmental objectives Individual objectives Top-down Approach Bottom-up Response: The result
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45. Planning Premises & Strategies Setting Goals/ Objectives What to accomplish & when Planning premises Internal & external environment Identifying alternatives Comparing & choosing an alternative Decision making Strategic Planning Process Strategy = determination of the purpose / the basic long-term objectives; the adoption of courses of action and allocation of resources required to achieve the aims.
46. Planning Premises & Strategies …ctd. The Strategic Planning Process Stakeholder Wishes & Shareholder demands Management Orientation Enterprise Profile Purpose & Major objectives of enterprise Current External situation Current resource situation Forecast External situation External Opportunity & Threat Internal Strengths & Weakness Key success factors & Alternative Strategies Strategic choice
50. Generic Strategy: BCG Matrix Red: Marketing Perspective ; Blue: Financial Perspective Cash Source Cash Use Hi Hi Lo Lo Market Growth rate Relative Market Share Hi Hi Lo Lo STAR “ Hold” ??? “ Build” Cash Cow “ Harvest” DOGS “ Divest”
51. Planning Premises & Strategies …ctd. Decision Making = is the core of the planning process; a plan does not come into being unless a ‘decision’ i.e. certain commitments of resources, managerial time and money are made and risks are taken. Caution: A “Plan” is not intentions and should not suffer from “ Analysis Paralysis”. Comparing & choosing an alternative Decision making Budgeting ( Numberizing Plans) Say, Sales budget Operational Expense budget, Capital expenditure budget Formulating Supporting plans Say, plan to buy Equipment, recruit & train Employees, develop product etc Deployment (MBO etc.)
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53. Decision Making…ctd. How to select Amongst the Alternatives ? “ Experience”: good teacher and useful when routine/repeat situations arise under similar circumstances. Without due analysis of the conditions, mistakes tend to repeat or a poor fit results. “ Research & analysis”: the approach is in at first understanding the problem (‘half the solution’!), then finding relations between various factors which hinder or foster goal attainment. This is a structured, analytical approach quantitative or otherwise. “ Experimentation”: arguably, the best technique to use, particularly when either experience or rationale is lacking/limited. However is expensive and ‘success/failures’ are magnified, results are subject to interpretational errors.
58. Nature of Organizing …ctd. The Business Organization Model: “Value Chain” (Porter,1985) The margin reflects the reward for the risks run by the company. All activities together need to generate ‘value’ greater than the sum of its costs. Margin Margin Firm Infrastructure Human Resource Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service Support Activities Primary Activities
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62. Nature of Organizing …ctd. The building block of an organization is the Department : a group charged with independent task & responsibility. # Hierarchical levels Span of control # # # # # Office Bridge Team $ $ $ $ Car pool
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66. C.E.O Finance Qual. HRM BU 1 BU 2 I.R.M Recr. T&D G/H.R Plant 1 G/H.R Ind. Sin. I.S.O “ Departmentation” …ctd. Example of “Grid Control” & S.B.U’s
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Editor's Notes
There are many types of plans. Short term , Long term depending on time frame Mission of Indira is ‘To train our students to become the best business minds and entrepreneurs today who will lead their companies successfully into the future tomorrow, locally, nationally and globally”
Strategy - Infosys acquiring an IT firm in Australia to increase business opportunities. Hindustan Lever opting for ‘contract ‘ manufacturing of Wheel detergent to keep costs down to compete with Nirma
Promotions from within the company, Policy of recruiting only IIM graduates.
Procedures for responding to a Sales query
Setting up educational institute, Setting up a new factory, Setting up a business
Could be in Financial terms such as “Sales figures”, Profit, Expense figures, Capital expenditure etc.. Also could be in terms of “No. of units produced”, “Man hours’ , “ consumption of raw material’ or any other numerically measurable term
Being aware of the opportunity- Though not exactly part a part of Planning process, it is the starting point. Setting realistic objectives depends on this awareness
Time frame for product development of a new generation of air craft will be 6 to 8 years. That for a new soap will be 1 to 2 years
Objectives specify expected results and when. Objectives drive all other plans. Major objectives control objective of subordinate departments. – Hierarchy of objectives
Traditional appraisal was based on personality traits and objectives were generally vague
(Sales, Profit, Cost , Quantity of production, Number of hours of work or Training…..) ( % Profit margin, % cost reduction, % increase in Sales, % Reduction in machine down time hours , % increase in production…)
Goals should be challenging (stretch) and achievable (realistic). This presents problems Excessive emphasis on numerical goals encourages unethical behaviour ( Over promising which Org cannot deliver) Production manager neglecting plant maintenance to achieve cost reduction. But there will be more breakdowns in future. Short term at odds with Long term
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