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MANAGING A NEW ENTERPRISE
AUTHOR: ALPANA TREHAN
CHAPTER-4
© 2011, Dreamtech Press :: Chapter 4
In a startup enterprise, the entrepreneur performs the functions of both, an owner and manager.
As a manger, he/she performs two types of management functions: Managerial Functions
Planning Organizing Staffi ng Directing Controlling
Operative Functions Human Resource Management Marketing Management Financial Management Production And Operation Management
MANAGEMENT FUNCTIONS OF AN ENTREPRENEUR
© 2011, Dreamtech Press :: Chapter 4 2
Planning Involves determining goals and objectives of the enterprise
Organizing Refers to the process of integrating, balancing, unifying, and
coordinating activities of employeesStaffi ng
Refers to the process of employing right type of individuals for the right job
Directing Involves influencing, motivation, encouraging, counseling,
mentoring, and guiding the employees to achieve the goalsControlling
Involves establishing performance standards, determining the gap between set standards and achieved results, and rectifying the gap
MANAGERIAL FUNCTIONS OF AN ENTREPRENEUR
© 2011, Dreamtech Press :: Chapter 4 3
Human resource is considered to be the most valuable asset of an enterprise as it utilizes the various resources, such as raw materials and machinery, of the enterprise and converts them into final products.
A new enterprise needs HRM due to the following reasons: Building and maintaining cordial relations among
employees working at different levels of the enterprise Ensuring effective utilization of available human resources Providing fair working conditions, wages and salaries, and
amenities to employees Achieving the development of each individual employee to
his/her fullest potential
HUMAN RESOURCE MANAGEMENT IN A NEW ENTERPRISE
© 2011, Dreamtech Press :: Chapter 4 4
Human Resource Planning (HRP)•A systematic process of identifying and evaluating human resource requirements of an enterprise
Recruitment•A process of identifying and attracting efficient candidates for vacant positions in the enterprise
Selection•A process of staffing the right type of candidates for various positions in the enterprise
Induction and Orientation•A process of providing information to the new employees about the enterprise’s background and introducing a new employee to his/her profile in the enterprise
Placement•A process of assigning a specific job and its associated grade and responsibility to each of the selected candidates
Training•A process of enhancing the knowledge, skills, aptitude, and abilities of an employee for doing a specific job in an efficient manner
Performance appraisal•A mechanism that helps the enterprise to understand the abilities and competencies of its each employee
ACTIVITIES OF HRM PROCESS
© 2011, Dreamtech Press :: Chapter 4 5
Preliminary Interview
Application Blank
Employment Tests
Employment
Interviews
Reference Checks
Physical Examinati
on
Appointment Letter
Final Selection
THE SELECTION PROCESS
© 2011, Dreamtech Press :: Chapter 4 6
On- the- job training method Coaching and Mentoring Understudy Job Rotation Apprenticeship Training Special Project Assignments Self-Instructional Mode
Off-the- job training method Special Courses Classroom Training Case Study Role Playing Vestibule Training Programmed Instructions Simulation Exercises Sensitivity Training In-Basket Exercise
TRAINING METHODS
© 2011, Dreamtech Press :: Chapter 4 7
Performance appraisal includes all formal procedures used to evaluate personalities and contributions and potentials of group members in a working organization. It is a continuous process to secure information necessary for making correct and objective decisions on employees. --- Dale Yoder
Performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job. --- Flippo
Performance appraisal is a method of acquiring and processing the information needed to improve an individual employee’s performance and accomplishments. --- Douglass
PERFORMANCE APPRAISAL
© 2011, Dreamtech Press :: Chapter 4 8
Establishing performance
standards
Communicating the standards
Determining the person
responsible to conduct the
appraisal
Measuring the actual
performance
Communicating the results of
appraisal to the concerned employee
Taking corrective actions
THE PERFORMANCE APPRAISAL SYSTEM
© 2011, Dreamtech Press :: Chapter 4 9
A monetary value or non-monetary reward that an enterprise off ers to its employees in exchange of services rendered by them.
The diff erent types of compensation provided by the enterprise are: Skill-based Pay
Refers to the compensation that depends not only on the job but also on the potential of the employee
Team-based Pay Refers to the remuneration that is given to teams where a group
of people work together Variable Pay
Refers to the reward that is based on the performance of the employee on his/her job
COMPENSATION
© 2011, Dreamtech Press :: Chapter 4 10
A monetary form of compensation given to workers in exchange of services rendered by them.
The diff erent types of wages are: Minimum Wage Living Wage Fair Wage Need-based Minimum Wages
WAGES
© 2011, Dreamtech Press :: Chapter 4 11
Basis Wages Salaries
Hours Amounts paid per hour
Paid on a monthly basis
Contract base Wages are not based on contracts
Salaries are based on contract
Type of workers Paid to blue collar workers
Paid to white collar workers
Type of work Paid for physical labor Paid for mental Labor
DIFFERENCES BETWEEN WAGES AND SALARIES
© 2011, Dreamtech Press :: Chapter 4 12
It is described as a process of creating, building, and maintaining beneficial products.
A market consists of diff erent types of customers; therefore, an enterprise divides the market as per the customers’ gender, age, tastes, attitudes, and personalities.
It includes: Market Segmentation Marketing Mix Marketing Research Branding
MARKETING MANAGEMENT IN A NEW ENTERPRISE
© 2011, Dreamtech Press :: Chapter 4 13
Market segmentation is a natural result of the vast diff erences among people. --- Donald Norman, a Doctorate of Philosophy
The following figure shows the bases of market segmentation adopted by enterprises:
MARKET SEGMENTATION
© 2011, Dreamtech Press :: Chapter 4 14
It is defi ned as a collection of tools that can be used in achieving marketing objectives.
It uses four Ps as its tools to decide the marketing strategy for a product: Product
Includes the goods, services, events, persons, places, ideas, and information offered to the customers by producers
Price Implies the monetary value given by a buyer to a seller to get a
product Place
Involves a decision about the location of the product from where it can be purchased
Promotion Involves the use of communication tools to increase the awareness
of the customer about the product
MARKETING MIX
© 2011, Dreamtech Press :: Chapter 4 15
Advertising Refers to a promotional technique of marketing communication that
is used to target a huge number of geographically dispersed audiences.
Direct Marketing Refers to the type of marketing in which the enterprises reach
customers directly without any intermediary. Personal Selling
Refers to face-to-face selling in which a sales representative tries to convince the customer to purchase a product by explaining or demonstrating its features.
Public Relations (PR) Refers to the process in which enterprises maintain a relationship
with the customers, shareholders, employees, distributors, partners, competitors, and the government.
Sales Promotion Refers to a traditional element of marketing communication.
PROMOTIONAL TECHNIQUES OF MARKETING
© 2011, Dreamtech Press :: Chapter 4 16
Defining a Problem
Designing Research
Collecting Data
Interpreting
Research Findings
Reporting Research Findings
PROCESS OF MARKETING RESEARCH
© 2011, Dreamtech Press :: Chapter 4 17
Financial Management is an area of financial decision making, harmonizing individual motives and enterprise goals. ---- Weston and Brigham
The various elements of Financial Management are: Financial Planning Financial Decision-Making Financial Control
FINANCIAL MANAGEMENT IN A NEW ENTERPRISE
© 2011, Dreamtech Press :: Chapter 4 18
It is a process of supervising and monitoring the financial operations of an enterprise.
The various tools of financial control are: Financial Statements
Contains detail regarding the financial activities, such as total income, expenditures, and cash inflows and outflows, of the enterprise
Financial Audits The formal investigations to ensure that financial management
practices follow accepted accounting procedures, policies, laws, and ethical guidelines
Financial Ratio Analysis The systematic use of ratios to assess the performance and
status of the enterprise
FINANCIAL CONTROL
© 2011, Dreamtech Press :: Chapter 4 19
It is the field of management that deals with supervising, designing, and redesigning business operations in the production of goods and services.
Operations management is the field concerned with managing and directing the physical and/or technical functions of a fi rm or organization, particularly those relating to development, production, and manufacturing. --- The U.S. Department of Education
PRODUCTION AND OPERATIONS MANAGEMENT IN A NEW
ENTERPRISE
© 2011, Dreamtech Press :: Chapter 4 20
Characteristics Production Management Operations ManagementNature of Output Involves the production of
tangible productsInvolves production of intangible goods, such as services and utilities
Consumption of Output There is a time gap between production and consumption
The output is consumed immediately after it is produced
Nature of Work Need land, labor, machinery, and capital on large scale
Need comparatively less land, labor, machinery, and capital
Degree of Customer Contact There is no direct contact with customers
In almost every case, there is direct customer contact
Customer Participation in Conversion
There is no participation of customer in conversion process. For example, during the production of steel, customer has no role in converting iron ore into steel.
There is frequent customer contact in conversion process. For example, when a sick child goes to hospital for treatment, the child goes through conversion process, he/she is being cured.
DIFFERENCE BETWEEN PRODUCTION AND OPERATIONS
MANAGEMENT
© 2011, Dreamtech Press :: Chapter 4 21
Output/Labor Ratio The ratio of output produced to input of labor. It is measured for an enterprise, a process, an industry, or a
country. The two major problems associated with output/labor ratio
are: This ratio uses labor as the only input It ignores other important factors of production, such as
equipment and raw materials
Multifactor Productivity (MEP) The ratio of the real value of output to the collective labor
and capital input The formula of calculating the MFP is:MFP =
METHODS FOR MEASURING PRODUCTIVITY
© 2011, Dreamtech Press :: Chapter 4 22
The long-term survival of an enterprise requires an effi cient management of its business.
Managing an enterprise involves several interrelated functions, such as searching the market for profi table business opportunities and formulating marketing, financial, and human resource strategies.
The effi ciency and productivity of employees is directly linked with the type of work environment.
RECAP
© 2011, Dreamtech Press :: Chapter 4 23