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Unit -1 (easy to understand and to write )
Questions:
1. Define management and explain its importance and functions?2. Explain motivational theories?3. Explain 14 principles of management?4. Explain Taylor’s scientific management?5. Explain decision making process?6. Explain line and line and staff organization?
Answers :
1. Ans
Introduction:
Managing is the art of getting things done through people in formally organized groups. Management can thus be defined ad the art or skill of directing human activities and physical resources in the attainment of predetermined goals.
Management:
Management is a wide term. It carries different meanings depending on the context in which it it used.
It is described as an “activity” , “a process”, and a group of people vested with the authority to make decisions.
Definitions:
• According to Louis Allen “Management is what a manager does”
• According to Henry Fayola “To manage is to forecast and plan to organize to command, to co-ordinate, and to control.
• According to Peter Ducker “Management is a multipurpose organ that manages business, manages a manager and manage a worker and work.
• According to Koontz and O'Donnell “Management is the art of directing and inspiring people”
Thus Management refers to all those activities which are concerned with:
• Formulation of objectives, plans and policies of the collective enterprise,
• Assembling men, money, materials, machine and methods for their accomplishment,
• Directing and motivating the men at work,
• Coordinating the physical and human resources,
• Supporting and controlling performance and
• Securing maximum satisfaction for both employer and employee and providing the public with the best possible services.
Objectives of management:
Organizational Objectives:
Management as expected to work for the achievement of the objectives of the particular organization in which it exists It includes:
• Reasonable profits
• Continuity or survival solvency
• Growth and expansion of the enterprise.
• Improving goodwill or reputation of the enterprise.
Personal Objectives:
• An organization consists of several persons. Who have their own objectives.
These objectives are as follows:
• Fair remuneration for work performance.
• Reasonable working conditions.
• Opportunities for training and development.
• Reasonable security of service.
Social Objectives:
Management is not only a representative of the owners and worker but also responsible for the various group outside the organization. It is expected to fulfill the objectives of the society which are as follows:
• Quality of goals and services.
• Honest and prompt payment of taxes to the court.
• Fair dealings with suppliers dealers and competitors.
• Preservation of ethical values of the society.
Concept of Management:
A precise definition of management is not so simple because the term management is used in variety of ways.
The term management is used in three alternative ways:
• Management as a discipline.
• Managements as group of people
• Managements as process
Management as a discipline:
• Discipline refers to a field of study having well-defined concepts and principles when we refer to management as a discipline we include in it the various relevant concept and principles, the knowledge which aids in managing.
Management as a group of people:
Sometimes we refer to management as group of people in which we include all those personnel who perform managerial functions in organizations.
Management as a process:
In studying management discipline we generally refer to management as a process. A process can simply be defined a systematic method of handling activities. Historically Four such orientations have been adopted in defining management process
• Production or efficiency oriented
• Decision-oriented
• People-oriented
• Function-oriented
Nature of management:
The nature of management can be described as follows:
1. Multi disciplinary
2. Dynamic nature of principles
3. Relative, not absolute principle
4. Management as profession
5. Management is goal oriented
Importance of Management:
• Importance of Management may be traced in the following contexts.
1. Effective utilization of resources
2. Development of resources
3. Integrating various interest groups and
4. To incorporate innovations.
• It facilitates the achievement of goals through limited resources.
• It ensures smooth sailing in the case of difficulties
• It ensures continuity in the organization
• It ensures economy and efficiency
• It is the key to the economic growth
Functions of management:
The classical analysis, which is the basis for management analysis, takes various functions which managers at all of the organization perform in order to a organizational objectives.
The list of management function varies from author to author with the number of functions varying from three to eight.
Following table presents the management functions identified by various writers.
Writers Management function
Henry Fayola
Ralph Davis
EFL Preach
Knouts and O'Donnell
Luther Gluck
Planning, organizing, coordinating
Planning, organizing, controlling
Planning organizing, motivating,
coordinating, controlling
Planning, organizing, staffing, leading (directing), controlling
POSDCORB : Planning, organizing, staffing, directing, coordinating, reporting, budgeting
From this, it can be generalized that function of managers are
1.Planning,
2.Organizing,
3.Staffing,
4.Directing, and
5.Controlling
1. Planning:
Planning is the conscious determined of future course of action.
This involves “why an action”
“ what action”
“ How to take action” and
“ When to take action”
Planning involves essentially four stages:
identifying the goal to be achieved
Exploring the coursed of action and to reach his goal.
Evaluating each course of action merits.
Finally selecting the best course of action for implementation
In other words, planning ends with selection decision-making. Planning is also referred as the process of determining the best course of action to achieve the given goals.
2. Organizing:
It is the process of dividing work convenient tasks or duties, grouping of such duties in the form of positions, grouping of various positions into departments and section assigning duties to individual positions, and delegating authority to each position so that the work is carried out as planned.
Simply it refers to the process of grouping the related activities and assigning them to a manager with authority to supervise it.
4.Staffing:
Ascertain how many positions are there in the organization and what level once this information is available, the new task is to collect detailed such as what type of candidates are required for each position, and accordingly, fill up these positions with the right people.
5.Directing:
After filling the positions in the organizations with the right kind of people, the next task is guide and enable to achieve the common goals.
Directing is a process of issuing orders and instructions to guide and teach the subordinates the proper methods of work and ensuring that they perform their jobs as planned
It includes leading, motivating, communicating coordinating.
In other words, the manager has to perform the above functions while directing the members of his group.
6. Controlling : It is the process of measuring current performance of the employee and whether the given objectives are achieve or not.
It involves
a. Measuring the actual performance employee.
b. Comparing it with the target, and
c. Taking follow up action for improving the performance if necessary.
2. Ans
Concept of motivation:
The term motivation can be traced to the Latin word “mover”, which means “to move”
A motive is an inner state that energizes, activities, or moves (hence motivation) and that directs behavior towards goals)
Theory of motivation:
• Maslow’s Need hierarchy
• Herzberg’s motivation-hygiene theory
• Theory X and Y
• Vroom’s expectancy theory
• Aldermen's ERG theory
Maslow’s need hierarchy theory:
The behaviour of an individual at a particular moment is usually determined by his strongest need.
As the basic needs are satisfied or individual seeks to satisfy the higher needs if his basic needs are not met, efforts to satisfy the higher needs should be postponed.
Abraham Maslow a famous social scientist has given a frame work that helps to explain the strength of certain needs. According to him, there seems to be a hierarchy into which human needs are arranged as follows.
Physiological needs:
Include need for food sleep, warmth, shelter, sex and others. These are basic needs and these are not satisfied one does not need at the higher level.
Safety/security needs:
these cover security, protection, job security, safety and property, availability of food or shelter continuing basis and soon.
organisations can influence these security needs either positively through pension insurance plan etc. Or negativity by arousing fear of being fixed laid off or demoted.
Affiliation / acceptance needs:
man cannot live in isolation. He wants to live in society as a member of society. He wants to love and be loved by others. He feels great when others recognise his efforts and accept him as a member of their group. Affiliation or acceptance needs include desire to seeks or show affection and recognition, identification with a group and so on
Esteem needs:
Maslow states that one does not stop with affiliation or acceptance need one goes one step beyond. One wants to respected and garlanded. To satisfy esteem needs people wants to feel more prestigious, politically very strong and powerful or enjoy better status.
Self actualisation:
these needs indicate the strong desire to achieve something, particularly in view of the potential one has
Herzberg's motivational or two factors theory:
A research study was conducted by Frederick Herzberg and associates of case western reserve university. This study consists of an intensive analysis of the experiences and fee of 200 engineers and accountants in Nero different companies in Pittsburgh area
Physiological
Security Social
Esteem Self actual Basic
needs
Safety needs
Acceptance
U.S .A on analysis the information from the interview Herzberg concluded that there were two categories of needs essentially independent of each other affecting behaviour in different ways. Finally he developed two factor theory of motivational
Hygiene factor – dissatisfactory
Motivational factory – satisfactory
Hygiene factors:
hygiene factor are the basic factor and requirements such as company policies procedures salary security supervision working condition personal and social life and so on.’
if these are provided it may lead to happiness. But if these are not provided if may lead to unhappiness. If these are provided people can work in the organisation in the normal way. But if these are not provided if results in dissatisfactory.
Motivational factor:
these factors are capable of having positive effect on job satisfactory after resulting in a increase in ones total output. Herzberg includes these are achievement recognition advancement work it self possibility of growth and responsibility.
where these at least a few are taken care of it leads to satisfaction if not it may not result in satisfaction
Mc Gregor theory X and Y:
Mc gregor presented two sets of assumption managers make about the nature of their employees. These sets are named as theory X (-ve) and Y(+ve).
Under theory X it is assumed that
Employees are inherently lazy.
They required constant guidance and support
Sometimes they requires even coercion and control
Given an opportunity they would like to avoid responsibility
They do not slow up any ambition but always seeks security
The theory Y focuses a totally different of assumptions about the employees theory states that some employees are consider work as natural.
These employees are capable of directing and controlling performance of their own.
They are much committed to the objectives of the organisation
These employee are highly 9nitiative
These employees are always active
These employees are highly creative
These employee are more responsible
3. Ans
Fayols Administrative Management:
Perhaps the real father of modern operational management theory is the French industrialist Henry Fayola.
His contributions are generally termed as operational management or administration management.
Fayola looked at the problems of Manager an organization from top management point of view.
Fayola found that activities of an individual organization could be divided into six groups.
1. Technical- relating to production
2. Commercial – buying, selling and exchange
3. Financial – Search for capital and its optimum use
4. Security – Protection of property and person
5. Accounting – Maintain account books
6. Managerial – Planning, organizing, command
7. And also Fayola identified 14 principles management. They are:
1. Division of work:
Here, the work is divided among members of the group based on the employees, skills and talents.
It also provides an opportunity should in different problem areas.
2. Authority:
It refers to the right or power gives orders. It must also be adequate supply by responsibility.
3. Discipline:
Both the employer and employee should respect each other by observing the rules.
4. Unity of command:
An employee should receive instructions from only one superior.
5. Unity of direction:
Where the objectives are similar the action plans also should be similar. In other words, similar activities should be grouped together, placed under one manager and these should be one action plan.
6. Subordination of individual interest to group interest:
Group interests or goals of organization must prevail any time over the individual interest or personal goals.
Remuneration:
The wages and salaries must be fair and bring out the best possible commitment in the employee to achieve the organizational goals.
8. Centralization:
Authority is said to be centralized when decision- making powers are retained at the top level.
9. Scalar chain:
It indicates 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:
Equity is the combination of justice and kindness. This implies that the dealing with the employees should be so fair and so open that they will reinforce their commitment to the organization. Be kind and fair to them.
12. Stability of tenure:
No employee should be removed in short time. And avoiding frequent transfer of the employees much before they settle in jobs.
13. Initiative:
With in the limits of authority and discipline, managers should encourage their for taking initiative. Initiative increases zeal energy on the part of human beings.
14. Spirit- decors:
This means team work. Implying that there is unity in strength.
4. Ans
Taylor and scientific management :
The concept of scientific management was introduced by F.W.Taylor in U.S.A. in the beginning of 20th century.
“Scientific Management is concerned with knowing exactly what you want men to do and then see in that they do it in the best and cheapest way.”
Taylor joined Midrale steel company in U.S.A. as a worker and later on became supervisor during this period, he continued his studies and eventually completed his M.E. subsequently he joined Bethlehem steel company.
At both these places, he carried experiments about how to increase the efficiency of people.
On basis of his experiments he published many papers and books and all his contributions were compiled in his book “Scientific Management”
Scientific Management
Taylors contributions can be described in two parts
1. Elements
2. Principles
Elements of scientific management:
1. Separation of planning and doing : according to F.W. Taylor, planning and doing real work. He developed the concept of functional foremanship which eight persons are involved, four persons, route clerk, instruction card clerk, time and cost clerk, and disciplinarian are concerned with planning and the other four including speed boss, inspector, maintenance foreman and gang boss are concerned with doing aspects.
2. Job analysis : Taylor opined that job to be performed should be scientifically studied to find the best way to doing things. According to Gilbreth, job analysis
Time study : It determines appropriate time to complete the job.
Scientific management
Elements and tools of scientific management
Separation of planning and doingJob analysisStandardizationScientific selection and training workersFinancial incentives
Principles of scientific management
Replacing the rule of thumb with scienceHarmony in group actionCooperationDevelopment of workersMaximum output
Motion study : Motion study is concerned with the study of motion/ movement of worker, part, materials, and machines. It eliminates unnecessary movements and possibility of accidents.
Method study : method study is concerned with issues related to methods to complete the job, and its helps find the best methods to perform work.
Fatigue study and rest study : fatigue study and rest study are concerned with the study of physical exertion that job requires and the need of rest after a particular time.
3. Differential wage system: differential wage system involves the payment of higher wages to more efficient workers to encourage them to surpass previous performance. Taylor was of the opinion that efficiency could only be improved if workers were benefitted from increased productivity.
4. Standardisation: all the inputs like instruments and tool period of work working conditions methods and so forth should be standardised to improve productivity. The standards for these aspects should be fixed in advance through proper job analysis.
5. Scientific selection and training of workers: the selection of workers should be on scientific basis taking into account their education work experience aptitude physical fitness etc..
6. Financial incentives: Taylor suggested that workers should be given financial incentives to encourage them to put maximum efforts and to achieve better performance.
Principles of scientific management
1. Replacing rule of thumb with science: he advised replacing the rule of thumb with scientific precision. Job aspects like day fair work standardisation time rate of payment etc.
2. Harmony in group action not discord: there should be mutual give and take situation based on proper understanding. Harmony group action can maximise contribution.
3. Cooperation not chaotic individualism: cooperation between management and workers should be develop. Mutual confidence cooperation and goodwill can make them friends.
4. Maximum output not restricted output: scientific management is based on continuous increase in production and productivity he strongly recommended that workers and management concentrate their attention on increasing production until the size of surplus became the source of quarrel over how to divide it.
5. Development of workers: according to scientific management all workers should be develop to fullest extent for both their benefits and company prosperity.
5. Ans
Decision making:
Before we go through the various aspect of decision making, it is essential to go that the concept of decision making. The word “ “ which means a cutting away or a cutting of in a practical sense.
A decision represents a judgment.
Definition:
Decision making is a conscious human process involving both individual and social based upon factual and value which concludes with a choice of one activity from among one or more alternatives with the intention of moving some desired state of affairs.
Decision making is involved in every walk of life. It is relevant in organization as well s non-organizational context.
1. Objectives specification: any activity in an organisation is goal directed. The first step in decision making is to specify the objective of the decision. A decision maker must know why the decision is to taken. It is advisable that manger has knowledge of organisational objectives so that every decision can be taken in light of the objectives.
2. Problem identification: the decision process starts with identification of the problem a problem is a felt need. Is the indication that there is something wrong with organisation it shows the gap between the present condition and the desire condition. Every decision my face a variety of problems such as decreasing sales reduced profits employees unrest problem identification consist of two phases diagnosis and analysis.
diagnosis concerns with finding the problems in relation to objectives analysis is concerned with analysis or studying every aspect of the problem identified *what is the problem? Where is the problem? Who will take decision?
Decision-making process:
Step 1Step 2Step 3 Step 4Step 5Step 6Step 7
Specific objectivesIdentification of problemsSearch for alternativesEvaluation Of alternativesChoice of alternativesAction Results
3. Search for alternatives : the third step involves finding solution for the problem every problem can be solved in several ways. Here the decision maker searches for possible solutions there are various sources for indentifying alternatives like past experience practice followed by other research and analysis using creative techniques and so on.
4. Evaluation of alternatives: each alternatives is evaluated according to the chosen criteria. The step consists of two issues. First is scrutiny of the list of alternatives to avoid irrelevant alternatives right from the beginning to minimise unnecessary cost and time. The second issues involves a detailed evaluation of remaining alternatives. Each alternatives is evaluated in light of its contribution to objectives various tangible and intangible factors are considered to evaluated alternatives. Where as intangible factors include psychological problems arising from something new or different resistance to change and other similar issues.
5. Choice of alternative : evaluation of alternatives provides a clear picture regarding contribution of each towards achieving the objectives now comparison is made among these alternatives to select the best generally selection of alternative based on * past experience of decision maker, expert advice, this step involves a lot of calculations personal values beliefs perception and personal interest play a vital role.
6. Action : in this stage the decision taken is put into practice implementation of decision is an integral part of the decision making process implementation requires the follow actions, * communication with subordinates, getting acceptance of subordinates, seeking cooperation of other departments.
7. Result : implementation of decision leads to results based on result one can easily say whether the objectives are being achieved if result are satisfactory there is no need to take further action. But when result deviate signification it is a serious concern and appropriate follow up action need to be taken. Include measuring actual deviation investigating causes responsible for the deviation and modifying objectives or decision or both.
Each and every organization has to follow these several steps when they required take a decision
6. Ans
Organization:
Organization may be formal, informal both
It is said to be formal when it is (for achieving a common purpose)
Certain rules and regulations always govern it.
( A chief executive calls his staff for a meeting at a given time and when the staff meets, it is called a formal organization)
A formal organization comes into being when persons in official capacity
• are able to communicate with one another
• are willing to act in an atmosphere of co-operation
• share a common explicit purpose
on the other hand after meeting is called off when some staff stay back to discuss their personal problems with the chief executive, it is said to be informal organization.
Basic concepts related to organization:
Organizational hierarchy:
The hierarchy in a business refers to the layers of management from the top management down to managers.
Authority and responsibility:
The authority and responsibility should always be commensurate and co-existence with each other.
Delegation of authority:
The process of transferring from the top to the lower levels in the organization is called delegation of authority.
Line organization:
It is also called military organization. It is said to be the oldest and traditional type of organization, which is widely even today. This is called line organization.
In this organization managers directly responsible for the results.
Based on authority relationships line organization are as follows:
Engineer
Draughtman IIPlans
Draughtman I (Design 4 drawings)
Draughtman III Specifications
Production manager
Foreman DForeman C
Foreman A
Foreman Bworkers workers workersworkers
Line and staff organization:
In this organization we have both the line and staff managers. Staff mangers support the functions of the line mangers.
The word staff means a stick support.
The staff managers are specially appointed to give advise, suggest, or assist the live managers in their day to day matters.
Such advise is provided to lie manger by staff personal who are generally specialist in their fields.
Unit 2
1. Explain the concept of work study?2. What is inventory control and explain different techniques of inventory control?
Line and staff organization in a manufacturing unit:
General manager ……..Advisor
Manager (personal)
Manager (marketing)
Manager (production)
Manager (financial)
3. Define SQC and explain its elements?4. Define method study. How do you carry it out?5. Explain the basic procedure for work measurement?
Ans 1:
The main aim of work-study is to bring efficiency and economy by making improvements in the method of doing job. In the process, all necessary movements are done away with. It is more concerned with human work
DEFINITON: “It is the study of work”
Work study is the study which will help to understand the human work method and time for a given job.
According to British Standard, Work Study refers to the method study and work Measurement which are used to examine Human work in all its context by systematically investigating into all factors affecting its efficiency and economy to bring forth the desired improvement.
Nature and Scope:
The Principal aim of Work study is to bring efficiency and economy by making improvements in the method of doing the Job. Work study is more concerned with Human Manual Work. It deals with efficient Design and Execution of Manual work.
Work study has two parts
1. Method Study
2. Work Measurement
Work study
method study work measurement
Method study: Method study is the systematic recording and critical examination of the existing and proposed ways of doing work, as a means of developing and applying easier and more effective methods, reducing costs and increasing efficiency
Work Measurement: Work Measurement also called Time study, establishes the time taken by Qualifies person, worker to complete a specified job at a defined level of Performance
Benefits:
It directly leads to Standardisation of the Job Process. It enhances Productivity of Workers & Machines. It helps to Evaluate the Performance of an Employee. It enables the Worker to earn Incentive.
It determines the cost of the work Performed.
Ans 2:
Inventory: It defined as a comprehensive list of movable items which are required for manufacturing the products and to maintain the plant facilities in working conditions.
Inventory Control: The systematic location, storage and recording of goods in such a way the desired degree of service can be made to the operating shops at minimum ultimate cost.
Objectives of Inventory Control:
1. To support the production departments with materials of the right quality in the right quantity, at the right time and the right price, and from the right supplier
2. To minimize investments in the materials by ensuring economies of storage and ordering costs
3. To avoid accumulation of work in process
4. To ensure economy of costs by processing economic order quantities
5. To maintain adequate inventories at the required sales outlets to meet the market needs promptly, thus avoiding both excessive stocks or shortages at any given time
6. To contribute directly to the overall profitability of the enterprise
Functions of inventory control:
To develop policies, plans and standards essential to achieve the objectives
To build up a logical and workable plan of organization for doing the job satisfactory
To develop procedure and methods that will produce the desired results economically
To provide the necessary physical facilities
To maintain overall control by checking results and taking corrective actions.
Techniques of inventory control:-
EOQ and ABC analysis
ABC Analysis: ABC analysis is a technique of controlling inventories based on their
value and quantities. It is more remembered as an analysis for ‘Always Better Control’ of
inventory. Here all items of the inventory are listed in the order of descending values,
showing quantity held and their corresponding value. Then, the inventory is divided into
three categories A, B and C based on their respective values.
A category comprises of inventory, which is very costly and valuable. Normally 70% of the funds are tied up in such costly stocks, which would be around 10% of the total volume of stocks. Because the stocks in this category are very costly, these require strict monitoring on a day-to-day basis.
B category comprises of inventory, which is less costly. Twenty percent of the funds are tied up in such stocks and these accounts for over 20% of the volume of stocks. These items require monitoring on a weekly or fortnightly basis.
C category consists of such stocks, which are of least cost. Volume- wise, they form 70% of the total stocks but value-wise, they do not cost more than 10% of the investment in the stocks. This category of stocks can be monitored on a monthly or bi-monthly basis.
The following table summarizes the concept of ABC analysis;
Category Value (%) Volume (%)Desired Degree
of Control A 70 10 STRICT B 20 20 MODERATE C 10 70 LOW
Economic Order Quantity (EOQ): Economic order quantity is defined that quantity of materials, which can be ordered at one time to minimize the cost of ordering and carrying the stocks. In other words, it refers to size of each order that keeps the total cost low.
Inventory costs: The inventory costs can be classified into two categories, 1) Inventory ordering cost 2) Inventory carrying cost.
Inventory Ordering Costs (Co): The cost refer to the cost incurred to procure the materials particularly in large organizations, these cost are significant. This is also called as procurement cost.
Definition: It is the cost of placing an order from a vendor. This includes all costs incurred from calling for quotation to the point at which the item is taken into stock.
Ex: Receiving quotations, Processing purchase requisition, Receiving materials and then inspecting it , Follow up and expediting purchase order, Processing sellers invoice.
Inventory Carrying cost: Carrying cost which are also known as holding costs are the costs incurred in maintaining the stores in the firm. They are based on average inventory and consist of:
Ex: Storage cost includes: Rent for storage facilities, Salary of person and related storage expenses, Cost of insurance, Cost of capita
Determine EOQ:
Step1:
Total Ordering cost per year = No. of orders placed per year x ordering cost per
Order
= (A/S) x O
A = Annual demand
S = Size of each order (units per order)
O = Ordering cost per order
Step2:
Total Carrying cost per year = Average inventory level x Carrying cost per year
= (S/2) x C
A = Annual demand
S = Size of each order (units per order)
C = Carrying cost per unit
Step3:
Total Ordering cost per year= Total Carrying cost per year
(A/S) x O = (S/2) x C
Ans 3:Statistical Quality Control:
The Process of applying Statistical Principle to solve the problem of controlling the Quality Control of a Product or Service is called Statistical Quality Control.
Quality can be of Two elements
1. Quality of Design
2. Quality of ConformanceQuality of Design refers to Product Features such as Performance, Reliability, Durability and so on…
Quality of Conformance means whether the Product meets the given Quality Specifications or not.
Elements of Statistical Quality Control:
The Techniques under SQC are divided into two parts.
a. Process Control b. Acceptance Samplingc.
Statistical Quality Control
Process control is carried Acceptance Sampling is carried
through Control Charts. through Sampling Plans.
For Variable For Attributes
�̅ X Charts C Chart Single Sampling Plan
R Charts P Chart Double Sampling Plan
Control Chart for Variables:
A Variable is one whose Quality Measurement changes from unit to unit. The Quality of these Variables is measured in term of Hardness, Thickness, Length and so on.
There are two types of Control Chart for Variables.
�̅ X and R Charts.
The Formulae for the Control limits on Sample Averages are:
For ̅ X Chart:
Upper Control Limit = ̿X + A2�R
Lower Control Limit = ̿X – A2 �R
Where ̿X = mean of Means
�̅ R = Mean of Sample Ranges
A2 = Constant taken from the table of Constants.
For R Chart:
Upper Control Limit = D4�R
Lower Control Limit = D3�R
D3, D4 are Constants.
�̅ R is the Average of Sample Ranges.
Procedure for Constructing ̅ X Chart:
a. Compute Average of Averagesb. Caluculate Average Range �Rc. Multiply the Average Range by the Conversion Factor A2. This gives A2 �R
i. To obtain the Upper Control Limit and Lower Control Limit, Apply the following formula.
Upper Control Limit = ̿X + A2 �R
Lower
Control Limit = ̿X – A2�R
Procedure for Constructing R Chart:
a) Compute �X and R for each of the Samples Obtainedb) Calculate Average Range �R c) Multiply the Average Range by the Conversion Factor. (D4or D3)
To obtain the UCL, apply the following Formula
UCL = D4�R
To obtain the LCL, apply the following Formula
LCL = D3�R
Control Charts for Attributes:
The Quality of Attributes can be determined on the basis of ‘Yes’ or ‘No’ or ‘Go’ or ‘No go’. In other words, in case of Mirror – Glass, even if there is one Scratch, it is not considered to be Quality Mirror.
In such a case, the Quality is decided based on whether the Mirror has any Scratch or not. Each Scratch is considered as a defect. Every Mirror Containing one or more than one defects is called Defective. In some cases, if the number of defects per Unit is low, it can be sold as 2nd Quality item.
The Control Charts for Attributes are:
‘C’ Chart and
‘P’ Chart
‘C’ Chart:
‘C’ Chart is used where there are a number of defects per unit. This Control Chart controls the number of Defects per unit. A Control Chart reveals the Pattern of the Quality.
The Control limit are
U.C.L = ̅C + 3√ � ̿C
L.C.L = �C - 3√ � ̿C
Where ̅C = Total Number of Defects in all the samples
Total Number of Samples inspected
‘P’ Chart:
‘P’ Chart is used where there is data about the number of defectives per sample. It is also called Fraction Defective Chart or Percentage Defective Chart.
The Following are the formulae to compute the control limit for P – Chart.
Where Average Defective(̅P) = Total number of defective Units
Total number of pieces inspected
Ans 4:Method Study:
It is the Systematic recording and Critical examination of the existing and proposed way of doing work, as a means of developing and applying easier and more effective methods, reducing costs and increasing efficiency. Method study is used in order to effect Solutions to a variety of Production Problems such as Workplace layout, Equipment Design, Product/Process Design, Worker Fatigue and so on.
The basic procedure of a Method study is
Method Study
Aim: To develop better Working Methods
Ans 5:
Work Measurement:
Work Measurement also called Time study, establishes the time taken by Qualifies person, worker to complete a specified job at a defined level of Performance.
Procedure
Select: The Task to be studied
Record: All related facts about current and proposed methods
Examine: The facts Critically considering the purpose.
Develop: The best possible method.
Define: The Best method so developed
Install: The New Method
Maintain: The Installed Method.
Work Measurement
Aim to develop Time Standard
PROCEDURE
DESCRIBE the given work for Measurement
BREAK the Job into Elements
MEASURE the Performance of the Operator
DETERMINE the basic time
PROVIDE time allowance for fatigue
RESULT
Work Measurement employed for the following purpose
To develop Costing Systems
To Determine Production Schedules
To Develop Incentive Schemes
Unit 3
1. Define human resource management and explain various functions of HRM?2. Explain the techniques of job evaluation?3. Explain the techniques of merit rating?4. Define marketing explain its functions?5. Explain the concept of channels of distribution?
Ans 1:-
INTRODUCTIONAmong all the factors of management,Human Resource Management(HRM) is the human factor that is very dynamic,and this is to be carefully identified,developed to achive organizational goals.DEFINATION
HRM:Human Resource Management is the process of managing the human resources of an oorganisation in tune with the vision of top management.In the other words,it is through the human resources that the management attempts to convert its vision and mission into action.
FUNCTIONS OF HRM:Managing human resources is one of the key functions of business organizations
HRM functions Operative functions managerial functions
Planning organizing directing controlling
Acquisition development integration maintance compensation
Job analysis performance motivation organizational job
Man power appraisal job health evalution
planning Satisfaction
recruitment training grievance HR audit wage and
selection career handling HR salary
placement planning collective accounting administr
induction and career bargaining -ation
transfer development employee incetives
promotion participation bonus
demotion discipline fringe benefits
The main functions of HRM is to effectively utilize the available human resources by developing their competencies in tune with the organissational requirements.
The functions of human resources management are broadly classified into two categories.
1.Managerial Functions
2.Operative Functions
1.MANAGERIAL FUNCTIONS
(i)PLANNING:planning is predetermined course of action .It is connected with determining organizational goals and formulating the policies and procedures for attaining those goals.
(ii)ORGANIZING:organizing is the method of achiving the planned task.It the process of allocating the jobs in the direction of achieving the goals.
(iii)DIRECTING:The next step is the execution of the plan.In other words,it is the process of activating and co ordinating the individual and group efforts inorder to achieve the goals ans objectives.
(iv)CONTROLLING:It is the process of checking the performance to confirm wheather the activities are going according to the plans made.
2.OPERATIVE FUNCTIONS:
The operative functions are functions related to a particular department or section
(i)Acquisition: Acquisition involves acquiring right kind of people and placing them in right position intune with orgasitinal requirements.
It includes following activities
-job analysis: job analysis is the method of collecting and analyzing the facts related to the particular job inorder to identity the job contents and characterstics of the person intending to do that job
-Man power planning: Man power planning is the forcasting the man power(skills,knowledge,abilities etc)requirement of and organization and the future supply of manpower
-Requirements: It is the process of searching the prospective employees and encouraging them to apply for the jobs in the organisation
-Selection: It I sthe process of choosing the best qualified and most suitable candidate for each unfilled job.
-Placement: It is the process of determing the job which can selected candidate can be given job
-Induction: It is the process of receving and welcoming the employee and giving him the basic information to start the work.
-Transfer:It is the process of moving the employee to the same level of the job where their potentialities can be more effectivetly utilized.
-Promotion and Demotion: Promotion is the upward movement of an employee to occupy higher position.
Demotion is the downward movement of an employee in the organization.
(ii)Development: Development is the process to improve knowledge,skills of employees so that they can better contribute to heir job.
-Performance Apparaisal: it is themethod of evauating the behavior of employee in the workspot of performing the job.
-Training: it is the act of improving the knowledge,skills of an employee to a particular job
-career planning: It is the process by which one select career goal sand path to these goals.
Career development is that personal improvement one undertakes to achieve the personal career plan.
(iii)Integration: Integration is the process of reconciling and reuniting the organizational goals with the members
-Motivation:It is the process of simulating an dinspiring the subordinates to achieve the organizational goals.
-Job Satisfaction: Job satisfaction is the result of various attitudes the employee holds towards his job.
Grievance Handling: Grivance is the size of employees dissatisfaction with job and its nature.
-Collective Bargaining: It is the process of negotiation between the employees and employers to settle the conflict between them.
-Employee Participation: It is the involvement of employees in organizational decisions-making process.
-Discipline: It refers to the attitude prevailing among the employees w.r.t rules and regulations.
(iv)Maintance:
-Organizatinal health: It is studied through the result of employes contribution to the organization
-Human resource Audit: It is the process of evaluating the policies,procedures to determine the effectiveness of HRM.
-Human Resource accounting: It is the measurement of cost and value of human resource to the organization.
(v)Compensation: It includes the determination of wages and salaries matchindg with contribuction made by the employees to achieve organizational goals
-Job Evaluation: It is the process of determing the relative worth of job.
-Wages and Salary Administration: It is the process of developing and operating a suitable wages and salary program.
-incetives: It is the additional payment to regular wages and salaries.
-Bonus: Payment of statutory according to the payment of bouns act,1965.
Fring Benefits: It is the payment made by the management to motivate employees and to meet their contingencies in life.
Ans 2:-
Job Evaluation: An attempt to determine and compare the demands which the normal
performance of particular job makes on normal workers without taking account of the
individual abilities or performance of workers concerned. It rates the job not the rank.
Objectives:
1. To establish correct wage correct wage differentials for all jobs with in the factory
2. To bring new jobs into their proper relatively with jobs previously established
3. To help clarify lines of authority, responsibility and promotion
4. To accomplish the foregoing by means of the facts and principles, which can be readily explained to and accepted by all concerned
5. To establish a general wage level for a given factory which will have parity with those of neighboring factories
Advantages:
1. It is simple, inexpensive and expeditions
2. It is easily understood and easily administered
3. It helps setting better rates than the arbitrary rates based purely an judgment and experience
4. Same unions prefer it, because it leases more room for bargaining.
Disadvantages:
1. Job may be ranked on the basis of incomplete inform action and without the benefits of well defined standards
2. The rank position of different jobs is likely to be influenced by the prevailing wage ranks
3. No one committee number is likely to be familiar with all the jobs
Method of Job Evaluation: It is broadly be classified as
1) Qualitative Method
2) Quantitative Method
1) Qualitative Method: It can broadly be classified as ranking or classifying the job from lowest to highest.a) Ranking technique : In this method, the jobs in the organization are arranged in either
in the ascending or descending order and numbered serially. The basis of such
arrangement could be the job description in terms of duties, responsibilities,
qualifications needed, relative difficulty involved in don the job, or value to the company.
Points considered:
1. Amount of work involved
2. Supervision needed
3. Extent of responsibility required
4. Difficulties involved in the work
5. Work conditions required
b) Classification Method : This is also called job-grading method. Here, the number of
grades and the salary particulars for each grade are worked out first. The grades are
clearly described in terms of knowledge, skill and so on. Major steps for job evaluation:
1. Deciding the number of grades
2. Writing grade descriptions
3. Identifying/listing of the jobs to be evaluated
4. Preparing job descriptions
2) Quantitative Method: Where point values are assigned to the various demands of a
job and relative value is obtained by summing all such point values.
a) Factor comparison method: Every job requires certain capabilities on the part of the
person who does the job. These capabilities are considered as critical factors, which can
be grouped as follows:
Mean effort Skill
Physical
Responsibility
Working conditions
Step involved in the factor comparison method:
Identify the key jobs
Rank the key job, factor by factor
Apportion the salary among each factor and rank the key jobs
Compare factor ranking of each job with its monetary ranking
Develop a monetary comparison scale
Evaluate non-key jobs based on the monetary comparison scale
b) Point-rating method : There are four widely accepted factors used in the point-rating
method, skill, effort, responsibility and job conditions each of these factors is divided into
sub-factors.
Skills - 1. Education and training
2. Experience
3. Judgment and initiative
Efforts - 1. Physical
2. Mental
Responsibility towards - 1. Materials or product
2. Equipment or process
3. Safety of others
4. Work of others
Ans 3:-
Merit Rating: Merit rating is the process of evaluating the relative merit of the person on
a given job. It is an essential task of the personnel manager to distinguish the meritorious
employees from the other. The data collected from this task is used for strategic decisions
such as releasing an increment in pay, promotion, transfer, and transfer on promotion to a
critical assignment or even discharge.
Objectives of Merit Rating:
To determine salary increments
To decide who has to be transferred, promoted, or demoted
To discover the workers needs for retaining and advanced training To unfold the exceptional skills among the employees based on their innate potentials
To guide and monitor the performance of those who are lagging behind.
Method of Merit Rating:
Ranking method: In this method, all the staff of a particular cadre or a department are
arranged either in the ascending or the descending order in order of merit or value to the
firm. Though this is a simple method, it cannot be followed where the employees in the
department are many in number.
Paired comparison method: Here, every employee is compared with all others in a
particular cadre in the department. By comparing each pair of employees, the rater can
decide which of the employees is more valuable to the organization.
Rating scale: Here, the factors dealing with the quantity and quality of work are listed and
rated. A numeric value may be assigned to each factor and the factors could be weighed
in the order of their relative importance. All the variables are measured against a three or
five point scale.
job evaluation.pptx
Forced distribution method: Here, employees are given a set of alternatives and they have
to choose one, which reflects their understanding of the true nature of the job. Their
thinking is conditioned by the given set of answers.
Narrative or essay method: Here, the candidate is required to narrate in an essay format
his/her strengths, weaknesses, and potential to perform. Here, the candidate is not
restricted by any given set of alternatives. The candidate is free to decide what to furnish
or what not to furnish.
Management by objectives (MPO): The short-term objectives mutually agreed upon by
the management and the employees are used as performance standards. This method
considers the actual performance as the basis for evaluation. It is a systematic method of
goal setting. In addition, it provides for reviewing performance based on results rather
than personality traits or characteristics. However, this is not practical at all levels and for
all kinds of work in the organizations.
Ans 4:-
Marketing: Marketing as a social process by which individuals and groups obtain what they need and want through creating, offering exchanging products and services of value with others.
Selling versus Marketing:
Selling refers to the act of transferring the ownership of the goods and services from the seller to the buyer.
Marketing refers to the whole process encompassing the entire range of activities starting from identifying the customers requirements to satisfying these in a mutually beneficial manner.
Marketing Function:
Buying: Buying involves both the marketing and the customers. The marketing manager must know about the type of customers, their consuming habits demands and buying pattern.
Selling: It creates a demand for a product selling function involves. 1. Product planning and development
2.Finding out or locating buyers
Mrit Rating.pptx
3.Demand creation through salesmanship, advertising and sales promotion
4.Negotiation of terms of sales such as price, quantity and quality etc.Transporting: It involves the creation of place utility. In order to have value goods must first be transported from the place they are produced to the place where they are needed.
Storage: It concerned with storing finished products properly without any damage, until
they are dispatched to the customers it is also concerned to the customers it is also
concerned with maintaining stock of raw materials with maintaining stock of raw
materials, components etc. to meet production schedules.
Standardization and grouping: These two functions are supplementary and
complementary to each other. A standard is a measure of fixed value. The standard could
be based on colour, weight, quality, and number of items, price, or any other parameter.
Both domestic and export markets rely extensively on this function. Grading is the
process of sorting the goods. The price varies with the grade of the goods. This function
enables the marketer to fix a uniform price for a given grade of the goods. It further
promotes good understanding between the buyer and the seller.
Finance: Finance is the life blood of business value of goods is expressed is money and it donated by price to be paid by buyer to seller credit is necessary in marketing it plays all important role in retail trade particularly in the sales of costly consumer goods.
Marketing research: The marketing personnel must study the trends in market demand,
supply prices and related market information. The knowledge about the latest market
information may help the firm to reduce risk loss in purchasing, in pricing, in forecasting
market demand and in facing competition in the market.
Ans 5:-
Type of Channels of Distribution: Channels of distribution refer to the ways and means of reaching the customer through the intermediaries such as wholesalers, retailers, and other agencies, if any.
Manufacturer – consumer: This is a direct marketing channel where the manufacturer contacts the customer directly without involving middlemen or intermediaries. The manufacturers of industrial goods such as aeroplanes,
Turbo-engines, ships, and other high-value capital goods mostly follow this route. However, consumer product manufacturers also through Internet, mail order operations, and door-to-door selling are following this method. It is common sight to find the representatives of the manufacturers going from house to house to sell their products, which are normally used in the households.
Manufacturer – wholesaler – consumer: This channel is primarily used in the case of
industrial goods and high-value consumer durable products. The wholesaler, who may
also be called as distributor in this channel, carries out the functions of retailing to large
customers who may in themselves be the manufacturers also. The wholesalers in this
channel buy goods from many manufacturers, stock, and subsequently, sell them through
internet or directly to the customers in a wider geographical area. An example of the use
of this method can be observed in the computer hardware industry.
Manufacturer – retailer – consumer: Here, the large retailing chains, including
supermarkets, use this channel to buy products in large quantities from manufacturers at a
very competitive price and sell the same to the ultimate consumers. As the retailers enjoy
large discounts in this process, they share this benefit with their customers by keeping
their products competitively priced. The consumers patronage this channel because they
can buy in small quantities from a wide variety at lower prices.
Manufacturer – wholesaler – retailer – consumer: This is a chain widely followed for fast
moving consumer goods, which are likely to have mass markets. When the consumers are
large in number, widely dispersed geographically, and products are of low value, this
channel is favoured. Manufacturers would find it prohibitively expensive to set up their
own outlets in such circumstances. For manufacturers of consumer goods such as hosiery,
food items, confectionery, clothes, and readymade garments, cosmetics, and so on,
intermediaries are indispensable in the distribution chain.
Unit 5
1. Define vision ,mission ,goal ,strategy?2. Write the elements of corporate planning process?3. Explain the concept of environmental scanning?4. Explain strategy formulation and implementation?
Ans 1
VISION:
• Corporate Vision is a short and inspiring statement of what the Organization intends to become and to achieve at some point in the Future.
• It refers to the Category of intentions that are broad, all inclusive and Forward-Thinking.
• It describes Aspirations for the future.
Example:
BSNL Vision: “To become the Largest telecom Service Provider in Asia.”
MISSION:
• A Mission Statement defines Why the Organisation exists.
• It describes the Customer Needs both Present and Future.
• It may specify the Role, the Company has to play in the Society.
• A Mission Statement is an Organization’s VISION translated into Written form.
Examples:
Facebook Mission is “To lead a more open and connected World.”
Google’s Mission is “To Organize the World’s information and to make it universally accessible and useful.”
GOAL:
• Goals are the overall objectives of a department or an Organization.
For Instance, the Goal of the Army is to emerge Victorious amongst the Enemy.
The Goal of the Football Team is to Win.
The Goal of the Manager is to Create Surplus for the Company.
Here, the Goal is for entire Team. Every Player contributes his/her best to achieve the Goal. The Captain of the team co-ordinates the Efforts of all these individual players for Victory. Every Individual is Clear and Conscious about what is required of him/her to achieve the Goal.
Similarly, the Manager is concerned about the Achievement of the Goals set by the Top Management.
Types of Goals:
Based on the Timeframe, goals may be classified as
1. Long Term Goals
2. Short Term Goals
• Getting into any of the IIM may be a Long term Goal of a Student who in the Second or Third year of Engineering but for a Final Year Student, it is a Short Term Goal.
• SHORT TERM GOALS are those which are achieved in less than a Year whereas the Time Frame for LONG TERM GOALS is more than a Year
• The Goals are always set within the Scope of the Mission Statement.
STRATEGY:
• A Strategy is an Operational tool to achieve the Goals, and thus Corporate Mission.
• It is a Plan of Action designed to achieve a Long term or Overall Aim.
• Strategies are very much useful in the Organization for Guiding, Planning and Control.
• Strategy refers to the Course of Actions designed to achieve the Objectives of the Enterprise.
• Managers use Strategies for different purposes such as to Overcome Competition, to increase Sales, to increase Production, to Motivate the Employees to provide their Best and so on..
• Implementation of a Strategy is as crucial task as the Formulation of it.
Ans 2 :
CORPORATE PLANNING:
Corporate Planning refers to the Process of Planning undertaken by the Top management to achieve their Organizational Goals.
Two Significant Phases in Corporate Planning are:
• Environmental Scanning and
• Strategy Formulation
Basic Concepts of Corporate Planning:
1. Mission
2. Goal
3. Objectives
4. Policy
5. Strategy
6. Programmes
Definition of Corporate Planning Process
It can be defined as “The Process of Formulating the Corporate Mission, Scanning the Business Environment, Evolving Strategies, creating necessary Infrastructure, and assigning resources to achieve the given Mission.”
Elements of Corporate Planning:
The elements of the Corporate Planning Process can be described below:
1. Identifying Corporate Mission
2. Formulating Strategic Objectives
3. Appraising Internal and External Environment
4. Developing and Evaluating Alternative Strategies
5. Selecting the best Strategy
6. Fixing Key Targets to Strategic Business Units(SBU’s)
7. Allot resources to each SBU
8. Developing Operating Plans
9. Monitoring the Performance
10. Revising the Plans where ever Necessary.
Identifying Corporate Mission: Identify what the organization wants to achieve to start
with for the purpose of it is necessary that all concerned parties understand the overall
purpose of the organization and the methods of attaining them. It is also desirable that
they agree on the corporate policies of the organization.
Formulate strategic objectives: By preparing statements of mission, policy, strategy,
and goals, the top management established the frame work within which its divisions or
departments prepare their plans. It is essential that the members of the organization agree
on these given strategic objectives. The strategic objectives thus formulated reinforce the
commitment of the members of the organization to achieve the corporate goals.
Appraise internal and external environment: To evolve alternative strategies to
achieve these evolve alternative strategies to achieve these goals, a detailed appraisal of
both the internal and external environment is carried out. The appraisal of internal
environment reveals the strengths and weakness of the firm. The appraisal of external
environment reveals the opportunities and threats for the firm. It is popularly called as
SWOT analysis capitalizes on internal strengths, make use of best opportunities and
beware of the threats in the external environment.
Develop and evaluate alternative strategies: There could be some alternative strategies
to pursue a given goals. If the goal is to expand the business, the following could be the
three alternatives.
Sold new products to the existing product line
Finding new markets, a part from the present market territories.
Manufacturing within the organization, the components, which were earlier
procured from outside.
Similarly, if the goal is to attain stability, the alternative strategies could be to maintain the following.
The existing range of products The existing markets
The functions presently being carried out.
Select the best strategy: For the firm to be more successful, it is necessary to focus its
strategies around its strengths and opportunities. It is a prerequisite that the numbers of
the organization agree on the strategic plan. Such a plan, which has been generally agreed
upon, is normally considered as the best strategy.
Establish strategic business units (SBUs ) : It is more strategic to define a business unit
in terms of customer groups, needs and/or technology and set up the business unit
accordingly. Most of companies define their businesses in term of products.
Fix target allot resources to each SBU: The development of SBUs based on appropriate
finding the top level management knows that its portfolio has certain old, established
relatively new, and brand new products.
Resources should be allocated based on market growth rate and relative market
share of SBUs. Here resources mean executive talent money and time.
Developing operating plans : The operating plan explain how the long-term goals of the
organization can be met, the corporate plans reveal how much the projected sales and
revenue are where the top management finds a significance gap between the targeted
sales and actual sales, it can either develop the existing business or acquire a new one to
fill the gap.
Monitor performance: The results of the operating plans should be will monitored from
time to time. In the case of poor performance, check up with the members of the team to
find out their practical problems and sort these out. Also, it is essential to verify whether
there are any gaps in formulating the operating/tactical plans.
Revise the operating plans, where necessary: It is necessary to rise the operational plans particularly when the firm does not perform as well as expected. The planes can be revised in terms of focus, resource or time frame
Ans 3
Environmental Scanning:
Introduction:
A Major Purpose of Environmental Scanning is to identify and understand the new opportunities in which the company can perform profitably.
Definition:
It is a vital part of the Corporate Planning Process. Effective Planners try to anticipate what is likely to happen or attempt to influence the Environment in favorable Directions.
Note:
The External Environment is to determine the Opportunities and Threats. The Internal Environment is to determine the Strengths and Weaknesses of their
Firms.
Environmental Scanning: Environmental scanning is a vital part of the
corporate planning process. Effective planners try to anticipate what is likely
to happen or attempt to influence the environment in favorable directions.
This requires long-term strategic vision and commitments to corporate
planning.
Why environmental scanning:
The banks and business enterprises in the public sector are being disinvested by the government.
The government policies keeping changing the current focus of the
government of India has been an globalization, privatization,
deregulation. As a results foreign goods are being dumped into the
markets.
Computers have wiped out the market for typewriters and electronic type writers.
Info-tech industry, which was very strong for over decades, suddenly revealed downtrend.
The advent of television channels has almost zeroed down the market for VCR and significantly affected the flow of film viewer traffic.
Environmental analysis: Refers to the process of analyzing the environment,
component-wise or sector-wise to provide a basis for further diagnosis. It interrelates the
formation of objectives, generation of alternative strategies, and other related issues.
Environmental diagnosis: Comprises the managerial decisions based on the perceived
opportunities and threats of the firm. In effect, it helps to determine the nature of the
impending tasks to take advantage of opportunity or to effectively manage threat
External Environment Analysis (Opportunity and Threat): The external environment
has a profound impact on the business operations irrespective of the nature of the
business. The business has to monitor the key forces both in to micro and macro
environment. The forces in the micro-environment may be customer competitors, and
other
The forces in the macro environment may be demographic, economic,
technological socio-cultural, political or legal. All these factors and parties affect the
business operations both in the short and long run. These factors can be grouped under
three parts of the environment.
1. General environment
2. Industry environment
3. International environment 4. General environment : A firm is said to be more effective when its strategy caters
to the needs effective when its strategy caters to the needs of the environment.
The additional features added to the main product at times could provide a new
life to the main product. The corporate units, which realize this, will survive in
the long-run.
Thus, the major causes of growth, decline, and other large scale changes in firms are the factor in the external environment, not internal development.
Socio-economic sector
The technological sector
The government sector
5. Industry environment : It is an important component of the overall environmental
analysis as input for corporate planning. Industry refers to the group of firms
carrying on similar activity. It has three sectors, customers, suppliers and
competitors.
Customers: The strategist must identify and analyze the customers for the organization
locates the potential customers and the emerging changes in their buying pattern. It is
necessary to identify the profile of buyers in terms of their needs and preferences based
on the basic demographic factors such as age, income size of household and consumption
pattern. These factors create the primary demand for products or service and help to scan
the geographical environment for potential market and customers.
Suppliers: Strategist also must determine the availability and costs of supply condition
including raw materials, energy, prevailing technology, money and labour. The supplier
can influence a firm and its strategy, particularly when the firm is outsourcing its logistic
requirements.
Competition: The strategist moulds his strategy in the light of the competitor’s strategy, the exit or entry of competitors to be analyzed and diagnosed.
6. International Environment : The strategy of globalization implies a great source
of opportunities and also threats to business firms. Such firms, which an make
use of the opportunities, would flourish and those, which cannot gear up, would
demise.
Internal Environment analysis and diagnosis: Internal environmental analysis and
diagnosis is a process of analyzing and diagnosing the firm’s internal strengths and
weaknesses. By identifying its strength and weaknesses, the firm can strategically exploit
the available opportunities, overcome threats, and correct weaknesses placing itself at a
competitive advantage.
Conducting internal analysis and diagnosis: Identify first the internal strength and weaknesses. The strength and weaknesses may include the following.
Marketing factors
Research and development
Engineering design and management Production management
Managerial personnel
Accounting and financial policies and procedures.
Profile of research and development:
Financial resources (budget to conduct research, to develop new products and processes, improve existing processes and so on)
Infrastructure (in terms of state-of-the-art technologies)
Human resources (how many scientist and engineers are required, presently available, turnover of key personnel)
Organizational system (system to monitor technological developments from time to time)
Strategy advantage profile: The ultimate result of such a detailed internal analysis to
build a strategic advantage profile strategic advantage profile is a tool used to evaluate
systematically the enterprises internal factors the competitive strengths or weaknesses for
each internal area such as marketing, R &D and others
SWOT Analysis: SWOT analysis is defined as the rational and overall evaluation of a
company’s strength, weakness, opportunities, and threats which are likely to affect the
strategic choice significantly.
External environment analysis (Opportunities and Threats): The external
environment has a profound impact on the business operations irrespective of the nature
and size of the business. The business has to monitor its key macro-environment forces
and micro economic parties.
Opportunities: It necessary should identify what opportunities are available to it to focus
upon. The latest technology, deregulated or free markets, liberalized rules and regulations
and other may make a lot of difference for a business organization provided it can
envision how to avail these visionary identify opportunities from treats.
Threats: Some development in the external environment represents threats. A threat is a
challenge posed by an unfavorable trend or a development that results in the loss of sales
or profit till a defensive marketing action is initiated. A few example of threat could be
outlined as change in government policy such as liberalization privatization and
globalization, changing technology changing value systems environmental constraints
law and order.
Internal environment analysis (Strength and Weakness): It is necessary to analyze
one’s own strength and weakness periodically to sustain the degree of its competitive
strength. Generally top management or an outside consultant reviews competencies
pertaining to marketing, financial, manufacturing and organizational system and rates
each factor as a major strength, minor strength, mental, factor, minor weakness, or major
weakness.
Strength: It is not necessary that a business organization has to correct all its weakness
nor that its propagate its strength. The big question is whether the business should limit
itself to those opportunities, where its possesses the required strength or should it
consider better opportunities where it might have to develop certain strength.
Weakness: Some times the company may not do well not because its departments lack
the required motivation but because they do not work together as a team for example
consider the case of an electronics company which employs engineers, sales and service
staff for its operations. It is not adequate if they keep on doing their work. The
organization becomes more effective only when they work as a team. It is therefore,
critically important to build effective teams and assess the effectiveness of these teams.
This is a part of the internal environmental audit. Progressive companies adopt this
strategy.
Strength: Weakness:
1) Value for money programme 1) Not aggressive in selling
2) Pool of trained faculty 2) Course differentials not sharp
3) Wide choice of offering 3) Counselor enthusiasm in adequate
4) National network of well equipped 4) Customers service not focused
training centre enough
Opportunities: Threats:
1) Growing demand for computer 1) Rise in number of competitions
education 2) High rate of technological
2) Computer library be coming a obsolescence
necessity 3) Commoditization of training under
3) Growth of rich training needs cutting of fees.
4) Need for customized training
modules
Ans 4
STRATEGY:
• A Strategy is an Operational tool to achieve the Goals, and thus Corporate Mission.
• It is a Plan of Action designed to achieve a Long term or Overall Aim.
• Strategies are very much useful in the Organization for Guiding, Planning and Control.
• Strategy refers to the Course of Actions designed to achieve the Objectives of the Enterprise.
• Managers use Strategies for different purposes such as to Overcome Competition, to increase Sales, to increase Production, to Motivate the Employees to provide their Best and so on..
• Implementation of a Strategy is as crucial task as the Formulation of it.
The process of formulating the strategyand its implementation includes the following stages
1. Identification of mission and objectives. 2. Environmental scanning.3. Generic strategy alternatives. 4. Strategic variations.5. Strategic choise.6. Allocation of resources & develop organisational structure.7. Formulating the plans,polycies,programmes & administration.
8. Evaluation & Control
Stages in strategy of formulation and implementation
UNIT 6
Questions:
1. Explain the basic concepts of MIS and MRP?2. What is BPO and BPR?3. Describe the importance of Total Quality Management.(TQM)?4. Write a brief note on balanced score card? How is bench marking useful?5. What is SCM and ERP?6. Explain what different levels mean under capability maturity models?
Ans 1
Management Information System
A Management Information System(MIS) is a Computerized database of Financial Information organized and Programmed in such a way that it produces regular reports on Operations for every level of Management in a Company.
It is usually also possible to obtain special reports from the System easily.
Definition:
MIS is a Planned System of Collecting, Storing and disseminating Data in the form of Information needed to carry out the functions of Management.
Objectives of MIS:
1. Capturing Data
2. Processing Data
3. Information Storage
4. Information Retrieved
5. Information Propagation
Allocation of resources
Formulation of plans
Materials Requirement Planning(MRP):
MRP is a Software based Production Planning and Inventory Control System used to manage Manufacturing Process.
MRP is a Computer based Production Planning and Inventory Control System.
MRP is concerned with both Production Scheduling and Inventory Control.
Objectives of MRP:
1. Ensure Materials are available for Production and Products are available for Delivery to Customers.
2. Maintain the lowest possible Material and Product levels in Store.
Plan Manufacturing activities, Delivery Schedules and Purchasing activities
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Business Process Outsourcing
◦ Business Process Outsourcing (BPO) is a Subset of Outsourcing that involves the Contracting of the Operations and Responsibilities of a specific Business Process to a Third – Party Service Provider.
Categories of BPO:
It is often divided into two Categories:
1. Back office Outsourcing
2. Front office Outsourcing
Back office Outsourcing: Which includes Internal Business Functions such as Billing or Purchasing
Front office Outsourcing: Which includes Customer related Services such as Marketing or Tech Support
Key Terms of BPO:
1. Off shore: BPO that is contracted outside a Company’s Own Country.
2. On Shore: BOP that is contracted with the Company’s Own Country.
3. Near Shore: BPO that is contracted a Company’s neighbouring Country
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Total Quality Management:
TQM is a description of the Culture, Attitude and Organization of a Company that strives to provide Customers with Products & Services that satisfy their Needs.
Meaning: TQM means Quality of output of every department and by every employee, cleanliness, orderliness, punctuality, Customer service, standardization of works and continuous efforts for their improvement.
Customer satisfaction is the most important aspect of TQM. The customer may be external to the organization or may be inside the organization. Effective TQM results in greater customer satisfaction, fewer defects, less waste, reduced costs, improved profitability and Increased productivity
Objectives of TQM:
◦ Decrease of Mistakes in all Operating Plans.
◦ Early Mistake Recognition
◦ Avoidance of Wasted
◦ To make the whole Company work towards Customer Satisfaction.
Prerequisites for TQM:
There are some Prerequisites for Successful implementation of TQM. They are:
Customer – Driven Quality
Top Management Leadership and Commitment
Continuous improvement
Fast Response.
.Elements of TQM:1) Customers satisfaction.2) Employees, involvement and empowerment.3) Morale of employees.4) High revenue.5) Lower cost.6) Quality of production.
7) Control of production.8) Quality planning.9) Quality Improvement.10) Quality implementation.11) Quality assurance system.12) Vendor control and quality in procurement.13) Customer relationship management.14) Total organization involvement.15) Quality education and Training.16) Strategic Quality management.17) Leadership.
Methods of TQM:1) ISO 90002) Cost-benefit Analysis.3) Bench Marking.4) Acceptable Quality Level5) Objective Ranking.
1. ISO 9000 (International Organization for Standard): This certificate speaks about the Quality of its products and services globally. It is a well designed, well implemented and carefully managed quality system so, it provides Confidence that the output of the process will meet customer expectations and requirements.
2. Cost-Benefits Analysis: This is a simple technique which involves evaluating all the costs associated with implementing a particular project and comparing them with the expected benefit. The evaluation usually covers a three or five year period.
3. Bench-Marking: It is a method for continuous improvement that involves an ongoing and systematic evaluation and incorporation of external products and services and processes recognized as representing best practice.
4. Acceptable Quality: It ensure the quality which is designed by the company is more adequate to meet Consumers Satisfaction.
5. Objective Ranking: This is method which will helps to give Ranking according to the achievements of the objectives of the company.
Benefits of TQM:1) Customer satisfaction oriented benefits2) Economic improvement oriented benefits
Customer satisfaction oriented benefits: Improvement in product quality Improvement in product design Improvement in production flow Improvement in employee morale Improvement in quality consciousness Improvement in market place acceptance Improvement in product service Improved quality and productivity
Economic improvement oriented benefits: Reduction in operating costs Reduction in operating losses
Reduction in field service costs Reduction in liability exposure Reduction in rejection, scrap and wastage, reworking.
Four Cs of TQM: These are:1) Commitment2) Competence3) Communication4) Continuous improvement.
Conclusion: Effective TQM results in greater customer satisfaction, fewer defects, less waste, reduced costs, improved profitability and increased productivity
Six Sigma
◦ SixSigma is the set of Practices developed byMotorolato systematically improve processes by eliminating defects.
◦ ADefect is defined as Non – Conformity of a Product or Service to itsSpecifications.
◦ SixSigma focuses on Quality
◦ SixSigma seeks to improve the Quality of the Output of the Process by identifyingand removing the causes of Defects and minimizing Variability in ManufacturingProcess.
Methodologies:
◦ SixSigma follow two Project Methodologies inspired by Deming’sPlan - Do - Check - ActCycle.
◦ TheseMethodologies, composed of Five Phases each, bear the Acronyms
DMAIC
DMADV
DMA I C Project Methodology has Five Phases:
DMADV ProjectMethodology has Five Phases:
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Balanced Scorecard:Introduction: Balanced Scorecard is a new approach to strategic management develop in 1990’s by Robert Kaplan and David Norton. This approach replaces the customary practice of
Evaluating the performance of an organization or individual in the organization in terms of profits made or market share gained etc.
Designing the performance management systems around the annual budget and operating plan. These promote short term, incremental tactical behaviour.
Meaning: It 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-The four Perspectives:
1) Financial: Encourages the identification of a few relevant high-level financial measures. In particular, designers were encouraged to choose measures that helped inform the answer to the question “How do the Firm look to Shareholders?”
2) Customers: Encourages the identification of measures that answer the question “How do customers see the Firm?”
3) Internal Business Processes: Encourages the identification of measures that answer the question “ How well does the firm manage its operational Processes?”
Learning and Growth: Encourages the identification of measures that answer the question “Can the firm continue to improve and create value
Bench Marking:Introduction: Bench Marking is finding and implementing best practices that lead to superior performances of an organization.
Meaning: It is the process of comparing an organization’s operations and internal processes against those of other organizations within or outside its industry.Types of Bench Marking: Bench Marking is classified on the basis of the type of partner selected for the benchmarking. Based on the approaches the Bench Marking is classified as:
1) Internal Benchmarking2) Competitive Benchmarking3) Functional Benchmarking4) Beat Practice(Generic) Benchmarking
Benchmarking Process: 1. Plan 2. Search 3. Observe 4. Analyse 5. Adopt
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6. Supply Chain Management:Introduction: Supply chain encompasses all activities associated with the flow and transformation of goods from the raw material stage to the end user as well as associated information flow, material flows both up and down.Meaning: SCM is defined as the “design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.”Objectives of Supply Chain:
To maximize the overall value generated. To achieve maximum supply chain profitability. To reduce supply chain costs to the minimum possible level.
Activities of Supply Chain: Strategic level Tactical level Operational level
Need for Supply Chain Management:1) Improve operations2) Increasing levels of outsourcing.3) Increasing transportation costs4) Competitive pressures.5) Increasing globalization.6) Increasing importance of e-commerce.
7) Complexity of supply chains8) Manage inventories.
Benefits of Supply Chain Management:1) Lower inventories.2) Higher productivity3) Greater agility.4) Shorter lead times5) Higher profits6) Greater Customer Loyalty
Problems addressed by Supply Chain Management: Supply chain management must address the following problems:1) Distribution Network Configuration: Number, location and network missions of
suppliers, production facilities, distribution centers, warehouses, cross-docks and customers.
2) Distribution Strategy: Questions of operating control(Centralized, Decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking.
3) Trade-Offs in Logistical Activities: Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload(FTL) rates are more economical on a cost per pallet basis than less than truckload(LTL) shipments. If however, a full truckload of a product is ordered to reduce transportation costs. But there will be an increase in inventory holding costs which may increase total logistics costs.
4) Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc.
5) Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP) and finished goods.
6) Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.
Conclusion: Thus, supply chain consists of the network of organization that connects supplier and end users. It provides the route through which raw material is converted into finished good/services into the hand of consumers. Supply chain management, in turn, covers the “flow of goods from suppliers through manufacturing and distribution chains to the end users”.8. Enterprise Resource Planning(ERP):Introduction: ERP is an integrated enterprise-wide information system. It integrates the information system of an organization and automates most of the business functions. Enterprise is the group of people with a common goal, which has certain resources at its disposal to achieve this goal. In an Enterprise way, the entire organization is considered as a system and all the departments are its subsystems. The Purpose of ERP systems is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.Meaning: ERP refers to the techniques and concepts for integrated management of business as a whole from the view point of the effective use of management resources to improve the efficiency of enterprise management.
.Elements of ERP: Ideally , ERP delivers a single database that contains all data for the software modules, which would include:Manufacturing: Engineering, Bills of Material, Scheduling, Capacity, Work flow Management, Quality Control, Cost Management, Manufacturing process, Manufacturing Projects, Manufacturing Flow. Benefits/Advantages of ERP : Installing an ERP system has many advantages both direct and indirect.The Direct Advantages include
Improved Efficiency. Information Integration for better decision making. Faster response time to customer queries etc.
The In Direct Advantages include Better Corporate Image. Improved customer goodwill. Customer satisfaction etc.
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7. Capability Maturity Model(CMM):Introduction: CMM is a way to develop and refine an organization processes. The first CMM was for the purpose of developing and refining software development processes. A maturity model is a structured collection of elements that describe characteristics of effective processes.The CMM has been used extensively worldwide in government offices, commerce, and industry and software and software development organizations. The Capability Maturity Model Integration(CMMI) is a new Version of CMM. Meaning: Capability Maturity Model is a collection of Instructions an organization can follow with the purpose to gain better control over its software development process.Maturity Model: A maturity model is a structured collection of elements that describe characteristics of effective process.
The Capability Maturity Model Integration (CMMI)is a new version of Capability Maturity Model(CMM). Levels of CMM: The CMM ranks software development organizations in a hierarchy of five levels. Each level is described as a level of maturity. Those five levels are equipped with different number of instructions to follow.Level 1-Initial: At this processes are usually adhoc and the organization usually does not provide a stable Environment.Level 2-Repeatable: At this maturity level, software development success are repeatable. The organization may use some basic project management to track cost and schedule.Level 3-Defined: At this maturity level, Processes are well characterized and understood, and are described in standards, procedures, tools and methods.
Level 4-Managed: Using precise measurements, the management can effectively manage and control the software development effort.Level 5-Optimizing: This maturity level focus on continually improving process performance through both incremental and innovative technological improvements.Structure of CMM: The structure of Capability Maturity Model involves the following aspects
Maturity levels: There are Five Maturity levels those are 1) Initial2) Repeatable3) Defined4) Managed5) Optimizing
Key Process Areas: A key process area(KPA) identifies a cluster of related activities that, when performed together, achieve a set of goals considered important.
Goals: The goals signify the scope, boundaries, and intent of each key Process area.
Common Features: There are five types of common features: Commitment to perform, ability to perform, activities performed, measurement and analysis, and verifying implementation.
Key Practices: The key practices describe the elements of infrastructure and practice that contribute most effectively to implementation and institutionalization of the KPAs.Conclusion: Within each of these maturity levels are key process area(KPAs)which characterize that level, and for each KPA the five definitions identified are goals, commitment, ability, measurement and verification.
