Unit 1: Management Process (Work Organisation Management)

Unit: 1 Management Process

Unit 1 Syllabus

•  1.1 Concept of Business and management
• 1.2 Introduction to types of business – Service, Manufacturing, Trading
• 1.3 Introduction to types of Industry – Engineering Industry (Heavy & Light Engineering Industries), Process Industry
• 1.4 Resources of management, primary and secondary objectives of management
• 1.5 Introduction to types of management according to nature of Organization -Industrial Management, Hotel management , Sports management, Transport management , Event management etc. ( types only )
• 1.6 Introduction to types functional areas of management – Human resources management, Materials management, Financial management, Production management
• 1.7 Principles of Scientific management by F.W.Taylor
• 1.8 Principles of Management (14 principles of Henry Fayol)
• 1.9 Functions of Management -Planning, Organizing, Directing, Controlling

1.1 Concept of Business and management

What is Business?

• A business is an organisation that makes profit, using economic resources to provide goods and services to the customers.

Note:

• Economic means financial/money related
• Resources means capital/funds/fund/possessing/resources/savings
• Goods means Product/merchandise/stuff/commodities
• Mobile Phone, Clothing, Books, Computer etc.
• Services
• Internet, Banking, Ration, Health Care etc.

What is Management?

Management is a process of planning, decision making, organizing, leading, motivation and controlling the human resources, financial resources and information resources of an organization to reach its goals efficiently and effectively.

Concept of Management

• Management consists of a set of five general functions: planning, organizing, staffing, leading and controlling the activities of any organization.
• The concepts and activities of management apply to all levels of management, and to all types of organizations.
• “Maximum results with the minimum of efforts” is the motto of management of any organization.

1.2 Functions of Management – Planning, Organizing, Directing, Controlling

 Functions of Management

The most important four Functions of Management are as follows –

1. Planning,
2. Organizing,
3. Directing,
4. Controlling

Planning

• It is the basic function of management.
• Planning is determination of course of actions to achieve desired goals.
• It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals.
• It is an exercise in problem solving & decision making.
• Planning is necessary to ensure proper utilization of resources of an organisation.

Organizing

• A manager’s organizational skills can help to ensure a company or departmental unit runs smoothly.
• From establishing internal processes and structures to knowing which employees or teams are best suited for specific tasks, keeping everyone and everything organized throughout daily operations are important functions of management.

Directing

• Managers should be comfortable and confident directing their team members’ daily tasks as well as during periods of significant change or challenge.
• This involves projecting a strong sense of direction and leadership when setting goals and communicating new processes, products and services, or internal policy.

Controlling

• Managers should consistently monitor employee performance, quality of work, and the efficiency and reliability of completed projects.
• Controlling is making sure the ultimate goals of the business are being adequately met and making any necessary changes when needed.

 1.3 Introduction to types of business – Service, Manufacturing, Trading

 Types of Business

Businesses can be classified as following –

• Manufacturing Business
• Service Business
• Trading or, Merchandising Business
• Hybrid Business

Manufacturing Business

•  Manufacturing means making a new product of use.

• Steel Industry(TATA/SAIL), Heavy Electrical Industry(BHEL), Smart Phone, Computer, Furniture, Tooth Brush, Car, Bike etc.
• The process of manufacturing a new product is called “Production Process” in Engineering.
• It includes Raw Material, Factory Overhead, Labour, Production Process.
• After Production goods are sold to the customers.
• Factory Overhead means cost of operating a factory/plant for manufacturing – cost of Land, Logistics, Road/Rail Communication, Staffs, Machinery, Electricity etc.

More examples of Manufacturing Business

•  Food processing, such as producing dairy products (AMUL), bottled drinks(Coca Cola), bakeries(Monjinis) etc.
• Fabric mills and textile production from cotton, wool, polyester; and also clothing factories that use textile as raw material
• Wood and metal works, such as in building cabinets, tables, chairs (Nilkamal Furniture).
• Oil refineries(Reliance/ONGC/IOCL/BPCL), chemical labs, plastic and rubber production.
• Ship builders, aircraft manufacturers (Booing), car makers (Tata Motors/ Maruti Suzuki) etc.

Service Business

•  Service (পরিষেবা) business provides products without any physical form.
• It includes Expert Personnel (Skilled Manpower), Office Overhead, Technological Medium(Internet/Telecommunication/Banking).
• Services are provided to the customers in return of money.
• Education, Tourism, Beauty Saloon, Expert Advice (Consultancy Firm, Law Firm, Accounting Firm), Health Care, Gym/Yoga, Internet, Telecommunication, Banking etc.

Note:

Office Overhead means cost of operating an office – cost of office building/rent, electricity, security staffs, stationery items etc.

More examples of Service Business

• Business services, such as accounting, advisory, taxation, advertising, engineering, legal, research agencies, computer programming (TCS) etc.
• Personal services, such as laundry, beauty salon (Habibs), photography.
• Automotive repairs(Inline 4 Engineering), car rental, car wash, parking spaces.
• Fitness facilities (Gold’s Gym), amusement parks, bowling centres, golf courses, theatres (Inox).
• Hospitals and clinics, schools, museums, banks, Hotel and lodging etc.

Trading or, Merchandising Business

• Trading or, Merchandising business organisation buys goods/products at wholesale price and sell them at retail price.
• It is also called Buy and Sell Business.

            Example:

• Clothing Business, Grocery Stores, Convenience Stores (Consumer Electronics, Home Furniture, Appliance Stores,Medical Stores, Hardware Stores etc.), Distributors (Product of any Specific Brand) etc.
• Wholesale price is the price of products when purchased in bulk amount from factory outlets of whole sellers/distributors.
• Retail Price is the price that the end customer pays to the retailer(shop owner) for purchasing product & it also the price of a product that the Manufacturer recommends for selling to the end customers.
• MRP means Maximum Retail Price.

Hybrid Business

• Hybrid business means a business organisation that provides product/goods, service and Merchandising to the end customers.
• Hybrid means mixing of two or more things.
• A restaurant sells meals(manufacturing the meal from raw materials), can sells cold drinks(merchandising) and also provides a place for eating/dining        venue(service) is a good example of Hybrid Business.

1.4 Introduction to types of Industry – Engineering Industry (Heavy & Light Engineering Industries), Process Industry

What is an Industry?

• An industry is a group of manufacturers or businesses that produce a particular kind of goods or services.
  1. The automobile industry
  2. Textile Industry
  3. Petroleum and petrochemicals
  4. Leather Goods
  5. Iron and steel
  6. Information technology
  7. Tourism Industry etc.

1.5 Resources of management, Primary and Secondary objectives of management

 Resources of management

•  Resources are essential to achieve the goals of any organization.
• Resources of the management of any organization are finances, staff, physical space, equipment, technology, and time.
• Management is all about optimum uses of finite resources.

Objectives of management:

 Organizational Objective:

 a) Survival: The very first objective of management is to survive, means that the business should earn profit at least equal to its cost of capital. For this purpose, management has to ensure that all activities are done efficiently to produce goods and services according to the needs and requirements of the consumers and society.

b) Growth: Every business wants to grow because growth means increased sales, increased profits, market share, increased demand, etc. Therefore, management has to plan for growth and make sure that all activities are carried out in such a way that targets can be easily achieved.

c) Profit: The finance manager may try to maximize the firm’s profits by selecting projects that have higher profit returns than their respective costs. He/she should also promptly ensure that loss-making projects are discontinued to minimize losses.

Social Objectives

 Social objectives are related to the society at large; these objectives are an integral part of any business. A business cannot thrive without society; it needs support from the society and vice versa is also true. Some social objectives are as follows:

a) To provide employment opportunities to people

b) To produce quality goods and services those fulfil customer requirements.

c) To pay taxes on time to the government so that the government can provide better facilities to the society.

d) To provide a safe working environment with strict safety measures for its employees to work without fear and anxiety.

e) To maintain good relations with labour unions so that there is no labour unrest in the organization and work continues without any interruption.

f) To develop good public relations activities so that public image is enhanced and goodwill is created among people.

Personal Objectives

1. An organization can achieve personal objectives by providing
2. Better pay packages
3. Better working conditions
4. Recognition and appreciation

1.7 Introduction to types functional areas of management – Human Resources Management, Materials Management, Financial Management, Production Management

Human Resources Management (Definition)

 Human Resource Management (HRM) is that part of management process which develops and manages the human element of the enterprise considering their resourcefulness in terms of total knowledge, skills, creative abilities, talents, aptitudes and potentialities for effectively contributing to the organizational objectives.

Materials Management

 Materials Management is the planning, directing, controlling and coordinating those activities which are concerned with materials and inventory requirements, from the point of their introduction into the manufacturing process.

Financial Management

 Financial management may be defined as planning, organizing, directing and controlling the financial activities of an organization. Financial activities deal with the procurement and utilization of funds in the proper manner and assessing of needs for funds, raising required finance, capital budgeting, distribution of surplus, financial controls, etc.

Production Management

 Production Management refers to the application of management principles to the production function in a factory. In other words, production management involves application of planning, organizing, directing and controlling the production process.

1.8 Principles of Management (14 principles of Henry Fayol)

 Principles of Management

•  Henry Fayol, also known as the „father of modern management theory‟ gave a new perception of the concept of management.
• He introduced a general theory that can be applied to all levels of management and every department.
• The Fayol theory is practiced by the managers to organize and regulate the internal activities of an organization.

14 principles of Henry Fayol are as follows –

1.  Division of Work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interest
7. Remuneration
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability
13. Initiative
14. Esprit de Corps (Brotherhood)

1. Division of Work

• Division of work amongst the worker will enhance the quality of the product/work.
• The division of work improves the productivity, efficiency, accuracy and speed of the workers.
• This principle is appropriate for both the managerial as well as a technical work level.

2. Authority and Responsibility

• Authority enables the management to work efficiently.
• Responsibility makes them responsible for the work, done under their guidance or leadership.

3. Discipline

• Without discipline, nothing can be accomplished.
• It is the core value for any project or any management.

4. Unity of Command

• This means an employee should have only one boss and follow his command.
• If an employee has to follow more than one boss, there begins a conflict of interest and can create confusion.

5. Unity of Direction

• All the person working in a company should have one goal and motive which will make the work easier and achieve the set goal easily.

6. Subordination of Individual Interest

• A company should work united towards the interest of a company rather than personal interest.

7. Remuneration

• This plays an important role in motivating the workers of a company.
• Remuneration can be monetary (Incentive/Bonus/Perks) or non-monetary (Promotion)

8. Centralization

• In any company, the management responsible for the decision making process should be neutral.
• There should be a balance between the hierarchy and division of power.

9. Scalar Chain

• The hierarchy steps should be from the top to the lowest.
• This is necessary so that every employee knows their immediate senior also they should be able to contact any, if needed.

10. Order

• A company should maintain a well-defined work order to have a favorable work culture.

11. Equity

• All employees should be treated equally and respectfully. It is the responsibility of a manager that no employees face discrimination.

12. Stability

• An employee delivers the best if they feel secure in their job. It is the duty of the management to offer job security to their employees.

13. Initiative

• The management should support and encourage the employees to take initiatives in an organization. It will help them to increase their interest and make them worth.

14. Esprit de Corps (Brotherhood)

• It is the responsibility of the management to motivate their employees and be supportive of each other regularly. Developing trust and mutual understanding will lead to a positive outcome and work environment.

1.9 Principles of Scientific management by F.W.Taylor

 Scientific Management by F.W.Taylor

•  Scientific management is a management theory that analyzes work flows to improve economic efficiency, especially labor productivity.
• This management theory, developed by Frederick Winslow Taylor, was popular in the 1880s and 1890s in U.S. manufacturing industries.

The five principles of management by F.W Taylor Are as follows –

1. Science, Not Rule of Thumb
2. Harmony, Not Discord
3. Mental Revolution
4. Cooperation, Not Individualism
5. Development of each and every person to his or her greatest efficiency and prosperity.

1. Science, not the Rule of Thumb

• This rule focuses on increasing the efficiency of an organization through scientific analysis of work and not with the ‘Rule of Thumb’ method.

2. Harmony, Not Discord

• The relationship between the workers and management should be in harmony.
• Difference between the two (i.e., workers and management) will never be beneficial to either side.
• Management and workers should acknowledge and understand each other’s importance.

3. Mental Revolution

• This means the attitude of management and workers towards each other.
• Both should understand the value of each other and work with full participation and cooperation.
• The aim of both should be to improve and boost the profits of the organization.

4. Cooperation, not Individualism

• Managers and workers should have mutual cooperation & confidence and a sense of goodwill.
• The main purpose is to substitute internal competition with cooperation.

5. Development of Every Person to his Greatest Efficiency

• The effectiveness of a company also relies on the abilities and skills of its employees.
• With proper training, learning best practices and technology, is the scientific approach to brush up the employee skill.
• Training should be given to the right employee, the right steps should be taken at the time of selection and recruiting candidates based on a scientific selection.

——End of Unit 1 Notes——

Previous Year Questions:

2023 July Work Organisation Management Semester 6 Question Paper

Practice MCQs

WOM MCQ Paper 1