ENGINEERING MANAGEMENT

(HU701)
Ramakrishna B.,
Humanities Department,
N M A M Institute of Technology,
Nitte !" ##$.
%&ucation is the transformation of the information for the formation of the
people.
- Late. Mrs. Indira Gandhi., Former Prime Minister of India
1
%N'IN%%RIN' MANA'%M%NT
(Institution )e*el +ore ,aper-
.u/0ect +o&e 1 H2!$#34$# IA Marks 1 $
Hours35eek 1$6 %7am Hours 1 $6
Total Hours 168 %7am Marks 1 $
2NIT I
4 Hrs
Management1 Meaning Functions of Management
,lanning Nature and Importance of Panning, !"pes of Pans, Panning Process,
Panning Premises and Panning #ori$on.
9/0ecti*es Meaning, %haracteristics&'uaities of (ound )*+ecti,e, Management -"
)*+ecti,es .M-)/.

:orecasting Meaning, Methods of Forecasting .'uaitati,e methods and 'uantitati,e
methods simpe mo,ing a,erage method, 0eighted mo,ing a,erage method,
e1ponentia smoothing method, simpe regression mode/

Decision Making Meaning, !"pes of 2ecisions, 2ecision Ma3ing under %ertaint"
inear programming graphica soution.
2NIT II
! Hrs
9rgani;ing1 Meaning, Lega Forms of )rgani$ation (oe Proprietorship, Partnership,
%orporation&%ompan", %o-operati,es Meaning and Features on"/
.pan of +ontrol Meaning, (ignificance, Factors 2etermining the (pan of %ontro,
!"pes of (pans, %urrent !rends in (pan of %ontro.
Authority an& ,o<er (ources of Po0er, Delegation 4easons for 2eegation,
-arriers to 2eegation.

Human Aspects of Management=Manpo0er Panning, 5mpo"ing Peope .4ecruitment,
(eection Process, Ma3ing 6o* )ffer, the Induction Process, %ost of 5mpo"ing Ne0
(taff, !ermination of 5mpo"ment/, !raining and 2e,eopment %onducting !raining
and Methods of !raining, 6o* 2esign and Pa"ment ("stem.

,erformance Appraisal aims and forma schemes&methods of appraisa, performance
appraisa and pa" re,ie0.
2NIT III
8 Hrs
Moti*ation an& )ea&ership1
7
Moti*ation Meaning, !heories of moti,ation .the %arrot and the (tic3, Maso08s Need
#ierarch" theor", #er$*erg8s Moti,ation-#"giene theor", Mc%eand8s !rio of Needs,
(ef-Moti,ation, Genera Moti,ationa !echni9ues/.
)ea&ership Meaning, Ingredients&!raits of eadership, st"es of eadership.
+ontrolling Meaning, %ontroing Process, !hree Perspecti,es on the !iming of
%ontro, !"pes of %ontro, %haracteristics of 5ffecti,e %ontro ("stem.
2NIT I>
8 Hrs
,ro0ect %*aluation Techni?ues Interest 4ate %acuations, Pa"*ac3 !ime, Present
:orth, Future :orth, ;nnua :orth %acuations.
+reati*ity %reati,e Process, %haracteristics of %reati,e Peope, ,rotection of I&eas
Patents, %op"rights, !rade Mar3s, !rade (ecrec" La0s.
,lanning ,ro&uction Acti*ity Pant Location, 'uantitati,e !oos in Production
Panning In,entor" %ontro 5conomic )rder 'uantit" .5)'/, -rea3 5,en ;na"sis,
Learning %ur,es.
2NIT >
$@ Hrs
,ro0ect ,lanning Tools Gantt .-ar/ %harts, Net0or3 ;na"sis P54! and %PM
%rashing the Pro+ect competion duration using net0or3 ana"sis.
Depreciation 4easons for 2epreciation, !"pes of 2epreciation, Methods of %omputing
2epreciation soutions to pro*ems.
T%AT B99B. 1
1. Managing 5ngineering and !echnoog", <rd 5dition,- 2anie L. -a*coc3, Luc" % Morse.
7. Management in 5ngineering Principes and Practice, (econd 5dition, - Gai
Freeman -e, 6ames -a30i= Prentice #a of India P,t. Ltd., Ne0 2ehi 11>>>1.
<. 5ssentias of Management, Fifth 5dition, - #arod ?oont$, #ein$ :eihrich= !ata
MacGra0 #i 5dition, Ne0 2ehi.
@. 5ngineering 5conomics, @
th
5dition, - 6ames L. 4iggs, 2a,id 2. -ed0orth,
(a*ah A. 4andha0a= !ata McGra0 #i 5dition.
B. Industria and -usiness Management, - Martand ! !esang= (uthan %hand C
%ompan" Ltd., Ne0 2ehi 11>>BB.
R%:%R%N+% B99B. 1
1. Fundamentas of Financia Management, - Prasanna %handra= !ata McGra0
#i Pu*ishing %ompan" Ltd, Ne0 2ehi.
7. )peration 4esearch, - (. 2. (harma.
<. )peration 4esearch ;n Introduction, - #amd" ; !aha= Pearson Prentice #a.
@. )rgani$ationa -eha,iour, - (tephen P 4o**ins= Prentice #a, India.
B. )rgani$ationa -eha,iour, - Fred Luthans= McGra0 #i Internationa 5dition.
D. Financia Management !e1t, Pro*ems C %ases, - M E ?han, P ? 6ain= !ata
McGra0 #i.
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2NIT I
Management1 Meaning Functions of Management
,lanning Nature and Importance of Panning, !"pes of Pans, Panning Process,
Panning Premises and Panning #ori$on.
9/0ecti*es Meaning, %haracteristics&'uaities of (ound )*+ecti,e, Management -"
)*+ecti,es .M-)/.

:orecasting Meaning, Methods of Forecasting .'uaitati,e methods and 'uantitati,e
methods simpe mo,ing a,erage method, 0eighted mo,ing a,erage method,
e1ponentia smoothing method, simpe regression mode/

Decision Making Meaning, !"pes of 2ecisions, 2ecision Ma3ing under %ertaint"
inear programming graphica soution.
@
,lanning1
Panning is a primar" and an important function of modern management. !he
*asic functions of management are common" identified as planning, organizing,
staffing, leading (directing, guiding, and motivating), and controlling. )f these, panning
is said to ha,e primac" to come first. )rgani$ing, staffing, eading and controing ha,e
itte purpose uness the" are focused on achie,ing desired o*+ecti,es.
Definitions1
Panning *eing a centra function of management refers t o the determination of a
course of action to achie,e a desired resut. Panning concentrates in ad,ance 0hat to
do, ho0 to do it, 0hen to do it and 0ho is to do it. It *ridges the gap *et0een Gfrom
0here 0e are to 0here 0e 0ant to go8 and panning is actua" the foundation of
management. Panning is ,er" much essentia *ecause an organi$ation has to cope 0ith
the pro*ems i3e scarce resources and uncertain en,ironments 0ith a fierce competition
for these resources.
,eter Drucker has defined panning as a continuous process of ma3ing present
entrepreneur decisions s"stematica" and 0ith *est possi*e 3no0edge of their futurit",
organi$ing s"stematica" the efforts needed to carr"-out these decisions and measuring
the resuts of these decisions against the e1pectations through organi$ed and s"stematic
feed*ac3.
Boont; and 9CDonnel defined panning as an inteectua process, the conscious
determination of courses of action, *ased on decisions on purposes, acts and considered
estimates.
;n effecti,e panning programme incorporates the effects of *oth e1terna as 0e as
interna factors.

Importance1
:hie panning does not guarantee success in organi$ationa o*+ecti,es= there is
e,idence that companies engaged in forma panning, constant" performed *etter than
those 0ith none or imited forma panning= and impro,ed their o0n performance o,er a
period of time. It is ,er" rare for an organi$ation to succeed soe" *" uc3 or
circumstances. (ome of the reasons as to 0h" panning is considered a ,ita manageria
function are gi,en *eo0H
#. ,lanning as a 'oal 9riente& process panning is ,er" cose" associated 0ith
the goas or o*+ecti,es of the organi$ation. !he goas ma" *e e1pressed or
impied and 0e defined goas ead to efficienc" in panning.
B
D. ,lanning as a tool of :orecasting panning main" concerned 0ith oo3ing
ahead and reduces the eements of ris3s and uncertainties= since accurate forecast
of the future is an integra part of effecti,e panning.
6. ,lanning as a 'o*erning factor of sur*i*al, gro<th an& prosperity - the
gro0ing compe1it" of the modern *usiness 0ith rapid technoogica changes,
d"namic changes in consumer preference and gro0ing tough-competition
necessitates order" operation= not on" in the current en,ironment *ut aso in the
future en,ironment. Panning offsets future uncertaint" and changes. ,lanning is
essential in mo&ern /usiness.
". ,lanning as a tool of making choice Gchoosing is the root of panning8 i.e.,
panning in,o,es pic3ing-out 0ith care and caution, the *est from a num*er of
aternati,e gi,en. :ithout panning, a *usiness 0oud *e a roing stone= and it
cannot ha,e much chance of succeeding in an" fied.
. ,lanning affects performance it is e,ident that the organi$ations 0ith forma
panning consistent" performed *etter than those 0ith no forma panning.
@. ,lanning anticipates pro/lems an& uncertainties of future a significant
aspect of an" forma panning process is coection of ree,ant information for the
purpose of forecasting the future as accurate" as possi*e. !his 0oud minimi$e
the chances of hapha$ard decisions. (ince, the future needs of the organi$ation
are anticipated in ad,anced, the proper ac9uisition and aocation of resources can
*e panned= thus minimi$ing 0astage and ensuring optima use of these scare
resources.
!. ,lanning offers effecti*e coor&ination panning heps the management in the
coordination process aso. ;s Boont; and 9CDonnel sa", pans are seected
courses aong 0hich the management desires to coordinate group actions. It
a,oids dupication of 0or3 and inter-department conficts aso.
4. ,lanning lea&s to economy of operation i.e., the *enefits of arge scae
production such as mar3et econom", a*our econom", technica econom", etc.
Panning is the on" 0a" to reai$e the *usiness o*+ecti,es at cheapest and the
*est. It pro,ides for the proper utii$ation of compan" resources.
8. ,lanning encourages inno*ation an& creati*ity panning is *asica" the
deciding function of management= it promotes inno,ati,e and creati,e thin3ing
among the managers, *ecause man" ne0 ideas come to the minds of a manager
0hen he&she is panning.
#$. ,lanning helps in the process of &ecision making since panning specifies the
actions and steps to *e ta3en in order to accompish organi$ationa o*+ecti,es, it
ser,es as the *asis for the decision ma3ing a*out future acti,ities. It aso heps
the managers to ma3e routine decision a*out current acti,ities as the o*+ecti,es,
pan, poicies, schedues, etc., are cear" aid do0n.
##. ,lanning facilitates an& pro*i&es itself as an effecti*e tool of controlling it is
a0a"s pre-re9uisite for controing. No contro can *e e1ercised 0ithout
panning. Panning, is for0ard oo3ing and contro as a *ac30ard oo3ing. :e
de,eoped pans can aid the process of contro *" 0a"H
a- 5sta*ishing a s"stem of ad,ance 0arning of possi*e de,iations from the
e1pected performances and the de,iation ma" come to ight during
D
periodic in,estigations= and hence immediate action can *e ta3en *efore
an" harm is done.
/- ;s a contri*ution to controing process panning pro,ides 9uantitati,e
data 0hich 0oud ma3e it easier to compare the actua performance in
9uantitati,e terms.
,lanning ,remises1
;n essentia for effecti,e panning is esta*ishment of the premises, or
assumptions, on 0hich panning is to *e *ased. 5eihrich and Boont; define panning
premises as the anticipated en,ironment in 0hich pans are e1pected to operate. !he"
incude assumptions or forecasts of the future and 3no0n conditions that 0i affect the
operation of pans. 51ampes of panning premises incude assumptions a*out future
economic conditions, go,ernment decisions .reguation, ta1 a0, and trade poic", etc./,
the nature of competition, and future mar3ets.
In managing technoog" it is essentia to esta*ish panning premises a*out the
future of technoog" and competition. :here there are uncertainties a*out critica
premises, prudent managers de,eop contingency plans that can *e impemented if
indicators sho0 a change in the en,ironmenta conditions from those on 0hich
mainstream panning is *ased. Modest changes in current pans ma" *e needed to add
fe1i*iit" so that a s0itch to a contingenc" pan can *e made 9uic3" if needed.
,lanning Hori;on1
!he planning hori;on as3s ho0 far into the future one shoud pan. !his ,aries
great", depending on the nature of the *usiness and the pan. !he panning period
needed to oo3 far enough ahead to encompass a return on compan"8s ong-term
in,estment. ?oont$ and :eihrich summari$e the G%ommitment Principe8 i.e., ogica
panning encompasses a future period of time necessar" to fufi, through a series of
actions, the commitments in,o,ed in decisions made toda". !he high technoog"
products ma" ha,e short effecti,e i,es, and, therefore, a short panning hori$on.
9/0ecti*es1
)*+ecti,es feature in a *ranches of management and are one of the most *asic
and fundamenta" important toos of management and the" are constant" in use 0ith in
organi$ations. )*+ecti,es are defined as, the important ends toward which
organizational and individual activities are directed. In the 0ords of ?oont$ and
)82onne, objective is a term commonly used to indicate the end-point of a
management programme. )*+ecti,es decide 0here 0e 0ant to go, 0hat 0e 0ant to
achie,e, and 0hat is our destination, etc. ;n organi$ation cannot ta3e inteigent
panning 0ithout cear o*+ecti,es.
!he Need for )*+ecti,esH
!here are t0o po0erfu infuences that cause the need for o*+ecti,es in
engineering management.
I
a/ !he practica imits in communication= 0hich resuts in misunderstanding in
deegation of tas3s and authorit" in management hierarch". !he organi$ations
need o*+ecti,es .0hich are cear and precise/ to eiminate misunderstanding from
the deegation process.
*/ )*+ecti,es are aso a desira*e 0a" to *e managed from a persona point of ,ie0
since the" ao0 room or scope to do things .0or3/ the 0a" peope 0ant. Peope
are not forced into methods that the" do not necessari" appro,e of and the" ha,e
the opportunit" to *ring their o0n ideas to manage the pro*em at 0or3.
!hus, the need for an o*+ecti,e is to *e an unam*iguous ans0er to the 9uestion
0hat e1act" the management e1pects from the su*ordinates at 0or3 or
empo"eesJ ;nd, another reason to ha,e o*+ecti,es is to fufi a deep" rooted
part of empo"ees8 moti,ationa ps"choog". !hus, the t0o *asic reasons .needs/
for ha,ing o*+ecti,es in an organi$ation are as a*o,eH
!o pro,ide unam*iguous deegation of 0or3 and authorit"= and
!o ser,e a fundamenta dri,e of humans i.e., the need to achie,e or
accompish.
-" 0or3ing to0ards o*+ecti,es as end-resuts, these t0o things are aso simutaneous"
reai$ed *" the peope at 0or3.
;ttri*utes&Features&%haracteristics of Good )*+ecti,esH
)*+ecti,es are cear and unam*iguous statements of desired outcomes or end-
resuts. )*+ecti,es are used *" peope 0ho deegate or *" indi,iduas 0ho are managing
their time. !he" ma" *e corporate o*+ecti,es app"ing to man" peope or the" ma" *e
departmenta o*+ecti,es, app"ing to on" a fe0. :hiche,er the form of o*+ecti,es, in a
cases, there are ,arious important characteristics of a 0e-specified o*+ecti,e that pre,ent
am*iguit" and foster accurate interpretation. !here are man" popuar tests of attri*utes or
characteristics that 0e-0ritten o*+ecti,es shoud e1hi*it. !he ma+or features or
attri*utes of sound o*+ecti,es are sho0n as *eo0H
a- 'uantifia*eH )*+ecti,es must *e 9uantified, numerica", if possi*e. If a gi,en
o*+ecti,e cannot *e 9uantified then one can ne,er 3no0 0hether it 0i *e
achie,ed or not. #o0e,er, the 9uantification must aso *e appropriate.
/- ;chie,a*e .;ttaina*e )H ;n o*+ecti,e must *e achie,a*e, *ecause it aimed at
t0o thingsH
It is moti,ating to the empo"ees, if the gi,en an o*+ecti,e is e1citing and
athough tough, sti achie,a*e.
;chie,a*e o*+ecti,es ma3e panning possi*e= and there*" optimi$e the
use of resources and predict o,era ead times. If an" of the *enefits of
panning are to *e reai$ed, there must *e a 3no0n i3eihood that each of
the tas3s 0i *e achie,ed.
c- %ompati*e H !his attri*ute is reated to feasi*iit", *ut is distinct from it.
%ompati*iit" reates to a coection of o*+ecti,es and descri*es the need for them
to fit together as a 0hoe. !herefore, o*+ecti,e-setting a0a"s starts 0ith one,
centra, goa that is supported *" others that foo0 from it. (uch a progressi,e
su*-di,ision ensures that conficting o*+ecti,es do not occur.
K
&- !ime-*ound .!ime-*ased/ H ;n o*+ecti,e 0hich is not ha,ing an" time-imit to
accompish or achie,e it has no use 0hat so e,er. 5,er" resut that is desired has
some appropriate deadine .time-imit/ to accompish or achie,e. )pen-ended
o*+ecti,es resut in 0astage of resources= and if there is no particuar time *"
0hich an o*+ecti,e is achie,ed= then it ne,er *e achie,ed so easi".
e- Measura*e H !his is reated to the attri*ute *eing 9uantified. #o0e,er, for an
o*+ecti,e measura*e, peope ha,e to ha,e access to an appropriate measuring
s"stem. If peope cannot measure the changes the" are ma3ing, the" cannot 3no0
if the" are ha,ing the desired effect.
!hese ma+or characteristics of a sound o*+ecti,e ma" *e presented in the form of a chart
as *eo0H
'uantifia*e
!ime-*ound .!ime-*ased/
Measura*e
;chie,a*e .;ttaina*e/
Feasi*e
4eia*e and %ompati*e
(impe and Fe1i*e
In addition, the sound .0e-0ritten/ o*+ecti,es must aso fufi the foo0ing attri*utesH
!he o*+ecti,es must *e pre-determined and cear" defined.
!he o*+ecti,es must *e reduced .stated/ in -ac3 and :hite, i.e., the" must *e
cear" 0ritten.
!he o*+ecti,es must *e reaistic and attaina*e.
!he o*+ecti,es must ha,e socia-sanction .appro,a *" the societ" or genera
accepta*iit"/.
; o*+ecti,es must *e interconnected and mutua" supporti,e= so as to a,oid
confict of o*+ecti,es.
!he o*+ecti,es must *e arranged in a hierarch" i.e., o,era .organi$ationa/,
ma+or, di,isiona, departmenta, indi,idua, etc.
!he o*+ecti,es must aso *e fe1i*e to changes, and repacea*e 0ith ne0 ones=
etc.
!o ma3e it more specific a sound o*+ecti,e must *e (M;4! - (impe, Measura*e,
;ttaina*e, 4eaistic, !ime-*ounded in e,er" respect.
Management /y 9/0ecti*es1
Management guru Peter Drucker is credited 0ith *eing the first to introduce the
concept Management -" )*+ecti,es .M->/ as an approach for increasing
organi$ationa effecti,eness in his 0or3 The Practice of Management(1954). #e
stressed that, *usiness performance re9uires that each +o* *e directed to0ards the
o*+ecti,es of the 0hoe *usiness. M-) is a techni9ue 0here the manager and
su*ordinates together agree upon the targets, the t"pe of acti,ities, and the time schedue
for using as a criterion for e,auating the performance of su*ordinates. #e o*ser,es that
L
%haracteristics
.features/ of
(ound&0e 0ritten
o*+ecti,es
e,er" manager and empo"ee, from the highest to the o0est e,es in the organi$ation,
shoud ha,e cear o*+ecti,es to pursue.
;ccording to eorge !"iorne, 0ho has done an e1tensi,e research on M-)
states, the s"stem of M-) can *e descri*ed as a process 0here *" the superior and
su*ordinate managers of an organi$ation +oint" identif" its common goas, define each
indi,iduas ma+or areas of responsi*iit" in terms of resuts e1pected of him and use these
measures as guides for operating the unit and assessing the contri*ution of each of its
mem*ers.

!he important areas 0here o*+ecti,es are to *e set according to Peter 2ruc3er areH
Mar3et standing,
Inno,ation and in,ention,
Producti,it"
Ph"sica and financia resources,
Profita*iit" of the firm,
Manageria performance and de,eopment,
:or3er8s performance= and
;ttitudes and pu*ic responsi*iit".
!hus, M-) is a resut-centred, non-speciaist, operationa manageria process for the
effecti,e utii$ation of materia, ph"sica, and human resources of the organi$ation *"
integrating the indi,idua 0ith the organi$ation and organi$ation 0ith the en,ironment.
!he tota management process re,o,es round the o*+ecti,es set +oint" *" the superior
and su*ordinate. )*+ecti,es in M-) pro,ide guideines for appropriate s"stems and
procedures. 4esource aocation, deegation of authorit", etc., are determined on the
*asis of o*+ecti,es. (imiar", re0ard and punishment s"stem is attached 0ith the
achie,ement of the o*+ecti,es. M-) has *een 0ide" adopted to transate *road
organi$ationa goas and o*+ecti,es i3e those discussed a*o,e into specific indi,idua
o*+ecti,es. M-) can *e empo"ed *et0een superior and su*ordinate at e,er" e,e.
;s a process, M-) *egins at the top of the organi$ation 0ith the esta*ishment
of specific organi$ationa o*+ecti,es. (u*se9uent", o*+ecti,es at the ,arious other e,es
do0n the hierarch" are decided *" mutua discussions and consutations *" *oth the
superiors and the su*ordinates. !hen, the process of M-) in,o,es the steps i3eH
5sta*ishing the ong-term organi$ationa o*+ecti,es,
(etting-up of specific short-term organi$ationa o*+ecti,es,
Identification of ?e" 4esut ;reas .?4;8s/ or the priorit" areas of 0or3,
5sta*ishment of su*ordinates agreed o*+ecti,es 0ith in the frame0or3 pro,ided
*" the superior,
(uperior8s recommendations on su*ordinates o*+ecti,es,
1>
Matching resources and ta3ing action-pans to0ard the achie,ement of
organi$ationa o*+ecti,es,
6oint re,ie0 .*oth *" the superior and the su*ordinates/ of progress at reguar
inter,as in the ight of predetermined o*+ecti,es= and
!a3ing correcti,e measures, if necessar", as re,eaed *" the re,ie0 and using
feed-*ac3 mechanism to0ards this end.
!he process of M-) ma" *e depicted in the form of a chart as *eo0H

5sta*ish ong-term o*+ecti,es and pans
F
5
5sta*ish specific short-term organi$ationa o*+ecti,es 5
2
-
;
Identification of ?e" 4esut ;reas .?4;8s/ %
?
(uperiors 5sta*ish ;ction Pans and (u*ordinates agreed
recommendations Matching 4esources o*+ecti,es and performance

;ppraise 4esuts

!a3e correcti,e ;ctions
:igure1 Management -" )*+ecti,es.

M-) is a s"stem for achie,ing organi$ationa o*+ecti,es, enhancement of
empo"ee commitment and participation. !herefore, its process shoud faciitate
transation of *asic concepts into manageria practice. !he M-) process is characteri$ed
*" the emphasis on the rigorous ana"sis, the carit" and *aance of o*+ecti,es, and
participation of managers 0ith accounta*iit" for resuts. !he M-) process is not as
simpe as it appears to *e. Managers need training and e1perience for de,eoping the
re9uired s3is.

11
In the 0hoe process of M-), setting of goas for the su*ordinate position is the
crucia step and the goas are set in a democratic 0a" of functioning through consensus
reached *et0een the superiors and su*ordinates. (uperiors act as faciitators and create a
fa,ora*e cimate 0here su*ordinates free" e1press their opinions, ,ie0points and
perceptions a*out 0hat the" *eie,e coud *e achie,ed. ;s a resut, there is ampe
possi*iit" for the su*ordinates to fee that the" are 0or3ing for their o0n goas and not
for some*od" ese8s. %onse9uent", the" stri,e hard to achie,e goas and get moti,ated
to achie,e them and such achie,ement of goas contri*utes for the satisfaction of their
egoistic needs aso. !hus, M-) ser,es as a moti,ationa techni9ue. !herefore, M-) has
aso *een referred to as, Management By esults and !oal Management.
!hus, to put it in nutshe, the M-) process *egins 0ith an understanding
*et0een the superior and su*ordinates regarding the goas and o*+ecti,es of the o,era
organi$ation and those of the superior8s group. !hen the superior and su*ordinate then
meet to esta*ish o*+ecti,es for the su*ordinate8s attention o,er the ne1t si1 months or
"ear that consistent 0ith group o*+ecti,es. !hese o*+ecti,es shoud re9uire some effort to
attain, "et not *e *e"ond reach. !he reati,e amount of input from superior and
su*ordinate in negotiating these o*+ecti,es ma" ,ar", *ut the resut shoud *e mutua
agreement. )*+ecti,es shoud not *e confined to tas3s for the soe *enefit of the superior,
*ut shoud aso incude de,eopmenta o*+ecti,es designed to strengthen the
su*ordinate8s capa*iities. !hen, the su*ordinate proceeds o,er the ensuing period
t"pica", si1 months or a "ear to carr" out his or her +o* 0ith an emphasis on achie,ing
these o*+ecti,es. Natura", if pro*ems occur or priorities change, superior and
su*ordinate can meet at an"time and ma" modif" the o*+ecti,es, *ut the" shoud not *e
changed 0ithout such agreement. ;t the end of the period, superior and su*ordinate meet
again to e,auate the su*ordinate8s success in meeting assigned goas. !his shoud *e a
constructi,e process, not an e1cuse for pacing *ame. !his re,ie0 session shoud end *"
mutua" esta*ishing a ne0 set of o*+ecti,e for the foo0ing period, of 0hich some ma"
*e e1tensions of earier o*+ecti,es, some ma" *e ne0 o*+ecti,es, and some earier
o*+ecti,es ma" *e deemphasi$ed.
;d,antages of M-)H
!he ad,antages of M-) ma" incudeH
1. a greater commitment and satisfaction on the part of su*ordinates,
7. enforced panning and prioriti$ing of future acti,ities on the part of superior and
su*ordinates, and
<. a more rationa method of performance e,auation *ased on contri*ution to
organi$ationa o*+ecti,es, etc.
2isad,antages of M-)H
!he disad,antages ma" *e in the form ofH
1. an e1tensi,e time and paper0or3 in,o,ed,
7. possi*e misuse of freedom and authorit" 0hen superior simp" assign o*+ecti,es,
<. the su*ordinates ma" tr" to negotiate for eas" goas.
@. there ma" aso *e a tendenc" for su*ordinates to focus on the reati,e" a fe0,
,erifia*e, M-) o*+ecti,es negotiated to the detriment of the man" other
17
o*+ecti,es, *oth 9uaitati,e and 9uantitati,e, that a professiona must aso 3eep in
*aance.
B. the M-) 0i not *e a success uness it has the initiating and continuing support
of higher management.
:orecasting1
#enri Fa"o identified the first management function as pre#oyance, a French
0ord meaning to foresee and prepare for action. ;n essentia preiminar" to
effecti,e panning is therefore foreseeing or forecasting 0hat the future 0i *e i3e. !he
engineer manager must *e concerned 0ith *oth future mar3et and future technoog", and
must, therefore, understand *oth saes and technoogica forecasting.
!he most important premise or assumption in panning and decision ma3ing is the
e,e of future saes .or, for nonprofit acti,ities, of future operations/. ;most e,er"thing
for 0hich 0e pan is *ased on this assumptionH
the production e,e .0hich determines ho0 man" peope 0e must hire and train
or, if production decined, a" off/,
the need for ne0 faciities and e9uipment,
the si$e of the saes force and ad,ertising *udget= and
ne0 funding for purchases and for in,estment in in,entor" and accounts
recei,a*e.
!he foo0ing are the common 0a"s or methods of Forecasting and are cassified into
t0o *road categoriesH
1. 'uaitati,e Methods= and
7. 'uantitati,e Methods.
#. Eualitati*e Metho&s1
!he 9uaitati,e methods of saes forecasting of a firm genera" in,o,e the
foo0ing methodsH
a- Fury of %7ecuti*e 9pinion1 !his is the simpest method, in that the e1ecuti,es
of the organi$ation .t"pica", the ,ice presidents or managers of the ,arious
di,isions/ each pro,ide an estimate .educated guess/ of future ,oume, and the
president pro,ides a considered a,erage of these estimates. !his method is
ine1pensi,e and 9uic3 and ma" *e entire" accepta*e if the future conforms to
the assumptions the e1ecuti,es ha,e used in estimating.
/- .ales :orce +omposite1 In this common" used method, mem*ers of the saes
force estimate saes in their o0n territor". 4egiona saes managers ad+ust these
estimates for their opinion of the optimism or pessimism of indi,idua
saespeope, and the genera saes manager massages the figures to account for
ne0 products or factors of 0hich indi,idua saesmen are una0are. (ince the
fied saes force is cosest to the customer, this method has much to recommend it.
#o0e,er, if there is an" suggestion that the estimate a saesperson pro,ides 0i
ne1t appear as a minimum goa the" must achie,e, the saes force ma" find it in
their o0n *est interest to pa" games 0ith the figures.
1<
c- 2sersC %7pectation1 :hen a compan" ses most of its product to a fe0
customers, the simpest method is to as3 the customers to pro+ect their needs for
the future period. !he customers depend for their o0n success on reia*e sources
of supp", and so communication is in the *est interest of *oth parties. !his might
*e done *" mar3et testing or mar3et sur,e"s. For consumers goods, though, not
on" is such information e1pensi,e to o*tain, *ut customers often do not 3no0
0hat the" 0i purchase in the future.
D. Euantitati*e Metho&s1
(ome of the 9uantitati,e methods of saes forecasting areH
a- .imple Mo*ing A*erage1 :here the ,aues of a parameter sho0 no cear trend
0ith time, a forecast :
nG#
for the ne1t period can *e ta3en as the simpe a,erage of
some num*er Gn8 of the most recent actua ,aues A
t
. !hen=
:
nG#
H

n
t
t
"
n
1
1
/- 5eighte& Mo*ing A*erage1 !he (impe Mo,ing ;,erage method has the
disad,antage the an earier ,aue .the ,aue in past to that 0hat is gi,en in the ist
for estimation/ has no infuence at a, *ut a ,aue Gn8 "ears in the past .the ,aue
of e1treme past as gi,en in the ist for estimation/ is 0eighted as hea,i" as the
most recent ,aue .recent past as gi,en in the ist for estimation/. :e can impro,e
on the simpe a,erage mode *" assigning a set of 0eights G<
t
8 that tota unit"
.1.>/ to the pre,ious ,aues. !henH
:
nG#
M
> . 1
1 1



n
t
t
n
t
t t
w #here " w
c- %7ponential .moothing1 !he :eighted Mo,ing ;,erage techni9ues ha,e the
disad,antage that one must record and remem*er Gn8 pre,ious ,aues and Gn8
0eights for each parameter *eing forecast, 0hich can *e *urdensome if Gn8 is
arge. !he simpe e1ponentia smoothing method continuous" reduces the
0eight of a ,aue as it *ecomes oder, "et minimi$es the data that must *e retained
in memor". In this techni9ue the forecast ,aue for the ne1t time period :
nG#
is
ta3en as the sum ofH
i. !he forecasted ,aue :
n
for the current period, pus
ii. (ome fraction I of the difference *et0een that actua .A
n
/ and forecasted
.:
n
- ,aues for the current periodH
:
nG#
M
( )
n n n
$ " $ +

H
( )
n n
$ " + 1
In this e9uation the 0eight put on past ,aues continues to decrease *ut
ne,er *ecomes $ero.
1@
&- Regression Mo&els1 4egression modes are a ma+or cass of e$planatory
forecasting mo"els% 0hich attempt to de,eop ogica reationships that not on"
pro,ide usefu forecasts, *ut aso identif" the causes and factors eading to the
forecast ,aue. 4egression modes assume that a linear relationship e1ists
*et0een a ,aria*e designated the "epen"ent (unkno&n) #aria'le and one or
more other in"epen"ent (kno&n) #aria'les.
i. .imple Regression Mo&elH !he simpe regression mode assumes that the
independent ,aria*e ."/ depends on a singe dependent ,aria*e .1/, i.e.,
" M a N *1
ii. Multiple RegressionH In mutipe regression, the dependent ,aria*e ."/ is
assumed to *e a function of more than one independent ,aria*e .1
+
/, such asH
" M
...... .......... <
7
<
7
7
+ + + + % c
%
c
% c c
j t o !he dependent ,aria*e can
*e assumed to *e proportiona direct" or in,erse" proportiona to a po0er or
a root, or proportiona in some other 0a" to the independent ,aria*es, as is
suggested in the e9uation a*o,e. Past ,aues of dependent and independent
,aria*es are then used in regression analysis to reduce the independent
,aria*es to the most important ones and to find the ,aues for the constants c
i
that gi,e the *est fit. For e1ampe, a manufacturer of repacement automo*ie
tires might find that the demand for tires ,aried 0ith the cost of gasoine, the
current unempo"ment rate, saes of automo*ies t0o "ears *efore, and the
0eight of the automo*ies.
Euestions1
1. :h" is panning said to ha,e primac" among the manageria functionsJ
7. 2e,eop a mode of steps in panning.
<. :rite a note on Mission (tatement. (eect a compan" 0hose mission or purpose
has changed o,er its histor" and descri*e the change.
@. :hat are the &ey result areas as identified *" Peter 2ruc3er in deciding a*out the
o*+ecti,es of the compan"J
B. 2efine M-) and e1pain *asic steps of M-). For 0hat t"pes of empo"ees or
positions do "ou thin3 management *" o*+ecti,es .M-)/ shoud pro,e
particuar" effective and ineffectiveJ
D. :hat ength of panning hori$on 0oud "ou recommend for panning
a/ the forest resources of a arge paper compan"=
*/ construction of a ne0 automo*ie pant=
c/ creation of a ne0 housing de,eopment of 1B homesJ
I. %reate an e1tended ist of the pans and decisions for a arge manufacturing
compan" that 0i depend on the saes forecast for the ne1t "ear.
K. (aes of a particuar product .in thousand of doars/ for the "ears 1LLI through
7>>> ha,e *een @K, D@, DI, and K<, respecti,e".
.a/ :hat saes 0oud "ou predict for 7>>1 using a simpe four-"ear mo,ing
a,erageJ
1B
.*/ :hat saes 0oud "ou predict for 7>>1 using a 0eighted mo,ing a,erage 0ith
0eights of >.B> for the immediate preceding "ear and >.<, >.1B, and >.>B for the
three "ears *efore thatJ
L. Asing e1ponentia smoothing 0ith a 0eight

of >.D on actua ,auesH

a/ If saes are O @B,>>> and O B>,>>> for 1LLK and 1LLL, 0hat 0oud "ou
forecast for 7>>>J .!he first forecast is e9ua to the actua ,aue of the
preceding "ear/.
*/ Gi,en this forecast and actua 7>>> saes of O B<,>>>, 0hat 0oud "ou
then forecast for 7>>1J
1>. In 9uestion K, ta3ing actua 1LLI saes of O @K,>>> as the forecast for 1LLK,
0hat saes 0oud "ou forecast for 1LLL, 7>>>, and 7>>1 using e1ponentia
smoothing and a 0eight

on actua ,aues of .a/ >.@H and .*/ >.KJ

11. In 9uestion K, 0hat saes 0oud "ou forecast for 7>>1 using the simpe
regression .east s9uares/ methodJ
17. 2escri*e an entrepreneur "ou either 3no0 or ha,e read a*out. :hat persona
characteristics ed to or imited his or her successJ
Decision Making1
Manageria decision ma3ing is the process of ma3ing a conscious choice *et0een
t0o or more rationa aternati,es in order to seect the one that 0i produce the most
desira*e conse9uences .*enefits/ reati,e to un0anted conse9uences .costs/. If there is
on" one aternati,e, there is nothing to decide. !he o,era panning&decision-ma3ing
process has aread" *een descri*ed at the *eginning of the chapter Panning.
If panning is tru" deciding in ad,ance 0hat to do, ho0 to do it, 0hen to do it,
and 0ho is to do it, then decision ma3ing is an essentia part of panning. 2ecision
ma3ing is aso re9uired in designing and staffing an organi$ation, de,eoping methods of
moti,ating su*ordinates, and identif"ing correcti,e actions in the contro process.
#o0e,er, it is con,entiona" studied as part of the panning function, and 0e 0i do so
here.
9ccasions for Decision1
;s stated *" %hester I -arnard, the occasions for decision originate in three distinct
fiedsH
1. from authoritati,e communications from superiors,
7. from cases referred for decision *" su*ordinates= and
<. from cases originating in the initiati,e of the e1ecuti,e concerned.
-arnard points out that occasion for decisions stemming from the re9uirements of
superior authorit" PPPP..cannot *e a,oided, athough portions of it ma" *e
deegated further to su*ordinates. -arnard concudes that occasions of decision arising
from the initiati,e of the e1ecuti,e are the most important test of the e1ecuti,e. !hese
are the occasions 0here no one has as3ed for a decision, and the e1ecuti,e usua" cannot
*e critici$ed for not ma3ing one. !he effecti,e e1ecuti,e ta3es the initiati,e to thin3
through the pro*ems and opportunities8 facing the organi$ation, concei,es programmes
to ma3e the necessar" changes, and impements them. )n" in this 0a" does the
1D
e1ecuti,e fufi the o*igation to ma3e a difference *ecause he or she is in that chair
rather than someone ese.
Types of Decisions1
#. Routine an& non=routine &ecisions Pringe et a cassif" decisions on a continuum
ranging from routine to non-routine, depending on the e1tent to 0hich the" are
structured. !he" descri*e routine decisions as focusing on 0e-structured situations that
recur fre9uent", in,o,e standard decision procedures, and entai a minimum of
uncertaint". %ommon e1ampes incude pa"ro processing, reordering standard
in,entor" items, pa"ing suppiers, and so on. !he decision ma3er can usua" re" on
poicies, rues, past procedures, standardi$ed methods of processing, or computationa
techni9ues. Pro*a*" L>Q of the management decisions are arge" routine. !he routine
decisions usua" can *e deegated to o0er e,es to *e made 0ithin esta*ished poic"
imits, and increasing" the" can *e programmed for computer Gdecision8, if the" can *e
structured simp" enough.
!he non-routine decisions, on the other hand, deas 0ith unstructured situations
of a no,e, nonrecurring nature, often in,o,ing incompete 3no0edge, high
uncertaint", and the use of su*+ecti,e +udgement or e,en intuition, 0here no aternati,e
can *e pro,ed to *e the *est possi*e soution to the particuar pro*em. !he non-
routine decisions are common at higher e,es of management acti,it" and the onger the
future period infuenced *" the decision. (ince, engineers depend on te1t*oo3
soutions, often find themse,es una*e to rise in management uness the" can de,eop
the toerance for am*iguit" that is needed to tac3e unstructured pro*ems.
D. 9/0ecti*e *ersus /oun&e& rationality (imon defines a decision as *eing
o*+ecti,e" rationa if in fact it is the correct *eha,iour for ma1imi$ing gi,en ,aues in a
gi,en situation. (uch rationa decisions are made *" H
a/ ,ie0ing the *eha,iour aternati,es prior to decision in panoramic .e1hausti,e/
fashion,
*/ considering the 0hoe compe1 of conse9uences that 0oud foo0 on each
choice, and
c/ 0ith the s"stem of ,aues as criterion singing out one from the 0hoe set of
aternati,es.
4ationa decision ma3ing, therefore, consists of optimi$ing or ma1imi$ing the outcome
*" choosing the singe *est aternati,e from among a possi*e ones, 0hich is the
approach suggested in the panning&decision-ma3ing mode.
(imon *eie,es that actua *eha,iour fas short, in at east three 0a"s, of
o'(ecti#e rationalityH
a/ 4ationait" re9uires a compete 3no0edge and anticipation of the conse9uences
that 0i foo0 on each choice. In fact, 3no0edge of conse9uences is a0a"s
fragmentatar".
*/ (ince these conse9uences ie in the future, imagination must supp" the ac3 of
e1perienced feeing in attaching ,aue to them. -ut ,aues can *e on"
imperfect" anticipated.
1I
c/ 4ationait" re9uires a choice among a possi*e aternati,e *eha,iours. In actua
*eha,iour, on" a fe0 of these possi*e aternati,es e,er come to mind.
Managers, under pressure to reach a decision, ha,e neither the time nor other
resources to consider a aternati,es or a the facts a*out an" aternati,e. ; manager
must operate under conditions of 'oun"e" rationality, ta&ing into account only
those few factors of which he or she is aware, understands, and regards as relevant.
6. )e*el of +ertainty 2ecisions ma" aso *e cassified as *eing made under
conditions of certaint", ris3, or uncertaint" depending on the degree 0ith 0hich the
future en,ironment determining the outcome of these decisions is 3no0n.
Decision Making 2n&er +ertainty1
2ecision ma3ing under certaint" impies that 0e are certain of the future state of
nature .or assume that 0e are/. ;though this ma" seem i3e a tri,ia e1ercise, there are
man" pro*ems that are so compe1 that sophisticated mathematica techni9ues are
needed to find the *est soution. !his incudes the foo0ing techni9uesH
)inear ,rogramming1
)ne common techni9ue for decision ma3ing under certaint" is caed linear
programming. In this method, a desired *enefit .such as profit/ can *e e1pressed as a
mathematica function .the ,aue mode or objective function/ of se,era ,aria*es. !he
soutions is the set of ,aues for the independent ,aria*es that ser,es to ma1imi$e the
*enefit .or, in man" pro*ems, to minimi$e the cost/ su*+ect to certain imits .constraints/.
)$ample* %onsider a factor" producing t0o products, product R and product E. !he
pro*em isH if "ou can reai$e O1> profit per unit of product R and O1@ per unit of product
E, 0hat is the production e,e of 1 units of product R and " units of product E that
ma1imi$es the profitJ
!hen, ma1imi$e P M 1>1 N 1@"
y
Anits of D>
Product-"
B>
@>

<> P M I>>
1K
7> PM <B>
P M D7>
1>
%
1> 7> <> @> B> D> I> K> L>

Anits of product-1

:igure = #1 Linear Programme e1ampeH Isoprofit lines .P M 1>1 N 1@"/
;s iustrated in the figure a*o,e, "ou can get a profit of
O<B> *" seing <B units of R or 7B units of E
OD7> *" seing D7 units of R or @@.< units of E
OI>> *" seing I> units of R or B> units of E or an" other com*inations of R and
E on the 'soprofit ine connecting these t0o points.
Eour production, and therefore "our profit, is su*+ect to resource imitations, or
constraints. ;ssume in this e1ampe that "ou empo" fi,e 0or3ersH three machinists and
t0o assem*ers, and that each 0or3s on" @> hours a 0ee3. Products R and&or E can *e
produced *" these 0or3ers su*+ect to the foo0ing constraintsH
Product R re9uires three hours of machining and one hour of assem*" per unit.
Product E re9uires t0o hours of machining and t0o hours of assem*" per unit.
!hese constraints are e1pressed mathematica" as foo0sH
1. <1 N 7" 17> .hours machining time/
7. 1 N 7" K> .hours assem*" time/
(ince there are on" t0o products, these imitations can *e sho0n on a t0o-
dimensiona graph, as *eo0H
y
Anits of D> %onstraint 1
Product-" .<1 N 7" 17>/
B>
@> Ma1imum profit point
0ith constraints
<>
%onstraint 7
7> .1 N 7" K>/
1L

1>
%
1> 7> <> @> B> D> I> K>

Anits of product-1
:igure =D1 Linear Programme e1ampe %onstraints and soution.
(ince a reationships are inear, the soution to our pro*em 0i fa at one of the
corners. !o find the soution, *egin at some feasi*e soution .satisf"ing the gi,en
constraints/ such as .1, "/ M .>, >/, and proceed in the direction of steepest ascent of
the profit function .in this case, *" increasing production of E at O1@ profit per unit/ unti
some constraint is reached. (ince assem*" hours are imited to K>, no more than
7
K>
or
@>, units E can *e made, earning @> O1@ , or OBD> profit. !hen proceed aong the
steepest ao0a*e ascent from there .aong the assem*" constraint ine/ unti another
constraint .machining hours/ is reached. ;t that point .1, "/ M .7>, <>/ and profit M
( ) 1@ O <> / 1> O 7> . +
, or OD7>. (ince there is no remaining edge aong 0hich profit
increases, this is the optimum soution. !he OD7> isoprofit ine from pre,ious figure 1,
has *een repeated in figure-7, to iustrate that the ma1imum profit soution has *een
reached. In this particuar case the optimum soution is at the point the constraints
intersect .0here 0e ta3e a constraints as e9uaities/, *ut this is not a0a"s the case. For
e1ampe, if the unit profit for E increased from O1@ to O71, "ou 0oud ma1imi$e profit .P
M 1>1 N 71"/ *" ma3ing @> units E and none of R.
+ote* ,or mathematical analysis see the class notes--
+omputer solutions1 ;*out fift" "ears ago 'eorge Dan;ig of (tanford Ani,ersit"
de,eoped the simple% method, 0hich e1presses the foregoing techni9ue in a
mathematica agorithm that permits computer soution of inear programming pro*ems
0ith man" ,aria*es .dimensions/, not +ust the t0o as in the inear programming
techni9ue. It aso incudes sophistication to get soutions to the pro*ems ma1imi$ation
and minimi$ation, transportations pro*ems, and the i3e.
Euestions1
1. 2istinguish *et0een routine and non-routine decisions.
7. Eou operate a sma 0ooden to" compan" ma3ing t0o productsH apha*et *oc3s
and 0ooden truc3s. Eour profit is O<> per *o1 of *oc3s and O@> per *o1 of
truc3s. Producing a *o1 of *oc3s re9uires one hour of 0ood0or3ing and t0o
hours of painting= producing a *o1 of truc3s ta3es three hours of 0ood0or3ing
7>
*ut on" one hour of painting. Eou empo" three 0ood0or3ers and t0o painters,
each 0or3ing @> hours a 0ee3. #o0 man" *o1es of *oc3s .-/ and truc3s .!/
shoud "ou ma3e each 0ee3 to ma1imi$e profitJ (o,e graphica" as a inear
program and confirm ana"tica".
<. ; %ommercia orchard gro0s, pic3s, and pac3s appes and pears. ; pec3 .9uarter
*ushe/ of appes ta3es @ minutes to pic3 and B minutes to pac3= a pec3 of pears
ta3es B minutes to pic3 and @ minutes to pac3. )n" one pic3er and one pac3er
are a,aia*e. #o0 man" pec3s each of appies and pears shoud *e pic3ed and
pac3ed e,er" hour .D> minutes/ if the profit is O<&pec3 for appes and O7&pec3 for
pearsJ (o,e graphica" as a inear program and confirm ana"tica".
2NIT II
! Hrs
9rgani;ing1 Meaning, Lega Forms of )rgani$ation (oe Proprietorship, Partnership,
%orporation&%ompan", %o-operati,es Meaning and Features on"/
.pan of +ontrol Meaning, (ignificance, Factors 2etermining the (pan of %ontro,
!"pes of (pans, %urrent !rends in (pan of %ontro.
Authority an& ,o<er (ources of Po0er, Delegation 4easons for 2eegation,
-arriers to 2eegation.

Human Aspects of Management=Manpo0er Panning, 5mpo"ing Peope .4ecruitment,
(eection Process, Ma3ing 6o* )ffer, the Induction Process, %ost of 5mpo"ing Ne0
(taff, !ermination of 5mpo"ment/, !raining and 2e,eopment %onducting !raining
and Methods of !raining, 6o* 2esign and Pa"ment ("stem.

,erformance Appraisal aims and forma schemes&methods of appraisa, performance
appraisa and pa" re,ie0.
71
9rgani;ing1
!he nature of organi$ing incudes the foo0ing aspects in our discussionH

9rgani;ing = Definition1
5eihrich and Boont; *eied that peope 0i 0or3 together most effecti,e" if
the" 3no0 the parts the" are to pa" in an" team operation and ho0 their roes reate to
one anotherPPP2esigning and maintaining these s"stems of roes is *asica" the
manageria function of organi$ing.
For an (rganizational ole to e1ist and *e meaningfu to peope, it must incorporateH
a/ Serifia*e o*+ecti,es, 0hich P.are a ma+or part of panning=
*/ ; cear idea of the ma+or duties or acti,ities in,o,ed= and
c/ ;n understood area of discretion or authorit", so that the person fiing the roe
3no0s 0hat he or she can do to accompish goas.
In addition, to ma3e roe 0or3 out effecti,e", pro,ision shoud *e made for
supp"ing needed information and other toos necessar" for performance in that roe.
In this sense, the ,rocess of 9rgani;ing .(teps in )rgani$ing Process/ in,o,esH
1. the identification and cassification of re9uired acti,ities,
7. the grouping of acti,ities necessar" to attain o*+ecti,es,
<. the assignment of each grouping to a manager 0ith the authorit" .deegation/
necessar" to super,ise it= and
@. the pro,ision for coordination hori$onta" .on the same or simiar organi$ationa
e,e/ and ,ertica" .for e1ampe, corporate head9uarters, di,ision, and
department/ in the organi$ation structure.
)egal :orms of 9rganisation1
;s *ac3ground to the stud" of organi$ation, et us first compare the ega forms in
0hich a *usiness firm can *e organi$ed and their saient features. !he ma+or forms
genera" considered areH
1. !he (oe Proprietorship or (oe !radership,
7. !he Partnership,
<. !he %orporations .!he 6oint (toc3 %ompanies or %ompanies/= and
77
@. !he %ooperati,es.
#. The .ole ,roprietorship (.ole Tra&ership-1
!his form of *usiness is 3no0n *" other names such as Gindividual
proprietorship), Gsole-ownership) and Gindi,idua enterprise). It is o0ned and controed
*" a singe indi,idua. !he proprietor or the soe trader in,ests his o0n capita, s3i and
inteigence and he recei,es a the profits and assumes a the ris3s of o0nership. :hen
the acti,ities of the industr" increase, he can ta3e the assistance of empo"ees or his o0n
fami" mem*ers.
!his form of organi$ation is the odest and most natura form of o0nership. !he
industriaist carries out the functions of the industr" e1cusi,e" *" and for himsef. !he
soe trader has unimited freedom in seecting the t"pe of industr" depending upon his
i3es and disi3es. !his form of organi$ation is 0e suited in the circumstances i3eH
i. :hen the si$e of the industr" is sma,
ii. :hen the capita to *e in,ested is sma,
iii. :hen the *usiness re9uires the persona attention of o0ner to his customers and
empo"ees,
i,. :hen the ris3 in,o,ed is ess= and so on.
!he soe trader, for e1ampe, ma" *e in the form of sma shops, ne0sagents, eectrician,
pum*ers and sma consutants and *uiders, etc.

:eatures (characteristics- of .ole tra&er (,roprietorship-1
;s far as soe trader or proprietorship is concerned, the *usiness has no separate ega
identit" from the o0ner, 0hich means that a de*ts, ia*iities, and profits *eong to the
o0ner. )perating, as soe trader does not mean that the o0ner has to 0or3 on his o0n,
he can e,en empo" other peope. (ome of the ma+or features (characteristics) of soe
trader or proprietorship areH
a/ .n"i#i"ual o&nership.
b) +o separate entity of 'usiness
c/ /nlimite" lia'ility i.e., in case the *usiness incur oss and runs in de*ts, then the
soe trader is ia*e to pa" it not on" from his compan" assets *ut aso ia*e to
his persona propert" to pa" the de*ts to an unimited e,es. !hus, ia*iit" for
de*ts is unimited.
d/ 0entrali1e" management an" control i.e., the o0ner .soe trader/ ma3es a
decisions, and therefore has the tota contro of the *usiness. It pro,ides for a
*uic& and prompt decisions on issues reated to the areas i3e credit poic", saes
promotion, production programmes, in,entor" contro and management, a*our
poic", etc. ; soe trader *eing a supreme +udge and master of his *usiness ma3es
prompt and 9uic3 decisions and there*" ta3es ad,antage of fa,oura*e situations.
e/ 2ole en(oyer of profit i.e., since the soe trader in,ests his capita .either
persona or *orro0ed at persona ia*iit"/, s3is and inteigence and *eing the
0hoe and soe o0ner of the *usiness, the soe trader is the soe en+o"er of the
*usiness profit aso.
f/ ,ree from too much go#ernment regulations i.e., as a soe trader he is in an
eminent position to 3eep the *usiness affairs to himsef and aso to maintain the
7<
utmost secrets of the *usiness. !he soe trader need not *ound to furnish
particuars of the *usiness or to pu*ish it for others. !he accounts do not ha,e to
*e discosed pu*ic", and are therefore not a,aia*e to the competitors. !his
ena*es the soe trader to maintain utmost secrec" in a matters reating to his
*usiness and sustain the competiti,e strength.
g/ ; soe trader can offer a personal ser#ice, 0hich ma" *e ,aued more high" *"
some customers.
h/ It can *e a high cost enterprise *ecause the soe trader rare" *enefits from
economies of scae.
D. The ,artnership1
Partnerships e1ist 0hen there are a num*er of peope in,o,ed 0ho are part
o0ners of the *usiness. !his form of organi$ation eiminates some of the disad,antages
of the soe trader form of *usiness, such as imited capita, a*sence of speciai$ation, and
imited manageria a*iit", etc.
(ection of @ of the Indian Partnership ;ct 1L<7 defines a partnership as, the reation
*et0een persons 0ho ha,e agreed to share the profits of a *usiness carried on *" a or
an" of them acting for a.
;ccording to +enry a partnership is, the reation *et0een persons competent to ma3e
contracts, 0ho agree to carr" on a a0fu *usiness in common 0ith a ,ie0 to pri,ate
gain.
;s defined *" ,niform -artnership "ct, the partnership is an association of t0o or
more partners to carr" on as co-o0ners of a *usiness for profit.
!he persons 0ho enter into partnership are ,ountari" 3no0n as partners and coecti,e"
as a firm. !he name under 0hich the partnership *usiness is carried on is 3no0n as the
firm name.
:eatures (characteristics- of ,artnerships1
!he ma+or features of a *usiness operating as a partnership form of organi$ation areH
a/ Plurality of persons i.e., the minimum num*er of persons to partnership
*usiness is !:). !he ma1imum is restricted to !5N in the case of partnership
organi$ation carr"ing on *an3ing *usiness and !:5N!E in the case of a trading
and manufacturing *usiness. -ut in certain professiona partnership 0here
companies are not ao0ed to *e formed *" a0, such as soicitors and
accountants, there ma" *e more than t0ent" partners.
*/ Mutual agreement 0here a partnership form of *usiness is esta*ished *" a
contractua agreement entered into *" a the partners. !herefore, an" person 0ho
cannot 9uaif" to enter into a contract cannot +oin a partnership organi$ation. ;
partnership *usiness can *e set up 0ithout an" formait" *ut it is usua" ad,isa*e
to dra0 up a deed of partnership, 0hich co,ers things such as the 0a" in 0hich
the profit 0i *e spit *et0een the partners.
7@
c/ 3a&ful 'usiness i.e., the contractua *usiness entered into *" the partners must
*e for a a0fu *usiness. In other 0ords, the *usiness genera" accepted *" the
societ" and a0 as especia" ,ia*e one.
d/ 2haring of profits It is immateria 0hether a partner ta3es an acti,e part in the
*usiness or not= *ut sharing of profit must *e the criterion to ca a person as
partner.
e/ 0ollecti#e management Ani3e proprietorship or soe trader form of *usiness,
the partnership form of *usiness is managed coecti,e" *" most of the partners if
not *" a of them. !he ia*iit" and decision-ma3ing are shared. !his can *e the
ad,antage 0hen the s3is and e1perience of the partners compement each other
and the management of the *usiness is carried out effecti,e".
f/ +on4transfera'ility of interest (o&nership rights) ; partner in a partnership
*usiness cannot transfer his interest or o0nership rights to an"one .either to an"
of his fami" mem*ers or to a third part"/ uness the other partners gi,e consent to
it. #o0e,er, if a partner does not i3e to continue 0ith the partnership
organi$ation, he can retire or 0ithdra0 on his o0n and thus get *ac3 his capita
share from the firm.
g/ /nlimite" lia'ility !he ia*iit" of the partners .e1cept the minor partners and
secret&hiding out partners/ of the *usiness organi$ation is unimited as in the case
of soe trader .proprietorship/ form of *usiness= 0here the partners to the *usiness
are e1pected to go for forced disposa of their persona propert" and the
possessions to pa" the de*ts o,er and a*o,e the organi$ation8s assets in case the
de*t *urden is so hea," to pa"-off from the organi$ation8s assets. !hus, the
partners are ia*e to de*ts to an unimited e,e.
h/ Dura'ility of role !he partner in a partnership form of organi$ation pa"s t0o
roes as Gprincipal8 .one of the o0ners/ as regards to the outsiders and assume
the roe of an Gagent8 as *et0een the partners themse,es.
i/ /tmost goal faith !he partnership if formed on the *asis of faith and trust,
0hich each partner reposes in others.
+/ )asy to form !here is ess formait" and e1pense than is in,o,ed in forming a
compan" form of *usiness. It does not in,o,e an" ega formaities to *e
fufied. 4egistration of the firm or organi$ation is aso not compusor" and e,en
if desired it is ,er" simpe.
3/ Maintenance of 'usiness secrets (ince the accounts of the *usiness in a
partnership form of organi$ation need not *e pu*ic" discosed for the reference
of the pu*ic and to the competitors, it is eas" to maintain utmost *usiness secrec"
and sustain the competiti,e strength.
Types of ,artnershipH
!he ma+or t"pes of partnerships are cassified and identified on *asis ofH
Lia*iit" - as genera partnership T0hich in,o,es the cassifications i3e
genera, seeping .dormant or sient/, acti,e, specia or nomina, and secret
or hiding-out partnersU and imited partnership.
;ge of the partners as ma+or and minor partners.
7B
2uration of the firm partnership at 0i .0here *usiness is carried out on
an indefinite period/ and particuar partnership .0here partnership is
formed for a definite period and purpose on"/.
!he genera partners are ia*e to an unimited e,e to the de*ts of the organi$ation. !he
seeping partners ta3e no acti,e participation in *usiness *ut entited to share of profit.
(pecia or nomina and secret partners are insignificant part of partners and ha,e no direct
in,o,ement in managing of *usiness. Limited partnership is a registered form of
partnership and is to *e registered under a0. In the case of minor partner the ia*iit" is
imited. !he partnership at 0i carried on for an indefinite period, 0here as the
particuar partnership on" for a specific purpose and particuar period.
6. The +orporations1
%ompan" form of organi$ation 0as e,o,ed 0ith a ,ie0 to o,ercome some of the
disad,antages and handicaps of the partnership *usiness such as ac3 of continuit",
unimited ia*iit", etc., and to meet the re9uirements of the modern *usiness such as
arge capitas, professiona managers carr"ing on *usiness on a arge scae and the i3e.
;ccording to Indian %ompan" ;ct, 1L1< a +oint-stoc3 compan" is an artificial
person created by law having a separate entity, with a perpetual succession and a
common seal.
%hief 6ustice Marsha of A(; has defined a corporation .compan"/ as a person
artificial, invisible, intangible and e%isting only in the eyes of law.
; compan" ma" *e defined as an artificia person recogni$ed *" a0 0ith a
distinct name, common sea, and a common capita comprising of transfera*e shares of
fi1ed ,aue carr"ing imited ia*iit" and ha,ing a perpetua succession.

:eatures (characteristics- of +ompany form of 9rgani;ation1
!he main features of a *usiness organi$ation operating as a compan" areH
a/ 2eparate legal entity ; compan" has a separate ega entit" from its o0ners and
managers. It is considered to *e 9uite distinct from its mem*ers, and in the e"es
of a0 it is a separate entit" 0ith corporate status. !hus, it can sue others and *e
sued *" others. It cannot *e seen or touched *ut its e1istence can *e fet.
!herefore, it is an artificia person 0ith a separate ega entit".
*/ 5oluntary association of person ; +oint-stoc3 compan" is a ,ountar"
association of man" persons, 0ho contri*ute mone" .capita/ to common stoc3
and empo" it for common purpose of producing goods and ser,ices on a arge
scae. !he" create it on their o0n and there is no 3ind of compusion *" the a0
of the go,ernment to from it.
c/ 3egal sanction ; +oint-stoc3 compan" has to incorporate 0ith due process of
a0. In Indian %ompanies ;ct of 1LBD a"s do0n the procedure and *asic
conditions, 0hich ha,e to *e fufied to start a compan". )nce a the conditions
7D
are satisfied the compan" must *e registered under the act i.e., the 4egistrar of
+oin3-stoc3 companies does registration of the compan". ; arge-scae
enterprises of the countr" are coming under the %ompanies ;ct of 1LBD.
d/ Perpetual succession (continue" e$istence) !he perpetua succession and
sta*e e1istence is one of the distinct features of the compan" form of
organi$ation. It means the ife of the compan" is independent of the ife of its
sharehoders .stoc3&sta3e hoders/. -eing a ega person it 0i not die i3e a
natura person 0ith ph"sica e1istence. It goes on fore,er unti a0 0inds it up.
(harehoders ma" come and go, and ma" change hand an" num*er of times *ut
the compan" goes on fore,er. ; compan" is *rought into e1istence *" a0 and its
ife can *e put to an end on" *" a0.
e/ Profit moti#e - ; compan" is esta*ished on" on to carr" out a *usiness to earn
profit.
f/ 3imite" lia'ility-!he ia*iit" of sharehoders is imited to the e1tent of amount
remaining unpaid on shares hed *" the sharehoders. !his means once the
sharehoders pa" the 0hoe amount on shares the" cannot *e as3ed to *ring
further amount from his pri,ate propert" to meet osses and to pa" off de*ts= in
other 0ords, in a compan" form organi$ation, the ia*iit" of o0ners
.i.e., share&sta3e hoders/ imited to the amount of capita the" in,est in *usiness
indi,idua".
g/ 0ommon seal 6 ; compan" is as an artificia person, it cannot spea3 or sign
documents on its o0n to faciitate entering contract 0ith outsiders, the compan"8s
common sea is affi1ed on a documents and ser,e the purpose of e,idence, t0o
directors of compan" 0i sign such documents on *ehaf of the compan". Moreo,er,
the common sea of the compan" shoud *e 3ept in a safe custod" to a,oid its possi*e
access to others and misuse.
h/ Management an" control 'y electe" representati#es ; compan" *eing an
artificia person cannot manage its *usiness *" itsef. !herefore, a -oard of 2irectors
consisting a group of representati,es of sharehoders manage it. !hese mem*ers are
3no0n as the promoters of the compan" and such mem*ers in -oard of 2irectors are
genera" the men of reputation in *usiness and industria circes. !hough the
sharehoders are the o0ners of the compan", the" do not ta3e direct part in the
management of the compan". !hus, the management and the o0nership are
separate from one another.
i) Transfera'ility of shares !he sharehoders of pu*ic imited compan" are free
to transfer shares to an" one 0ho is 0iing to *u" them. -" this process,
sharehoders can get *ac3 the ,aue of his share 0hen he is in financia need. 51tra
capita can *e raised in pu*ic companies *" issuing more shares. (hares in pu*ic
companies can *e free" transferred 0ithout consuting other sharehoders.
() +um'er of mem'ers !he minimum num*er of mem*ers re9uired to form a
pri,ate imited compan" is !:) and (5S5N in a pu*ic imited compan" 0hereas
the ma1imum num*er of mem*ers are fi1ed at FIF!E for a pri,ate imited compan"
and there is no imit to the ma1imum num*er for pu*ic imited compan".
3/ 7ccounts an" 7u"its !he accounts and audits are to *e maintained
compusori" in a companies. !he accounts re to *e prepared according to the
re9uirements of %ompanies ;ct and audited *" an auditor of the compan". !he
7I
accounts ha,e to *e discosed pu*ic", and therefore, it is possi*e to cose" monitor
0hat is happening in a competing compan". !he compan"8s o*+ecti,es are imited
*" the o*+ect cause. !he compan" is more cose" controed and reguated *"
outsiders than in the case of soe traders and partnership form of *usiness
organi$ations.
/ )$cessi#e o#ernment control 4 !he companies are su*+ected to e1cessi,e
go,ernment contro. !he" must aso furnish ,arious particuars and documents to the
go,ernment and other go,ernment agencies from time to time.


". The +ooperati*es1
!he '.( ('nternational .abour (rganization) defines a cooperati,e
organi$ation as, an association of persons, usua" of imited means, 0ho ha,e
,ountari" +oined together, to achie,e a common economic end through the formation of
a democratica" controed *usiness organi$ation, ma3ing e9uita*e contri*utions to the
capita re9uired and accepting a fair share of ris3s and *enefits of such underta3ing.

!he main o*+ecti,e of a cooperati,e organi$ation is to promote Gsef-hep8 and
Gmutua-hep8 among men of moderate means and incomes ha,ing needs and interest in
common.
:ormation of +ooperati*es (+ooperati*e .ocieties-1
!o setup a cooperati,e societ", an appication is to *e su*mitted to the registrar of
societies. It ma" *e formed *" a minimum of 1> mem*ers and shoud *e registered 0ith
the registrar of cooperati,e societies. !he officias of this department 0i attend the first
genera *od" meeting in 0hich the *"a0s are formed to go,ern the societ" and the
directors are eected *" the sharehoders. If the officias are satisfied 0ith the soundness,
a icense is issued *" the registrar and cooperati,e societ" 0i *e ega" formed. !he
*oard of directors meets at east once in < months.
:eatures (+haracteristics- of +ooperati*es1
!he main characteristics or features of cooperati,es areH
a/ .t is a #oluntary organi1ation !here is open and ,ountar" mem*ership for
a 0ho 0or3 in the organi$ation. ; mem*er can continue his mem*ership as
ong as he desire, and can 0ithdra0 his mem*ership after gi,ing a notice. No
distinction is made *et0een caste, creed, se1, and reigion of the persons
0hie admitting to the mem*ership of the cooperati,e societ".
*/ +o upper limit to mem'ership !here must *e minimum 1> mem*ers and
ma1imum no imits to mem*ership.
7K
c/ 3o&er face #alue of shares !he face ,aue of the share is genera" 3ept in
*et0een 4e. 1 to 4s. 7B to ena*e poor peope aso to *ecome cooperati,e
societ"8s mem*ers.
d/ !he management is *ased on "emocratic line of e8uality 5,er" mem*er can
cast on" one ,ote irrespecti,e of the num*er of share he&she ma" hod.
e/ 2er#ice moti#e - !he main o*+ecti,e is to ser,e and not ma3e profit= and aso
promoted the principa of sef-hep and mutua cooperation among the
mem*ers of the communit" i.e., the idea of each for a and a for each.
!hus, ser,ice is the motto of the societ".
f/ ,ulfillment of common interest !he cooperati,es are aimed at the
fufiment of common interest such as economic acti,ities i3e trade,
commerce, finance, agricuture and reated acti,ities.
g/ Mutual faith% cooperation an" honest as the guiding principe of the
cooperati,es in functioning. It gi,es a due emphasis on morait" of *usiness.
h/ The pro#ision of cash4sale i.e., cash and carr" s"stem to a,oid the ris3 of
oss due to *ad de*t.
i/ 7 separate legal status (ince a cooperati,e societ" has to *e registered
under the cooperati,e societ" act, gets a separate ega status.
+/ 2ocial responsi'ilities !he *usiness must *e socia" a0are and act
responsi*" to0ards other *usinesses, customers, suppiers and the oca
communit"= the" are not necessari" profit-ma3ing.
3/ Disposal of surplus i.e., the surpus amount of re,enue is not fu"
distri*uted as profit to the mem*ers of the societ". It transfers 7BQ of its
re,enue to genera reser,e fund of the cooperati,e organi$ation and 1>Q of
the re,enue for the genera 0efare of the ocait" 0here the cooperati,e
societ" is functioning. !he *aance is distri*uted as profit to its mem*ers.
/ 2tate control i.e., a cooperati,e form of organi$ation is go,erned *" the
cooperati,e societies act, 1L17, and *esides that is aso go,erned *" the
cooperati,e societies act enacted from time to time for ,arious state
go,ernments.
m/ Ta$ e$emption !he cooperati,es are e1empted from pa"ing ta1 to the
go,ernment so as to encourage the formation of the arge num*er of societies.
n/ 7ccounts an" au"iting ; cooperati,e form of organi$ation has to
compusori" maintain its accounts and the" are to *e audited *" the auditor of
cooperati,e societies.

!he cooperati,e form of the *usiness organi$ations ma" *e of ,arious types such asH
%ooperati,e credit societies,
Producers .industria/ cooperati,es,
%onsumers8 cooperati,e societies .distri*uti,e cooperati,es/,
%ooperati,e mar3eting societies,
#ousing cooperati,es,
Farming .agricutura/ cooperati,es, and so on.
:hie soe proprietorships are the most common form of *usiness organi$ation in
sheer num*ers, most arge organi$ations are corporations.
7L
.pan of +ontrol1
;s soon as a ne0 organisatin gro0s to a significant si$e, su*ordinate managers
must appointed to hep the top management. !he 9uestion is not 0hether immediate
managers are needed, *ut how manyJ It must *e decided, in e,er" organi$ation, ho0
man" su*ordinates a superior can manage. !he span of management an" control is
defined as the number of subordinates under a manager or the number of people
reporting to a particular person or superior. In other 0ords, it refers to the num*ers of
positions that can *e coordinated *" a singe e1ecuti,e.

.ignificance of .pan of +ontrol1 !he span of contro ma" *e 9narro&: 0ith a fe0
indi,iduas reporting to a superior or manager and ma" *e G&i"e8 0ith a arge num*er of
indi,iduas are under the super,ision of the same manager or superior. It is ad,isa*e to
ha,e no more than @ or D su*ordinates 0or3ing under one e1ecuti,e or superior. !he
narro0 and 0ide span of contro ma" *e depicted in the form of chart as *eo0H
Managing 2irector
(ection Manager


P1 P7 P< P@
(1 (7 (1 (7 (1 (7 (1 (7


:1 :7 :1 :7 :1 :7 :1 :7 :1 :7 :1 :7 :1 :7 :1 :7
:igure1 )rgani$ation 0ith Gnarro0 span of contro8
Managing 2irector
(ection Manager
P1 P7 P< P@ PB PD PI PK

(1 (7 (< (@ (B (D (I (K (L
:igure1 )rgani$ation structure 0ith G0ide span of contro8
:actors Determining %ffecti*e .pans1 :hat, then, does determine a desira*e spanJ
'raicunas, a Lithuanian engineer and a Paris-*ased management consutant stated that
this depended on the num*er of relationships that e1isted *et0een managers and
<>
su*ordinated indi,idua" and in ,arious com*ination, and among the su*ordinates
themse,es. #e cacuated the num*er of reationships for a manager 0ith Gn8
su*ordinates as
( )
[ ] 1 7
1
+

n n
n
so that e,er" su*ordinate added more than doubled the num*er of reationships the
manager had to *e concerned 0ith and, 'raicunas assumed, the difficut" of the +o*.
#o0e,er, effecti,e span of contro depends on man" factors other than the simpe
num*er of su*ordinates and studies of effecti,e spans ha,e identified the foo0ing
conditions or factors as affecting the num*er of peope a manager can effecti,e"
super,iseH
1. !he e,e of /raining of the 0ubordinates as per the +o* re9uirements.
7. !he Nature of the 6o* super,ises 0hether simpe or compe1.
<. !he 4ate of %hange of ;cti,ities and Personne.
@. !he %arit" of instruction and deegation of po0er and authorit".
B. !he (taff assistance re9uired to a manager in discharging his responsi*iities.
D. (imiarit" of function in 0hich su*ordinates are in,o,ed.
I. %ompe1it" of functions= ma3ing too man" su*ordinates difficut to manage and
super,ise.
K. Geographica coseness of empo"ees at 0or3 pace.
L. 2egree of direction and coordination re9uired.
1>. %apa*iities of su*ordinates.
11. Ase of o*+ecti,e standards.
17. 5ffecti,e communication and meetings 0ith su*ordinates and persona contact
0ith su*ordinates.
1<. Maturit" e,e of the su*ordinates and their support to the manager or eader.
1@. !he phiosoph" of centrai$ation and decentrai$ation in decision-ma3ing=
1B. Fina", the s3i and e1perience of the manager does, of course, ha,e an effect on
the num*er of peope that he or she can super,ise.
!hus, the span of contro has a crucia infuence on a manager8s effecti,eness and
aso determines the e,e of coordination of resources for a proper utii$ation to
accompish organi$ationa goa or tas3.
+urrent Tren&s in .pans1
!he current trend in spans of contro is definite" to increase the spans of
contro, 0hich utimate" decreases the num*er of organi$ationa .hierarchica/ e,es
0ithin a gi,en organi$ation or compan". !his shift to arge span of contros is due in part
to the Information 4e,oution. :ith more automated s"stems, data*ases, and e,er-
increasing methods of communication, decisions can *e made efficient". Line 0or3ers
and technicians no onger ha,e a sma roe in a particuar process *ut ha,e the a*iit" to
manage, in arge part, the particuar process that the" are part" responsi*e for 0ith the
atest in technoog". !hese resuts in arge spans genera" are around 7> to <>
su*ordinates per span, and the organi$ation shoud consist of no more than fi,e
organi$ationa e,es in hierarch". !he ma+or 3e" points .ad,antages or *enefits or
reasons/ that 0i resut in 0ider or arge span of contro areH
<1
1. (ignificant reduction in administration costs.
7. More effecti,e and efficient organi$ation communication.
<. Faster decisions and coser interaction *et0een organi$ationa e,es.
@. 4e9uirement that a e,es of personne *ecome *etter trained, informed and
educated= and
B. -etter eadership at a e,es.
!he progress in information technoog" and its appication resuting in arge span of
contro *enefit the entire organi$ation as a 0hoe, re9uiring *etter educated, in,o,ed,
and trained 0or3ers and forcing *etter eadership, decision ma3ing, and in,o,ement
from managers.
)ine an& .taff Relationships1
!raditiona", the ine functions in an organisation 0ere thaought to incude production,
saes, and finance in the t"pica manufacturing organisation. (taff functions, on the
other hand, 0ere those that heped the ine to accompish these o*+ecti,es *" pro,iding
some sort of ad,ice or ser,ice. ; usefu distinction ma" *e made *et0een personal staff,
such as the assistant to 0ho does trou*eshooting or specia assignments for a singe
manager= and personal staff, 0ho ser,e the entire organisation in an area of specia
competence. 51ampes of speciai$ed staff organisations incude personne, procurement,
eg counse, and mar3et research. In toda"s more compe1 3no0edge-*ased
organisations, the acti,ities of staff speciaists ma" *e as essentia to the utimate
success of the organisation as ine 0or3ers, and these distinctions ha,e amost *ecome
insignificant and *urred.
!he ma+or reationship *et0een ine and staff structure *etter e1pained as *eo0.
a- )ine .tructure - It is the simpest and odest form of organisation= 0here e,er"one
has a 0e defined manager and there is cer definition of the routes of authorit" and
communication. !his is aso 3no0n as Gscaar8 t"pe of organisation structure. In this
form the ine of authorit" runs in the order of ran3, through the successi,e a"ers fo
managers and super,isors, from top management to o0er e,e of 0or3ers. In other
0ords, ine reatinships are superior su*ordinate reationships and can *e traced in a
chain of command from the organisation president .or the %5)/ through a succession
of e,es of managers to the o0est 0or3er. !his ma" *e sho0n as *eo0H
Managing 2irector
Manager 1 Manager 7 Manager - <
P1 P7 P< P@ PB P1 P7 P< P@ PB PD P1 P7 P< P@ PB
:igure1 Line )rganisation (tructure.
/- .taff .tructure - It is aso 3no0n as Gmatri1 organisation8, 0here in this t"pe of
structure there are no ine-managers. !he" 0or3 as consutants to more than one
organisation and is the greater disad,antage of this form of organisation structure. It aso
re9uires peope in the organisation to *e fair" good in time management and dipomac".
<7
0taff reationships are advisory in nature. Four t"pes of staff reationships, arranged in
order of increasing e,es of infuence, and areH
i. Pro,iding ad,ice on" on re9uest,
ii. 4ecommending 0here the staff office deems appropriate,
iii. consuting authorit", in 0hich ine managers must consut .*ut need not o*e"/
staff in their area= and
i,. concurring authorit", in 0hich the staff speciaist has a ,eto authorit" o,er the
ine manager.
d/ )ine an& .taff .tructure - !he most genera" foo0ed and common
organisation structure is a com*ination of ine and staff, 0ith the e,e of
compromise *eing appropriate to the organisaton in,o,ed. !his t"pe of
organisation consists of the addition of staff speciaists to the simpe ine
organisation. +arrington 1merson 0as the first man to introduce this t"pe of
organisation. !he term Gstaff8 in this t"pe of organisation refers to hepers or
speciaists 0ho ena*e the ine officers to 0or3 more effecti,e". !he" are
supporters 0ho pro,ide ser,ice and ad,ice to the ine-officers. !his can *e sho0n
in a chart as *eo0 in figure.a/ and figure.*/H
e/
5ngineering 2irector
Production Manager !est Manager 5ngineering Manager
P1 P7 !1 !7 !< 5ngineer 1 5ngineer 7
:igure(a-1 Line and (taff )rganisation (tructure.
;nd,
-oard of 2irectors
Lega ;d,isor Genera Manager .%5)/ %hief ;ccountant
Production 5ngineer Production Manager 'uait" %ontro Inspector
(uper,isor Foreman !oo 51pert
:or3ers
:igure(/-1 Line and (taff )rganisation (tructure.
<<
&- :unctional (speciali;e&- authority it is a specia t"pe of staff authorit" o,er other
0ho are not their ine su*ordinates. It is as *inding as ine authorit", *ut does not carr"
the right to discipine for ,ioation. Asua", it contros ho0 to accompish some action
faing in the area of responsi*iit" of the staff office, and it is deegated to staff *ecause
of the need for uniformit" or specia e1pertise. 51ampes incude specification of *udget
formats *" the financia officer and of criteria for documenting research findings or for
reducing product ia*iit" *" the ega counse.

e- .er*ice relationships these are faciitati,e acti,ities that are centrai$ed for
econom" of scae, uniformit", or specia capa*iit", *ut are on" supporti,e of the main
mission. 51ampes incude custodia, securit", and medica ser,ices.
; manager ma", at different times, e1hi*it a of these reationships. For
e1ampe, a personne .#4/ manager 0i e1ert ine authorit" o,er direct su*ordinates in
his or her office, pro,ide staff ad,ice to the chief e1ecuti,e on the need for instituting an
affirmati,e action program, e1ercise functiona authorit" *" defining ho0 +o*
descriptions must *e fied out, and pro,ide a ser,ice to the entire organi$ation *"
maintaining empo"ee records.
Friction *et0een ine and staff personne occurs for man" reasons. (taff
speciaists, hired *ecause of their coege training in a needed ne0 discipine, ma" ha,e
itte understanding of the pro*ems and reaities of the ine organi$ation. Line managers,
on the other hand, are often oder and ha,e onger tenure in the organi$ation *ut ma" *e
ess educated and ha,e itte understanding of the e1pertise of the staff speciaist and the
need the organi$ation has for it. 5ach side needs to isten to the other 0ith courtes" and
mutua respect for the good of the tota organi$ation.
%orporate restructuring in the 1LL>s is reducing the si$e of speciaist staff
organi$ations at the corporate and di,isiona e,es. Instead, indi,idua speciaists
*ecome mem*ers of 0or3ing teams that, as a group, are empo0ered to get the 0or3 of
the organi$ation accompished 0ith much ess need for appro,as up the chain of
command. ;s a resut, speciaists can integrate their 3no0edge into 0or3 as it is *eing
done, a,oiding much of the friction, misunderstanding, and 0astage, and repeated efforts
of the past.
Impact of the Information Re*olution1
Modern computer and teecommunication .Information !echnoog"/
technoogies are rapid" changing the organi$ations in 0a"s that 0e do not "et fu"
understand. )un& and Hansen *eie,e that the time hori$ons *et0een design and
production are coapsing *ecause the design data *ase, once created, is a,aia*e for
design ana"sis and e,auation, creating protot"pes, contro of utimate production and
e,en panning and contro of 9uait" inspection. It reduces the resources tied up in in-
process and finished goods in,entor". Product ife c"ces 0i *e shortened in man"
industries. !he successfu firms 0i *e those e,idencing the fe1i*iit", adapta*iit", and
9uic3 response that computer *ased technoogies can pro,ide.
<@
)un& and Hansen aso o*ser,ed a diminishing of the si$e and importance of
centrai$ed corporate head9uarters as operating decisions are pushed to o0er e,es
.and e,en simper once are automated/.
;s computer-*ased automation repaces con,entiona processes, it 0i sharp"
reduce the num*er of 0or3ers needed per unit of output. Factor" 0or3ers 0i *e
monitoring the production process rather than forming part of it and the" 0i need at
east the foo0ing s3isH
1. Sisuai$ation .a*iit" to manipuate menta patterns/
7. %onceptua thin3ing .or a*stract reasoning/
<. Anderstanding of process phenomena .machine fundamentas and
machine&materia interactions/
@. (tatistica inference .appreciation of trends, imits, and the meaning of data/
B. )ra and ,isua communication
D. ;ttenti,eness
I. Indi,idua responsi*iit".
Peter 2ruc3er o*ser,ed four specia pro*ems for management as particuar"
critica in the ne0 information-*ased organi$ationH
1. 2e,eoping re0ards, recognition, and career opportunities for speciaists .since
opportunities for promotion into the management hierarch" 0i drastica"
decrease/.
7. %reating unified ,ision in an organi$ation of speciaist.
<. 2e,ising the management structure for an organi$ation of tas3 forces.
@. 5nsuring the supp", preparation, and testing of top management peope .since the
progression of midde management e,es that pro,ided this training in the past
ha,e diminished/.
; specia -usiness :ee3 report on 4ethin3ing :or3 discusses some of the saient
aspectsH
1. Sirtua disappearance of +o* securit", repaced *" shared responsi*iit".
7. Increasing demand for 0e-paid professiona and technica 0or3ers= decreasing
demand for operators, a*ourers, craftsmen, cerica staff, and farm 0or3ers.
<. 4educed rea 0ages and increasing the need for the t0o-income fami".
@. %ontinuing do0nsi$ing of staff, 0ith the sur,i,ing personne 0or3ing onger
hours under higher stress.
B. Increases in part-time, contract, and sef-empo"ed 0or3ers 0ho are paid on"
0hen needed 0ithout the fringe *enefits that often add @>Q to pa"ro cost.
!herefore, each indi,idua must ta3e persona responsi*iit" for their o0n career, to
assure the" continue to ac9uire the ne0 3no0edge and s3is the" 0i need.
Authority an& ,o<er1
<B
)ther important human considerations in organi$ations, once the" ha,e *een
proper" staffed, incude the nature of authorit" and po0er and their effecti,e deegation.
Nature of Authority1
Forma ;uthorit"H !he traditiona ,ie0 of authorit" is egitimate po0er, the right,
*ased on one8s position in an organi$ation, to direct the 0or3 acti,ities of su*ordinates.
Acceptance Theory of Authority1 2hester ' Barnard, on the other hand, *eie,ed that
authorit" originates 0hen su*ordinates choose to accept the directi,es of superiors.
;ccording to -arnardH
'f a directive communication is accepted by one to whom it is addressed, its
authority for him is confirmed or established. 't is admitted as the basis for action.
3isobedience of such a communication is a denial of authority for him. /herefore, under
this definition the decisions as to whether an order has authority or not lies with the
person to whom it is addressed, and does not reside in 4persons of authority5 or those
who issue orders5.
2espite this, 0e 3no0 that the o,er0heming ma+orit" of re9uests or directi,es
from superiors are, indeed, compied 0ith. :hen a person enters empo"ment 0ith an
organi$ation, he or she is tacit" agreeing to accept an" directi,es to0ard 0hich the
empo"ee fees no strong o*+ection. !herefore, -arnard modifies his acceptance theor"
*" postuating a $one of indifference, 0hich he e1pains as foo0sH
'f all the orders for action reasonably practical be arranged in the order of
their acceptability to the person affected, it my be conceived that there are a number
which are completely unacceptable, that is, which certainly will not be obeyed6 there is
another group somewhat more or less on the neutral line, that is, either barely
acceptable or barely unacceptable6 and a third group un*uestionably acceptable. /his
last group lies within the 4zone of indifference5. /he person affected will accept orders
lying within this zone and is relatively indifferent as to what the order is so far as the
*uestion of authority is concerned.
.ources of ,o<er1
French and 4a,en ha,e di,ided the sources of po0er and infuence into fi,e
t"pesH
1. )egitimate or ,osition po<er (authority- stemming from one8s appointment
or eection as eader.
7. Re<ar& ,o<er the po0er to re0ard others for cooperation.
<. +oerci*e or punishment po<er stemming from fear of punishment.
@. %7pert po<er stemming from a person8s capa*iit" and reputation.
B. Referent po<er *ased on an attraction to or identification 0ith another
indi,idua .or the program or cause that person is eading/ that ma3es the foo0er
0ant to *eha,e or *eie,e as the other does= it is simiar to 0hat is common"
caed charisma, a specia persona gift for inspiring others that is easier to gi,e
e1ampes of than to define.
<D
Thamhain *ases his 2ystem 6 . style of engineering programme management n the first
three of these fi,e *ases of infuence .legitimate, reward, and coercive power/ 0hich
deri,e primari" from one8s forma position. ;nd his 2ystem 6 .. st"e, 0hich is a
com*ination of e%pert and referent powers primari" from one8s persona capa*iities and
reputation, are necessar" for effecti,e eadership. 5,en 0hen ("stem-I po0er is ampe,
the addition of ("stem-II infuence ma3es the manager e,en more effecti,e.
,ringle et al ist some additiona sources of po0er that ha,e *een suggested *" othersH
D. Po0er through access to important indi,iduas,
I. Po0er o*tained through ingratiation or praise,
K. Manipuati,e po0er,
L. Po0er of persistence or asserti,eness= and
1>. Po0er gained through forming coaitions.
5ngineers ma" fee that the" shoud automatica" *e granted enough po0er to get the +o*
done and ma" find the office poitics in,o,ed in ac9uiring po0er distastefu.
Humpherey ta3es a more pragmatic approachH
#hile power is the ability t cause action, politics is the art of obtaining power.
-ower and politics are important management concerns because they form the basis for
all dealing between managers.
Delegation1
;uthorit" is deegated 0hen a superior gi,es a su*ordinate discretion to ma3e
decisions. !hree interreated concepts of importance are the assignment of duties,
deegation of authorit", and e1action of accounta*iit", as sho0n in the figure *eo0.
Manager

;ssigns 2uties 2eegates ;uthorit" 51tracts ;ccounta*iit"
to to from
.u/or&inates
:igure1 ;ssignment, deegation, and accounta*iit".
!he ,rocess of Delegation in,o,es the foo0ing ma+or stepsH
1. determining the resut e1pected from a position .su*ordinate/,
7. assigning tas3s to a position,
<. deegating authorit" for accompishing these tas3s= and
@. hoding the person in that position responsi*e for the accompishment of the tas3s.
Managers use their authorit" to assign "uties to su*ordinates, ma3ing them responsi*e
for carr"ing out the specified acti,ities. !his assignment proceeds in stages from top
management do0n. )nce a su*ordinate has *een assigned tas3s to perform, it is
important to pro,ide him or her 0ith the resources needed to carr" out the assignment.
!his is caed "elegation of authority and incudes authorit" o,er peope 0ho 0i *e
<I
needed to carr" out the assignment as 0e as financia authorit" to ac9uire the
e9uipment, perform the tra,e, or ma3e other commitments of resources needed. Li3e
assignment of duties, deegations of authorit" proceeds in stages from top management
do0n. It is essentia management precept that authorit" shoud *e commensurate 0ith
responsi*iit", so that a su*ordinates has enough authorit" to carr"out assignment
effecti,e".
:hen the manager has assigned duties to a su*ordinate and deegated authorit"
to carr" them out, he or she is sti not though. !he manager must e1act .insist on or
re9uire/ accounta'ility from the su*ordinates *" ma3ing the su*ordinate responsi*e to
the manager for carr"ing out the duties and reporting progress periodica". !he manager
has no0 made the su*ordinate responsi*e for the tas3 and responsi*e to report
progress, *ut the manager is sti accounta*e .responsi*e/ to the ne1t higher e,e of
e1ecuti,e to assure that the tas3 is effecti,e" carried out hence the sa"ing "ou can8t
deegate responsi*iit".
Reasons for Delegation1
2eegation reie,es the manager of 0or3 the su*ordinate is capa*e of doing,
su*stituting the need to assure that the 0or3 is actua" done. !he su*ordinate, on the
other hand, is gi,en a chance to de,eop his or her s3is *" *eing deegated more and
more responsi*e pro*ems. :hie some su*ordinates prefer the securit" associated 0ith
,er" detaied super,ision, those 0ith the most future potentia 0i respond fa,oura*" to
the deegation of increasing responsi*iit" and initiati,e. Further, deegation tends to
ocate decision ma3ing coser to the 0or3 *eing performed, and this often resuts in more
practica and prompt decisions.
Barriers to Delegation for %ngineers1
!he engineers has *een trained in a rigorous discipine and has *een hed
responsi*e for e,er" cacuation and e,er" decima pace through four or more "ears of
coege and su*se9uent "ears of engineering practice. :hen an engineer *ecomes a
manager, ho0e,er, he or she must no0 *e responsi*e for the 0or3 of other peope, and
this can *e especia" threatening to the engineers. !he engineer-manager has the
responsi*iit" to train ne0 su*ordinates carefu" .often 0ith the hep of his or her more
e1perienced su*ordinates/ and to assign +o*s 0ithin the capa*iit" of the su*ordinate.
Insecure managers oad themse,es 0ith their su*ordinates8 pro*ems through
inade9uate deegation. !he superior in the ine of management fais in deegation of
authorit" successfu" *ecause of the reasons i3e ac3 of confidence and trust 0ith the
su*ordinates, fear of faiure, fear of the oss of contro on the su*ordinates, and so on.
!herefore, 9ncken and 5ass suggest fi,e degrees of initiati,e for the su*ordinates to
0or3 onH
1. 0ait unti tod .o0est initiati,e/,
7. as3 0hat to do,
<. recommend, then ta3e resuting action,
@. act, *ut ad,ise at once= and
B. act on o0n, then routine" report .highest initiati,e/.
<K
Managers need to eiminate e,es 1 and 7 as ear" as possi*e, re9uiring the competed
staff 0or3 of e,e < .*ringing a suggested soution 0ith each pro*em/, and progressing
to e,es @ and B in most pro*ems as soon as the e1perience of the su*ordinate +ustifies
this.
'ui&elines for %ffecti*e Delegation1
(ome of the ma+or guideines to faciitate successfu deegation of authorit" areH
1. 2efine assignments C deegate authorit" in the ight of resuts e1pected.
7. (eect the person in the ight of the +o* to *e done.
<. Maintain open ines of communication.
@. 5sta*ish and use proper contros.
B. 4e0ard effecti,e deegation and successfu assumption of authorit".
Human Aspects of Management = Man ,o<er ,lanning1
!he management function of staffing in,o,es finding, attracting, and 3eeping personne
of the 9uait" and 9uantit" needed to meet the organi$ation8s goas. (taffing is incuded
in some management te1t*oo3s as part of the organi$ation function and in others as a
separate function, *ut the same steps are re9uired. 5ffecti,e staffing re9uires first
identif"ing the nature and num*er of peope needed, panning ho0 to get them, seecting
the *est appicants, orienting and training them, e,auating their performance, and
pro,iding ade9uate compensation.
#iring a a*ourers 0hen +o*s are scarce ma" in,o,e +ust a ca to the nearest
union ha, *ut hiring 9uantities of engineers and other professionas, 0hether ne0
coeges graduates or e1perienced professionas 0ith specific s3is, re9uires panning
ahead from si1 months to more than a "ear. Panning for the o,era personne .or human
resource/ needs of a arge high-technoog" firm can therefore *e 9uite compe1.
Foo0ing is the process used in hiring technica professionasH
1. 2ocument the num*er of technica personne of each cassification present" on
hand.
7. 5stimate the num*er of professionas of each t"pe needed in the near future .si1
months to a "ear/ to meet firm contracts and i3e" potentia *usiness.
<. 5stimate the e1pected attrition in the current staff incuding
a. resignations as a function of the nationa demand for scientists and
engineers and the reationship *et0een saar" scae and the empo"ees
strength of competition.
*. !ransfers out to other di,isions and promotion to higher positions= and
c. 4etirements, deaths, and ea,es of a*sence.
@. 5sta*ish the need for increased personne as
'ncrease (7) 8 need (9) : personnel on hand (;) < attrition (=)
(u*di,ide this increase .@/ into .B/ ne0 coege hires, .D/ e1perienced
professionas, .I/ technica support, and .K/ other sources.
B. #iring from the coeges and technica institutes.
<L
D. 2e,eop a hiring pan to ac9uire e1perienced personne using nationa and oca
hiring, empo"ment agencies and headhunters career centres, and empo"ees
-referras.
I. 2e,eop a pan to ac9uire needed technicians and technoogists from t0o and four
"ear technica institutes= -.;. and -.(. graduates in ph"sics, and mathematics,
discharged miitar" technicians, ad,ertisements, state and commercia
empo"ment ser,ices, and empo"ee-referra.
K. Needs that cannot *e *et *" sours .B/, .D/, and .I/, especia" those of to short a
duration to +ustif" permanent hiring, can *e met *" scheduing o,ertime, hiring
contract .temporar"/ engineers, *orro0ing engineers from other compan"
di,isions, and contracting 0or3 to other compan" di,isions or to other companies.
Fo/ re?uisition3&escription1 ; manager 0ishing to fi a professiona position norma"
must fi out a form 3no0n ,arious" as a +o* description or +o* re9uisition, 0hich then is
appro,ed *" higher management and gi,en to the personne department as guidance in
their search for candidates that might *e considered for the position. ; t"pica +o*-
re9uisition consists ofH
1. !ite of the position and grade
7. 5ducationa re9uirements
<. 51perience
@. Persona specifications ph"sica and ps"choogica
B. 2escription of the duties to 0hom to report, authorit" of the empo"ee,
responsi*iities and tas3s in,o,ed in the +o*, t"pes of machiner" and materias to
*e handed, 0or3ing conditions, etc., and
D. 5mouments and pa" pac3ages saar" range, etc.
!he +o*-description contents that cear" communicates to the 0or3ers as to 0hat the" are
re9uired to do and this reduces confusion and misunderstanding. ; cause m" aso *e
incorporated 0hich pro,ides the empo"er 0ith a degree of fe1i*iit" 0hen as3ing the
+o* hoder to carr"-out specific tas3s.
.election1
(eecting those appicants 0ho 0i *e offered +o*s from among the man"
contracted in the search descri*ed in human resource panning is essentia" a fitering
process. 4esumes and appications are re,ie0ed, potentia candidates are screened in
campus or teephonic inter,ie0s, references are chec3ed, and appicants 0ho pass
through these screens are in,ited to the compan" for inter,ie0s .and sometimes testing/
*efore +o* offers are made. !he seection process incudesH
4esume and co,er etter
5mpo"ment appication
%ampus inter,ie0
4eference chec3s
(ite .pant/ ,isit
(tarting saar"= and
6o* offer.
Resume an& +o*er )etter1 For the most engineering professionas the first impression
is norma" made *" the resume, 0hich is su*mitted 0ith a co,er etter in response to an
@>
ad,ertisement or as an initia in9uir". !he co,er etter shoud *e addressed to the
appropriate indi,idua *" name. Norma" the co,er etter *egins *" identif"ing the
position or t"pe of 0or3 "ou are app"ing for and if appropriate, 0here "ou heard of the
opening. !he second paragraph can state 0h" that compan" and position interest "ou,
and descri*e concisely .a sentence or t0o/ the education, e1perience, and other a*iities
that ha,e prepared "ou for the position "ou see3. ; cosing paragraph can *e referred to
the attached resume, than3 the recipient for his&her time to in9uire a*out a possi*e
inter,ie0. !he co,er etter must *e impecca*e in appearance, grammar, and speing. ;
9uait" co,er etter shoud encourage the recipient to gi,e "our resume fair consideration=
0ith a poor one, "our resume ma" not *e read.
!he resume genera" incudes a or most of the foo0ing detaisH
1. Name, address, and teephone num*er.s/.
7. %urrent +o* position and&or status .such as Ggraduating senior8/
<. %urrent and onger term empo"ment o*+ecti,es.
@. (ummar" of education .forma degrees and continuing education/
B. 5mpo"ment e1perience, 0ith the most recent empo"ment firs, emphasi$ing
accompishment .the onger "ou are out of coege, the more i3e" this is to
precede education in a resume/.
D. Pu*ications, significant presentations, and patents.
I. Professiona affiiations.
K. (ignificant honours and a0ards.
L. 4eferences a,aia*e on re9uest .not a re9uirement on the initia resume/.
:riting an effecti,e resume is an important s3i that man" engineers do not
master easi". ;n effecti,e resume norma" shoud not e1ceed t0o pages .e1cept for
academic positions, since pu*ications and presentations are isted there in detai/. !he
resume shoud *e 0e organi$ed concise, fautess in grammar and speing, and
attracti,e" printed on 9uait" paper.
%mployment Application1 If the resume eads to further interest from a potentia
empo"er, the appicant 0i norma" ha,e to fi out .neat", of course/ much of the
same information on an empo"ment appication, arranged in a standard form famiiar to
inter,ie0ers from that organi$ation.
+ampus Inter*ie<1 !he ne0" graduating engineer t"pica" ma3es the first contact
0ith the potentia empo"ers in the campus inter,ie0. Inter,ie0 outcomes are a compe1
d"namic of the attri*utes of the appicant, of the inter,ie0er, and of the situation.
5ngineers need to earn to conduct inter,ie0s as 0e, since the" ma" find themse,es
inter,ie0ing candidates at their pant or *ac3 on campus after a fe0 "ears e1perience.
Reference +hecks1 -efore in,iting an appicant for a site ,isit, a prospecti,e empo"er
common" chec3s the references gi,en in an appication or re9uests them if the" ha,e not
aread" *een pro,ided. 4eferences for ne0 graduate incude professors and super,isors
from part-time +o*s= for the e1perienced engineers the" 0i *e primari" the past and
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current super,isors and co-0or3ers. ;n increasing pro*em 0ith references is the fear of
ia*iit" if a *ad reference is gi,en.
.ite (plant- *isit1 :hen a compan" has a strong interest in an engineer or other
professiona, he or she 0i norma" *e in,ited for a ,isit to a chosen compan" ocation
at compan" e1pense.
;t the end of an inter,ie0 and pant ,isit it is perfect" proper for the appicant
to in9uire 0hen to "ou e1pect to ma3e a hiring decision or If I ha,en8t heard from
"ou *" .date/, ma" I ca "ouJ ; prompt etter than3ing the inter,ie0er for courtesies
e1tended and e1pressing continuing interest in the compan" is genera" appropriate.
.tarting .alary1 If an empo"er is interested in an appicant, sooner or ater he or she
0i as3 :hat saar" do "ou e1pectJ )ften this 0i occur to0ard the end of a site
,isit, and the appicant shoud *e prepared. 4emem*er, e,er"thing is not set in stone. ;
candidate 0ho repies 0hate,er is "our going rate, 0i pro*a*" *e offered the *ottom
of the range. (ince future saar" ad+ustments in most companies are t"pica" sma
percentage ad+ustments to current saar", ine9uities in starting saar" can *e ad+usted on"
so0". Benne&y suggestsH
!he ans0er shoud *e ' understand that mar&et in this area for entry-level
(your specialty) engineering jobs is > to ? dollars. ')m told ' should e%pect to be paid at
mar&et rate5. !his is *oth accurate and poite. !he iron" of the 0hoe saar" negotiation
game is that if "ou hod out for mar3et, the compan" thin3s "ou are *etter and *righter
then someone 0ho actua" hand them a *argain.
51perienced engineers 0i measure their e1pectations *ased on the "ears since
their *acheor8s degree, graduate degrees if an", the 9uait" of their e1perience, oca cost
of i,ing, and other factors.
Fo/ 9ffer1 !he empo"ment offer is a standard format etter offering a specific position
and identif"ing saar", reporting date, position and tite, the person to 0hom the candidate
0i report to, and often pro,isions for mo,ing e1penses. ; candidate shoud
ac3no0edge the offer immediate". #o0e,er, the candidate 0ith other interesting offers
in hand ma" as3 for a reasona*e dea" and if re+ecting the offer shoud aso rep" a*out
the re+ection of the offer in a poite 0a". (tri3ing a *aance *et0een demanding too
much and seing onesef too cheap" re9uires the candidate to ha,e a cear understanding
of his or her true 0orth in the current +o* mar3et.
9rientation an& Training1
:hen a ne0 empo"ee reports to 0or3, the empo"ing organi$ation needs to
hep the ne0comer *ecome part of the organi$ation *" introducing him or her to the
poicies and ,aues of the organi$ations as a 0hoe and specific re9uirements of the
person8s ne0 department and +o*. !he personne department genera" deas 0ith these
responsi*iities in modern organi$ations. )rientation aso in,o,es the process of
incucating the ,aues of the organi$ation, such as attitudes to0ard 9uait", safet", and
customers, etc. !he management aso needs to arrange for the appropriate training
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sources and methods to impart the s3is and e1pertise re9uired to 0or3 on specific areas
in organi$ationa acti,ities. In a more comprehensi,e sense, orientation and training can
*e considered to incude the tota sociai$ation of the ne0 empo"ee to the en,ironment
and cuture of his or her ne0 organi$ation.
!raining and 2e,eopment is the process of de,eoping 3no0edge, s3is, and
*eha,iour in peope that 0i ena*e them to perform *etter their current and future +o*s,
and to discharge the responsi*iit" effecti,e". It is, ho0e,er, important to distinguish
*et0een !raining and 2e,eopment *efore 0e procede 0ith further discussions on the
topic. !raining presuposes that the desire s3i is aread" 0ith in the capacit" of the
indi,idua and that the" on" need to *e sho0n ho0 to app" the s3is and 3no0edge to
perform the +o*. 2e,eopment, ho0e,er, in,o,es preparation for tas3s or *eha,iours
that current" *e"ond the indi,idua8s range of responses.
!here are t0o prere9uisites for successfu trainingH
Inteectua capa*iit"= and
!he desire to earn.
It shoud *e reaised that there are imits to ho0 much a person ma" change as a resud of
training. !raining cannot affect the *asic ps"choogica attri*utes.
#o0e,er, there are se,era factors ha,e contri*uted to the increased adoption of
Gtraining and de,eopment8 schemes in modern organisations, such asH
1. need for s3ied a*ourers,
7. gro0th and de,eopment of ne0 technoogies, and techni9ues of operation,
<. persistent o*soescence of manpo0er,
@. the poic" of the go,ernment reating to empo"ing of socia" and economica"
*ac30ard casses= and
B. reaisaion on the part of empo"ees the need of training to impro,e the producti,e
efficienc", etc.
+on&ucting (organisation of- Training ,rogramme1
!he foo0ing phases to *e considered 0hie conducting ororganising a training
programmeH
#. Identif" the Needs 1 It is the process of assessing the training needs in the
orgaisation= using organisation8s o*+ecti,es and a summer" of the gi,en
indi,idua8s a*iities as starting points, generate a ist of training needs for each
indi,idua in the form of o*+ecti,es.
D. (eect and app" the appropriate and *est method of training 1 !here are man"
techni9ues 0ith 0hich peope ma" *e trained and each method and t"pe of
training is suited to particuar circumstances and t"pes of training are genera"
incudeH
indi,idua instructions,
group instructions,
ecture method,
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demonstrationa method,
0ritten instructions method,
0ritten instructions method,
conferences .ma" e,en incude ,ideo and audio conferences,etc. aso/=
and
meetings, etc.
T,arious methods of training are discussed in preceding paragraphs 0ith tite
methods of trainingU
!herefore, most appropriate techni9ue shoud *e seected and appied.
6. Monitoring the 5ffecti,eness 1 It in,o,es the process of e1amining the trainees8
+o*, to correct mista3es and de,iations, if an"= ti he gets competence.
!herefore, the foo0ing steps shoud *e gi,en due consieration, such asH
Preparation of training programme this step is crucia, since the
organisation has to arrange a training materias, etc., to ta3e-up training
programme.
%onducting training it in,o,es the steps i3eH
Fi1ation of time-ta*e of training,
; e,es of +o* shoud *e ta3en into account for training= and
!raining stipend is to *e paid to the trainee 0or3ers, etc.
;t this stage of Gmonitoring the effecti,eness8, the manager assesses the response
of the group to the training. !his coud *e measured *oth *" ho0 the empo"ees are
performing and *" discussing it 0ith the trainers. !he manager 0i 0ish to 3no0
0hether an" further training is re9uired, 0hether the indi,iduas are no0 a*e to produce
the re9uired s3is, and 0hether ,aue for mone" has *een reaised. !he appraisa forms
an e1ceent means to the manager to e1amine the success of training= as it has genera"
*een identified the training for impro,ement in the agenda of the performance appraisa.
Metho&s of Training an& De*eloping ,ersonnel1
!raining and de,eoping *eing one of the methods or 0a"s to enhance the
empo"ees performance foo0ed in organisations. !here are ,arious Gmethods8 of
training seected on the *asis of its suita*iit" in organisations= and the ma+or methods of
training and de,eopment of personne are cassified into t0o *road catergories as sources
of trainingH
1. Interna !raining Methods= and
7. 51terna !raining Methods.
#. Internal Training Metho&s1
In this method, the training is imparted 0ith in the organisation and it incudes the
foo0ing important methods of trainingH
a/ Induction and )rientation !raining H !his t"pe of training is imparted or offered
to the ne0" appointed empo"ees inorder o famiiarise 0ith a departments and
nature of +o*s to *e carried-out *" them, so as to ma3e 0or3 0ithout assistance
and 0ith confidence.
*/ )n-the-6o* 51perience H !his is the simpe, e1treme" ree,ant, cheapest and
0ide" used method of training. !his t"pe of trining ta3es-pace a through the
0or3ing da". In this t"pe the 0or3er is trained on the +o* under the cose
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super,ision of a trainer or trained instructor= 0ho is an"one ese in,o,ed in the
dai" running of the department and is usua" more senior and e1perienced.
(ometimes, on-the-+o* training is ,er" structured. !his training continues ti the
super,isor or the trainer is satisfied that the empo"ee can ade9uate" perform the
+o* 0ithout super,ision. In this t"pe, inorder to train the empo"ees in ,ariet" of
+o*s, the empo"ees are mo,ed to ,ariet" of +o*s *" the trainer at different e,es
of management= 0here the empo"ee get trained in ,ariet" of s3is. !his is caed
+o*-rotation and it 0i heps the organisation to ha,e a poo of muti-+o*
trained 0or3ers to 0or3 in the situations i3e a*senses, ,acations, or resignations
of some 0or3ers at different e,es.
c/ %oaching H It is genera" used to insti particuar s3is, often of ph"sica nature.
It in,o,es a coach 0ho 0i ta3e the students through the earning process so as
to ac9uire the desired s3is. %oaching is ,er" effecti,e at instiing s3is and is
of particuar ree,ance 0hen persona safet" or credi*iit" are threatened.
d/ 4oe-pa" H In roe-pa" the trainees use their a*iit" to see things from another8s
point of ,ie0 and earn from the e1perience of pa"ing another person8s roe.
e/ ;pprentice training H !his method is offered to earners 0ho cannot *e trained
effecti,e" through Gon-the-+o*8 training programmes, *ecause of the e1tended
period of time re9uired to earn the +o*. !he ;pprentice !raining asts for ,arious
periods from 7 "ears to I "ears and during th=is period the trainees are paid a fi1ed
amount Gstipend8 as remuneration. Asua", an agreement in 0riting= 0here in
the empo"ee guarantees to 0or3 for a certain period after ac9uiring apprentice
training for the compan". In India, the Indian ;pprentice ;ct 0as enacted and
amended in 1LII, and under this act 1,<1,17I apprentices 0ere pro,ided training
as on +une 1LKB.
f/ )ff-the-6o* .Sesti*ue/ training H !his is one in 0hich a cass-room is setup 0ith a
reguar production area as an attempt to stimuate an actua production situation.
!his method of training is adopted 0hen a arge num*er of 0or3ers are to *e
trained in simiar s3is, uniform" and 9uic3". #o0e,er, these t"pes of training
programmes are cost" as it re9uires specia arrangements and high" paid
instructors.
g/ 4efresher training H It is the method of training to refresh the 0or3ers in methods
0hich might ha,e *een forgotten in passage of time= and to train on the ne0
techni9ues in the pace of out-dated techni9ues. It is an opportunit" to the
empo"ees to impro,e their 3no0edge.
h/ Promotiona training H !he training under this method is imparted on to the
0or3ers 0ho mo,es into higher positions on promotion and 0ho needs to hande
greater responsi*iities.
i/ !raining *" (3ied, 51perienced and (enior :or3ers H In this method a ne0
empo"ee is attached to an od .senior and e1perienced/ empo"ee= 0here the ne0
empo"ee 0atchthe processes of doing 0or3 *" the e1perienced 0or3er and do
the same t"pe of 0or3 *" himsef. !his form of training is common in sma
*usiness enterprises.
+/ !raining *" #eper ("stem H !his is aso 3no0n as Gunderstudu" s"stem8 of
training. !his method pressumes that a 0or3er 0i earn *" heping another
0or3er to do his&her +o*. !he Gunderstud"8 or the Gtrainee8 is taught *" the
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empo"er actua" 0or3ing on the +o*, to 0hom the trainee is understud" or
heper.
3/ (tud" H It is especia" appropriate to the persona ac9uisition of factua
3no0edge. It is not, ho0e,er, efficient for the ac9uisition of practica s3is. !he
forma stud", if it is 0ith in the structured s"a*us on" and the stud" is on"
aimed at getting forma 9uaifications.
/ 4etraining H It is most" imparted to the e1isting empo"ees for the foo0ing
reasonsH
to 3eep the a-round s3is of empo"ees as a reser,e in case of need,
0hen retrenched or dismissed 0or3ers are caed *" after a"-off period o0ing
to se,era reasons,
0hen ne0 technoog" demands ne0 methods of promotion,
0hen a 0or3er is not in a position to his norma aoted 0or3 due to iness,
accidents, or incapacit" due to age, *ut 0ho can ta3e-up +o*s 0hich are 0ithin
such empo"ee8s reach.
D. %7ternal Training Metho&s1
51terna training methods as a source of training resorted to in such circumstances
0here faciit" of interna sources of training are not a,aia*e. (pecia training institutes
ha,e come into e1istence, 0hich are either o0ned pri,ate" or *" the pu*ic and
go,ernement. !he empo"ees are deputed in such institutions for a specific duration and
made to earn the re9uired s3is and a*iities. For e1ampe, the institutions i3e
Nationa Producti,it" %ounci .NP%/, (ma (cae (er,ice Institutes, the Industria
!raining Institutes, (ma-scae Industries ;ssociations, the Go,ernment !oo 4oom and
!raining %entres, etc.
#o0e,er, the seection of a training method, depends on the factors i3eH
nature of the pro*em,
trainee8s e,e in management hierarch",
interest of the trainees,
a,aia*iit" of trainers, finance, time and other resources a,aia*e 0ith the
compan", and so on.
!hus, G!raining and 2e,eopment of Personne8 pa"s ,er" improtant roe in staffing
function of management .organisation/, so as to ena*e the 0or3ers to gain the necessar"
s3is to achie,e professiona efficienc" or proficienc" in their +o*.
Appraising ,erformance1
!here are se,era reasons for re9uiring forma appraisa of an empo"ee8s
performance. It needs to decide upon the compensation pac3age .pa" and *onus and
other *enefits/, to decide upon the training and de,eopment needs of the empo"ees,
need for counseing, need for promotions, and aso need for staff panning and aso to
ma3e retention&discharge decisions.
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Ani,ersit" of Missouri s"stem de,eoped a method of rating the empo"ees in
fi,e steps from outstanding to inade9uate in each ofH
a/ ?no0edge of the 0or3,
*/ 'uait" of the 0or3,
c/ 'uantit" of the 0or3,
d/ ;ttendance and punctuait" .timeiness/,
e/ Initiati,e *eha,iour of the empo"ee,
f/ %ommunication s3is,
g/ %arr"ing out instructions, and
h/ ),era appraisa.
!here are ,arious methods of performance appraisa as gi,en and e1pained *" the
speciaists= ho0e,er, most forms used for the appraisa of professionas in arge
organi$ations in,o,e com*inations of methods. Genera", the performance appraisa
methods ma" incudeH
;ppraisa forms,
;ppraisa inter,ie0s,
4an3ing or forced distri*ution methods, and so on.
!he primar" emphasis in appraisa toda", therefore, is on the contri*ution made to0ard
achie,ing organi$ationa o*+ecti,es, 0hich is the reason that personne are empo"ed to
*egin 0ith. ;nd 0ith the increased emphasis on team0or3, there is greater emphasis on
re0arding team mem*ers for team .or e,en tota organi$ation/ performance rather than
+ust indi,idua performance.
!he Impication of an ;ppraisa ("stemH
!he impementatation of an appraisa scheme needs financia as 0e as personne
panning. It aso n,o,e time and cost. #o0e,er, the *enefits of performance appraisa
are arge" intangi*e and it is difficut to produce a numerica cost +ustification.
!he ad,antages of appraisa for empo"ees areH
it ao0s an o*+ecti,e assessment of an indi,idua8s performance to *e made,
it pro,ides a data*ase of information concerning the personned, their s3is, and
a*iities, on 0hich the compan" can dra0. From this, it can ead to *etter and
more effecti,e use of staff *" means of transfer, training and panned pro+ects,
it can identif" difficuties and potentia pro*ems so that the" can *e deat 0ith
*efore the" *ecome ma+or pro*ems,
it can impro,e the performance of personne through the use of o*+ecti,e setting
and increased moti,ation, and
It is an idea too for use 0ith in a management s"stem that reies on o*+ecti,e-
setting to contro and moti,ate the 0or3-force.
#o0e,er, the appraisa schemes aso suffer from certain imitations and disad,antages for
0hich the" creiticised.
Lin3ing ;ppraisa to Pa"-re,ie0H
Man" organisations in3 the appraisa inter,ie0s to pa"-re,ie0. It pro,ide a fair
*ase on 0hich to di,ide the saar" *udget *" a0arding merit points for performance and
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gi,ing saar" increments on the *asis of points achie,ed. #ence, 0ho contri*ute
.perform/ *etter get the *est re0ard. Moreo,er, it heps in increasing empo"er
moti,ation to reach compan" o*+ecti,es. #o0e,er, there are disad,antages to in3ing
appraisa and pa"-re,ie0, and these are oftendeemed to out0eigh the ad,antages= such
asH
It 0i increase the amount of defensi,e *eha,iour and reuctance to admit fauts
on the part of the appraisee,
It can cause peope to use the appraisa as an opportunit" to +ustif" 0h" their
saar" shoud increase= and
It can ead to confict *et0een the appraiser and appraisee, damaging the persona
reationship and understanding the purpose of the appraisa.
Euestions1
1. Eou ha,e *egun a sma *ut gro0ing *usiness. :hat ad,antages and
disad,antages shoud "ou consider *efore changing it form a soe proprietorship
to a corporationJ
7. 2efine (pan of %ontro. 51pain the t"pes and factors determining the span of
contro.
<. 2istinguish *et0een functiona .speciai$ed/ staff authorit" and traditiona ine
authorit".
@. :hat changes in organi$ation structure might "ou e1pect as a resut of the
information re,outionJ
B. %hoose an enterprise 0ith 0hich "ou are famiiar that has undergone significant
recent reorgani$ation. %ompare the ne0 and od organi$ations 0ith regard to
a. si$e and infuence of speciai$ed staff,
*. management e,es,
c. t"pica spans of contro,
d. responsi*iit" deegated to nonmanageria professionas.
:hat other changes occurred in the organi$ationJ
D. 2iscuss the strateg" "ou propose to use in "our persona career to assure "ou 0i
remain in demand in a changing, competiti,e 0ord.
I. Prepare a resume of "ou 9uaifications meeting the criteria descri*ed. :hat
might .if an"thing/ might "ou i3e to add or deete from this resume formatJ
:h"J
K. :rite a note on campus inter,ie0.
L. 2escri*e a performance appraisa techni9ue or form 0ith 0hich "ou are famiiar
and assess its strengths and 0ea3ness.
1>. 51pain *rief" -arnard8s acceptance theor" of authorit", and gi,e an e1ampe.
11. :hat are some conditions under 0hich a forma or ("stem I st"e of eadership
0oud *e most effecti,e, 0here 0oud "ou re" on ("stem II st"eJ
17. 51pain the ,arious sources of po0er and authorit".
1<. 2efine 2eegation. 51pain the reationship *et0een deegation, assignment and
accounta*iit".
1@. 51pain the ma+or reasons and *arriers to effecti,e deegation of authorit" for
engineers.
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2NIT III
8 Hrs
Moti*ation an& )ea&ership1
Moti*ation Meaning, !heories of moti,ation .the %arrot and the (tic3, Maso08s Need
#ierarch" theor", #er$*erg8s Moti,ation-#"giene theor", Mc%eand8s !rio of Needs,
(ef-Moti,ation, Genera Moti,ationa !echni9ues/.
)ea&ership Meaning, Ingredients&!raits of eadership, st"es of eadership.
+ontrolling Meaning, %ontroing Process, !hree Perspecti,es on the !iming of
%ontro, !"pes of %ontro, %haracteristics of 5ffecti,e %ontro ("stem.
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Moti*ation1
Intro&uction Definitions1
!he term moti,ation is deri,ed from the 0ord Gmoti,e8 and is as defined *" -ereson and
(teiner an inner state that energises, acti,ates and that directs or channes *eha,iour
to0ards goas.
Moti,ation is a genera term app"ing to the entire cass of dri,es, desires, needs, 0ishes
and such simiar forces or factors. :hen 0e sa" that, a manager moti,ates his
su*ordinate empo"ees, it means that he does those things 0hich, he hopes, 0i satisf"
these factors .dri,es and desires/ and there*" induce su*ordinates to act in the desired
manner.
(cot defines moti,ation as, a process of stimuating peope to action, to accompish
desired goas.
!he e,e of moti,atiomn direct" reated to the e,e of incenti,es and disincenti,es, i.e.,
Moti,ation M Incenti,es 2isincenti,es.
!he e,e of moti,ation does not on" affect empo"ees ps"choogica", *ut aso their
performance e,e= i.e.,
Performance M ;*iit" 1 Moti,ation.
!o ha,e an effecti,e technica organi$ation 0e need to understand the nature of
moti,ation, especia" as it appies to technica professionas Berelson and .teiner ha,e
defined moti,e as an inner state that energi$es, acti,ates, or mo,es .hence Gmoti,ation8/,
and that directs or channes *eha,iour to0ard goas.
Ro//ins defines moti,ation in an organi$ationa sense as the 0iingness to e1ert high
e,es of effort to reach organi$ationa goas, conditioned *" the effort8s a*iit" to satisf"
some indi,idua need.
+amp/ell et al. define moti,ation in terms of three measures of the resuting *eha,iourH
1. !he direction of an indi,idua8s *eha,iour .measure *" the choice made 0hen
se,era aternati,es are a,aia*e/
7. !he strength of that *eha,iour once a choice is made.
<. !he persistence of that *eha,iour.
B>
(hannon concudes that there is on" one 0a" to get peope to do 0hat "ou 0oud i3e
them to do, and that is *" ma3ing them want to do it. Moti,ation fo0s from 0ithin the
indi,idua. !herefore, 0e need to earn 0h" peope 0ant to do things, and ho0 the" can
*e persuaded .or moti,ated/ to do those things that 0i enhance organi$ationa goas.
The +arrot an& The .tick Theory1
!he metaphor Gthe %arrot and the (tic38 reated to the use of re0ards and
penaties respecti,e" in order to induce the desired *eha,iour of the empo"ees. It
comes from the od stor" that to ma3e a don3e" mo,e, one must put a carrot in front of
him or +a* him 0ith a stic3 from *ehind.
2espite a the research on moti,ation techni9ues, the re0ard and punishment are
sti considered as the strong moti,ators. !he %arrot in the form of re0ard represents
mone", promotion, appreciation and other *enefits and the (tic3 in the form of
punishment represents oss of +o*, oss of income, reduction of *onus, demotion or
some other forms of penat". Asing the carrot and stic3 approach, there are *asica" t0o
0a"s= *eha,iour is changed *" force or *" choice through the use of incenti,es.
!he Gstic38 or fear is a good moti,ator and 0hen used at the correct times can *e
,er" hepfu. In that conte1t, fear has a0a"s *een the Gcon,enient8 choice of Maa"sian
managers and organi$ations. :hen a ese fais, the stic3 approach is someho0 most
attracti,e as it usua" produces instantaneous compiance and hence immediate resuts.
Fear is aso attracti,e as in the short term, an empo"ee8s performance ma" *e impro,ed
0ithout an" need for incenti,es or financia remuneration.
Fear ho0e,er has its 0ea3nesses in that an organi$ation moti,ated *" fear is
prone to mutin". It can aso *e stressfu for empo"ees. It is e1trinsic, 0hich means that
the moti,ation on" 0or3s 0hie the moti,ator is present. :hen the moti,ator goes, the
moti,ation aso usua" goes. Fear is aso on" usefu on a short-term *asis, as it needs to
*e appied in e,er-increasing doses. In a 0orst case scenario, fear moti,ation can *ac3fire
and coud e,en ead to cases of sa*otage.
)n the other hand, peope contri*ute or *ecome more producti,e *ecause the"
are offered incenti,es i.e. the carrot approach. !he ma+or ad,antage 0ith this is that it can
0or3 ,er" 0e as ong as the incenti,e is attracti,e enough. ; good iustration of this
concept is *" using the 0e-3no0n anaog" of a don3e" 0ith a carrot danging in front,
and 0ith a cart *ehind. In this instance the carrot ser,es as the incenti,e. #o0e,er, the
carrot 0i ser,e as an incenti,e to moti,ate on" if there a com*ination ofH
a/ the don3e" is hungr" enough,
*/ the carrot is s0eet enough= and
c/ the oad is ight enough.
If an" of the a*o,e is not satisfied, then the carrot 0i not ser,e as an incenti,e.
)n the assumption that the conditions are satisfied, there is sti the 9uestion of etting the
don3e" ta3e a *ite of the carrot from time to time, other0ise it is going to get
discouraged. ; ne0 scenario 0i then de,eop in that if the don3e" gets to eat the 0hoe
carrot and is no0 not hungr" an"more= putting another carrot in front of it 0i not ser,e
B1
as an incenti,e, unti it gets hungr" again. !his is ,er" often seen in organi$ations 0here
saesmen on meeting their 9uota, stop 0or3ing as their moti,ation is on" imited to
meeting that target.
)nce the don3e" has eaten the carrot, the ne1t carrot ma" not *e as attracti,e an
incenti,e as the first. )n the other hand changing the incenti,e to another ,egeta*e ma"
not necessari" moti,ate uness the don3e" percei,es it as a *etter incenti,e than the
carrot. !his is another ,er" important eement in moti,ation and that is the re0ard must
*e percei,ed as attracti,e enough. )ther0ise it 0i not ser,e its purpose effecti,e", and
ma" in fact *ac3fire.
#ere is the 9uestion to e,auate critica" .s Money the 'est 0arrotJ
Maslo<Cs Nee& Hierarchy Theory of Moti*ation1 Maso08s Gneed hierarch" theor"8
is pro*a*" one of the eariest and most popuar and infuenccia content theor" of
moti,ation. A/raham.H.Maslo<, a famous ps"choogist and socia scientist, suggested
that peope ha,e a compe1 set of e1ceptiona" strong needs and the *eha,iour of the
indi,iduas at a gi,en moment is usua" determined *" their strongest needs.
Maso08s theor" is *ased upon t0o assumptions, name"H
1. the human *eings ha,e man" needs that are different in nature ranging from the
*ioogica needs at the o0er e,e 0hich is the e,e of sur,i,a to ps"choogica
needs at the upper e1treme 0hich is the e,e of gro0th= and
7. the needs occur in an order of hierarch" so that o0er needs must *e satisfied
*efore the higher e,e needs arise or *ecome moti,ators. Mahatma 'an&hi,
therefore, once remar3ed e,en God cannot ta3 to a hungr" man e1cept in
terms of food.
Maso0 sa0 human needs in the form of hierarch" and is arranged in a hierarch"
of fi,e successi,e orders, ascending from the o0est to the highest needs. !he
ph"sioogica needs are the o0est e,e foo0ed *" the securit" .safet"/, socia, esteem
.egoistic/, and sef-actuaisation needs= and he concuded that 0hen one set of needs 0as
satisfied, this 3ind of need ceased to *e the moti,ators. Maso08s need hierarch" ma" *e
depicted as *eo0H


(ur,i,a Needs Gro0th Needs
:igure1 Maso08s Need #ierarch" !heor".
!he first three e,e needs are 3no0n as "eficiency nee"s or sur#i#al nee"s,
*ecause the" must *e satisfied inorder to ensure the indi,idua8s ,er" e1istence and
securit" .safet"/ and ma3e him fundamenta" comforta*e. !he t0o higher e,e needs
B7
Ph"sioogica
needs
(ocia needs
(ef-
;ctuai$a-
tion
needs
5steem or
5goistic needs
(ecurit" or
(ocia needs
are cassified as gro&th nee"s, since the" are concerned 0ith persona gro0th ,
de,eopment, and fu reaisation of one8s potentia.
1. ,hysiological Nee&s !hese needs arise out of the *asid ph"sioog" of ife and
the *asic needs for sustaining human ife itsef= such as food, 0ater, 0armth,
sheter, seep, rest, etc., and are must *e ateast partia" satisfied for continued
sur,i,a as necessaries of ife.
7. .ecurity or .afety Nee&s )nce the ph"sioogica needs are satisfied
reasona*", other e,e needs *ecome important. ;ccording to P.F.2ruc3er ,
one8s attitude to0ards securit" is an important consideration in choosing a +o*.
It incudes feeing free from ph"sica danger, depri,ations, economic threats and
protection from ar*ritrar" a"-off, dismissa, disaster, etc., and aso sta*iit" and
the i3e. )rganisation can infuence these securit" needs through pension pan,
insurance pan, pro,ident fund faciities, etc.
<. .ocial Nee&s (ince man is a socia *eing, he has needed to *eong and to *e
accepted *" others and the peope 0ant to o,e and *e o,ed. It incudes the need
of *eongingness, association, affiiation, etc.
@. %steem (%goistic- Nee&s !he esteem needs are concerned 0ih sef-respect,
sef-confidence, a feeing of persona 0orth, feeing of *eing uni9ue and
recognition, po0er, prestige, status, contro, etc.
B. .elf=actualisation Nee&s !his term coined for the first time *" ?urt Godstein
and he stated it as the tendenc" to *ecome actuaised in one8s o0n potentiait".
; man 0ith high intensit" of achie,ement needs 0i *e restess uness he can find
fufiment in doing 0hat he is fitted to do. ;s Maso0 states, this need might *e
phrased as the desire to *ecome more and more of 0hat one is, to *ecome
e,er"thing that one is capa*e of *ecoming. (tatus and roe are not materia to
the dri,e for sef-satisfaction.

Maso0 suggests that the ,arious e,es of needs are interdependent and
o,eraping, 0here higher e,e needs emerge *efore the o0er e,e needs are fu"
satisfied. :hen a need is fu" satisfied, that need ceases to *e the primar" moti,ator and
the ne1t e,e need then *egins to dominate. Maso08s need hierarch" theor" made
management a0are that peope are moti,ated *" a 0ide ,ariet" of needs and that
management must pro,ide an opportunit" for the empo"ees to satisf" these needs
through creating a ph"sica and conceptua 0or3 en,ironment so that the" 0i *e
moti,ated to do their *est to achie,e organisationa goas.
Moti*ation Hygiene Theory ( Her;/ergCs T<o :actor Theory- of Moti*ation1
In 1LB>s Fredric3 #er$*erg, a 0e 3no0n management theorist 0ith his associates
conducted intensi,e stud" of e1periences, feeings, and need satisfaction of 7>> engineers
and accountants empo"ed in the firms in and around Pitts*urg, A(;. !he purpose of the
stud" 0as to find out 0hat peope 0ant and 0hat moti,ates them. #e as3ed the peope
to e1pain the situations in 0hich the" found their +o*s Ge1ceptiona" good8, therefore
moti,ating and Ge1ceptiona" *ad8. #er$*erg concuded, that there 0ere t0o categories
B<
of needs essentoia" indepe de t of each other affecting *eha,iour in different 0a"s= the"
are H
1. The Hygiene or Maintenance :actors1
!hese incude the need-factors 0h=i=ch operate primari" to dissatisf" empo"ees
0hen the" are a*sent and are not effecti,e enough to *ring strong moti,ation 0hen the"
are present. !hese factors are T%N in num*ersH
%ompan" poic" and administration
!echnica super,ision
Interpersona reations 0ith superior
Interpersona reations 0ith peer
Interpersona reations 0ithsu*ordinates
(aar"
6o* securit"
Persona ife
:or3 conditions= and
!he status.
!hen, these factors operate as sho0n *eo0H
Hygiene or Maintenance :actors

No dissatisfaction 2issatisfaction
.if the" are present/ .if the" are a*sent/
!hese are e$trinsic to the +o*, *ut the" are reated to conditions under 0hich a +o* is
performed. !hese maintenance factors are necessar" to maintain a reasona*e e,e of
satisfaction in empo"ees and the" pre,ent on" osses in 0or3ers performance, *ut
produce no gro0th in producti,it".
7. Moti*ational :actors1
Moti,ationa factors or satisfiers are direct" reated to +o* content itsef, the
indi,idua performance or it, its responsi*iities and the gro0th and recognition o*tained
fronm it= i,e., moti,ators are intrinsic to the +o*. #er$*erg incuded si7 factors under this
categor" such asH
;chie,ement
4ecognition
;d,ancement through creati,e and chaenging 0or3
!he 0or3 itsef
!he possi*iities of persona gro0th= and
!he responsi*iit".
!hese are the +o*-conditions, if present *uid high e,es of moti,ation and +o*-
satisfaction. #o0e,er, if these conditions are not present, the" do not cause
dissatisfaction, and then the" operate as *eo0H
B@
Moti,ators
(atisfaction No satisfaction
.if the" are present/ .if the" are a*sent/
!hus, the empo"ees of an organisation are cassified into Gmoti,ation see3ers8.those 0ho
0or3 for h"gine or maintenance factors/ and Gmaintenance see3ers8.those 0ho 0or3 for
the moti,ators/
" composite of the factors that are involved in causing job satisfaction and job
dissatisfaction, (was) drawn from samples of ;,@AB employeesCCC../he results
indicate that motivators were the primary cause of satisfaction, and hygiene factors the
primary cause of unhappiness on the job. /he employees, studied in 17 different
investigations, included lower-level supervisors, professional women, agricultural
administrators, men about to retire from management positions, hospital maintenance
personnel, manufacturing supervisors, nurses, food handlers, military officers, engineers,
scientists, house&eepers, teachers, technicians, female assemblers, accountants, finish
foremen, and hungarian engineers.
!he" 0ere as3ed 0hat +o* e,ents has occurred in their 0or3 that had ed to e1treme
satisfaction or e1treme dissatisfaction on their part PP.of a the factors contri*uting to
+o* satisfaction, K1Q 0ere moti,ators. ;nd of a the factors contri*uting to the
empo"ees8 dissatisfaction o,er their 0or3, DLQ in,o,ed h"giene eements.
Maslo<Cs Theory an& Her;/ergCs Theory A +omparison1
#er$*erg8s h"giene factors correspond 0e to the o0er three of Maso08s needs
.ph"sioogica, securit"&safet", and socia/, and his moti,ators 0ith the upper t0o
.esteem&egoistic and sef-actuaisation&sef-fufiment/. #er$*erg considered saar" as
primari" a h"giene factor, and certain" it eads a person to *e dissatisfied 0hen their
saar" is ess than thin3 is merited, or 0hen the" are gi,en a smaer raise than the
empo"ee at the ne1t des3. #o0e,er, saar" is a 0a" of 3eeping score, and a heath"
raise can *e cear recognition for one8s 0or3 and in that sense moti,ating. -onuses and
profit sharing can *e moti,ating as 0e.
(ef-actuaisation needs
5steem&5goistic needs

(ocia Needs

(ecurit"&(afet" needs
Ph"sioogica Needs
BB
Moti,ators
#"giene&Maintenance
Factors
Maslo<Cs Nee& Hierarchy Her;/ergCs T<o=:actor Theory
Rele*ance (Implications- of the Her;/erg Theory1
#er$*erg de,eoped the methodoog" of job enrichment to increase the content of
moti,ators in a +o*. 51ampes of +o* enrichment actions incude reducing the num*er
and fre9uenc" of contros, ma3ing the 0or3er responsi*e for chec3ing his or her o0n
0or3, esta*ishing a direct reationship *et0een the 0or3er and the customer or user of
that 0or3 .0hether interna or e1terna/, and in other 0a"s increasing authorit" and
autonm".
6o* enrichment and the under"ing t0o-factor thero" ha,e attracted man" discipes,
0ho ha,e appied it in a 0ide ,ariet" of en,iorments. In an e1tended stud" at Te7as
Instruments, M"ers found that engineers, manufacturing super,isors, hour" mae
technicians, and especia" scientists tended to *e moti,ation see3ers, 0hereas femae
assem*ers tended to *e maintenance see3ers.
-ased on ana"sis of +o*-enrichment efforts and attitude sur,e"s in,o,ing
primari" *ue-coar 0or3ers, :ein reported that essentia" a +o*-enrichment efforts are
initiated *" management, not *" a desire of 0or3ers or their unions to ma3e +o*s more
meaningfu, and concudedH
$or the most part (blue-collar) wor&ers satisfied with the nature of their wor&.
#hat they find most discomforting is their pay, their job security, and many of the wor&
rules with which they must cope.
In the 1LK>s man" ;merican companies, especia" the automo*ie industr", tried to
reduce the num*er of categories of production 0or3ers *" as3ing 0or3ers to earn se,era
+o*s,so that the" coud *e used more fe1i*" and a*our cost coud *e reduced. In
essence, this amounted to +o* enrichment for the *enefit of corporate profit and,
utimate", the sur,i,a of the pants against foreign competition. ;merican union
0or3ers fought this attempt *itter".
Mc+lellan&Cs Trio of Nee&s1
2a,id Mc%eand and others ha,e proposed that there are three ma+or moti,es
or needs in 0or3 situations. (hort" after :ord :ar II, a group of ps"choogists ed *"
2a,id % Mc%eand of #ar,ard Ani,ersit" *egan to e1periment 0ith !;! .!hematic
;pperception !est/ to see if it 0ere sensiti,e enough to detect changes in moti,ation that
0ere caused *" simpe attempts to s0a" the indi,idua8s attitudes. In order to simpif"
their tas3, the group decided to seect one particuar moti,e for intensi,e ana"sis. For, it
0as not ong *efore the impications of the achie,ement moti,e 0ere recogni$ed that it
*ecame the su*+ect of intensi,e in,estigation in its o0n right.
Mc%eand had identified three t"pes of *asic moti,ating needs. #e cassified
these needs asH
#. Nee& for Achie*ement (n;70<- this is aso caed as ;chie,ement Moti,e.
),er the "ears, *eha,ioura scientists ha,e o*ser,ed that some peope ha,e an
BD
intensi,e desire to achie,e. It is the dri,e or desire to e1ce, to accompish
something *etter than has *een done in the past. Peope 0ith a high need for
achie,ement tend to *e entrepreneurs, setting moderate" difficut goas, ta3ing
moderate ris3s to achie,e them, and ta3ing persona responsi*iit" for getting
things done. Mc%eand8s research has ed him to *eie,e that the need for
achie,ement is a distinct human moti,e that can *e distinguished from other
needs. It can aso *e isoated and assessed in an" group. #e identified four *asic
characteristics of high achie,ersH
a. ;*iit" to accept Moderate is&s.
*. Immediate and precise feedbac& a*out ho0 he is progressing to0ard goa.
c. "ccomplishment of the tas3.
d. -reoccupation with the tas&s unti it is successfu" competed.
D. Nee& for ,o<er (n;P=>- !he a*iit" induce or infuence *eha,iour is po0er
and is aso caed as Po0er Moti,e. It is the desire to contro one8s en,ironment,
incuding resources and peope. Persons 0ith high need for po0er are more i3e"
to *e promoted to manageria positions and are i3e" to *e successfu managers if
the" master sef-contro and use their po0er for the good of the organi$ation
rather than soe" for persona ends. Mc%eand and his associates ha,e found
that peope 0ith high po0er moti,e are genera" see3ing positions of eadership=
the" in,o,e in con,ersations= the" are forcefu, outspo3en, hard headed, and
demanding.
6. Nee& for Affiliation (n;7,,- (ince peope are socia animas, most indi,iduas
i3e to interact and *e 0ith others in situations 0here the" fee the" *eong and
are accepted. !hese are the needs of a human for companionship and acceptance.
(ometimes, affiiation is e9uated 0ith socia moti,es or needs. Peope 0ith a
strong need for affiiation 0ant reassurance and appro,a, are concerned a*out
other peope, and perform 0e as coordinators, integrators, counseors, and in
saes positions. Mc%eand has suggested that peope 0ith high need for
affiiation usua" deri,e peasure from *eing o,ed and tend to a,oid the paid of
*eing re+ected. !he" are concerned 0ith maintaining peasant socia
reationships, en+o"ing a sense of intimac" and understanding, and en+o"
consoing and heping others in trou*e.
Implications of the Theory1 !he need for affiiation might *e compared 0ith Maso08s
third e,e needs the socia needs, the need for po0er 0ith his fourth e,e needs
5steem or 5goistic needs, and the need for achie,ement 0ith the fifth e,e needs (ef
actuai$ation needs. #o0e,er, Mc%eand8s point is that different peope ha,e different
needs, not +ust the same need in a cear hierarch" of importance. For e1ampe, an
engineer 0ith a high need for achie,ement ma" achie,e success in technica assignments
in the process of satisf"ing this need, and he or she might *e promoted into a
management position as a resut. If this need for achie,ement is com*ined 0ith a o0
need for po0er, the engineer 0i often pea3 earier in his or her career and at a o0er
e,e, since the need for achie,ement can *e satisfied *" the 0or3 itsef rather than .as
0ith need for po0er/ re9uiring continuing promotions. ;gain, engineering +o*s that put a
premium on coordination and cooperation, such as toda"8s team management
BI
organi$ation or the matri1 organi$ations common in pro+ect management, certain"
re9uire a *end of need for achie,ement and for affiiation.
.elf Moti*ation1
!he Managers or the Managements are responsi*e for pro,iding an
en,ironment conduci,e to performance. -ut, indi,iduas themse,es are responsi*e for
sef moti,ation. (ome of the steps to sef moti,ationH
a/ (et a goa for "oursef and do not ose sight of it.
*/ (uppement "our ong term o*+ecti,es 0ith short term goas and specific
actions.
c/ Learn a chaenging ne0 tas3 each "ear.
d/ Ma3e "our +o* a different one. (et impro,ement o*+ecti,es for "our position.
e/ 2e,eop an area of e1pertise. -uid on "our strengths or de,eop "our
0ea3nesses into strengths.
f/ Gi,e "oursef feed*ac3 and re0ard "oursef. (etting ,erifia*e goas pro,ides
"ou 0ith a standard against 0hich "ou can measure "our performance.
'eneral Moti*ational Techni?ues (Moti*ation in ,ractice-1
!here e1ist no correact ans0ers to the moti,ation pro*em to dea 0ith it
effecti,e". Man" engineers and managers 0ho ha,e a ,er" rationaistic approach to
0or3 seem to ha,e difficut" 0ith this. !here are no uni,ersa soutions. :hat moti,ates
one person 0i not moti,ate another, therefore the engineer 0ho manages has to *e
prepared to compromise and de,eop strategies that form the *est o,era soution for a
num*er of peope, incuding themse,es.
!herefore, managers ha,e to tr" to de,eop an idea a*out 0hat their su*ordinates
are rea" i3e and e1pect and aso esta*ish 0hat it is that dri,es them. (ince, the
moti,ation is a compe1 issue, affected and infuenced *" man" factors, it is difficut to
e,auate 0hat moti,ates 0or3ers. Eet, managers or eaders need to possess and coect
such information= using their 3no0edge of moti,ation theories of Maso08s Need
#ierarch" theor", !0o Factor !heor" or Moti,ation and #"giene !heor" of #er$*erg,
and Ggoas8 as moti,ators as e1pained *" #unt and others 0hich 0i hep the managers
to understand the ps"choog" of the empo"ees.
Inorder to impro,e the moti,ation and pro,iding opportunit" for impro,ement it is
essentia to understand the factors 0hich moti,ate the su*ordinate empo"ees of a
manager. 6o*-descriptions and appraisa inter,ie0s of empo"ees can *oth hep in
impro,ing moti,ation as the" cn *e used to set goas, carif" 0hat is e1pected *" the
empo"ees of doing a particuar +o*. Moreo,er, ,arious genera and common
moti,ationa factors are identified to promote *etter 0or3 conditions and impro,e
producti,it" *oth in 9uait" and 9uantit".
!he techni9ues of moti,ation refers to the +o* redesign and structuring tas3s high
e,e of moti,ation. It in,o,es ateration of specific aspects of +o* in a manner, that
0oud increase *oth the 9uait" of the empo"ees8 0or3 e1perience as 0e as his
producti,it". It in,o,esH
;tering the *asic reationship *et0een empo"ees and their +o*s.
BK
2e,eoping a direct reationship *et0een the +o* and empo"ee *eha,iour= so as to
ma3e the 0or3er to e1perience more re0arding 0or3= through 0ich de,eoping
fa,oura*e attitudes.
It opens opportunities to initiate changes in other areas such as de,eopment of
super,isor" s3is and management de,eopment programmes.
It ma3es an organisation peope-oriented rather than machine-oriented. !he 0or3
acti,ities *ecome more chaenging and as a resut the 0or3ers e1perience feeing
of 0orth, persona gro0th and de,eopment and aspire for higher needs such as
sef-esteem and sef-actuaisation.
!he practice of moti,ation and the techni9ues .moti,ators/ used to moti,ate the
empo"ees in an" organisation genera" in,o,esH
o Moneta" and economic re0ards,
o 6o*-enargement 0hich see3s to moti,ate the empo"ees *" enarging
the scope of the +o*,
o 6o*-enrichment it impies dei*erate upgrading of responsi*iit", scope
and chaenge in 0or3,
o 6o*-rotation the empo"ees ma" *e shifted from one +o* to
anotherinorder to pro,ide some ,ariet" so as to minimise the monotom"
and *oredom of doing the same routine +o*,
o Participation of 0or3ers *" using participation of 0or3ers in decision-
ma3ing, greater acceptance to change is accompished,
o %reation of high" 0or3 accompishment en,ironment,
o 5ffecti,e %riticism it heps in impro,ing an empo"ees *eha,iour and
performance= and
o Praise the praise and credit for 0or3 done is a good and effecti,e method
of moti,ation and it satisfies ego and esteem needs of empo"ees.
)ea&ership1
Nature of )ea&ership1
Leadership is the process of getting the cooperation of other in accompishing a
desired goa. !he modern da" eaders a o,er the 0ord ha,e ta3en their paces in
guiding the thoughts and effforts of peope to the achie,ement of the common goas.
%oming to the *usiness organisations, peope 0or3ing there need eaders= 0ho coud *e
instrumenta in guiding the efforts of group of 0or3ers to the achie,ement of goas and
o*+ecti,es *oth of the indi,iduas and the organisation. Leadership is intrinsica" in3ed
0ith moti,ation.
9r&<ay Tea& in his !he ;rt of Leadership has defined eadership as the
activity of influencing people to cooperate towards some goal which they come to find
desirable. In the conte1t of *usiness situation, eadership is one of the means of
direction and represent that part of the manager8s acti,ities *" 0hich he guides and
infuences the *eha,iour of his su*ordinates and the group to0ards some specified goas
*" persona" 0or3ing 0ith them and *" understanding their feeings and pro*ems as
BL
the" engage themse,es in doing certain +o*s assigned to them. !hus, eadership is
defined as, the a'ility to influence people or su'or"inate to&ar" the accomplishment
of goals.
Harry Truman e1painedH Eou 3no0 0hat ma3es eadershipJ It is the a*iit"
to get men to do 0hat the" don8t 0ant to do and i3e it. In a more su*te ,ein, Barney
:rank saidH !he great eader is the one 0ho can sho0 peope that their sef-interest is
different from that 0hich the" percei,ed.
Peope *ecome eaders *" appointment are caed as $ormal or titular eaders.
1mergent or informal eaders e,o,e *ased on their e1pertise or referent po0ers as it is
e1pressed in the process of group acti,it".
)ea&ership Traits1 5ar" researchers into the nature of eadership tried to identif" the
personal characteristics or traits that are made for effecti,e eaders. For e1ampe,
Peterson and Po0man ist the foo0ing 1K attri*utes as *eing desira*e in a eader.
1. ,hysical ?ualities heath, ,itait", and endurance.
7. ,ersonal attri/utes persona magnetism, cooperati,eness, enthusiasm, a*iit"
to inspire, persuasi,eness, forcefuness, and tactfuness.
<. +haracter attri/utes integrit", humanism, sef-discipine, sta*iit", and
industriousness= and
@. Intellectual ?ualities menta capacit", a*iit" to teach others, and a scientific
approach to pro*ems.
.tyles of )ea&ership1
!he st"es of eadership adopted *" a eader differs and are reati,e to the
attitude and traits of the eader, *eha,iour of the foo0ers, and e1pectations of the
management and so on. !he ma+or st"es of eadership descri*ed 0ith the foo0ing
termsH
#. Autocratic (Dictator- lea&ership = ;utocratic eadership is an e1treme form of
transactiona eadership, 0here eaders ha,e a*soute po0er o,er their 0or3ers or team.
(taff and team mem*ers ha,e itte opportunit" to ma3e suggestions, e,en if these 0oud
*e in the teamVs or the organi$ationVs *est interest.
Most peope tend to resent *eing treated i3e this. !herefore, autocratic eadership
often eads to high e,es of a*senteeism and staff turno,er. #o0e,er, for some routine
and uns3ied +o*s, the st"e can remain effecti,e *ecause the ad,antages of contro ma"
out0eigh the disad,antages.
D. Bureaucratic lea&ership = -ureaucratic eaders 0or3 W*" the *oo3.W !he" foo0
rues rigorous", and ensure that their staff foo0s procedures precise". !his is a ,er"
appropriate st"e for 0or3 in,o,ing serious safet" ris3s .such as 0or3ing 0ith
machiner", 0ith to1ic su*stances, or at dangerous heights/ or 0here arge sums of mone"
are in,o,ed .such as handing cash/.
D>
6. +harismatic lea&ership = ; charismatic eadership st"e can seem simiar to
transformationa eadership, *ecause these eaders inspire ots of enthusiasm in their
teams and are ,er" energetic in dri,ing others for0ard. #o0e,er, charismatic eaders can
tend to *eie,e more in themse,es than in their teams, and this creates a ris3 that a
pro+ect, or e,en an entire organi$ation, might coapse if the eader ea,es. In the e"es of
the foo0ers, success is direct" connected to the presence of the charismatic eader. ;s
such, charismatic eadership carries great responsi*iit", and it needs a ong-term
commitment from the eader.
". Democratic lea&ership or participati*e lea&ership ;though democratic eaders
ma3e the fina decisions, the" in,ite other mem*ers of the team to contri*ute to the
decision-ma3ing process. !his not on" increases +o* satisfaction *" in,o,ing team
mem*ers, *ut it aso heps to de,eop peopeVs s3is. !eam mem*ers fee in contro of
their o0n destin", so the"Vre moti,ated to 0or3 hard *" more than +ust a financia re0ard.
-ecause participation ta3es time, this approach can ta3e onger, *ut often the end resut is
*etter. !he approach can *e most suita*e 0hen 0or3ing as a team is essentia, and 0hen
9uait" is more important than speed to mar3et, or producti,it".
. )aisse;=faire (:reerein- lea&ership = !his French phrase means Wea,e it *e,W and
itVs used to descri*e eaders 0ho ea,e their team mem*ers to 0or3 on their o0n. It can
*e effecti,e if the eader monitors 0hatVs *eing achie,ed and communicates this *ac3 to
the team reguar". Most often, aisse$-faire eadership is effecti,e 0hen indi,idua team
mem*ers are ,er" e1perienced and s3ied sef-starters. Anfortunate", this t"pe of
eadership can aso occur 0hen managers donVt app" sufficient contro.
@. ,eople=oriente& lea&ership or relations=oriente& lea&ership = !his is the opposite of
tas3-oriented eadership. :ith peope-oriented eadership, eaders are tota" focused on
organi$ing, supporting, and de,eoping the peope in their teams. ItVs a participati,e st"e,
and it tends to encourage good team0or3 and creati,e coa*oration. In practice, most
eaders use *oth tas3-oriented and peope-oriented st"es of eadership.
!. .er*ant lea&ership = !his term, created *" 4o*ert Greeneaf in the 1LI>s, descri*es a
eader 0ho is often not forma" recogni$ed as such. :hen someone, at an" e,e 0ithin
an organi$ation, eads simp" *" meeting the needs of the team, he or she is descri*ed as
a Wser,ant eader.W
In man" 0a"s, ser,ant eadership is a form of democratic eadership, *ecause the 0hoe
team tends to *e in,o,ed in decision ma3ing.
(upporters of the ser,ant eadership mode suggest that itVs an important 0a" to mo,e
ahead in a 0ord 0here ,aues are increasing" important, and 0here ser,ant eaders
achie,e po0er on the *asis of their ,aues and ideas. )thers *eie,e that in competiti,e
eadership situations, peope 0ho practice ser,ant eadership can find themse,es eft
*ehind *" eaders using other eadership st"es.
D1
4. Task=9riente& lea&ership = #igh" tas3-oriented eaders focus on" on getting the +o*
done, and the" can *e 9uite autocratic. !he" acti,e" define the 0or3 and the roes
re9uired, put structures in pace, pan, organi$e, and monitor. #o0e,er, *ecause tas3-
oriented eaders donVt tend to thin3 much a*out the 0e-*eing of their teams, this
approach can suffer man" of the fa0s of autocratic eadership, 0ith difficuties in
moti,ating and retaining staff.
8. Transactional lea&ership = !his st"e of eadership starts 0ith the idea that team
mem*ers agree to o*e" their eader tota" 0hen the" accept a +o*. !he WtransactionW is
usua" the organi$ation pa"ing the team mem*ers in return for their effort and
compiance. !he eader has a right to WpunishW team mem*ers if their 0or3 doesnVt meet
the pre-determined standard.
!eam mem*ers can do itte to impro,e their +o* satisfaction under transactiona
eadership. !he eader coud gi,e team mem*ers some contro of their income&re0ard *"
using incenti,es that encourage e,en higher standards or greater producti,it".
;ternati,e", a transactiona eader coud practice Wmanagement *" e1ceptionW rather
than re0arding *etter 0or3, the eader coud ta3e correcti,e action if the re9uired
standards are not met.
!ransactiona eadership is rea" a t"pe of management, not a true eadership
st"e, *ecause the focus is on short-term tas3s. It has serious imitations for 3no0edge-
*ased or creati,e 0or3, ho0e,er it can *e effecti,e in other situations.
#$. Transformational lea&ership = ;s 0e discussed earier, peope 0ith this eadership
st"e are true eaders 0ho inspire their teams constant" 0ith a shared ,ision of the future.
:hie this eaderVs enthusiasm is often passed onto the team, he or she can need to *e
supported *" Wdetai peope.W !hatVs 0h", in man" organi$ations, *oth transactiona and
transformationa eadership are needed. !he transactiona eaders .or managers/ ensure
that routine 0or3 is done reia*", 0hie the transformationa eaders oo3 after initiati,es
that add ne0 ,aue.
The )ea&ership 'ri&1
)ne of the 0ide" 3no0n and popuar approaches to identif" eadership st"es of
practicing managers is the G3ea"ership ri" 8 or the GManagerial ri" 8 *" 4o*ert -a3e
and 6ane Mouton, 0hich sho0s that good eadership depends on s3ifu management of
the tas3 and the reationship *et0een group mem*ers. !he 0ord GGrid8 means an iron
grating, a frame0or3 of parae *ars. It is graphica portra"a of t0o dimensiona ,ie0
of the grid Gconcern for the peope8 aong 0ith ,ertica a1is and Gconcern for tas3 or
production8 aong 0ith hori$onta a1is, as depicted in the chart.
>o'ert.>.?lake and @ane.2.Mouton emphasi$e that eadership st"e consists of
factors *oth the Gtas3 oriented8 and Greation oriented8 *eha,iour in ,ar"ing degrees. !he
D7





















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.(# %oncern for 4esuts +'!+
------------------.%oncern for !as3 or Production/------------------
Gconcern for8 phrase has *een used to con,e" ho0 managers are concerned for peope or
production, rather than Gho0 much8 production getting out of group. G0oncern for
pro"uction or task8 means the attitudes of superiors .eaders/ to0ards a ,ariet" of things,
such as 9uait" of poic" decisions, procedures and processes, creati,eness of research,
9uait" of staff-ser,ices, 0or3-efficienc", and ,oume of output. G0oncern for People8
incudes degree of persona commitment, trust, and satisf"ing interpersona reations, etc.
-a3e and Mouton identified :I>% *asic eadership st"es of practicing managers
in the grid representing ,arious com*inations of the aforesaid t0o dimensions Gconcern
for peope8 and Gconcern for tas3 or production8. It is, ho0e,er, important to point out
these *asic st"es are a matter of con,enience rather than a fact. !he figure gi,en
represents manageria grid or eadership grid in a nine-*"-nine .L 1 L/ matri1
outining eight" one .K1/ different eadership st"es= and -a3e and Mouton ha,e
descri*ed the fi,e *asic st"es identified in the grid, 0hich represents ,ar"ing
com*ination of Gconcern for peope8 and Gconcern for tas38. !he chart gi,en represents
the Geadership grid8 of -a3e and Mouton, representing different st"es of eadership
foo0ed *" the practicing managers or eaders.
+'!+
#,8 +ountry +lu/ Management1 8,8 Team Management1
!houghtfu attention to the needs :or3 accompishment is from
of the peope for satisf"ing committed peope= interdependence
reationship eads to a comforta*e through a Gcommon sta3e8 in
friend" organi$ation atmosphere organi$ation purpose eads to
and 0or3 tempo. reationships of trust and respect.
, = Mi&&le of the Roa& Management1
;de9uate organi$ation performance
is possi*e through *aancing the
necessit" to get 0or3 out 0hie
maintaining morae of peope at a
satisfactor" e,e.

#,# Impo*erishe& Management1 8,# Authority +ompliance (Task-
51ertion of minimum effort to get management1
re9uired 0or3 done is appropriate 5fficienc" in operations resuts
to sustain organi$ation mem*ership. from arranging conditions of 0or3
in such a 0a" that human eements
.(# interfere to a minimum degree.


!he fi,e ma+or *asic st"es of eadership foo0ed *" the practicing managers are
discussed as *eo0H
D<
!he 1,1 - Manageria (t"e .Impo,erished Management/H
It reates to the e1ertion of minimum effort to get re9uired 0or3 done is
appropriate to sustain organi$ationa morae and mem*ership. ; manager or eader 0ith
this orientation e1erts minimum infuence on the contact 0ith group mem*ers. #e
e1poses itte concern for the peope and production or tas3. In this st"e the su*ordinates
and mem*ers of the group are eft to find for themse,es the 0a"s of doing the +o*.
!he 1,L - Manageria (t"e .%ountr" %u* Management/H
It reates to thoughtfu attention to needs of peope for satisf"ing reationships
eads to a comforta*e friend" organi$ation atmosphere and 0or3-groups and 0or3-
tempo. #ere the *oss is more of a *ig *rother than an autocratic eader. !he group, not
the indi,idua, is the 3e" in the organi$ation. !he aim is to achie,e friendiness and
harmon" among the mem*ers of the organi$ation.
!he L,1 - Manageria (t"e .!as3 or ;uthorit" %ompiance Management/H
It reates to the efficienc" resuts in operation from arranging conditions of 0or3
in such a 0a" that human eements interfere to a minimum degree= and ha,e itte effect.
Peope or mem*ers of the group are regarded as the instruments of production under the
L,1 manageria st"e. It is an autocratic st"e of eadership= and it paces hea," emphasis
on tas3 and +o* re9uirement. #uman reationships and interactions are minimi$ed.
(u*ordinates or the mem*ers are e1pected to carr" out orders 0ith an un9uestioning
o*edience= mere" as Gmeans for doing the tas3s assigned to them.
!he B,B Manageria (t"e .Midde of the 4oad Management/H
It reates to ade9uate organi$ation performance is possi*e through *aancing the
necessit" to carr" out 0or3 0ith maintaining morae of peope at satisf"ing&satisfactor"
e,e. In this st"e, the Gpeope-dimension8 is as important as the Gproduction or tas3
dimension8 at 0or3. !his st"e see3s to maintain a *aance *et0een the t0o. ; *asic
assumption of this st"e is that peope 0i 0or3 0iing" and the" are tod the reasons
for doing so are e1pained to them. In this st"e meetings are hed to isten to their
suggestions and to create a sense of participation in decision-ma3ing.
!he L,L Manageria (t"e .!eam Management/H
It reates to 0or3-accompishment from committed peope 0ith interdependence
through a common sta3e in organi$ation purpose, 0hich eads to reationships of trust and
respect. ; ma+or difference *et0een L,L st"e and other manageria st"e is in goa
setting and its use as a *asic management approach to a arge ,ariet" of pro*ems. !he
capa*iit" of peope to *e in,o,ed in organi$ationa o*+ecti,e through commitment to
o*+ecti,es is fundamenta. In other 0ords, L,L st"e aims at integrating the Gpeope and
production8 dimensions of 0or3 under conditions of high concern for gro0th. !he 3e" is
the in,o,ement and participation of these responsi*e for panning and e1ecution of
0or3. !his *rings a*out a 3ind of team-spirit that eads to high organi$ationa
accompishment.
!he Geadership-grid8 of -a3e and Mouton is 0ide" used as a techni9ue of manageria
training and for identif"ing ,arious com*inations of eadership st"es. It heps the eaders
D@
and the managers to understand 0h" the" get the reactions from the su*ordinates or
mem*ers. It aso suggests some aternati,e st"es a,aia*e to the eaders 0ith in the
Moti*ating an& )ea&ing Technical ,rofessionals1
In the ight of the 3no0edge of the stud" of genera theories of moti,ation and
eadership, et us ma3e an attempt to app" them to the technica professionas. In this
attempt 0e discuss something of the nature of the professiona, 0hat moti,ates scientists
and engineers, and fina" consider the significance of these factors in the effecti,e
eadership of technica professionas.
'eneral Nature of the Technical ,rofessional1
; num*er of authors ha,e e1amined the specia characteristics of technica
professionas .0ithout distinguishing *et0een scientists and engineers/. !he" areH
1. #a,ing a high nee" for achie#ement 0here deri,ing their moti,ation primari"
from the 0or3 itsef.
7. 2esiring autonomy .independenc"/ o,er the conditions, pace, and content of their
0or3. !o achie,e this, the" need to participate in goa setting and decision ma3ing
as it affects their 0or3.
<. !ending to i"entify first &ith their profession and secondari" 0ith their
compan". ;s professionas, the" oo3 to their peers .0hether inside or outside the
organi$ation/ for recognition, ethica standards, and coegia support and
stimuation.
@. (ee3ing to maintain their e$pertise, gained through ong and arduous stud", and
sta,e off o*soescence through continuing education, reading the iterature,
professiona societ" acti,it", and especia" through 0or3 assignments that 3eep
them 0or3ing at the state of the art.
)ea&ing Technical ,rofessionals1
Leading and moti,ating the technica professionas in,o,e the foo0ing aspectsH
2imensions of !echnica eadership.
Leading as )rchestration.
-rea3 point eadership.
Dimensions of Technical )ea&ership1 4osen*aum *eie,ed that, to faciitate
achie,ement of indi,idua and group goas, successfu technica eaders shoud master
fi#e strategic "imensionsH
#. +oach for peak performance isten, as3, faciitate, integrate, and pro,ide
administrati,e support= act as a sounding and supporti,e critic, hep the
professiona manage change.
D. Run organi;ational interference o*tain resources, act a ad,ocate for the
professiona and his or her ideas, and minimi$e the demands of the *ureaucrac"
.time and paper0or3/ on the professiona.
DB
6. 9rchestrate professional &e*elopment faciitate career de,eopment through
chaenging assignments, foster a *usiness perspecti,e in professionas, find
sources 0here ne0 areas of 3no0edge are re9uired.
". %7pan& in&i*i&ual pro&ucti*ity through team<ork ma3e sure teams are 0e
oriented regarding goas and roes, and that the" get the resources and support
the" need.
. :acilitate self=management assure that technica professionas are empo0ered
to ma3e their o0n decisions *" encouraging free t0o-0a" information fo0,
deegating enough authorit", and pro,iding materia and ps"choogica support.
)ea&ing as 9rchestration1 Mc+all has e,auated a num*er of studies of the
reationship *et0een a forma eader and a foo0er group of professionas, most" 4C2
settings. #e concudes that in such groups effecti,e super,isor" eadership is more
orchestration than direct appication of authorit". It seems a matter of creating and
maintaining .or at east not destro"ing/ conditions that foster scientific producti,it".
:hie the super,isor is not the on" factor determining group effecti,eness, Mc+all
identifies four general areas 0here the eader can ma3e a differenceH
#. !echnica competence.
D. %ontroed freedom.
6. Leader as metronome.
". :or3 chaenge.
Breakpoint lea&ership1 Mc%a confined himsef a*o,e arge" to direct super,ision of
a group of technica professionas, especia" in 4C2. !hen he addedH
"t some point on the way up in the managerial ladder, a different &ind of
leadership demand occurs. #hen influencing other parts of the organization is as
important, or more important, than influencing a subordinate group, leadership is a
brea&point. 1ffectiveness is no longer measured by the group productivity6 but also
involves such things as impact on organizational direction, influence across
organizational and even hierarchical boundaries, and securing and protecting
organizational (and e%ternal) resources and support CCCC.$or many professionals
the first brea&point leadership role is that of project manager5.
+ontrolling1
Meaning an& .teps in the +ontrol ,rocess1
!he simpest definition of controing, attri*uted to -.5. Goet$, is compeing
e,ents to conform to pans. ;s stated *" 4o*ert 5 (hannon, contro techni9ues and
actions are intended to insure, as far as possi*e, that the organi$ation does 0hat
management 0ants it to do. %ontro is a process that per,ades not on" management,
*ut technoog" and our e,er"da" i,es. 5ffecti,e contro must *egin in panning= as
sho0n in figure *eo0, the panning and contro are insepara*e.
DD
1. 5sta*ishing
standards
7. Measuring actua
performance
<. %omparing
performance 0ith
standards
@. %orrecti,e
;ctions
Panning %ontroing
:igure1 !he %ontro process.
!he steps in the %ontro Process areH
1. 5sta*ishing standards of performance aso an essentia part of effecti,e
panning. (tandards shoud *e measura*e, ,erifia*e, and tangi*e to the e1tent
possi*e.
7. Measurement of the actua e,e of performance achie,ed.
<. %omparison of the t0o the esta*ished target or standard and actua
performance, and measurement of the ,ariance .de,iation *et0een the t0o/ and
communicating this de,iation prompt" to the entit" responsi*e for contro of this
performance.
@. !he fina step is ta3ing %orrecti,e ;ction as re9uired to compe e,ents t conform
to pans.
+lose&=)oop *ersus 9pen=)oop +ontrol1
%osed-oop contro, aso 3no0n as automatic or cy'ernetic control, monitors
and manages a process *" means of a sef-reguating s"stem. !he essentia feature of this
t"pe of contro is the strong feed*ac3 s"stem. ; common home thermostat is a simpe
e1ampe of an automatic contro s"stem.
9pen=loop or noncy/ernatic contro re9uires an e1terna monitoring s"stem and an
e1terna agent to compete the contro oop. Fre9uent", 0hen an automatic de,ice
identifies and measures the de,iation 0ith 0arning signas, then the human +udgement is
re9uired to identif" the reason for the ,ariance and to determine correcti,e action. 5,en
s"stems that are automated .c"*ernetic/ in the short run are utimate" open oop, *ecause
the" permit an e1terna agent to ad+ust the standard. In engineering management the ast
step in the contro process, correcti,e action, usua" re9uires human +udgement.
Three ,erspecti*es on the Timing of +ontrol1
1. :ee&/ack +ontrol 5ngineers are usua" comforta*e 0ith idea of feed*ac3
s"stems, in 0hich the output of a s"stem can *e measured and the ,ariance
*et0een measured and desired output used to ad+ust the s"stem.
7. .creening or +oncurrent +ontrol %ontros ma" aso *e appied concurrent"
0ith the effort *eing controed. In this method correcti,e actions are sought at
reguar inter,a of production process. #o0e,er, concurrent contro can *e
e1pensi,e, stifing of initiati,e, and ead to inacti,it" 0hie a0aiting the ne1t
inspection.
<. :ee&=for<ar& (,reliminary or .teering- +ontrol the essence of this s"stem of
contro is that it can predict the impact of current actions or e,ents on future
DI
outcome, so that current decisions can *e ad+usted to assure that future goas 0i
*e met. 5ngineers and managers ha,e man" appications 0here contros must *e
appied in the ear" phases of a pro+ect or program. !he P54! .Programme
5,auation and 4e,ie0 !echni9ue/ and %PM .%ritica Path Method/ are the
e1ampes of the feed-for0ard contro toos used *" the managers in controing
function.
+haracteristics of %ffecti*e +ontrol .ystem1
;n effecti,e contro s"stem shoud satisf" most of the foo0ing criteriaH
1. %ffecti*e %ontro s"stem shoud measure 0hat needs to *e measured and
controed.
7. %fficient %ontro s"stems shoud *e economica and 0orth their cost.
<. Timely %ontro s"stems shoud pro,ide the manager 0ith information in time to
ta3e correcti,e action.
@. :le7i/le %ontro s"stems shoud *e toos, not strait+ac3ets, and shoud *e
ad+usta*e to changing conditions and re9uirements.
B. 2n&erstan&a/le %ontro s"stems shoud *e eas" to understand and use, and
the" shoud pro,ides information in the format desired *" the users.
D. Tailore& :here possi*e, contro s"stem shoud dei,er to each e,e of
manager the information the" need for decisions, at the e,e of detain appropriate
for the e,e.
I. Highlight &e*iations Good contro s"stems 0i fag parameters that de,iate
from paned ,aues *" more than a specified percentage or amount for specia
management attention.
K. )ea& to correcti*e action %ontro s"stems shoud either incorporate automatic
correcti,e action or communicate effecti,e" to an agent that 0i pro,ide
effecti,e action= this is 0h" the contro s"stem e1ists.
Types of +ontrols1
!he ma+or t"pes of contros are grouped into Financia %ontros and Non-financia
contros.
:inancial +ontrols
Financia (tatements
4atio ;na"sis
-udgets -udgeting process
%ost ;ccounting
;udits of Financia 2ata
Non=financial +ontrols
#uman 4esource %ontros
Management audits
#uman resource accounting
(ocia contros - incudes the corporate cuture, ,aues,
o*igations, norms, procedures, poicies, etc..
DK
)ther non-financia contros i3e in,entor" contro, 9uait"
contro, pro+ect
management contros, and so on
Euestions1
1. 2efine and distinguish *et0een moti,ation and eadership.
7. 51pain Maso08s Need #ierarch" theor". 2iscuss its ree,ance to moti,ate
engineers and technica professionas in modern *usiness enterprises.
<. 51pain #er$*erg8s theor" of moti,ation and 0hat are its manageria
impicationsJ
@. %ompare and contrast Maso08s Need #ierarch" theor" and #er$*erg8s !0o-
Factor theor" of moti,ation.
B. #er$*erg specifica" cassed (aar" as a h"giene factor, not a moti,ator. #o0
0oud "ou cassif" itJ 2iscuss.
D. 6o* enrichment see3s to ma3e 0or3 more meaningfu and gi,e empo"ees more
contro o,er their 0or3. 2iscuss the negati,e response of man" *ue-coar
production 0or3ers to0ard this initiati,e. :h" do "ou thin3 that 0or3ers ha,e
this attitudeJ
I. 51pain Manageria Grid .Leadership Grid/.
K. 51pain ,arious aspects of moti,ating and eading technica professionas.
L. 2efine controing. 51pain the ma+or steps in contro process.
1>. 51pain the %osed oop and )pen oop contro s"stems.
11. :hat are the three Perspecti,es on the !iming of %ontroJ 51pain.
17. :rite a not onH
a. Feed*ac3 contro
*. (creening or concurrent contro.
c. Feed for0ard .preiminar" or steering/ contro.
1<. 51pain *rief" the characteristics of effecti,e contro s"stems.
DL
2NIT I>
8 Hrs
,ro0ect %*aluation Techni?ues Interest 4ate %acuations, Pa"*ac3 !ime, Present
:orth, Future :orth, ;nnua :orth %acuations.
+reati*ity %reati,e Process, %haracteristics of %reati,e Peope, ,rotection of I&eas
Patents, %op"rights, !rade Mar3s, !rade (ecrec" La0s.
,lanning ,ro&uction Acti*ity Pant Location, 'uantitati,e !oos in Production
Panning In,entor" %ontro 5conomic )rder 'uantit" .5)'/, -rea3 5,en ;na"sis,
Learning %ur,es.
I>
Managing Research :unction1
,ro&uct an& Technology )ife +ycle1
; ne0 product *egins as an idea for the soution of a pro*em or the satisfaction
of a need. In nature on" a fe0 out of a hundred tadpoes sur,i,e to *ecome frogs= in
research on" a fe0 out of man" research ideas 0i *e ,igorous enough to sur,i,e and
0i reach the right en,ironment to mature into a successfu product. Li3e the *ugg"
0hip, our product 0i ha,e its da" and 0i then *e repaced *" ne0er ideas that satisf"
ne0er needs. !his crade-to-gra,e se9uence is 3no0n as the pro"uct life cycle. !he
product ife c"ce or the pro"uct planning an" research in,o,e the *asic stages&steps
i3eH
1. I&entification of nee& i.e., the suggestion of a product opportunit", 0hich
might come from researchers, saes-personne, or customers, from o*ser,ation of
a competitors, or .or miitar" goods/ from fear of a potentia enem". !he product
idea must then *e su*+ected to screening process to seect from the man" ideas
a,aia*e those that are technica" and economica" feasi*e, and to propose a
programme for their successfu design and de,eopment.
7. ,ro&uct planning function it in,o,es the mar3eting ana"sis, feasi*iit" stud",
ad,anced product panning .product seection, specifications and pans,
ac9uisition pan-research, design and production, e,auation pan, product use and
ogistic support pan/= and panning re,ie0 and proposa. !his stage is aso caed
as systems engineering phases or engineering stages of ne& pro"uct
"e#elopment.
I1
<. ,ro&uct research function it in,o,es the *asic research, appied research
.need oriented/, research methods, resuts of research, e,oution from *asic
research to product design and de,eopment.
@. ,ro&uct &esign function here the management 0i decide a*out design
re9uirements, conceptua design, preiminar" s"stem design, detaied design,
design support, engineering mode&protot"pe de,eopment and transition from
design to production.
B. ,ro&uction3construction function the products that sti appear desira*e after
the design process then go to the production function. It decides a*out production
and construction re9uirements, industria engineering and operations ana"sis
.pant engineering, manufacturing engineering, methods engineering, production
contro/, 9uait" contro, production operations.
D. ,ro&uct e*aluation function i.e., e,auation re9uirements, categories of test
and e,auation, test preparation phase .panning, resource re9uirements, etc./
forma test and e,auation, data coection, ana"sis, reporting, and correcti,e
actions and retesting are *eing underta3en.
I. ,ro&uct use an& logistic support function fina", the products are put into
use, and if the" are at a compe1, the" 0i re9uire continuing technica effort to
support their operation and maintenance. It aso in,o,es product distri*ution and
operationa use= eements of ogistic and ife c"ce maintenance support, product
e,auation, modifications, product phase-out, materia disposa, recamation, and
or rec"cing.
!hese steps in production in product ife c"ce ma" *e presented in the form of a
ta*e as foo0sH
%onsumer Identification of need
Producer
Product Panning function
Product 4esearch function
Product 2esign function
Production and&or %onstruction function
Product 5,auation function
%onsumerF Product use and ogistic support function
Fsome of the specific supporting function indicated m" *e accompished
*" the producer throughout and&or at ,arious stages in the
product ife c"ce.
For a product ine .fami" of products/ *ased on a technoog" that is de,eoped
and impro,ed o,er a period of "ears of product manufacture, the mode of the technoog"
ife c"ce portra"ed *" Bet; is more appropriate as sho0n in the figure *eo0H
"
Market >olume
I7
P
r
o
d
u
c
t

L
i
f
e

%
"
c

e
1
!echnoog" ;ppication ;ppication Mature !echnoog"
de,eopment aunch gro0th technoog" su*stitution and
o*soescence
Time
:igure1 !echnoog" Life %"ce .from Fredric3 -et$/
RJD Define&1
4esearch and de,eopment are common" umped together under the catcha term
RJD. !o distinguish *et0een them, et us adopt the definitions common" used *" the
Nationa (cience FoundationsH
>esearch, *oth *asic and appied, is s"stematic, intensi,e stud" directed to0ard
fuer scientific 3no0edge of the su*+ect studied.
?asic research is PPP.research de,oted to achie,ing a fuer 3no0edge or
understanding, rather than a practica appication, of the su*+ect under stud" PP.
Tathough 0hen founded *" commercia firmU ma" *e in fieds of present or potentia
interest to the compan".
7pplie" research is directed to0ard the practical application of 3no0edge,
0hich for industr" means the disco,er" of new scientific 3no0edge that has specific
commercia o*+ecti,es 0ith respect to either products or processes.
De#elopment is the s"stematic use of scientific 3no0edge directed to0ard the
production of usefu materias, de,ices, s"stems, or methods, incuding design and
de,eopment of protot"pes and processes.
.election of RJD ,ro0ects1
Nee& for .election1
;n" successfu technoog" *ased manufacturing firm 0i ha,e man" more ideas
and needs for research pro+ects than it has resources to in,est in them. -oo$, ;en and
#amiton, Inc. has suggested appro1imate" the foo0ing ratio of ra0 ne0 product ideas
profita*e products and areH
I<
a/ D> ideas .from researchers, other empo"ees, customers, and suppiers/ need to *e
screened for technical feasibility, financial feasibility, and suitability to
corporate resources and objectives - 9uic3" do0n to
*/ 17 ideas 0orth" of preiminar" technica e,auation and ana"sis of producti,it"
0ith respect to preliminary engineering design, mar&et research and costDbenefit
analysis to produce
c/ D defined potentia products 0orth further design development and analysis, to
o*tain
d/ < protot"pes for detaied ph"sica and mar3et testing, resuting in
e/ 7 products committed to fu-scae production and mar3eting, or 0hich
f/ 1 product shoud *e a rea mar3et success and as profita*e product.
Initial .creening1
!o sash D> crude ideas into 17 0orth" of an" significant e,auation re9uires a
method that is 9uic3 and ine1pensi,e. ; common method is use of a simpe chec3ist, in
0hich proposed product is gi,en a simpe +udgementa rating .poor&fair&good&e1ceent or
-7&-1&N1&N7, for e1ampe/ for each of a num*er of characteristics. .eiler suggests, for
e1ampe, scoring 1> itemsH
1. Technical factors .a,aia*iit" of needed s3is and faciities= pro*a*iit" of
technica success/
7. Research &irection and /alance .compati*iit" 0ith research goas and desired
research *aance/
<. Timing .of 4C2 and mar3et de,eopment reati,e to the competition.
@. .ta/ility .of the potentia mar3et to economic changes and difficut" of
su*stitution/.
B. ,osition factor .reati,e to other product ines and ra0 materias/
D. Mar3et gro0th factors for the product.
I. Marketa/ility and compati/ility 0ith current mar3eting goas, distri*ution
methods, and customer ma3eup
K. Produci*iit" 0ith current production faciities and manpo0er
L. :inancial factors .e1pected in,estment need and rate of return from it/
1>. ,atenta/ility and the need for continuing defensi,e research.
)n" sight" more sophisticated is the use of a &eighte" checklist or scoring mo"el
in 0hich each factor is scored on a scae, often from >.> to 1.>. ; reati,e weight
representing the importance of that factor is then used as a mutipe, and the 0eighted
scores for a factors are added. !he ta*e *eo0 pro,ides an e1ampe of such a
scoring mode.
,ro&uct +oncept %*aluation .heet
%riteria :eight (core :eighted (core
!echnica FactorsH
%ompati*iit" 0ith research o*+ecti,es
%ompati*iit" 0ith production faciities and
capa*iities
Pro*a*iit" of technica success
1
7
7
L
K
L
L
1D
1K
Mar3eting FactorsH
I@
%ompati*iit" 0ith mar3eting goas,
distri*ution, customers
Pro*a*iit" of mar3eting success
@
@
@
7
1D
K
Potentia profita*iit" 7 @ K
!otas <D IB
Ta/le1 51ampe of a :eighted (coring Mode
In this e1ampe, a potentia ne0 product has *een gi,en a ra0 score of <D .D>Q of the
ma1imum D>/ and a 0eighted score IB .on" B>Q of the ma1imum 1B>/. !he product 0as
+udged ,er" fa,oura*" on technica factors and coud *e de,eoped 0ith some confidence of
technica success. #o0e,er, it 0as rated poor" on its mar3eting factors, 0hich had *een
assigned greater 0eight in the mode, and therefore pro*a*" 0oud not *e de,eoped.
Euantitati*e Approaches1
)nce the arge num*er of ideas for research pro+ects has *een screened to a more
managea*e num*er, the remaining proposas +ustif" more detaied consideration of their
technica and financia merits. !he technica e,auation can ta3e pace in se,era stages
increasing in depth and detai .such conceptua, technica feasi*iit", de,eopment, and
commercia ,aidation stages of ne0 product de,eopment/, 0ith a decision point at the end of
each phase. ;ong 0ith e,oution of the technoog" shoud come increasing" detaied
ana"sis of costs of producing the proposed product and mar3et estimates of potentia saes
and profit.
Man" mathematica modes ha,e *een proposed for e,auating the financia suita*iit" of
proposed pro+ects. !"pica" the" in,o,e estimating the reationship *et0een the in,estment
re9uired and the *enefits to *e gained.
a/ The Pay'ack Time (or Perio") metho" the easiest to cacuate is the simpe
pa"*ac3 time ./
pb
)
,
0hich is the ratio of re9uired in,estment I and mean annua gross
profit ;H
"
'
/
pb

(impe pa"*ac3 time is often used to +ustif" in,estments that need to *e reco,ered
9uic3" *ecause of uncertainties, *ut it is unsuita*e for onger-term in,estments
*ecause it ignores profits e1pected *e"ond the point of pa"*ac3 and doesn8t consider
the time ,aue of mone" .the fact that a unit of mone" returned at some future time
has ess ,aue than a unit of mone" a,aia*e no0 or toda"/. Man" engineers earn
these ,aua*e methods of +ustif"ing in,estment in a ne0 pro+ect or purchase of ne0
e9uipment in a course in engineering econom" and return to te their teachers that it
0as one of the most usefu, practica courses the" too3 in coege.
*/ The )ngineering )conomy (+et Present =orth) metho" Asing the standard
engineering econom" nomencature= 0hereH
P M Present :orth of future cash fo0
;
+
M cash fo0 .re,enue ess e1pense/ in the +
th
"ear
i M discount rate .minimum attracti,e rate of return or cost of capita/
n M num*er of "ears of future cash fo0.
IB
;n" sum P toda", paced at an .annua" compounded/ interest i 0oud compound
to ;
1
M P.1Ni/ in one "ear, ;
7
M P.1Ni/
7
in t0o "ears, and ;
+
M P.1Ni/
+
in + "ears.
!herefore, the present 0orth of an" future sum ;
+
can *e cacuated as
( )
j
j
i
"
-
+

1
,
and the present 0orth of n "eas of such cash fo0 0oud *e
( )

n
j
j
j
i
"
-
1 1
+ote* ,or numerical e$amples% please refer the class notes

2uring the cacuation if the net present 0orth is negati,e, then the proposa ma" *e
re+ected and if the net present 0orth is positi,e, then the proposa ma" *e accepted for
in,estment. ;nd if the present 0orth is e9ua to $ero, the situation ma" *e considered
as position of indifference.
+reati*ity1
Nature of +reati*ity1
%reati,it" is the a*iit" to produce ne0 and usefu ideas through the com*ination
of 3no0n principes and components in no,e and non-o*,ious 0a"s.
;nother definition for creati,it" gi,en *" )ums&aine is pa"ing 0ith imagination and
possi*iities, eading to ne0 and meaningfu connections and outcomes 0hie interacting
0ith ideas, peope, and the en,ironment. %reati,it" e1ists throughout the popuation,
arge" independent of age, se1, and education. Eet in an" group a fe0 indi,idua 0i
dispa" creati,it" compete" out of proportion to their num*er. !o ha,e an effecti,e
research organi$ation re9uires understanding the creati,e process, identif"ing and
ac9uiring creati,e peope, and maintaining an en,ironment that supports rather than
inhi*its creati,it".
The +reati*e ,rocess1
!here are a num*er of modes for pro*em so,ing such as tria and error
method, panning&decision-ma3ing process 0hich in,o,es pro*em definition,
identification of aternati,es, e,auating them against o*+ecti,es. Its ma+or thrust is
ana"tica reasoning, athough its success is enhanced *" some creati,it" in seection of
aternati,es to *e e,auated. Foo0ing are the steps identified in creati,e processH
1. ,reparation (hannon descri*es this step as a period of conscious, direct
menta effort de,oted to the accumuation of information pertinent to the pro*em
PPP.and incude the areas i3eH
a/ (tructure the pro*em,
*/ %oect a a,aia*e information,
c/ Anderstand reations and effects,
d/ (o,e su*-pro*ems= and
ID
e/ 51pore a possi*e soution and com*inations that ma" ead to a satisfactor"
soution.
7. :rustration an& incu/ation Faiure to so,e the pro*em satisfactori" *" the
ana"tica process a*o,e ead to frustration and the decision to set if aside and get
on 0ith something ese. #o0e,er, the pro*em, fortified 0ith a the facts
gathered a*out it, ste0s or incu*ates in the su*conscious mind.
<. Inspiration or illumination ; possi*e soution to the pro*em ma" occur as a
spontaneous insight, often 0hen the conscious mind is at rest during rea1ation or
seep. Man" creati,e indi,iduas are ne,er 0ithout a notepad and pen, on their
person or *eside ta*e, to 0rite do0n these fashes of insight.
@. >erification Intuition or insight is not a0a"s correct, and the soution re,eaed
in a fash of insight must no0 *e tested and e,auated to assure it is, indeed, a
satisfactor" soution to the pro*em.
.hannon defends this mode as PPPPP.#hen applied to problem solving, the human
mind has two aspectsE
;. a judicial, logical, conscious mind that analyses, compares, and chooses6 and
7. an imaginative, creative, sub-conscious mind that visualizes, foresees, and generates
ideas from stored &nowledge and e%perience5.
Brainstorming an& 9ther Techni?ues for +reati*ity1
Dhillon descri*es eight creati,it" techni9ues designed for one, t0o, or up to a
do$en peope. -est 3no0n is *rainstorming, a modern method for organi$ed ideation,
and he reports that the idea had *een used in India for more than @>> "ears as part of the
techni9ue of #indu teachers under the name Prai4?arshana, itera" outside
"oursef-9uestion. !he essence of *rainstorming is a creati,e conference, idea" of K to
17 peope meeting for ess than an hour to de,eop a ong ist of B> or more ideas.
(uggestions are isted 0ithout criticism on a *ac3*oard or ne0sprint as the" are offered=
one ,isi*e idea eads to others. ;t the end of this session participants are as3ed ho0 the
ideas coud *e com*ined or impro,ed. )rgani$ing, 0eeding, and prioriti$ing the ideas
produced is a separate, su*se9uent step. !his description is more unstructured.
For more structured *rainstorming, the Nomina Group !echni9ue is used. In this
case, the pro*em is presented and participants 0rite do0n their ideas 9uiet" for a short
period of time .B to 1> minutes/. !hen each participant in an organi$ed manner 0ith no
repetitions presents one idea at a time. :hen one pass is finished, another is *egun unti
a the ideas are presented. !hen the process continuous as 0ith the unstructured
*rainstorming. !he ad,antage of this process is that e,er"one participants, and the 9uiet
time often eads to ideas that other0ise 0oud not ha,e *een considered.
2hion ne1t ists t0o *rainstorming techni9ues that can *e used *" t0o peope
and areH
the tear4"o&n approach 0here the first person Mr. ;, must disagree 0ith
the e1isting soution to a pro*em and suggest another approach= ne1t, second
person Mr. -, must disagree 0ith *oth ideas and suggest a third= then Mr. ;
must suggest "et another soution= this c"ce continues unti a usefu idea
cic3s.
II
!he an"4also method 0here Mr. ; suggests an impro,ement on the su*+ect
under stud"= Mr. - agrees, *ut suggests a further impro,ement= this se9uentia
impro,ement continues unti a sound soution is reached.
In a some0hat different group techni9ue de,eoped *" 5.F.'or&on, a team
e1pores the under"ing concept of the pro*em. For e1ampe, if a ne0 can opener is
desired the team 0oud first discuss P..the meanings of the 0ord opening and e1ampes
of opening in rea ife things. !he method encourages finding unusua approaches *"
pre,enting ear" cosure on the pro*em. Gordon used a team of si1 meeting for a*out a
da" on a pro*em.
2hion descri*es t0o approaches in 0hich indi,iduas are gi,en a description of
a pro*em and re9uired to ist soutions in ad,ance of group effort. In the simper form,
each participant has to ha,e a certain num*er of soution ideas, sa" 1I, to the pro*em
*efore he is ao0ed to attend the meeting. In a more compe1 ,ersion 3no0n as the
0+? metho", each mem*er of a team is gi,en a note*oo3 0ith a pro*em statement
and supporting materia a month in ad,ance. 5ach da" during that month the team
mem*er 0rites one or more ideas in the note*oo3 and at the end of the month seects the
*est idea aong 0ith fruitfu suggestions for further e1poration. ; pro*em
coordinator coects and studies note*oo3s and prepares a detaied summar" for
distri*ution= if necessar", a team mem*ers then participate in a fina meeting.
2hion fina" incudes t0o methods that indi,iduas ma" useH
attri'ute4listing approach 0here a person ists attri*utes of an idea or item,
then concentrates on one attri*ute at a time to ma3e impro,ements in the
origina idea or item.
force"4relationship approach this method tries to generate ne0 ideas *"
creating a forced reationship *et0een t0o or more usua" unreated ideas or
items.
!hereafter, Min"4mapping com*ines aspects of *rainstorming, s3etching, and
diagramming. ; mind-map consists of a centra 0ord or concept 0ith B to 1> main ideas
that reate to that 0ord, simiar to creating a spider-0e*. Tony Busman, a -ritish
researcher, in,ented mind-maps in the 1LI>s, and the" can *e appied to a ,ariet" of
situations incuding note ta3ing, creati,e and report 0riting, stud"ing, meetings, and
thin3 tan3s. ; procedure for dra0ing a mind-map foo0sH
1. (tart "our mind-map .in a team or indi,idua"/ *" 0riting the main topic in the
center of a arge piece of *an3 paper.
7. !hin3 a*out 0hat main factors, ideas, concepts, or components are direct"
reated to "our topic. :rite do0n the most important factors as main *ranches
off the centra concept. %onnect them to the main topic.
<. No0 concentrate on one of these headings or main ideas. Identif" the factors or
issues reated to this particuar idea. ;dditiona *ranches and detais can *e
added if needed. Ase 3e" 0ords, not phrases, if at a possi*e, to 3eep the map
uncuttered.
IK
@. 4epeat the process for each of the main ideas. 2uring this process, associations
and ides 0i not a0a"s come to mind in an order" arrangement soon "ou
0i *e ma3ing e1tensions a o,er the mind-map. %ontinue the process for at
east 1> minutes unti "ou can no onger add ideas to the map.
B. Ne1t come the organi$ation and ana"sis phase of mind-mapping. %onnect the
reated ideas and concepts. 4e,ie0, annotate, organi$e, and re,ise. 5dit and
redra0 the mind-map unti "ou are satisfied 0ith the ogic of the reationships
among a the ideas.
D. Fina", "ou are read" to *egin 0riting. !he time spent thin3ing up and
organi$ing the mind-map 0i ma3e the 0riting tas3 easier. !he resut 0i *e a
0e-organi$ed and 0e-understood product.
+haracteristics of +reati*e ,eople1
!here ha,e *een man" studies comparing more creati,e 0ith ess creati,e peope.
%haracteristics of creati,e peope can *e grouped in the foo0ing categoriesH
#. .elf=confi&ence an& in&epen&ence %reati,e peope seem to *e sef-confident,
sef-sufficient, emotiona" sta*e, and a*e to toerate am*iguit". !he" are
independent in thought and action and tend to reduce group pressures for
conformit" and rues and reguations that do not ma3e sense.
D. +uriosity !he" ha,e a dri,e for 3no0edge a*out ho0 and 0h" things 0or3,
are good o*ser,ers 0ith good memories, and *uid a *road 3no0edge a*out a
0ide range of su*+ects.
6. Approach to pro/lems %reati,e peope are open-minded and uncritica in the
ear" stages of pro*em so,ing, generating man" ideas. !he" en+o" a*stract
thin3ing and empo" method, precision, and e1actness in their 0or3. !he"
concentrate intensi,e" on pro*ems that interest them and resent interruptions to
their concentration.
". .ome personal attri/utes %reati,e peope ma" *e more comforta*e 0ith
things than peope, ha,e fe0er cose friends, and are not +oiners. !he" ha,e
*road inteectua interests= and en+o" inteectua games, practica +o3es,
creati,e 0riting, and are amost a0a"s attracted *" compe1it".
,ro*i&ing a +reati*e %n*ironment1
%reati,e peope tend to *e independent, non-conformist, and to 0or3 intensi,e"
for ong periods *ut 0ith a disregard for con,entiona 0or3 hours. !he" are most
effecti,e in an organi$ation that 0i toerate idios"ncrasies, remo,e as much routine
reguation and reporting as feasi*e, pro,ide support personne and e9uipment as
re9uired, and recogni$e and re0ard success. Peope doing routine 0or3 and those doing
creati,e 0or3 shoud *e separated 0here possi*e. 5ngineer managers, therefore, must
*e especia" carefu to 0ithhod criticism unti its appropriate pace at the concusion
.,erification/ of the creati,e process.
%reati,e peope ,aue 0or3ing on pro*ems of interest to themse,es and 0or3ing
on their o0n schedue. It is important to e1pain the pro*em and its importance fu",
agree on a timeta*e, and sta" in contact 0ithout cose super,ision as ong as reasona*e
progress is made.
IL
+reati*ity an& Inno*ation1
In,ention .the creati,e process/ on" produces ideas. !he" are not usefu unti
the" are reduced to practice and use, 0hich is the process of inno,ation. Bi&&&er
pro,ides an e1ceent stud" of moti,ation and creati,it" in the de,eopment of a <7-*it
computer at 2ata Genera. Ro/erts and 5ainer ha,e identified fi,e 3inds of peope
0ho are needed for technoogica inno,ationH
i. 'dea generator : the creative individual
ii. 1ntrepreneur : the person who 4caries the ball5
iii. !ate&eeper : high technical performers
iv. -rogram manager : who manage without inhibiting
v. 0ponsor or 2hampion : the person, often in senior management, who
provides financial and moral support
,rotection of I&eas1
(trategic panning for competition impies searching for means of capturing a
sustaina*e ad,antage. 4C2 is conducted to de,eop and impro,e technoogica products
and processes that pro,ide the organi$ation a competiti,e ad,antage. If these ad,antages
are readi" dupicated *" others, then there is an often insufficient reason for e1pending
the initia resources for a short-term ad,antage. !herefore, the products and ser,ices that
ha,e high creati,e ,aue added content, it is ,ita to the economic 0e-*eing of the
creati,e organi$ations and countries that there *e some means for protection of these
inteectua properties. Fortunate", there are means for protection of ideas in a
industriai$ed countries of the 0ord.
!here are genera" F)A4 ega means to protect an organi$ation8s .or an
indi,idua8s/ ideas and right to *enefit from those ideas. !he" areH
1. Patents,
7. %op"rights,
<. !rade (ecrets= and
@. !rade Mar3s and other mar3s.
!his area of a0 is genera" referred to as intellectual property la&. !hrough the efforts
of the :ord !rade )rgani$ation, inteectua propert" a0 is *ecoming more uniform
across nationa *oundaries, athough it is important to recogni$e that there are sti
significant differences. #o0e,er, the discussion foo0ed in this chapter reates much to
A.(. inteectua propert" a0s.
#. ,atents1
; patent is an e1cusi,e propert" right to an in,ention issued *" the
%ommissioner of Patents and !rademar3s. !he rights granted are imited to the caims
of the patent. !here are !#455 cassifications of patentsH
a/ /tility patent a utiit" patent ma" *e o*tained for a process, a machine, and
artice of manufacture, a composition of materia, or an" impro,ement. !he ife
of the utiit" patent is genera" 7> "ears from the date of appication. Atiit"
K>
patents cannot *e o*tained on a0s of nature, scientific principes, or printed
matters.
*/ Design patent design patents are granted on ne0, origina, and ornamenta
design of an artice of manufacture for a term of 1@ "ears from the date the design
patent is granted. !he design patent is not concerned 0ith ho0 the artice of
manufacture 0as made or ho0 it 0as constituted, *ut 0ith ho0 it oo3s. !he
design must *e primari" ornamenta rather than primari" functiona to *e ,aid.
c/ Plant patent the pant patents are granted for 7> "ears from date of appication
for pants 0hen ase1ua" reproduced, 0ith e1ception of tu*er-propagated pants
or pants found in the uncuti,ated state.
!o *e patenta*e, the in,ention must fufi the 9uaities&characteristics i3eH
a/ Ne0 or no,eistic,
*/ Asefu or ha,e utiit"= and
c/ Non-o*,ious.
%sta/lishing ,atent Rights1 !he in,ention process incudes .1/ conception, and
.7/ reduction to practice. In A(, if the first to concei,e ma3es a reasona*e, diigent
effort to reduce the in,ention to practice, he or she 0i recei,e the patent, e,en if
someone ese actua" reduces it to practice earier. ;ccording", it has *een essentia for
the in,entor to maintain good records to esta*ish the date of conception and diigence in
reduction to practice in case of an" ater interference. !hen, a 0ritten discosure of the
in,ention shoud *e made as soon after conception as possi*e. !he discosure must *e
0itnessed *" at east t0o persons 0ho fu" understand its content.
!o demonstrate diigence to reduce to practice, chronoogica" 0ritten record
in a note *oo3 0ith page num*ers, 0ritten in in3 and errors not erased *ut crossed out for
corrections, and a the entries must *e made in her or his o0n hand0riting. 5ach page
must *e signed 0itnessed in pro1imit" to the entries on a pages. ;though it is
permissi*e for an in,entor to fie his or her o0n appication, it is strong" ad,ised that a
patent attorne" or agent *e used to ma3e and prosecute the appication. In amost a
other countries, patents are a0arded to the first person to fie the appication, rather than
the first to concei,e.
6ust o,er haf of A( utiit" patents ha,e *een a0arded to ;mericans in recent
"ears= the first 1> companies a0arded the most A( patents in 7>>> incuded si1 6apanese
companies. !he other four companies incuded I-M, first= Lucent !echnoogies Inc.,
fourth= Micron !echnoogies, Inc., (e,enth= and Motoroa Inc., ninth.
D. Tra&emarks an& 9ther Marks1 !he Lanham ;ct defines a mar3 as an" 0or3,
name, s"m*o, or de,ice, or an" com*ination thereof. !here are F)A4 t"pes of mar3sH
a/ Tra"emark is used *" a manufacturer or merchant to identif" his goods and
distinguish them from those manufactured or sod *" others. ; trademar3 differs
from trade name, *ut on" trademar3 attracted to a product is protected *" a0.
*/ 2er#ice mark is associated 0ith ser,ices rather than goods.
c/ 0ertification mark - indicates that the mar3ed goods or ser,ices meet standards or
ser,ices esta*ished *" the mar38s o0ner, e.g., good house 3eeping.
K1
d/ 0ollecti#e mark - identifies mem*ers of a group such as an organi$ation, a union,
or an association.
!he rights to a mar3 can *e ost, especia" if a mar3 is a*andoned or ao0ed to
*ecome a generic 0ord. !o a,oid osing a mar3, ,igiance must *e e1ercised e,en to
the point of suing infringers. ; non-registered mar3 has common a0 rights. )fficia
registration, ho0e,er, pro,ides distinct ad,antages.
6. +opyrights1 ; cop"right is a *unde of rights to reproduce, deri,e, distri*ute,
perform, and dispa" an origina creati,e 0or3 in a tangi*e form for the ife of the
author, pus I> more "ears thereafter. 51ceptions to this term incude 0or3 for hire,
0here the cop"right asts for 17> "ears from the date of creation or LB "ears from the
"ear of first pu*ication. %op"right o0ners can sue an"one 0ho infringes their rights to
stop iega reproduction= impound infringing artices= coect ost profits, court costs, and
attorne"8s fees= and in e1treme cases, in,o3e crimina penaties.
%op"rights can *e gi,en for iterar" 0or3s= musica 0or3s, incuding an"
accompan"ing music= dramatic 0or3s= pictoria, graphic, and scuptura 0or3s= motion
pictures and other audio,isua 0or3s= sound recordings= and architectura 0or3s. ;
cop"right protects e1pressions, not ideas. ; potentia" patenta*e idea e1pressed in a
cop"righted te1t ma" *e used *" others.
!here are num*er of e1ceptions to the rights of a cop"right. !he most nota*e and
high" pu*ici$ed is the fair use e1ception. )ne ma", 0ithout permission, ma3e fair
use of a cop"righted 0or3 for purposes such as criticism, comment, ne0s-reporting,
teaching, schoarship, or research. Fair use is determined *" consideration of such factors
as the purpose of the use, the nature of the 0or3, the amount and su*stantiait" used, and
mar3et effect.
". Tra&e .ecrets1 !rade (ecrets, or confidentia technoogica and commercia
information, re the most important assets of man" *usinesses. !he a0 protects trade
secrets as aternati,es to patents and cop"rights. !rade (ecrets ha,e no precise
definition, *ut to *e protected *" the courts, the" must *e secret, su*stantia, and
,aua*e. !he secret can *e amost an"thing as ong as it is not genera" 3no0n in the
trade or industr" to 0hich it appies. ; trade secret pro,ides its o0ner 0ith a competiti,e
ad,antage. !he trade secret ma" *e a formua, process, 3no0-ho0, specifications,
pricing information, customer ists, supp" sources, merchandising methods, or other
*usiness information. It ma" or ma" not *e protected *" other means.
Ani3e, patents or cop"rights, trade secrets ha,e no time imitations, and there is
no registration 0ith an" go,ernment agenc". ; trade secret, ho0e,er, has ,aue on"
0hie it remains secret.
+omparison of Means of ,rotecting I&eas1
; comparison ma" hep the in,entor or author to ma3e an inteigent decision on
the proper protection needed for each idea. 2ifferent options offer ,er" different 3inds of
protection. Man" ideas that are protected as trade secrets cannot *e patented. %on,erse",
K7
a item that is patenta*e can theoretica" *e protected as a trade secret. If the idea can *e
easi" disco,ered through re,erse engineering ho0e,er, a patent is the on" practica
choice for protection.
Ta/le1 %omparison of Means of Protecting IdeasH
%ategor" Atiit" patents 2esign patents !rademar3s %op"rights !rade secrets
Idea or
(u*+ect matter
Ne0 or usefu
processes,
machines,
artices,
compositions
Ne0
ornamenta
designs
:ords, names,
s"m*os, and
other de,ices of
distinguishing
the artices
:ritings,
music, 0or3s
of art, and the
i3e tangi*e
medium of
e1pression
;most
an"thing that
is secret, and
,aua*e
(ources of
protection
A( Patent and
!rademar3
office patent
A( Patent and
!rademar3
office patent
4egistration
0ith Patent and
!rade-mar3ing
)ffice
4egistration
0ith the
secretar" of
state
%ommon a0
protection
through courts
as ong as
proper use
continues
Federa La0
protects on" a
tangi*e
medium of
e1pression
5nforcea*e
on" 0hen
registered 0ith
the cop"right
office
Primari"
common a0
protection
through
courts
!erms of
protection
7> "ears from
appication
fiing date
1@ "ears from
issue date of
patent
1> "ears from
registration
0ith federa
office,
rene0a*e for
additiona 1>
"ears term
Life of the
author pus
additiona I>
"ears
For as ong as
it remain a
secret
!ests for
infringement
Ma3ing, using,
or seing
in,ention
descri*ed in
patent caim
Ma3ing, using,
or seing
design sho0n
in patent caim
Li3eihood or
confusion,
mista3e, or
deception
%op"ing of
protected
su*+ect matter
!a3ing of
trade secret
*" *reach of
trust of a
confidentia
reationship
!he computer soft&are ma" *e protected *" cop"right as iterar" 0or3. It ma" *e
that a utiit" patent coud *e used to protect it. ; utiit" patent protects the idea, 0hereas,
the cop"right 0oud protect on" the e1pression. !he separation of 0hat constitutes the
idea and 0hat constitutes the e1pression is one that is often decided *" the courts. 4ecent
practice has *een to see3 protection of soft0are *" utiit" patents to ensure the strongest
protection.
!he data*ase that consists of facts is not protecti*e *" cop"right. !hat ea,es
on" the means of trade secret. #o0e,er, the ,aue of data*ase is in ma3ing it a,aia*e
to the pu*ic, it cannot *e protected.
K<
!hus, the 3no0edge a*out changing inteectua propert" rights protection a0s is
essentia to a engineering managers to gain the competiti,e ad,antage to sustain and
gro0 in modern mar3et structures.
,lanning ,ro&uction Acti*ity1
,lant )ocation1
It deas 0ith ma3ing decision a*out region of the countr" in 0hich this pant 0oud
*e ocated. Man" factors, such as transportation, a*our supp" and attitude, resource
a,aia*iit", and poitica cimate, had to *e considered *efore the di,ision 0as fina"
ocated. -efore the pant 0as *uit, corporate e1ecuti,es had to decide the communit"
0ithin that state and the specific site 0ithin the communit" that 0oud pro,ide the *est
ocation for the pant. ;mrine et a. outine se,en *asic steps in ocating and *uiding
e,er" ne0 pant foo0ed *" one arge compan"H
1. 5sta*ish the need for a ne0 pant.
7. 2etermine the *est geographica area for the pant on the *asis of the compan"8s
*usiness needs.
<. 5sta*ish the re9uirements .i.e., product to *e made, e9uipment and *uidings
needed, utiities and transportation necessar", num*er of empo"ees, etc./.
@. (creen man" communities for detaied studies.
B. (eect the *est ocation.
D. -uid the pant.
(ome of the factors affecting the choice of region, communit", and site are as foo0sH
!ransportation .high0a", rai, air, 0ater/
La*our .supp", s3i e,e, oca 0age rates, union mem*ership, and attitudes/
Geographica ocation .reati,e to ra0 materias, customers, or other compan"
acti,ities/
Atiities .supp" and cost of 0ater, eectric po0er, and fossi fues/
-usiness cimate .ta1es, poution contros, communit" attitudes/
;menities .cimate, educationa faciities, near*" recreation/
Pant sites .and a,aia*iit" and cost, $oning, space for e1pansion/.
,lant Design1
)nce the site is seected, engineers must decide on the nature of the pant and its
arrangement on the site. It in,o,es the decision a*out mutistor" or singe stor"
construction, par3ing faciities and pro,isions, rai-road and truc3 accessi*iit", and aso
appearance. (ome arge companies ha,e their o0n corporate engineering staffs for pant
design, *ut most companies 0i ca on the architect&engineering .;&5/ firm for this
speciai$ed ser,ice.
,lant )ayout1
Pant a"out attempts to achie,e the most effecti,e arrangements of the ph"sica
faciities and personne for ma3ing a product. !he three principa methods mo,ing the
K@
product through the manufacturing steps are pro&uct layout, process layout, and group
technology. .In a fourth method, fi$e"4position layout, the product remains stationar"
and the processes are *rought to it. !his method is arge" confined to ship*uiding and
other massi,e construction/.
In pro"uct layout, machines and personne are arranged in the se9uence of
product manufacture so that the product can *e mo,ed aong the production .assem*"/
ine 0ith a minimum of tra,e *et0een steps. !his method is especia" usefu 0hen
arge 9uantities of standardi$ed products are to *e produced o,er a ong period of time,
and it is the *asis for mass production of most automo*ies, ma+or househod appiance,
and the i3e.
In process layout, a machines or acti,it" of a particuar t"pe are ocated
together. !hus, a pant ma" ha,e separate departments for turning, panning, grinding,
miing, driing, and painting. Indi,idua products are transported from department to
department in the se9uence needed for their production. !his a"out is particuar" usefu
for the +o*-shop en,ironment, in 0hich a arge num*er of different products are to *e
produced using the same e9uipment and 0or3ers. It pro,ides great fe1i*iit" in the use
of e1pensi,e e9uipment and s3ied personne at the e1pense of su*stantia in-pant
transportation. %omputer programs ha,e *een de,eoped to hep in ocating departments
in reationship 0ith each other so that transportation cost minimi$ed.
In group technology, a set of products re9uiring simiar processing e9uipment is
identified, and a sma group of the machines needed to ma3e this set of simiar products
is paced together. !ransportation *et0een steps in the manufacturing process is
therefore minimi$ed, in,entor" accumuating *et0een steps can *e amost eiminated,
and products are produced much faster.
Euantitati*e Tools in ,ro&uction ,lanning1
!here are three *asic 9uantitati,e toos 0i *e discussed the economic order
9uantit" .5)'/ approaches to in,entor" contro, *rea3 e,en charts, and earning
cur,es.
Types of In*entory1
Most t"pes of manufacturing processes *egin 0ith some t"pe of ra0 materia .sheet stee,
um*er, eather/ that re9uires processing. !he" add purchased parts .,a,es, s0itches,
hinges/, and consume suppies .cutting ois, time cards, dri *its/. ;s 0or3 progresses,
there 0i *e a considera*e in,estment in 0or3-in-progress, *efore the finished goods are
dei,ered to the 0arehouse to a0ait sae, and shipment. 5ach of these t"pes of in,entor"
represents an in,estment of capita, re9uires storage space, and is su*+ect to oss, so it
0oud seem desira*e capita, re9uires storage space, and is su*+ect to oss, so it 0oud
seem desira*e to ma3e or purchase ,er" sma 9uantities at time. #o0e,er, ea h time a
ot of product is made there is a setup cost, consisting of the cerica cost of processing
and trac3ing the order and the cost of finding tooing and ad+usting machines to ma3e the
KB
item= these costs are ess 0hen ots are arger. In,entor" contro is the process of
identif"ing and impementing in,entor" e,es that resut in a minimum tota cost.
%conomic 9r&er Euantity (%9E-1
%onsider an in,entor" item for 0hich the annua re9uirement is > units. (toring
each unit of the item in in,entor" 0i cost . doars per "ear. !hese storage costs incude
interest on the 0or3ing capita in,ested in the unit, 0arehouse e1pense, and threat of
deterioration, theft, and o*soescence 0hie the unit is in storage. If, e,er" time the ast
item is used, "ou rene0 the in,entor" 0ith a *atch of A units, "our a,erage in,entor" 0i
*e A;B units and "ou 0i need >;A *atches per "ear. 5ach such *atch in,o,es an
ordering or setup cost of ( doars. !he tota annua cost 0
T
of that in,entor" item is,
therefore,

,
_

+
,
_

0
F
' 2
/
7
(etting the differentia of tota cost .0ith respect to A / to $ero and so,ing for A "ieds
the economic order 9uantit"H
5)' M
'
0 7
2etermination of the 5)' is sho0n graphica" as *eo0H

%ost .2oars/
<>>>
;nnua !ota %ost
7>>> ;nnua In,entor" #oding cost
1>>> ;nnua )rdering %ost

> @>> K>> 17>> 1D>> 7>>> 7@>>
KD
)rder 'uantit" .E/
:igure1 5conomic )rder 'uantit" T5)'U
!he 5)' has *een used as an effecti,e too .techni9ue/ of estimating the
in,entor" cost and in,entor" management and its minimi$ation. It has 0ide" *een used
*" the companies in ;merica, 6apan and man" other eading industria economies of the
0ord.
Break %*en +harts1
-rea3 5,en ;na"sis di,ides cost into their fi1ed cost and ,aria*e cost
.components/ to estimate the production e,es needed for profita*e operation. :i7e&
cost are those assumed to *e independent of production e,e, at east in the range of
production ,oume of interest. !he" incude ease pa"ments, insurance costs, e1ecuti,e
saaries, pant heating and ighting, and the i3e. >aria/le +osts are those assumed to
,ar" direct" 0ith the e,es of production, such as direct a*our, direct materias, and
po0er for production e9uipment. (ome semi=*aria/le costs ma" *e di,isi*e into fi1ed
and ,aria*e components, i.e., seing costs, ma" consist of *oth saar" .fi1ed/ and
commissions .,aria*e/
!he reationship *et0een the fi1ed costs, ,aria*e cost and tota cost and aso tota
cost 0ith the tota re,enue .income/ determining the -rea3 5,en Point ma" *e
represented in the chart *eo0. !he *rea3 e,en chart represents that at the point of -5P
the !ota 4e,enue is e9ua to the !ota %ost .!4M!%/. !he ,oume of output and saes
*eo0 the -5P resuts in oss= and the ,oume of output and saes a*o,e the -5P resuts
in profit as a difference *et0een the !ota 4e,enue and !ota %ost .i.e., the Profit M !ota
4e,enue !ota %ost/.
!ota %ost&!ota 4e,enue
!4
!4
Profit !4

!% M !4 !S%
Loss
!F%
!F%
> '
-5P
'
m
Soume or 'uantit"
KI
:igure1 -rea3-5,en-%hart
;t -5P .i.e., at '
-5P
/ the !ota 4e,enue is e9ua to !ota %ost, earning neither profit nor
oss. ;n" 9uantit" or ,oume a*o,e -5P .'
m
/ 0i resut in earning profit as a difference
*et0een the !ota 4e,enue and !ota %ost .i.e., !4X!%/ and an" ,oume of output
*eo0 -5P 0i resut in oss .i.e., !4Y!%/. !he -rea3-5,en-%hart 0i aso hep in
estimating and depicting the change that ma" resut in Fi1ed %ost, Saria*e %ost and aso
(eing Price on the -rea3 5,en Point and profit ma3ing a*iit" of the firm.
!he genera e9uation to cacuate the -rea3 5,en Point isH
unit per G2 unit per 0-
/$2
B1-

:here= (P S% is aso caed as contri*ution margin.

and= for the tota ,aues H
0ales /otal
/G2
/$2
B1-

1
)earning +ur*es1
!he earning cur,e concept deri,es from the o*ser,ation that, in man" repetitious
human acti,ities, the time re9uired to produce a unit of output is reduced *" a constant
factor 0hen the num*er of units produced is dou*ed. :ith a L>Q earning cur,e, for
e1ampe, if the first unit ta3es 1>>> a*our hours to produce, the second 0i ta3e L>>
hours, the fourth K1>, the eighth I7L, and so on, as sho0n in the figure *eo0H
La*our hours per unit E
1>>>
B>>
<>>
1>>
1 1> 1>> 1>>>
Num*er of units produced n
:igure1 ; L>Q earning cur,e.
If it ta3es C
1
time periods to ma3e the first unit, the time C
n
to produce the n
th
unit can *e
found fromH
KK

b
n
n ? ?

1

n b ? ?
n
n n n
1

!he e1ponent ' can *e found for an" earning cur,e rate k *" setting n M 7H
b
&
?
?

7
1
7
(o that, for the L>Q earning cur,e, for 0hich 3 M >.L= then the ,aue of e1ponent ' 0i
*eH
1B7 . >
7 n
L . > n
7 n / L . > . n

b
b
!his reationship 0as de,eoped in the aircraft industr", and its most common use has
*een there. )ther appications are in the automo*ie industr", eectronics assem*", and
repetiti,e construction. Impro,ements are from a com*ination of factors, incuding
increased 0or3er s3i, *etter 0or3 methods, *etter tooing and e9uipment, and
organi$ationa impro,ements, *ut tas3s 0ith greater manua and ess mechanica content
tend to sho0 a faster reduction in time re9uired .o0er percent earning cur,e/.
:hat to *e noted here, is that the earning cur,e appies on" for a continuous
se9uence of acti,it"= if production stops at the end of one *atch or ot and resumes ater,
the time to produce the first unit of the ne0 *atch 0i *e greater than that for the ast unit
of the pre,ious *atch, and the earning cur,e 0i *egin again at that point.
Euestions1
#. :hat are some of the positions that engineers fi in a arge manufacturing pantJ
D. :hat su*+ects 0i *e important in the education of the manufacturing engineers
for the t0ent"-first centur"J
6. 2istinguish *et0een .a/ product a"out, .*/ process a"out, and .c/ group
technoog".
". (a- If it costs O7 per unit to store an item for one "ear, O@> setup cost e,er" time
"ou produce a ot, and "ou use 1>>> units per "ear, ho0 man" ots of 0hat si$e
shoud *e manufactured each "earJ (/- #o0 0oud "our ans0er change if the
setup cost can *e reduced to O1>J
. (et up for a stamping operation re9uired a time-consuming fi1ture instaation and
testing that too3 @ hours each time a different part 0as to *e produced= t"pica",
17 hours production 0as made for in,entor" of a gi,en stamping *efore the
machine 0as stopped to permit setup for a ne0 part. ;fter carefu process
ana"sis, fi1tures and transfer methods 0ere re,ised to permit setup in 1B minutes.
2iscus the impications for this change on (a- optimum *atch si$e, (/- order
fre9uenc", and (c- machine and a*our producti,it".
KL
@. ; production pant 0ith fi1ed costs of O<>>,>>> produces a product 0ith ,aria*e
costs of O@> per unit and ses them at O1>> each. :hat is the *rea3-e,en-
9uantit" and costJ Iustrate 0ith a *rea3-e,en chart.
!. ; machine too saesperson offers the pant of the pre,ious 9uestion .'. No. D/
e9uipment that 0oud increase their fi1ed cost *" O1K>,>>> *ut reduce their
,aria*e cost from O@> to O7B. (houd the pant accept this suggestion if the" can
se their entire pant capacit" of 1>,>>> units per "ear at O1>> eachJ Iustrate *"
modif"ing the *rea3-e,en chart of 9uestion D.
4. ; pant is *eginning production of a ight ao" product and finds that it ta3es @>>
hours to produce the first item. #o0 man" hours shoud it ta3e to produce each
of the foo0ingH .a/ the second item= .*/ the eighth item= .c/ the thirt" se,enth
itemJ %onsider K>Q earning cur,e for "our cacuation.
8. !he first t0o units of a product cost a tota of OL>>> to produce. If "ou *eie,e an
K>Q earning cur,e appies, ho0 much 0oud "ou e1pect the fourth unit to costJ
#$. %ompare and contrast the appication of -anchard8s product ife c"ce 0ith that
of -et$8s technoog" ife c"ce.
##. :oud the same 3ind of eader *e suita*e throughout -et$8s technoog" ife
c"ceJ If not, 0hat 3ind of eader 0oud *e effecti,e in each portion of itJ
#D. 51pain the ,arious steps in product ife c"ce and technoog" ife c"ce.
#6. :rite a not on 4C2 acti,it" of an organi$ation.
#". ;n engineer proposes to *u" a machine for O1>>,>>> toda" that 0i sa,e OD>,>>>
in a*our costs at the end of the ne1t t0o "ears. If the compan" demands a 1BQ
return on in,estment such as this, 0hat is the net present 0orth .NP:/ of the
proposaJ (houd it *e fundedJ
#. Eour compan" has t0o aternati,e opportunities, each re9uiring "our entire
capita in,estment *udget O<7B,>>>. ;ternati,e ; 0i return O<L>,>>> at the
end of one "ear= aternati,e - 0i return O71D,>>> at the end of each of the first
t0o "ears. :hich .if either/ aternati,e shoud "ou recommend on the *asis of .;/
simpe pa"*ac3 timeJ .*/ net present 0orthJ
#@. If "ou ha,e *een e1posed to capita in,estment ana"sis and&or engineering
econom", comment on the proposa to in,est O1,>>>,>>> in a ne0 product no0
that is pro+ected to generate O7>>,>>> profit at the end of each "ear for eight
"ears, assuming that "our compan" re9uires 1BQ return on in,estment *efore
ta1es.
#!. :hat are ma+or methods of protection of ideasJ 51pain.
#4. :hat is a patent rightJ 51pain ma+or t"pes of patent. :hat are the *asic
9uaities or features re9uired get a patent right.
#8. 51pain the in,ention process to esta*ishing patent rights.
a. :hat are the different t"pes of trademar3sJ 51pain.
D$. :rite a note on %op"rights and !rade (ecrets.
D#. :hat are the different t"pes protections of ideasJ Ma3e a comparison *et0een
the different t"pes of protection of ideas.
DD. #o0 do the 3inds of ideas *est protected *" patent differ from those *est
protected *" 3eeping them a trade secretJ
D6. 2efine %reati,it". 51pain the ma+or steps in creati,e process.
L>
D". :hat are some of the steps a manager can ta3e to encourage creati,it" in his or
her technica empo"eesJ
D. :hat is -rainstormingJ 51pain ,arious approaches to -rainstorming as
proposed *" 2hion.
D@. :rite a note on procedure for dra0ing a mind-mapping.
D!. :hat are the characteristics of %reati,e PeopeJ 51pain.
D4. :rite a note on !echnoog" Gate3eepers in 4C2 )rgani$ations.
D8. 51pain the aspects of ma3ing 4C2 organi$ations successfu.
6$. 51pain the components of e,auating 4C2 5ffecti,eness .)rgani$ationa
5ffecti,eness and Indi,idua 5ffecti,eness/.
6#. :hat are the supports needed for 4C2 in an organi$ation.
6D. :hat are some of the support ser,ices an organi$ation might pro,ide to ma3e the
0or3 of researchers and design engineers more effecti,e"J
2NIT >
$@ Hrs
,ro0ect ,lanning Tools Gantt .-ar/ %harts, Net0or3 ;na"sis P54! and %PM
%rashing the Pro+ect competion duration using net0or3 ana"sis.
Depreciation 4easons for 2epreciation, !"pes of 2epreciation, Methods of %omputing
2epreciation soutions to pro*ems.
L1
,ro0ect ,lanning an& Ac?uisition1
+haracteristics of a ,ro0ect1
; pro+ect represents a coection of tas3s aimed to0ard a singe set of o*+ecti,es,
cuminating in a defina*e end point and ha,ing a finite ife span. ; pro+ect is a one-of-
a-3ind acti,it", aimed at producing some product or outcome that has ne,er e1isted
*efore.
4esponsi*iit" for a pro+ect is norma" assigned to a singe indi,idua, assisted *"
a cose-3nit pro+ect team. !he term Gprogramme8 is sometimes used interchangea*" 0ith
Gpro+ect8, *ut more often a program is a more comprehensi,e underta3ing, 0hich ma" in
turn consist of a num*er of pro+ects.
Pro+ect management methods shoud *e consideredH
1/ 0here cose interaction of a ,ariet" of technoogies, di,isions, or separate
organi$ations is re9uired=
7/ 0hen competion 0ithin a tight schedue and *udget is necessar"= and
L7
</ for acti,ities in,o,ing significant technica and&or economic ris3 to the organi$ation.
!he three essential consi&erations in pro0ect management .three-egged stoo of
successfu pro+ect management/ areH
1/ Time .pro+ect schedue/,
7/ 0ost .monetar" and other resources/= and
</ Performance .the e1tent to 0hich o*+ecti,es are achie,ed/.
(ince, achie,ing ma1imum performance is often possi*e on" at the e1pense of cost and
schedue, difficut trade-off decisions in,o,ing compromises are often necessar".

The ,ro0ect ,roposal ,rocess1
5,er" t"pe of pro+ect shoud *e preceded *" a detaied description of 0hat is to *e
accompished, together 0ith a proposa or estimate of the time and cost re9uired. !he
,arious steps or components of the proposa process areH
,roposal %ffort1
; successfu organi$ation genera" *egins the 0or3 ong *efore a re9uest for
proposa .4FP/ is recei,ed from a potentia customer. !he successfu pro+ect-dri,en
organi$ation is continuous" identif"ing ne0 *usiness opportunities- areas of technoog"
or t"pes of acti,it" 0here attracti,e pro+ects are i3e" to *e funded. !he firm estimates
the resources and capa*iities that 0i *e needed to meet the e1pected future needs of
potentia customers, compare them 0ith the resources the" ha,e on hand, and then
proceeds to de,eop the needed technica s3is and ac9uire other needed resources or at
east identif" sources for them in ad,ance.
,roposal ,reparation1
-" the time the re9uest for proposa .4FP/ arri,es, management often has
appointed a proposa manager, 0ho has prepared a *udget for the proposa process and a
etter read" for reease caing on functiona managers to pro,ide mem*ers of the
proposa team. !he 4FP is 9uic3" e1amined to *e sure it hods no surprise, and the
tentati,e decision to prepare a *id is reconfirmed.
; 0e prepared 3ic3off meeting for the proposa team aunches the proposa
process. ; representati,e of senior management ma" gi,e a short pep ta3 on the
importance of the pro+ect to the compan" and introduce the proposa manager, 0ho 0i
do much or a of the foo0ing duties in proposa preparationH
a/ Gi,e an o,er,ie0 of 0hat the 4FP .re9uest for proposa/ as3s for.
*/ Pro,ide the *est estimate from compan" inteigence as to 0hat the customer
rea" 0ants and the factors the customer 0i use in determining the contract
0inner.
c/ Identif" the organi$ation, schedue, and a*our-hour aocations for the proposa
effort.
d/ Pro,ide handouts gi,ing, in as much as preparation time has permitted,
management8s concept of ho0 the pro+ect might *e carried out, and instructions to
the pro+ect proposa team.
L<
Proposa personne are usua" a e1perienced peope, and so the" can 0or3 rapid" 0ith
minimum guidance.
,roposal +ontents1
!he 4FP .re9uest for proposa/ often specif" separate management, technica, and
cost proposas and their e1pected contents. It in,o,esH
a/ Management Proposa - !he management proposa t"pica" discussed the
compan", its organi$ations, its ree,ant e1perience, its management methods and
contro s"stems, and descri*es the personne proposed to ead the pro+ect.
*/ !he !echnica Proposa - !he technica proposa outines the design concept
proposed to meet the cient8s needs, 0ith specia emphasis on the approach
panned to reso,e the most difficut technica chaenges posed *" the pro+ect.
c/ !he %ost Proposa - !he cost not on" incudes a detaied price *rea3do0n, *ut
often aso discusses aspects of infation, contingencies, and contract change
procedures.
!he proposa pac3age is critica" re,ie0ed *" compan" senior management not
in,o,ed in creation of the proposa, re,ised, printed, and dei,ered to the customer.
,ro0ect ,lanning Tools1
!he pro+ect is a set of acti,ities and panning is ,er" e1tensi,e and critica to
carr"out these acti,ities in pro+ect. !he ma+or panning toos a,aia*e areH
1. !he (tatement of :or3,
7. !he Miestone (chedue,
<. !he :or3 -rea3do0n structure,
@. !he Gantt .-ar/ %harts,
B. !he Net0or3 (cheduing ("stems .P54!, %PM , etc./= and
D. 4esource ;ocation Methods.
#. The .tatement of 5ork1
!he pro+ect a0ard 0i genera" *e accompanied *" a statement of 0or3 .():/
descri*ing e1act" 0hat is to *e pro,ided in the pro+ect. !he (): 0i norma" *egin
0ith the genera scope of the 0or3, and then itemi$e the tas3s to *e performed, the
contract end items .products/ to *e dei,ered, and the data and reports to *e suppied.
(ometimes the (): is that proposed *" the contractor in the proposa *id pac3age, and
sometimes it has *een created or modified *" the customer. In an" e,ent, it is essentia
that customer and contractor come to a common understanding of e1act" 0hat each
paragraph of the (): means *efore 0or3 has progressed ,er" far.
D. Milestone .che&ule1
Miestones are the 3e" dates for ma+or pro+ect phases or acti,ities. ; t"pica
miestone schedue of an aerospace pro+ect is gi,en *eo0H
Miestone
7>>B 7>>D
1 7 < @ B D I K L 1
>
1
1
1
7
1 7 < @ B D I K L 1
>
1
1
17
Pro+ect go-
L@
ahead
%ompete
pro+ect pan
Preiminar"
design re,ie0
L>Q design
reease
Protot"pe
compete
("stem !est
%ompete
Fina 2esign
4e,ie0
Production
4eease
(uch a schedue is essentia for detaied panning, since reaching a ma+or
miestone point t"pica" re9uires the coordinated effort of a great man" peope. For
e1ampe, a ma+or design re,ie0 ma" re9uire competion to a specified e,e of
component or su*s"stem design *" do$ens of design groups, ana"ses of reia*iit",
maintaina*iit", produci*iit", safet", and other aspects of the design, and pans for
testing, training operators, production tooing, and ogistic support. !he miestone
schedue is an essentia and usefu too in accompishing these aspects of a pro+ect
proposa and design and a guideine to meet the ma+or and crucia miestones in a pro+ect.
6. 5ork Break&o<n .tructure (5B.-1
; :or3 -rea3do0n (tructure .:-(/ is a product-oriented fami" tree of 0or3
effort that pro,ides a e,e-*"-e,e su*di,ision of the 0or3 to *e performed in a contract.
!he :-( pro,ides a common frame0or3 or outine that can *e used toH
a/ 2escri*e the tota programme or pro+ect effort,
*/ Pan and schedue effort,
c/ 5stimate costs and *udgets,
d/ (upport net0or3 schedue construction,
e/ ;ssign responsi*iities and authori$e 0or3= and
f/ !rac3 time, cost, and performance.
5,er" pro+ect acti,it" that consumes resources is incuded in some 0or3 pac3age,
permitting progress on a particuar end item of the 0or3 *rea3do0n structure to *e
e,auated.
". 'antt (Bar- +hart1
#enr" L Gantt, one of the pioneers of the scientific management mo,ement, is
genera" credited 0ith initiating the concept of a cass of charts in 0hich the progress of
some set or se9uence of acti,ities or resources in the ,ertica dimension is potted against
time in the hori$onta dimension. Gantt chart has man" manageria appications such as
in the +o*-shop or *atch production en,ironment, it is used to schedue the use of
production machines, and ese0here for the panning and contro of 0or3 cre0s. In
pro+ect management, it is tas3s or acti,ities that must *e charted against time. !hree
things must *e esta*ished in the pro+ect panning process *efore Gantt charts can *e
createdH
a/ !he tas3s or acti,ities needed o compete the pro+ect.
LB
*/ !he precedence reationships of the tas3s .0hich tas3s must *e competed *efore
other specified tas3s can *egin/.
c/ !he e1pected duration of each tas3.
TNote1 i#e a numerical e$ample an" chart using e$ample &orke" out in the class
using the class notes on )TMU
. Net<ork .che&uling .ystem1
;*out 1LBK t0o simiar s"stems for net0or3-*ased pro+ect scheduing 0ere
de,ised the Programme )#aluation an" >e#ie& Techni8ue .,%RT/ 0as created *"
-oo$, ;en and #amiton .management consutants/ and Loc3heed ;ircraft %orporation
for the use in de,eopment of Poaris *aistic missies , and the 0ritical Path Metho"
.+,M/ 0as de,eoped *" 2uPont %ompan" for chemica pant construction. In the
su*se9uent "ears the features of each ha,e *een added to the other, *ut the terminoog"
P54! is sti used in aerospace and reated industr", and %PM is preferred in the
construction industr".
!he net0or3 can *e portra"ed using either of the t0o graphica techni9uesH
a/ !he ;cti,it"-)n-Node .;)N/ net0or3 diagram= and
*/ !he ;rro0 .;cti,it"-)n-;rro0/ Net0or3 diagram.
P54! !reatment of Ancertaint"H
; specia feature de,eoped 0ith P54! is treatment of acti,it" duration .and
therefore tota pro+ect duration/ as ,aria*es rather than constants. !o use this feature,
estimators are as3ed to pro,ide three estimates of the duration of an" acti,it" that might
,ar"H
a/ ;n optimistic time .t
a
/ that 0oud on" *e impro,ed upon once in 1>> attempts,
*/ ; most li&ely time .t
m
/ that 0oud occur most often if the acti,it" 0ere repeated
man" times .statistica", the mode/= and
c/ ; pessimistic time .t
*
/ that 0oud on" *e e1ceeded once in 1>> attempts.
!hen, the e%pected time .t
e
/ or mean ,aue in the *eta distri*ution can *e appro1imated *"
D
@
b m a
e
t t t
t
+ +

and, the e%pected length of 2ritical -ath .!

e
/ for the entire pro+ect is o*tained simp" *"
adding the e1pected times .t
e
/ for on" those acti,ities "ing on the critica path.
Moreo,er, the standard deviation

! of the tota pro+ect duration *ecomes the root

mean s*uare of the standard de,iations of acti,ities "ing aong the critica pathH

7
/
P54! cacuations norma" consider on" the ongest .critica/ path. If there is a second
near-critica path 0ith a duration cose to the critica one, ignoring it ma" ead to an
o,er" optimistic estimate of the pro*a*iit" of competion.
TNoteE ,or the graphical% "iagrammatic an" numerical e$amples to &rite in your
theory ans&ers% please refer to your class notes on )TMU
LD
Distinction /et<een ,%RT an& +,M Net<ork Analysis1
;though these techni9ues .P54! and %PM/ use the same principes and are
*ased on net0or3 ana"sis "et the" are different from each other in the foo0ing
respectsH
a- P54! is appropriate 0here time estimate is uncertain in the duration of acti,ities as
measured *" optimistic time, most i3e" time and pessimistic time, 0hereas %PM is
good 0hen time estimates are found 0ith certaint". %PM assumes that the duration of
e,er" acti,it" is constant and therefore e,er" acti,it" is critica or not.
/- P54! is concerned 0ith e,ents, 0hich are the *eginning or ending points of
operation, 0hie %PM is concerned 0ith acti,ities.
c- P54! is suita*e for non-repetiti,e pro+ects, 0hie %PM is designed for repetiti,e
pro+ects.
&- P54! can *e ana"$ed statistica", 0hereas %PM cannot.
e- P54! is not concerned 0ith the reationship *et0een time and cost, 0hereas %PM
esta*ishes a reationship *et0een time and cost 0hich is proportionate to time.
!he most important difference is that origina" the time estimates for the
acti,ities 0ere assumed to *e deterministic in %PM and pro*a*iistic in P54!. !oda",
P54! and %PM actua" comprise one techni9ue and the differences if an" are on"
historica. !herefore, these techni9ues are referred to as GPro+ect (cheduing8 techni9ues.
Managerial 2ses of ,%RT an& +,M1
P54! and %PM as Pro+ect (cheduing techni9ues has a 0ide arra" of appications in
manageria practice.
a- !he P54! and %PM techni9ues hep the management in proper" panning the
compicated pro+ects, controing 0or3ing pan, and aso 3eeping g the pan upto-date.
!hese are aso hepfu in searching the potentia spots and in ta3ing correcti,e measures.
/- !he net0or3 techni9ues pro,ide a num*er of chec3s and safeguards against going
astra" in de,eoping the pan for the pro+ect. !hus there are itte chances of o,er-sight of
certain acti,ities and e,ents.
c- !hese techni9ues hep the management in reaching the goa 0ith minimum time and
east cost and aso in forecasting the pro*a*e pro+ect duration and the associated cost.
d/ !he net0or3s cear" designate the responsi*iities of different super,isors. !he
super,isor of an acti,it" himsef 3no0s the time schedue precise" and aso the
super,isors of other acti,ities 0ith 0hom he has to co-operate.
e- !he fe1i*iit" of the net0or3 permits the management to ma3e the necessar"
aterations and impro,ements as and 0hen the" are needed. !hese aocations can *e
made during the depo"ment of the resources and re,ie0ing.
f- ;ppication of net0or3 techni9ues has resuted in *etter manageria contro, *etter
utii$ation of resources, impro,ed communication and progress reporting, and *etter
decision ma3ing.
g/ ;ppication of P54! and %PM techni9ues resuted in sa,ing of time 0hich direct"
resuts in sa,ing the cost. ;so, sa,ing in time or ear" competion of the pro+ect resuts
in earier returns of re,enue and introduction of the product or process ahead of the
competitors, resuting in increased profits.
LI
!hough the ist containing the areas of appication of P54! and %PM is ,er"
arge, these techni9ues are ,er" 0ide" used in the areas of
- *uiding construction,
- in administration for streamining the paper0or3, ma3ing ma+or administrati,e
changes, for ma3ing ong range pans, etc.,
- in manufacturing areas i3e design de,eopment, testing, pant a"out pans,
instaation acti,ities, etc.,
- maintenance panning,
- research and de,eopment,
- mar3eting and in,entor" management and panning, etc.
Depreciation1
No artices remain e,er ne0 and immorta. Most of the producti,e instruments
and artices such as *uiding, pant, machiner", e9uipments and so on *ecome o*soete
.outdated/ in course of time, osing their economic ,aue and producti,e efficienc"= and
such fa in the economic ,aue of assets is referred to as Gdepreciation8.
!he theor" of depreciation contends that the capita sun3 on an asset 0i *ecome
,aueess after some period of time. !his period of time id considered to *e the ife
time of the asset. !he ma+or aspects to *e ta3en into consideration in depreciation
cacuation areH
a/ !he first cost or initia cost of the asset.
*/ !he period of time of depreciation assessment since the time of purchase.
c/ !he action of the enterprise resuting in depreciation= and
d/ ;n" possi*e e1terna changes of norma and predicta*e imits, etc.
Types (Bin&s- an& +auses of DepreciationH
; common cassification of the t"pes of depreciation incudesH
1. Ph"sica 2epreciation= and
7. Functiona 2epreciation.
1. Ph"sica 2epreciation !he depreciation resuting in ph"sica impairment of asset is
3no0n as Gph"sica depreciation8. Ph"sica depreciation manifests itsef in such tangi*e
0a"s as the 0earing of partices of an asset. !he ma+or causes of ph"sica depreciation
areH
Ph"sica deca" or deterioration !here are certain items in a factor" such as
insuation materias, furniture, eectric ca*es, *uidings, chemicas, and ,esses,
etc., 0hich get deca" *ecause of cimate and atmospheric effect, 0ith the resut
,aue of these artices goes on reducing 0ith apse of time.
:ear and !ear %ontinuous use of machines causes the machine and artices to
0ear-a0a" and tear-out 0ith time. !he machines gradua" tend to go out of
ad+ustment not on" as a resut of use, and aso *ecause of temperature changes,
,i*ration impact, etc.
LK
;geing ;rtices e1posed to the atmosphere and 0eather conditions deca" in the
operating capacities or in their usefuness. !his aso contri*utes to the reduction
in the economic ,aue of the artices.
;ccident 2epreciation !he ne0" instaed machines 0ithout carefu
maintenance= the une1pected accidents resut in oss of ph"sica 0or3-efficienc"
due to hea," damages and aso oss if its economic ,aue and such depreciation is
caed as Gaccidenta depreciation8.
2eferred .-ad/ Maintenance and Negigence If the machines and artices are not
maintained according to the instruction issued= such as u*ricating, decar*onising,
etc., and aso negigence on the part of user of the machine ma" aso resut in
essening 0or3-efficienc" and depreciation of machines and assets. It aso resuts
in reduction of e1pected ife time of the asset and oss of economic ,aue.
7. Functiona 2epreciation !his is the resut of faiure of the machine or pant to
function proper"= caused *" the factors i3eH
Inade9uac" It means the capacit" of a machine *ecoming ess than 0hat is
re9uired. :here the e9uipments are *ecoming inade9uate for handing the oad
of ne0 products and increased demands. !hen these machines need to *e either
scrapped or repaced. (ometimes, e,en the heath" machines need to *e
dismanted and sod for a esser price than 0hat is rea" 0orth e1pected of it.
)*soescence or )utdatedness It is oss of ,aue of machine due to ne0
in,entions and ne0 products repacing the od ones atogether. In other 0ords,
the e1isting machines *ecome outdated and inadapta*e to the ne0 changes in
production techni9ues, use and to produce the ne0 products introduced into the
product-ine of the compan".
Lac3 of adapta*iit" the faiure of the e1isting machines to adapt to the ne0
method of production and use.
Metho&s of +omputing Depreciation1
!here are different depreciation methods appica*e on the *asis of the t"pe and
nature of the industr", pattern of profit earning, gro0th rate of the enterprise and out put,
etc. Ma+or methods of computing the depreciation of assets areH
#. .traight )ine Metho&H
!his method assumes that the oss of ,aue of machine is direct" proportiona to
its age. In this method the *oo3-,aue of the asset decreases inear" .a straight ine a0/
0ith time= *ecause same amount of depreciation charge is made each "ear. It means one
shoud deduct the scrap or sa,age ,aue .(/ from the origina ,aue and di,ide the
remaining ,aue *" the num*er of "ears of usefu ife .n/. !hen,
n
0 2
3
/ .

:here % origina cost

( - sa,age or (crap ,aue or residua ,aue
n the ser,icea*e ife or economic ife i.e., the num*er of "ears of usefu
LL
ife of the asset.
2 depreciation amount per "ear
!hus,
the depreciation in an" "ear Gt8 isH
n
0 2
3
t
/ .

depreciation fund .tota amount of depreciation accumuated/ at the end of "ear Gt8 isH
1
]
1

n
0 2
t 3
t f
and = the -oo3-Saue .the ,aue eft 0ith the machine/ at the end of the "ear Gt8 isH
1
]
1

n
0 2
t 2 3
t v
D. Re&ucing Balance Metho&H
!his method is aso caed as G2iminishing or 2ecining -aance Method8 or
GPercentage on -oo3-Saue Method8. In this method, depreciation ta3es pace at a fi1ed
rate on the *asis of Gnegati,e compound interest a08. )*,ious", the depreciation charge
is the argest in the first "ear and decreases in each succeeding "ears. #ence, under this
method, the *oo3-,aue of the machine goes on diminishing as its e1istence continues.
!hen=
the fi1ed percentage rate of depreciation on -oo3 SaueH
n
2
0
-
1
1
,
_

and= depreciation for an" "ear Gt8 isH
( )
1
1


t
t
- - 2 3
the depreciation fund at the end of "ear Gt8 isH
( ) [ ]
t
t f
- 2 3 1 1
the *oo3-,aue for the "ear Gt8 isH
( ) [ ] ( )
t t
t v
- 2 - 2 2 B 1 1 1
!here are t0o cases to *e considered 0hie cacuating depreciation *" reducing or
diminishing *aance methodH
a/ %onsidering not an" interest on depreciation fund accumuated= i.e., depreciation fund
is not in,ested on securities or deposited to earn interest. !he formuae used are as
gi,en a*o,e and the cacuations are direct.
*/ %onsidering the interest earned on depreciation fund. !he formua used here to
cacuate depreciation fund for the "ear Gt8 isH
1>>
( ) ( ) [ ]
t t
t f
- i
i -
2 -
3 +
+

1 1
0here= P fi1ed percentage rate, i.e.,
n
2
0
-
1
1
,
_

i - interest charged on depreciation fund.
6. .inking :un& Metho&H
!his method is aso 3no0n as the GInterest La0 Method8, or G;nnuit" or
%ompound Interest Method8. In this method, an identica sum is charged e,er" "ear as
depreciation. !he rate of depreciation 0i *e constant throughout the ife of the machine.
;t the end of the usefu ife of the machine or asset, the tota amount in depreciation pus
compound interest shoud *ecome e9ua to the origina cost of the fi1ed assets.
!he formuae to cacuate depreciation under this methodH
2epreciation for an" "ear Gt8 isH
( ) ( ) [ ] ( ) 1 Q, , Q, , t n 0 2 3
-
$
$
"
t
M
( )
( ) 1 1 +

n
i
0 2 i
2epreciation fund at the end of "ear Gt8 isH
( ) ( ) [ ] ( ) t n 0 2 3
"
$
$
"
t
Q, , Q, ,
and the -oo3 Saue at the "ear end Gt8 isH
ft t v
3 2 B
i.e., M % - ( ) ( ) [ ] ( ) t n 0 2
"
$
$
"
Q, , Q, ,
". .um of the KearsC Digits Metho&H
!his method is often caed as GFi1ed -ase 2iminishing 4ate Method8. In this
method, the depreciation 0i *e greater initia" and it 0i go on decreasing gradua" in
su*se9uent "ears of usefu" ife of the asset. !herefore, 0hie cacuating the
depreciation, the net amount .i.e., the tota depreciation fund accumuated during the ife
time is e9ua to the tota first cost minus scrap or sa,age ,aue/ is spread o,er the 0hoe
ife of the asset in a decreasing proportion. !he credit of de,eoping and ea*orating this
method goes to :.M.%oe in simiarit" 0ith 2iminishing -aance Method.
-" foo0ing this method, if Gn8 is the estimated ife of the asset, the rate of
depreciation is cacuated for each period as a Gfraction8 in 0hich denominator is a0a"s
the sum of the series 1, 7, <, @, PPPt,PPP..n-1, n and the digits representing a the
"ears from the first "ear of ife to the ast "ear of the ife .eg., if a proposa has a ife of @
"ears , i.e., n M @ "ears, then the sum of the "ears8 digits is 1N 7 N < N @ M 1>/= and the
numerator of the fraction is the digit gi,ing the num*er of the "ears e1pressed in the
1>1
re,erse order, starting from the ast "ear to the first "ear.eg., 0hen n M @= it *egins from
the "ear @, <, 7, 1/. Let us sa",
% M First cost of the asset,
( M (crap or (a,age ,aue of the asset,
N M usefu ife .economic ife/ of the asset.
!hen,
!ota 2epreciation M
( ) 0 2
:here, the denominator of the fraction isH
( )
( )
7
1
1 .......... @ < 7 1
+
+ + + + +
n n
n n
and the numerator of the fraction for depreciation at the end of a particuar "ear Gt8 isH
t n +1
hence, 2epreciation for a particuar "ear Gt8 isH
( )
( ) 0 2
n n
3
t

1
1
1
1
]
1

+
+

7
1
t - 1 n

and the 2epreciation fund accumuated after the "ear Gt8 isH
( )
( ) 0 2
n n
3
t f

1
1
1
1
]
1

,
_

7
1
B
7
t
- n t

and the -oo3 Saue at the en of the "ear Gt8 isH
t f t v
3 2 B
Depletion1
!he cacuation of depreciation of an asset that has a ,aue .i.e., depreciation
fund/ that can *e reco,ered *" a repacement. 2epetion is simiar to depreciation=
ho0e,er, the depetion is ,er" much appica*e in cacuations reated to natura
resources, 0hich cannot *e repurchased or repaced 0ith ne0 one i3e machines, pant,
*uiding, etc. !hus, the depetion method is appica*e to natura deposits remo,ed from
mines, 0es, 9uarries, forests, and so on. !here are t0o methods of depetionH
a/ Factor or %ost or Anit 2epetion= and
*/ Percentage 2epetion.
Factor 2epetion is *ased on the e,e of acti,it" or usage, not time, as in the case of
depreciation. !he depetion factor, therefore, for the "ear Gt8 isH

1>7
2epetion .2
t/ M
Initia In,estment Z 4esource %apacit"
Euestions1
1. :hat 0oud *e some of the difficuties faced during the actua proposa
preparation process, and ho0 can the" *e minimi$edJ
7. :rite a note onH
a/ Miestone schedue
*/ :or3 *rea3do0n structure
c/ (tatement of :or3 .():/
<. :hat are the ma+or characteristics of a pro+ectJ 51pain *rief" ,arious aspect
.steps&phases/ in Pro+ect Proposa Process.
@. 51pain Gantt .-ar/ %hart 0ith a suita*e e1ampe.
B. :rite a note on P54! and %PM.
D. (eect a pro+ect of "our choice and esta*ish tas3s, times, and precedence
reationships and dra0 .a/ a *ar chart, .*/ a net0or3 diagram schedue for it.
I. For the pro+ect outined in the foo0ing ta*e, prepare .a/ a *ar chart, .*/ an
arro0 net0or3 diagram, .c/ a %irce .;)N/ net0or3 diagram, and .d/ :hat and
ho0 ong is the critica pathJ
-----------------------------------------------------------------
!as3 Foo0s !as3.s/ :ee3s 2uration
-----------------------------------------------------------------
; (tart <.>
- (tart I.>
% ; 7.>
2 - I.>
5 -, % B.>
F 2, 5 1.>
-----------------------------------------------------------------
K. For the pro+ect outined in the foo0ing ta*e, prepare .a/ a *ar chart, .*/ an
arro0 net0or3 diagram, .c/ a %irce .;)N/ net0or3 diagram, and .d/ :hat and
ho0 ong is the critica pathJ
-----------------------------------------------------------------------------------
!as3 Foo0s !as3.s/ :ee3s 2uration Manning Le,e
-----------------------------------------------------------------------------------
1><
; (tart D.> <
- (tart B.> @
% (tart B.>
<
2 ; <.> 7
5 ;, - D.> B
F 2, 5, % 1.> 7
----------------------------------------------------------------------------------
L. !as3s R, E, and [ must *e competed in series to compete a pro+ect. !he three
time estimates .a, m, and */ for each tas3 in da"s are RH <>, @B, and DD da"s=
EH 7@, @7, and D> da"s= and [H 7D, B>, and DK da"s. For each tas3, cacuate .a/
the e1pected time t
e
and .// the standard de,iation

. :hat is the .c/ e1pected

time !
e
and .&/ the standard de,iation

! for the compete pro+ectJ

1>. If a pro+ect has an e1pected time of competion !
e
of @B 0ee3s 0ith a standard
de,iation

! of I 0ee3s, 0hat is the pro*a*iit" of competing it .a/ 0ithin one

"ear .B7 0ee3s/J .// :ithin <K 0ee3sJ
11. !as3s ;, -, and % must *e competed in series to compete a pro+ect. !he three
time estimates .a, m, and */ for each tas3 in da"s are ;H K, 11, and 1@ da"s= -H I,
1>, and 1L da"s= and %H 1>, 1L, and 77 da"s. For each tas3, cacuate .a/ the
e1pected time t
e
and .// the standard de,iation

. :hat is the .c/ e1pected time

!
e
and .&/ the standard de,iation

! for the compete pro+ectJ :hat is the

pro*a*iit" of competing the pro+ect in .e/ @> 0ee3sJ .f/ @D 0ee3sJ
17. 2escri*e 0hat t"pes of products or ser,ices each of the foo0ing contracts 0oud
*e appropriate for, and gi,e an e1ampe for eachH .a/ firm fi1ed price= .// cost
pus fi1ed-fee= and .c/ time and materias.
1<. :hat are the ma+or t"pes of contractsJ 51pain.
1@. 2efine 2epreciation. 51pain ,arious method of computing depreciation.
1B. 51pain the t"pes and causes of depreciation.
1D. ; *oier 0as purchased for 4s.@B,>>> on 1
st
6an 1L@D, the erection and instaation
0or3 cost 4s.I>>>. !he *oier 0as repaced *" a ne0 one on <1
st
2ecem*er
1LDB. If the scrap ,aue 0as estimated as 4s.1B,>>>, 0hat shoud *e the rate of
depreciation and depreciation fund on 1B
th
6une 1LBBJ If after 17 "ears of
running, same *oier is repaced after repair and the repacement cost is 4s.1B>>,
then 0hat 0i *e the ne0 rate of depreciationJ
1>@
1I. !he particuars a,aia*e for the purchase of an eectrica machine in,oice cost
4s.@>,>>>, transportation charges 4s.B>>, instaation cost 4s.1>>>, accessories
4s.7B>>, estimated sa,age ,aue 4s.B>>> and estimated ife 7> "ears. %acuate
a/ the amount to *e reco,ered *" the use of machine
*/ the annua depreciation cost
c/ the *oo3-,aue at the end of 1> "ears of usefu ife.
1K. ; machine 0as purchased for 4s.<7,>>>. Its ife 0as estimated as 1> "ears and
the scrap ,aue as 4s.K>>>. Asing the reducing *aance method, cacuate the
depreciation rate in percentage and estimate the depreciation fund and *oo3 ,aue
at the end of t0o "ears of usefu ife.
1L. %onsidering the pro*em gi,en in 9uestion No. 1K, if the machine is disposed for
4s. D>>> at the end of I "ears
a/ :hat 0as the estimated e9ui,aent annua cost of capita reco,er" 0ith return
at 1>Q rate of interestJ
*/ :hat 0as the sun3-cost that 0as caused if sin3ing fund depreciation 0as
foo0edJ
7>. ; machine 0as purchased for 4s. @>,>>>. !he estimated ife of the machine is 1B
"ears and scrap-,aue 4s.1B,>>>. If the rate of interest of the depreciation fund is
charged at BQ = cacuate the rate of depreciation *" sin3ing fund method and
*oo3 ,aue and the depreciation accumuated after K "ears of usefu ife.
71. ; machine 0as purchased for 4s.1>,>>> and it has depreciated in its ,aue *"
4s.7<K1 at the end of the second "ear of its usefu ife= foo0ing the sum of the
"ears8 digits method, cacuate the ife of the machine assuming $ero sa,age
,aue.

Te7t Books1
1. Managing 5ngineering and !echnoog", !hird 5dition,
- 2anie L. -a*coc3, Luc" % Morse.
7. Management in 5ngineering Principes and Practice, (econd 5dition, - Gai
Freeman -e, 6ames -a30i= Prentice #a of India P,t. Ltd., Ne0 2ehi 11>>>1.
<. 5ssentias of Management, Fifth 5dition, - #arod ?oont$, #ein$ :eihrich= !ata
MacGra0 #i 5dition, Ne0 2ehi.
@. 5ngineering 5conomics, @
th
5dition, - 6ames L. 4iggs, 2a,id 2. -ed0orth,
(a*ah A. 4andha0a= !ata McGra0 #i 5dition.
B. Industria and -usiness Management, - Martand ! !esang= (uthan %hand C
%ompan" Ltd., Ne0 2ehi 11>>BB.
References1
I. Fundamentas of Financia Management, - Prasanna %handra= !ata McGra0
#i Pu*ishing %ompan" Ltd, Ne0 2ehi.
K. )peration 4esearch, - (. 2. (harma.
L. )peration 4esearch ;n Introduction, - #amd" ; !aha= Pearson Prentice #a.
1>B
1>. )rgani$ationa -eha,iour, - (tephen P 4o**ins= Prentice #a, India.
11. )rgani$ationa -eha,iour, - Fred Luthans= McGra0 #i Internationa 5dition.
17. Financia Management !e1t, Pro*ems C %ases, - M E ?han, P ? 6ain=
!ata McGra0 #i.
FFF
1>D