2.

FUNCTIONS OF
MANAGEMENT
1
2.1 INTRODUCTION
Managers should carry out their activities,
which consist of a number of functions, in a
systematic way to overcome challenges that
arise from different perspectives.

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MANAGEMENT
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2. FUNCTIONS OF
MANAGEMENT
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Fig. 2.1 Sources of Challenges
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MANAGEMENT
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Inside challenges are those managers face with
in their industry/company:
Implement projects/programs;
Manage people, technologies, and resources to
add value;
Develop new product features to enhance
company competitiveness;
Define, control and reduce costs to improve
profitability;
Initiate technology projects to sustain company
position.

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MANAGEMENT
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Outside challenges may include:
Keep abreast of emerging technologies and apply
them to strengthen companys core
competencies;
Apply web-based tools to enhance operations
and foster customer relations;
Identify best practices to improve engineering
operations and surpass them;
Create supply chain networks to derive speed,
quality and cost benefits.
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Present challenges that managers should
worry about:
Do things right to keep company operating
smoothly;
Monitor non-financial and financial performance;
Control costs and eliminate wastes to attain
profitability in the short-run.

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MANAGEMENT
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Future challenges:
Seek e-transformation opportunities to create
company profitability in the long-run;
Introduce new generation products timely;
Create vision for the future related to
technologies;
Define what should be done for technology-based
success in the future.

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MANAGEMENT
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Local challenges:
Utilize resources to best achieve companys
objectives;
Take ethical and lawful actions while taking into
account local conditions;
Maintain and nurture local professional networks;
Share lessons gained with people at other
company sites.

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MANAGEMENT
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Global challenges:
Apply location-based resources to realize global
economies of scale and scope for achieving cost
and technology advantages;
Develop global professional networks;
Acquire a global mindset;
Exercise leadership roles in international settings.

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MANAGEMENT
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2.2 PLANNING
Planning is the most basic of all the
management functions.
Planning is thinking before doing.
Planning is the work done to predetermine a
course of action, in order to provide focus and
direction for enhancing the efficiency and
effectiveness of the company.
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Planning defines who, how, where, when and
using which resources to do the what work.

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Strategic planning is to define future activities
which are worth doing by the unit/company to
assure that the company applies its recourses
(skilled manpower, time, money, physical
resources, equipment, facilities, and business
relationships) effectively to achieve its short-
term and long-term goals.

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MANAGEMENT
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The following questions should be addressed by the
strategic planning
What are the companys vision, mission and value system?
What specific goals (profitability, market share, sales,
technology leadership position, global penetration) to
accomplish by when, with what investment and which
technology?
Which new/improved product streams to offer by when
(considering product life cycle)?
What core technologies (design, production, distribution,
service) to maintain, develop, acquire and/or apply?
Which business networks/partnerships to create (suppliers,
co-marketing, production, logistics, service)?
With which performance metrics to monitor corporate
progress?
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MISSION AND VISION
Mission
Why do we exist?
Whom are we serving?
What do we do to serve them?
Examples
Dells mission is to be the most
successful computer company in the
world at delivering the best customer
experience in markets we serve. In
doing so, Dell will meet consumer
expectations of highest quality;
leading technology; competitive
pricing; individual and company
accountability; best-in-class service
and support; flexible customization
capability; superior corporate
citizenship; financial stability.
Vision - Company Aspiration
Market capital
Business standing
Ranking in industrial sector
Market Share
Others.
Examples
General Motors vision is to be the world
leader in transportation products and related
services.
PepsiCos responsibility is to continually
improve all aspects of the world in which we
operate environment, social, economic
creating a better tomorrow than today.
Dells vision is to create a company culture
where environmental excellence is second
nature.

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Sample
corporate
values
Innovation
Honest
y
quality
Social responsibility
Continuous
improvement
Stabilit
y
Collaboration
Accountability
Trust and openness
Etc
Fig. 2.2 Sample
Values
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MANAGEMENT
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Tools for Strategic Planning
Market research
SWOT analysis
Sensitivity analysis (what-if, scenarios)
External benchmarking
Technology forecasting
Product life cycle analysis
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MANAGEMENT
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Operational planning is to define
tasks/events to be accomplished with the least
amount of resources within the shortest time,
to assure that the company applies its
resources efficiently to achieve its short-term
and long-term goals.

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MANAGEMENT
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Like strategic planning, operational planning
has questions that have to be addressed:
What is the most efficient way of accomplishing a
project/task with known objectives (doing things
right) ?
How to link up with the best suppliers in the
marketplace for parts needed?
What are the operational guidelines for
performing specific work?
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MANAGEMENT
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Tools for Operational Planning
Project management including action planning
Design, test and analysis procedures
Operational guidelines

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MANAGEMENT
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Objectives of planning
The important objectives of planning are:
Planning helps in effective forecasting
Planning provides certainty in the activities
Planning provides performance standards
Planning gives a specific direction to the organization
Helps the organization to tune with the environment
It provides economy in the management
It is very much helpful in preparing the budgets
The need for plan arises from constant change
Planning is directed towards efficiency

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MANAGEMENT
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Steps in planning
The details of planning may differ depending up on the specific
requirements of a particular business. However, in all types of
business planning process involves certain necessary steps
summarized as follows:
Determination of objectives
Forecasting to assist planning
Decide the planning period
Collection, classification and processing of information
Deciding alternative courses of action
Evaluation of alternatives
Selection of best plan
Subsidiary plans to aid master plan
Controlling plans
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Advantages of planning
Maximum utilization of resources
Minimization of unproductive work
Reduces uncertainty
Basis for managerial action
Avoids bottlenecks in production
Improves motivation
Facilitates effective delegation of authority
Gives competitive edges to the enterprise

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MANAGEMENT
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Limitations of planning
Though planning facilitates various planning
functions and brings orderliness, stability and
continuity of operation, it suffers from certain
limitations:
Limitations of forecast
Costly affair
Influence of external factors
Resistance to change/Rigidity and inflexibility
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MANAGEMENT
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Elements/components of planning or types
of planning
Goals-any achievement of an end point
(quantitative)
Objectives-ends towards which activities of a
company are directed (derived from goals)
Policies-verbal, written or implied overall guide setting
up boundaries that supply the general limits and directions
in which managerial actions will take place. Not to employ
any person over 60 years of age.
Rules- specific action to be taken or not taken in a given
situation. No smoking.
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MANAGEMENT
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Elements/components of planning or types
of planning
Procedures- How a particular activity is carried out.
Steps that must be followed after the receipt of an
order till dispatch of products to customers.
Programs-precise plan which lays down the
operations to be carried out to accomplish a given work.
Schedules- time sequence of the work to be done.
Budget-an appraisal of expected expenses against
anticipated income for a future period.

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2.3 FORECASTING
Forecasting is estimating and predicting future
conditions and events. e.g.,
technology,
products,
marketplace,
customers,
competition and economy,
global supply chains,
manpower,
capital and
facilities.
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MANAGEMENT
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Definitions of forecasting
i. Forecasting is defined as the estimation of future activities
(type, quantity and quality of future work). This estimates
the basis to plan the future requirements for men,
machines, materials, time, money, etc.
ii. Forecasting is a systematic attempt to probe the future by
inference from known facts. The purpose is to provide
management with information on which it can base
planning decisions.
iii. Forecasts are predictions or estimates of change, if any in
characteristic economic phenomena which may affect ones
business plans.
iv. Business forecasting refers to the statistical analysis of the
past and current movements in the given time series so as
to obtain clues about the future pattern of the movements.
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MANAGEMENT
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Forecasting may be done in connection with
sales, production or any other type of business
activities.
Forecasting begins with the sales forecast and
is followed by production forecast and forecast
for probable costs, finance, purchases, profit
or loss etc.

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MANAGEMENT
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While making the forecast the following points
should be taken in to consideration.
invention of new materials,
fashion changes,
policies of competitors,
unseasonable weather,
threat of war and the general economic situation
expected in the country and foreign markets.


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MANAGEMENT
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Purposes of Forecasting
Set bounds for possibilities to help focus on
specifics
Form basis for setting objectives
Promote inter-group coordination
Provide basis for resources allocation
(manpower, budget, facilities and business
relations - alliances, joint ventures)
Induce innovation through forecasted needs

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MANAGEMENT
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Steps to Forecast
Identify critical success factors for achieving
company goals
Determine forecasting horizon (short,
intermediate and long terms)
Select forecasting techniques (e.g., trend
analysis, statistics, intuition, judgment)
Predict future states and their probability of
occurrence
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MANAGEMENT
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2.4 ORGANIZING
Organizing involves determining activities needed
to fulfill the objectives, grouping these activities
into manageable units or departments and
assigning such groups of activities to managers.
Organizing provides a framework of management
or a mechanism for positive, integrated and
cooperative action by many people, in a joint effort
to implement plan.
Planning decides what management wants to do,
while organizing provides an effective machine for
achieving the plan or objectives.

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MANAGEMENT
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Thus organizing involves identification and
grouping the activities to be performed and
dividing them among the individuals and
creating authority and responsibility,
relationship among them.
Organization, in fact, is a backbone of
management, which establishes relationship
between people, work and resources.
It coordinates these factors in such a way that
maximum output is obtained effectively and
efficiently with minimum total cost.

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MANAGEMENT
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Steps in organizing
The process of organizing involves the following
steps:
Determination of activities
Division of activities
Fitting individuals in to jobs
Developing relationships in terms of authorities
and responsibilities

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MANAGEMENT
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2.5 STAFFING
Staffing is filling the positions needed in the
organization structure by appointing competent
and qualified persons for the jobs.
Staffing involves:
Recruitment,
Selection
Placement
Training
Personal development
Developing system for remuneration

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MANAGEMENT
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Staffing is important since people differ in their
intelligence, knowledge, skills, experience,
physical condition, age and attitudes.
Management must understand in addition to
the technical and operational competence, the
sociological and psychological structure of the
work force. This will enable them to select right
man for the right job and train and motivate
them to increase the organizational
effectiveness and productivity.
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MANAGEMENT
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2.6 DIRECTING
Directing consists of motivating, guiding and
supervising the subordinates in their activities.
Only giving orders is not directing.
This is an important managerial function because
the managerial decisions are put in to action
through effective directing.
Actual activity starts only when manager issues
directions to his subordinates so as to what is to
be done and how it should be done.
The person who directs must have dynamic
leadership.
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MANAGEMENT
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Steps in directing:
Issue of orders and instructions
Guidance and training
Supervision-(work as per plan, subordinates as
directed)
Directions given should be definite, clear cut,
understandable, communicable and practicable.
A manager can plan and organize, but no tangible
results can be obtained until he implements the
proposed course of action.
This needs directing or actuating which literally
means moving in to action.
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MANAGEMENT
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2.7 MOTIVATING
Motivating means inspiring people to intensify their
desire and willingness to perform their duties effectively
and cooperate for the achievement of common
objectives of the business.
It is the mental preparation of an individual to do a
specific job.
Motivation is the act of stimulating someone or oneself
to get a desired course of action, to push the right button
to get desired action.
The concept of motivation is mainly psychological. It
relates to those forces operating within the individual
employee or subordinate which imputes him to act or not
active in certain ways.

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MANAGEMENT
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Fundamentals of motivation
1. A person wants to exist and survive and for
this he needs basic necessities of life.
2. The desire to achieve a goal, for satisfaction
or bliss. Basically people are motivated to put
in sincere efforts if they are assured of
fulfilling their needs, such as psychological
needs, social needs, security needs, ego
(needs for self respect) etc.

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MANAGEMENT
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Classifications of motivation
Internal motivation-interests, emotional
attachments, burning desires, fighting spirit for
some noble cause, ...
External motivation-attractive salary, bonus,
praise, incentive, punishment, fear of loss of
job,

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Importance of motivation
Arise desire to work.
Appropriate use of factors of production.
Reduction in labor turnover.
Increase in production and productivity.
Basis of cooperation-good employer-employee
relationship.
Thus without motivation the workers will not
discharge their duties efficiently. Effective
motivation is secrete of improved quantity and
quality.
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MANAGEMENT
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2.8 CONTROLLING
Controlling can be defined as:
Setting standards, measuring actual
performance, and taking corrective action. It
is more than mere evaluation, appraisal or
correction.
Verifying whether everything occurs in
conformity with the plan adopted, the
instructions issued and the principles
established.
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MANAGEMENT
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Necessity of controlling
To ensure that every activity is carried out
according to the plan and directions.
Control enables the manager to keep a check
and coordinating the activities of his
subordinates so as to meet the objectives of
the company, economically and effectively.

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MANAGEMENT
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Essential steps in controlling procedure
1. Setting standards. (output, quality, cost,
production targets, time standards, )
2. Checking and reporting of performance.
3. Taking corrective action.

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MANAGEMENT
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Types of control
Physical control. (quality and quantity)
Financial control. (cost per unit of production,
cost of material, labor, indirect expenses)
Budgetary control. Physical and financial
standards for future are determined and
results are compared against the pre-
determined standards.
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MANAGEMENT
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2.9 COORDINATING
Coordination is an ongoing process whereby
a manager develops an integrated, orderly
and synchronized pattern of group effort
among his subordinates and tries to attain
unity of effort in the pursuit of a common
purpose.
Coordination deals with the task of blending
efforts in order to ensure successful
attainment of an objective. It is accomplished
by means of planning, organizing, actuating
and controlling.

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MANAGEMENT
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Need for coordination by management arises
because of:
Numerous persons at work.
Subdivisions and complexity of work.
Delegation of responsibility and authority.
Chances of difference between executives and
specialists.
Human nature and their problems.
Growth in size of organization.
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Tools of coordination
Clear cut objectives.
Clear cut authority and responsibility of every
subordinate.
Effective communication.
Good human relationship.
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Types of coordination
Internal coordination- (departments, branches,
sections, )
External coordination- (customers, suppliers,
society, government, )
Vertical coordination- (top to bottom or bottom to
top)
Horizontal coordination-(managements at the
same level-purchase, sales, accountant, finance,
)

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2.10 COMMUNICATING
Communication is a process by which
instructions, ideas, thoughts or information are
transmitted, received and understood, by the
persons working in an organization.
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MANAGEMENT
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Process of effective communication
For every communication, at least two persons
are required i.e. a sender and a receiver.
The various steps involved are shown below.
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MANAGEMENT
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Creating idea
Encoding
Transmission
Receiving Decoding
Action
Feedback
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Methods of communication
Verbal or written
Formal or informal
Downward, upward or horizontal
communication

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MANAGEMENT
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Purposes of formal communication

Purposes of
formal
communication
Downward
-instructions
-rationale
-policies
-feedback
-motivation
Upward
-feedback
-suggestions
-requests
-grieviences
Lateral
-information
-coordination
-problem
solving
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MANAGEMENT
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Essentials of communication
For effective communication the following are
important points:
It must be clear in purpose and intention.
It has to be participatory.
It must be simple and the language used has to
be understandable and specific.
It has to attach importance to action rather than
words.
There should be cordial employer-employee
relations.
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MANAGEMENT
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The importance of effective communication
in management is described below.
Smooth and unrestricted running of the
enterprise.
Quick decision and implementation.
Proper planning and coordination.
Maximum productivity with minimum cost.
Morale building and democratic management.

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MANAGEMENT
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DECISION MAKING
Decision-making, along with leadership and
communication is one of the top three attributes of a
successful manager needs.
It is a direct result of thinking and you need to be able
to think until it hurts.
Decision-making is directed to reaching a
goal/objective. It is about the how, what, why, when
(and where) of a course of action and of how to
overcome obstacles and to solve problems.
Decision-making is what turns thought into action: it
implies change and requires a decision to be made
against a background of uncertainty and risk.
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MANAGEMENT
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Decision-making skills
You need to be able to choose the action or course of
action that is the best for you/your organization to meet
its objective(s).
It is important to be able to project ahead, to take the
expected and unexpected into account, to have
contingency plans in case events intrude in such a way
as will turn a good decision into a bad one.
There are usually several different decisions that can be
taken and pressure to decide.
Fear of failure must not serve to make you risk-averse;
rather it should push you harder to think until it hurts.
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The effective decision has these six
elements:
1. Defining the objective
2. Gathering sufficient information
3. Identifying the feasible options
4. Evaluating those options
5. Making the decision (choosing an option)
6. Testing its implementation: by feel, by
measurement and by assessment.

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Characteristics of decision making
It is a continuous process.
The question of decision making comes in to
picture only when there are alternatives.
Decision making is always purposive.
It is an intellectual process supported by sound
reasoning and judgment.
Decision making is all pervasive in that all levels
of management take decisions though the impact
and scope of decisions vary.