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NATURE OF MANAGEMENT
Basic Concepts of Management
• Elements Of Management
• Levels Of Management & Their Respective Functions. Management
• External Environment
• The Social Responsibility of Manager.
• Professionalism in Management.
Origin of the word Management
Manager- Italian word- maneggiare
Mesnagement (later menagement )- French word
Additional Key Concepts
Managers are the people responsible for supervising the use of an organization‘s
resources to meet its goals.
Resources are organizational assets and include:
• People,
• Machinery,
• Raw materials,
• Information, skills,
• Financial capital.
DEFINITION OF MANAGEMENT
Henry Fayol says, ―To manage is to forecast and plan, to organise, to direct, to
co-ordinate and to control.‖
F. W. Tailor, ―Management is an art of knowing what you want to do and then
seeing that it is done in the best and the cheapest way.‖
Management
Management is a process of working with and through others to achieve
organizational objectives in a changing environment. Central to this process is the
effective and efficient use of limited resources.
Efficiency versus Effectiveness
ELEMENTS OF MANAGEMENT
Man
Machine
Money
Material
Method
IMPORTANCE OF MANAGEMENT
Effective utilization of resources
Development of resources
Stability in the society
Incorporating innovations
Integrating interest groups
FEATURES OF MANAGEMENT
• Management is Universal: applicable in all the areas.
• Management has an existence of objectives
• Management is a unifying area: reconciles individual goal with organizational
goal.
• Management is a social process: it is by the people, through and for the people.
• Management is organised.
• Management is intangible:is an unseen or invisible force.
• Management is situational:different ways of doing things.
• Management is an art as well as science:contains theoretical and practical
knowledge.
NATURE OF MANAGEMENT PROCESS
-Levels of Management
KINDS OF MANAGERS BY LEVEL
Top management: consists of board of directors and chief executives. Broadly it
performs the following functions:
To analyze and interpret changes in management
To establish long term corporate plans
To formulate and approve master budget and departmental budgets.
To design broad organization structure
Intermediate management: comprises of departmental and divisional heads e.g.
marketing manager. Its broad functions include:
Accountable for the performance of his division
He coordinates and controls the activities of all personnel working in different
branches or sections of his particular department.
Lower level management: consists of supervisors,foremen,sales officers. Its
functions include:
Planning day to day production within the goals laid down
To assign jobs to workers
Ordering an instructing
Advising and assisting workers by explaining work procedures.
FUNDAMENTAL MANAGEMENT SKILLS
Technical
– Skills necessary to accomplish or understand the specific kind of work
being done in an organization.
Interpersonal
– The ability to communicate with, understand, and motivate both individuals
and groups.
Conceptual
– The manager‘s ability to think in the abstract and to see the ―big picture.‖
To perceive how all the parts fit together.
Managerial Roles
Described by Mintzberg.
– A role is a set of specific tasks a person performs because of the position
they hold.
Roles are directed inside as well as outside the organization.
There are 3 broad role categories:
1. Interpersonal
2. Informational
3. Decisional
Interpersonal Roles
Roles managers assume to coordinate and interact with employees and provide
direction to the organization.
– Figurehead role: symbolizes the organization and what it is trying to
achieve.
– Leader role: train, counsel, mentor and encourage high employee
performance.
– Liaison role: link and coordinate people inside and outside the
organization to help achieve goals.
Informational Roles
Associated with the tasks needed to obtain and transmit information for
management of the organization.
– Monitor role: analyzes information from both the internal and external
environment.
– Disseminator role: manager transmits information to influence attitudes
and behavior of employees.
– Spokesperson role: use of information to positively influence the way
people in and out of the organization respond to it.
Decisional Roles
Associated with the methods managers use to plan strategy and utilize resources
to achieve goals.
– Entrepreneur role: deciding upon new projects or programs to initiate and
invest.
– Disturbance handler role: assume responsibility for handling an
unexpected event or crisis.
– Resource allocator role: assign resources between functions and
divisions, set budgets of lower managers.
– Negotiator role: seeks to negotiate solutions between other managers,
unions, customers, or shareholders.
SOCIAL RESPONSIBILITY OF MANAGER
Definition-
―Social responsibilities refer to the businessman‘s decisions and actions taken for
reasons atleast partially beyond the firm‘s direct economic or technical interest.‖
Impact of the decision of business on the society
SHAREHOLDERS
EMPLOYEES
CUSTOMERS
CREDITORS AND SUPPLIERS
SOCIETY
GOVERNMENT
SHAREHOLDERS:
• Interest
• Use of the capital
• Good returns on capital (dividend and increase in stock value)
• Information
EMPLOYEES:
• Treat workers as the main pillars of the organization
• Promote cooperation between employees and employers
• Harmonious and healthy working atmosphere
• Provide fair wages
• Other benefits to motivate them
CUSTOMERS:
• Charging reasonable prices
• Standardized and quality product
• Easy availability of goods and services
• Abstaining from unethical practices
• Refraining from deceiving customers
SOCIETY:
• Using its technical expertise to solve local problems
• Setting socially desirable standards of living
• Providing basic amenities, healthcare and education facility
• Establishing development programs for the benefit of economically weaker
sections of the society
• Playing an important role in civic affairs
GOVERNMENT:
• Be law-abiding
• Pay taxes and other dues fully, timely and honestly
• Not bribe government servants
• Not try to use political influence in its favour
• McDonald $15-20 million for Ronald McDonald House Charity
• Tata group
• Colgate - educating kids
• HUL - CRY
• IBM- donated computers
PROFESSION
Profession means an occupation by which the intelligence and the efforts for the
purpose of providing skilled service or advice to others for an agreed amount.
MANAGEMENT – A PROFESSION
1. Existence of organized and systematic knowledge
2. Formalized methods of acquiring training
3. Existence of professional association
4. Existence of ethical code of conduct
5. Service motive
Foundation of A Profession
Experience
Education
Training
FREDERICK WINSLOW TAYLOR
―Father of Modern Management‖
In 1895- proposed a Piece Rate System:
– Observe & Analyze – set the ―standard‖ for job
(use Time and Motion studies)
– Pay workers for meeting/exceeding standard
– Pay individual worker – not everyone, or group/department, or the ―job‖ =
pay according to individual value to business
What Adam Smith had done for markets, Taylor does for the firm – place wealth
creation squarely on the individual worker who is managed, rewarded for effort.
Biography: Wealthy Philadelphia Quaker family. Worked in hydraulics factory as
laborer/foreman/chief engineer
At 25 earned college degree in engineering
At 35- consultant: introduced functional foreman, production planning, differential
pay= cut costs/increased production)
1905 – wrote Shop Management
1909-14: Lecturer at Harvard
Management consultant – US Navy and Army
1911- Wrote Scientific Management
―Soldiering‖ – people don‘t always try/work hard. WHY?
If we work hard and complete the job – no more work next day; fewer workers
needed!
SO what is the amount of time needed to do the job?
How should it be performed – ―One Best Way‖
What is the standard?
F.W. TAYLOR AND SCIENTIFIC MANAGEMENT
Scientific Management
The systematic study of the relationships between people and tasks for the purpose of
redesigning the work process to increase efficiency.
Four Principles of Scientific Management
1) Study the way workers perform their tasks, gather all the informal job knowledge that
workers possess and experiment with ways of improving how tasks are performed
• Time-and-motion study
2) Codify the new methods of performing tasks into written rules and standard operating
procedures
3) Carefully select workers who possess skills and abilities that match the needs of the
task, and train them to perform the task according to the established rules and
procedures
4) Establish a fair or acceptable level of performance for a task, and then develop a pay
system that provides a reward for performance above the acceptable level
Problems with Scientific Management
Managers frequently implemented only the increased output side of Taylor‘s
plan.
– Workers did not share in the increased output.
Specialized jobs became very boring, dull.
– Workers ended up distrusting the Scientific Management method.
Workers could purposely ―under-perform.‖
– Management responded with increased use of machines and conveyors
belts.
FAYOL’S PRINCIPLES OF MANAGEMENT
Division of Labor: allows for job specialization.
– Jobs can have too much specialization leading to poor quality and worker
dissatisfaction.
Authority and Responsibility - Both formal and informal authority resulting from
special expertise.
Unity of Command - Employees should have only one boss.
Line of Authority - A clear chain of command from top to bottom of the firm.
Centralization - The degree to which authority rests at the top of the organization.
Unity of Direction - A single plan of action to guide the organization.
Equity - The provision of justice and the fair and impartial treatment of all
employees.
Order - The arrangement of employees where they will be of the most value to
the organization and to provide career opportunities.
Initiative - The fostering (development) of creativity and innovation by
encouraging employees to act on their own.
Discipline - Obedient, applied, respectful employees are necessary for the
organization to function.
Remuneration of Personnel - An equitable uniform payment system that
motivates contributes to organizational success.
Stability of Tenure of Personnel - Long-term employment is important for the
development of skills that improve the organization‘s performance.
Subordination of Individual Interest to the Common Interest - The interest of the
organization takes precedence over that of the individual employee.
Esprit de corps - Comradeship (Company, friendship), shared enthusiasm foster
(shared) devotion to the common cause (organization).
THE HAWTHORNE STUDIES: NEW DIRECTION
The ―Hawthorne Experiments‖ were a series of studies into worker productivity
performed at the Cicero plant beginning in 1924 and ceasing in 1932, initially conducted
by the National Research Council and later by Western Electric and Harvard University
Illumination Studies, 1924 -1927: Does Use of Electric Lights Increase Productivity?
Hypothesis: Increased illumination is correlated with higher productivity.
Finding: No relationship―Hawthorne effect‖ or "halo effect― – Researcheraffects outcome
(bias)
2nd Hawthorne Experiment
Relay Assembly Test Room Experiments, 1927-1929 Harvard research team set
up experiment with 5 females from Relay Assembly area to test impact of incentives
and work conditions on worker fatigue
There is no conclusive evidence that these affected fatigue or productivity.Productivity
and workersatisfaction increase whenconditions are improvedand made worse.
3rd Hawthorne Experiment
Mica-Splitting Test group, 1928 – 1930 Relationship between work conditions
and productivity, by maintaining a piece-rate incentive system and varying work
conditions
Productivity increased by about 15% and researchers concluded that productivity
was affected by non-pay considerations
Conclusion: social dynamics were the basisof worker performance.
Hawthorne Interviews
Plant-wide Interview program, 1928-1931
1. Western Electric implemented a plant-widesurvey of employees to record their
concerns and grievances. From 1928 to 1930, 21,000 employees were interviewed.
2. Data supported the research conclusion that work improved when supervisors
began to pay attention to employees, that work takes place in a social context in
which work and non-work considerations are important, norms and groups matter
to workers.
Hawthorne: Final Experiment
Bank Wiring Observation group, 1931-1932
– The final test studying 14 male workers in the Bank Wiring factory to study
the dynamics of the group when incentive pay was introduced.
There was no effect. Why?
Work group established a work ―norm‖ – a sharedexpectation about how much work
should beperformed in a day and stuck to it, regardless ofpay.
The conclusion: informal groups operate in the work environment to manage
behavior.
Hawthorne Experiments – Importance
Changed perspective in management from Taylor‘s engineering approach to a
social sciences approach, leading to "Human Relations" approach and, later,
"Organization Behavior" approach:
Engineering approach subordinated to social sciences
Managers = leaders, motivators, communicators
At one time major contributors to Management theory worked on Hawthorne
experiments.
Elton Mayo - ―Human Relations‖ approach (to 1950‘s). Mayo‘s viewslead to the
construction of manageras a leader.
MANAGEMENT FUNCTIONS OR PROCESS OF MANAGEMENT
Planning
Organization
Staffing
Directing
Decision Making
Controlling
Coordination
Motivating
Innovation
Representation
The traditional classification of management functions
Function 1: Planning
Develop Strategies for Success.
Set Goalsand Objectives
Develop Action Plans
Function 2: Organizing
Employee Activities
Facilities and Equipment
Decision Making
Supervision
Resource Distribution
Function 3: Directing
Implementing
Plans
Motivating
People
Function 4: Controlling
Monitoring Progress
Resetting the Course
Correcting Deviations
FUNCTIONS OF MANAGEMENT VERSUS LEADERSHIP
WHAT SKILLS DO MANAGERS NEED? (KATZ 1955)
Too often managers over-rely on interpersonal skills. However, careers in management
depend heavily on the managers‘ technical skills and especially on the managers
conceptual skills.
PLANNING
DEFINITION
―Planning involves selecting mission and objectives and the actions to achieve them; it
requires decision-making that is, choosing from alternative courses of action.‖
- Heinz and Koontz
―A plan is a trap laid to capture.‖
-Allen
Planning is the process of bridging the gap between where we are and where we want
to be in the future.
Thinking before doing is planning.
Nature Of Planning
Characteristics Of Planning
• Goal- oriented
• An intellectual or Rational process
• A primary function
• Pervasive (Strong/Single minded, Determined, Persistent)
• Forward looking
• A perpetual (unending) process
• An integrated process
• Involves choice
Planning Process
Types of Planning
Plans based on organizational levels
Making Planning Effective
Linked to long-term objectives
Direction for action
Consistent
Feasible
Simplicity
Flexible
ORGANIZING
Organizing is a function in which the synchronization and combination of human,
physical and financial resources takes place. All the three resources are
important to get results.
DEFINITION
According to Chester Barnard, ―Organizing is a function by which the concern is
able to define the role positions, the jobs related and the co- ordination between
authority and responsibility. Hence, a manager always has to organize in order to
get results.
Organizing is a technical function; it means establishing authority and
responsibility relationships, and formal structure and reporting relationships.
Organizing focuses on grouping activities and resources in a logical manner,
including the division of work and job design, work methods and processes,
coordination among units, and the use of information and feedback systems.
• Organizingis establishing the internal organizational structure of the organization.
The focus is on division, coordination, and control of tasks and the flow of
information within the organization. It is in this function that managers distribute
authority to job holders.
• Organizing establishes relationships between activity and authority.
Importance
Specialization
Well defined jobs
Clarifies authority
Co- ordination
Effective administration
Growth and Diversification
Sense of security
Scope for new changes
The various steps involved in this process
Determination of Objectives
Enumeration (list) of Objectives
Classification of Activities
Assignment of Duties
Delegation of Authority
Determination of Objectives
It is the first step in building up an organization. Organization is always related to
certain objectives.
Determination of objectives will consist in deciding as to why the proposed
organization is to be set up
Enumeration (List) of ObjectivesThe first step in organizing group effort is the
division of the total job into essential activities. Each job should be properly
classified and grouped.
For example, the work of an industrial concern may be divided into the following
major functions – production, financing, personnel, sales, purchase, etc.
Classification of Activities
Activities according to similarities and common purposes and functions and
taking the human and material resources into account. Then, closely related and
similar activities are grouped into divisions and departments and the
departmental activities are further divided into sections.
Assignment of Duties
Here, specific job assignments are made to different subordinates for ensuring a
certainty of work performance. Each individual should be given a specific job to
do according to his ability and made responsible for that.
Delegation of Authority
Authority without responsibility is a dangerous thing and similarly responsibility
without authority is an empty vessel. Everybody should clearly know to whom he
is accountable; corresponding to the responsibility authority is delegated to the
subordinates for enabling them to show work performance.
ORGANISATION
Introduction
Organization involves division of work among people whose efforts must be co-
ordinate to achieve specific objectives
Definition OfOrganisation
McFerland has defined organization as, "an identifiable group of people contributing
their efforts towards the attainment of goals".
Mooney and Railey, "Organization is the form of every human association for the
attainment of a common purpose.‖
OrganisationAs A Process
Organization is the process of establishing relationship among the members of the
enterprise. The relationships are created in terms of authority and responsibility.
Principles OfOrganisation
Consideration of unity of objectives
Specialization
Co-ordination
Clear unbroken line of Authority
Responsibility
Efficiency
Delegation
Unity of Command:
Span of Management:
Communication
Flexibility
Organisation Structure
An organization structure shows the authority and responsibility relationships
between the various positions in the organization by showing who reports to
whom. Organization involves establishing an appropriate structure for the goal
seeking activities. It is an established pattern of relationship among the
components of the organization.
Formal And Informal Organisation
Formal Organization:
-"a system of consciously coordinated activities or forces of two or more persons.
It refers to the structure of well-defined jobs, each bearing a definite measure of
authority, responsibility and accountability."
Characteristic Features of formal organization
Laid down by the top management
Formal organization prescribes the relationships
Concentrates on the jobs to be performed
Individuals are fitted into jobs
Is bound by rules, regulations and procedures.
authority, responsibility and accountability of each level are clearly defined.
division of labor and specialization to achieve efficiency in operations.
coordination proceeds according to the prescribed pattern.
Advantages of formal organization
on the jobs to be performed.
everybody responsible for a given task.
bound by rules, regulations and procedures.
people of the organization to work together
Disadvantages or criticisms of formal organization
does not consider the goals of the individuals.
bound by rigid rules, regulations and procedures. This makes the achievement of
goals difficult.
Informal Organization
an informal organization is an organization which is not established by any formal
authority, but arises from the personal and social relations of the people.
Characteristics features of informal organization
It is unplanned
Reflects human relationships.
It is not based on rules,
Informal organizations are based on common taste, problem, language,
Benefits of Informal organization
It is more effective.
Many things which cannot be achieved through formal organization can be
achieved
It provides social satisfaction to group members.
Job satisfaction.
The best means of employee communication.
It serves as an agency for social control of human behavior.
Differences Between Formal and Informal Organization
Formal Organization:
Formal organization is established with the explicit aim of achieving well-defined
goals.
The social and psychological needs and interests of members of the
organizationget little attention.
In formal organization, much emphasis is placed on efficiency, discipline,
conformity, consistency and control.
The roles and relationships of people in formal organization are impersonally
defined
Is bound together by authority relationships among members.
Informal Organization:
Informal organization springs on its own. Its goals are ill defined andIntangible.
Is characterized by a generalized sort of power relationships.
In informal organization the relationships among people are interpersonal.
Is characterized by relative freedom, spontaneity, homeliness and warmth.
The socio psychological needs, interests and aspirations of members get
priority.
Organisational Structures
Why Have a Structure?
All businesses have to organise
what they do
A clear structure makes it easier to see which part of the business does what
There are many ways
to structure a business
Some Key Terms
Flat or tall structure
Span of control
Chain of command
Hierarchy
Delegation
Empowerment (Authority)
Ways to Structure a Business
By Function: arranging the business according to what each section
or department does
By Product or Activity: organising according to the different products made
By Area: geographical or regional structure
By Customer: where different customer groups have different needs
By Process: where products have to go through stages as they are made
What are the advantages/disadvantages of different types of business structure?
Pros and Cons of Different Structures
This depends on the business type, size and structure used
Let‘s look at a functional structure:
Functional Structure
Organisation By Product/Activity
An Example of Organisation by Product/Activity
Organisation By Area
Hewlett-Packard‘s Headquarters Worldwide
Other Organisational Structures
By Customer:Similar effects to structuring by product
By Process:Similar to structuring by function
ORGANISATIONAL STRUCTURES
Flat Structure Organisation
In contrast to a tall organisation, a flat organisation will have relatively few layers
or just one layer of management. This means that the ―Chain of Command‖ from
top to bottom is short and the ―span of control is wide‖. Due to the small number
of management layers, flat organisations are often small organisations.
Flat Structure
Advantages of flat Organisations
More/Greater communication between management and workers
Better team sprit
Less bureaucracy and easier decision making.
Fewer levels of management which includes benefits such as lower costs as
managers are generally paid more than worker.
Disadvantages of flat Organisations
Workers may have more than one manager/boss.
May limit/hinder the growth of the organisation.
Structure limited to small organisations such as partnerships, co-operatives and
some private limited companies.
Function of each department/person could be blurred and merge into the job
roles of others.
Tall Structure Organisation
In its simplest form a tall organisation has many levels of management and
supervision. There is a ―long chain of command‖ running from the top of the
organisationeg Chief Executive down to the bottom of the organisationeg shop
floor worker.
Tall Structure
Advantages of tall Organisations
There is a narrow span of control ie each manager has a small number of
employees under their control. This means that employees can be closely
supervised
There is a clear management structure
The function of each layer will be clear and distinct. There will be clear lines of
responsibility and control.
Clear progression and promotion ladder
Disadvantages of tall OrganisationsThe freedom and responsibility of employees
(subordinates) is restricted
Decision making could be slowed down as approval may be needed by each of
the layers of authority.
Communication has to take place through many layers of management.
High management costs because managers are generally paid more than
subordinates. Each layer will tend to pay it‘s managers more money than the
layer below it.
Matrix (or project-based) organisations
A Matrix structure organisation contains teams of people created from various
sections of the business. These teams will be created for the purposes of a
specific project and will be led by a project manager. Often the team will only
exist for the duration of the project and matrix structures are usually deployed to
develop new products and services.
Advantages of matrix
Individuals can be chosen according to the needs of the project.
The use of a project team which is dynamic and able to view problems in a
different way as specialists have been brought together in a new environment.
Project managers are directly responsible for completing the project within a
specific deadline and budget.
Disadvantages
A conflict of loyalty between line managers and project managers over the
allocation of resources.
If teams have a lot of independence can be difficult to monitor.
Costs can be increased if more managers (ie project managers) are created
through the use of project teams
Matrix Structure
IMPORTANCE OF ORGANISATION
Facilitates Administration
Facilitates Growth and Diversification
Provides for Optimum use of Technological Improvements
Encourages Human use of Human Beings
Stimulates Creativity
Facilitates stability of the organisation
Reduces Employee Turnover
Reduces Duplication of Activities
Fosters Coordination
Facilitates Administration
A properly designed and balanced organization facilitates both management and
operation of the enterprise. It increases management's efficiency and
promptness, avoids delay and duplication of work and motivates the employee to
perform their job efficiently.
Facilitates Growth and Diversification
The organization structure should provide for expansion and diversification of the
enterprise otherwise, the enterprise will find itself in a serious administrative
crisis.
Provides for Optimum use of Technological Improvements
A sound organization structure facilitates the optimum use of technological
improvements like computer systems etc.
Encourages Human use of Human Beings
A sound organization provides for efficient selection, training and development of
staff, job rotation and job enlargement. The organization structure can profoundly
affect the people of the company. Proper organization facilitates the intensive
use of human capital.
Stimulates Creativityorganization provides sufficient freedom to the managers
and encourages their initiative, independent thinking and creativity.
Facilitates stability of the organization
By ensuring delegation of authority, two-way communication, co-operation,
effectiveleadership, employee morale and flexibility to adjust to changes in the
conditions, a soundorganization facilitates stability of the organization.
Reduces Employee Turnover
Organization increases employee satisfaction, ensures better relations between
the management and the workers, and thereby reduces employee turnover.
Reduces Duplication of Activities
Organisation avoids delay and duplication of activities and consequent confusion
by ensuring well-defined responsibilities and authority.
Fosters Coordination
By providing the framework for holding together the various functions in an
orderlypattern, organization fosters co-ordination.
ORGANISATION CHARTS AND MANUALS
Organization chart: The pattern of network of relations between the various positions
in an organization as well as between the persons who hold those positions is
referred to as "Organization chart".
In the word of J Batty, "An organization chart is a diagrammatic representation of
the framework or structure of an organization."
The organization chart has the following characteristics:
It is a diagrammatical presentation
l It shows principal lines of authority in the organization
It shows the interplay of various functions and relationships
l It indicates the channels of communication.
Advantages of Organization Chart
It gives a clear picture of the organization structure.
It shows at a glance the lines of authority and responsibility.
to avoid misunderstanding of jurisdictional problems
outsiders can easily know the persons whom
they have to approach in connection with their work.
to avoid overlapping and duplication of authority and secure unity of command.
what extra training is required for promotion to a higher position.
Types of Organization Chart
An organization chart can be drawn in different forms. They are:
Top-to-down chart or vertical chart
Left-to-right chart or Horizontal chart
Circular chart.
Top-to-down chart or vertical chart:
Most organizations use this type of chart which presents the different levels of
organization in the form of a pyramid with senior executive at the top of the chart
and successive levels of management depicted vertically below that
Left-to-right or Horizontal Chart:
Horizontal charts which read from left to right areoccasionally used.
The pyramid lies horizontally instead of standing in the vertical position.The line
of command proceeds horizontally from left to right showing top level at the left
and each successive level extending to the right.
Circular Chart:
In this chart, top positions are located in the centre of the concentric circle. Positions of
successive echelons extend in all directions outward from the centre.
Positions of equal status lie at the same distance from the centre on the same
concentric circle
MEANING OF ORGANIZATION MANUAL
An organization may prepare a Manual or Management Guide. Manual sets
down in the form of a book or booklet all the details of the organization.
Good organization manual has the following contents.
1.Nature of the enterprise
2. Objectives of the enterprise
3. Policies of the management
4. Job Descriptions
5. Duties and responsibilities of various personnel
6. Instructions relating to the performance of standard as well as non-standard jobs.
Types of Manuals
Policy Manuals:
Operations Manual:
Organization Manual:
Departmental Practice Manual:
Rules and Regulations Manual:
Policy Manuals:
It describes the overall limitations within which activities are to take place and
thus reveals the broad courses of managerial action likely to take place under
certain conditions.
Operations Manual:
It is prepared to inform the employees of established methods, procedures and
standards of doing the various kinds of work.
Departmental Practice Manual:
It deals in detail with the internal policies,organization and procedures of one
department.
Organization Manual:
It explains the organization, the duties and responsibilities of various
departments, and their respective sub-divisions.
Rules and Regulations Manual: It gives information about the operating rulesand
employment regulations. It is a handbook of employment rules.
Advantages of Manuals
1. It contains in writing all-important decisions relating to internal organization of
theenterprise.
2. It avoids conflicts and overlapping of authority.
3. It enables new employees to know the various procedure and practice in the shortest
possible time.
4. It enables quick decisions.
5. It contains rules and regulations which employees must follow.
Disadvantages of Manual
1. The preparation of manual is costly and time consuming and process.
2. Manuals leave little scope of individual's initiative and direction.
3. Manuals bring rigidity to the organization.
4. Manuals may put on record those relationships which no one would like to see
exposed.
Staffing
• Staffing is filling and keeping filled with qualified people all positions in the
business. Recruiting, hiring, training, evaluating and compensating are the
specific activities included in the function.
• Staffing success is having the "right person" in a position, rather than simply
filling a position.
Directing
• Directingis influencing people's behavior through motivation, communication,
group dynamics, leadership and discipline. The purpose of directing is to channel
the behavior of all personnel to accomplish the organization's mission and
objectives while simultaneously helping them accomplish their own career
objectives.
One important category of directing
• Motivation covers up ability and skill deficiencies in employees.
• The most effective motivation for employees comes from within each employee -
self-motivation.
• Highly motivated people perform better than unmotivated people.
Controlling
• Controlling - The final function of management
• Controlling is a five-step process of establishing performance standards based
on the firm's objectives, measuring and reporting actual performance, comparing
the two, and taking corrective or preventive action as necessary.
• The basic purpose of controlling is to determine how successful the planning
function has been.
OBJECTIVES
• ―Objectives are the goals, aims or purposes that organizations wish to achieve
over varying periods of time.‖
• ―Objective is a term commonly used to indicate the end point of a management
program.‖
Organizational Hierarchy Types of Objectives
Board of Directors and Top Level
Managers
Socio-economic purpose
Mission
In all Key Areas
Middle-Level Managers Divisional Objectives
Departmental Objectives
Lower-Level Managers Department and Unit
Objectives for Subordinates
• Performance goal
• Development goals
Nature Of Objectives
- Hierarchy of Objectives
- The process of formulating objectives and the organizational hierarchy
- A network of objectives
- Multiplicity of objectives
Advantages of objectives
- Unified planning
- Individual motivation
- Co-ordination
- Control
- Basis for Decentralization
MANAGEMENT BY OBJECTIVES
- Peter Drucker in his 1954 book 'The Practice of Management'.
- The essence of MBO is participative goal setting, choosing course of actions and
decision making. An important part of the MBO is the measurement and the
comparison of the employee‘s actual performance with the standards set. Ideally,
when employees themselves have been involved with the goal setting and the
choosing the course of action to be followed by them, they are more likely to fulfill
their responsibilities.
Management by objectives (MBO) is a systematic and organized approach that allows
management to focus on achievable goals and to attain the best possible results from
available resources.
THE GILBRETHS
1. Break up and analyze every individual action necessary to perform a particular
task into each of its component actions
2. Find better ways to perform each component action
3. Reorganize each of the component actions so that the action as a whole could be
performed more efficiently-at less cost in time and effort
Administrative Management Theory
Administrative Management
– The study of how to create an organizational structure that leads to high
efficiency and effectiveness.
Max Weber
– Developed the principles of bureaucracy as a formal system of organization
and administration designed to ensure efficiency and effectiveness.
Weber’s Principles of Bureaucracy
1) A manager‘s formal authority derives from the position he holds in the
organization.
2) People should occupy positions because of their performance, not because of
their social standing or personal contacts.
3) The extent of each position‘s formal authority and task responsibilities and it‘s
relationship to other positions should be clearly specified.
4) Authority can be exercised effectively when positions are arranged hierarchically,
so employees know whom to report to and who reports to them.
5) Managers must create a well-defined system of rules, standard operating
procedures,
and norms so they can effectively control behavior .
RULES, SOPS AND NORMS
Rules–
Formal written instructions that specify actions to be taken under different
circumstances to achieve specific goals
Standard Operating Procedures (SOPs) –
Specific sets of written instructions about how to perform a certain aspect of a
task
Norms –
Unwritten, informal codes of conduct that prescribe how people should act in
particular situations
FAYOL’S PRINCIPLES OF MANAGEMENT
Division of Labor: allows for job specialization. - Jobs can have too much
specialization leading to poor quality and worker dissatisfaction.
Authority and Responsibility - Both formal and informal authority resulting from
special expertise.
Unity of CommandEsprit de corps - Comradeship, shared enthusiasm foster
devotion to the common cause (organization).
Behavioral Management Theory
Behavioral Management
The study of how managers should personally behave to motivate employees
and encourage them to perform at high levels and be committed to the
achievement of organizational goals.
Mary Parker Follett
Concerned that Taylor ignored the human side of the organization
Suggested workers help in analyzing their jobs
If workers have relevant knowledge of the task, then they should control the task
Studies of how characteristics of the work setting affected worker fatigue and
performance at the Hawthorne Works of the Western Electric Company from
1924-1932.
The Hawthorne StudiesWorker productivity was measured at various levels of
light illumination.
Researchers found that regardless of whether the light levels were raised or
lowered, worker productivity increased.
Human Relations Implications
Hawthorne effect — workers‘ attitudes toward their managers affect the level of
workers‘ performance
Human relations movement – advocates that supervisors be behaviorally trained
to manage subordinates in ways that elicit their cooperation and increase their
productivity
Implications
Behavior of managers and workers in the work setting is as important in
explaining the level of performance as the technical aspects of the task
Demonstrated the importance of understanding how the feelings, thoughts, and
behavior of work-group members and managers affect performance
Theory X and Theory YDouglas McGregor proposed the two different sets of
assumptions about workers.
Theory X assumes the average worker is lazy, dislikes work and will do as little
as possible.
Workers have little ambition and wish to avoid responsibility
Managers must closely supervise and control through reward and punishment.
Theory Y assumes workers are not lazy, want to do a good job and the job itself
will determine if the worker likes the work.
Managers should allow workers greater latitude (liberty), and create an
organization to stimulate the workers.
Theory X vs. Theory Y
Management Science TheoryContemporary approach to management that
focuses on the use of rigorous quantitative techniques to help managers make
maximum use of
organizational resources to produce goods and services.
Quantitative management — utilizes linear and nonlinear programming,
modeling, simulation, queuing theory and chaos theory.
Operations management —techniques used to analyze any aspect of the
organization‘s production system.
Total Quality Management (TQM) —focuses on analyzing input, conversion,
and output activities to increase product quality.
Management Information Systems (MIS)— provides information vital for
effective decision making.
Organizational Environment
The set of forces and conditions that operate beyond an organization‘s boundaries
but affect a manager‘s ability to acquire and utilize resources
The Open-Systems View
– Employees should have only one boss.
Line of Authority - A clear chain of command from top to bottom of the firm.
Centralization - The degree to which authority rests at the top of the organization.
Unity of Direction - A single plan of action to guide the organization.
Equity - The provision of justice and the fair and impartial treatment of all
employees.
Order - The arrangement of employees where they will be of the most value to
the organization and to provide career opportunities.
Initiative - The fostering of creativity and innovation by encouraging employees to
act on their own.
Discipline - Obedient, applied, respectful employees are necessary for the
organization to function.
Remuneration of Personnel - An equitable uniform payment system that
motivates contributes to organizational success.
Stability of Tenure of Personnel - Long-term employment is important for the
development of skills that improve the organization‘s performance.
Subordination of Individual Interest to the Common Interest - The interest of the
organization takes precedence over that of the individual employee.
Esprit de corps - Comradeship, shared enthusiasm foster devotion to the
common cause (organization).
Behavioral Management Theory
Behavioral Management
– The study of how managers should personally behave to motivate
employees and encourage them to perform at high levels and be
committed to the achievement of organizational goals.
Mary Parker Follett
– Concerned that Taylor ignored the human side of the organization
• Suggested workers help in analyzing their jobs
• If workers have relevant knowledge of the task, then they should
control the task
– Studies of how characteristics of the work setting affected worker fatigue and
performance at the Hawthorne Works of the Western Electric Company from
1924-1932.
The Hawthorne Studies
– Worker productivity was measured at various levels of light illumination.
– Researchers found that regardless of whether the light levels were raised
or lowered, worker productivity increased.
– Human relations movement – advocates that supervisors be behaviorally trained
to manage subordinates in ways that elicit their cooperation and increase their
productivity
Implications
Behavior of managers and workers in the work setting is as important in
explaining the level of performance as the technical aspects of the task
Demonstrated the importance of understanding how the feelings, thoughts, and
behavior of work-group members and managers affect performance
Theory X and Theory Y
Douglas McGregor proposed the two different sets of assumptions about workers.
– Theory X assumes the average worker is lazy, dislikes work and will do as
little as possible.
• Workers have little ambition and wish to avoid responsibility
• Managers must closely supervise and control through reward and
punishment.
– Theory Y assumes workers are not lazy, want to do a good job and the job
itself will determine if the worker likes the work.
• Managers should allow workers greater latitude (liberty), and create
an organization to stimulate the workers.
Theory X vs. Theory Y
Management Science Theory
Contemporary approach to management that focuses on the use of rigorous
quantitative techniques to help managers make maximum use of
organizational resources to produce goods and services.
Quantitative management — utilizes linear and nonlinear programming,
modeling, simulation, queuing theory and chaos theory.
Operations management —techniques used to analyze any aspect of the
organization‘s production system.
Total Quality Management (TQM) —focuses on analyzing input, conversion, and
output activities to increase product quality.
Management Information Systems (MIS) — provides information vital for
effective decision making.
Organizational Environment –
The set of forces and conditions that operate beyond an organization‘s boundaries
but affect a manager‘s ability to acquire and utilize resources
The Open-Systems View
Open System
– A system that takes resources for its external environment and transforms
them into goods and services that are then sent back to that environment
where they are bought by customers.
– Inputs: the acquisition of external resources to produce goods and
services
– Conversion: transforms the inputs into outputs of finished goods and
services.
– Output: the release of finished goods and services to its external
environment.
Closed System
A self-contained system that is not affected by changes in its external
environment.
Likely to experience entropy and lose its ability to control itself
Systems
Synergy – the performance gains that result from the combined actions of
individuals and departments
– Possible only in
an organized system
Contingency Theory
―There is no one best way to organize‖
The idea that the organizational structures and control systems manager choose
depend on—are contingent on—characteristics of the external environment in
which the organization operates.
Type of Structure
Mechanistic Structure
– Authority is centralized at the top.
– Emphasis is on strict discipline and order
– Employees are closely monitored and managed.
– Can be very efficient in a stable environment.
Organic Structure
– Authority is decentralized throughout the organization.
– Departments are encouraged to take a cross-departmental or functional
perspective
– Works best when environment is unstable and rapidly changing
CONTROLLING
– Knootz and O‘Donnel, ―Controlling is the measurement of accomplishment
against the standards and the correction of deviations to assure attainment of
objectives according to plans.‖
– Standards
– Performance
– Deviations
– Controlling
– Evaluation of performance and the implementation of corrective actions to
accomplish organizational objectives.
Importance Of Controlling
1. Coping with uncertainty
2. Detecting irregularities
3. Identifying opportunities
4. Handling complex situations
5. Decentralizing authority
6. Decentralizing authority
7. Minimizing costs
Steps of controlling
1. Establishing standards
2. Measuring performance
3. Comparison of actual with standards
4. Taking corrective actions
Requirements of effective controlling
- Controls should reflect plans, positions and structures (suitability).
- Timely and forward looking.
- They should be objective and comprehensive (understandable).
- They should be cost effective.
- Identify only major expectations.
- Flexibility
- Motivational (employee centered ).
- Should provide adequate and complete information.
- Should not lead to less attention to other aspects
Types of control
- Feedforward control (future oriented)
- Concurrent control (steering control)
- Feedback control (past oriented)
Old Techniques New Techniques
- Budgeting *
- Standard costing
- Responsibility centres*
- Financial statements
- Ratio analysis*
- Break- even analysis
- Audits
- Reports
- Rules and observations
- PERT
- CPM
- HRA
BUDGETING
- Sales
- Selling and distribution cost
- Production
- Production cost
- Capital expenditure
- Cash
- Master (summary of all functional budgets)
Ratio analysis
- Liquidity ratios
- Leverage ratios
- Activity ratios
- Profitability ratios
Responsibility Centers
- Standard cost
- Discretionary expenses
- Revenue
- Profit
- Investment
Relationship between planning and controlling
- Use of IT in controlling
- Concept Of International Management
- Reasons For Some International Contemporary Issues
- Globalization & Global Business Practices.
REASONS
1. enhancing market
2. Huge profits
3. Getting products for home market
4. Satisfying management‘s desire
5. Protecting domestic market
6. Acquiring technology
7. Diversifying geographically
STAFFING
Staffing involves manning the organization structure through proper and effective
selection, appraisal and development of the personnel to fill the roles assigned to the
employers/workforce.
• Staffing is filling and keeping filled with qualified people all positions in the
business. Recruiting, hiring, training, evaluating and compensating are the
specific activities included in the function.
• Staffing success is having the "right person" in a position, rather than simply
filling a position.
• According to Theo Haimann, ―Staffing pertains to recruitment, selection,
development and compensation of subordinates.‖
STAFFING
• Staffinginvolves a set of activitiesaimedatattracting and selectingindividuals for
positions in awaythatwillfacilitate the achievement of organizational goals.
• The two basic steps of staffing are recruitment and selection.
NATURE of Staffing
• An important managerialfunction
• A continuousactivity
• The basis of staffingfunctionis efficient management of personnels
• Helps in placing right men at the right job
• It isperformed by all managers
• Carried out in all types of organization
• Staffing PROCESSManpower requirements
• Recruitment
• Selection
• Orientation and Placement
• Training and Development
• Remuneration
• Performance Evaluation
• Promotion and Transfer
Manpower Planning
• Manpower Planning which is also called as Human Resource Planning consists
of putting right number of people, right kind of people at the right place, right
time, doing the right things for which they are suited for the achievement of goals
of the organization.
Procedure
• Analyzing the current manpower inventory
• Making future manpower forecasts
• Developing employment programs
• Design training programs
Analyzing the current manpower inventory
Type of organization
Number of departments
Number and quantity of such departments
Employees in these work units
Manpower forecasting techniques commonly employed
Expert Forecasts: This includes informal decisions, formal expert surveys
and Delphi technique
Trend Analysis: Manpower needs can be projected through extrapolation
(projecting past trends), indexation (using base year as basis), and
statistical analysis (central tendency measure)
Work Load Analysis: It is dependent upon the nature of work load in a
department, in a branch or in a division.
Work Force Analysis: Whenever production and time period has to be
analyzed, due allowances have to be made for getting net manpower
requirements.
Other methods: Several Mathematical models, with the aid of computers
are used to forecast manpower needs, like budget and planning analysis,
regression, new venture analysis.
Developing employment programs
• Once the current inventory is compared with future forecasts, the employment
programs can be framed and developed accordingly, which will include
recruitment, selection procedures and placement plans.
Design training programs
• These will be based upon extent of diversification, expansion plans, development
programs, etc. Training programs depend upon the extent of improvement in
technology and advancement to take place. It is also done to improve upon the
skills, capabilities, knowledge of the workers.
Importance of Manpower Planning
• Key to managerial functions
• Efficient utilization
• Motivation
• Better human relations
• Higher productivity
Types of Recruitment
• Internal Recruitment
• External Recruitment
3 Internal Sources
• Transfers
• Promotions (through Internal Job Postings)
• Re-employment of ex-employees
External Recruitment
• Employment at Factory Level
• Advertisement
• Employment Exchanges
• Employment Agencies
• Educational Institutions
• Recommendations
• Labour Contractors
Employee Selection Process
• Right Men Right Job
• Organizational Requirements = Skills & Qualifications
• Effective Matching impact Effective Selection
Organization
• Quality Performance of Employees
Results of Effective Selection
• Quality Performance of Employees
• Less Absenteeism Employee Turnover
• Save Time & Money
Selection
• Proper screening of candidates
• Tested
• Choosing the best candidate with
o Best abilities
o Skills
o Knowledge for the required job
Selection Vs Recruitment
• Recruitment - Positive process - Motivates more of candidates to apply for the
job
o Creates a pool of applicants.
o Just sourcing of data
• Selection - Negative process - Inappropriate candidates - Rejected here
• Recruitment precedes Selection
Employee selection Process
• Preliminary Interviews
• Application blanks
• Written Tests
• Employment Interviews
• Medical examination
• Appointment Letter
Preliminary Interviews
• Used to eliminate those candidates who do not meet the minimum eligibility
criteria
• Skills, academic and family background, competencies and interests of the
candidate are examined during preliminary interview
• Less formalized & planned than the final interviews.
• Candidates are given a brief up about the company & the job profile;
• Also examined how much the candidate knows about the company
• Preliminary interviews are also called screening interviews.
Application blanks
• Candidates who clear the preliminary interview are required to fill application
blank
• Contains data record of the candidates such as details about age, qualifications,
reason for leaving previous job, experience, etc.
Written Tests
• Written tests conducted
Aptitude test
Intelligence test
Reasoning test
Personality test, etc.
• Tests are used to objectively assess the potential candidate (Not to be biased)
Employment Interviews
• Interaction between the interviewer and the potential candidate
• Used to find whether the candidate is best suited for the required job or not
• Consume time and money both
• Competencies of the candidate cannot be judged
• May be biased at times
• Should be conducted properly
• No distractions should be there in room
• Should be an honest communication between candidate and interviewer.
Medical examination
• Medical tests conducted to ensure physical fitness of the potential employee
• Will decrease chances of employee absenteeism
Appointment Letter
• A reference check is made about the candidate selected and then finally he is
appointed by giving a formal appointment letter.
PERFORMANCE APPRAISAL
Performance
• Performance appraisal refers to the degree of accomplishment of the tasks that
make up an employee job often confused with effort which refers to energy
expanded performance is measured in terms of results.
Appraisal
• Appraisal is a process of evaluation the performance or contribution of a
company own people, especially workers, executives or managers towards the
objectives and goals of the company.
Performance appraisal is a method of evaluating the behavior of employees in the work
spot, normally including both the qualitative and quantitative aspects of job
performance.
• Performance here refers to the degree of accomplish of the task that make up an
individual job.
• Performance Appraisal is a process of obtaining analysis and recording
information about the relative worth of an employee.
• Performance Appraisal is the systematic evaluation of the performance of
employees and to understand the abilities of a person for further growth and
development.
Performance Appraisal
• Definition:
―It is the systematic evaluation of the individual with regard to his or her performance on
the job & his potential for development‖.
Systematic Ways of Doing PA
• The supervisors measure the pay of employees and compare it with targets and
plans.
• The supervisor analyses the factors behind work performances of employees.
• The employers are in position to guide the employees for a better performance.
Objectives of PA
• Salary increase
• Promotion
• Training & development
• Feedback
• Pressure on employees
Features of Performance Appraisal
• Performance Appraisal is the systematic description of an employee‘s job-
relevant strengths and weaknesses
• The basic purpose is to find out how well the employee is performing the job and
establish a plan of improvement
• Appraisal is arranged periodically according to a defined plan
• Performance appraisal is a continuous process of every large organization
• Performance appraisal is not job evolution it refers to how well someone is doing
the assigned job .Job evolution determine how much a job is worth to the
organization and there what range of pay should be assigned to the job
Objectives of Performance Appraisal
• To maintain records in order to determine compensation packages, wage
structure, salaries raises, etc.
• To identify the strengths and weaknesses of employees to place right men on
right job.
• To maintain and assess the potential present in a person for further growth and
development.
• To provide a feedback to employees regarding their performance and related
status.
• It serves as a basis for influencing working habits of the employees.
• To review and retain the promotional and other training programs.
• To reduce grievances of the employees
Advantages of Performance Appraisal
• Promotion
• Compensation
• Employees Development
• Communication
• Motivation
Performance Evaluation
• In order to keep a track or record of the behavior, attitudes as well as opinions of
the workers towards their jobs. For this regular assessment is done to evaluate
and supervise different work units in a concern. It is basically concerning to know
the development cycle and growth patterns of the employees in a concern.
Aims of a performance appraisal
• Give employees feedback on performance
• Identify employee training needs
• Document criteria used to allocate organizational rewards
• Form a basis for personnel decisions: salary increases, promotions, disciplinary
actions, bonuses, etc.
• Provide the opportunity for organizational diagnosis and development
• Facilitate communication between employee and employer
• Validate selection techniques and human resource policies to meet federal Equal
Employment Opportunity requirements.
• To improve performance through counseling, coaching and development.
Promotion and Transfer
• Promotion is said to be a non- monetary incentive in which the worker is shifted
from a higher job demanding bigger responsibilities as well as shifting the
workers and transferring them to different work units and branches of the same
organization.
Process of Performance Appraisal-
Establishing Performance Standard
Commenting standards and
Expectations
Measuring actual Performance
Comparing with Standard
Discussing Result
(Providing Feedback)
Decision making -taking corrective
actions
INTRODUCTION TO MARKETING
Understanding Marketing Management
‗Marketing is the human activity directed at satisfying human needs and wants through
an exchange process‘
Kotler 1980
‗Marketing is a social and managerial process by which individuals and groups obtain
what they want and need through creating, offering and exchanging products of value
with others‘
Kotler 1991
Another Definition of Marketing
Marketing is the study of an organization‘s relationship with its customers.
What is marketing?
‗Marketing is the management process that identifies, anticipates and satisfies customer
requirements profitably‘
- The Chartered Institute of Marketing
‗The right product, in the right place, at the right time, and at the right price‘
For an exchange to occur;
There are at least two parties.
Each party has something that might be of value to the other party.
Each party is capable of communication and delivery.
Each party is free to reject the exchange offer.
Each party believes it is appropriate or desirable to deal with the other party
WHAT IS MARKETED?
Places
Properties
Organizations
Information
Ideas
Goods
Services
Events
Experiences
Persons
A total system of interacting business activities designed to plan ,price ,promote and
distribute want satisfying products and services to present and potential buyers.
-William j Stanton
Art of selling surplus
Discover needs & translate in product service
Marketers create the needs or needs preexist
Create and serve demand for these products & services
Nature Of Marketing
Marketing is both consumer & competitor oriented
It starts with consumer and ends with consumers by satisfying their needs
profitably
Marketing is an integrated process which is based on strategies and
models
Must deliver goods and services in exchange of money
self-centered competitor -
oriented
Customer -
oriented
Market driven
Scope Of Marketing
Marketing is typically seen as task of creating promoting goods and services to
consumers and business.
Goods: food,commodities, clothing,housing,cars, Steel,cotton are the main stay of the
economy.
NCAER 2002
Distribution population
Rural 72.22 %
Urban 27.78%
SERVICES
Almost 60 % of the contribution to India's GDP
from service sector.
PATA(pacific Asia travels association) reported 5.5 million foreign
tourists arrived India in 2009
This would increase to 5.9 million in 2010.
jet airways-air Sahara- 46% market share
Indian airlines 25%,air deccan-13% spice jet 6%, Kingfisher 8 %
Airlines ,Hotels,Entertainment, Education,Financial,Consulting,Tourism
company house hold
penetration
HUL
88%
NIRMA
56%
COLGATE
33%
PARLE FOODS
31%
EXPERIENCES
There is market for different experiences.Like spending a week at Jammu and Kashmir
and experiencing the skiing or climbing Mount Everest.
A jungle safari, water sports, a roller coaster ride.
Walt Disney,Essel world,Ramoji film city, planet holllywood
EVENTS
Marketers Promote Time Based Events. There are professionals who plan ,work out
details of an event and make it perfectly.
Event management companies.
Olympics,Twenty-20,Auto-Expo, It Exhibition, Major trade shows, sports events,artistic
performances.
PERSONS
Celebrity branding has become a major business. Tom peters marketing guru has
advised every person can brand himself.
PLACES
Cities, states, regions, and whole nations, compete actively to attract tourists, industries,
company headquarters, residents.
Place marketers include: economic dev. Planners, Real estate agents, banks and PR
agencies
PROPERTIES
Properties are intangible rights of ownership of either real property(real estate) or
financial property (stocks and bonds).These are bought and sold and thus can be
marketed.
Investment companies and banks ,and insurance firms are involved in its
marketing to both individual as well as institutions.
Hiranandani, DSK, Soft Corner Marketing,LIC housing, ICICI, HDFC home loans
ORGANIZATIONS
Organizations actively work to build a strong and favorable brand image In the
mind of their publics .We call it as corporate branding
Heritage
Assets and capabilities
People
Values and culture
Corporate Performance
INFORMATION
Information can be produced and marketed by as a product.
Schools, colleges, universities, Encyclopedias,C.D‘s, internet, books
The production,packaging, and distribution are one of the society's major industries.
IDEAS
Products and services are platforms for delivering some idea or benefit.Marketers try
hard to search for core need they try to satisfy.
MARKETING STRATEGY PLANNING
If we want to know what a business is, we have to start with its purpose. And its
purpose must lie outside the business itself. In fact, it must lie in society since a
business enterprise is an organ of society. There is one valid definition of business
purpose: to create a customer.*
Key Customer Markets
Consumer markets
Business markets
International Markets/Global markets
Nonprofit/Government markets
Core Concepts
Needs, wants, and demands
Target markets, positioning, segmentation
Offerings and brands
Value and satisfaction
Marketing channels
Supply chain
Competition
Marketing environment
Marketing planning
Core Concepts of Marketing
Exchange and Transactions
Relationships and Networks
Simple Marketing System
Structure of Flows
Customer Equity
How Much Is A Customer Worth
How does an organization create a customer?
• Identifying customer needs
• Designing goods and services that meet those needs
• Communicating information about those goods and services to prospective
buyers
• Making the goods or services available at times and places that meet customers‘
needs
• Pricing goods and services to reflect costs, competition, and customers‘ ability to
buy
• Providing for the necessary service and follow-up to ensure customer satisfaction
after the purchase*
Evolving Views of Marketing’s Role
Company Orientations Towards the Marketplace
Production Concept
Product Concept
Selling Concept
Marketing Concept
Consumers prefer products that,
- are widely available and inexpensive
- offer the most quality, performance, or innovative features
Consumers will buy products only if the company aggressively promotes/sells these
products.
Focuses on needs/ wants of target markets & delivering value better than competitors
The Marketing Concept
HOW CUSTOMERS FORM EXPECTATIONS
Evolution of Marketing
Production Era
Sales Era
Marketing Concept Era
Societal Era
Production Orientation
Focuses on internal capabilities of firm.
― Field of Dreams‖ strategy
―If we build it, they will come‖
Best used when
competition is weak
demand exceeds supply
generic products competing solely on price
Problem is that they don‘t understand wants/needs of marketplace.
Sales Orientation
People will buy more goods/services if aggressive sales techniques are used.
High sales will result in high profits.
Used with unsought products
life insurance
encyclopedias
Problem is that they don‘t understand wants/needs of marketplace.
I can sell everything, if I know how to sell it
Marketing Orientation
Marketing concept
The social and economic justification for an organization‘s existence is the satisfaction
of customer wants and needs, while meeting organizational objectives.
Focusing on customer wants so the organization can distinguish its products
from competitors‘ .
Integrating all the organization‘s activities, including promotion, to satisfy these
wants.
Achieving long term goals for the organization by satisfying customer wants and
needs legally and responsibly.
Requires:
Top management leadership
A customer focus
Competitor intelligence
strengths
weaknesses
Interfunctional coordination to meet customer wants/needs and deliver
superior values.
Societal Marketing Orientation
Organization exists not only to satisfy customer wants/needs and to meet
organizational objectives, but also to preserve and enhance individuals‘ and
society‘s long-term best interests.
Extends marketing concept to serve one more customer - society as a whole.
Differences between Sales & Marketing Orientations
Production/Sales Focus
Organization‘s needs
Producing/Selling goods/services
Everybody
Profit through max. sales volume
Intensive promotion
Marketing Focus
Customer‘s needs
Satisfying customer wants/needs
Specific groups of people
Profit through customer satisfaction
Coordinated mktg. activities (4 p‘s)
Marketing Philisophies
Orientation Key Ideas
Production Focus on efficiency of internal operations –
if we make it, they will buy it
Sales Focus on aggressive sales techniques and believe that
high sales result in high profits
Marketing Focus on satisfying customer needs and wants
while meeting objectives - if they will buy it, we will make it
Societal Focus on satisfying customer needs and
wants while enhancing individual and
societal well-being. I.e.-mfg using recyclables
Relationship Marketing
Forging long-term partnerships with customers and contributing to their success.
Companies benefit from
repeat sales/referrals that lead to increases in sales, market share and
profits, and
decreased costs - it‘s less expensive to serve existing customers than
attract new ones.
Customers benefit from:
stable relationships with suppliers (especially in business-to-business)
greater value and satisfaction
discounts, (frequent flyer programs, shopper clubs, etc.)
Successful relationship marketers have:
customer-oriented personnel
effective training programs
employees with authority to make decisions and solve problems
teamwork
Marketing Mix and the Customer Four Ps
Product
Price
Place
Promotion
Four Cs
Customer solution
Customer cost
Convenience
Communication
The Four Cs & The Four Ps
Implications of marketing
Who are our existing / potential customers?
What are their current / future needs?
How can we satisfy these needs?
Can we offer a product/ service that the customer would value?
Can we communicate with our customers?
Can we deliver a competitive product of service?
Why should customers buy from us?
Successful marketing requires
Profitable
Offensive (rather than defensive)
Integrated (Incorporated)
Strategic (is future orientated)
Effective (gets results)
Marketing management process
Analysis/Audit - where are we now?
Objectives - where do we want to be?
Strategies - which way is best?
Tactics - how do we get there?
Implementation - Getting there
Control - Ensuring arrival
Marketing Environment
All the factors and forces influencing the company‘s ability to transact business
effectively with it‘s target market
Includes:
Microenvironment - forces close to the company that affect its ability to
serve its customers.
Macroenvironment - larger societal forces that affect the whole
microenvironment
All the actors and forces influencing the company‘s ability to transact business
effectively with it‘s target market
UNCONTROLLABLE FACTORS AFFECTING MARKETING DECISIONS
The Company‘s Microenvironment
Company‘s Internal Environment- functional areas such as top management, finance,
and manufacturing, etc.
Customers - five types of markets that purchase a company‘s goods and services.
Competitors - those who serve a target market with similar products and services.
Public - any group that perceives itself having an interest in a company‘s ability to
achieve its objectives.
Suppliers - provide the resources needed to produce goods and services.
Marketing Intermediaries - help the company to promote, sell, and distribute its goods to
final buyers.
Demographic - monitors population in terms of age, sex, race, occupation, location and
other statistics.
Economic - factors that affect consumer buying power and patterns.
Natural - natural resources needed as inputs by marketers or that are affected by
marketing activities.
Political/legal
Monopolies legislation
Environmental protection laws
Taxation policy
Employment laws
Government policy
Legislation
Economic Factors
Inflation
Employment
Disposable income
Business cycles
Energy availability and cost
Socio-cultural factors
Demographics
Distribution of income
Social mobility
Lifestyle changes
Consumerism
Levels of education
Technological
New discoveries and innovations
Speed of technology transfer
Rates of obsolescence
Internet
Information technology
Marketing Plan
Market Analysis
Company Analysis
Determining the Goals
Determining the Strategies
Determining the Tactics
Control
Market Analysis
Customer Analysis
Segmentation
Motivation
Unmet Needs
Competitor Analysis
Who are our competitors (Rivals)?
What advantages do they have?
What are their goals?
What are their strategies?
What are their organizational structures?
What are their strengths and weaknesses?
Market Analysis
Structural Analysis
Industrial analysis
Actual and potential size of the industry
Growth of the industry
Cost structure of the industry
Distribution structure of the industry
Changes in the industry
Company Analysis
SWOT analysis
Strengths (internal)
Weaknesses (internal)
Opportunities (external)
Threats (external)
ORGANISATIONAL STRUCTURES
Why Have a Structure?
All businesses have to organise
what they do
A clear structure makes it easier to see which part of the business does
what
There are many ways
to structure a business
Some Key Terms
Flat or tall structure
Span of control
Chain of command
Hierarchy
Delegation
Empowerment (Authority)
Ways to Structure a Business
By Function: arranging the business according to what each section
or department does
By Product or Activity: organising according to the different products
made
By Area: geographical or regional structure
By Customer: where different customer groups have different needs
By Process: where products have to go through stages as they are made
What are the advantages/disadvantages of different types of business
structure?
Pros and Cons of Different Structures
This depends on the business type, size and structure used
Let’s look at a functional structure:
Functional Structure
Advantages
Specialisation – each department focuses on its own work
Accountability – someone is responsible for the section
Clarity – know your and others’ roles
Disadvantages
Closed communication could lead to lack
of focus
Departments can become resistant
to change
Coordination
may take too long
Gap between top and bottom
Organisation by Product/Activity
Organisation by Product/Activity
Advantages
Clear focus on market segment helps meet customers’ needs
Positive competition between divisions
Better control as each division can act as separate profit centre
Disadvantages
Duplication of functions (e.g. different sales force for each division)
Negative effects of competition
Lack of central control over each separate division
Organisation by Area
Hewlett-Packard’s Headquarters Worldwide
Advantages
Serve local needs better
Positive competition
More effective communication between firm and local customers
Disadvantages
Conflict between local and central management
Duplication of resources and functions
Other Organisational Structures
By Customer:
Similar effects to structuring
by product
By Process:
Similar to structuring by function
Organisational Structures
Flat Structure Organisation
In contrast to a tall organisation, a flat organisation will have relatively few
layers or just one layer of management. This means that the “Chain of
Command” from top to bottom is short and the “span of control is wide”.
Due to the small number of management layers, flat organisations are often
small organisations.
Flat Structure
Advantages of flat Organisations
More/Greater communication between management and workers
Better team sprit
Less bureaucracy and easier decision making.
Fewer levels of management which includes benefits such as lower costs
as managers are generally paid more than worker.
Disadvantages of flat Organisations
Workers may have more than one manager/boss.
May limit/hinder the growth of the organisation.
Structure limited to small organisations such as partnerships, co-
operatives and some private limited companies.
Function of each department/person could be blurred and merge into the
job roles of others.
Tall Structure Organisation
In its simplest form a tall organisation has many levels of management and
supervision. There is a “long chain of command” running from the top of
the organisation eg Chief Executive down to the bottom of the organisation
eg shop floor worker.
Advantages of tall Organisations
There is a narrow span of control ie each manager has a small number of
employees under their control. This means that employees can be closely
supervised
There is a clear management structure
The function of each layer will be clear and distinct. There will be clear
lines of responsibility and control.
Clear progression and promotion ladder
Disadvantages of tall Organisations
The freedom and responsibility of employees (subordinates) is restricted
Decision making could be slowed down as approval may be needed by
each of the layers of authority.
Communication has to take place through many layers of management.
High management costs because managers are generally paid more than
subordinates. Each layer will tend to pay it’s managers more money than
the layer below it.
Matrix ( or project-based) organisations
A Matrix structure organisation contains teams of people created from
various sections of the business. These teams will be created for the
purposes of a specific project and will be led by a project manager. Often
the team will only exist for the duration of the project and matrix structures
are usually deployed to develop new products and services.
Advantages of matrixIndividuals can be chosen according to the needs of
the project.
The use of a project team which is dynamic and able to view problems in a
different way as specialists have been brought together in a new
environment.
Project managers are directly responsible for completing the project within
a specific deadline and budget.
DisadvantagesA conflict of loyalty between line managers and project
managers over the allocation of resources.
If teams have a lot of independence can be difficult to monitor.
Costs can be increased if more managers (ie project managers) are created
through the use of project teams
THE MARKETING RESEARCH
Uses of Marketing Research
Key Point
To practice marketing; to implement the marketing concepts; to implement
marketing strategy, managers must make decisions.
Many decisions require additional information and marketing research is
needed in order to supply that information.
We need Marketing Research to:
Make the ―right‖ decisions to
Implement marketing
Practice the marketing concept and
Make the right decisions to select the right marketing strategy
Research Objective
Precise
Detailed
Clear
Operational
The Iceberg Principle
What is Marketing Research? (Burns and Bush Definition)
Marketing research is the process of designing, gathering, analyzing, and
reporting information that may be used to solve a specific marketing
problem.
What is Marketing Research? AMA definition
Marketing research: the function that links the consumer, customer, and
public to the marketer through information – information used to identify
and define marketing opportunities and problems; generate, refine, and
evaluate marketing actions; monitor marketing performance; and improve
the understanding of marketing as a process.
Market Research vs. Marketing Research
Market research: the “systematic gathering, recording, and analyzing of
data with respect to a particular market, where ‘market’ refers to a specific
group in a specific geographic area.”
What is the purpose of Marketing Research?
To link the consumer to the marketer by providing information that can be
used in making marketing decisions
What are the uses of Marketing Research?
Identify marketing opportunities and problems
Generate, refine, and evaluate potential marketing actions
Monitor marketing performance
Improve marketing as a process
Classifying Marketing Research Studies
Identifying marketing opportunities and problems
Market-demand determination
Market segments identification
Marketing audits SWOT analysis
A marketing plan outlines the specific actions you intend to carry out to interest
potential customers and clients in your product and/or service and persuade
them to buy the product and/or services you offer.
For successful business marketing, you need to develop a proper business
marketing plan, and then gauge its performance for your business growth. There
are many things that your business marketing plan needs to address and these
points may include some of the following:
• -What are your business marketing goals?
• -What is your target audience?
• -Deciding business marketing system
SWOT Analysis
A basic marketing plan begins with SWOT analysis about your company
and the SWOT should be :
A summary of the key elements in your business
Brief, concise and interesting, without being too abbreviated
Focused on the real issues facing your company
Action-oriented, so that positive proposals can be envisaged
Strengths- You can bank upon these.
Weaknesses- Definitely need to be corrected
Opportunities- Help you in setting the target where you want to reach.
Threats- Make necessary contingency plan to combat threats which would
automatically become a part of the marketing plan.
Classifying Marketing Research Studies
Generating, refining, and evaluating potential marketing actions
Proposed marketing-mix evaluation testing
New-product prototype testing
Advertising pretesting…see Insight Express AdInsight ad pretesting…
Monitoring marketing performance
Image analysis…bank image analysis
Tracking studies...sales, market shares of all brands in our category
Customer satisfaction studies
Improving marketing as a process
The purpose of these studies is to expand knowledge (basic research) of
marketing as a process rather than to solve a specific problem facing a
company…How does background music affect perceptions of
products…How preshopping information affects product
returns…Understanding cultural differences in consumer impatience…all
in Journal of Marketing.
Identifying Target Market
Identifying Market Characteristics
Measurement of Marketing Potential
Competitors Analysis
Sales Analysis
Identify and forecast Business Trends
Sales Forecasting
New Product/Service Acceptance and Potential
Long Range Forecasting of Marketing Mix Variables
Pricing Strategies and Studies
How to collect certain information about your customers, market and competitors.
This information tells you about your potential market, prices, trends, competition,
target customer, its preferences, income, habits, accessibility, convenient time
and plans. This information should be accurate, and reliable to help you make
the right business decision.
Step One : Defining the Purpose or Objectives
Ask people what they think of the product or service and collect
some background demographics & attitudes of these individuals.
How much potential customers would be willing to pay for the
product or service.
Where potential customers would prefer to purchase the product or
service.
Where the customer would expect to hear about or learn about
such a product or service.
Step Two: Gathering Data from Secondary Sources
Data that already exists i.e information from
Trade magazines
Libraries
Government Agencies
Universities
Internet
The entrepreneur should exhaust all possible secondary data sources,
observation, and networking before beginning any more costly primary data
research.
Step Three: Gathering Information from Primary Sources
Information that is new is Primary data and involves data collection
procedures like
Observation
Networking
Interviewing
Focus Groups
Experimentation
Data collection is done with the help of Data Instruments like Questionnaire.
FOCUS Groups: They are more informal method of gathering in-depth
information. A focus group is a sample of 10-12 potential customers who are
invited to participate in a discussion relating to the Entrepreneurs‘ research
objectives.
Step Four: Analyzing & Interpreting the results
The results should be evaluated and interpreted in response to the research
objectives. The data can then be cross tabulated to give better insights and
interpretations regarding the segmentation of the market.
Input into a Marketing Information System
Marketing Information Systems
Gather data from inside and outside the organization
Process and store the data
Make information available to everyone in the organization
Allow employees to request additional information from the system
Informal vs. Formal Marketing Research
The Marketing Research Process
The Research Question(s):
―What is the likely acceptance of this product among females?‖
―How might the packaging be changed to improve the product?‖
―Which radio station do you listen to the most?‖
―Do you like the color scheme being used in our new packaging
materials?‖
Types of Data
secondary data
primary data
qualitative data -
quantitative data -
Sources of Data
Primary Data
Internet
Mail Surveys
Telephone Surveys
Personal Interview
Secondary Data
Databases
Government
Periodicals
Trade Journals
Trade Associations
Data Collection Methods
experimentation
observation
survey
qualitative research:
Comparison of Four Survey Methods
Alternative Sample Designs
Marketing Research – Analyse Complexity of Buying Behaviour
Understanding Consumer Characteristics
CHARACTERISTICS Innovators
2-3%
Early
Adopters
12-15%
Early
Majority
33%
Late
Majority
34%
Laggards
12-15%
PERSONAL
Social,
Income, Occupation,
Education,
Housing,
Family Influence,
Time orientation
PSYCHOLOGICAL
Nature of needs, Perceptions,
Self-concept, Aspiration
Groups, Reference Groups
Changing Priorities
Stage Priorities Major Purchases
Fledging : Teens & early
20s
Self,Socialising, Education Appearance Products,
Clothing, Automobiles,
Recreation, Hobbies,
Travel
Courting :20s Self & Other, Pair
bonding,Career
Furniture & Furnishing,
Entertainment, Savings
Nest Building:20s &early
30s
Babies & Career Home, Garden,,Baby Care
products, insurnce
Full Nest 30-50s Children, Career, Midlife
crisis
Children Food, clothing,
education, transportation,
life counseling
Empty Nest 50-70 Self & others, relaxation Furniture, Entertainment,
Travel, Hobbies, Luxury
Automobiles, Investments
Sole survivor 70-90 Self, health,loneliness Health care , Diet, Security,
Comfort, TV, Books, Long
distance telephone
services
Analyse Target Market
Marketing Strategy to be Based on WHO MAKES THE BUYING DECISIONS
DECIDER
INFLUENCER
BUYER
USER
GATE KEEPER
Characteristics of a Marketing Plan
Should provide a strategy for accomplishing company goals and missions
Should be based on facts and valid assumptions
Should provide for continuity so that future plans can be built on it for long-term
goals
Should be simple and short
Should be flexible i.e. should provide scope for inclusion of ―what if‖ scenarios
Should specify performance criteria that will be monitored and controlled
Marketing Plan- The Algorithm
Defining the Business Situation – Describe the past and present business
achievements of the new venture.
Defining the Target market –
Market Segmentation- Dividing a market into definable and measurable
groups for the purpose of targeting market strategy.
Market Segmentation- The process of segmenting & targeting the market should
process in the following way
Decide what general market or industry you wish to pursue
Divide the market into smaller groups based on
Characteristics of the customer
Geographic
Demographic
Psychographic
Buying situation
Desired benefits (e.g. Product features)
Usage (e.g. frequency of usage)
Buying conditions (e.g. time available & product purpose)
Awareness of buying intention (e.g. familiarity of product &
willingness to buy)
Select segment or segments to Target
Develop a marketing plan integrating product, price, distribution & promotion
(together called THE MARKETING MIX)
Considering the Strengths and Weaknesses – The SWOT analysis which was
discussed earlier.
Establishing Goals & Objectives – Asking oneself ―Where do we want to go?‖ in
terms of Market share, profits, sales, market penetration, new products launching
etc. All such goals n objectives should be quantifiable and could be measured for
control purposes.
Defining Marketing Strategy – Outline all the activities needed to meet the
venture‘s business plan goals & objectives.
The 5-P’s
In the marketing plan, you should endeavor to follow best practice to maximize
your competitive advantage in each of the following key areas:
Product – packaging, the brand name, warranty, image, service, delivery time,
features, style etc.
Price – Pricing of a product or service has to be done very carefully considering
numerous things like quality, prospective demand, margins, competitor‘s prices,
discounts, market segmentation etc..
Promotion – The promotion plan itself a mini-marketing plan. Advertising is an effective
as well as an expensive way & has to be taken care of. The procedure to be followed
includes :
• Set specific campaign objectives (building sales, market share)
• Decide your strategy (budget, media choice, geographical profile)
• Target the Audience (market segment, demographic profile)
• Decide the advertising content (specific product/service benefits to
highlight)
• Decide the execution and style
Place (Distribution Plan)- The distribution plan must match the other elements of the
Marketing MIX to maintain the differentiation and focus of the Company.
If your product is of highest quality, with price & promotion to match, it must be available
in the major quality stores.
The choice of distribution channel, therefore can make an important contribution to both
your company differentiation & to reaching your target group of customers.
People – The final ingredient in the marketing plan jigsaw must be quality salespeople
who can consistently maintain your marketing differentiation.
A well remunerated & motivated staff will act as enthusiastic sales promoters and act as
eyes and ears of the company in the competitive market place.
Coordination of the planning process
Designating responsibility for implementation
Budgeting the Marketing Strategy
Implementation of the Market Plan
Monitoring Progress of Market Actions
Lack of a real plan (particularly regarding goals & objectives)
Inadequate situational analysis – There is no point in deciding where you want to
go if you do not know ―where you are?” and ―where you have been?‖
Lack of Goal Clarity and Unrealistic Goals – This generally happens due to lack
of understanding of the situation.
Unexpected competitive moves, product deficiencies, Delay in Getting Finance,
and acts of God.
