CHEMICAL ENGINEERINGL.D. COLLEGE OF ENGINEERING

Engineering Economics And Management

1. Divyesh Paghdar (130280105029)2. Harsh Bhatt (130280105002)3. Meet Kansagara (130280105021)4. Ankit Misrty (130280105026)5. Dharmang Patel (130280105035)6. Ankit Shah (130280105050)7. Aftab Ajmeri (130280105001)8. Dhruv Dholaria (130280105009)

INTRODUCTIONTO MANAGEMENT

&MANAGEMENT

PRINCIPLE- Guided By Prof. J. D. Mistry

INTRODUCTION TO MANAGEMENT

Meaning Of Management:

Various experts give their view for defining management as under:• “Management is a distinct process consisting of

planning, organizing, actuating and controlling performed to determine and accomplish the objectives by the use of people and resources.”

- George R. Terry

“Management is art the of knowledge what you want to do and then seeing that it is done in the best and cheapest way.”

- Frederick W. Taylor“Management is a process involving planning,

organizing, staffing, directing and controlling human efforts to achieve stated objectives in an organization”

- Dr. L. M. Prasad

Nature or Characteristics of Management:

• Following points are considered as nature or characteristics of management:

Human Activity: During management human is at the centre. Any activity

is done through human. Without human nothing could be done through money

and material.Manager must need human element to accomplish the

task.

Group of Function, not a Group of People:Management is a group of various functions like

planning, organizing, staffing, directing and controlling.It is the process which combined such element in

systematic and in continuous manner.to perform such functions responsibility assign to different people.

By this way it can be said that management is a group of functions not a group of people.

Universal activity:In any activity where, a group of people formed together

to achieve a common goal and in organized manner and under required guidance, in proper controllable atmosphere it is considered as a management activity.

Normally in any activity all these characteristics or few of them must be seen because, there is not any activity, without any goal or objective. That`s why management is universal activity.

Management is a process:During Management different functions, must be

perform like planning, organizing, staffing, coordinating, controlling etc.

Because once objectives are decided, resources are allocated to different functions or responsible area.

Proper direction or training is provided.

Constant Activity:Management is a different function of planning,

organizing, staffing, directing and controlling.All this activities must be in continuous manner.Because once, goal is framed, different objectives should

be assigned to achieve such goal.It is a continuous or constant task.

Co-ordination must be required:Since, the group has to work together, the task be

coordinated with each other.If it is not coordinated then sometimes, the activities

done by different function may goes in different direction.

Dynamic activity:Management is human activity. Hence, because of

variety of nature, the way to complete same task in different environment in different geographical area in different situation by different personalities is always varies.

Flexible activity:Management is human activity and it is perform mainly

in accordance with the objectives. The objectives may not be unique for all time periods.

For different situation, different organisation pattern, its direction and training is changed.

Therefore, management activity may not be static or rigid to all the way, it is always flexible.

Leadership Activity:Management means to do the job in group and get works

from them.Hence, the manager must lead the group in proper

direction by communicating regarding achievement of common goal and assigning appropriate task, meanwhile necessary control must be observe.

Solves future problems:Once, a manager solves specific problem, he gets proper

knowledge regarding the nature and its solution.Now he is able to solve such type of problem in different

departments. Even more he can guide somebody in this way.

Therefore, it can be said that if certain type of problem arises again, it can be solves easily.

SCOPE OF MANAGEMENT

The field of management is very wideThe operation areas of business management may be classified

into the following categories :

1. Production It is the basic or core functional area of the organization.

• (A) Purchasing : • The production manager needs to be careful for purchasing eaw material.

• Raw material should be better quality because the quality of the final product is depends on quality of raw material.

• (B) Materials Management :• It includes time period for accepting raw material , its quantity storage and speed of production

department for demanding another raw material.

• (C ) Research and Development :• With the passage of time and due to more and more requirement of customers , it is the duty of the

company to provide latest products in the market.

• Establish a separate R & D department for innovations.

2. Marketing

• (A) Advertising :• It is the main function of marketing.

• Advertisement by T.V , radio , news paper , hoarding , brochures etc.

• (B) Sales management :• It is concerned with the distribution system of the company.

• (C) After sales service :• Producer servicing system , or guarantee or warranty provided by the company and replacement system etc. makes ,major

effect on goodwill of the company.

• (D) Marketing Research :• It is related with the systematic collection , recording and analyzing of data relating to marketing of goods and services.

3. Finance and Accounting

• (A) Project finance :• It covers investment aspect of project.

• It considers the selection of sources of finance.

• (B) Financial accounting:• It relates the record all accounting records of financial transaction occurred during the specific period normally for one year.

• At the end of the year the financial results i.e. profit or loss are found out.

• (C) Cost Accounting :• It is useful to find out the cost of the product or service.

• (D) Taxation :• Management doesn’t forget the existence of Govt.

4. Human Resource

• (A) Recruitment and selection :• For different positions , various recruitment procedure is concluded which deals with many orals and written test .

• (B) Training and development :• The person is well educated and have proper skills but may not aware with current business.

• (C) Administration of wage and salary :• Along with position of job, proper wages are decided.

• Wages and salary of overtime is also decided and company gives increment so that workers feels secure in the company.

• (D) Industrial relation :• This area deals with the maintenance of relationship of overall employee with the company management.

• Benefits of worker are considered like wages payment , bonus system, overtime payment etc.

SKILLS ANF TYPES OF MANAGEMENT

SKILLS OF MANAGER

• Knowledge about the cost of production.• Set points based on a clearly defined mission.• Possess good personal skills like, communication , leadership and

empowerment.• Access ,assess and use information.• Innovating to adopt and changing environment.• Dissatisfied with status quo.• Organize , focus and prioritize various activities.• Effectively view the future aggressively.• Willing to assess and takes risks.

TYPES OF MANAGERS1. AUTOCRATIC OR AUTHORITARIAN –

Here complete authority is in the hand of one person and no one can raise any questions.

Also known as "totalitarianism or dictatorship”.In no. of cases this can be proved as best one.This type of manager believes in top-down

communication wherein orders are given by higher hierarchical level to lower ones.

2. PERSONALISTIC –

As the term itself says that it's like treating people as daughter and son.

Her authority is in the hands of an individuals that means the manager will be more parent rather than boss.

In this management style , the complete authority lies in hands of one person only but the method of working is different from autocratic.

3. DEMOCRATIC –

Here employees are free to put their matter and take decision for their work and carry out accordingly.

Most company policies and decision are made after taking the opinion of the employees into consideration.

That means a meeting is held with representatives if each hierarchical level in order to take decision about company policies and rules.

4. CHAOTIC --

This type of management style believes that employees perform their full potential when they are given a free hand.

To use full talent of their resources , they should make them totally free and let them think and act.

Many modern thinkers believes that chaotic management style allows an employees to work on his idea, without interference of the management and thhis will help to create new innovation.

5. LAISSEZ-FAIRE –

It is very liberal management style.Only target is communicated to them and they will

decide each and everything about their work and will take their own decision in completing goal.

On the other hand manager evade his duties very conveniently.

However it has been adopted by many organixzation and has worked well .

Managerial Roles

Managerial roles

Interpersonal role

Informational role

Decision roles

1. INTERPERSONAL ROLES:

Manager’s Interpersonal role is concerned with his interacting with other people that is both of the organizational members and outsider parties.

Interpersonal role

Figure head

Leader

liaison

A. Figurehead Role:

In this figurehead role, the manager needs to perform activities which are of traditional or formal and representative nature. These may include greeting the visitors, attending social functions involving employees, and handing out merit certificates and other awards to outstanding employees.

B. Leadership Role:

Leadership role involves leading subordinates and motivating them for willing contributions. Hence, he needs to do various tasks concern with employees like hiring, training, motivating and encouraging employee.

C. Liaison Role:

In liaison role, the manager needs to servers liaison that is to connect link between his organization and outsiders or between his unit and other organizational units. The major objective of this role is to maintaining a relationship between the organization and its external environment. Here, he has to inform of such factors as the degree of competition in the market, changes in government policy and in social phenomena etc.

2. INFORMATIONAL ROLES:

Manager’s informational roles include communicating information to both inside and outside the organization.

Informational role

recipient

Dissementor

spokesperson

A. Monitor Role:

In his monitoring role, the manager constantly collects information about those factors which affect his activities. Such factors may be inside of the organization. Mostly he collects information from his subordinates and through the study of internal and external incident.

B. Disseminator Role:

In the disseminator role, the manager distributes important information to his subordinates. In this way if subordinates cannot meet each other personally, then he may act as a link between them. The manager makes use of different sources like, memos, circulars, telephones and meeting for dissemination of important information.

C. Spokesman Role:

As a spokesperson, the manager needs to represent his organization or unit while interacting with outsiders like customers, financiers, government, suppliers, or other agencies of the society. In this way he provides information about financial position of the company to the directors and shareholders. He assures the costumers of the company’s awareness and efforts to fulfill its social responsibilities. He also assures the government that the company is abiding by the law.

3. DECISIONAL ROLES:

Decisional roles of a manager involve taking certain decision. In this way the manager needs choose the most appropriate alternative out of the available for the problem.

Decision role

The entrepreneurial

Disturbance holder

Resource allocator

negotiator

A. Entrepreneurial Role:

Here, the manager measures the risk involved in the task terms of the result of an action. Since, the course of action is also affected by different external factors, which are dynamic and change constantly. Hence, the manager is required to bring suitable changes in the organizational processes to align these with requirement of the environment.

B. Disturbance Handler Role:

Sometimes a problematic situation arises in the company like, strikes, bankruptcy of some major customer, revocation of contracts by suppliers etc. which may adversely affect the interest of the company. At this time, manager needs to compel in this situation to respond and take corrective measures.

C. Resource Allocation Role:

Here, the manager allocates resources-human, physical, and financial-to various organizational units according to their needs. He allocates authority and responsibility among the employees. He also decides the amounts of expenditure to be incurred on various machines and materials.

D. Negotiator Roles:

Here, the manager negotiates with various interest groups in the organization. Such interest groups are shareholders, employees, and outside agencies. For e.g. the president of a company has to negotiate the issue of strikes. The sales manager has to negotiate with the costumers to settle the terms of sale. The purchase manager has to negotiate with suppliers.

Limitations of role approach

1. The types of roles that have been identified by Mintzberg are not applicable to all types of managers particularly those at the lower levels.

2. There are many other managerial roles which have not been included in this list for example, manager as controller, as a coordinator, etc.

Reconciling managerial roles

• According to the wren and voich, most of the roles prescribed by Mintzberg can be integrated with the earlier classification of management functions.• In planning , a manager perform informational and decisionals role

since; he collects relevant information on the basis of which he makes decisions.

MANAGEMENT AND

ADMINISTRAION

• Management and administration may be describe by the following three concept:

1. American Concept 2. English Concept 3. Modern Concept

1. American Concept

The relationship between management and administration as per American concept mat be clarified with the help of following diagram:

Top Level Function

Middle Level Function

Lower Level Function

Board of Directors General Manager

Supervisor

Departmental Manager

Determining the policy and object or Determining

Function

Accomplishment of pre-determined objects or Executive Function

Administration

Management

As far as American concept concern they believe that top level function considered as administration. And Rests of levels in the organisations are considered as management. They projecting in such way that reflects that administration is a superior than that of management. Administration takes decision and management just makes the implementation and is implementing authority.

2. English Concept

After American concept, we have another concept known as English concept and according to this concept; management is wider than administration which is connected with Top level functions while administration is only a part of it which follows the policies decided by the management. This concept is absolutely opposite the American concept.

3. Modern Concept

According to the modern concept, management and administration are synonymous. In the modern scientific age of management this is the most prevalent and accepted concept of management and its make no difference between management and administration. The chief supporters of this concept is Henry Fayol, Kimbal and Kimbal, William H. Newman, Peter F. Drucker, Theo Haimann, Koontz O’Donnell.

Top Level Management

Middle Level Management

Lower Level Management

Management

Function

Administration

Function

Organisation

The above diagram shows that at all the three levels of management, the manager performs both managerial and administrative function simultaneously. The only difference is that as the management level starts coming lower from the top level, the function of management increase and the amount of administrative function gets reduced. For example, at the lower level of management, a manager has to do less administrative function than the management function.

Principles Of Management

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•A principle refers to a fundamental truth.•It establishes cause and effect relationship between two or more variables under given situation.•They serve as a guide to thought & actions.

These principles are derived: -

•On the basis of observation and analysis•By conducting experimental studies

Introduction

2

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Scientific management• The concept of scientific management was

introduced by Fredrick Winslow Taylor in USA in the 1911.• Scientific management was concerned essentially

with improving the operational efficiency at the shop-floor level.

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Scientific management cont.

• Taylor has defined scientific management as follow: “Scientific management is concerned with knowing exactly what you

want men to do and then see in they do it in the best and cheapest way.”

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Efficiency and Effectiveness

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4 Principles of Scientific management

1. The development of a spirit of hearty cooperation between workers and management to ensure that work would be carried out in accordance with scientifically devised procedures.

2. The division of work between workers and management in almost equal shares, each group taking over the work for which it is best fitted instead of the former condition in which responsibility largely rested with the workers.

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4 Principles of Scientific management cont.

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..

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Schematic diagram of scientific management

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Features of scientific management

• Taylor emphasized on separation of planning aspect from actual doing the work.• He evolved the concept of functional foremanship

based on specialisation of functions.• Job analysis is undertaken to find out one best way of

doing the things.• Workers should be selected on the basis of their

education, work experience, aptitude, physical strength etc.

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Features of scientific management cont. • Insist on the training of workers for making them

more efficient and effective.• Maintenance of standardisation in respect of

instruments and tools, period of work, amount of work, working conditions, cost like production etc.• Financial incentive provides to motivate workers to

put in their maximum efforts.

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Implementation Problems• Rather than sharing performance gains with workers

through bonuses, only increased the amount of work that each worker was expected to do.• Unhappy workers: more work but same pay; increase

in performance meant fewer jobs and greater layoffs; dissatisfied with monotonous and repetitive jobs.

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Implementation Problems• Managers did not care about the workers’ well beings• Workers withheld job knowledge to protect their jobs

and pay.• Workers develop informal work rules that discourage

high performance .

Administrative ManagementOr

Operational Management

Administrative or Operational Management Approach was presented by Henry Fayol. His work is concerned with the higher levels of the organization. His analysis and discussion is from the view of a top management. Henry Fayol found that all industrial activities could be divided into the following six groups :

1. Technical activities (for e.g.. Production, manufacture and adoption).

2. Commercial activities (for e.g.. Buying, selling & exchange)3. Financial activities( for e.g.. Search for capital)4. Security activities (for e.g.. Protection of property &

persons)5. Accounting activities ( for e.g.. Stock-taking, balance

sheets, etc.)6. Managerial activities (for e.g. Planning, organising,

commanding, coordinating & controlling, etc.)

As Fayol suggests, there are six types of qualities required in a manger which are as under :

1) Physical efficiency (for e.g.. Health, vigor & alertness) ;2) Mental ability (for e.g.. To understand & learn, judgment &

mental vigour) ;3) Moral competence ( for e.g.. Energy, firmness, loyalty, tact &

dignity) ;4) Educational qualification (for e.g.. General acquaintance with

matter not belonging to function performed) ;5) Technical awareness ( for e.g.. Peculiar to the function being

performed) ; 6) Experience (which is arising from the work).

Fayol’s analysis provides a means of main five function of management, which are main principles of management. These five functions include :

1) Planning and forecasting (Purveyance))2) Organizing3) Commanding4) Co-coordinating &5) Controlling• According to Fayol above five functions helps in

managerial process and guides the principles for implementing the process in well mannered.

His Principles of Management are as under :

1) Division of Work : Division of work directs to specialization. It may be applied to all kinds of work-management or technical. Specialization increases efficiency & output.

2) Authority & Responsibility : Authority & Responsibility both runs in parallel & goes together. There should be parity of authority & responsibility for performing necessary functions and for discharging the responsibility properly.

3) Discipline : For better superior at all levels, clear & fair agreement & judicious use of penalties. In this way discipline is a prime requirement.

4) Unity of Command : For smooth working it is necessary that subordinate receives order from only one superior. So that possibility duplication of order can be removed.

5) Unity of Direction : It is necessary that all the groups do their job in same direction.

6) Individual Interests Linked to General Interests : The interest of the business enterprise should supersede the individual interests and group interests.

7) Remuneration : Remuneration to workers should be fair and adequate.

8) Centralization : The decision for type of organization that is centralized or decentralized depends on various circumstances. It would be different from one organization to another.

9) Scalar Chain : The scalar chain is important for the link of authority & responsibility. As chain of authority falls from high to low level and chain of responsibility goes from low to high level.

10) Order : This principle suggests that all things should be as per its order. That is everything or every activity should be as per its schedule & per its plan.

11) Equity : Management should be kind and justice for all subordinates. Unbiased, meaningful and equal treatment should be the motto of management in its relations with workers.

12) Stability : Stability is concerned with long term sustainability of employees in the enterprise.

13) Initiative : Employee is encouraged for more efficiently to execute a plan of action. Moreover, initiative brings self-confidence in employees which are essential for better results.

14) Team Spirit : Fayola emphasized for team spirit. By promoting team spirit in organization a sense of unity increases. He also emphasized importance of good communication in achieving team-spirit.

MASLOW’S HIERARCHY OF

NEEDS THEORY

SIR ABRAHAM MASLOW

PHYSIOLOGICAL NEEDS

Clothing. Shelter – needed by even animals. Metabolic needs – air, water, food, rest.

PHYSIOLOGICAL NEEDS

SAFETY NEEDS

Security at work place. Job security and stability. Safety of property against natural disasters,

calamities, wars, etc.

SAFETY NEEDS

SOCIAL NEEDS

Need for love. Affection Friends Identification

SOCIAL NEEDS

ESTEEM NEEDS

Desire for success. Self respect. Achievement.

ESTEEM NEEDS

SELF ACTUALIZATION

Self fulfillment. Realization of capability or potential.

SELF ACTUALIZATION

USES

Hierarchy of needs theory lead the managers to think about and lay emphasis on ways of satisfying worker needs at various levels to keep them spirited and motivated.

BEHAVIOURAL APPROACHCharacteristics:-• Managerial decisions focus on human and its behavior.• Study of psychology, sociology, etc. is required for

understanding employees’ behavior.• Healthy human relation are good for employees’

productivity.• Motivation, Leadership, Communication, Participative

management should be properly used.

Advantages:-• Development of management.• Employee job-satisfaction increases.• Achievement of objectives.

BEHAVIOURAL APPROACH

Limitations:-• Difficult to forecast human behavior.• It cannot be universally accepted as human behavior is based

on occasional experiments.• Instigates avoiding work.• Leads to inefficiency.• Undermines the economic performance, not good foe

business unit.

BEHAVIOURAL APPROACH

Conclusion:-• Job itself is source of motivation and satisfaction.• Manager should use untapped human potential.• Manager should create environment where each employee

can give his best.• Operating efficiency can be increased by self-direction, self-

control and subordinate influence.• Work satisfaction improves employees’ productivity which is

good for business.

BEHAVIOURAL APPROACH

THE END

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