third assignment

MOHANDAS COLLEGE OF ENGINEERING AND TECHNOLOGY

Second Semester MCA

Principles of Management

Assignment -3(i)

Max. Marks: 30                                                                                                           10-09-2012

Date of Submission:    28-09-2012

GROUP I

1.       Describe any 4 on the job training techniques.                                                                                 (5)

2.       Explain the pre requisites of a good recruitment policy in an IT organization.                          (5)              

3.       Write in brief about performance appraisal process.                                                                      (5)

4.       Write in short on variables determining manpower forecasting.                                                 (5)

5.       Define Transfer? Write in short on any 2 types of transfer technique.                                        (5)

6.      Explain career planning process.                                                                                                           (5)

GROUP II

1.     Describe any 4 off the job training techniques.                                                                  (5)

2.     Explain the recruitment technique in a global I.T. firm.                                         (5)

3.     Critically evaluate any 3 performance appraisal techniques.                                             (5)

4.     Explain any 3 techniques used for manpower forecasting.                                                (5)

5.     Differentiate between Promotion and Demotion.                                                  (5)

6.     Define Induction.                                                                                                       (5)

TYPES OF AUTHORITY

In an organization, there are three types of authority.

·        Line authority gives a manager the right to direct the work of his or her employees and make many decisions without consulting others. Line managers are always in charge of essential activities such as sales, and they are authorized to issue orders to subordinates down the chain of command.

·        Staff authority supports line authority by advising, servicing, and assisting, but this type of authority is typically limited. For example, the assistant to the department head has staff authority because he or she acts as an extension of that authority. These assistants can give advice and suggestions, but they don't have to be obeyed. The department head may also give the assistant the authority to act, such as the right to sign off on expense reports or memos. In such cases, the directives are given under the line authority of the boss.

·        Functional authority is authority delegated to an individual or department over specific activities undertaken by personnel in other departments. Staff managers may have functional authority, meaning that they can issue orders down the chain of command within the very narrow limits of their authority. For example, supervisors in a manufacturing plant may find that their immediate bosses have line authority over them, but that someone in corporate headquarters may also have line authority over some of their activities or decisions.

Functional Authority is given to a line or staff manager to do a specific job. When the job is completed, the authority is taken back.

For e.g. The normal job of the Marketing manager is to sell the products of the company. The Managing Director (MD) may give him authority to conduct a New Year Party for the full company. This authority is called Functional Authority. So, functional authority is given to a manager to do a specific job. This job is not his normal job. When he is doing this new job, he may or may not do his normal job. The manager already has a line or staff authority to do his normal job. Thus, Functional authority is an additional authority given to him to do the new job. When this new job is completed, the functional authority is taken away, and he has to go back to his normal job.

Functional Authority is different from Line Authority because line authority is given only for one particular department. For e.g. A Production manager is given line authority only for the production department. However, Functional Authority may be given for a particular department or for the full organisation. For e.g. In the first example, the Marketing manager is given functional authority to conduct a new year party for the full organisation. So, Functional Authority is not restricted to a particular department.

Functional authority is also different from staff authority. This is because the manager that has staff authority cannot do anything. He can only give advice and service. However, the manager that has functional authority can do something. Here, functional authority is similar to line authority. In fact, it is a type of limited line authority.

Features of Functional Authority

The characteristics or features of functional authority are:-

Functional authority is given to a manager to perform a specific function.

The manager may be a line manager or a staff manager. But mostly functional authority is given to a staff manager.

It is not limited to a particular department. It may even cover the full organisation.

It is an additional authority. It is given to a manager in addition to his normal (line or staff) authority.

It is removed when the work is completed.

Advantages of Functional Authority

The importance or merits or advantages of functional authority are:-

The specific function is given to another manager. So, the line manager can concentrate on his regular job.

The specific function is performed by an expert. So, it will be done efficiently.

The service of the staff managers will be utilised fully for the benefit of the organisation.

It is suitable for large organisations.

The authority and responsibility is well-defined.

TYPES OF ORGANIZATION STRUCTURES(EXCEPT LINE STRUCTURE)

Line and Staff Organization Structure

What?

A pattern in which staff specialists advice line managers to perform their duties.

Why?

When the work of an executive(line manager) increases, its performance requires services of specialists in an area.

What staff can do?

Right to recommend ,advice ( IT Advisor, Economic Advisor, National Security Advisor)

Figure:

Merits

·        Planned specialization

                              Principle of specialization

Line manager responsible for operations which will achieve organizations objectives

Staff people provide expert advice on their field

·        Quality Decisions

Because managers takes decision after discussing with expert staff

·        Prospect for personnel growth

Opportunity for staff to concentrate in his area.

·        Training ground for personnel

Staff person do the job in which he is specialized.

Line manager observes how staff he is doing the job.

Demerits            

Lack of well defined authority

Line and staff conflicts

Suitability

Suitable for large organizations where specialization of activities is required.

Its success depends on harmony between Line and Staff people, clarity in Line of Authority, interpersonal contact of executives.

Functional Organization structure

It is created by grouping activities on basis of functions required for achieving the objective.

All functions are classified into basic, secondary etc.

Example: Production, Marketing, Finance, Personnel.

Marketing department can be sub divided in to Market Research, Advertising, and Sales

etc.

Characteristics

Whole activities of Organization are divided in to various functions based on type of work – Specialization by function.

Each functional area is put under one executive or specialist.

To take a decision related to particular function, consult the functional specialists.

Specialists have independence.

Advantages

Ensure division of labor and specialization

Quick decision making (consult functional head)

Limitation of one man control under line organization is removed

High degree of control and coordination of functions because all work of one kind is under one manager.

Promotes professional achievement as a person is restricted to his own area of specialization

Bring order and clarity in organization by prescribing what is expected from each subordinate.

Disadvantages

Responsibility for ultimate product

Here each department focuses on contribution on their area not on complete product.

Slow decision making- consult each department head

Line and staff and interdepartmental conflict

Divisional Organization Structure

Organization is divided into different autonomous units. Each unit is self contained and it has separate resources/ functional units to operate independent of others. Ie. Each unit has its own manufacturing; marketing etc. each unit is headed by a manager.

Basis of Departmentation

Product divisionalization

Product structure groups employees together based upon specific products produced by the company. An example of this would be a company that produces three distinct products, "product a", "product b", and "product c". This company would have a separate division for each product.

Example: Reliance Industries Limited has no of product divisions. : textiles,chemical ,oil and gas,polymers.

Territorial divisionalization

Here each organization may have regional offices operating in different areas. They may be established as separate units. Each regional office has its own set of functional departments.

Project Organization Structure

Here divisions or units are based on projects. There will be separate units for each project. When a project is completed, that unit/division may disappear.

Difference between Divisional and Project structure

In divisional various units are created on permanent basis, but in project structure units are created on temporary basis, ie: depend on life time of the project.

There will be a project manager for each project. He prescribes “what is to be done, when it is to be done, how much resources are required”.

The functional personnel are taken from various departments and functional managers decide who will perform the task and how it will be done.

 Project  manager has the responsibility for completing the project.

He doesn’t have the vertical authority on personnel from various functional departments.

Matrix Organization structure

Combination of functional and product structure

 A matrix organization frequently uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses.

An example would be a company that produces two products, "product a" and "product b". Using the matrix structure, this company would organize functions within the company as follows: "product a" sales department, "product a" customer service department, "product a" accounting, "product b" sales department, "product b" customer service department, "product b" accounting department

ORGANIZATION STRUCTURE

Organization structure

Definition

§  Formal relationships among various tasks, activities and people in the organization.

§  Framework  in which an organization arranges its authority , responsibility

Factors affecting Organization structure

1. Size

Small organization

                        Its structure can be simple/ no formal organization structure.

                        No specified job functions.

                         Individuals simply perform tasks based on their likes, dislikes, ability.

                        Rules and guidelines are not established

                        Small organizations are very often organic(respond to environment change) systems.

Large organizations

                        More complicated its structure.

                        More formal work assignments.

Some delegation of authority. 

Tasks are highly specialized.

Detailed rules and guidelines dictate work procedures. 

Superior subordinate relationship communication occurs through Authority, Responsibility

2.    Strategy

How an organization is going to position itself in the market in terms of its product is considered its strategy

2 Strategies  

a)    Differentiation  strategy

Always the first on the market with the newest and best product

b)    Cost -leadership strategy

Produce a product already on the market more efficiently and more cost effectively

3.    Environment

a)    Stable environment

The customers' desires are well understood and probably will remain consistent for a relatively long time.

Examples include manufacturers of items such as detergent, cleaning supplies, and paper products.

Here mechanistic structures would be advantageous.

b)    Dynamic environment

The customers’ desires are continuously changing.

Example of an industry functioning in a dynamic environment is electronics.

Technology changes, so do the desires of consumers.

Here organic structures would be advantageous.

4.    Technology

Types of technology involved in production

a)    Unit production

It refers to production of individual items tailored to a customers specifications.

Example: custom-made garments.

b)    Mass production

It refers to a large number of uniform goods in an assembly-line system. Workers are highly dependent on one another, as the product passes from stage to stage until completion.

Example: manufacturing of machine parts

c)     Process production

It refers to the production of materials that are sold by weight or volume.

                                    Example: chemicals

                                    Manpower increases from unit to mass production, span of management increases.

But if information technology is to be used, manpower requirement may decrease bcz of the work done by the computer. 

MOTIVATION

Motivation

Organizations objectives

Activities to achieve the objectives

Managers should try hard to make the employee do the activities to achieve the objectives.

Performance = Ability X Motivation

Motive is defined as needs, wants, drives, impulse etc within the individual.

Definition of motivation

Motivation means a process of stimulating/energizing people to accomplish the desired goals.

Motivation refers to the way in which drives, desires, aspiration, and strivings and needs direct, control or explain the behavior of human beings.

Motivation is an instrument in the hands of managers for inspiring and creating confidence in the workforce that they are capable of achieving good results.

Example for motivator: Money, Job security, Responsibility, Recognition, Possibility of Growth and Development, Suggestion scheme

Importance of Motivation

Helps in realizing organizational goals

Helps in increasing productivity

Helps in Reducing employees turnover and absenteeism

Helps in maintaining good industrial relations

Helps in getting right personnel

Helps in reducing employee grievances

Motivation theories

1. Abraham Maslow’s Hierarchy of Needs Theory

1.      Physiological needs

Basic needs for sustaining human life.

Food , shelter, water, sleep etc.

Basic needs motivate people to do the job

2.      Security of Safety needs

Fear of losing job, physical danger, pension

3.      Affiliation or Acceptance needs

As a social being, people want to be accepted by others in the society.

4.      Esteem needs

Power, prestige, status, self – confidence

5.      Need for self-actualization

Highest need in hierarchy.

Desire to become what one is capable of becoming.

To maximize one’s potential and to accomplish something.

2.      Herzberg two-factor theory - Motivation-hygiene approach to motivation

dissatisfiers /maintenance /hygiene factors

The presence will not motivate you, but the absence will dissatisfy you.

Eg: Salary, job security, working condition, company policy,  administration, status, interpersonal relationships

motivator/satisfier- the presence will satisfy/ motivate you

Eg: Achievement, recognition, challenging work, advancement, growth in job.

Comparison of Maslow’s need hierarchy and Herzberg’s 2 factor theory

Figure:

3.      Equity theory(compare/equate himself with others based on fairness of reward relative to inputs)

Individual’s judgment about the fairness of reward he got relative to inputs in comparison with reward of other.

Inputs are effort, education, and experience

Outcomes by a person/inputs by a person ==  Outcomes by a person/inputs by another person

If people feel they are inequitably (irregular, disproportionate) rewarded, they may be dissatisfied and reduce the quantity / quality of output/or may leave the organization., ask for a greater reward.

If people If people feel they are equitably (fairly) rewarded, they will continue at same level of output.

If people feel that the rewards are greater than equitable, they may work harder.

                                                                                                                

4. McClelland Needs theory of motivation

Need for power

               Power is needed for exercising influence and control over others

Need for affiliation

As a social being, people want to be accepted by others in the society/no one should reject them.

Need for Achievement

Intense desire for success and intense fear of failure.

They set difficult goals , assume personal responsibility for getting a job done, restless, like to work long hours

5.      McGregors Theory X and Theory Y

Assumptions about humans 2 predict the behavior of employees.

Theory X - Authoritarian Style

Theory Y - Participative management style

6.      Vroom’s Expectancy theory

Force=valence*expectancy

Force- strength of a person motivation

Valence- value they place on the outcome of their effort./ chance he sees of achieving that goal.

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FORECASTING TECHNIQUES

CORPORATE STRATEGY

Corporate strategy

The overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals.

 Corporate strategy is often stated explicitly in a "mission statement".

Corporate Strategy

Issues include:

• Scope of Business-----What Business you are in??

Product scope. How specialized should the firm be in terms of the range of products

it supplies? Coca-Cola (soft drinks), SAB Miller (beer), Gap (fashion retailing), and

Swiss Reliance (reinsurance) are specialized companies: they are engaged in a single

industry sector. General Electric, Samsung, and Bertelsmann are diversified

companies: each spans a number of different industries.

Geographical scope. What is the optimal geographical spread of activities for the

firm? In the restaurant business, Clyde’s owns 12 restaurants in the Washington DC

areas, Popeye’s Chicken and Biscuits operates throughout the US, McDonald’s

operates in 121 different countries.

Vertical scope. What range of vertically linked activities should the firm encompass?

Walt Disney Company is a vertically integrated company: it produces its own movies,

distributes them itself to cinemas and through its own TV networks (ABC and

Disney Channel), and uses the movies’ characters in its retail stores and theme parks.

Nike is much more vertically specialized: it engages in design and marketing but

outsources many activities in its value chain, including manufacturing, distribution,

and retailing.

• Resource deployment----How you are going to use your resources??
• Competitive advantage----What are your competitive advantages??
• Coordination of Production, Marketing, Personnel etc.----

Corporate planning

Corporate planning represents a formal, structured approach to achieving objectives and to implementing the corporate strategy of an organization.

It is the process of drawing up detailed action plans to achieve an organization's goals and objectives, taking into account the resources of the organization and the environment within which it operates.

Methods of developing Corporate Strategy

1.            Boston   matrix

Market Share and Market Growth

To understand the Boston Matrix, you need to understand how market share and market growth interrelate.

Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms. The higher your market share, the higher the proportion of the market you control.

 Market growth is used as a measure of a market's attractiveness. Markets experiencing high growth are ones where the total market is expanding, meaning that it’s relatively easy for businesses to grow their profits, even if their market share remains stable.

Understanding the Matrix

The Boston Matrix categorizes opportunities into four groups, shown on axes of Market Growth and Market Share:

These groups are explained below:

Dogs: Low Market Share / Low Market Growth
In these areas, your market presence is weak, so it's going to take a lot of hard work to get noticed. You won't enjoy the scale economies of the larger players, so it's going to be difficult to make a profit. And because market growth is low, it's going to take a lot of hard work to improve the situation.

Cash Cows:
High Market Share / Low Market Growth
Here, you're well-established, so it's easier to get attention and exploit new opportunities. However it's only worth expending a certain amount of effort, because the market isn't growing, and your opportunities are limited.

Stars:
High Market Share / High Market Growth
Here you're well-established, and growth is exciting! There should be some strong opportunities here, and you should work hard to realize them.

Question Marks (Problem Child):
Low Market Share / High Market Growth
These are the opportunities no one knows what to do with. They aren't generating much revenue right now because you don't have a large market share. But, they are in high growth markets so the potential to make money is there.

2.            SWOT Analysis/TOWS Matrix

The SWOT analysis allows managers to develop a strategic plan by examining organizational strengths and weaknesses in terms of the opportunities and threats presented by its environmental elements. Subsequent strategies and tactical decisions can produce a competitive advantage.

A SWOT Analysis examines the companies:

• Strengths...Internal
• Weaknesses...Internal
• Opportunites...External
• Threats...External
• 
  
  

By developing a SWOT analysis, a company can determine what its distinctive competencies are. This will help determine what the organization should be in business for, what its mission should be.

3.            Product life cycle
Four Stages to the Product Life Cycle:

1. Introduction
2. Growth
3. Maturity
4. Decline

Introduction

Failure rate for new products can range from 60%-90%, depending on the industry. A product does not have to be an entirely new product, can be a new model (car).

Marketing Mix(MM) considerations

Need to build channels of distribution/selective distribution
Dealers offered promotional assistance to support the product...PUSH strategy.
Develop primary demand/pioneering information, communications should stress the benefits of the product to the consumer, as opposed to the brand name of the particular product, since there will be little competition at this stage and you need to educate consumers of the product's benefits.
Price skimming...set a high price in order to recover developmental costs as soon as possible.
Price penetration...set a low price in order to avoid encouraging competitors to enter the market, also helps increase demand and therefore allows the company to take advantage of economies of scale.
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Growth

Need to encourage strong brand loyalty, competitors are entering the market place. Profits begin to decline late in the growth stage.
May need to pursue further segmentation.

MM considerations

May need to perform some type of product modification to correct weak or omitted attributes in the product.
Need to build brand loyalty (selective demand), communications should stress the brand of the product, since consumers are more aware of the products benefits and there is more competition, must differentiate your offering from your competitors.
May begin to move toward intensive distribution-the product is more accepted, therefore intermediaries are more inclined to risk accepting the product.
Price dealing/cutting or meeting competition, especially if previously adopted a price skimming strategy.

Maturity

Sales curve peaks-severe competition, consumers are now experienced specialists.

MM Considerations

A product may be rejuvenated through a change in the packaging, new models or aesthetic changes.
Advertising focuses on differentiating a brand, sales promotion aimed at customer (PULL) and reseller (PUSH).
Move to more intense distribution
Price dealing/cutting or meeting competition
Provides company with a large, loyal group of stable customers. Generally cash cows that can support other products.
Strategies during maturity include:

Decline

Sales fall off rapidly. Can be caused by new technology or a social trend.
Can justify continuing with the product as long as it contributes to profits or enhances the effectiveness of the product mix.
Need to decide to eliminate or reposition to extend its life.

MM Considerations

Some competition drop out
Need to time and execute properly the introduction, alteration and termination of a product.

decision making

Decision making

Definition

It is defined as selection based on some criteria of one behavior alternative from 2 or more possible alternatives.

Characteristics of decision making

Process of choosing a course of action from   among alternatives

It is a human process involving application of intellectual abilities.

It may be negative.

Means to an end

Significance of decision making

Decision making needed for all management functions.

Types of decisions

Programmed and Non-programmed

Major and Minor

Policy and Operating

Routine and Strategic

Organizational and Personal

Individual and Group

Departmental, interdepartmental and Enterprise

Simon’s Decision making process

Identifying the problem( Intelligence phase)

The decision-making process begins when a manager identifies the real problem.

A problem identified and defined is a problem half solved.

What is Symptom?

Symptom indicate that something is wrong with an organization, but they don't identify root causes. 

What is Diagnosis?

Diagnosis is the process of identifying a disease from its symptoms.

Here we identify the root cause or real problem from the symptoms.

TABLE 1

Symptoms and Their Real Causes

Symptoms	Underlying Problem
Low profits and/or declining sales	Poor market research
High costs	Poor design process; poorly trained employees
Low morale	Lack of communication between management and subordinates
High employee turnover	Rate of pay too low; job design not suitable
High rate of absenteeism	Employees believe that they are not valued

While  diagnosing the real problem the manager should consider causes and find out whether they are controllable or uncontrollable.

Analyzing the Problem: Design phase

After defining the problem, the next step in the decision-making process is to analyze the problem in depth. This is necessary to classify the problem in order to know

Who must take the decision and

Who must be informed about the decision taken,

What information is needed and

From  where the information is available.

Developing alternate solutions or courses of action - Design phase

Reason for Developing alternate solutions is to make the best decision.

Example : if the management wants to fill up vacancy , alternatives are

Promote from within

Recruit from outside

Appoint a relative of previous employee

Selecting the best solution- Choice Phase

Selection is based on parameters like experience, experimentation and detailed investigation.

Consider the merits and demerits of each alternative solution and costs involved in each.

Converting the decision in to effective action – Implementation phase

Implement the decision.

We need co operation of subordinates

They should be convinced that decision is correct.

Follow up the decision

A decision is said to be good if it also holds good in the same situation at another time and place.

Manager should introduce a system of follow up.

Effective decision

An effective decision is one which is action oriented,goal direct5ed and provides efficiency in implementation.

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