Industrial Management - Lecture 1

8/2/2019 Industrial Management - Lecture 1

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Industrial Management


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INDUSTRIAL MANAGEMENT HANDOUTS

LECTURE 1

INTRODUCTION 3

FU NC TIO NS O F.M AN AG EM EN T A NO LE VE LS O F M AN AG EM ENTE VO LU TIO N O F T HE IN DU ST RIAL MANAGEMENTAN ANALYSIS OF THE EMERGENCE OF THE INDUSTRIAL UNITSTAGES OF EVOLLJTlON OF INDUSTRIAL MANAGEMENT

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INTRODUCTION

FUNCT IONS OF MANAGEM ENT AND LEVELS OF MANAGEM ENT

Management supposes directing an organization in its way to becomeprofitable and competitive. It represents a dynamic endeavor carried out amidconstantly changing factors, both internal and external to the organization.Management takes place in aII economic functions of an industrial unit: research &.development, production (operations), bumen resources, finance &accountingend commercial.

Management represents the process used to accomplish organizational goalsthrough planning, organizing, coordinating, leading, end controlling people andother organizational resources. They are known as the primary functions ofmanagement.Planning includes anticipating trends and determining the best strateg ies andtactics to achieve organizational objectives. The trend todayis to have planningteams to help monitor the environment, find business opportunities, and watch forchallenges. -

Planning involves: Setting organizational goals _ Developing strateg ies and tactics to achieve those goals (through strategicplanning, tactical planning, operational planning and contingency planning) Determining resources needed Setting precise standardsA common planning tool is represented by SWC; :>T analysis (see figure 1 ). It isused to analyze an organization's strengths, weaknesses, opporlunities, end

threats. The company begins such a process with an analysis of the businessenvironment in general. Then it identifies strengths and weaknesses. These arer+> internal to the firm and can be studied relatively easily. Finally, as a result of theenvironmental analysis, it identifies opportunities and threats that are externa I to thefirm.

Potential STRENGTHS (Internal) Potential WEAKNESSES (Internal) Core competencies in key areas No clear strategic direction An acknowledged market leader Obsolete facilities . Cost advantages Lack of managerial depth and Better advertising campaigns talent Weak market imagePotential OPPORTUNITIES (External) Potential THREATS (External) Ability to serve additional customer groups Entry of lower-cost foreign Expand product lines competitors Falling trade barriers in attractive foreign rnarkets Rising sales of substitute products Ability to grow due to increases in market - Costly regulatory requirementsdemand Vulnerabilitv to recession

Fiqure 1. SWOT analysis.

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Organizing includes resource management, designing the structure of theorganization (includ ing organization chart) and creating conditions and systems inwhich everyone and everything work together to achieve the organization'sobjectives.Organizing involves:

Allocating resources Preparing a structure (organization chart) showing lines of authority andresponsibility Assigning tasks and establishing procedures for accomplishing goals Recruiting, selecting, training, and developing employees

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An organization chart is a visual device that shows relationships amongpeople and divides the organization's work (is a graphical representation of thecompany structure). The corporate hierarchy may include top, middle, and first-linemanagers and these are known as the levels of management (see figure 2)

PresidentChancellorChief Executive Officer

Divisiol1 headsBranch managersDeans

Section headsSupervisorsForemen

Figure 2. The management pyramid: levels of management.There are ditferent manners to portray an organization chart of an industrialunit. Two of the most usual are functional and departmental charts and are presentednext (see figure 3).

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Industrial ManagementI OWNER I

II Administrative Council

Person or group of persons

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IGeneral Manager

IHead of

CommercialActivities

IHead of

Economic

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Person or group of persons

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Fi ure 3. a. A functional or anizational chart of a Iar e industrial unit

Division A ' " O. . . . 1- c; ~,-.- a) ; : : : l~ CISales Sales ~. . r : : :u1-


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Coordinating supposes synchronization of people, processes, andinformation within organizations in order to maximize productivity. It relies on howactors can work together harmonious/y. Pure coordination processes includeidentifying goa/s, ordering activities, assigning activities to actors(scheduling), allocating resources, and synchronizing activities. Group decisionmaking is a second class of co-ordination processes and is about making collectivedecisions. This includes proposing a/ternatives, eva/uating a/ternatives, andmaking choices. Communication is another class of co-ordination processes and isabout establishing common /imguages, routing information ttows, and diffusinginformation within an organisation. Finally, the last class of co-ordinationprocesses is about the perception of common objects. It is important that actorssee objects (products, customers, plans, etc.) in the same way 50 that any decisionsmade are not based on different interpretations of the facts. This is where standards,training, or the use of shared databases come into play.Coordinating involves: Direct supervision: how a person is made responsible for the work of another,'and how a person manages this relation, are the prime responsibilities of aline manager. Standardization of work ptocesses. Standardization of outputs: this is done through the planning function, wherelevels of outputs (quantities, costs, quality levels) areset. Standardization by skills and knowledge: when workers. are given specificroles that use their specific (and standardized) skills.

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Leading supposes creating a vision for the organization and communicatlnq,guiding, training, coaching, and motivating others to workeffectively to achieve theorganization's objectives. The trend is to empower employees, giving them as muchfreedom as possible to become self-directed and self-motivated. Empowermentmeans giving employees the authority (the right to make a decision withoutconsulting the manager) and responsibility (the requirernent to accept theconsequences of one's actions) to respond quickly to customer requests. This means-; that more planning, organizing, and controlling are being delegated to lower-Ievelmanagers.This function was once known as directing, meaning telling employees exactlywhat to do. In many smaller firms, that is still the role of managers. In most largemodern firms, however, managers no longer tell people exactly what to do becauseknowledge workers often know how to do their jobs better than the manager.

Nevertheless, leadership is necessary to keep employees focused on the right tasksat the right time along with training, coaching, motivating, and the other leadershiptasks. Leading involves: Guiding and motivating employees to work effectively to accomplishorganizational objectives. Giving assignments Explaining routines. Clarifying policies. Providing feedback on performance.

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J Industrial Management DM l'----- ,Controlling involves establishing clear standards to determine whether anorganization is progressing toward its objectives, rewarding people for doing a goodjob, and taking corrective action if they are not. Basically, it means measuringwhether what actually occurs meets the organization's goals and seeking newopportunities.Controlling involves:

Measuririg results against corporate objectives Monitoring performance relative to standards Rewarding outstanding performance Taking corrective action when necessary.

EVOLUTION OF T HE IN DU ST RIAL M ANAGEM ENT

Industrial Management deals with the development and improvement ofintegrated systems of resources (people, materials - raw materials, energy,equipment-, money, knowledge, information).Historical events have shown that crucial shifts in firm organization coincidewith industrial revolutions. Even the factory itself was the result of the First IndustrialRevolution and later, following the Second Industrial Revolution, the large modernbusiness enterprise appeared by the 1920s.

The factory (industrial unit, plant) replaced the system that was based an thefamily firm craft-shop. The craft-shop was run by a master craftsman together withfamily helpers and apprentices. The entrepreneur owned the raw materials, thegoods in process, the equipments and tools, and outsourced the labor to workerswho usually operated at home. The factory was a new organizational farm: it was afirm, while the putting-out systern was a market-like organization based on marketcontracts. The main factors characterizing the emergence of a factory are consideredto be:

Technological factor. largely driven by the new technology: new source ofpower - steamengine (1789,James Watt)The technological advances occurred mostly in the following four areas:o energy (water power, steam engine)o metallurgy (iron making)o cotton (cotton spinning, mechanical weaving)o several industries and services (canals and road building).The main technological features were a new intrestructure (railways), a newsource of power (steam engine), and new machine tools that led toexpanding trade.

Commercial factor. expanding markets - growing population due to a longerlifespan gained through the improvement of living conditions (hygiene,development of medicine). Financial factor. partner ownership, important investments.

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1. Empirical management (1650 ~ 1850)2. Scientific approach of the industrial management (1850 ~ 1stWorldWar)3. Humanistic/behavioral approach (between the 2 World Wars)4. Industrial management as a science (2ndWorld War ~ present)Main characteristics

1. - small units (workshops, manufactures)- no or slow evolution of technologies and products- the manager is also the sole owner- the managerial process is based on applying the ancestral ideas (formula)2. -Iarge units (factories)-development of many technologies and products-distributive ownership-experimental approach of some management aspects.

For the first time the management process is approached on a quantitative,rigorous way. This approach called the c/assic approach has 2 points of view: Scientific management represented by Fr. W. Taylor (an Americanmechanical engineer; Ptinciples of Scientific Management, 1911). Thisperspective is concentrated on the problems of lower-Ievel managementdealing with everyday problems of the work force. The classical organization theory represented by Henri Fayol (a Frenchmining engineer; Administration industrielle et generale, 1916). Thisperspective is concentrated on the problems of top level managementdealing with everyday problems of managing the entire organization.Within the administrative activities he identified the rnost important tasks of amanager: planning, organizing, commanding and controlling.

3. Humanistic/behavioral approach appeared as a rejection of the scientificmanagement and has two directions: The human re/ations approach has as focal point the human personality,the work relation between groups of workers. This approach refers to themanner in which managers interact with subordinates. For the first timetraining programs for managers have appeared. The behaviora/ science approach considers that an individual is morecomplex and they are motivated to work for many reasons in addition to

making money (social relations, social status, etc.)

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4. This stage is characterized by the use of mathematics and statistics to solve. production & operation problems.

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Systems approach: the organization must be viewed as total systems witheach part linked to every other part. Contingency approach: the correctness of the managerial practicedepends on how it fits the particular situation to which is applied.

Rapid development of new technologies (electronics, nuclear physics) Developrnent of computers (allow solving of very complex problems).

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Industrial Management - Lecture 1