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32 INDUSTRIAL MANAGEMENT MODULE CODE: 539/S05 SECTION 1: INTRODUCTION DEFINITIONS 1. INDUSTRY Can be defined as a branch of trade, a way of classifying business that has something in common. Firms are included or excluded from an industry class on the degree of similarities in the product they make or sell and types of customers they service and market place in which they compete. E.g. steel, shipping, wood, automotive industries. 2. ORGANISATION Chester Bernard sees an organisation as an arrangement of inter- dependent parts each having a special function to the whole. The organisation is viewed as a set of stable relations deliberately created to serve a purpose. A social institution with character consciously created. 3. MANAGEMENT A process consisting of activities undertaken by one or more persons to coordinate the work of other persons to achieve results not achievable by any one person as an individual. It is a process of integrating resources (human & material) and tasks C.V.KEMBO 2012

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INDUSTRIAL MANAGEMENT MODULECODE: 539/S05

SECTION 1: INTRODUCTION

DEFINITIONS1. INDUSTRYCan be defined as a branch of trade, a way of classifying business that has something in common. Firms are included or excluded from an industry class on the degree of similarities in the product they make or sell and types of customers they service and market place in which they compete. E.g. steel, shipping, wood, automotive industries.2. ORGANISATIONChester Bernard sees an organisation as an arrangement of inter-dependent parts each having a special function to the whole. The organisation is viewed as a set of stable relations deliberately created to serve a purpose. A social institution with character consciously created.

3. MANAGEMENTA process consisting of activities undertaken by one or more persons to coordinate the work of other persons to achieve results not achievable by any one person as an individual. It is a process of integrating resources (human & material) and tasks towards achievement of stated targets. It is working with and through people to achieve goals.4. GOALSGoals are desired states of affairs or preferred results that organisations attempt to achieve. Goals should reflect a desired end result of organizational actions. Goals, objectives, and purposes could be considered interchangeably. However some scholars consider objectives as means of achieving goals. Objectives are short term aims of the organisation. They are per week or per month. Goals are ultimate long term results one wants to achieve. Goals are influenced by the operations of the key managers of the organisation. The aspirations of managers help to form the concept of what they should do. It is the vision or dream of management which enable achievement or attainment of goals set.i. IMPORTANCE OF GOALS.they guide and direct efforts of individuals and groups in an organisation

.they affect how organization plans and organize its activities.

.they motivate individuals to perform efficiently and effectively

.they form the basis for evaluating and controlling the activities of the organisation goals like plans and motivated workers, work towards the achievement of some end result. Evaluation and control indicate attempts to reach a target.

ii. CRITERIA FOR GOOD GOALS.clarity and specificGoals should be clear and specific concerning desired outcome. Clear and specific goals are known to all workers while non specific goals create confusion and conflict amongst workers.

.timingA particular time or date of anticipated achievement or goal achievement is required..consistency

Goals must be logically consistent with respect to external environment and internal resources because they indicate whether the organisation has taken the right path.

.difficulty and achievabilityIt is important for goals to be difficult enough to stimulate added effort by workers, but not so difficult that they create frustration. Easily achievable goals may not only be quickly forgotten by workers but may lead to complacency and neglect.iii. TYPES OF GOALS

Profitability

The ratio of profits to sales, profits to total assets, profit to capital (net worth). Usually expressed as a net income earnings per share and other similar ratios.

ProductivityMeasured using ratios of output to input. Other factors being equal the higher the ratio, the more efficient is the use of inputs. The ratio of value added to sales and to profit.

Marketing

Measure performance relating to products, markets, and distribution and customer service objectives. Well managed firms measure performance relating to market share of existing products, sales volume, number of outlets carrying the product and number of new products developed.

Physical and Financial

Reflect the firms capacity to acquire resources sufficient to achieve its objectives. Liquidity measures such as current ratio, working capital turnover, acid test ratio, debt equity ratio, accounts achievable and inventory turnover.

Innovative and Employee attitude and Social responsibility

Creativity and discovery however not so predictable or identifiable or measurable.

5. MANAGEMENT BY OBJECTIVESThe Underlying Premises

Odiorne's concept of management by objective is based on an underlying premise that any system of management is better than no system at all.

A secondary premise states that to be workable, any management system must bridge the ga+p between the theoretical and the practical.

A third important premise establishes that the appraisal of managerial performance is not an activity autonomous from other activities of the firm. In other words, it regards the appraisal process as only one of several sub-systems operating within the confines of a goal-oriented management system.

Before proceeding into a discussion of the basic elements of the management-by objective system several statements of condition seem warranted. Each of the following statements relates to the environmental conditions with which managers are confronted and establishes the setting for later determining the practical relevance of the management-by objective system:

A. Because the economic environment within which agribusiness firms operate has changed so drastically in recent years, a whole new set of requirements has been placed on companies and their managers.

B. The preliminary step in the management-by-objective system dictates that managers identify, in some manner, organizational goals designed to meet the new requirements noted in A, above.

C. Immediately following the identification of company goals, management must have available to it an orderly procedure for distributing or allocating responsibilities which are directed toward achieving those goals.

D. In the practical world of agribusiness management, managerial behavior must become predominant over managerial personality. Furthermore, in the final analysis, results of the behavior (measured against established goals) become the basic criteria for good performance evaluation.

E. Total management staff participation in goal-setting and decision-making is recognized for its social and political value even though its impact on production levels may be negligible.

F. There exists no one best system of management. Moreover, since managerial activity is dependent, to a large degree, on each manager's view of specific goals and the total economic system, his actions must be discriminatory.

By now you should note that each of the above conditions appears consistent with basic human intuition. For example, the notion that management activity should be directed towards the accomplishment of pre-established goals has considerable intuitive appeal. None of the conditions are at variance with acceptable manager conduct from either a social, legal, or common sense standpoint. Perhaps herein lies the secret to the success of Odiorne's concept. Nevertheless, we have not yet progressed beyond some general philosophical considerations. To do so, consider the basic elements of the proposed management system.

The Basic Elements

In its briefest form, decision making system of management by objective contains the following basic elements:(1) Establish an objective before you begin;(2) Collect and organize all of the pertinent facts;(3) identify the problem and its causes;(4) Work out a solution and some options;(5) Screen options through some decision criteria; (6) Establish some security actions to enhance the probable success of the solution; (7) Gain acceptance of the decision; (8) Implement the decision; and(9) Measure the results.

Each of the nine elements shall now be considered in more detail.

Step 1: Setting objectives: the first step in sound decision-making and systematic problem-solving is to define an objective. Why? In support of this first step, I would offer the following evidence. In my contacts with the agribusiness industry I meet with many disgruntled managers who feel they are not being properly rewarded for their efforts.

Cooperative managers, for example, claim their Board of Directors does not truly appreciate managerial performance. In many such cases, the manager, himself, is most to blame because of his failure to set an objective prior to taking action. Lacking the existence of an objective, the Board of Directors has no basis upon which to judge a manager's effectiveness as good or bad.

Objectives are statements of expected outputs; they should be defined before inputs are released, and they should be used by management to determine what inputs are to be used. Once established, an objective becomes a convenient measuring stick for judging (and then rewarding) managerial proficiency. Superior performance should no longer go without reward.

a modest taxonomy on this initial step by classifying and rating objectives con be as follows (1) Regular or routine, (2)Problem-solving, and (3) Innovative or improvement. The regular or routine objectives are those described as relating to day-to-day chores which are necessary for the firm's survival and stability. In the agribusiness industry, for example, a regular or routine objective may be to obtain a monthly inventory report, file a yearly tax statement, or conduct weekly maintenance checks on all plant equipment. The end result of achieving the regular objective is that the firm maintains the status quo, i.e., no expansion or improvement in the modus operandi results.

Problem-solving objectives are granted a somewhat higher rating. These are related to those problems which arise as a result of the natural tendency for matters to get worse if left alone. For example, a food processor may discover an increasing incidence of product contamination or defectiveness. Management's objective in this case may be to uncover the reason for the contamination or reduce defects to a specified level. Such objectives call for managerial problem-solving skills of a higher order than routine objectives.

Innovative or improvement objectives are awarded top priority in our hierarchy.

These are the objectives which make things happen and rest on the assumption that the perfect completion of routine activities and the rapid solution of unexpected problems just isn't good enough. Innovative objectives specify quantum changes rather than rely on maintenance or restoration. Examples of such objectives within the agribusiness industry might include:

Capture 25 percent of the total market by 1972; Convert to computer processing of all customer accounts by next spring; or

Initiate and conduct a management training program. In short, this third category differs from the first two in that innovative objectives connote action decisions rather than reaction decisions.

To summarize this first step in the management-by-objective system, therefore, the superior manager is one who does all of his regular duties, solves his operational problems, and, in addition, adds new ideas through the establishment of innovative objectives.

Step 2: Gather the facts: Facts should be verifiable and agreed-upon data. They should be supported by some hard evidence to which all management staff should agree. A common management deficiency is the inability to separate facts from opinions. This distinction is made most difficult because of a characteristic of human nature, i.e., we all tend to attach to a fact our own personal biases or hunches. For example, this headline appeared in the newspaper, Master Sergeant Charged with Treason. Immediately upon reading this headline, several biased assumptions began to develop in my own mind. First, I assumed the sergeant was spying for a communist nation.Second, I assumed the military was, no doubt, totally infiltrated by spies who will never be uncovered. Yet, upon closer reading of the headline, I discovered only two facts: (1) The person charged was a master sergeant; and (2) The sergeant has only been charged with treason and not yet found to be guilty or innocent. This illustration is really not as absurd as it may first appear. Every working day, managers confuse facts with opinions, facts with personalities, facts with wishful fantasies, and facts with fear of the unknown. The end result of this inability to separate fact from fiction is a system whereby management by emotion precludes any system of management by objective.

Step 3: Identify the problem: The difference between that which currently exists and that which you hoped would exist now or in the future comprises a problem. Assuming all of the routine functions of your firm are being accomplished, the only remaining managerial function for maintaining operations at a given level is to recognize problems when they arise and implement the appropriate solutions.

Problems, however, do not always arise as a result of something gone wrong. They are sometimes created in the mind of a decision maker, e.g., the manager may express an inward restlessness with present levels of operations. In such situations the manager conceives a gap between that which now exists and that which he wished would exist. This gap represents a problem which is often overlooked in the agribusiness industry. Managers find themselves totally occupied by the so-called brush-fire problems arising from daily operational failures. Acting as firemen, the managers have no time and little desire to be concerned about innovative problems.

Innovative problems arise as a result of management's attempt to alter (not maintain) a static environment or compete in a dynamic one. They often grow out of competition wherein the need for long-run survival places a premium on new products, procedures, markets, and ideas. They may also result from technological obsolescence, e.g., many managers are so busy solving equipment failure problems, and they fail to notice a technological improvement which renders their current line of equipment obsolete. People, like machines, also become obsolete. Most top managers display the ability to properly identify problems associated with human obsolescence. But, others feel that as long as the employee completes his task as well as he did twenty years ago, he is considered no problem. Only top managers will realize that a problem does exist if the employees' performance over the twenty years has failed to improve in response to training, experience, etc.

Step 4: Develop a solution and options: Before selecting what the manager believes to be the optimum solution to a problem, he must develop several alternative solutions. First, management should make a hard specification of the problem. The difference between a hard and soft specification may best be defined as the difference between a tangible, measurable problem and one which is vaguely identified, dubiously labeled, and poorly confined. In business, as in our personal lives, we display more skill at soft specification of problems, e.g., it's a social problem or a moral problem or a political problem. While such verbalizations place problems in acceptable categories, they become detrimental to the development of workable solutions. To eliminate the possibility of soft specifications, each alternative solution should be accompanied by a statement of charge, i.e., a declaration as to exactly what the solution is supposed to rectify and how. As a second step to solution development, management should describe the problem being confronted in terms of end results desired, intervening variables (extenuating circumstances), and root causes. Third, an attempt should be made to separate those root causes which are fixed (unalterable) from those which are conditional (subject to management action). This third step is particularly crucial to the agribusiness industry where, for example, a processing problem may be caused by defective equipment (fixed) as well as by variations in the quality of the raw product (conditional).Closely related to the third step, the fourth step calls for the separation of the vital from the trivial causes. The final step in solution development calls for management to follow innovative processes in option generation. In short, this asks managers to use their imaginations and not be constrained by standard solutions developed a decade ago and used religiously ever since. Optimal solutions are rarely standardized -- no more so than are problems in this dynamic economy.

Step 5: Screening option: In the simplified view of management, decision-making refers to the singular, heroic action of choosing one alternative out of all those available. Choosing the optimal solution from amongst several alternatives is no easy task and requires that each alternative be properly screened prior to selection. The development of screening criteria assumes that each alternative solution will be subjected to a standardized test of preferred outcome. To simplify the development process, managers may wish to use the following guidelines. Each option should be confronted with five questions. The answers to these questions should assist management in selecting the optimal solution. The questions are: (1) What will each option contribute toward the attainment of the objective selected at the time the system was installed? (2) What about the cost of each option relative to its likely effectiveness? (3) What is each option's feasibility?(4) How much time will be required to implement each option? (5) Are there any undesirable side effects associated with each option?

Step 6: Establish security action: When you are embarking for an afternoon drive in the country you do not anticipate having a flat tire. Yet to guard against the consequences of the unexpected, you do carry a spare. Similarly, when you are about to implement your choice of alternative solutions, you do not anticipate failure. Yet it would seem wise to try and protect yourself from the unexpected. These protective policies are often referred to as security actions.

Security actions are not uncommon to the agribusiness industry. Returning to the processing illustration used earlier, management may decide that the optimal solution to the problem of inadequate capacity is the replacement of the old plant equipment with more efficient versions. Yet, to protect himself against the consequences of an unprepared-for breakdown in the new equipment, the older machines are retained and held in reserve. Many similar examples could be found in other sectors of the industry. So long as security actions are not relied on too heavily, they become highly complementary to sound decision-making.

Step 7: Gain acceptance: The ideal solution is one which best combines the needs of two sets of requirements -- logic and acceptance. On this point, management experts divide into two factions. One faction insists that the quality of a solution is dependent solely on its logical base, i.e., its mathematical accuracy, its rigor, or its quantum efficiency. The other faction, which this author supports, proposes that while logic is important, the ultimate success of a solution also depends on its acceptance by those persons who have the ability to make even the most logical solution fail. Acceptance, therefore, must become a vital component of management by objective. Without it, even the best solutions will be poorly implemented and the objective never attained. The methods of gaining acceptance are many and varied. There exists an increasing amount of research evidence to indicate that people who participate in solution decisions that affect them will accept and execute the solution more effectively than if it had been dictated. Hence, the secret to acceptance appears to be the open involvement of all those who are to be affected by the solution and its accompanying attainment of the objective. Step8: Implement the decision: Now that the optimal solution has been selected and accepted, the obvious next step is that it be implemented. Implementation, of course, becomes the real action stage of the management-by-objective system. Three important factors have an impact on the implementation process: the manager, the subordinates, and the discipline situation. The manager, himself, represents an important ingredient because, at this point, the degree of autocracy exercised may determine success or chaos. Generally speaking, the manager's actions should be consistent with the amount of control he can exert. Implementation failures are often attributable to the manager who, having little control over his firm or his behavior, attempts to become an overly dominant leader. The degree of dependence which exists amongst subordinates and between the manager and his subordinates will also affect implementation. A high degree of dependence indicates that implementation is likely to be a team effort. A low degree of dependence suggests that strong leadership will be a necessary prerequisite to implementation success. If the situation is one in which tight discipline has been historically present, then the time required for successful implementation may be relatively short. If, however, management has been somewhat more permissive, implementation will be more time consuming and likely to require some highly creative managerial behavior.

Step 9: Measure the results: As a logical last step in the management-by-objective system, the decision maker should analyze the results of his actions. Had all the preceding steps been perfectly executed, there would be little need for the review process. But, in real life, we all know that perfect execution rarely, if ever, occurs. The optimal solution is confronted with unforeseen obstacles, the market takes an unexpected turnabout, or managers, as human beings, are found to be fallible. Hence, because of execution imperfections, a final control stage must exist whereby management observes the results of its action in the hope that later decisions will be improved. This final stage in the management-by-objective system should include two important elements: (1) It should provide for a judgment as to the similarity between the end result and that which was desired (your objective), and (2) It should permit corrective action to restore firm performance to that described in the objective.

Summary

Successful management consists of setting good objectives and making the right choices towards their achievement. Those who fail these two basic tasks, fail as managers. Management by objective is a generalized procedure which lends itself well to that portion of management capable of being systematized. The remaining portion of management evades both theory and systems.

SECTION 2: THEORIES OF MANAGEMENT

A. SCIENTIFIC/CLASSICAL MANAGEMENTPrinciples and development of Scientific ManagementFollowing the results of Taylors experiments, he drafted the following four principles of scientific management:

Managers must carry out scientific studies of all tasks they managed, to ensure that workers were performing as efficiently as possible.

Using this knowledge, managers should scientifically select the best workers for the job, and should actively train and develop each worker to achieve maximum performance

Managers should cooperate with the workers in ensuring that the best scientific methods are being used.

The workload should be divided between managers and workers, with managers using scientific management to plan the work and make the workers roles as simple and productive as possible.

Many factories and industries adopted scientific management, most notably Henry Ford, who applied the principles to his car factories, massively increasing productivity. However, Ford expanded the principles even further. Rather than have one worker perform each task, Ford split up the workload so that each worker simply performed a single action as the car moved down a conveyor belt. This Fordist approach to production became the model for modern mass production techniques.

However, whilst Taylors original principles held that management should use the principles of scientific management to improve productivity and reward workers who performed well, Fords development of the principles tended to reduce the level of skills required. In addition, many factory owners did not follow the principle of cooperating with workers; they simply used the first two principles to increase the productivity of workers, and decrease the skill levels needed to perform a task. As such, scientific management was often used by factory owners to reduce their workforce, as well as reduce the wages they paid to workers given that the scientifically planned jobs required much less skill that previous roles. Thus, the rise of Taylorism and Fordism can be seen as a contributor to the labour process theory argument that managers sole aim is to deskill workers and hence increase managers control over the labour process and the workers. Despite this controversy, scientific management has fundamentally changed the process of working and planning, and continues to be used in some forms today. For example, the McDonalds system of cooking, packaging and serving burgers and other fast food can be seen to follow some scientific management principles.Contributions of scientific management theory 1. The modern assembly line pours out finished products faster than Taylor could ever imagine.

2. This production Miracle is just one legacy of scientific management. 3. In addition its efficiency techniques have been applied to many tasks in non industrial organizations ranging from fat food service to the training of surgeons.

Limitations of scientific management theory 1. Although Taylor's method led to dramatic increase in productivity and higher pay in number of instance. Workers and unions began to oppose his approach because they feared that working harder or faster would exhaust whatever work was available causing layoffs.

2. Moreover, Taylors system clearly meant that time was of the essence. Labour viewed management as a threat to their freedom and success.3. His critics objected to the speed up condition that placed undue pressure on employees to perform at faster and faster levels. The system failed to incorporate aspects of psychological and social dimension found at work.4. The emphasis on productivity and by extension profitability led some managers to exploit both the workers and customers. Workers were treated as machines and were compelled to do more.

5. As a result more workers joined unions and thus reinforced a pattern of suspicious and mistrust that shaded labor relations for decades. Wages were determined by top management raising unionism.6. Too beaurocratic. Rules and procedures laid down become everyday norms and values to be followed.i. MAX WEBER (1864-1920) Bureaucratic Theory of ManagementMax Weber developed a structural model of organization that was most efficient means by which organizations could achieve organization's goals and objectives. Max Weber, a German sociologist, defines bureaucracy in terms certain features of organizational design. Weber viewed bureaucracy as the most efficient organizational design if it has the following characteristics:

(i) A continuous organization of official functions bound by rules.

(ii) A specified sphere of competence. This involves

(a) Sphere of obligations to perform functions which have been marked of as part of a systematic division of labor;

(b) The provision of incumbent with necessary authority to carry out these functions;

(c) That the necessary means of compulsion are clearly defined and their use is subject to definite conditions. A unit exercise authority which is organized in this way will be called an "administrative organ". There are administrative organ in this sense in large scale private organizations, in parties and armies, as well as in the state and church.

(iii) The organization of office follows the principle of hierarchy.

(iv) The rules which regulate the conduct of an office may be technical rules or norms. In both cases, if their application is to be fully rational, specialized training is necessary. It is thus normally true that only a person who has demonstrated an adequate technical training is qualified to be a member of the administrative of such an organized group, and hence only such persons are eligible for appointment to official positions. The administrative staff of a rational corporate group thus typically consists of officials; whether the organization be devoted to political, religious economics-in particular capitalist-or other ends.

(v) In the rational type it is a matter of principle that the members of administrative staff should be completely separated from ownership of the means of production or administration. There exists, furthermore, in principle complete separation of the property belonging to the International Research Journal of Finance and Economics - Issue 41 (2010) 63 organization, which is controlled within the sphere of the official, which is available for his own private uses.

(vi) In the rational type cases, there is also a complete absence of appropriation of his official position by the incumbent.

(vii) Administrative acts, decisions, and rules are formulated and recorded in writing, even in cases where oral discussion is the rule or is even mandatory.

(viii) Legal authority can exercises in a wide variety of different forms.

(ix) They are remunerated by fix salaries in money, for the most part with the right to pension.

(x) It constitutes a career.

Bureaucracy, as an organizational concept, has contributed to a better understanding of the working mechanism of organization. For Weber bureaucracy was a blueprint for dividing responsibility, authority, and accountability.

Stephen P. Robbins feels and asserts that bureaucracy is characterized by highly routine operating tasks through specialization, much formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command. He further observes that the primary strength of bureaucracy lies in its ability to perform standardized activities in a highly efficient manner. In addition, bureaucracies can get along well with less talented and less costly middle and lower level managers.

ii. F.W TAYLOR (1856-1915)

Fredrick w Taylor (1986-1915) rested his philosophy on four basic principles.

1. The development of a true science of management so that the best method for performing each task could be determined.

2. The Scientific selection of workers so that the each worker would be given responsibility for the task for which he or she was best suited.

3. The scientific education and development of workers.

4. Intimate friendly cooperation between management and labor.

Rather than quarrel over profits both side should increase production, by so doing, he believed profits would rise to such an extent that labor have to fight over them.

In short Taylor believed that management and labor had common interest in increasing productivity.

1. Taylor based his management system on production line time studies. Instead of relying on traditional work methods, he analyzed and timed steel workers movements on a series of jobs.

2. Using time study he broke each job down into its components and designed the quickest and best method of performing each component. In this way he established.

How much workers to do with the equipment and materials in hand. He also encourage employers to pay more productive workers higher rate than others. Using a scientifically correct rate that would benefit both the company and workers.

Thus the workers were urged to surpass their previous performance standards to earn more pay .Taylor called his plane the differential rate system.

Frederick Taylor is often viewed as one of the earliest management theorists, with his work on what he termed scientific management, having impacts throughout the twentieth century. Before Taylor, the majority of work was carried out by skilled craftsmen and operators who learned how to perform their jobs through apprenticeships and on the job training. As a result, most workers were more knowledgeable than the managers who controlled them, and hence the workers tended to make most of the decisions about how their job should be performed, how long it would take, and what materials were needed.

Taylor viewed this as being an absurd situation, with many managers unable to control their own workers due to their lack of knowledge around the job itself. As such, the main principle of scientific management was that managers should hold all the knowledge around how a job should be performed. This implied that managers should be able to determine the time and resources required for the job, as well as the best methods to train and manage their work force. Ultimately, Taylor believed that through a series of time and motion studies, managers should work out the most efficient way of performing any one task, and hence require all workers to perform the task in that way.

Taylors initial observations around some of the working practices imposed by skilled workers came from his observations of productivity at the Bethlehem Steel Works in the United States. He believed that workers deliberately operated below their maximum capacity and efficiency, something Taylor referred to as soldiering due to a three main factors:

Firstly, workers believed that if they worked more efficiently, the task could be completed with fewer workers and hence jobs would be lost.

Secondly, the majority of pay systems meant that workers would be paid the same no matter how much they produced, hence providing an incentive for workers to convince managers that their maximum pace for a job was much lower than it actually was. Even if employees were paid according to their productivity, they believed that if they increased their overall output, managers would set new standards and decrease the productivity bonus.

Finally, Taylor believed that most workers used whatever method they had grown accustomed to, rather than using the most optimal method of work, which could be determined by scientific time and motion studies of the work.

Taylor believed that all these issues could be overcome if management would take responsibility for improving the productivity of workers, through a scientific study of the individual actions associated with each task, and how these actions could be most efficiently organised. He held that this was a much better method of planning working that attempting to incentivise workers, as incentives placed the responsibility on the worker to increase productivity, and hence the manager had no input. Taylor thus carried out a series of time and motion studies to determine the time taken for each action, and how the action could be performed more efficiently, or even eliminated from the task altogether.

Taylors studiesOne of Taylors first studies concerned the amount of raw pig iron that workers could move each day. He found that, on average, workers at the yard managed to move around 12.5 tons of iron each day. By conducting time and motion studies of the workers moving the pig iron, Taylor found that, if the amount lifted, lifting method, rest periods, paths taken across the yard and other factors were optimized, workers could move 47.5 tons each day. As such, Taylor introduced a specific system for lifting and carrying the iron, and specific rest periods, to maximise the productivity of the workers.

During the course of this study, Taylor found that not all workers could reach the 47.5 tons a day target, and that only around 12% of the workers in the yard were physically capable of achieving this. As such, he also argued that not only should a job be scientifically planned and managed, but that workers should be scientifically selected depending on their capabilities and how well they performed on a particular job. Taylor referred to these workers as high priced workers, and claimed that they should be paid a much higher wage due to their particular capabilities, provided they were willing to carry out their job in the scientifically best way.

Taylor also studied the shovels used by workers to move material around the yard. Prior to his study, workers used their own shovel, with some being large and others small. Taylor held that there was a tradeoff between a smaller shovel, which allowed faster movement around the yard, and a larger shovel which carried more but slowed the worker down. As such, he carried out a study which demonstrated that the optimal weight for a shovel to hold was 21 pounds, and this allowed workers to carry the most of any material across the yard of the steel works. As such, the company provided the workers with a variety of shovels which would each hold 21 pounds of a specific material. Workers using these shovels were able to vastly increase their productivity, and were similarly dubbed high price workers, and paid significantly higher wages.

iii. THE GILBRETHSBrought in the motion study and job simplification. Gave an analysis of the sequence and path of basic movements in the workshop and advocated for economic use of human energy and technical improvements.

Inspired by Taylors experiments, Gilbreth performed an analysis of bricklaying, which demonstrated that most bricklayers tended to use more than ten motions to lay a single brick; when in fact only four were needed. By cutting down the number of motions to four, bricklayers were able to vastly increase their productivity, and hence compete with other more productive industries such as concrete pouring.

iv. H.L GANTTHenry L.Gantt (1861-1919) worked with Taylor on several projects but when he went out on his own as a consulting industrial engineer, Gantt began to reconsider tailors insensitive systems. Developed the principle of work scheduling. He developed charts showing relationships between planned work and completed work against time elapsed. He believes that wage system provides a fair remuneration. He devised a task-and bonus system in which a workman received a bonus on completion of assigned work. Also identified that non-monetary factors like job security are powerful incentives. Abandoning the differential rate system as having too little motivational impact Gannet came up with new idea. Every worker who finished days assigned work load win 50 percent bonus. Then he added a second motivation the supervisor would earn a bonus for each worker who reached the daily standard. Plus an extra bonus if all the workers reached it. This Gantt reasoned would spur super wiser to train their workers to do a better job. Every workers progress was rated publicly and recorded an individual bar charts I black on days the worker made the standard in red when he or she fell below it. Going beyond this Gantt originated a charting system for production was translated into eight languages and used throughout the world.1. In planning, managing and controlling complex organization the critical path method (cpm) originated by dupont and program evaluation and review Technique (pert), developed by navy. 2. Lotus 1-2-3 is also a creative application of the giant chart.

v. H EMERSON (1910)He defined principle of efficiency where resources use was to be accomplished. The managers has to use scientific, objective and factually based analysis, should define the aims of the undertaking, should relate each part to the whole, should provide standardized procedures and methods and reward individuals for successful execution of work.

vi. HENRY FAYOL (1841-1925)Henry Fayol (1841-1925) is generally hailed as the founder of the classical management school not because he was the first to investigate managerial behavior but because he was the first to systematize it.

Fayols 14 principle of management1. Division of labor/work The most people specialize the more efficiency they can perform their work. This principle is epitomized by the modern assembly line.-reduces the span of attention or effort for any one person or group.

-it develops practice and familiarity.

2. Authority Managers must give orders so that they can get things done while this format give them a right to command managers will not always compel obedience unless they have

Personal authority (such as relevant) expert as well3. Discipline members in an organization -Need to respect the rules and agreement that govern the organization. To Fayol, discipline leadership at all levels of the organization fair agreements and judiciously enforced penalties for infractions. Management Science I Prof. M.Thenmozhi

Indian Institute of Technology Madras

4. Unity of command Each employee must receive instruction from one person, fayol believe that if employee reported to more than one manager conflict in instruction and confusion in authority would result.5. Unity of direction Those operation within the same organization that has the same objective should be directed by only one manager using one plan.

For example the personnel department in the company should not have a woo directors each with a different hiring policy.6. Subordinate of individual interest to common good In any undertaking the interest of employees should not take the precedence over the interest of organization as a whole7. Remuneration Compensation of work done should be common to both employees and employers.nce I Prof. M.Thenmozhin Institute of Technology Madras8. Centralization Decreasing the role of subordinates in decision making is centralization, increasing their role is decentralization.

Fayol believed that the managers should retain the final responsibility, but should at the same time give their subordinate enough authority to do the jobs properly.

The problem is finding the proper degree of centralization in each case.9. The hierarchy/ scalar chain The line of authority in an organization should represent in the neat box and the line of chart runs in order of rank from top management and lowest levels of enterprise.10. Order Materials and the order should be in the right place at the right time.

People in particular should be in job or position they are most suited to.11. Equity Managers should be fair and friendly to their subordinate.

Management Science I Prof. M.Thenmozhiian Institute of Technology Madras

12. Stability of staff A high employee turnover rate undermines the efficient functioning of an organization.13. Initiative Subordinate should be given the freedom to conceive and carry out their plans even though some mistake may result.14. Esprit de crops Promoting team spirit will give the organization a sense of unity.

To Fayol even the small factor help to develop the spirit.

He suggested for example the use of verbal communication instead of formal, written communication whenever possible

vii. JAMES MOONEYViewed management as the technique or art of directing and inspiring other people. Hence gave his management duties as;

-coordination as the reason for organizing

-scaling tasks to be performed

-delegating authority and defining tasks

-Leadership-personification of authority

-specialization

viii. L F URWICKSaid management process has 3 functions which are planning, organizing, and controlling. These functions have guides which are forecasting, coordination and command. Planning is guided by forecasting. Organizing which has sub-functions of scaling, delegating and defining tasks was guided by coordination of authority, leadership and specialisation. Controlling is staffing, selecting and placing and disciplining falls under command by centralization, remuneration or equity. A consolidated list of management principles according to L F Urwick

1. The principle of the objective

2. The principle of specialization

3. The principle of coordination

4. The principle of authority

5. The principle of responsibility

6. The principle of definition

7. The principle of correspondence

8. The span of control

9. The principle of balance

10. The principle of continuity

ix. CHESTER BERNARD (1841-1925)-BEHAVIOURAL SCIENCEBelieved that the basic functions of the executive is to give the basis for cooperative effort, formulation of objectives and the acquisition of resources and effort required to meet the stated goals.

The degree of employee cooperation depends on the balance between inducements and contributions. Inducements are a sum of financial and non-financial rewards which accrue to individuals in exchange for their effort.

Recognized that communication is the active system to implement authority, orders flows downwards as superiors seek certain behavior from workers. He stated that the existence of the forward structures is no guarantee that subordinates will in fact follow orders.Challenged the wisdom of solely relying on the authority structure to achieve compliance, so he stated apposition that has become known as acceptance theory of authority. The theory postitulates that workers determine whether the order is legitimate to accept or reject it. They will accept the order only if they can understand it and are able to comply with it, or they will accept it only if the required behaviour is consistent with their view of purpose of the organisation and their own personal interests.

Chester viewed the scientific management approach as too harsh to workers, hence should be selective according to circumstances. Chester advocated for recognition of workers as psychologically social beings through cooperative system.

Sort that a good manager has a good insight of working situations, job, and worker as individuals.

B. MOTIVATION AND HUMAN RELATIONS MANAGEMENTi. MARY PARK FOLLET (1868-1933)-HUMAN RELATIONSBrought about the recognition of individuals in determining the success or failure of an organisation. It concentrated on the social environment surrounding the job.Believed that conferences and cooperation solve conflicts hence contribute to achieve productivity and efficiency. The system brought about integration, unity, debates, coordination of tasks and human relationships. Some of its proponents are;Division of labour

Take cognisance of social isolation, sense or feeling of anonymity resulting from insignificant jobs or lack of feeling of tasks completion. Assumes that as the division of labour increased, the need arose for motivating and coordinating activities.

Functional process

Human problems result through imperfections in the manner in which the functionalisation process is handled. For example too much or not enough delegation results or discourages management action.ii. ELTON MAYO (1880-1949)Human relations theory is largely seen to have been born as a result of the Hawthorne experiments which Elton Mayo conducted at the Western Electrical Company. However, the so called Hawthorne Effect was not foreseen by the study. Instead, the Western Electrical Company wished to show that a greater level of illumination in a working area improved productivity, hence encouraging employers to spend more money on electricity from the company. As such, they carried out a study of how productivity varied with illumination levels. However, the results of the study showed that any changes in light levels tended to increase productivity levels, and the productivity level also increased significantly within the control group. This was completely the opposite of what Mayo expected, and created an entirely new branch of management theory. The core aspect of Human Relations Theory is that, when workers were being observed and included in the research, they felt more important and valued by the company. As a result, their productivity levels went up significantly. This represented a significant departure from many of the classical theories, particularly Fordism, as it went against the notion that management needed to control workers, and remove their autonomy at every step. Instead, it showed that by engaging with workers and considering their requirements and needs, companys could benefit from increased productivity.

Another important part of human relations theory came from the other one of Mayos experiments: the bank wiring experiment. This experiment involved monitoring the production of a group of workers who were working as a group to produce electrical components. This investigation showed that, as believed by Taylor and Ford, the group as a whole decided on the level of production, purposely failing to produce their maximum output in spite of the potential bonus which was offered by management. This indicated that factors such as peer pressure, and the desire for harmony within the group, overrode any economic considerations which the workers held. This study also first drew management theorists focus to the informal aspect of the organisation, and the important role that it played in productivity. However, Mayo argued that managers needed to encourage good communication with workers and develop a connection with their employees, which runs counter to Taylor and Fords claims that managers needed to focus on organisational goals and completely control the workers. Mayo argued that Taylor and Fords techniques would boost productivity, but only to a certain level. In order to go above this level, workers needed to feel that they were valued more than simply on a monetary basis.

The concept that managers need to become involved with workers at a more individual level is at the core of human relations theory, and is what differentiates it from scientific management theory. Indeed, the vast majority of management literature since these competing theories emerged has been dominated by two points of view. The first is that workers will not support management attempts to get them to be more productive, and hence management needs to take control of the working process itself, hence leading to scientific management approaches. The second is that productivity is largely determined by social and group norms, and by tapping into these norms and fulfilling their workers needs, managers can encourage employees to motivate themselves to work harder and be more productive.

iii. DOUGLAS McGregor (theory X and Y)In response to the two sides of the debate around employee motivation and the best ways to boost productivity, Douglas McGregor argued that managers would tend to pursue the approach which was most in line with their view of their employees. He claimed that managers who viewed their employees as lazy would be more likely to follow an approach based on control, whilst managers who believed the workers could be motivated and wanted to develop themselves would be more likely to attempt to create positive working environments and opportunities for advancement. McGregor referred to these theories as theory X and theory Y.

It is important to note that, in contrast to popular opinion, McGregor did not state the theory Y was preferable to theory X, rather he held that both views had merit, and managers should not have too narrow a view of motivation. As such, he believed that scientific management approaches could benefit from focusing on the need to motivate workers, whilst motivational approaches could also benefit from greater managerial control. As such, he argued that theory X and theory Y simply represented different ends of a continuum of approaches to improving productivity, and managers should not fix themselves to one end of the continuum.

Both theory X and theory Y state that managers are responsible for assembling and organising the various factors of production, including their employees, with the goal being to produce maximum economic benefit for the shareholders. However, they take different views around the drivers of employee behaviour.

Theory XAccording to theory X, the average employee is lazy, does not like to work, and will attempt to avoid having to work as much as possible. They also have no ambition or responsibility, and do not care about the performance of the organisation. As such, they will tend to resist any organisational change, and not be particularly innovative or intelligent, only working because they have to in order to have money and security. However, it also holds that they are quite gullible and easy to manipulate. As a result, managers who follow a theory X approach can try to take a hard, controlling approach or a soft persuasive approach.

The hard approach depends on tight managerial controls and close supervision, such as proposed by scientific management, whilst also using coercion and implicit threats to prevent any soldiering. In contrast, the soft approach looks to manipulate employees with money and low levels of supervision, in an attempt to acquire employee cooperation and reasonable levels of productivity. Unfortunately, the hard approach will tend to generate hostility and resistance, whilst the soft approach will lead to workers requesting greater levels of rewards whilst working as little as possible. McGregor felt that most firms tried to use some aspect of both of these approaches, but neither were very successful

The reason for this is that McGregor claimed that theory X would only ever focus on low level needs such as security. As such, whilst the threat of removing security, in the form of pay cuts or potential sackings, would only motivate an employee to a certain level. As such, whilst following a Theory X approach would be better than following no approach, it will never satisfy high level needs, and employees will not be motivated by their work. Instead, they will look for more money and rewards to compensate, thus allowing them to fulfil their social and esteem needs outside of work. Therefore, employees will never satisfy their high level needs through work, and thus will never work to their maximum productivity.

In addition, McGregor argued that modern developed societies, with their abundant and cheap food, high tax rates and social safety nets, already satisfied most of the physiological and security needs of people. This meant that providing monetary rewards and punishments would not motivate staff as their discomfort at being controlled would outweigh the monetary benefits. As such, employees under theory X will tend to dislike their work and take no interest in the goals of the organisation, thus fulfilling the assumptions made under the theory. As such, McGregor argued that theory X was a self fulfilling prophecy, and that managers who followed it would end up demotivating even the most intrinsically motivated workforce.Theory YIn contrast to theory X, theory Y assumes that working can be made as natural to people as play and rest. As such, people will motivate themselves to fulfil their work objectives, provided they commit to them, and they feel they will fulfil higher needs by achieving them. In addition, if these conditions can be fulfilled, people will seek additional challenges and responsibility, and will handle them well because humans are naturally creative and innovative: their talents just need to be encouraged in their work.

The most important aspect of theory Y is that it focused on the cycle of managers providing interesting work, which motivates employees to achieve, which allows managers to provide them with more interesting and challenging work, thus fulfilling the higher level esteem needs, and allowing people to approach self actualisation in their work. As self actualisation is a continually evolving need, it will thus continue to motivate employees throughout their working lives.

This allows managers to align employees personal goals with the goals of the organisation, by allowing the employee to fulfil their needs as the organisation succeeds. For example, a firm can decentralise its control structure, providing employees with more responsibility and harnessing more of their skills to drive success. Companies can also consult employees as part of the planning and decision making processes, giving the employees input into the organisations success whilst benefitting from the employees creativity. Participative performance appraisals are also often used in theory Y, as when employees participate in setting and monitoring their objectives, they are more likely to strive to reach them.

If such a system can be properly implemented, it would result in very high levels of motivation, with employees working ever harder as their personal needs develop and their job develops to satisfy them. However, Theory Y management cannot be seen as a soft approach as it is easy for employees to manipulate the system by pretending to be demotivated and hiding their true motivations. Indeed, McGregor argued that some employees may not have developed sufficient emotional maturity to embrace a Theory Y style of management, and may believe the managers are trying to manipulate them or are being weak. As such, managers may need to develop an initial system of control for employees, and relax that system as the employee matures and develops.iv. ABRAHAM MUSLOWS HIERARCHY OF NEEDS

Abraham Maslow looked to expand on Human Relations Theory. His argument was that if motivation could be driven by managers filling their employees needs, then managers should look to understand which of these needs are the most important. Man is a wanting animal whose needs depend on what he already has. Only needs not yet satisfied can influence behaviour, so a satisfied need is not a motivator.

Through examinations of people who Maslow believed to be exemplary, such as Albert Einstein and Eleanor Roosevelt, Maslow claimed that people would only be motivated to perform to their fullest extent if their higher order needs would be fulfilled by said performance. In other words, it is not enough for a manager to simply pay their employees more, as pay eventually ceases to become a motivator once people have enough money. Instead, managers must find other needs that their employees possess, and look link performance to the satisfaction of these needs.

Mans needs are arranged in a hierarchy of importance. Once one need is satisfied, another one emerges and demand satisfaction. Maslow argues that there were five main categories of needs;

Self-actualisation

Esteem

Social

Security

VPhysiological

The first needs to be fulfilled were physiological needs, followed by security needs, social needs, esteem needs and finally the need for self-actualization. Maslow states that if all of a persons needs are not satisfied at a particular point, satisfaction of the most predominant needs will be more pressing than others. Those needs which come first must be satisfied before a higher level need comes into play and only when they are sufficiently satisfied are the next ones in line become significant. Physiological needs are the most basic requirements of human existence, such as food, water, sex and rest. Maslow argued that if these needs were not fulfilled, then people would devote all their needs to fulfilling them, and no extent of social interactions or esteem felt by people would compensate.

Once the physiological needs were met, people would next consider their security, and the extent to which they were safe from any harm. As such, people will look to live in a safe area, visit the doctor, look for a secure job, and build up savings so they would not risk being poor. As this is above physiological needs in the hierarchy, Maslow claimed that people who were hungry would put themselves at risk to obtain food. This explains why people in war torn regions will still attempt to plant crops in former minefields: the food is a more pressing need than their own safety.

Once people feel safe, secure and physiologically satisfied, they will begin to prioritise their social needs. This involves having meaningful social interactions with others, manifested as a need for friends, a need to belong to a social group, and a need to both give and receive love.

Once a person has fulfilled these social needs, they begin to desire esteem needs. Esteem needs are defined as those related to someones psychological image of themselves. As such, they can be external, such as receiving praise, recognition and promotion; or internal, such as knowing that a job has been done well, and having a high level of self respect.

Finally, the need for self-actualisation represents the highest level Maslows hierarchy of needs and Maslow argued that it represented the pinnacle of the human condition, only being reached by the most exemplary people. In addition, Maslow argued that the nature of this need is such that it can never be fully satisfied, as people can always strive to better themselves and reach a higher level of achievement. This explains why notable people such as Einstein continued to work throughout their lives, after achieving fame, fortune and recognition.Implications for managers and limitationsMaslows theory implies that managers cannot simply pursue a single all encompassing theory of management, such as scientific management or human relations theory, if they wish to maximise the performance of their workers. Instead, they must look to fulfil all their employees needs through their management style and the design of the job and financial rewards.

For physiological needs, managers need to provide employees with the opportunity to rest and eat, as well as wages to purchase food and drink. To fill security needs, workers need a safe working environment with job security, together with a wage that is enough to afford their desired lifestyle, house and quality of life. Social needs require managers to focus on team work and social events, as well as giving employees a chance to socialise outside of work, and esteem needs are fulfilled through recognition of achievements, rewards for good performance and a merit based promotion system. Finally, self-actualisation can only be achieved by allowing employees to reach what they feel is their full career potential, and allowing them to continue to develop as they do.

The main limitation of Maslows theory is that different people will place different weightings on their needs, and will have different relationships between motivating factors and their needs. For example, some people may see money as merely fulfilling a security need, and will be happy to work to a certain level of wages and achievement. In contrast, some people may see their earning power as a key part of their self esteem, and will work harder and harder if they are given the opportunity for increasing financial rewards. It is also difficult for a manager to determine what need is driving an employee at any one time, particularly as employees needs will often be affected by external factors such as their family life and social life outside of work.

In addition, there is no empirical evidence to support Maslows hierarchy as applying to all people, and there is evidence to support a different order of needs in many circumstances. For example, people such as Ghandi and Mother Teresa sacrificed some of their security to help others, hence achieving esteem and self actualisation without fulfilling their security needs. Also, many artists and actors will struggle by on minimum wages, with only minimum food and security, in the pursuit of recognition and achievement within their chosen career. There is also little evidence to support the argument that people focus on one need at once, and will often consider many needs when making a decision.

v. FREDRICK HERZBERGS TWO FACTOR THEORY

In an effort to better understand the factors which motivated employees, Frederick Herzberg performed in-depth interviews with employees looking to determine which aspects of their job they liked, and which caused them displeasure. This study revealed that one set of factors caused job satisfaction, whilst a different set of factors tended to cause job dissatisfaction. As a result, an absence of certain factors would demotivate employees, but increasing these factors past a certain level would not motivate the employees any further. In contrast, some factors would not demotivate employees if they were absent, but it they were provided they would increase employee motivation.

These results led Herzberg to terms the factors which could motivate employees motivators whilst the factors which caused dissatisfaction if they were absent were referred to as hygiene factors. As such, Herzberg developed that Motivation-Hygiene theory, also known as the Two Factor theory, to explain how managers could use these factors to motivate their employees.

The following factors were indicated as the most important hygiene factors:

Company policies and administration Quality of supervision

Employees relationship with their boss

General working conditions

Salary

Employees relationship with their peers Job security

Status

Personal lifeWhilst the following were the most important motivators:

Potential for achievement

Receiving recognition

The work itself

Being given responsibility

The potential for advancement

The potential for growth

As such, whilst an employee who has bad relationships with their peers will perform worse, someone with excellent relationships with their peers will not necessarily perform any better than those with good relationships. Furthermore, someone who has no responsibility will not perform any worse than someone with a small amount of responsibility, but someone with a good level of responsibility will perform better than both of them.

Herzberg argued that these results occurred because of the two distinct human needs represented by the two sets of factors. The hygiene factors represented physiological needs which people expected to be fulfilled: people will generally feel bad if they are hungry, poor or lonely but being full and rich does not guarantee happiness. In contrast, the motivation factors represented psychological needs that were seen as a bonus: people do not have to receive recognition to be happy, but in general receiving genuine recognition will always boost someones mood and motivation.

In addition, Herzberg observed that the hygiene factors tended to be external to the work: policies and salary would be set by the company, whilst relationships did not depend on what job was being done. As such, Herzberg referred to these factors as KITA factors, which stands for Kick In The Ass, as he believed that these incentives could only be used as a punishment. As such, they would only result in limited, short term benefits, as the employee would merely have to perform to avoid them being taken away. In contrast, the motivation factors were part of the work itself, and hence the harder the employee worked, the greater the motivation factors would become. Therefore these factors will tend to motivate employees to work harder.

Implications for managers and limitationsThe motivation-hygiene theory implies that managers must focus their efforts in two areas: ensuring that hygiene factors are sufficient to avoid any employee dissatisfaction, whilst also ensuring that the work is rewarding and challenging enough to motivate employees to work harder. Indeed, Herzberg argued that managers must focus on job enrichment in order to motivate employees, and this must represent a continuous management process. As such, not only must the job be challenging and interesting enough to utilise the employees ability, but employees who have proven themselves must be given more challenging roles and increased responsibility in order to continue to be motivated. As such, if a job does not fully utilise an employees abilities, the task should be automated or given to someone with a lower level of skill, to avoid demotivation.However, it has been argued that the two-factor result is a natural reaction to asking employees around the sources of satisfaction and dissatisfaction in their work. This is because people will tend to claim that their own performance and role provides them with satisfaction, whilst blaming any dissatisfaction on factors outside their control, such as salary, managers and colleagues. In addition, there is little evidence to support the argument that factors which provide job satisfaction will always increase employee motivation.SECTION 3: MANAGEMENT IN PRACTICE

A. TYPES OF BUSINESS ORGANISATIONi. Factors to consider when setting up a business ventureWhen you are thinking of starting a business, it is wise to first ask yourself some questions:

Do I know the product or service field?

Do I have the resources or can I get them?

How will my family cope?

Do I have the qualities needed to succeed?

Here are some basic factors you should consider:Business ideaFirst is to decide what type of business you want to start. This is your business idea. Your business idea includes what your business will produce or what service it will provide, whom your business will sell to, how it will sell its products or services, and what customer needs the business will satisfy. Spelling out your business idea in detail at the beginning increases your chances of success.Technical skillsEntrepreneurs need the practical abilities to produce the goods or services. If you plan to start a hairdressing business, for instance, you need to be able to wash, set, and style hair. Without the necessary technical skills, it is going to be difficult for you to start and run your hairdressing business. Family situationIt is important to have your familys support. Starting and running your own business will take a lot of your time, which might conflict with your family responsibilities. When your family agrees with your business plan and supports you, you will be able to give enough time to your business.Personal entrepreneurial characteristics and skillsYou are the most important person in the business, and its success depends on your efforts. Since you are responsible for managing the business, you need certain entrepreneurial characteristics and skills:

Motivation: You must be highly motivated by your business idea and enthusiastic about the prospects of starting and running your own business. Your plan should arise from your interests and desires, not because you have no other job to do. Motivation increases the chances that your business will succeed.

Commitment: You must put your business above everything else and be willing to devote the time, attention, and resources the business needs.

Tolerance for risk: Investing in a business involves risks, including the risk that the business will fail. You must be willing to take such risks. At the same time, you must learn to take calculated risks. Decision making skills: A good entrepreneur must be able to make difficult decisions affecting the business. People skills: Good entrepreneurs must be able to deal with customers. They also have to be able to handle suppliers. Self-knowledge: Wise entrepreneurs know their managerial strengths and weaknesses. To compensate for the weaknesses, they can hire consultants or employees with complementary strengths.Other key factorsOther factors to take into account when starting a business or preparing a business plan include understanding the following:

Customers/market potential: Define your potential customers and their needs. It is important to estimate how much business you will receive from your target market. Competition: Know your potential competitorsfirms selling similar or substitute products or services to your target market. Resources/capital: Determine the resources you will need, what you have available, how much they will cost, where you will get them, and how you will pay for them. Some of the basic resources you need to succeed or start a business include the following:

Human: Employees are the most important resources of a business. Physical: Land, building, machines, equipment, and natural resources needed to achieve business objectives; however, these resources come with costs. As a beginner you can start operating from your home. You can also use the services of communication and business centers for typing letters or other secretarial services. Financial: Organizations need cash and credit to operate. Physical and intangible resources are all obtained through financing. The major sources of finance are friends and relatives, banks and nonbank financial institutions (e.g., savings and loans companies). Nearly all successful businesses in Ghana, as in other countries, rely on their own funds for the first two years. Marketing: Determine potential customers, which products or services to offer, the distribution system to get the products or services to the customer, means of promotion to induce the customer to buy the products, and pricing. Uniqueness: Your product or service should offer customers something unique that they cannot get elsewhere. You need an original idea or invention, or your idea may be to improve on somebody elses product/service. People must need your product or service: if they do not need it, no marketing effort will make it succeed. Market saturation: When selecting your business idea, consider whether there are more providers, suppliers, or service/product than there are customers. You may have a great idea, but there may not be enough room for you in the industry because too many people are already providing something similar. Location: Because of its long-term relationship to profitability, a firms location is key and deserves thoughtful analysis. Poor location is a hindrance that is especially destructive when it comes to retail operations. For retail businesses, the key to profitability is traffic. If your business is located off the main traffic zone, its survival and prosperity diminishes. A firms growth might force expansion requiring the business owner to make a decision about expanding at the same location, if possible, or moving to another area. Regardless of the reason, the location decision may involve a significant expenditure, and you will have to live with the decision.

To start a business, you should know the various factors that are important in making your location decision: proximity to the target market proximity to your source of labor transportation facilities availability of raw materials size of population/potential market Demographic factors (age, sex, distribution) of the population.Usually, it will have to balance several factors in making a decision. Sometimes one factor may sway the decision.ii .Limited companies

Characteristics

Are treated as separate legal entities capable of owning property, employing people, making contracts, and suing or be sued.They have continuity of succession as they are not affected by the death of a member or incapacities of one or more members.

Has the protection of the limited liability. Members meet the debts up to the limit of the nominal value of their shares.

Ownership and control are vested in the shareholders and the directors.

Fall into two i.e. public limited companies and private limited companies.

The memorandum of a public limited company should clearly state that it is a public limited company with its shares available for purchase by the public whilst a private limited company may or may not offer its share to the public.

Both companies must have at least two members and one director.Once registered, a private limited company can start trading without further formality, but a public limited company has to obtain a certificate of trading from the registrar of companies.

Both companies have to fill in the Memorandum of association and the Articles of association

Contents of the MoA-companys name

-the location of the registered office

-the objects or purpose of the company-a statement that the liability of members is limited

-the amount of share capital i.e. number and class

-a declaration of association in which members express their desire to form a company and to take up shares.

Contents of AoA-give internal affairs of the company and gives details of shareholders, directors, secretary and auditors.

Advantages of limited companies

-limited liability

-shares are transferable

-wider share ownership

-annual returns are submitted to the Registrar for inspection

Disadvantages of limited companies

-it may be difficult for small companies to borrow as extensively as desired

-considerable legal procedures involved in setting and publishing various aspects of the company

iii. Sole tradersCharacteristics

Simplest form. One person in business on his own.Owner is fully liable for any debts incurred in running the business

Ownership and control are combined

All profits are subject to income tax rather than corporate tax

There are no formal accounts to be published.

Advantages

-minimal formalities for starting up

-complete autonomy to run the business as the owner wishes

-profits belong to the trader

-various business expenses are allowable against income tax

-no public disclosure of accounts

Disadvantages

-the owner is entirely responsible for the debts of the business-relies on owner for all aspects like marketing, product development, sales, finance etc.

iv. PartnershipsCharacteristicsExists when at least two people but not more than twenty, agree to do business together.Guided by the Partnerships Act

Members are owners of the business

Partners are not automatically entitled to a salary but to share of the profits of the business

Advantages-few formalities are required when starting up

-share partners knowledge and skill

-share management of business

-no obligation to publish accounts

-profit or losses are equally shared

Disadvantages

Each partner is liable for debts of the partnership-risk that partners may not be able to work together at a personal level

-death or bankruptcy of one partner will automatically dissolve the partnership, unless otherwise provided for in the agreement.

v. Cooperatives

CharacteristicsFormed by small groups of people along democratic line who want to enjoy limited liabilityIn lieu of MA and AA, they have set rules approved by the Registrar of Societies

Each member must have equal control on the one person one vote principle

Members must benefit as employees as well as investors

Interest on loan or share capital has to be limited

Profit must be shared in proportion to contribution of each member

Membership is open to all who qualify

Must be registered

Advantages-gives opportunity for genuine pooling of capital between a group

-encourage active collaboration between all sections of the workforce-enables decisions to be made democratically

-provides rewards on an equitable basis among those involved-provides limited liability if registered

Disadvantages

-less likelihood of a level of profitability and growth is achievable-relationships can deteriorate

-democratic decision making can lead to lengthy discussions before action is taken

-members who are not truly dedicated to democratic ethos may be at odds with communication and decision making principles.

B. MANAGEMENT FUNCTIONS1. PlanningDefines a process that involves those activities of a manager which result in a course of action. Managers should make the best possible forecast of future events that affect the firm and draw up an operating plan that guide future decisions.

Is a process that involves defining the companys objectives or goals, establishing an overall strategy for achieving those goals and developing a comprehensive hierarchy of plans to integrate and coordinate activities.

Is thought to be a cycle not a straight thought process. Plans should be evaluated. Evaluation may be cost or number based or may use other analytical tools. The analysis may show that the plan specified may cause unwanted consequences, may cost too much or may simply not work. The planning cycle will have to cycle back to an earlier stage or the plan may have to be abandoned altogether.

The function of management of systematically making decisions about the goals to be achieved and activities or actions needed to achieve those goals that an individual, a group, a work unit, or the overall organization will pursue in the future.

Plans are developed for the entire organizational unit and individuals for certain period of time.

Its activities include:

Analyzing current situations.

Anticipating the future.

Determining the organizational objectives.

Deciding the activities to be involved.

Choosing strategies.

Determining resources to achieve organizational goals.

Etc. It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ, Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.Purpose of planning

Direction

To give directions to managers and non managers alike. Workers need to know where the organisation is going and what they must contribute to reach the set targets. A plan coordinates tasks, ensures cooperation of workers and encourages teamwork.

Reduce uncertainty

Plan force managers to look ahead, anticipate change, consider the impact of change and develop appropriate responses.

A plan clarifies the quensequences of actions managers might take in response to change.

Minimize waste

A plan reduces overlapping and wasteful activities. When ways and ends are clear, inefficiencies become obvious and can be corrected or eliminated.

Standards

A plan establishes objectives or standards that are used in controlling. If people know and are sure of what to achieve, how to actually achieve it, planning develops objectives, then compare actual performances against objectives, identify any significant deviation, and take necessary corrective action.

The planning cycle

Analysis of current position

Identify aim

Explore options

Plan evaluation

Plan implementation

Closure of plan

Feedback

Analysis of current position

Situation arising given existing environment.

Aims

Profits, service, social satisfactions are set with priority of importance.

Exploring options

Why this idea and not that one? Compare and contrast the ideal alternatives in sequential order of forces and other parameters binding the aims.

Evaluation

Share ideas, consult and review. Give an achievable forecast. Is the objective workable/. Go back to optional analysis and pick another alternative if this one fails.

Implementation

The actual doing of the plan. Taking the plan into effect. Put budget plans, policy, rules, and procedures to attain the intended goals.

Closure of the plan

Give an overall evaluation of the satisfying end plan. The planning exercise is closed by laying down standards and concrete aims.

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Give conclusion based forecast. Update the current situation. Give a value analysis, profit analysis. Is it viable? Should give an assessment of what consumer behave against their expectations. Is it worthy expanding or remain like that or close. Adjust to technological advances.2. OrganizingIncludes all activities which result in a structure of tasks and authority. Determines the appropriate machine, materials, and human mix which are necessary to achieve or accomplish set objectives

The management function of assembling and coordinating human, financial, physical, information and other resources needed to achieve organizational goals.It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnels. To organize a business involves determining & providing human and non-human resources to the organizational structure. Organizing as a process involves:

Its activities include:

Specifying job responsibilities and identification of activities Grouping jobs into work units.

Resource allocation. Classification of grouping of activities. Assignment of duties. Delegation of authority and creation of responsibility. Coordinating authority and responsibility relationships.

3. Leadership/CommandingRefers to directing the activities of workers or subordinates. Managers should set good examples and should have direct two-way communication channel with subordinates. Managers should evaluate, continuously, the organizational structure, and workers and should not hesitate to change or alter the anomalies if considered faulty.

The management function that involves the manager's efforts to stimulate high performance by employees and includes directing, motivating and communicating with employees, individually and in groups. It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has the following elements:

Supervision

Motivation

Leadership

Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

Its activities include:

Directing the workforce.

Motivating your subordinates.

Communicating with employees

4. Coordinating

Binding together all individual efforts and direct them towards a common purpose.

Co-ordination is the unification, integration, synchronization of the efforts of group members so as to provide unity of action in the pursuit of common goals. It is a hidden force which binds all the other functions of management. According to Mooney and Reelay, Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals. According to Charles Worth, Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding.

Management seeks to achieve co-ordination through its basic functions of planning, organizing, staffing, directing and controlling. That is why, co-ordination is not a separate function of management because achieving of harmony between individuals efforts towards achievement of group goals is a key to success of management. Co-ordination is the essence of management and is implicit and inherent in all functions of management.

A manager can be compared to an orchestra conductor since both of them have to create rhythm and unity in the activities of group members. Co-ordination is an integral element or ingredient of all the managerial functions as discussed below: -a.

a. Co-ordination through Plan