TECHNOLOGICAL INNOVATION

MANAGEMENT
AND
ENTREPRENEURSHIP

Ravishankar S Ulle
Assistant Professor
Dept of MBA, GSSSIETW
[email protected]
09742260116
Course Learning Objectives: This course will enable you to:

• Understand basic skills of Management

• Understand the need for Entrepreneurs and
their skills
• Identify the Management functions and Social
responsibilities
• Understand the Ideation Process, creation of
Business Model, Feasibility Study and sources
of funding
 Course Outcomes
After studying this course, you will be able to:
• Understand the fundamental concepts of Management
and Entrepreneurship and opportunities in order
to setup a business
• Describe the functions of Managers, Entrepreneurs and
their social responsibilities
• Understand the components in developing a business plan
• Awareness about various sources of funding and
institutions supporting entrepreneurs
 Module

1
MANAGEMENT
and
PLANNING
 What Is Management?
• Managerial Concerns
– Efficiency
• “Doing things right”
– Getting the most output
for the least inputs
– Effectiveness
• “Doing the right things”
– Attaining organizational
goals
Effectiveness and Efficiency in Management
 What Is Management?
• Management involves coordinating
and overseeing the work activities of
others so that their activities are
completed efficiently and effectively.
 MANAGEMENT Defined…

• Management is a distinct ongoing

process of allocating inputs of an
organization by variety of specialist
functions for the purpose of stated
objectives
 Definition of Management by other
authors
• By Griffin:
“A set of management functions directed at the
efficient and effective utilization of resources in the
pursuit of organization goals.”
• By Koontz and Weihrich:
“Management is the process of designing and
maintaining an environment in which individuals
working together in groups, efficiently accomplish
selected aims.”
 The 4 different views of Management
are:
1. Management is a PROCESS

2. Management is a DISCIPLINE

3. Management is a HUMAN ACTIVITY

4. Management is a CAREER
 Concept of Management
• Management may be labeled as the
art of getting work done through
people, with satisfaction for
employer, employees and the public
 Concept of Management
• For getting the work done through the efforts of
other people, it is necessary to guide, direct,
coordinate and control the human efforts
towards the fulfillment of the goals.
• The goals are fulfilled through the use of
resources like men, money, materials and
machines.
With reference to manufacturing management,
industrial management
 Concept of Management
• Management can be called as an ART as well
as SCIENCE

Management is an art Management has

because management scientific basis because
means coordinating management techniques
and getting work done are susceptible to
through others measurement and factual
measurement
 Concept of Management
• Management is an executive function
which actively directs human efforts
towards common goals
• Main characteristics of management
– To integrate and apply the knowledge
– To develop and deploy analytical
approaches.
 Concept of Management
• Management does not frame policies, it only
implements and executes the policies laid
down by the organizations
• Management is productive in character
• Planning, Organizing, Staffing, Directing,
Coordinating and Controlling are all the
functions of management.
• Owners are not the management, managers
are the management
 Who Are Managers?
• Manager
– Someone who coordinates and oversees the
work of other people so that organizational goals
can be accomplished.
 Classifying Managers
• First-line Managers
– Individuals who manage the work of non-managerial
employees.
• Middle Managers
– Individuals who manage the work of first-line
managers.
• Top Managers
– Individuals who are responsible for making
organization-wide decisions and establishing plans and
goals that affect the entire organization.
Managerial Levels
 What Managers Do?
• Three Approaches
Functions they perform.
Roles they play.
Skills they need.
 Functions of Management
1. Planning
2. Organizing
3. Coordinating
4. Written and Oral Communication
5. Leadership, Motivation and
Organization Culture
6. Controlling and IT
Relative Amount of Time That Managers
Spend on the Four Managerial Functions
 Planning
Defining goals, establishing
strategies to achieve goals,
developing plans to integrate and
coordinate activities.
 Organizing

• Arranging and structuring

work to accomplish
organizational goals.
 Leading
Involves motivating subordinates,
influencing individuals or teams as
they work, selecting the most
effective communication channels
 Controlling

Monitoring, comparing,
and correcting work.
 What Managers Do?
• Actions
– thoughtful thinking
– practical doing
 Management Roles
Interpersonal roles
Leader
Figurehead Motivator

Negotiator Managerial Monitor

Resource roles
Allocator
Disturbance
handler Spokesperson
Entrepreneur Informational roles
Decisional roles
 Interpersonal Roles

• Roles that involve interacting with other people

inside and outside the organization

• Interpersonal roles:
– Figureheads: Greet visitors, Represent the company at
community events

– Leader: Influence, motivate, and direct others as well

as strategize, plan, organize, control, and develop
 Informational Roles

• Collecting, Processing
• Roles: Monitor, and
spokesperson
 Decisional Roles
• Whereas interpersonal roles deal with people and informational
roles deal with knowledge, decisional roles deal with action
• Decisional roles:
– Entrepreneur: Managers must make sure their
organizations innovate, change, develop, and adopt
– Disturbance handler: Addressing unanticipated problems
as they arise and resolving them.
– Resource allocator: How best to allocate resources
– Negotiator: Negotiation is continual for managers
• Interpersonal roles deal with people

• Informational roles deal with

knowledge

• Decisional roles deal with action

 What Is An Organization?
• An Organization Defined
– A deliberate arrangement of people to accomplish
some specific purpose (that individuals independently
could not accomplish alone).
• Common Characteristics of Organizations
– Have a distinct purpose (goal)
– Composed of people
– Have a deliberate structure
Characteristics of Organizations
 What Managers Do?
• Skills Managers Need
– Technical skills
• Knowledge and proficiency in a specific field
– Human skills
• The ability to work well with other people
– Conceptual skills
• The ability to think and conceptualize about abstract
and complex situations concerning the organization
Skills Needed at Different Management Levels
How The Manager’s Job Is Changing
• The Increasing Importance of Customers
– Customers: the reason that organizations exist
• Managing customer relationships is the responsibility of all
managers and employees.
• Consistent high quality customer service is essential for
survival.
• Innovation
– Doing things differently, and taking risks
• Managers should encourage employees to be
aware of and act on opportunities for innovation.
 Why Study Management?
• The Value of Studying Management
– The universality of management
• Good management is needed in all organizations.
– The reality of work
• Employees either manage or are managed.
– Rewards and challenges of being a manager
• Management offers challenging, exciting and creative
opportunities for meaningful and fulfilling work.
• Successful managers receive significant monetary rewards for
their efforts.
Universal Need for Management
Difference between
Administration and
Management
BASIS FOR COMPARISON MANAGEMENT ADMINISTRATION

An organized way of The process of

managing people and administering an
Meaning things of a business organization by a group of
organization is called the people is known as the
Management. Administration.

Authority Middle and Lower Level Top level

Role Executive Decisive

Concerned with Policy Implementation Policy Formulation

BASIS FOR COMPARISON MANAGEMENT ADMINISTRATION

It has full control over the

It works under
Area of operation activities of the
administration.
organization.

Government offices,
Profit making military, clubs, business
Applicable to organizations, i.e. enterprises, hospitals,
business organizations. religious and educational
organizations.

What should be done?

Who will do the work?
Decides And When is should be
And How will it be done? done?

Putting plans and policies Formulation of plans,

Work framing policies and
into actions. setting objectives
BASIS FOR COMPARISON MANAGEMENT ADMINISTRATION

Making best possible

Focus on Managing work allocation of limited
resources.

Key person Manager Administrator

Owners, who get a return

Employees, who work for
Represents on the capital invested by
remuneration them.

Legislative and
Function Executive and Governing
Determinative
PLANNING
 What is Planning?
• Deciding in advance what to do, how to do it,
when to do it and who has to do it.
• Planning is the pre-selection of objectives
and outlines the action before starting any
business.
• Planning is decision making in advance.
• Choosing the alternatives and making the
decision is called planning.
 Nature of Planning
• Goal oriented: Every plan must contribute in some
positive way towards the accomplishment of objectives.
• Dominance of Planning: Planning is the first of the
managerial functions
• Efficiency, Economy and Accuracy
• Co-ordination
• Limiting Factors: money, manpower etc
• Flexibility
• Planning is an intellectual process: The quality
of planning will vary according to the quality of the mind of
the manager.
 Importance of Planning
• Provides direction
• Leads to economical utilization of resources
• Reduces the risks
• Facilitates decision making
• Encourages Innovation & Creativity
• Improves morale
• Facilitates control
Planning Process
(or)
Steps in Planning
 Steps in Planning
Being Aware of opportunities
Market, competition, Customers, Strengths Weakness

Establishing objectives
Where we want to be, what to achieve and when

Developing premises
In what environment, scenarios

Determining alternative courses

How many and which are most promising

Evaluating alternative courses

In the light of objectives

Selecting a course

Formulating derivative plans

Quantifying plans by budgeting

 1. BEING AWARE OF OPPORTUNITIES
• All managers should take look at future
opportunities and see them clearly and completely.
• They should know their strengths and weakness,
understand what problems they wish to solve and
why, and know what they expect to gain.
• Setting realistic objectives depends on
(i) About market
(ii) About expected competition
(iii) What customers wants
 2. SETTING OBJECTIVES
• The second step in planning is to establish or
set objectives
• Objectives specify the expected results and
indicate the end points of
(i) What is to be done
(ii) Where the primary emphasis is to be placed
(iii) What is to be accomplished by the
strategies, policies, procedures, rules, budgets
and programs.
 3. DEVELOPING PREMISES
• It is important for all the managers involved
in planning to agree on the premises.
• Forecasting is important in premising: What
kind of markets will be there? What
volume of sales? What prices? What
products? What technical developments?
What cost? Etc
 4. INDENTIFYING ALTERNATIVE
COURSES OF ACTION
• to search and examined alternative
courses of actions.
• The planner must usually make
preliminary examination alternative
courses to accomplish the goal.
5. EVALUATING ALTERNATIVE COURSES
• After determining alternative courses
and examining their strong and weak
points, the next step is to evaluate the
alternatives.
 6.SELECTING A COURSE
• Selecting an alternative is the real point
of decision making. This is the point at
which the plan is adopted.
• the manager has to decide one best
alternative or several alternative courses of
action.
 7.FORMULATING DERIVATIVE PLANS
• The seventh step in planning is
formulating derivative plans.
• When a decision is made next step is to
formulate a supporting plan, such as to
buy equipment, materials, hire and train
workers and develop a new product.
 8. QUANTIFYING PLANS BY
BUDGETING
• the final step in planning is to quantify
them by converting them into budgets.
• The overall budgets of an enterprise
represent the sum total of income and
expenses with resulting profit.
 Types of Plans
• Long range Vs Short range

• Strategic Vs Operational

• Corporate Vs Functional

• Proactive Vs Reactive

• Standing Vs Single Use

 Long range Vs Short range
Long range plan Point of Short range plan
distinction
Covers many years & Meaning Covers less than one
affects many year and is more
departments of an specific & detail
organization
5 yrs or more Time Up to one year
Mission ,long term Deals Current operations of
goals and strategies with organization
Top management Prepared Lower level executives
by
 Strategic Vs Operational
Strategic Plan Point of Operational Plan
distinction

5 years or more Time Under one year

horizon

Adapt to external Purpose Implement internal goals

environment based on
internal strengths
Top management Level Middle & lower level
involved

Primarily judgmental Basis for Exact data & Standards

planning used
 Corporate Vs Functional
• Corporate Plan:
– A comprehensive plan that outlines the
broad objectives of a company as a whole
and develops plans to achieve those
objectives
– Focus on organizational performance

• Functional Plan:
– Is unit planning and deals with different
departments.
– Focus on departmental performance
 Proactive Vs Reactive
• Proactive Planning:
– Managers challenge the future,
anticipating future contingencies
• Reactive Planning:
– Organizations react to events as and
when they arise
 Standing Vs Single Use

• Standing Plans • Single Use plans

– Developed for – Developed to carry
activities that recur out a course of
regularly over a action that is not
period of time likely to be
repeated in future
• Ex:
– Objectives, Policies,
• Ex:
Procedures, Methods,
– Programmes,
Schedules, Projects,
Rules
Budgets
 Types of Plans – Key Point
• Strategic Plans
– Apply to the entire organization.
• Operational Plans
– Specify the details of how the overall
goals are to be achieved.
 Types of Plans – Key Point
• Long-Term Plans
– Plans with time frames extending 5 years
• Short-Term Plans
– Plans with time frames of one year or less
• Specific Plans
– Plans that are clearly defined and leave no room for
interpretation
• Directional Plans
– Flexible plans that set out general guidelines and
provide focus,
 Types of Plans – Key Point
• Single-Use Plan
– one-time plan specifically designed to
meet the need of a unique situation.
• Standing Plans
– Ongoing plans that provide guidance
for activities performed repeatedly.
TYPES OF PLANS/ Hierarchy of Plans

 Mission or purposes
 Objectives or goals
 Strategies
 Policies
 Procedures
 Rules
 Programs
 Budgets
Mission or purpose
The basic purpose or function or
tasks of an enterprise or agency
or any part of it

Objectives or goals
The end towards which
activity is aimed
Strategies
The determination of the basic long term
objectives of an enterprise and the adoption of
courses of action and allocation of resources
necessary to achieve these goals

Policies
General statements or understanding
that guide or channel thinking in decision
making
Procedures
Plans that establish a required
method of handling future activities

Rules
Rules spell out specific required
actions or non actions allowing no
discretion
Programs
A complex of goals, policies, procedures,
rules, task assignments, steps to be taken,
resources to be employed, an other elements
necessary to carry out a given course of
action

Budgets
A statement of expected results
expressed in numerical terms
Cascading of Objectives
Management by Objectives
(MBO)
 Management by Objectives (MBO)
• Is a method whereby managers and employees
define goals for every department, project, and
person and use them to monitor subsequent
performance.

4 major activities:
1. Set goals
2. Develop action plans
3. Review progress
4. Appraise overall performance
 Step 1: Set Goals Step 2: Develop Action Plans
• Corporate Strategic
Action Plans
Goals
• Departmental Goals
• Individual Goals

Review Progress

Step 3:
Review
Take Corrective Progress
Action
Appraise
Performance

Step 4: Appraise
Overall Performance
 Benefits of MBO Problems with MBO
1. Improvement of 1. Danger of inflexibility
management

2. Performance can be 2. An environment of poor

improved at all company employer-employee relations
levels. reduces MBO effectiveness.
3. Employees are motivated. 3. Strategic goals may be
displaced by operational goals.
4. Departmental and 4. Mechanistic organizations and
individual goals are values that discourage
aligned with company participation can harm the
goals. MBO process.
5. Too much paperwork saps
MBO energy.
 LIMITATIONS OF PLANNING
1. Planning is costly,
2. Planning is a time consuming process,
3. Planning reduces initiative of employees,
4. Reluctance to change,
5. Capital invested in fixed assets limits
planning,
6. Inaccuracy in planning,
7. Planning is effected by external limitations
DECISION MAKING PROCESS
Decisions and Decision Making

• Decision = choice made from available

alternatives

• Decision Making = process of identifying

problems and opportunities and resolving
them
Six Steps in Decision Making
 Decision Making Steps
Step 1. Recognize Need for a Decision
• Managers must first realize that a decision must be
made.
Step 2. Generate Alternatives
– Managers must develop feasible alternative
courses of action.
• If good alternatives are missed, the resulting decision
is poor.
• It is hard to develop creative alternatives, so managers
need to look for new ideas.
Step 3. Evaluate Alternatives
– What are the advantages and disadvantages of
each alternative?
– Managers should specify criteria, then evaluate.
Step 4. Choose Among Alternatives
– Rank the various alternatives and make a decision
Step 5. Implement Chosen Alternative
– Managers must now carry out the alternative.

Step 6. Learn From Feedback

– Managers should consider what went right and
wrong with the decision and learn for the future.
– Without feedback, managers do not learn from
experience and will repeat the same mistake over.
CASE Study: Which is Best Cool Drink
Step 1: Identifying the problem
Step 2: Identification of decision criteria

1) Brand
2) Taste
3) Color
4) Packaging
5) Price
Step 3: Allocation of weights to criteria
Criteria A B C D Total
Brand 9 10 10 8 37
Taste 10 8 10 10 38
Color 6 5 7 6 24
Packaging 9 8 6 5 28
Price 8 9 9 8 34

Criteria Weight
Taste 10
Brand 9
Price 8
Packaging 6
Color 4
Step 4: Development of alternatives
• Coca Cola
• Sprite
• Pepsi
• Fanta (orange)
• Lipton (ice tea)
• Tipco (fruit juice)
• Ichitan (green tea)
 Step 5: Analyzing alternatives
Drink Taste Brand Price Packaging Color
Coca Cola 10 10 7 6 7
Sprite 8 9 8 7 6
Pepsi 9 10 6 8 6
Fanta (Orange) 6 7 8 8 10
Lipton (Ice Tea) 10 9 8 5 5
Tipco (Fuit Juice) 10 9 7 8 8
Ichitan (Green
Tea) 10 8 8 6 5
 Step 6: Selecting an alternative
Criteria*Weight

Drink Taste Brand Price Packaging Color Total

Coca Cola 100 90 56 36 28 310
Sprite 80 81 64 42 24 291
Pepsi 90 90 48 48 24 300
Fanta
(Orange) 60 63 64 48 40 275
Lipton (Ice
Tea) 100 81 64 30 20 295
Tipco (Fuit
Juice) 100 81 56 48 32 317

Ichitan
(Green Tea) 100 72 64 36 20 292
Step 7: Implementing the decision
Step 8: Evaluating the decision’s effectiveness
Decision Making Process
A) Define the Problem
B) Consider Your Value:
C) List Your Options
D) Weigh the Consequences:
E) Decide and Act
It is also a powerful strategic planning tool used to
evaluate a project in business venture or in an organization
or individual requiring a decision in pursuit of an objective
 CASE STUDY
• How to choose a education after +2
 FACTORS
• Marks
• Interest
• Economy
• Job opportunities
• Family Background
• No of years(3,4,5)
 THREE FRIENDS
• Palani, Mani and Arun studying in a same school
• They are average students
• Let us take a decision on their future education .
 PALANI
• Likes adventure and sports
• Hails from poor family
• He had two elder brother who works in their
home town
 MANI
• Mother and Father are teachers
• They desire to make his son to acquire higher
degree
• Mani is interested in vehicles and machines
 ARUN
• Hails from an average family
• He is good in maths.
• He had a younger sister and it is his
responsibility to educate him.
 DECIDE
• Take a decision on
all three friends by
considering the
factors and
situation given
above
 CASE STUDY
• TRAIN TRACK AND CHILDREN
 WHAT TO DECIDE
• A group of children were playing near 2 railway tracks,
one still in use while the other disused. Only one child
played on the disused track, the rest on the operation
track
 WHAT TO DECIDE
• The train came and you were just beside the
track interchange.
• It was not possible to stop the train but you
could make the train change its course to the
disused track and save most of the kids
 WHAT TO DECIDE
• However, that would also mean the
lone child playing in the disused
track would be sacrificed. Or would
you rather let the train go way.
Let us take a pause to think what kind
of decision we would make
 WHAT TO DECIDE
• Analyze the
situation
• Thick and reflect
• Decide
• Now go ahead
 WHAT TO DECIDE
Most people might choose to divert the
course of the train, and sacrifice only one
child.
To save most of the children at the expense
of only one child was rational decision
most people would make morally and
emotionally
 WHAT TO DECIDE
• But, have you ever thought that the child
choosing to play on the disused track had
in fact made the right decision to play at
a safe place.
• Nevertheless, he had to be sacrificed
because of his ignorant friends who
choose to play in the used track which is
dangerous.
 WHAT TO DECIDE
• This kind of dilemma happens around us
everyday. In the office community, in politics
and especially in a democratic society the
minority is often sacrificed for the interest of
the majority. No matter how foolish or
ignorant the majority are and how farsighted
and knowledgeable the minority are.
 WHAT TO DECIDE
• The child who choose not to play
with the rest on the operational
track was side lined. And in the
case he was sacrificed, no one
would shed a tear for him
 WHAT TO DECIDE
• To make the proper decision is not try to
change the course of the train because the kids
playing on the operational track should have
known very well that track was still in use and
that they should have run away if they heard
train sirens.
 WHAT TO DECIDE
• If the train was diverted, that lone
child would definitely die because he
never thought the train could make
over to that track.
• Notably that track was not in use
probably because it was not safe.
 WHAT TO DECIDE
• If the train was diverted to the unused
track, we would put the lives of all
passengers on board at stake. And in
your attempt to save a few kids by
sacrificing one child, you might end up
sacrificing hundreds of people to save
these few kids
 WHAT TO DECIDE
• While we are all aware that life is full of
tough decisions that need to be made, we
may not realize that hasty decisions may
not always be the right one.
• Remember that What’s right is not
always popular and what’s popular isn’t
always right.
CASE STUDY: Buying a CAR
 BUYING A CAR
• Price
• Model
• Options
• Style
• Fuel Efficiency
CASE STUDY: Buy a MOBILE
LAPTOP
Criterion Weight
Memory and Storage 10
Battery life 8
Carrying Weight 6
Warranty 4
Display Quality 3
Evaluation of Laptop Alternatives Against Weighted Criteria
 Decision-Making Approach
• Rationality
• Bounded Rationality
• Intuition

Types of Problems and Decisions

• Well-structured Decision
- programmed • Choose best
• Poorly structured alternative
Decision-Making
- nonprogrammed - maximizing
Process - satisficing
• Implementing
• Evaluating
Decision-Making Conditions
• Certainty
• Risk Decision Maker Style
• Directive
• Uncertainty
• Analytic
• Conceptual
• Behavioral
 Types of Decisions

Programmed decision:
– A decision that is fairly structured
or recurs (occur again)with some
frequency (or both).
Non-programmed decision:
– A decision that is relatively
unstructured and occurs much
less often than a PROGRAMMED
DECISION.
Rational Decision Making(logical)
 1.Recognize the need for a decision
• Manager recognize the need for a decision
in the form of a problem or opportunity.
 2.Definition of the problem
• A problem is the gap between present and
the desired state of affairs on the subject
matter of the decision.
 3.Search and develop alternatives
• The alternative course of action can be developed
by collecting more information, thinking
creatively, consulting experts and undertaking
research.
 4.Evaluate Alternatives
• After identifying alternative courses of action,
they must be compared and evaluated. This step
determines the relative cost of each alternative.
 5.Implement chose alternative
• The decision taken by the management will not
serve the purpose if it is not executed properly.
 6.Learn from feedback
• Feedback is important because decision making
is a continuous and never ending process
• Feedback information is very much useful in
taking the corrective measures and in taking
right decisions in the future
 Decision-Making Conditions

The decision
maker faces
conditions of:

Certainty Risk Uncertainty

Level of ambiguity and chances of making a bad decision

Lower Moderate Higher

1.Certainty:
– A condition in which the
decision maker knows with
reasonable certainty what
the alternatives are and what
conditions are associated
with each alternative.
2. Risk:
– A condition in which the
availability of each
alternative and its potential
payoffs and costs are all
associated with probability
estimates.
 3.Uncertainty
• A condition in which
the decision maker
does not know all
the alternatives, the
risks associated with
each, or the likely
consequences of
each alternative.
 UNIT-3
ORGANIZING
 What Is Organizing?
• Deciding how best to
group organizational
activities and resources.
• Organizing: the process
by which managers
establish working
relationships among
employees to achieve
goals.
 NATURE OF organizing:

1. Group of Persons
2. Common Objectives
5. Communication
3. Division of Work
6. Central Authority
4. Co-ordination
7. Rules & Regulations
8. Environment
 Common Objectives: Every organization has a
common objectives. The common goal is the
basis of cooperation among the members.

 Group of Persons: An organization is a group of

people working together for the achievement of
common objectives.
 Division of Work: total task is divided into the members
of the group. Division of work is necessary not only
because one individual cannot do all the work but
specialization results in efficiency and effectiveness.

 Co-ordination: The members of an organization are

willing to help each other for the achievement of desired
goals.
 Communication: People who form an
organization communicates with each other in
order to integrate or coordinate there efforts.
People can perform together efficiently.

 Authority: In an organization, there is a central

directing authority which controls the concerted
efforts of the group. The chain of authority-
responsibility relationships is known as the chain
of command.
 Rules and Regulations: For the orderly and
systematic working of the members, rules and
regulations are laid down and enforced by the
central authority.

 Environment:
Economic,social,political and legal factors.
 1. Facilitates
Administration

7. 2. Encourages
Coordination Growth &
Diversification

IMPORTANCE OF
ORGANIZING
6. Ensures
3. Optimum
Continuity of
Use of
Enterprise
Technology

5. Encourages 4. Stimulates
Good Human Innovation &
Relations Technology
 PURPOSE / IMPORTANCE OF organizing:
 Facilitates Administration: Achievement of the objectives
of an enterprise by providing a framework of coordination
and control. Individual goals can be coordinated towards
group goals. A properly balanced organization facilitated
both management and operation of the enterprise.

 Encourages Growth & Diversification: It has enabled

organizations to grow and expand to giant sizes. It provides
flexibility for growth without losing control over various
activities.
 Optimum Use of New Technology: Optimum use of
technology permits optimum utilisation of human
resources. Sound organization ensures that every
individual is placed on the job for which one is best suited.

 Stimulates Innovation & Creativity: It stimulates

creative thinking and initiative on the part of employees. It
provides recognition for the professional and the specialist
in terms of their achievement.
 Encourages Good Human Relations: The assignment of
right jobs to right person improves job satisfaction and
inter-personal relations. Well-defined jobs and clear lines
of authority and responsibility ensure good human
relations.

 Ensures Continuity of Enterprise: It provides scope for

the training and development of future management.

 Coordination: Division of labor, better utility of

technology and human talent helps to improve the
efficiency and quality of work.
 PROCESS:
IDENTIFICATION GROUPING OF
OF ACTIVITIES ACTIVITIES

2.
2.

1.
1. 3.
3.

4.
4.

ASSIGNMENT OF DELEGATION OF
DUTIES AUTHORITY
 Process of organizing:
1. Identification of Activities: First step is to determine the
tasks that must be performed to achieve the established
objectives. Activities and jobs are building blocks of any
organization. The activities to be performed depends
upon the objectives, nature & size of the enterprise.

2. Grouping of Activities: The various activities are the

grouped into departments or divisions according to
similarity and common purpose.
It may be grouped on various basis i.e. functions
products, territories, customers etc depending on
requirements.
3. Assignment of Duties: The assignments of activities
creates responsibility and ensures certainty of work
performance. The process should be carried down to the
lowest levels.

4. Delegation of Authority: Every individual is given the

authority required to carry out the responsibility assigned
to him. Every individual must know to who are his
subordinates.
 Organizational Structure
It is a framework within which an Organization
arranges it’s lines of authorities and
communications and allocates rights and
duties.
Formal and Informal Organization

Formal structure is defined as the relationships

among organizational resources as outlined by
management.

Informal structure is defined as the patterns of

relationships that develop because of the
informal activities of organization members.

9
 DEPARTMENTATION
The basis by which jobs are grouped together.
Forms (or) Types
• Departmentation by Function
• Departmentation by Geography
• Departmentation by Customer Group
• Departmentation by Product
• Departmentation by Process
 Functional/Divisional Structures
• A division is a collection of functions working
together to produce a product.

– Product structure: divisions created according to the

type of product or service.
– Geographic structure: divisions based on the area of
a country or world served.
– Market structure: divisions based on the types of
customers served.
 Product Structure
CEO
C o r p o r a tio n

C o rp o ra te
M a n a g e rs

W a s h in g M a c h in e L ig h tin g T e le v is io n
D iv is io n D iv is io n D iv is io n
 Geographic Organization

• Geographic Organization – The categorization of

organizational units by geography.

• Advantages :

 Allows for the use of local employees or salespeople.

• Disadvantages :

• Having multiple locations can be costly.

 Geographic Structure
CEO
C o r p o r a tio n

C o rp o r a te
M a n a g e rs

N o rth e rn W e s te rn S o u th e rn E a s te rn
R e g io n R e g io n R e g io n R e g io n
 Customer Organization
• Customer Organization – The categorization of organizational units by
customers served.

• Advantages :
 Allows employees to identify with a particular customer type.

• Disadvantages :
• Possible duplication of facilities and equipment.
 Market Structure
CEO
C o r p o r a tio n

C o rp o ra te
M a n a g e rs

L a r g e B u s in e s s S m a ll B u s in e s s E d u c a tio n a l In d iv id u a l
C u s to m e rs C u s to m e rs In s titu tio n s C u s to m e rs
 Hybrid Organization
• Hybrid Organization – An organizational structure that uses
multiple types of departmentalization within the organization.

• A small organization may have no organization at first. As it

grows, it may organize first on one basis, then another, and
then another.

• Hybrid organizations share the same advantages and

disadvantages as the organization types being used within it.
 Line Authority
• An organizational structure in which authority originates at
the top and moves downward in a line
• It is the simplest organizational structure.
Advantages :
• It is a clear authority structure that promotes rapid
decision making.
Disadvantages :
• May force managers to perform too broad a range of
duties.
• May cause the organization to become too dependent on
key employees who are capable of performing multiple
duties.
Line VS Staff
 Matrix Structure
• Matrix Structure – A hybrid organizational structure in which
individuals from different functional areas are assigned to work on a
specific project or task.

• Advantages :

• Employees are challenged constantly, interdepartmental cooperation

develops along with expanded managerial talent.

• Disadvantages:

• A role conflict can develop if the authority of the project manager is

not clearly delineated form that of a functional managers.
 Matrix Organization
Functional Control

Project A

Project-
based Project B
Control
Project C

Engineering Production Logistics Design

 Team Organization
Functional Control
Team Leader

Member A

Member B

Member C

Member D

Engineering Production Logistics Design

 Span of Control
The number of subordinates a manager can efficiently and
effectively direct

Concept
Concept
Wider
Widerspans
spansofofmanagement
managementincrease
increaseorganizational
organizational
efficiency
efficiency

Narrow
NarrowSpan
SpanDrawbacks
Drawbacks
••Expense
Expenseofofadditional
additionallayers
layersofofmanagement
management
••Increased
Increasedcomplexity
complexityofofvertical
verticalcommunication
communication
••Encouragement
Encouragementofofoverly
overlytight
tightsupervision
supervisionand
and
discouragement
discouragementofofemployee
employeeautonomy
autonomy
Contrasting Spans of Control
 Determination of Span of Control
• Direct single relationship

A SUPERVISOR

• Direct C
B group relationship
SUBORDINATES

B C
• Cross relationship
 Factors that Determine an Effective Span
• Capacity of supervisor
• Capacity of subordinates.
• Nature of Work
• Type of Technology
• Delegation of Authority
• Clarity of plans
• Communication Techniques
• Using of objective standards
• Geographical closeness of employees
• Direction and Coordination
 Tall Structure
• Large, complex organizations often require a
taller hierarchy.
• In its simplest form, a tall structure results in
one long chain of command similar to the
military.
 Flat Organizational Structure
• Flat structures have fewer management levels,
with each level controlling a broad area or
group.
• Flat organizations focus on empowering
employees rather than adhering to the chain
of command.
Centralization & Decentralization
Centralization
The degree to which decision making is concentrated at a
single point in the organization.

Decentralization
The degree to which decision making is spread
throughout the organization.
CENTRALIZATION
 Advantages & Disadvantages Centralization

ADVANTAGES: DISADVANTAGES:
• Provide Power • less motivated
• Minimal extensive • Neglected functions for
controlling procedures mid. Level
and practices
• Minimize duplication of
function
 Advantages & Disadvantages Decentralization

ADVANTAGES: DISADVANTAGES:
• Quicker Decisions • Loss of Control
• Motivation of Local • Duplication of Services
Managers
• Reduces workload
Delegation of
Authority
 Delegation of Authority (Distributing Authority)

• Authority:
– Power that has been
legitimized by the
organization.
• Delegation:
– The process by
which managers
assign a portion of
their total workload
to others.
 PROCESS OF DELEGATION

Determining the Define RESPONSIBILITY MOTIVATION to

GOAL and AUTHORITY subordinates

Holding TRAINING to Establishing

ACCOUNTABILITY subordinates CONTROL
 IMPORTANCE OF
DELEGATION
 Relief to top managers.
 Development of managers.
 Development of subordinates.
 Better decision-making.
 Specialization.
 Job satisfaction.
 BARRIERS TO DELEGATION
Insecurity.
Lack of confidence in subordinates.
Fear of making mistakes.
Lack of initiative.
Absence of access to various resources.
 WAYS TO OVERCOME
BARRIERS TO DELEGATION
 Develop confidence
 Communication.
 Motivation.
 Choose the right person for the right
job.
 Freedom to subordinates.
 Clarity of task.
 Matching the jobs with abilities of
subordinates.