I. MANAGEMENT FUNCTIONS AND RESOURCES
PLANNING
in organizations and public policy is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired goal on some scale. As such, it is a fundamental property of intelligent behavior. This thought process is essential to the creation and refinement of a plan, or integration of it with other plans, that is, it combines forecasting of developments with the preparation of scenarios of how to react to them.
The term is also used to describe the formal procedures used in such an endeavor, such as the creation of documents diagrams, or meetings to discuss the important issues to be addressed, the objectives to be met, and the strategy to be followed. Beyond this, planning has a different meaning depending on the political or economic context in which it is used.
Two attitudes to planning need to be held in tension: on the one hand we need to be prepared for what may lie ahead, which may mean contingencies and flexible processes. On the other hand, our future is shaped by consequences of our own planning and actions.
Overview:
Planning is a process for accomplishing purpose. It is blue print of business growth and a road map of development. It helps in deciding objectives both in quantitative and qualitative terms. It is setting of goals on the basis of objectives and keeping in view the resources.
What should a plan be?
A plan should be a realistic view of the expectations. Depending upon the activities, a plan can be long range, intermediate range or short range. It is the framework within which it must operate. For management seeking external support, the plan is the most important document and key to growth. Preparation of a comprehensive plan will not guarantee success, but lack of a sound plan will almost certainly ensure failure.
Purpose of Plan
Just as no two organizations are alike, so also their plans. It is therefore important to prepare a plan keeping in view the necessities of the enterprise. A plan is an important aspect of business. It serves the following three critical functions:
• Helps management to clarify, focus, and research their business's or project's development and prospects. • Provides a considered and logical framework within which a business can develop and pursue business strategies over the next three to five years. • Offers a benchmark against which actual performance can be measured and reviewed.
Importance of the planning Process
A plan can play a vital role in helping to avoid mistakes or recognize hidden opportunities. Preparing a satisfactory plan of the organization is essential. The planning process enables management to understand more clearly what they want to achieve, and how and when they can do it.
A well-prepared business plan demonstrates that the managers know the business and that they have thought through its development in terms of products, management, finances, and most importantly, markets and competition.
Planning helps in forecasting the future, makes the future visible to some extent. It bridges between where we are and where we want to go. Planning is looking ahead. Planning basics
Essentials of planning
Planning is not done off hand. It is prepared after careful and extensive research. For a comprehensive business plan, management has to
1. Clearly define the target / goal in writing. 1. It should be set by a person having authority. 2. The goal should be realistic. 3. It should be specific. 4. Acceptability 5. Easily measurable 2. Identify all the main issues which need to be addressed. 3. Review past performance. 4. Decide budgetary requirement. 5. Focus on matters of strategic importance. 6. What are requirements and how will they be met? 7. What will be the likely length of the plan and its structure? 8. Identify shortcomings in the concept and gaps. 9. Strategies for implementation. 10.Review periodically.
Applications
In organizations
Planning is also a management process, concerned with defining goals for future organizational performance and deciding on the tasks and resources to be used in order to attain those goals. To meet the goals, managers may develop plans such as a business plan or a marketing plan. Planning always has a purpose. The purpose may be achievement of certain goals or targets. The planning helps to achieve these goals or target by using the available time and resources. To minimize the timing and resources also require proper planning. The concept of planning is to identify what the organization wants to do by using the four questions which are “where are we today in terms of our business or strategy planning? Where are going? Where do we want to go? How are we going to get there? [1]
In public policy
Planning refers to the practice and the profession associated with the idea of planning an idea yourself, (land use planning, urban planning or spatial planning). In many countries, the operation of a town and country planning system is often referred to as 'planning' and the professionals which operate the system are known as 'planners'......
It is a conscious as well as sub-conscious activity. It is “an anticipatory decision making process ” that helps in coping with complexities. It is deciding future course of action from amongst alternatives. It is a process that involves making and evaluating each set of interrelated decisions. It is selection of missions, objectives and “ translation of knowledge into action.” A planned performance brings better results compared to unplanned one. A Managers’ job is planning, monitoring and controlling. Planning and goal setting are important traits of an organization. It is done at all levels of the organization. Planning includes the plan, the thought process, action, and implementation.Planning gives more power over the future. Planning is deciding in advance what to do, how to do it, when to do it, and who should do it. It bridges the gap from where the organization is to where it wants to be. The planning function involves establishing goals and arranging them in logical order. ORGANIZING
is the act of rearranging elements following one or more rules.
Anything is commonly considered organized when it looks like everything has a correct order or placement. But it's only ultimately organized if any element has no difference on time taken to find it. In that sense, organizing can also be defined as to place different objects in logical arrangement for better searching.
Organizations are groups of people frequently trying to organize some specific subject, such as political issues. So, even while organizing can be viewed as a simple definition, it can get as complex as organizing the world's information.
History
Historically, humanity has always tried to organize itself. The organizing of information can be seen since the time humans began to write. Prior to that, history was passed down through song and word. Be it with religion, books and spoken word, science, through journals and studies, or in many other ways, organizing not only is history, but also helps communicate history. Writing ideas in a book, as opposed to verbally communicating with someone, and more specifically cataloging ideas and thoughts, is also an attempt to organize information.
Science books are notable by their organization of a specific subject. Encyclopedias, instead, usually try to organize any subject into one place, for faster indexing and seeking of meanings.
Nature of organization
The following are the important characteristics of organisation.
Division of work or specialization
The entire philosophy of organisation depends on the concept of specialization. In specialization, various activities are assigned to different people who are specialists in that area. Specialization improves efficiency. Thus, organisation helps in division of work and assigning duties to different people.
Orientation towards goals
Every organisation has its own purposes and objectives. Organizing is the function employed to achieve the overall goals of the organisation. Organisation harmonies the individual goals of the employees with overall objectives of the firm.
Composition of individuals and groups
Individuals form a group and the groups form an organisation. Thus, organisation is the composition of individual and groups. Individuals are grouped into departments and their work is coordinated and directed towards organizational goals.
Differentiated functions
The organisation divides the entire work and assigns the tasks to individual in-order to achieve the organizational objectives each one has to perform a different task and tasks of one individuals must be coordinated with the tasks of others.
Continues process
An organization is a group of people with defined relationship to each other that allows them to work together achieve the goals of the organisation. This relationship do not come to end after completing a task. Organisation is a never ending process. Purpose or importance of organization
Helps to achieve organizational goal
Organization is employed to achieve the overall objectives of business firms. Organization focuses attention of individuals objectives towards overall objectives.
Optimum use of resources
To make optimum use of resources such as men, material, money, machine and method, it is necessary to design an organization properly. Work should be divided and right people should be given right jobs to reduce the wastage of resources in an organization.
To perform managerial function
Planning, Organizing, Staffing, Directing and Controlling cannot be implemented without proper organization.
Facilitates growth and diversification
A good organization structure is essential for expanding business activity. Organization structure determines the input resources needed for expansion of a business activity similarly organization is essential for product diversification such as establishing a new product line.
Human treatment of employees
Organization has to operate for the betterment of employees an must not encourage monotony of work due to higher degree of specialization. Now, organization has adapted the modern concept of systems approach based on human relations and it discards the traditional productivity and specialization approach.
Applications
Organizing, in companies point of view, is the management function that usually follows after planning. And it involves the assignment of tasks, the grouping of tasks into departments and the assignment of authority and allocation of resources across the organization.
Structure
The framework in which the organization defines how tasks are divided, resources are deployed, and departments are coordinated.
1. A set of formal tasks assigned to individuals and departments. 2. Formal reporting relationships, including lines of authority, decision responsibility, number of hierarchical levels and span of managers control. 3. The design of systems to ensure effective coordination of employees across departments.
Work specialization
Work specialization (also called division of labour) is the degree to which organizational tasks are sub-divided into individual jobs. With too much specialization, employees are isolated and do only a single, tiny, boring job. Many organizations enlarge jobs or rotate assigned tasks to provide greater challenges. Chain of command
The chain of command is the unbroken line of authority that links all individuals in an organization, and specifies who reports to whom.
• o Unity of Command - one employee is held accountable to only one supervisor o Scalar principle - clearly defined line of authority in the organization that includes all employees
Authority, responsibility, and accountability
• Authority is a manager's formal and legitimate right to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes. • Responsibility means an employee's duty to perform assigned task or activities. • Accountability means that those with authority and responsibility must report and justify task outcomes to those above them in the chain of command.
Delegation
Delegation is the process managers use to transfer authority and responsibility to positions below them. Organizations today tend to encourage delegation from highest to lowest possible levels. Delegation can improve flexibility to meet customers’ needs and adaptation to competitive environments. Managers often find delegation difficult
Types of authority (and responsibility)
Line authority managers have the formal power to direct and control immediate subordinates. The superior issues orders and is responsible for the result—the subordinate obeys and is responsible only for executing the order according to instructions.
Functional authority is where managers have formal power over a specific subset of activities. For instance, the Production Manager may have the line authority to decide whether and when a new machine is needed but the Controller demands that a Capital Expenditure Proposal is submitted first, showing that the investment will have a yield of at least x %; or, a legal department may have functional authority to interfere in any activity that could have legal consequences. This authority would not be functional but it would rather be staff authority if such interference is "advice" rather than "order".
Staff authority is granted to staff specialists in their areas of expertise. It is not a real authority in the sense that a staff manager does not order or instruct but simply advises, recommends, and counsels in the staff specialists' area of expertise and is responsible only for the quality of the advice (to be in line with the respective professional standards etc) It is a communication relationship with management. It has an influence that derives indirectly from line authority at a higher level.
Span of management
Factors influencing larger span of management.
1. Work performed by subordinates is stable and routine. 2. Subordinates perform similar work tasks. 3. Subordinates are concentrated in a single location. 4. Subordinates are highly trained and need little direction in performing tasks. 5. Rules and procedures defining task activities are available. 6. Support systems and personnel are available for the managers. 7. Little time is required in non-supervisory activities such as coordination with other departments or planning. 8. Managers' personal preferences and styles favour a large span.
Tall versus flat structure
• Tall - A management structure characterized by an overall narrow span of management and a relatively large number of hierarchical levels. Tight control. • Flat - A management structure characterized by a wide span of control and relatively few hierarchical levels. Loose control. Facilitates delegation.
Centralization, decentralization, and formalization
• Centralization - The location of decision making authority near top organizational levels. • Decentralization - The location of decision making authority near lower organizational levels. • Formalization - The written documentation used to direct and control employees.
Departmentalization
The basis on which individuals are grouped into departments and departments into total organizations.
Approach options include;
1. Functional - by common skills and work tasks 2. Divisional - common product, program or geographical location 3. Matrix - combination of Functional and Divisional 4. Team - to accomplish specific tasks 5. Network - departments are independent providing functions for a central core breaker importance of organizing
• Organizations are often troubled by how to organize, particularly when a new strategy is developed • Changing market conditions or new technology requires change • Organizations seek efficiencies through improvements in organizing
LEADING
A good leader inspires employees, boosts morale and encourages effective communication among employees. Excellent leadership can even increase the organization's income.
As one of the four functions of management, leading can be both extremely important and challenging. Along with planning, organizing and controlling, all managers will execute these four functions of management. From managing a local store to managing a large corporation, every manager will perform each of the functions at some point in their jobs. Leading Means Inspiring
A manager should strive to become an inspiration to the rest of the employees. Employees will follow a manager because the manager is the boss. However, a manager that is an inspiration means that employees follow that person because they believe in what the manager is doing and they are trying to help the company achieve its goals. Finding ways to inspire employees means coaching them and motivating them to succeed as integral parts of the company.
Leading Affects Morale
The way a manager leads greatly affects employee morale within the department and company as a whole. Managers should create a climate that encourages new ideas and employee input. The more the employees feel that they have a say in the company, the more they will be willing to share ideas and attempt to find better ways to improve processes. For example, a good manager may reward employees with monetary or benefit incentives if they can increase output of a product. Another idea is a treasure box of goodies. Managers can set a goal early in the week and employees who meet the goal by the end of the week are allowed to take a prize from the treasure box.
Leading is Key to Effective Communication
For a manager to be an effective leader, he or she must also be an effective communicator. A manager that shares information and lets employees know the latest news in the company is someone that is deemed trustworthy by his or her employees. Employees feel little loyalty or trust towards a manager who does not readily give out information.
Leading Effectively Contributes More to the Bottom Line
An effective leader inspires employees, which allows those employees to feel like they are making a meaningful contribution to the company. Satisfied employees generally work harder and take more ownership in their job positions. This can mean happy customers and a higher level of customer service.
Leadership has been described as the “process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task”.[1] Definitions more inclusive of followers have also emerged. Alan Keith of Genentech states that, "Leadership is ultimately about creating a way for people to contribute to making something extraordinary happen."[2] According to Ken "SKC" Ogbonnia [3], "effective leadership is the ability to successfully integrate and maximize available resources within the internal and external environment for the attainment of organizational or societal goals."
Leadership remains one of the most relevant aspects of the organizational context. However, defining leadership has been challenging and definitions can vary depending on the situation. According to Ann Marie E. McSwain, Assistant Professor at Lincoln University, “leadership is about capacity: the capacity of leaders to listen and observe, to use their expertise as a starting point to encourage dialogue between all levels of decision-making, to establish processes and transparency in decision-making, to articulate their own values and visions clearly but not impose them. Leadership is about setting and not just reacting to agendas, identifying problems, and initiating change that makes for substantive improvement rather than managing change.”
The following sections discuss several important aspects of leadership including a description of what leadership is and a description of several popular theories and styles of leadership. This article also discusses topics such as the role of emotions and vision, as well as leadership effectiveness and performance, leadership in different contexts, how it may differ from related concepts (i.e., management), and some critiques of leadership as generally conceived.
Leadership styles
Leadership styles refer to a leader’s behaviour. It is the result of the philosophy, personality and experience of the leader.
[edit] Kurt Lewin's Leadership styles Kurt Lewin and colleagues identified different styles of leadership [48]:
• Dictator • Autocratic • Participative • Laissez Faire
[edit] Dictator Leaders
A leader who uses fear and threats to get the jobs done. As similar with a leader who uses an autocratic style of leadership, this style of leader also makes all the decisions.
[edit] Autocratic or Authoritarian Leaders
Under the autocratic leadership styles, all decision-making powers are centralized in the leader as shown such leaders are dictators.
They do not entertain any suggestions or initiative from subordinates. The autocratic management has been successful as it provides strong motivation to the manager. It permits quick decision-making as only one person decides for the whole group, and keeps it to themselves until they feel it is needed by the rest of the group. An autocratic leader does not trust anybody.
[edit] Participative or Democratic Leaders
The democratic leadership style favors decision-making by the group as shown, such as leader gives instruction after consulting the group.
He can win the cooperation of his group and can motivate them effectively and positively. The decisions of the democratic leader are not unilateral as with the autocrat because they arise from consultation with the group members and participation by them.
[edit] Laissez Faire or Free Rein Leaders
A free rein leader does not lead, but leaves the group entirely to itself as shown; such a leader allows maximum freedom to subordinates.
They are given a freehand in deciding their own policies and methods. Free rein leadership style is considered better than the authoritarian style. But it is not as effective as the democratic style.[citation needed]
[edit] Leadership performance
Main article: Leadership Performance
In the past, some researchers have argued that the actual influence of leaders on organizational outcomes is overrated and romanticized as a result of biased attributions about leaders (Meindl & Ehrlich, 1987). Despite these assertions however, it is largely recognized and accepted by practitioners and researchers that leadership is important, and research supports the notion that leaders do contribute to key organizational outcomes (Day & Lord, 1988; Kaiser, Hogan, & Craig, 2008). In order to facilitate successful performance it is important to understand and accurately measure leadership performance.
Job performance generally refers to behavior that is expected to contribute to organizational success (Campbell, 1990). Campbell identified a number of specific types of performance dimensions; leadership was one of the dimensions that he identified. There is no consistent, overall definition of leadership performance (Yukl, 2006). Many distinct conceptualizations are often lumped together under the umbrella of leadership performance, including outcomes such as leader effectiveness, leader advancement, and leader emergence (Kaiser et al., 2008). For instance, leadership performance may be used to refer to the career success of the individual leader, performance of the group or organization, or even leader emergence. Each of these measures can be considered conceptually distinct. While these aspects may be related, they are different outcomes and their inclusion should depend on the applied/research focus.
[edit] Contexts of leadership
[edit] Leadership in organizations
An organization that is established as an instrument or means for achieving defined objectives has been referred to as a formal organization. Its design specifies how goals are subdivided and reflected in subdivisions of the organization. Divisions, departments, sections, positions, jobs, and tasks make up this work structure. Thus, the formal organization is expected to behave impersonally in regard to relationships with clients or with its members. According to Weber's definition, entry and subsequent advancement is by merit or seniority. Each employee receives a salary and enjoys a degree of tenure that safeguards her/him from the arbitrary influence of superiors or of powerful clients. The higher his position in the hierarchy, the greater his presumed expertise in adjudicating problems that may arise in the course of the work carried out at lower levels of the organization. It is this bureaucratic structure that forms the basis for the appointment of heads or chiefs of administrative subdivisions in the organization and endows them with the authority attached to their position.[49]
In contrast to the appointed head or chief of an administrative unit, a leader emerges within the context of the informal organization that underlies the formal structure. The informal organization expresses the personal objectives and goals of the individual membership. Their objectives and goals may or may not coincide with those of the formal organization. The informal organization represents an extension of the social structures that generally characterize human life — the spontaneous emergence of groups and organizations as ends in themselves.
In prehistoric times, humanity was preoccupied with personal security, maintenance, protection, and survival. Now humanity spends a major portion of waking hours working for organizations. Her/His need to identify with a community that provides security, protection, maintenance, and a feeling of belonging continues unchanged from prehistoric times. This need is met by the informal organization and its emergent, or unofficial, leaders.[50]
Leaders emerge from within the structure of the informal organization. Their personal qualities, the demands of the situation, or a combination of these and other factors attract followers who accept their leadership within one or several overlay structures. Instead of the authority of position held by an appointed head or chief, the emergent leader wields influence or power. Influence is the ability of a person to gain co-operation from others by means of persuasion or control over rewards. Power is a stronger form of influence because it reflects a person's ability to enforce action through the control of a means of punishment.[50]
A leader is a person who influences a group of people towards a specific result. It is not dependent on title or formal authority. (elevos, paraphrased from Leaders, Bennis, and Leadership Presence, Halpern & Lubar). Leaders are recognized by their capacity for caring for others, clear communication, and a commitment to persist.[51] An individual who is appointed to a managerial position has the right to command and enforce obedience by virtue of the authority of his position. However, she or he must possess adequate personal attributes to match his authority, because authority is only potentially available to him. In the absence of sufficient personal competence, a manager may be confronted by an emergent leader who can challenge her/his role in the organization and reduce it to that of a figurehead. However, only authority of position has the backing of formal sanctions. It follows that whoever wields personal influence and power can legitimize this only by gaining a formal position in the hierarchy, with commensurate authority.[50] Leadership can be defined as one's ability to get others to willingly follow. Every organization needs leaders at every level.[52]
Leadership versus management
Over the years the philosophical terminology of "management" and "leadership" have, in the organisational context, been used both as synonyms and with clearly differentiated meanings. Debate is fairly common about whether the use of these terms should be restricted, and generally reflects an awareness of the distinction made by Burns (1978) between "transactional" leadership (characterised by eg emphasis on procedures, contingent reward, management by exception) and "transformational" leadership (characterised by eg charisma, personal relationships, creativity). That those two adjectives are in fact used equally well with the noun "management" as with the noun "leadership" indicates that there is such a messy overlap between the two in academic practice that attempts to pontificate about their differences are largely a waste of time.
[edit] Leadership by a group
In contrast to individual leadership, some organizations have adopted group leadership. In this situation, more than one person provides direction to the group as a whole. Some organizations have taken this approach in hopes of increasing creativity, reducing costs, or downsizing. Others may see the traditional leadership of a boss as costing too much in team performance. In some situations, the maintenance of the boss becomes too expensive - either by draining the resources of the group as a whole, or by impeding the creativity within the team, even unintentionally.[citation needed]
A common example of group leadership involves cross-functional teams. A team of people with diverse skills and from all parts of an organization assembles to lead a project. A team structure can involve sharing power equally on all issues, but more commonly uses rotating leadership. The team member(s) best able to handle any given phase of the project become(s) the temporary leader(s). Additionally, as each team member has the opportunity to experience the elevated level of empowerment, it energizes staff and feeds the cycle of success.[53]
Leaders who demonstrate persistence, tenacity, determination and synergistic communication skills will bring out the same qualities in their groups. Good leaders use their own inner mentors to energize their team and organizations and lead a team to achieve success.[54]
According to the National School Boards Association (USA) [55]
These Group Leadership or Leadership Teams have specific characteristics:
Characteristics of a Team
• There must be an awareness of unity on the part of all its members. • There must be interpersonal relationship. Members must have a chance to contribute, learn from and work with others. • The member must have the ability to act together toward a common goal.
Ten characteristics of well-functioning teams:
• Purpose: Members proudly share a sense of why the team exists and are invested in accomplishing its mission and goals. • Priorities: Members know what needs to be done next, by whom, and by when to achieve team goals. • Roles: Members know their roles in getting tasks done and when to allow a more skillful member to do a certain task. • Decisions: Authority and decision-making lines are clearly understood. • Conflict: Conflict is dealt with openly and is considered important to decision-making and personal growth. • Personal traits: members feel their unique personalities are appreciated and well utilized. • Norms: Group norms for working together are set and seen as standards for every one in the groups. • Effectiveness: Members find team meetings efficient and productive and look forward to this time together. • Success: Members know clearly when the team has met with success and share in this equally and proudly. • Training: Opportunities for feedback and updating skills are provided and taken advantage of by team members. [edit] Leadership among primates
Richard Wrangham and Dale Peterson, in Demonic Males: Apes and the Origins of Human Violence present evidence that only humans and chimpanzees, among all the animals living on earth, share a similar tendency for a cluster of behaviors: violence, territoriality, and competition for uniting behind the one chief male of the land.[56] This position is contentious. Many animals beyond apes are territorial, compete, exhibit violence, and have a social structure controlled by a dominant male (lions, wolves, etc.), suggesting Wrangham and Peterson's evidence is not empirical. However, we must examine other species as well, including elephants (which are undoubtedly matriarchal and follow an alpha female), meerkats (who are likewise matriarchal), and many others.
It would be beneficial, to examine that most accounts of leadership over the past few millennia (since the creation of Christian religions) are through the perspective of a patriarchal society, founded on Christian literature. If one looks before these times, it is noticed that Pagan and Earth-based tribes in fact had female leaders. It is important also to note that the peculiarities of one tribe cannot necessarily be ascribed to another, as even our modern-day customs differ. The current day patrilineal custom is only a recent invention in human history and our original method of familial practices were matrilineal (Dr. Christopher Shelley and Bianca Rus, UBC). The fundamental assumption that has been built into 90% of the world's countries is that patriarchy is the 'natural' biological predisposition of homo sapiens. Unfortunately, this belief has led to the widespread oppression of women in all of those countries, but in varying degrees. (Whole Earth Review, Winter, 1995 by Thomas Laird, Michael Victor). The Iroquoian First Nations tribes are an example of a matrilineal tribe, along with Mayan tribes, and also the society of Meghalaya, India. (Laird and Victor, ).
By comparison, bonobos, the second-closest species-relatives of man, do not unite behind the chief male of the land. The bonobos show deference to an alpha or top-ranking female that, with the support of her coalition of other females, can prove as strong as the strongest male in the land. Thus, if leadership amounts to getting the greatest number of followers, then among the bonobos, a female almost always exerts the strongest and most effective leadership. However, not all scientists agree on the allegedly "peaceful" nature of the bonobo or its reputation as a "hippie chimp".[1]
Critical Thought on the concept of leadership
Noam Chomsky [59] and others[60] have brought critical thinking to the very concept of leadership and analyzed the processes whereby people abrogate their responsibility to think and will actions for themselves. While the conventional view of leadership is rather satisfying to people who "want to be told what to do", one should question why they are being subjected to a will or intellect other than their own if the leader is not a Subject Matter Expert (SME).
The fundamentally anti-democratic nature of the leadership principle is challenged by the introduction of concepts such as autogestion, employeeship, common civic virtue, etc, which stress individual responsibility and/or group authority in the work place and elsewhere by focusing on the skills and attitudes that a person needs in general rather than separating out leadership as the basis of a special class of individuals.
Similarly various historical calamities are attributed to a misplaced reliance on the principle of leadership.
Controlling is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in desired manner. According to modern concepts, control is a foreseeing action whereas earlier concept of control was used only when errors were detected. Control in management means setting standards, measuring actual performance and taking corrective action. Thus, control comprises these three main activities. Definitions
According to Henri Fayol,
Control of an undertaking consists of seeing that everything is being carried out in accordance with the plan which has been adopted, the orders which have been given, and the principles which have been laid down. Its object is to point out mistakes in order that they may be rectified and prevented from recurring.
According to EFL Breach,
Control is checking current performance against pre-determined standards contained in the plans, with a view to ensure adequate progress and satisfactory performance.
According to Harold Koontz,
Controlling is the measurement and correction of performance in order to make sure that enterprise objectives and the plans devised to attain them are accomplished.
According to Stafford Beer,
Management is the profession of control.
In 1916, Henri Fayol formulated one of the first definitions of control as it pertains to management:
Control consists of verifying whether everything occurs in conformity with the plan adopted, the instructions issued, and principles established. It ['s] object [is] to point out weaknesses and errors in order to rectify [them] and prevent recurrence.[1]
Robert J. Mockler presented a more comprehensive definition of managerial control:
Management control can be defined as a systematic effort by business management to compare performance to predetermined standards, plans, or objectives in order to determine whether performance is in line with these standards and presumably in order to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives.[2]
Also control can be defined as "that function of the system that adjusts operations as needed to achieve the plan, or to maintain variations from system objectives within allowable limits". The control subsystem functions in close harmony with the operating system. The degree to which they interact depends on the nature of the operating system and its objectives. Stability concerns a system's ability to maintain a pattern of output without wide fluctuations. Rapidity of response pertains to the speed with which a system can correct variations and return to expected output. [3]
A political election can illustrate the concept of control and the importance of feedback. Each party organizes a campaign to get its candidate selected and outlines a plan to inform the public about both the candidate's credentials and the party's platform. As the election nears, opinion polls furnish feedback about the effectiveness of the campaign and about each candidate's chances to win. Depending on the nature of this feedback, certain adjustments in strategy and/or tactics can be made in an attempt to achieve the desired result.
From these definitions it can be stated that there is close link between planning and controlling. Planning is a process by which an organisation's objectives and the methods to achieve the objectives are established, and controlling is a process which measures and directs the actual performance against the planned objectives of the organisation. Thus, planning and control are often referred to as siamese twins of management.
Characteristics of Control
• Control is a continuous process • Control is a management process • Control is embedded in each level of organizational hierarchy • Control is forward looking • Control is closely linked with planning • Control is a tool for achieving organizational activities
The elements of control
The four basic elements in a control system — (1) the characteristic or condition to be controlled, (2) the sensor, (3) the comparator , and (4) the activator — occur in the same sequence and maintain a consistent relationship to each other in every system.[3]
The first element is the characteristic or condition of the operating system which is to be measured. We select a specific characteristic because a correlation exists between it and how the system is performing. The characteristic may be the output of the system during any stage of processing or it may be a condition that has resulted from the output of the system. For example, it may be the heat energy produced by the furnace or the temperature in the room which has changed because of the heat generated by the furnace. In an elementary school system, the hours a teacher works or the gain in knowledge demonstrated by the students on a national examination are examples of characteristics that may be selected for measurement, or control.
The second element of control, the sensor, is a means for measuring the characteristic or condition. The control subsystem must be designed to include a sensory device or method of measurement. In a home heating system this device would be the thermostat, and in a quality-control system this measurement might be performed by a visual inspection of the product.
The third element of control, the comparator, determines the need for correction by comparing what is occurring with what has been planned. Some deviation from plan is usual and expected, but when variations are beyond those considered acceptable, corrective action is required. It is often possible to identify trends in performance and to take action before an unacceptable variation from the norm occurs. This sort of preventative action indicates that good control is being achieved.
The fourth element of control, the activator, is the corrective action taken to return the system to expected output. The actual person, device, or method used to direct corrective inputs into the operating system may take a variety of forms. It may be a hydraulic controller positioned by a solenoid or electric motor in response to an electronic error signal, an employee directed to rework the parts that failed to pass quality inspection, or a school principal who decides to buy additional books to provide for an increased number of students. As long as a plan is performed within allowable limits, corrective action is not necessary; this seldom occurs in practice, however.
Information is the medium of control, because the flow of sensory data and later the flow of corrective information allow a characteristic or condition of the system to be controlled. To illustrate how information flow facilitates control, let us review the elements of control in the context of information.[4]
Relationship between the elements of control and information
Controlled Characteristic or. Condition The primary requirement of a control system is that it maintain the level and kind of output necessary to achieve the system's objectives.[5] It is usually impractical to control every feature and condition associated with the system's output. Therefore, the choice of the controlled item (and appropriate information about it) is extremely important. There should be a direct correlation between the controlled item and the system's operation. In other words, control of the selected characteristic should have a direct relationship to the goal or objective of the system.
Sensor
After the characteristic is sensed, or measured, information pertinent to control is fed back. Exactly what information needs to be transmitted and also the language that will best facilitate the communication process and reduce the possibility of distortion in transmission must be carefully considered. Information that is to be compared with the standard, or plan, should be expressed in the same terms or language as in the original plan to facilitate decision making. Using machine methods (computers) may require extensive translation of the information. Since optimal languages for computation and for human review are not always the same, the relative ease of translation may be a significant factor in selecting the units of measurement or the language unit in the sensing element.
In many instances, the measurement may be sampled rather than providing a complete and continuous feedback of information about the operation. A sampling procedure suggests measuring some segment or portion of the operation that will represent the total.[2]
Comparison with Standard
In a social system, the norms of acceptable behavior become the standard against which so-called deviant behavior may be judged. Regulations and laws provide a more formal collection of information for society. Social norms change, but very slowly. In contrast, the standards outlined by a formal law can be changed from one day to the next through revision, discontinuation, or replacement by another. Information about deviant behavior becomes the basis for controlling social activity. Output information is compared with the standard or norm and significant deviations are noted. In an industrial example, frequency distribution (a tabulation of the number of times a given characteristic occurs within the sample of products being checked) may be used to show the average quality, the spread, and the comparison of output with a standard.
If there is a significant and uncorrectable difference between output and plan, the system is "out of control." This means that the objectives of the system are not feasible in relation to the capabilities of the present design. Either the objectives must be reevaluated or the system redesigned to add new capacity or capability. For example, the traffic in drugs has been increasing in some cities at an alarming rate. The citizens must decide whether to revise the police system so as to regain control, or whether to modify the law to reflect a different norm of acceptable behavior.
Activator
The activator unit responds to the information received from the comparator and initiates corrective action. If the system is a machine-to-machine system, the corrective inputs (decision rules) are designed into the network. When the control relates to a man-to-machine or man-to-man system, however, the individual(s) in charge must evaluate (1) the accuracy of the feedback information, (2) the significance of the variation, and (3) what corrective inputs will restore the system to a reasonable degree of stability. Once the decision has been made to direct new inputs into the system, the actual process may be relatively easy. A small amount of energy can change the operation of jet airplanes, automatic steel mills, and hydroelectric power plants. The pilot presses a button, and the landing gear of the airplane goes up or down; the operator of a steel mill pushes a lever, and a ribbon of white-hot steel races through the plant; a worker at a control board directs the flow of electrical energy throughout a regional network of stations and substations. It takes but a small amount of control energy to release or stop large quantities of input. [4]
The comparator may be located far from the operating system, although at least some of the elements must be in close proximity to operations. For example, the measurement (the sensory element) is usually at the point of operations. The measurement information can be transmitted to a distant point for comparison with the standard (comparator), and when deviations occur, the correcting input can be released from the distant point. However, the input (activator) will be located at the operating system. This ability to control from afar means that aircraft can be flown by remote control, dangerous manufacturing processes can be operated from a safe distance, and national organizations can be directed from centralized headquarters.
Process of Controlling
• Setting performance standards. • Measurement of actual performance. • Comparing actual performance with standards. • Analysing deviations. • Correcting deviations. [edit] Kinds of control
Control may be grouped according to three general classifications: (1) the nature of the information flow designed into the system (that is, open- or closed-loop control), (2) the kind of components included in the design (that is man or machine control systems), and (3) the relationship of control to the decision process (that is, organizational or operational control). [3]
[edit] Open- and Closed-Loop Control
The difference between open-loop control and closed-loop control is determined by whether all of the control elements are an integral part of the system being regulated, and whether allowable variations from standard have been predetermined. In an open-loop system, not all of the elements will be designed into the system, and/or allowable variations will not be predetermined.
A street-lighting system controlled by a timing device is an example of an open-loop system. At a certain time each evening, a mechanical device closes the circuit and energy flows through the electric lines to light the lamps. Note, however, that the timing mechanism is an independent unit and is not measuring the objective function of the lighting system. If the lights should be needed on a dark, stormy day the timing device would not recognize this need and therefore would not activate energy inputs. Corrective properties may sometimes be built into the controller (for example, to modify the time the lights are turned on as the days grow shorter or longer), but this would not close the loop. In another instance, the sensing, comparison, or adjustment may be made through action taken by an individual who is not part of the system. For example, the lights may be turned on by someone who happens to pass by and recognizes the need for additional light.
If control is exercised as a result of the operation rather than because of outside or predetermined arrangements, it is a closed-loop system. The home thermostat is the classic example of a control device in a closed-loop system. When the room temperature drops below the desired point, the control mechanism closes the circuit to start the furnace and the temperature rises. The furnace-activating circuit is turned off as the temperature reaches the preselected level. The significant difference between this type of system and an open-loop system is that the control device is an element of the system it serves and measures the performance of the system. In other words, all four control elements are integral to the specific system.
An essential part of a closed-loop system is feedback; that is, the output of the system is measured continually through the item controlled, and the input is modified to reduce any difference or error toward zero. Many of the patterns of information flow in organizations are found to have the nature of closed loops, which use feedback. The reason for such a condition is apparent when one recognizes that any system, if it is to achieve a predetermined goal, must have available to it at all times an indication of its degree of attainment. In general, every goal-seeking system employs feedback.[3]
[edit] Man and Machine Control
The elements of control are easy to identify in machine systems. For example, the characteristic to be controlled might be some variable like speed or temperature, and the sensing device could be a speedometer or a thermometer. An expectation of precision exists because the characteristic is quantifiable and the standard and the normal variation to be expected can be described in exact terms. In automatic machine systems, inputs of information are used in a process of continual adjustment to achieve output specifications. When even a small variation from the standard occurs, the correction process begins. The automatic system is highly structured, designed to accept certain kinds of input and produce specific output, and programmed to regulate the transformation of inputs within a narrow range of variation. [6]
For an illustration of mechanical control, as the load on a steam engine increases and the engine starts to slow down, the regulator reacts by opening a valve that releases additional inputs of steam energy. This new input returns the engine to the desired number of revolutions per minute. This type of mechanical control is crude in comparison to the more sophisticated electronic control systems in everyday use. Consider the complex missile-guidance systems that measure the actual course according to predetermined mathematical calculations and make almost instantaneous corrections to direct the missile to its target. Machine systems can be complex because of the sophisticated technology, whereas control of people is complex because the elements of control are difficult to determine. In human control systems, the relationship between objectives and associated characteristics is often vague; the measurement of the characteristic may be extremely subjective; the expected standard is difficult to define; and the amount of new inputs required is impossible to quantify. To illustrate, let us refer once more to a formalized social system in which deviant behavior is controlled through a process of observed violation of the existing law (sensing), court hearings and trials (comparison with standard), incarceration when the accused is found guilty (correction), and release from custody after rehabilitation of the prisoner has occurred. [6]
The speed limit established for freeway driving is one standard of performance that is quantifiable, but even in this instance, the degree of permissible variation and the amount of the actual variation are often a subject of disagreement between the patrolman and the suspected violator. The complexity of our society is reflected in many of our laws and regulations, which establish the general standards for economic, political, and social operations. A citizen may not know or understand the law and consequently would not know whether or not he was guilty of a violation.
Most organized systems are some combination of man and machine; some elements of control may be performed by machine whereas others are accomplished by man. In addition, some standards may be precisely structured whereas others may be little more than general guidelines with wide variations expected in output. Man must act as the controller when measurement is subjective and judgment is required. Machines such as computers are incapable of making exceptions from the specified control criteria regardless of how much a particular case might warrant special consideration. A pilot acts in conjunction with computers and automatic pilots to fly large jets. In the event of unexpected weather changes, or possible collision with another plane, he must intercede and assume direct control.[4]
[edit] Organizational and Operational Control
The concept of organizational control is implicit in the bureaucratic theory of Max Weber. Associated with this theory are such concepts as "span of control", "closeness of supervision", and "hierarchical authority". Weber's view tends to include all levels or types of organizational control as being the same. More recently, writers have tended to differentiate the control process between that which emphasizes the nature of the organizational or systems design and that which deals with daily operations. To illustrate the difference, we "evaluate" the performance of a system to see how effective and efficient the design proved to be or to discover why it failed. In contrast, we operate and "control" the system with respect to the daily inputs of material, information, and energy. In both instances, the elements of feedback are present, but organizational control tends to review and evaluate the nature and arrangement of components in the system, whereas operational control tends to adjust the daily inputs.
The direction for organizational control comes from the goals and strategic plans of the organization. General plans are translated into specific performance measures such as share of the market, earnings, return on investment, and budgets. The process of organizational control is to review and evaluate the performance of the system against these established norms. Rewards for meeting or exceeding standards may range from special recognition to salary increases or promotions. On the other hand, a failure to meet expectations may signal the need to reorganize or redesign. [7]
In organizational control, the approach used in the program of review and evaluation depends on the reason for the evaluation — that is, is it because the system is not effective (accomplishing its objectives)? Is the system failing to achieve an expected standard of efficiency? Is the evaluation being conducted because of a breakdown or failure in operations? Is it merely a periodic audit-and-review process?
When a system has failed or is in great difficulty, special diagnostic techniques may be required to isolate the trouble areas and to identify the causes of the difficulty. It is appropriate to investigate areas that have been troublesome before or areas where some measure of performance can be quickly identified. For example, if an organization's output backlog builds rapidly, it is logical to check first to see if the problem is due to such readily obtainable measures as increased demand or to a drop in available man hours. When a more detailed analysis is necessary, a systematic procedure should be followed. [7]
In contrast to organizational control, operational control serves to regulate the day-to-day output relative to schedules, specifications, and costs. Is the output of product or service the proper quality and is it available as scheduled? Are inventories of raw materials, goods-in-process, and finished products being purchased and produced in the desired quantities? Are the costs associated with the transformation process in line with cost estimates? Is the information needed in the transformation process available in the right form and at the right time? Is the energy resource being utilized efficiently?
The most difficult task of management concerns monitoring the behavior of individuals, comparing performance to some standard, and providing rewards or punishment as indicated. Sometimes this control over people relates entirely to their output. For example, a manager might not be concerned with the behavior of a salesman as long as sales were as high as expected. In other instances, close supervision of the salesman might be appropriate if achieving customer satisfaction were one of the sales organization's main objectives.
The larger the unit, the more likely that the control characteristic will be related to some output goal. It also follows that if it is difficult or impossible to identify the actual output of individuals, it is better to measure the performance of the entire group. This means that individuals' levels of motivation and the measurement of their performance become subjective judgments made by the supervisor. Controlling output also suggests the difficulty of controlling individuals' performance and relating this to the total system's objectives.[7]
[edit] Problems of control
The perfect plan could be outlined if every possible variation of input could be anticipated and if the system would operate as predicted. This kind of planning is neither realistic, economical, nor feasible for most business systems. If it were feasible, planning requirements would be so complex that the system would be out of date before it could be operated. Therefore, we design control into systems. This requires more thought in the systems design but allows more flexibility of operations and makes it possible to operate a system using unpredictable components and undetermined input. Still, the design and effective operation of control are not without problems.
The objective of the system is to perform some specified function. The purpose of organizational control is to see that the specified function is achieved; the objective of operational control is to ensure that variations in daily output are maintained within prescribed limits. It is one thing to design a system that contains all of the elements of control, and quite another to make it operate true to the best objectives of design. Operating "in control" or "with plan" does not guarantee optimum performance. For example, the plan may not make the best use of the inputs of materials, energy, or information — in other words, the system may not be designed to operate efficiently. Some of the more typical problems relating to control include the difficulty of measurement, the problem of timing information flow, and the setting of proper standards. [7]
[edit] Measurement of Output
When objectives are not limited to quantitative output, the measurement of system effectiveness is difficult to make and subsequently perplexing to evaluate. Many of the characteristics pertaining to output do not lend themselves to quantitative measurement. This is true particularly when inputs of human energy cannot be related directly to output. The same situation applies to machines and other equipment associated with human involvement, when output is not in specific units. In evaluating man-machine or human-oriented systems, psychological and sociological factors obviously do not easily translate into quantifiable terms. For example, how does mental fatigue affect the quality or quantity of output? And, if it does, is mental fatigue a function of the lack of a challenging assignment or the fear of a potential injury?
Subjective inputs may be transferred into numerical data, but there is always the danger of an incorrect appraisal and transfer, and the danger that the analyst may assume undue confidence in such data after they have been quantified. Let us suppose, for example, that the decisions made by an executive are rated from 1 to 10, 10 being the perfect decision. After determining the ranking for each decision, adding these, and dividing by the total number of decisions made, the average ranking would indicate a particular executive's score in his decision-making role. On the basis of this score, judgments — which could be quite erroneous — might be made about his decision-making effectiveness. One executive with a ranking of 6.75 might be considered more effective than another who had a ranking of 6.25, and yet the two managers may have made decisions under different circumstances and conditions. External factors over which neither executive had any control may have influenced the difference in "effectiveness". [7] Quantifying human behavior, despite its extreme difficulty, subjectivity, and imprecision in relation to measuring physical characteristics is the most prevalent and important measurement made in large systems. The behavior of individuals ultimately dictates the success or failure of every man-made system.
Information Flow
Another problem of control relates to the improper timing of information introduced into the feedback channel. Improper timing can occur in both computerized and human control systems, either by mistakes in measurement or in judgment. The more rapid the system's response to an error signal, the more likely it is that the system could overadjust; yet the need for prompt action is important because any delay in providing corrective input could also be crucial. A system generating feedback inconsistent with current need will tend to fluctuate and will not adjust in the desired manner.
The most serious problem in information flow arises when the delay in feedback is exactly one-half cycle, for then the corrective action is superimposed on a variation from norm which, at that moment, is in the same direction as that of the correction. This causes the system to overcorrect, and then if the reverse adjustment is made out of cycle, to correct too much in the other direction, and so on until the system fluctuates ("oscillates") out of control. This phenomenon is illustrated in Figure 1. “Oscillation and Feedback”. If, at Point A, the trend below standard is recognized and new inputs are added, but not until Point B, the system will overreact and go beyond the allowable limits. Again, if this is recognized at Point C, but inputs are not withdrawn until Point D, it will cause the system to drop below the lower limit of allowable variation. [3]
One solution to this problem rests in anticipation, which involves measuring not only the change but also the rate of change. The correction is outlined as a factor of the type and rate of the error. The difficulty also might be overcome by reducing the time lag between the measurement of the output and the adjustment to input. If a trend can be indicated, a time lead can be introduced to compensate for the time lag, bringing about consistency between the need for correction and the type and magnitude of the indicated action. It is usually more effective for an organization to maintain continuous measurement of its performance and to make small adjustments in operations constantly (this assumes a highly sensitive control system). Information feedback, consequently, should be timely and correct to be effective. That is, the information should provide an accurate indication of the status of the system. [3]
Setting Standards
Setting the proper standards or control limits is a problem in many systems. Parents are confronted with this dilemma in expressing what they expect of their children, and business managers face the same issue in establishing standards that will be acceptable to employees. Some theorists have proposed that workers be allowed to set their own standards, on the assumption that when people establish their own goals, they are more apt to accept and achieve them.
Standards should be as precise as possible and communicated to all persons concerned. Moreover, communication alone is not sufficient; understanding is necessary. In human systems, standards tend to be poorly defined and the allowable range of deviation from standard also indefinite. For example, how many hours each day should a professor be expected to be available for student consultation? Or, what kind of behavior should be expected by students in the classroom? Discretion and personal judgment play a large part in such systems, to determine whether corrective action should be taken.
Perhaps the most difficult problem in human systems is the unresponsiveness of individuals to indicated correction. This may take the form of opposition and subversion to control, or it may be related to the lack of defined responsibility or authority to take action. Leadership and positive motivation then become vital ingredients in achieving the proper response to input requirements.
Most control problems relate to design; thus the solution to these problems must start at that point. Automatic control systems, provided that human intervention is possible to handle exceptions, offer the greatest promise. There is a danger, however, that we may measure characteristics that do not represent effective performance (as in the case of the speaker who requested that all of the people who could not hear what he was saying should raise their hands), or that improper information may be communicated. [3 II. THE INDUSTRY AND MANAGEMENT
Foreign and local management international business = Business transactions crossing national borders at any stage of the transaction.
Is The Difference Important?
I often talk to people that have different definitions or conceptions of what an international business is. These differences are so inbred, that I often find myself totally avoiding the words “international business” to avoid miscommunication.
People contact me because they want to develop their international business. The miscommunication problems are usually centered around the word “business”. To me a business has a structure. At the very minimum there is buying and selling carried out within a defined structure and with certain processes.
You cannot say you have an international business until you have a clearly defined structure to carry out your buying and selling.
What Is Global?
With internet, there is an additional monkey wrench. Everyone tends to think they have an international company just because they say they are willing to sell to people abroad. Often this means that the people abroad have to come looking for them too. all to often there is no business, just a bright shiny desire to sell abroad.
This is where two people can think they are speaking about the same thing, when in fact they are not. The problem gets more complicated when people say that global business and international business is the same thing. In a general conversation this can be true, to some extent. But it is not true when you are talking about international business.
My Definition Of International Business
I tend to use two different definitions for the term “international business”, depending on what I am talking about.
• General meaning – Any business that has international clients – buyers and sellers located in different countries. • Specific meaning – To differentiate from an export company, an international company takes country-specific marketing and sales actions to sell their products in different countries.
And because of the difficulties I have in communicating with some clients, I try my best to avoid the term “global business”. The term “global business” just opens a can of worms.
Differences In Communication
In reality, I can use whatever definition I want to for “international business”, and I will always have a communication issue to deal with if the other person does not understand my definition. This also goes for you and your definition of the term “international business”.
• Be sure others understand, and continue to understand your definition of international business.
In my experience, it is also wise not to interchange your use the term “global business” and “international business”. In fact I do not even use the term “global business” with anyone I speak to about “international business”. The word “global” can trigger different definitions and change the discussion.
The question of vocabulary may seem like an innocent one. There are dictionaries after all. The truth is that vocabulary does make a big difference in how others understand you. In different countries, words can take on slightly different meanings. Yes, even when you speak in English.
Participate in the March Cross Cultural Communication Challenge and learn more ways to improve your cross- cultural communication.
Government regulation
Most legal jurisdictions specify the forms of ownership that a business can take, creating a body of commercial law for each type.
[edit] Organizing
The major factors affecting how a business is organized are usually:
• The size and scope of the business, and its anticipated management and ownership. Generally a smaller business is more flexible, while larger businesses, or those with wider ownership or more formal structures, will usually tend to be organized as partnerships or (more commonly) corporations. In addition a business which wishes to raise money on a stock market or to be owned by a wide range of people will often be required to adopt a specific legal form to do so. • The sector and country. Private profit making businesses are different from government owned bodies. In some countries, certain businesses are legally obliged to be organized certain ways. • Limited liability . Corporations, limited liability partnerships, and other specific types of business organizations protect their owners or shareholders from business failure by doing business under a separate legal entity with certain legal protections. In contrast, unincorporated businesses or persons working on their own are usually not so protected. • Tax advantages. Different structures are treated differently in tax law, and may have advantages for this reason. • Disclosure and compliance requirements. Different business structures may be required to make more or less information public (or reported to relevant authorities), and may be bound to comply with different rules and regulations.
Many businesses are operated through a separate entity such as a corporation or a partnership (either formed with or without limited liability). Most legal jurisdictions allow people to organize such an entity by filing certain charter documents with the relevant Secretary of State or equivalent and complying with certain other ongoing obligations. The relationships and legal rights of shareholders, limited partners, or members are governed partly by the charter documents and partly by the law of the jurisdiction where the entity is organized. Generally speaking, shareholders in a corporation, limited partners in a limited partnership, and members in a limited liability company are shielded from personal liability for the debts and obligations of the entity, which is legally treated as a separate "person." This means that unless there is misconduct, the owner's own possessions are strongly protected in law, if the business does not succeed.
Where two or more individuals own a business together but have failed to organize a more specialized form of vehicle, they will be treated as a general partnership. The terms of a partnership are partly governed by a partnership agreement if one is created, and partly by the law of the jurisdiction where the partnership is located. No paperwork or filing is necessary to create a partnership, and without an agreement, the relationships and legal rights of the partners will be entirely governed by the law of the jurisdiction where the partnership is located.
A single person who owns and runs a business is commonly known as a sole proprietor, whether he or she owns it directly or through a formally organized entity.
A few relevant factors to consider in deciding how to operate a business include:
1. General partners in a partnership (other than a limited liability partnership), plus anyone who personally owns and operates a business without creating a separate legal entity, are personally liable for the debts and obligations of the business. 2. Generally, corporations are required to pay tax just like "real" people. In some tax systems, this can give rise to so-called double taxation, because first the corporation pays tax on the profit, and then when the corporation distributes its profits to its owners, individuals have to include dividends in their income when they complete their personal tax returns, at which point a second layer of income tax is imposed. 3. In most countries, there are laws which treat small corporations differently than large ones. They may be exempt from certain legal filing requirements or labor laws, have simplified procedures in specialized areas, and have simplified, advantageous, or slightly different tax treatment. 4. To "go public" (sometimes called IPO) -- which basically means to allow a part of the business to be owned by a wider range of investors or the public in general—you must organize a separate entity, which is usually required to comply with a tighter set of laws and procedures. Most public entities are corporations that have sold shares, but increasingly there are also public LLCs that sell units (sometimes also called shares), and other more exotic entities as well (for example, REITs in the USA, Unit Trusts in the UK). However, you cannot take a general partnership "public."
[edit] Commercial law
Most commercial transactions are governed by a very detailed and well-established body of rules that have evolved over a very long period of time, it being the case that governing trade and commerce was a strong driving force in the creation of law and courts in Western civilization.
As for other laws that regulate or impact businesses, in many countries it is all but impossible to chronicle them all in a single reference source. There are laws governing treatment of labor and generally relations with employees, safety and protection issues (OSHA or Health and Safety), anti-discrimination laws (age, gender, disabilities, race, and in some jurisdictions, sexual orientation), minimum wage laws, union laws, workers compensation laws, and annual vacation or working hours time.
In some specialized businesses, there may also be licenses required, either due to special laws that govern entry into certain trades, occupations or professions, which may require special education, or by local governments. Professions that require special licenses range from law and medicine to flying airplanes to selling liquor to radio broadcasting to selling investment securities to selling used cars to roofing. Local jurisdictions may also require special licenses and taxes just to operate a business without regard to the type of business involved.
Some businesses are subject to ongoing special regulation. These industries include, for example, public utilities, investment securities, banking, insurance, broadcasting, aviation, and health care providers. Environmental regulations are also very complex and can impact many kinds of businesses in unexpected ways.
[edit] Capital
When businesses need to raise money (called 'capital'), more laws come into play. A highly complex set of laws and regulations govern the offer and sale of investment securities (the means of raising money) in most Western countries. These regulations can require disclosure of a lot of specific financial and other information about the business and give buyers certain remedies. Because "securities" is a very broad term, most investment transactions will be potentially subject to these laws, unless a special exemption is available.
Capital may be raised through private means, by public offer (IPO) on a stock exchange, or in many other ways. Major stock exchanges include the Shanghai Stock Exchange, Singapore Exchange, Hong Kong Stock Exchange, New York Stock Exchange and Nasdaq (USA), the London Stock Exchange (UK), the Tokyo Stock Exchange (Japan), and so on. Most countries with capital markets have at least one.
Business that have gone "public" are subject to extremely detailed and complicated regulation about their internal governance (such as how executive officers' compensation is determined) and when and how information is disclosed to the public and their shareholders. In the United States, these regulations are primarily implemented and enforced by the United States Securities and Exchange Commission (SEC). Other Western nations have comparable regulatory bodies. The regulations are implemented and enforced by the China Securities Regulation Commission (CSRC), in China. In Singapore, the regulation authority is Monetary Authority of Singapore (MAS), and in Hong Kong, it is Securities and Futures Commission (SFC).
As noted at the beginning, it is impossible to enumerate all of the types of laws and regulations that impact on business today. In fact, these laws have become so numerous and complex, that no business lawyer can learn them all, forcing increasing specialization among corporate attorneys. It is not unheard of for teams of 5 to 10 attorneys to be required to handle certain kinds of corporate transactions, due to the sprawling nature of modern regulation. Commercial law spans general corporate law, employment and labor law, healthcare law, securities law, M&A law (who specialize in acquisitions), tax law, ERISA law (ERISA in the United States governs employee benefit plans), food and drug regulatory law, intellectual property law (specializing in copyrights, patents, trademarks and such), telecommunications law, and more.
In Thailand, for example, it is necessary to register a particular amount of capital for each employee, and pay a fee to the government for the amount of capital registered. There is no legal requirement to prove that this capital actually exists, the only requirement is to pay the fee. Overall, processes like this are detrimental to the development and GDP of a country, but often exist in "feudal" developing countries.
[edit] Intellectual property
Businesses often have important "intellectual property" that needs protection from competitors for the company to stay profitable. This could require patents or copyrights or preservation of trade secrets. Most businesses have names, logos and similar branding techniques that could benefit from trademarking. Patents and copyrights in the United States are largely governed by federal law, while trade secrets and trademarking are mostly a matter of state law. Because of the nature of intellectual property, a business needs protection in every jurisdiction in which they are concerned about competitors. Many countries are signatories to international treaties concerning intellectual property, and thus companies registered in these countries are subject to national laws bound by these treaties.
[edit] Exit plans
Businesses can be bought and sold. Business owners often refer to their plan of disposing of the business as an "exit plan." Common exit plans include IPOs, MBOs and mergers with other businesses. Businesses are rarely liquidated, as it is often very unprofitable to do so.
Business environment
Internal
The Internal Business department is responsible for all internal financial matters including but not limited to performing specialized administrative functions to support programs funded by the state, federal and local entities, monitor office compliance with Board policies, administrative regulations, California Education Code, and the California School Accounting Manual. Internal Business consists of four units which provide the following services:
Accounting Responsible for the development, adoption, and revision of County Office budgets, assisting other internal departments in fiscal matters, and the reporting to state, federal and local agencies. Accounting and reporting for special funds and JPA funds are included.
Accounts Payable Accounts payable is responsible for the encumbrance of expenditures and the audit and processing of payments to all vendors and contractors.
Accounts Receivable The accounts receivable clerk prepares the collection and deposit of monies owed to the County Office as well as the processing of employee travel and automobile mileage reimbursments.
Payroll The payroll staff collects and processes time records for County Office employees, and maintain records pertaining to tax exemptions and deductions.
External
Introduction
A business does not function in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies.
Main Factors
The main factor that affects most business is the degree of competition – how fiercely other businesses compete with the products that another business makes. The other factors that can affect the business are:
• Social – how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population. • Legal – the way in which legislation in society affects the business. E.g. changes in employment laws on working hours. • Economic – how the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors. • Political – how changes in government policy might affect the business e.g. a decision to subsidise building new houses in an area could be good for a local brick works. • Technological – how the rapid pace of change in production processes and product innovation affect a business. • Ethical – what is regarded as morally right or wrong for a business to do. For instance should it trade with countries which have a poor record on human rights.
Changing External Environment
Markets are changing all the time. It does depend on the type of product the business produces, however a business needs to react or lose customers.
Some of the main reasons why markets change rapidly:
• Customers develop new needs and wants. • New competitors enter a market. • New technologies mean that new products can be made. • A world or countrywide event happens e.g. Gulf War or foot and mouth disease. • Government introduces new legislation e.g. increases minimum wage.
Business and Competition
Though a business does not want competition from other businesses, inevitably most will face a degree of competition.
The amount and type of competition depends on the market the business operates in:
• Many small rival businesses – e.g. a shopping mall or city centre arcade – close rivalry. • A few large rival firms – e.g. washing powder or Coke and Pepsi. • A rapidly changing market – e.g. where the technology is being developed very quickly – the mobile phone market.
A business could react to an increase in competition (e.g. a launch of rival product) in the following ways:
• Cut prices (but can reduce profits) • Improve quality (but increases costs) • Spend more on promotion (e.g. do more advertising, increase brand loyalty; but costs money) • Cut costs, e.g. use cheaper materials, make some workers redundant
Social Environment and Responsibility Social change is when the people in the community adjust their attitudes to way they live. Businesses will need to adjust their products to meet these changes, e.g. taking sugar out of children’s drinks, because parents feel their children are having too much sugar in their diets.
The business also needs to be aware of their social responsibilities. These are the way they act towards the different parts of society that they come into contact with.
Legislation covers a number of the areas of responsibility that a business has with its customers, employees and other businesses.
It is also important to consider the effects a business can have on the local community. These are known as the social benefits and social costs.
A social benefit is where a business action leads to benefits above and beyond the direct benefits to the business and/or customer. For example, the building of an attractive new factory provides employment opportunities to the local community.
A social cost is where the action has the reverse effect – there are costs imposed on the rest of society, for instance pollution.
These extra benefits and costs are distinguished from the private benefits and costs directly attributable to the business. These extra cost and benefits are known as externalities – external costs and benefits.
Governments encourage social benefits through the use of subsidies and grants (e.g. regional assistance for undeveloped areas). They also discourage social costs with fines, taxes and legislation.
Pressure groups will also discourage social costs.
Busu org.
A service is the non-ownership equivalent of a good. Service provision has been defined as an economic activity that does not result in ownership and is claimed to be a process that creates benefits by facilitating either a change in customers, a change in their physical possessions, or a change in their intangible assets.
By composing and orchestrating the appropriate level of resources, skill, ingenuity,and experience for effecting specific benefits for service consumers, service providers participate in an economy without the restrictions of carrying stock (inventory) or the need to concern themselves with bulky raw materials. On the other hand, their investment in expertise does require consistent service marketing and upgrading in the face of competition which has equally few physical restrictions. Many so-called services, however, require large physical structures and equipment, and consume large amounts of resources, such as transportation services and the military.
Service characteristics
Services can be paraphrased in terms of their generic key characteristics.
1. Intangiblity
Services are intangible and insubstantial: they cannot be touched, gripped, handled, looked at, smelled, tasted or heard. Thus, there is neither potential nor need for transport, storage or stocking of services. Furthermore, a service cannot be (re)sold or owned by somebody, neither can it be turned over from the service provider to the service consumer nor returned from the service consumer to the service provider. Solely, the service delivery can be commissioned to a service provider who must generate and render the service at the distinct request of an authorized service consumer.
2. Perishability
Services are perishable in two regards
• The service relevant resources, processes and systems are assigned for service delivery during a definite period in time. If the designated or scheduled service consumer does not request and consume the service during this period, the service cannot be performed for him. From the perspective of the service provider, this is a lost business opportunity as he cannot charge any service delivery; potentially, he can assign the resources, processes and systems to another service consumer who requests a service. Examples: The hair dresser serves another client when the scheduled starting time or time slot is over. An empty seat on a plane never can be utilized and charged after departure. • When the service has been completely rendered to the requesting service consumer, this particular service irreversibly vanishes as it has been consumed by the service consumer. Example: the passenger has been transported to the destination and cannot be transported again to this location at this point in time.
3. Inseparability
The service provider is indispensable for service delivery as he must promptly generate and render the service to the requesting service consumer. In many cases the service delivery is executed automatically but the service provider must preparatorily assign resources and systems and actively keep up appropriate service delivery readiness and capabilities. Additionally, the service consumer is inseparable from service delivery because he is involved in it from requesting it up to consuming the rendered benefits. Examples: The service consumer must sit in the hair dresser's shop & chair or in the plane & seat; correspondingly, the hair dresser or the pilot must be in the same shop or plane, respectively, for delivering the service.
4. Simultaneity
Services are rendered and consumed during the same period of time. As soon as the service consumer has requested the service (delivery), the particular service must be generated from scratch without any delay and friction and the service consumer instantaneously consumes the rendered benefits for executing his upcoming activity or task.
5. Variability
Each service is unique. It is one-time generated, rendered and consumed and can never be exactly repeated as the point in time, location, circumstances, conditions, current configurations and/or assigned resources are different for the next delivery, even if the same service consumer requests the same service. Many services are regarded as heterogeneous or lacking homogeneity and are typically modified for each service consumer or each new situation (consumerised). Example: The taxi service which transports the service consumer from his home to the opera is different from the taxi service which transports the same service consumer from the opera to his home - another point in time, the other direction, maybe another route, probably another taxi driver and cab.
Each of these characteristics is retractable per se and their inevitable coincidence complicates the consistent service conception and make service delivery a challenge in each and every case. Proper service marketing requires creative visualization to effectively evoke a concrete image in the service consumer's mind. From the service consumer's point of view, these characteristics make it difficult, or even impossible, to evaluate or compare services prior to experiencing the service delivery.
Mass generation and delivery of services is very difficult. This can be seen as a problem of inconsistent service quality. Both inputs and outputs to the processes involved providing services are highly variable, as are the relationships between these processes, making it difficult to maintain consistent service quality. For many services there is labor intensity as services usually involve considerable human activity, rather than a precisely determined process; exceptions include utilities. Human resource management is important. The human factor is often the key success factor in service economies. It is difficult to achieve economies of scale or gain dominant market share. There are demand fluctuations and it can be difficult to forecast demand. Demand can vary by season, time of day, business cycle, etc. There is consumer involvement as most service provision requires a high degree of interaction between service consumer and service provider. There is a customer-based relationship based on creating long-term business relationships. Accountants, attorneys, and financial advisers maintain long-term relationships with their clientes for decades. These repeat consumers refer friends and family, helping to create a client-based relationship.
[edit] Service definition
The generic clear-cut, complete and concise definition of the service term reads as follows:
A service is a set of singular and perishable benefits
• delivered from the accountable service provider, mostly in close coaction with his service suppliers, • generated by functions of technical systems and/or by distinct activities of individuals, respectively, • commissioned according to the needs of his service consumers by the service customer from the accountable service provider, • rendered individually to an authorized service consumer at his/her dedicated request, • and, finally, consumed and utilized by the requesting service consumer for executing and/or supporting his/her day-to-day business tasks or private activities.
[edit] Service specification
Any service can be clearly, completely, consistently and concisely specified by means of the following 12 standard attributes which conform to the MECE principle (Mutually Exclusive, Collectively Exhaustive)
1. Service Consumer Benefits 2. Service-specific Functional Parameter(s) 3. Service Delivery Point 4. Service Consumer Count 5. Service Readiness Times 6. Service Support Times 7. Service Support Language(s) 8. Service Fulfillment Target 9. Maximum Impairment Duration per Incident 10. Service Delivering Duration 11. Service Delivery Unit 12. Service Delivering Price
The meaning and content of these attributes are:
1. Service Consumer Benefits describe the (set of) benefits which are callable, receivable and effectively utilizable for any authorized service consumer and which are provided to him as soon as he requests the offered service. The description of these benefits must be phrased in the terms and wording of the intended service consumers.
2. Service-specific Functional Parameters specify the functional parameters which are essential and unique to the respective service and which describe the most important dimension of the servicescape, the service output or outcome, e.g. maximum e-mailbox capacity per registered and authorized e-mail service consumer.
3. Service Delivery Point describes the physical location and/or logical interface where the benefits of the service are made accessible, callable, receivable and utilzable to the authorized service consumers. At this point and/or interface, the preparedness for service delivery can be assessed as well as the effective delivery of the service itself can be monitored and controlled. 4. Service Consumer Count specifies the number of intended, identified, named, registered and authorized service consumers which shall be and/or are allowed and enabled to call and utilize the defined service for executing and/or supporting their business tasks or private activities.
5. Service Readiness Times specify the distinct agreed times of day when
• the described service consumer benefits are o accessible and callable for the authorized service consumers at the defined service delivery point o receivable and utilizable for the authorized service consumers at the respective agreed service level • all service-relevant processes and resources are operative and effective • all service-relevant technical systems are up and running and attended by the operating team • the specified service benefits are comprehensively delivered to any authorized requesting service consumer without any delay or friction.
The time data are specified in 24 h format per local working day and local time, referring to the location of the intended service consumers.
6. Service Support Times specify the determined and agreed times of day when the usage and consumption of commissioned services is supported by the service desk team for all identified, registered and authorized service consumers within the service customer's organizational unit or area. The service desk is/shall be the so called the Single Point of Contact (SPoC) for any service consumer inquiry regarding the commissioned, requested and/or delivered services, particularly in the event of service denial, i.e. an incident. During the defined service support times, the service desk can be reached by phone, e-mail, web-based entries and/or fax, respectively. The time data are specified in 24 h format per local working day and local time, referring to the location of the intended service consumers.
7. Service Support Languages specifies the national languages which are spoken by the service desk team(s) to the service consumers calling them.
8. Service Fulfillment Target specifies the service provider's promise of effective and seamless delivery of the defined benefits to any authorized service consumer requesting the service within the defined service times. It is expressed as the promised minimum ratio of the counts of successful individual service deliveries related to the counts of requested service deliveries. The effective service fulfillment ratio can be measured and calculated per single service consumer or per consumer group and may be referred to different time periods (workday, calenderweek, workmonth, etc.)
9. Maximum Impairment Duration per Incident specifies the allowable maximum elapsing time [hh:mm] between
• the first occurrence of a service impairment, i.e. service quality degradation or service delivery disruption, whilst the service consumer consumes and utilizes the requested service, • the full resumption and complete execution of the service delivery to the content of the affected service consumer.
10. Service Delivering Duration specifies the promised and agreed maximum period of time for effectively delivering all specified service consumer benefits to the requesting service consumer at the currently chosen service delivery point.
11. Service Delivery Unit specifies the basic portion for delivering the defined service consumer benefits. The service delivery unit is the reference and mapping object for all cost for service generation and delivery as well as for charging and billing the consumed service volume to the service customer who has commissioned the service delivery.
12. Service Delivering Price specifies the amount of money the service customer has to pay for the distinct service volumes his authorized service consumers have consumed. Normally, the service delivering price comprises two portions
• a fixed basic price portion for basic efforts and resources which provide accessibility and usability of the service delivery functions, i.e. service access price • a price portion covering the service consumption based on o fixed flat rate price per authorized service consumer and delivery period without regard on the consumed service volumes, o staged prices depending on consumed service volumes, o fixed price per particularly consumed service delivering unit.
[edit] Service delivery
The delivery of a service typically involves six factors:
• The accountable service provider and his service suppliers (e.g. the people) • Equipment used to provide the service (e.g. vehicles, cash registers, technical systems, computer systems) • The physical facilities (e.g. buildings, parking, waiting rooms) • The requesting service consumer • Other customers at the service delivery location • Customer contact
The service encounter is defined as all activities involved in the service delivery process. Some service managers use the term "moment of truth" to indicate that defining point in a specific service encounter where interactions are most intense.
Many business theorists view service provision as a performance or act (sometimes humorously referred to as dramalurgy, perhaps in reference to dramaturgy). The location of the service delivery is referred to as the stage and the objects that facilitate the service process are called props. A script is a sequence of behaviors followed by all those involved, including the client(s). Some service dramas are tightly scripted, others are more ad lib. Role congruence occurs when each actor follows a script that harmonizes with the roles played by the other actors.
In some service industries, especially health care, dispute resolution, and social services, a popular concept is the idea of the caseload, which refers to the total number of patients, clients, litigants, or claimants that a given employee is presently responsible for. On a daily basis, in all those fields, employees must balance the needs of any individual case against the needs of all other current cases as well as their own personal needs.
Under English law, if a service provider is induced to deliver services to a dishonest client by a deception, this is an offence under the Theft Act 1978.
The dichotomy between physical goods and intangible services should not be given too much credence. These are not discrete categories. Most business theorists see a continuum with pure service on one terminal point and pure commodity good on the other terminal point.[citation needed] Most products fall between these two extremes. For example, a restaurant provides a physical good (the food), but also provides services in the form of ambience, the setting and clearing of the table, etc. And although some utilities actually deliver physical goods — like water utilities which actually deliver water — utilities are usually treated as services.
In a narrower sense, service refers to quality of customer service: the measured appropriateness of assistance and support provided to a customer. This particular usage occurs frequently in retailing.
[edit] List of economic services
In 2005, USA was the largest producer of services followed by Japan and Germany, reports the International Monetary Fund. Services accounted for 78.5% of the U.S. economy in 2007[1], compared to 20% in 1947.
The following is an incomplete list of service industries, grouped into rough sectors. Parenthetical notations indicate how specific occupations and organizations can be regarded as service industries to the extent they provide an intangible service, as opposed to a tangible good.
For an example of a service website with an extensive directory of service providers in the US, see http://www.service.com. • business functions (that apply to all organizations in general) o consulting o customer service o human resources administrators (providing services like ensuring that employees are paid accurately) • childcare • cleaning , repair and maintenance services o janitors (who provide cleaning services) o gardeners o mechanics • construction o carpentry o electricians (offering the service of making wiring work properly) o plumbing • death care o coroners (who provide the service of identifying cadavers and determining time and cause of death) o funeral homes (who prepare corpses for public display, cremation or burial) • dispute resolution and prevention services o arbitration o courts of law (who perform the service of dispute resolution backed by the power of the state) o diplomacy o incarceration (provides the service of keeping criminals out of society) o law enforcement (provides the service of identifying and apprehending criminals) o lawyers (who perform the services of advocacy and decisionmaking in many dispute resolution and prevention processes) o mediation o military (performs the service of protecting states in disputes with other states) o negotiation (not really a service unless someone is negotiating on behalf of another) • education (institutions offering the services of teaching and access to information) o library o museum o school • entertainment (when provided live or within a highly specialized facility) o gambling o movie theatres (providing the service of showing a movie on a big screen) o performing arts productions o sexual services o sport o television • fabric care o dry cleaning o Self-service laundry (offering the service of automated fabric cleaning) • financial services o accountancy o banks and building societies (offering lending services and safekeeping of money and valuables) o real estate o stock brokerages o tax preparation • foodservice industry • personal grooming o hairdressing o manicurist / pedicurist o body hair removal o dental hygienist • health care (all health care professions provide services) • hospitality industry • information services o data processing o database services o Interpreting o Translation • risk management o insurance o security • social services o social work • transport • Public utility o electric power o natural gas o telecommunications o waste management o water industry
Manufacturing is the use of machines, tools and labor to make things for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be used for manufacturing other, more complex products, such as household appliances or automobiles, or sold to wholesalers, who in turn sell them to retailers, who then sell them to end users - the "consumers".
Manufacturing takes turns under all types of economic systems. In a free market economy, manufacturing is usually directed toward the mass production of products for sale to consumers at a profit. In a collectivist economy, manufacturing is more frequently directed by the state to supply a centrally planned economy. In free market economies, manufacturing occurs under some degree of government regulation.
Modern manufacturing includes all intermediate processes required for the production and integration of a product's components. Some industries, such as semiconductor and steel manufacturers use the term fabrication instead.
The manufacturing sector is closely connected with engineering and industrial design. Examples of major manufacturers in the United States include General Motors Corporation, Ford Motor Company, Chrysler, Boeing, Gates Corporation and Pfizer. Examples in Europe include Airbus, Daimler, BMW, Fiat, and Michelin Tyre.
History and development
• In its earliest form, manufacturing was usually carried out by a single skilled artisan with assistants. Training was by apprenticeship. In much of the pre-industrial world the guild system protected the privileges and trade secrets of urban artisans. • Before the Industrial Revolution, most manufacturing occurred in rural areas, where household-based manufacturing served as a supplemental subsistence strategy to agriculture (and continues to do so in places). Entrepreneurs organized a number of manufacturing households into a single enterprise through the putting-out system. • Toil manufacturing is an arrangement whereby a first firm with specialized equipment processes raw materials or semi-finished goods for a second firm.
[edit] Manufacturing systems: The changing methods of manufacturing
• Craft or Guild system • Putting-out system • English system of manufacturing • American system of manufacturing • Soviet collectivism in manufacturing • Mass production • Just In Time manufacturing • Lean manufacturing • Flexible manufacturing • Mass customization • Agile manufacturing • Rapid manufacturing • Prefabrication • Ownership • Fabrication • Publication
[edit] Economics of manufacturing
According to some economists, manufacturing is a wealth-producing sector of an economy, whereas a service sector tends to be wealth-consuming. [1][2] Emerging technologies have provided some new growth in advanced manufacturing employment opportunities in the Manufacturing Belt in the United States. Manufacturing provides important material support for national infrastructure and for national defense.
On the other hand, most manufacturing may involve significant social and environmental costs. The clean-up costs of hazardous waste, for example, may outweigh the benefits of a product that creates it. Hazardous materials may expose workers to health risks. Developed countries regulate manufacturing activity with labor laws and environmental laws. In the U.S, manufacturers are subject to regulations by the Occupational Safety and Health Administration and the United States Environmental Protection Agency. In Europe, pollution taxes to offset environmental costs are another form of regulation on manufacturing activity. Labor Unions and craft guilds have played a historic role negotiation of worker rights and wages. Environment laws and labor protections that are available in developed nations may not be available in the third world. Tort law and product liability impose additional costs on manufacturing.
[edit] Manufacturing and investment around the world
Surveys and analyses of trends and issues in manufacturing and investment around the world focus on such things as:
• the nature and sources of the considerable variations that occur cross-nationally in levels of manufacturing and wider industrial-economic growth;
• competitiveness; and
• attractiveness to foreign direct investors.
In addition to general overviews, researchers have examined the features and factors affecting particular key aspects of manufacturing development. They have compared production and investment in a range of Western and non-Western countries and presented case studies of growth and performance in important individual industries and market-economic sectors.[3][4] On June 26 2009, Jeff Immelt, the CEO of General Electric, called for the United States to increase its manufacturing base employment to 20% of the workforce, commenting that the U.S. has outsourced too much in some areas and can no longer rely on the financial sector and consumer spending to drive demand.[5]
[edit] Taxonomy of manufacturing processes
• Taxonomy of manufacturing processes • Manufacturing Process Management
[edit] Manufacturing categories
• Chemical industry o Pharmaceutical • Construction • Electronics o Semiconductor • Engineering o Biotechnology o Emerging technologies o Nanotechnology o Synthetic biology , Bioengineering • Energy industry • Food and Beverage o Agribusiness o Brewing industry o Food processing • Industrial design o Interchangeable parts • Metalworking o Smith o Machinist o Machine tools o Cutting tools (metalworking) o Free machining o Tool and die maker o Global steel industry trends o Steel production • Metalcasting • Plastics • Telecommunications • Textile manufacturing o Clothing industry o Sailmaker o Tentmaking • Transportation o Aerospace manufacturing o Automotive industry o Bus manufacturing o Tire manufacturing
Trade is the voluntary exchange of goods, services, or both. Trade is also called commerce or transaction. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals (poles, coins), bill, paper money. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.
Trade exists for man due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production. As such, trade at market prices between locations benefits both locations. Trading can also refer to the action performed by traders and other market agents in the financial markets.
International trade is the exchange of goods and services across national borders. In most countries, it represents a significant part of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance have increased in recent centuries, mainly because of Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing. In fact, it is probably the increasing prevalence of international trade that is usually meant by the term "globalization".
Empirical evidence for the success of trade can be seen in the contrast between countries such as South Korea, which adopted a policy of export-oriented industrialization, and India, which historically had a more closed policy (although it has begun to open its economy, as of 2005). South Korea has done much better by economic criteria than India over the past fifty years, though its success also has to do with effective state institutions.
Trade sanctions against a specific country are sometimes imposed, in order to punish that country for some action. An embargo, a severe form of externally imposed isolation, is a blockade of all trade by one country on another. For example, the United States has had an embargo against Cuba for over 40 years.
Although there are usually few trade restrictions within countries, international trade is usually regulated by governmental quotas and restrictions, and often taxed by tariffs. Tariffs are usually on imports, but sometimes countries may impose export tariffs or subsidies. All of these are called trade barriers. If a government removes all trade barriers, a condition of free trade exists. A government that implements a protectionist policy establishes trade barriers.
The fair trade movement, also known as the trade justice movement, promotes the use of labour, environmental and social standards for the production of commodities, particularly those exported from the Third and Second Worlds to the First World. Such ideas have also sparked a debate on whether trade itself should be codified as a human right.[4]
Standards may be voluntarily adhered to by importing firms, or enforced by governments through a combination of employment and commercial law. Proposed and practiced fair trade policies vary widely, ranging from the commonly adhered to prohibition of goods made using slave labour to minimum price support schemes such as those for coffee in the 1980s. Non-governmental organizations also play a role in promoting fair trade standards by serving as independent monitors of compliance with fair trade labeling requirements.
III. OPERATION MANAGEMENT
Industrial engineering is a branch of engineering concerned with the development, improvement, implementation and evaluation of integrated systems of people, money, knowledge, information, equipment, energy, material and process. It also deals with designing new prototypes to help save money and make the prototype better. Industrial engineering draws upon the principles and methods of engineering analysis and synthesis, as well as mathematical, physical and social sciences together with the principles and methods of engineering analysis and design to specify, predict and evaluate the results to be obtained from such systems. In lean manufacturing systems, Industrial engineers work to eliminate wastes of time, money, materials, energy, and other resources. Industrial engineering is also known as operations management, management science, systems engineering, or manufacturing engineering; a distinction that seems to depend on the viewpoint or motives of the user. Recruiters or educational establishments use the names to differentiate themselves from others. In healthcare, for example, industrial engineers are more commonly known as management engineers or health systems engineers.
The term "industrial" in industrial engineering can be misleading. While the term originally applied to manufacturing, it has grown to encompass virtually all other industries and services as well. The various topics of concern to industrial engineers include management science, financial engineering, engineering management, supply chain management, process engineering, operations research, systems engineering, ergonomics, value engineering and quality engineering.
Examples of where industrial engineering might be used include designing a new loan system for a bank, streamlining operation and emergency rooms in a hospital, distributing products worldwide (referred to as Supply Chain Management), and shortening lines (or queues) at a bank, hospital, or a theme park. Industrial engineers typically use computer simulation, especially discrete event simulation, for system analysis and evaluation.
Examples of famous Industrial Engineers include Susan Story, CEO of Gulf Power [1] and Mohammad Barghash, a Jordanian Industrial Engineer well known in the United Arab Emirates and Australia for his revolutionary business ideas and skills in Activity Based Costing.
Nature of the Work Industrial engineers determine the most effective ways for an organization to use the basic factors of production - people, machines, materials, information, and energy - to make or process a product or produce a service. They are the bridge between management goals and operational performance. They are more concerned with increasing productivity through the management of people, methods of business organization, and technology than are engineers in other specialties, who generally work more with products or processes.
To solve organizational, production, and related problems most efficiently, industrial engineers
• study the product and its requirements • use mathematical methods to meet product requirements • design manufacturing and information systems • develop management control systems for financial planning and cost analysis • design production planning and control systems to coordinate activities and control product quality • design or improve systems for the physical distribution of goods and services • determine which plant location has the best combination of raw materials availability, transportation, and costs • develop wage and salary administration systems and job evaluation programs
Many industrial engineers move into management positions because the work is closely related.
Employment Industrial engineers held about 115,000 jobs in 1996. About 73 percent of these jobs were in manufacturing industries. Because their skills can be used in almost any type of organization, industrial engineers are more widely distributed among manufacturing industries than other engineers. These skills can be readily applied outside manufacturing as well. Some work in engineering and management services, utilities, and business services; others work for government agencies or as independent consultants.
Job Outlook Employment of industrial engineers is expected to grow about as fast as the average for all occupations through the year 2006, making for favorable opportunities. Industrial growth, more complex business operations, and the greater use of automation in factories and in offices underlie the projected employment growth. Because the main function of an industrial engineer is to make a higher quality product as efficiently as possible, their services should be in demand in the manufacturing sector as firms seek to reduce costs and increase productivity through scientific management and safety engineering. Most job openings, however, will result from the need to replace industrial engineers who transfer to other occupations or leave the labor force.
Plant engineering he Plant Engineering Department encompasses our Process, Environmental and Mechanical Engineering disciplines. Our staff has extensive knowledge of processes and control technologies for the industries we serve which gives us the ability to provide exceptional and unique value to our clients. Our focus is to satisfy specific client requirements with creative and cost-effective solutions. These solutions are developed by personnel with experience in plant operations and engineering.
Plant Engineering defines the architecture of the plant by means of design criteria, process flow sheets, equipment flow sheets, site plans and general arrangement drawings. The plant architecture is conceptualized during the Feasibility Study and then further developed during Basic Engineering. It is finalized after all the equipment has been purchased and the vendor technical and dimensional data has been incorporated.
Plant Engineering drives all the other disciplines and is therefore a key part of the design process. PENTA offers all aspects of Plant Engineering Design including specifications for equipment procurement, installation and mechanical construction. Our Plant Engineering group also provides all detail drawings for piping and duct installations, environmental controls, material handling chutes and any other detail information required by metal platework fabricators and mechanical construction contractors.
Plant Engineering Services
• Feasibility studies for plant upgrades, expansions and Greenfield plants • Development of plant and system concepts • Process and equipment selection • Capital investment budgets • Flow diagram development with heat and material balances • Raw material evaluation and selection • Calculation of emissions for environmental permitting • Kiln feed mix designs • Specifications preparation for major equipment and bid packages • Bid evaluations • Analyses to optimize raw material storage costs • Analyses of production and shipping patterns to optimize storage requirements • Design criteria • Plot plans • Equipment flow diagrams • Definition of process control loops for interlocking • General arrangements • Bulk material handling systems • Gas handling system design • Plant utilities • Dust collection and suppression • Vendor prequalification • Piping schematics • Equipment lists • Dust collection details/systems • Vendor drawing review • Chute and duct details • Pipe and duct support details Installation specifications • Construction bid analysis (of vendor proposals and construction bids) • Construction support • Start up
Public relations is the practice of managing the communication between an organization and its publics.[1] Public relations gains an organization or individual exposure to their audiences using topics of public interest and news items that provide a third- party endorsement[2] and do not direct payment.[3] Common activities include speaking at conferences, working with the media, and employee communication. It is something that is not tangible and this is what sets it apart from Advertising.
PR can be used to build rapport with employees, customers, investors, voters, or the general public.[3] Almost any organization that has a stake in how it is portrayed in the public arena employs some level of public relations. There are a number of related disciplines all falling under the banner of Corporate Communications, such as Analyst Relations, Media Relations, Investor Relations, Internal Communications or Labor Relations.
There are many areas of public relations but the most recognized are financial public relations, product public relations, and crisis public relations.
• Financial public relations deal with providing information mainly to business reporters. • Product public relations deal with gaining publicity for a particular product or service through PR tactics rather than using advertising. • Crisis public relations deal with responding to negative accusations or information.
Methods, tools and tactics
It has been suggested that Black Public Relations be merged into this article or section. (Discuss)
Public relations and publicity are not synonymous but many PR campaigns include provisions for publicity. Publicity is the spreading of information to gain public awareness for a product, person, service, cause or organization, and can be seen as a result of effective PR planning.
[edit] Publics targeting
A fundamental technique used in public relations is to identify the target audience, and to tailor every message to appeal to that audience. It can be a general, nationwide or worldwide audience, but it is more often a segment of a population. Marketers often refer to economy-driven "demographics," such as "black males 18-49," but in public relations an audience is more fluid, being whoever someone wants to reach. For example, recent political audiences include "soccer moms" and "NASCAR dads." There is also a psychographic grouping based on fitness level, eating preferences, "adrenaline junkies," etc...
In addition to audiences, there are usually stakeholders, literally people who have a "stake" in a given issue. All audiences are stakeholders (or presumptive stakeholders), but not all stakeholders are audiences. For example, a charity commissions a PR agency to create an advertising campaign to raise money to find a cure for a disease. The charity and the people with the disease are stakeholders, but the audience is anyone who is likely to donate money.
Sometimes the interests of differing audiences and stakeholders common to a PR effort necessitate the creation of several distinct but still complementary messages. This is not always easy to do, and sometimes – especially in politics – a spokesperson or client says something to one audience that angers another audience or group of stakeholders.
[edit] Lobby groups
Lobby groups are established to influence government policy, corporate policy, or public opinion. An example of this is the American Israel Public Affairs Committee, AIPAC, which influences American foreign policy. Such groups claim to represent a particular interest and in fact are dedicated to doing so. When a lobby group hides its true purpose and support base it is known as a front group such as the Peace Now Organization. Moreover, governments may also lobby public relations firms in order to sway public opinion. A well illustrated example of this is the way civil war in Yugoslavia was portrayed. Governments of newly succeeded republics of Croatia and Bosnia invested heavily with American PR firms, so that the PR firms would give them a positive war image in the US.[9]
[edit] Spin Main article: Spin (public relations)
In public relations, "spin" is sometimes a pejorative term signifying a heavily biased portrayal in one's own favour of an event or situation. While traditional public relations may also rely on creative presentation of the facts, "spin" often, though not always, implies disingenuous, deceptive and/or highly manipulative tactics. Politicians are often accused of spin by commentators and political opponents, when they produce a counter argument or position.
The techniques of spin include selectively presenting facts and quotes that support one's position (cherry picking), the so- called "non-denial," phrasing in a way that assumes unproven truths, euphemisms for drawing attention away from items considered distasteful, and ambiguity in public statements. Another spin technique involves careful choice of timing in the release of certain news so it can take advantage of prominent events in the news. A famous reference to this practice occurred when British Government press officer Jo Moore used the phrase It's now a very good day to get out anything we want to bury, (widely paraphrased or misquoted as "It's a good day to bury bad news"), in an email sent on September 11, 2001. The furor caused when this email was reported in the press eventually caused her to resign.
[edit] Spin doctors
Skilled practitioners of spin are sometimes called "spin doctors," despite the negative connotation associated with the term. It is the PR equivalent of calling a writer a "hack." Perhaps the most well-known person in the UK often described as a "spin doctor" is Alastair Campbell, who was involved with Tony Blair's public relations between 1994 and 2003, and also played a controversial role as press relations officer to the British and Irish Lions rugby union side during their 2005 tour of New Zealand.
State-run media in many countries also engage in spin by selectively allowing news stories that are favorable to the government while censoring anything that could be considered critical. They may also use propaganda to indoctrinate or actively influence citizens' opinions. Privately run media also uses the same techniques of 'issue' versus 'non-issue' to spin its particular political viewpoints.
[edit] Meet and Greet
Many businesses and organizations will use a Meet and Greet as a method of introducing two or more parties to each other in a comfortable setting. These will generally involve some sort of incentive, usually food catered from restaurants, to encourage employees or members to participate.
There are opposing schools of thought as to how the specific mechanics of a Meet and Greet operate. The Gardiner school of thought states that unless specified as an informal event, all parties should arrive promptly at the time at which the event is scheduled to start. The Kolanowski school of thought, however, states that parties may arrive at any time after the event begins, in order to provide a more relaxed interaction environment.
[edit] Other
• Publicity events, pseudo-events, photo ops or publicity stunts. • The talk show circuit. A PR spokesperson (or his/her client) "does the circuit" by being interviewed on television and radio talk shows with audiences that the client wishes to reach. • Books and other writings. • Blogs . • After a PR practitioner has been working in the field for a while, he or she accumulates a list of contacts in the media and elsewhere in the public affairs sphere. This "Rolodex" becomes a prized asset, and job announcements sometimes even ask for candidates with an existing Rolodex, especially those in the media relations area of PR. • Direct communication (carrying messages directly to constituents, rather than through the mass media) with, e.g., newsletters – in print and e-letters. • Collateral literature, traditionally in print and now predominantly as web sites. • Speeches to constituent groups and professional organizations; receptions; seminars, and other events; personal appearances. • The slang term for a PR practitioner or publicist is a "flack" (sometimes spelled "flak"). • A DESK VISIT is where the PR person literally takes their product to the desk of the journalist in order to show them what they are promoting. • Astroturfing is the act of PR agencies placing blog and online forum messages for their clients, in the guise of a normal "grassroots" user or comment. • Online Social Media.
[edit] Politics and civil society
[edit] Defining the opponent
A tactic used in political campaigns is known as "defining one's opponent." Opponents can be candidates, organizations and other groups of people.
In the 2004 US presidential campaign, Howard Dean defined John Kerry as a "flip-flopper," which was widely reported and repeated by the media, particularly the conservative media. Similarly, George H.W. Bush characterized Michael Dukakis as weak on crime (the Willie Horton ad) and hopelessly liberal ("a card-carrying member of the ACLU"). In 1996, President Bill Clinton seized upon opponent Bob Dole's promise to take America back to a simpler time, promising in contrast to "build a bridge to the 21st century." This painted Dole as a person who was somehow opposed to progress.
In the debate over abortion, self-titled pro-choice groups, by virtue of their name, defined their opponents as "anti-choice", while self-titled pro-life groups refer to their opponents as "pro-abortion" or "anti-life".
[edit] Managing language
If a politician or organization can use an apt phrase in relation to an issue, such as in interviews or news releases, the news media will often repeat it verbatim, without questioning the aptness of the phrase. This perpetuates both the message and whatever preconceptions might underlie it. Often, something innocuous sounding can stand in for something greater; a "culture of life" sounds like general goodwill to most people, but will evoke opposition to abortion for many pro-life advocates. The phrase "States' rights" was used as a code for anti-civil rights legislation in the United States in the 1960s, and, allegedly, the 70s, and 80s.
[edit] Conveying the message
The method of communication can be as important as a message. Direct mail, robocalling, advertising and public speaking are used depending upon the intended audience and the message that is conveyed. Press releases are also used, but since many newspapers are folding, they have become a less reliable way of communicating, and other methods have become more popular.
Arts organizations have begun to rely more on their own websites and have developed a variety of unique approaches to publicity and public relations, on and off the web.[10]
The country of Israel has recently employed a series of Web 2.0 initiatives, including a blog,[11] MySpace page,[12] YouTube channel,[13] Facebook page[14] and a political blog to reach different audiences.[15] The Israeli Ministry of Foreign Affairs started the country's video blog as well as its political blog.[15] The Foreign Ministry held the first microblogging press conference via Twitter about its war with Hamas, with Consul David Saranga answering live questions from a worldwide public in common text-messaging abbreviations.[16] The questions and answers were later posted on IsraelPolitik, the country's official political blog.[17]
[edit] Front groups
One of the most controversial practices in public relations is the use of front groups – organizations that purport to serve a public cause while actually serving the interests of a client whose sponsorship may be obscured or concealed. Critics of the public relations industry, such as PR Watch, have contended that Public Relations involves a "multi-billion dollar propaganda-for-hire industry" that "concoct[s] and spin[s] the news, organize[s] phoney 'grassroots' front groups, sp[ies] on citizens, and conspire[s] with lobbyists and politicians to thwart democracy." [3].
Instances of the use of front groups as a PR technique have been documented in many industries. Coal mining corporations have created environmental groups that contend that increased CO2 emissions and global warming will contribute to plant growth and will be beneficial, trade groups for bars have created and funded citizens' groups to attack anti-alcohol groups, tobacco companies have created and funded citizens' groups to advocate for tort reform and to attack personal injury lawyers, while trial lawyers have created "consumer advocacy" front groups to oppose tort reform. [4] [5] [6]
Human resource management
Human resource management (HRM) is the strategic and coherent approach to the management of an organization's most valued assets - the people working there who individually and collectively contribute to the achievement of the objectives of the business.[1] The terms "human resource management" and "human resources" (HR) have largely replaced the term "personnel management" as a description of the processes involved in managing people in organizations.[1] In simple sense, HRM means employing people, developing their resources, utilizing, maintaining and compensating their services in tune with the job and organizational requirement. Features
Its features include:
• Organizational management • Personnel administration • Manpower management • Industrial management[2][3]
But these traditional expressions are becoming less common for the theoretical discipline. Sometimes even employee and industrial relations are confusingly listed as synonyms,[4] although these normally refer to the relationship between management and workers and the behavior of workers in companies.
The theoretical discipline is based primarily on the assumption that employees are individuals with varying goals and needs, and as such should not be thought of as basic business resources, such as trucks and filing cabinets. The field takes a positive view of workers, assuming that virtually all wish to contribute to the enterprise productively, and that the main obstacles to their endeavors are lack of knowledge, insufficient training, and failures of process.
Human Resource Management(HRM) is seen by practitioners in the field as a more innovative view of workplace management than the traditional approach. Its techniques force the managers of an enterprise to express their goals with specificity so that they can be understood and undertaken by the workforce, and to provide the resources needed for them to successfully accomplish their assignments. As such, HRM techniques, when properly practiced, are expressive of the goals and operating practices of the enterprise overall. HRM is also seen by many to have a key role in risk reduction within organizations.[5]
Synonyms such as personnel management are often used in a more restricted sense to describe activities that are necessary in the recruiting of a workforce, providing its members with payroll and benefits, and administrating their work-life needs. So if we move to actual definitions, Torrington and Hall (1987) define personnel management as being: “a series of activities which: first enable working people and their employing organisations to agree about the objectives and nature of their working relationship and, secondly, ensures that the agreement is fulfilled" (p. 49).
While Miller (1987) suggests that HRM relates to:
"...... those decisions and actions which concern the management of employees at all levels in the business and which are related to the implementation of strategies directed towards creating and sustaining competitive advantage" (p. 352).
[edit] Academic theory
The goal of human resource management is to help an organization to meet strategic goals by attracting, and maintaining employees and also to manage them effectively. The key word here perhaps is "fit", i.e. a HRM approach seeks to ensure a fit between the management of an organization's employees, and the overall strategic direction of the company (Miller, 1989).
The basic premise of the academic theory of HRM is that humans are not machines, therefore we need to have an interdisciplinary examination of people in the workplace. Fields such as psychology, industrial engineering, industrial, Legal/Paralegal Studies and organizational psychology, industrial relations, sociology, and critical theories: postmodernism, post-structuralism play a major role. Many colleges and universities offer bachelor and master degrees in Human Resources Management.
One widely used scheme to describe the role of HRM, developed by Dave Ulrich, defines 4 fields for the HRM function:[6]
• Strategic business partner • Change management • Employee champion • Administration
However, many HR functions these days struggle to get beyond the roles of administration and employee champion, and are seen rather as reactive than strategically proactive partners for the top management. In addition, HR organizations also have the difficulty in proving how their activities and processes add value to the company. Only in the recent years HR scholars and HR professionals are focusing to develop models that can measure if HR adds value.[7]
[edit] Business practice
Human resources management comprises several processes. Together they are supposed to achieve the above mentioned goal. These processes can be performed in an HR department, but some tasks can also be outsourced or performed by line-managers or other departments. When effectively integrated they provide significant economic benefit to the company.[8]
• Workforce planning • Recruitment (sometimes separated into attraction and selection) • Induction , Orientation and Onboarding • Skills management • Training and development • Personnel administration • Compensation in wage or salary • Time management • Travel management (sometimes assigned to accounting rather than HRM) • Payroll (sometimes assigned to accounting rather than HRM) • Employee benefits administration • Personnel cost planning • Performance appraisal
[edit] Careers and education Cornell University's School of Industrial and Labor Relations was the world's first school for college-level study in HRM
The sort of careers available in HRM are varied. There are generalist HRM jobs such as human resource assistant. There are careers involved with employment, recruitment and placement and these are usually conducted by interviewers, EEO (Equal Employment Opportunity) specialists or college recruiters. Training and development specialism is often conducted by trainers and orientation specialists. Compensation and benefits tasks are handled by compensation analysts, salary administrators, and benefits administrators.
Several universities offer programs of study pertaining to HRM and broader fields. Cornell University created the world's first school for college-level study in HRM (ILR School).[9] University of Illinois at Urbana-Champaign also now has a school dedicated to the study of HRM, while several business schools also house a center or department dedicated to such studies; e.g., University of Minnesota, Michigan State University, Ohio State University, and Purdue University.
[edit] Professional organizations
Professional organizations in HRM include the Society for Human Resource Management, the Australian Human Resources Institute (AHRI), the Chartered Institute of Personnel and Development (CIPD), the International Public Management Association for HR (IPMA-HR), Management Association of Nepal (MAN) and the International Personnel Management Association of Canada (IPMA-Canada), Human Capital Institute (HCI)
[edit] Functions
The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding what staffing needs you have and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation, employee records and personnel policies. Usually small businesses (for-profit or nonprofit) have to carry out these activities themselves because they can't yet afford part- or full-time help. However, they should always ensure that employees have—and are aware of—personnel policies which conform to current regulations. These policies are often in the form of employee manuals, which all employees have.
Note that some people distinguish a difference between HRM (a major management activity) and HRD (Human Resource Development, a profession). Those people might include HRM in HRD, explaining that HRD includes the broader range of activities to develop personnel inside of organizations, including, eg, career development, training, organization development, etc.
There is a long-standing argument about where HR-related functions should be organized into large organizations, eg, "should HR be in the Organization Development department or the other way around?"
The HRM function and HRD profession have undergone tremendous change over the past 20–30 years. Many years ago, large organizations looked to the "Personnel Department," mostly to manage the paperwork around hiring and paying people. More recently, organizations consider the "HR Department" as playing a major role in staffing, training and helping to manage people so that people and the organization are performing at maximum capability in a highly fulfilling manner.
Financial management
Financial management may refer to:
• Managerial finance , the branch of finance that concerns itself with the managerial significance of finance techniques • Corporate finance , an area of finance dealing with the corporate financial decisions
Managerial finance is the branch of finance that concerns itself with the managerial significance of finance techniques. It is focused on assessment rather than technique.
The difference between a managerial and a technical approach can be seen in the questions one might ask of annual reports. One concerned with technique would be primarily interested in measurement. They would ask: are moneys being assigned to the right categories? Were generally accepted accounting principles GAAP followed?
One concerned with management though would want to know what the figures mean.
• They might compare the returns to other businesses in their industry and ask: are we performing better or worse than our peers? If so, what is the source of the problem? Do we have the same profit margins? If not why? Do we have the same expenses? Are we paying more for something than our peers? • They may look at changes in asset balances looking for red flags that indicate problems with bill collection or bad debt. • They will analyze working capital to anticipate future cash flow problems.
Managerial finance is an interdisciplinary approach that borrows from both managerial accounting and corporate finance.
The Role of Managerial Accounting
To interpret financial results in the manner described above, managers use Financial analysis techniques.
Managers also need to look at how resources are allocated within an organization. They need to know what each activity costs and why. These questions require managerial accounting techniques such as activity based costing.
Managers also need to anticipate future expenses. To get a better understanding of the accuracy of the budgeting process, they may use variable budgeting.
[edit] The Role of Corporate Finance
Managerial finance is also interested in determining the best way to use money to improve future opportunities to earn money and minimize the impact of financial shocks. To accomplish these goals managerial finance uses the following techniques borrowed from Corporate finance:
• Valuation • Portfolio theory • Hedging • Capital structure
Purchasing management directs the flow of goods and services in a company and handles all data relating to contact with suppliers. Effective purchasing management requires knowledge of the supply chain, business and tax laws, invoice and inventory procedures, and transportation and logistics issues. Although a strong knowledge of the products and services to be purchased is essential, purchasing management professionals must also be able to plan, execute, and oversee purchasing strategies that are conducive to company profitability.
Sourcing reliable suppliers is a crucial part of purchasing management. Purchasing managers, agents, and buyers usually learn about new products and services from Internet searches, trade shows, and conferences. They meet with potential suppliers in their plants whenever possible. Skills in foreign languages may be helpful for sourcing suppliers in other countries. Purchasing management professionals must always assess potential suppliers in terms of the supplier's ability to deliver quality merchandise at a suitable price on time.
Purchasing management professionals must be good negotiators, understand technical product information, have good mathematical ability, understand spreadsheet software, understand marketing methodology, and be outstanding decision makers. Increased responsibilities in purchasing management require good leadership skills, and higher positions often require a master's degree in a business related subject. Entry level purchasing management positions such as junior buyers, assistant buyers, and purchasing clerks, often require a college degree and some product knowledge.
Larger distributors may require a bachelor's degree for entry level purchasing management positions. Training and learning typically start in sales, then supervision, and invoice and stock monitoring. Professional purchasing management designations include Certified Purchasing Professional (CPP) in the United States, and Certified Professional Purchaser (CPP) in Canada.
Purchasing managers, buyers, and materials managers control budgets, manage staff, and may analyze procurement methods as well as negotiate supplier contracts. Purchasing management professionals must understand tax laws, purchasing trends, ethics, and global outsourcing issues. Buyers and purchasing agents usually deal specifically with purchasing tasks, while purchasing managers usually supervise others, including purchasing agents. However, titles and duties vary greatly between industries and employers. Buyers often have assistants to place orders and keep track of delivery details.
Buyers need the ability to select products that consumers will want to buy, so they need to understand trends as well as economic conditions that affect consumer buying decisions. Buyers employed in small stores may be responsible for purchasing the store's entire inventory, while buyers working for larger operations may focus on a few product lines.
A Purchasing Manager is an employee within a company, business or other organization who is responsible at some level for buying or approving the acquisition of goods and services needed by the company. The position responsibilities may be the same as that of a buyer or purchasing agent, or may include wider supervisory or managerial responsibilities. A Purchasing Manager may oversee the acquisition of materials needed for production, general supplies for offices and facilities, equipment, or construction contracts. A Purchasing Manager often supervises purchasing agents and buyers, but in small companies the Purchasing Manager may also be the purchasing agent or buyer.
A Purchasing Manager's responsibilities may include:
• seeking reliable vendors or suppliers to provide quality goods at reasonable prices • negotiating prices and contracts • reviewing technical specifications for raw materials, components, equipment or buildings • determining quantity and timing of deliveries (more commonly in small companies)
Marketing management is a business discipline which is focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities. Rapidly emerging forces of globalization have compelled firms ot market beyond the borders of their home country making Internatioanl Marketing highly significant and an integral part of a firm's marketing strategy.[1] Marketing managers are often responsible for influencing the level, timing, and composition of customer demand accepted definition of the term. In part, this is because the role of a marketing manager can vary significantly based on a business' size, corporate culture, and industry context. For example, in a large consumer products company, the marketing manager may act as the overall general manager of his or her assigned product [2]
From this perspect It consists of 5 steps, beginning with the market & environment research. After fixing the targets and setting the strategies, they will be realised by the marketing mix in step 4. The last step in the process is the marketing controlling.]] Marketing managemerketing strategy]] and design effective, cost-efficient implementation programs, firms must possess a detailed, objective understanding of their own business and the market in which they operate.[3] In analyzing these issues, the discipline of marketing management often overlaps with the related discipline of strategic planning. Traditionally, marketing analysis was structured into three areas: Customer analysis, Company analysis, and Competitor analysis (so-called "3Cs" analysis). More recently, it has become fashionable in some marketing circles to divide these further into certain five "Cs": Customer analysis, Company analysis, Collaborator analysis, Competitor analysis, and analysis of the industry Context.
Department analysis is to develop a schematic diagram for market segmentation, breaking down the market into various constituent groups of customers, which are called customer segments or market segmentations. Marketing managers work to develop detailed profiles of each segment, focusing on any number of variables that may differ among the segments: demographic, psychographic, geographic, behavioral, needs-benefit, and other factors may all be examined. Marketers also attempt to track these segments' perceptions of the various products in the market using tools such as perceptual mapping.
In company analysis, marketers focus on understanding the company's cost structure and cost position relative to competitors, as well as working to identify a firm's core competencies and other competitively distinct company resources. Marketing managers may also work with the accounting department to analyze the profits the firm is generating from various product lines and customer accounts. The company may also conduct periodic brand audits to assess the strength of its brands and sources of brand equity.[4]
The firm's collaborators may also be profiled, which may include various suppliers, distributors and other channel partners, joint venture partners, and others. An analysis of complementary products may also be performed if such products exist.
Marketing management employs various tools from economics and competitive strategy to analyze the industry context in which the firm operates. These include Porter's five forces, analysis of strategic groups of competitors, value chain analysis and others.[5] Depending on the industry, the regulatory context may also be important to examine in detail.
In Competitor analysis, marketers build detailed profiles of each competitor in the market, focusing especially on their relative competitive strengths and weaknesses using SWOT analysis. Marketing managers will examine each competitor's cost structure, sources of profits, resources and competencies, competitive positioning and product differentiation, degree of vertical integration, historical responses to industry developments, and other factors.
Marketing management often finds it necessary to invest in research to collect the data required to perform accurate marketing analysis. As such, they often conduct market research (alternately marketing research) to obtain this information. Marketers employ a variety of techniques to conduct market research, but some of the more common include:
• Qualitative marketing research , such as focus groups • Quantitative marketing research , such as statistical surveys • Experimental techniques such as test markets • Observational techniques such as ethnographic (on-site) observation
Marketing managers may also design and oversee various environmental scanning and competitive intelligence processes to help identify trends and inform the company's marketing analysis.
Marketing strategy Main article: Marketing strategy
Once the company has obtained an adequate understanding of the customer base and its own competitive position in the industry, marketing managers are able to make key strategic decisions and develop a marketing strategy designed to maximize the revenues and profits of the firm. The selected strategy may aim for any of a variety of specific objectives, including optimizing short-term unit margins, revenue growth, market share, long-term profitability, or other goals. To achieve the desired objectives, marketers typically identify one or more target customer segments which they intend to pursue. Customer segments are often selected as targets because they score highly on two dimensions: 1) The segment is attractive to serve because it is large, growing, makes frequent purchases, is not price sensitive (i.e. is willing to pay high prices), or other factors; and 2) The company has the resources and capabilities to compete for the segment's business, can meet their needs better than the competition, and can do so profitably.[3] In fact, a commonly cited definition of marketing is simply "meeting needs profitably." [6]
The implication of selecting target segments is that the business will subsequently allocate more resources to acquire and retain customers in the target segment(s) than it will for other, non-targeted customers. In some cases, the firm may go so far as to turn away customers that are not in its target segment.The doorman at a swanky nightclub, for example, may deny entry to unfashionably dressed individuals because the business has made a strategic decision to target the "high fashion" segment of nightclub patrons.
In conjunction with targeting decisions, marketing managers will identify the desired positioning they want the company, product, or brand to occupy in the target customer's mind. This positioning is often an encapsulation of a key benefit the company's product or service offers that is differentiated and superior to the benefits offered by competitive products.[7] For example, Volvo has traditionally positioned its products in the automobile market in North America in order to be perceived as the leader in "safety", whereas BMW has traditionally positioned its brand to be perceived as the leader in "performance."
Ideally, a firm's positioning can be maintained over a long period of time because the company possesses, or can develop, some form of sustainable competitive advantage.[8] The positioning should also be sufficiently relevant to the target segment such that it will drive the purchasing behavior of target customers.[7]
[edit] Implementation planning Main article: Marketing plan
The Marketing Metrics Continuum provides a framework for how to categorize metrics from the tactical to strategic.
After the firm's strategic objectives have been identified, the target market selected, and the desired positioning for the company, product or brand has been determined, marketing managers focus on how to best implement the chosen strategy. Traditionally, this has involved implementation planning across the "4Ps" of marketing: Product management, Pricing, Place (i.e. sales and distribution channels), and Promotion.
Taken together, the company's implementation choices across the 4Ps are often described as the marketing mix, meaning the mix of elements the business will employ to "go to market" and execute the marketing strategy. The overall goal for the marketing mix is to consistently deliver a compelling value proposition that reinforces the firm's chosen positioning, builds customer loyalty and brand equity among target customers, and achieves the firm's marketing and financial objectives. In many cases, marketing management will develop a marketing plan to specify how the company will execute the chosen strategy and achieve the business' objectives. The content of marketing plans varies from firm to firm, but commonly includes:
• An executive summary • Situation analysis to summarize facts and insights gained from market research and marketing analysis • The company's mission statement or long-term strategic vision • A statement of the company's key objectives, often subdivided into marketing objectives and financial objectives • The marketing strategy the business has chosen, specifying the target segments to be pursued and the competitive positioning to be achieved • Implementation choices for each element of the marketing mix (the 4Ps)
[edit] Project, process, and vendor management
Once the key implementation initiatives have been identified, marketing managers work to oversee the execution of the marketing plan. Marketing executives may therefore manage any number of specific projects, such as sales force management initiatives, product development efforts, channel marketing programs and the execution of public relations and advertising campaigns. Marketers use a variety of project management techniques to ensure projects achieve their objectives while keeping to established schedules and budgets.
More broadly, marketing managers work to design and improve the effectiveness of core marketing processes, such as new product development, brand management, marketing communications, and pricing. Marketers may employ the tools of business process reengineering to ensure these processes are properly designed, and use a variety of process management techniques to keep them operating smoothly.
Effective execution may require management of both internal resources and a variety of external vendors and service providers, such as the firm's advertising agency. Marketers may therefore coordinate with the company's Purchasing department on the procurement of these services.
[edit] Organizational management and leadership
Marketing management may spend a fair amount of time building or maintaining a marketing orientation for the business. Achieving a market orientation, also known as "customer focus" or the "marketing concept", requires building consensus at the senior management level and then driving customer focus down into the organization. Cultural barriers may exist in a given business unit or functional area that the marketing manager must address in order to achieve this goal. Additionally, marketing executives often act as a "brand champion" and work to enforce corporate identity standards across the enterprise.
In larger organizations, especially those with multiple business units, top marketing managers may need to coordinate across several marketing departments and also resources from finance, research and development, engineering, operations, manufacturing, or other functional areas to implement the marketing plan. In order to effectively manage these resources, marketing executives may need to spend much of their time focused on political issues and inte-departmental negotiations.
The effectiveness of a marketing manager may therefore depend on his or her ability to make the internal "sale" of various marketing programs equally as much as the external customer's reaction to such programs.[6]
[edit] Reporting, measurement, feedback and control systems
Marketing management employs a variety of metrics to measure progress against objectives. It is the responsibility of marketing managers – in the marketing department or elsewhere – to ensure that the execution of marketing programs achieves the desired objectives and does so in a cost-efficient manner. Marketing management therefore often makes use of various organizational control systems, such as sales forecasts, sales force and reseller incentive programs, sales force management systems, and customer relationship management tools (CRM). Recently, some software vendors have begun using the term "marketing operations management" or "marketing resource management" to describe systems that facilitate an integrated approach for controlling marketing resources. In some cases, these efforts may be linked to various supply chain management systems, such as enterprise resource planning (ERP), material requirements planning (MRP), efficient consumer response (ECR), and inventory management systems.
Measuring the return on investment (ROI) of and marketing effectiveness various marketing initiatives is a significant problem for marketing management. Various market research, accounting and financial tools are used to help estimate the ROI of marketing investments. Brand valuation, for example, attempts to identify the percentage of a company's market value that is generated by the company's brands, and thereby estimate the financial value of specific investments in brand equity. Another technique, integrated marketing communications (IMC), is a CRM database-driven approach that attempts to estimate the value of marketing mix executions based on the changes in customer behavior these executions generate.[9]