ENGINEERING MANAGEMENT What Engineering Managers do?

What is Engineering? ✓ Management of technical functions

✓ Management of (other) functions in a
The profession in which a knowledge of the
high-technology enterprise
mathematical and natural science gained by
study, and experience, and practice is applied Management
with judgments to develop ways to utilize,
Is the process of working with people and
economically, the materials and forces of nature
resources to accomplish organizational goals.
for the benefit of mankind (1979, US,
Good managers do those things both effectively
Engineering Societies)
and efficiently.
What is Management?
Effective
A set of activities (including planning, decision
✓ To be effective is to achieve
making, organizing, leading and control) directed
organizational goals.
at an organization’s resources (human, financial,
✓ Accomplish tasks that help fulfill
physical, and informational) with the aim of
organizational objectives (make the right
achieving organizational goals in an efficient and
decisions and successfully carry them
effective manner.
out to accomplish the organizational
Management is …… goal)
✓ Do those work activities that will help
✓ Getting things done through people.
the organization reach its goals.
✓ The process of achieving organizational
✓ “Doing the right things.”
goals by engaging in the four major
✓ Concern with ends (result) of
functions of planning and decision-
organizational goal achievement
making, organizing and staffing,
directing/ leading, and controlling Efficient
✓ Identifying a group of people whose job
✓ To be efficient is to achieve goals with
is to direct the effort and activities of
minimal waste of resources – that is, to
other people towards a common
make the best possible use of money,
organizational objective.
time, materials, and people.
✓ the performance of achieving desired
✓ Getting work done with a minimum
results by means of group effort
effort, expense, or waste (use of
consisting of utilizing resources, that will
resources – people, money, raw
determine the success and failure of an
materials – wisely and cost effectively)
organization.
✓ Getting the most output from the least
What is Engineering Management? amount of inputs
✓ “Doing things right.”
✓ Direct supervision of engineers and/or
✓ Concern with means (ways) of getting
the engineering function
things done.
✓ Application of quantitative methods and
engineering techniques to the practice
of management.
The Four Management Functions Four Different Levels of Managers

PLANNING TOP LEVEL

Is specifying the goals to be achieved and ✓ Are the organization’s senior executives
deciding in advance the appropriate actions and are responsible for its overall
needed to achieve those goals. management.

Planning activities include: MIDDLE-LEVEL

✓ Analyze current situations. ✓ Managers located in the middle layers of

✓ Anticipate the future. the organizational hierarchy, reporting to
✓ Determine objectives. the top-level executives.
✓ Decide on what actions to engage in
FRONTLINE
✓ Chose a business strategy.
✓ Determine resources to achieve goals. ✓ Lower-level managers who supervise the
operational activities of the
ORGANIZING
organization.
Is assembling and coordinating the human,
TEAM LEADER
financial, physical, informational, and other
resources needed to achieve goals. Organizing ✓ Employees who are responsible for
activities include attracting people to the facilitating successful team
organization, specifying job responsibilities, performance.
grouping jobs into work units, marshalling, and
allocating resources, and creating conditions so Managers need three Broad Skills
that people and things work together to achieve ✓ Technical Skill
maximum success. ✓ Conceptual and Decision Skills
LEADING ✓ Interpersonal and Communication Skills

Leading is stimulating people to be high EVOLUTION OF MANAGEMENT

performers. It includes motivating and CLASSICAL APPROACHES
communicating with employees, individually and
in groups. Leaders maintain close day today Systematic Management
contact with people, guiding and inspiring them The systematic management approach
toward achieving team and organizational goals. attempted to build specific procedures and
Leading takes place in teams, departments, and processes into operations to ensure coordination
divisions, as well as at the tops of large of effort, will engage, choosing corporate and
organizations. business strategies, and determining the
CONTROLLING resources needed to achieve the organization’s
goals.
Is about monitoring performance and making
necessary changes in a timely manner, by These goals were achieved through.
controlling, managers make sure the ✓ Careful definition of duties and
organization’s resources are being used as responsibilities.
planned and the organization is meeting its goals
for quality and safety.
 ✓ Standardized techniques for performing 4. Ownership – Managers, not owners,
these duties. should run the organization.
✓ Specific means of gathering, handling, 5. Rules and Controls – impersonal rules
transmitting, and analyzing information. should be applied consistently and fairly.
✓ Cost accounting, wage, and production
Administrative Management
control systems to facilitate internal
coordination and communications. The administrative management approach
emphasized the perspective of senior managers
Scientific Management
within the organization and argued that
This approach is advocated the application of management was a profession and could be
scientific methods to analyze work and to taught.
determine how to complete production tasks
Fayol’s 14 Principles of Management
efficiently.
1. Division of Work – Divide Work into
Taylor identified four principles of scientific
specialized tasks and assign
management.
responsibilities to specific individuals.
1. Management should develop a precise, 2. Authority – delegate authority along
scientific approach for each element of with responsibility.
one’s work to replace general guidelines. 3. Discipline – make expectations clear and
2. Management should scientifically select, punish violations.
train, teach, and develop each worker so 4. Unity of Command – each employee
that the right person hast the right job. should be assigned to only one
3. Management should cooperate with supervisor.
workers to ensure that jobs match plans 5. Unity of Direction – employees’ efforts
and principles. should be focused on achieving
4. Management should ensure an organizational objectives.
appropriate division of work and 6. Subordination of individual interest to
responsibility between managers and the general interest – the general
workers. interest must be predominated.
7. Renumeration – systematically reward
BUREAUCRACY
efforts that support organization’s
A classical management approach emphasizing a direction.
structured, form network of relationship among 8. Centralization – determine the relative
specialized positions in the organization. importance of superior and subordinate
roles.
Characteristics of an Effective Bureaucracy 9. Scalar Chain – keep communications
1. Division of labor – Tasks, assignments, within the chain of command.
and authority are clearly specified. 10. Order – orders job and materials so they
2. Authority - A chain of command or support the organization’s direction.
hierarchy is well established. 11. Equity – fair discipline and order
3. Qualifications – employees are selected enhance employee commitment.
and promoted based on their 12. Stability and tenure of personnel –
qualifications. promote employee loyalty and longevity.
 13. Initiative – encourage employees to act
on their own in support of the
organization’s direction.
14. Esprit de Corps – promote a unity of
interests between employees and
management.

Human Relations

A classical management approach that

attempted to understand and explain how Organizational Behavior
human psychological and social processes A contemporary management approach that
interact with the formal aspects of the work studies and identifies management activities
situation to influence performance. that promote employee effectiveness by
Hawthorne Effect examining the complex and dynamic nature of
individual, group, and organizational processes.
The researchers concluded that the workers
performed and reacted differently because the The revised perspective, known as organizational
researchers were observing them. behavior, studies and identifies management
activities that promote employee effectiveness
CONTEMPORARY APPROACHES through an understanding of the complex nature
of individual, group, and organizational
Sociotechnical Systems Theory
processes. Organizational behavior draws from a
An approach to job design that attempts to variety of disciplines, including psychology and
redesign tasks to optimize operation of a new sociology, to explain the behavior of people on
technology while preserving employees’ the job.
interpersonal relationships and other human
Quantitative Management
aspects of the work.
A contemporary management approach that
While research on sociotechnical systems theory
emphasizes the application of quantitative
was a precursor to the total quality management
analysis to managerial decisions and problems.
(TQM) movement, it also promoted the use of
teamwork and semiautonomous work groups as Quantitative management helps a manager
important factors for creating efficient decide by developing formal mathematical
production systems. The researchers believed models of the problem. Computers facilitated
that workers should be given the freedom to the development of specific quantitative
correct problems at early stages of the methods. These include such techniques as
production process rather than after products statistical decision theory, linear programming,
were made, when errors would create waste. queuing theory, simulation, forecasting,
inventory modeling, network modeling and
breakeven analysis. Organizations apply these
techniques in many areas including production,
quality control, marketing, human resources,
finance, distribution, planning, and research and
development.
Systems Theory We will consider five of these:

A theory that an organization is a managed that 1. Universalism

changes inputs into outputs. 2. Egoism
3. Utilitarianism
4. Relativism
5. Virtue ethics

These major ethical systems underlie personal

moral choices and ethical decisions in business.

Universalism

ETHICS AND CORPORATE RESPONSIBILITIES According to universalism, all people should

uphold certain values, such as honesty and other
values that society needs to function. Universal
FIVE PERSPECTIVES OF ETHICS values are principles so fundamental to human
existence that they are important in all societies
The aim of ethics is to identify both the rules that – for example, rules against murder, deceit,
should govern people’s behavior and the “goods” torture, and oppression.
that are worth seeking. Ethical decisions are
Egoism
guided by the underlying values of the individual.
Values are principles of conduct such as caring, According to egoism, individual self-interest is
being honest, keeping promises, pursuing the actual motive of all conscious action. “Doing
excellence, showing loyalty, being fair, acting the right thing.” The focus of moral philosophy is
with integrity, respecting others, and being a defined by egoism as “do the act that promotes
responsible citizen. the greatest good for oneself.” If everyone
follows this system, according to its proponents,
An ethical issue is a situation, problem, or
the well-being of society should increase.
opportunity in which an individual must choose
among several actions that must be evaluated as Utilitarianism
morally right or wrong.
Utilitarianism directly seeks the greatest good for
Business Ethics comprises the moral principles the greatest number of people.
and standards that guide behavior in the world
of business. Relativism

Moral Philosophy refers to the principles, rules, Relativism defines ethical behavior based on the
and values people use in deciding what is right or opinions and behaviors of relevant other people.
wrong. This seems to be a simple definition but Relativism acknowledges the existence of
often becomes terribly complex and difficult different ethical viewpoints. For example, norms,
when facing real choices. How do you decide or standards of expected and acceptable
what is right or wrong? Do you know what behavior, vary from one culture to another. A
criteria you apply and how you apply them? recent study fund that the perceived
Ethics scholars point to various major ethical effectiveness of whistleblowing – telling others,
systems as guides. inside and outside the organization, about
wrongdoing – differs across cultures.
Virtue Ethics decisions are evaluated and made on the basis of
right and wrong.
Virtue Ethics is a perspective that goes beyond
the conventional rules of society by suggesting MANAGERS BEHAVIOR AND ETHICAL DECISIONS
that what is moral must also come from what a
People often give in to what they perceive to be
mature person with good “moral character”
the pressures or preferences of powerful others.
would deem right.
In the workplace, that means managers
BUSINESS ETHICS influence their employees for good or for ill.
Managers formally and informally shape
Business Ethics refers to the standard for morally
employees’ behavior with money, approval,
right and wrong conduct in business. Law
good job assignments, a positive work
partially defines the conduct, but “legal” and
environment, and in many other ways.
“ethical” aren’t necessarily the same.
Ethical Leadership
3 Reasons why Business Ethics Matters
It’s been said that your reputation is your most
1. Business Ethics is an essential skill.
precious asset. Here’s a suggestion: set a goal for
2. Business ethics drives employee
yourself to be seen by others as both a “moral
behavior.
person” and as a “moral manager” someone
3. Business ethics benefits the bottom line.
who influences others to behave ethically.
Ethical Dilemmas
Ethical leader one who is both a moral person
An ethical dilemma (ethical paradox or moral and a moral manager influencing others to
dilemma) is a problem in which in the decision- behave ethically.
making process between two possible options,
Ethics Codes
neither of which is acceptable from an ethical
perspective. Although we face many ethical and To make ethics code effective, apply the
moral problems in our lives, most of them come following principles:
with relatively straightforward solutions.
✓ Involve those who must live with the
Ethics and the Law code writing in it.
✓ Focus on real-life situations that
Ethics are rules of conduct. Laws are rules
employees can relate to.
developed by the governments to provide
✓ Keep it short and simple, so it is easy to
balance in society and protection to its citizens.
understand and remember.
Ethics comes form people’s awareness of what is
✓ Write about values and shared beliefs
right and wrong. Laws are enforced by
that are important and that people can
government to their people.
believe in.
The Ethical Climate influences employees ✓ Set the tone at the top, having
executives talk about and live up to the
Ethics are not shaped only by laws and by statement.
individual development and virtue. They also
may be influenced by the company’s work
environment. The ethical climate of an
organization refers to the process by which
Ethics Programs
Corporate ethics programs commonly include
formal ethics codes articulating the company’s
expectations regarding ethics committees that
develop policies, evaluate actions, and
investigate violations: ethics communication
systems giving employees a means of reporting
problems or getting guidelines: ethics officers or
ombudspersons who investigate allegations and
provide education; ethics training programs: and
disciplinary processes for addressing unethical
Outcomes of unethical decisions
behavior.

Compliance-based ethics programs company

mechanisms typically designed by corporate
counsel to prevent, detect, and punish legal
violations.

Integrity-based ethics programs company

mechanisms designed to instill in people a
personal responsibility for ethical behavior.

Making ethical decisions takes three things:

1. Moral awareness – realizing the issue

has ethical implications. Ethics requires Courage.
2. Moral judgement – knowing what
Behaving ethically requires not just moral
actions are morally defensible.
awareness and moral judgement but also moral
3. Moral character - the strength and
character, including the courage to take actions
persistence to act in accordance with
consistent with your ethical decisions. Think
your ethics despite the challenges.
about how hard it can be to do the right thing.
The philosophe John Rawls created a thought
CORPORATE SOCIAL RESPONSIBILITY
experiment based in the “veil of ignorance.”
According to Caroll’s four part model of
Veil of ignorance a moral reasoning device
corporate social responsibility and Buchholtz,
designed to promote impartial decision making
2003, corporate social responsibility is defined
by denying decision makers access to potentially
as the economic, legal, ethical and discretionary
biasing information about who will benefit most
expectations that society has of organizations at
or least from the available options.
a given point in time.

The idea is that a business should give back to the

community and think about how its actions will
affect society and the environment. This has a
number of common advantages, including
increased community support, branding, and
costumer loyalty, lower costs, lower waste, and
The ethical decision-making process
improved employee productivity, engagement, consumers who seek investments that not only
talent acquisition, and retention. are profitable but also contribute to the welfare
of society and the environment.
Four Levels of corporate social responsibility
Socially responsible companies should adopt
1. Economic Responsibilities
policies that promote the well-being of society
Be profitable and do what is required by
and the environment while lessening negative
global capitalism.
impacts on them.
2. Legal Responsibilities
Obey the law and do what is required by Companies can act in many ways, such as by
the global stakeholders. promoting volunteering, making changes that
3. Ethical Responsibilities benefits the environment, engaging in ethical
Be ethical and do what is expected by labor practices, and engaging in charitable giving.
global stakeholders.
THE NATURAL ENVIRONMENT
4. Philanthropic Responsibilities
Be a good global corporate citizen and do Economic Activities has Environmental
what is desired by the global Consequences
stakeholders.
Environmental Activities
A transcendent education has five goals that
balance self-interest with responsibility to Are those activities that are based on the
others: production, distribution, exchange, and
consumption of goods and services. Economic
1. Empathy activities are carried out by human beings to
Feeling your decisions as potential earn their income and to acquire wealth. For
victims might feel them, to gain wisdom. example, a trader, and agriculturist, a
2. Generativity manufacturer, a doctor, a teacher, and laborers
Learning how to give as well as take, to working in a factor are all examples of economic
others in the present as well as to future activities. These activities are performed by
generations. people to earn their livelihood and to acquire
3. Mutuality wealth.
Viewing success not merely as personal
gain, but a common victory. The fundamental source of risk in modern
4. Civil aspiration society are the excessive production of hazards
Thinking not just in terms of “don’ts” (lie, and ecologically unsustainable consumption of
cheat, steal, kill) but also in terms of natural resources. Risk has proliferated through
positive contributions. population explosion, industrial pollution, and
5. Intolerance of Ineffective Humanity environmental degradation.
Speaking out against unethical actions. Industrial Pollution
Do business really have a social responsibility? Risks include air pollution, global warming,
Social responsibility means that business, in ozone depletion, acid rain, toxic waste sites,
addition to maximizing shareholder value, must nuclear hazards, obsolete weapon arsenals,
act in a manner benefiting society, not just the industrial accidents, and hazardous products.
bottom line. Social responsibility has become
increasingly important to investors and
Development can be sustainable. The Planning Process

Ecocentric Management

Has as its goal the creation of sustainable

economic development and improvement of
quality of life worldwide for all organizational
stakeholders.

Sustainable Grow

Is the economic growth and development that

meet present needs without harming the needs
of the future generations.

What is Planning?

Planning is the conscious, systematic process of

making decisions about goals and activities that
an individual, group, work unit, or organization
will pursue in the future.

Step 1: Analyze the situation.

Life Cycle Analysis (LCA) Planners should gather, interpret, and

summarize all information relevant to the
A process of analyzing all inputs and outputs, planning issue in question. They study past
through the entire “cradle-to-grave” life of a events, examine current conditions, and try to
product, to determine total environmental forecast future trends.
impact.
S – Specific
STRATEGIC PLANNING AND DECISION MAKING
M – Measurable
Strategic planning and decision-making are the
process of charting a course based on long-term A – Attainable
goals and a longer-term vision. By clarifying your
R – Relevant
company's big picture aims, you will have the
opportunity to align your shorter-term plans T – Time Bound
with this deeper, broader mission giving your
Step 2: Generate Alternative Goals and Plans
operations clarity and consistency.
Various types of Plans

Single-use plans are designed to achieve a set of

goals that are not likely to be repeated in the
future. A single-use plan is meant to solve one
problem and then be discarded.

Standing plans focus on ongoing activities

designed to achieve an enduring set of goals. It
contributes to coordinate in the business, as they Three major types of Plans
bring about consistency and unity.
Strategic
Contingency plans specify actions to take when
is a process in which an organization's leaders
a company’s initial plans have not worked well or
define their vision for the future and identify
events in the external environment require a
their organization's goals and objectives.
sudden change. A business contingency plan can
mitigate risk and help you get back to business as Tactical
usual as quickly as possible.
translates broad strategic goals and plans into
Step 3: Evaluate Goals and Plans specific goals and plans relevant to a particular
portion of the organization, often a functional
Next managers evaluate the advantages,
area such as marketing or human resources.
disadvantages, and potential effects of each
alternative goal and plan. They must prioritize Operational
the goals and even eliminate some of them. Also,
managers consider how well alternative plans identifies the specific procedures and processes
meet high priority goals, considering the cost of required at lower levels of the organization.
each initiative and likely investment return. Tactical and Operational Planning support the
Step 4: Select Goals and Plans Strategy.

Once managers have assessed the goals and The organization’s strategic goals and plans serve
plans, they select the most appropriate and as the foundation for planning by middle-level
feasible alternative. The evaluation and frontline managers. shows that as goals
process identifies the priorities and trade- and plans move from the strategic level to the
offs among the goals and plans. tactical level and then to the operational level,
they become more specific and involve shorter
Step 5: Implement the Goals and Plans time periods.
Once managers have selected the goals and
plans, they must implement them. Proper
implementation is key to achieving goals.
Managers and employees must understand the
plan, Have the resources to implement it, and be
motivated to do so.

Step 6: Monitor and Control Performance

Monitoring and Controlling is essential without

it, you would never know whether your plan is
Why is Alignment important?
succeeding. Managers must continually monitor
the actual performance of their work units To be fully effective, the organization’s strategic,
against the unit’s goals and plans. tactical, and operational goals and plans must
be aligned—that is, they must be consistent,
mutually supportive, and focused on achieving
the common purpose and direction. Whole
Foods Market, for example, links its tactical and
operational planning directly to its strategic Goal
planning. The strategic goal of Whole Foods is
The goal of planning is to achieve specific goals.
“to sell the highest-quality products that also
It specifies a key line of action for achieving
offer high value for our customers.”
objectives. All divisions of an organization’s
Strategic Planning Process activities should be focused on the execution of
plans.
is the process of documenting and establishing
the direction of your small business—by Second, analyze external opportunities and
assessing both where you are and where you’re threats.
going.
Stakeholders
Strategic Management
Are groups and individuals who affect and are
Strategic management involves managers from affected by achievement of the organization’s
all parts of the organization in the formulation mission, goals, and strategies.
and implementation of strategic goals and
Third, analyze internal strengths and
strategies.
weaknesses.
The Strategic Planning Process
Several Components of internal resource
Establish – First establish a Mission, Vision, and
Human Resource Assessment
Goals
Examines strengths and weaknesses of all
Analyze External – Second, analyze external
levels of managers and employees and focuses
opportunities and threats.
on key human resources activities, including
Analyze Internal – Third, analyze internal recruitment, selection, placement, training,
strengths and weaknesses. labor (union) relationships, compensation,
promotion, appraisal, quality of work life, and
Conduct – fourth, conduct a SWOT analysis and
human resources planning.
formulate strategy.
Marketing Audit
First establish a Mission, Vision, and Goals
Examines strengths and weaknesses of major
Mission
marketing activities and identifies markets, key
The mission is a clear and concise expression of market segments, and the organization’s
the organization’s basic purpose. It describes competitive position (market share) within key
what the organization does, whom it does it for, markets.
its basic good or service, and its values.
Financial Analysis
Vision
Operations Analysis
Points to the future; it provides a perspective on
Other Internal Resource Analyses
where the organization is headed and what it can
become. How are resources and capabilities related?

Resources are a source of competitive

advantage only under all the following
circumstances:
 ✓ The resources are instrumental for ✓ Related Diversification
creating customer value. ✓ Unrelated Diversification
✓ The resources are rare and not equally
Business Strategy
available to all competitors.
✓ The resources are difficult to imitate. It is major actions by which an organization
✓ The resources are well organized. builds and strengthens its competitive position
in the marketplace.
Core Capability
What are the key components of Business
✓ is something a company does especially
Strategy?
well relative to its competitors.
1. Vision and Objections
✓ a unique skill and/or knowledge an
2. Core Values
organization possesses that gives it an
3. SWOT (Strength, Weaknesses,
edge over competitors.
Opportunities, Threats)
✓ a core capability typically refers to a set 4. Tactics and Operational Delivery
of skills or expertise in some activity, 5. Resources and resource allocation
rather than physical or financial assets. 6. Measurements and analysis

Benchmarking How to build a Business Strategy?

✓ To assess and improve performance, 1. Define your vision.

some companies use benchmarking, the 2. Setting your objective
process of assessing how well one 3. Analyzing your business and your
company’s basic functions and skills marketplace
compare with those of another company 4. Defining your competitive advantage
or set of companies. 5. Building a framework

✓ The goal of benchmarking is to Low-cost Strategy

thoroughly understand the “best
A strategy and organization uses to build
practices” of other firms and to
competitive advantage by being efficient and
undertake actions to achieve better
offering a standard, no-frills product.
performance and lower costs.
5 Differentiation Strategies
Fourth, conduct a SWOT analysis and formulate
strategy. 1. Features
2. Marketing Tone
What is SWOT?
3. Pricing
is a framework used to evaluate a company's 4. Quality
competitive position and to develop strategic 5. Service
planning. SWOT analysis assesses internal and
Functional Strategy
external factors, as well as current and future
potential. Strategies implemented by each functional area
of the organization to support the organization’s
Corporate Strategy
business strategy.
✓ Concentration
✓ Vertical Integration
Implement the Strategy What are Managerial Positions?

Strategic managers also must ensure that the Managerial positions are roles where a person
new strategies are implemented effectively and oversees the job functions of another person or
efficiently. Recently corporations and strategy a group of people. Managers also might oversee
consultants have been paying more attention to the operation of a specific function within a
implementation. They realize that clever company.
techniques and a good plan do not guarantee
Why is decision making so challenging?
success.
Lack of structure is typical of managerial
Strategy Implementation Involves Four Related
decisions. Usually there is no automatic
Steps
procedure to follow. Problems are novel and
1. Define strategic tasks. unstructured, leaving the decision maker
2. Assess organization capabilities. uncertain about how to proceed. In other words,
3. Develop an implementation agenda. a manager’s decisions most often have the
4. Create an implementation plan. characteristics of nonprogrammed decisions.

Strategic Control System Programmed Decisions

a system designed to support managers in ✓ Problem is frequent, repetitive, and

evaluating the organization’s progress regarding routine, with much certainty regarding
its strategy and, when discrepancies exist, taking cause-and effect relationships.
corrective action.
✓ Decision procedure depends on
Managerial Decision Making policies, rules, and definite procedures.

Managers requiring months of analysis. Nonprogrammed Decisions

However, managers often ignore problems
✓ Problem is novel and unstructured, with
because they are unsure how much trouble will
much uncertainty regarding cause-and-
be involved in solving the problems, they are
effect relationships.
concerned about the consequences if they fail,
and many management problems are so much ✓ Decision procedure needs creativity,
more complex than routine tasks. For these intuition, tolerance for ambiguity, and
reasons, managers may lack the insight, courage, creative problem solving.
or will act.
Formal Decision Making has Six Stages
What is Managerial?
1. Identify and diagnose the problem.
✓ Constantly face problems and The decision-making process begins
opportunities, ranging from simple and with recognition that a problem or
routine decisions to problems opportunity exists and must be
solved or should be pursued.
✓ Relating to management or managers,
Typically, a manager realizes some
especially of a company or similar
discrepancy between the current
organization, Managerial means relating
state and a desired state (the way
to the work of a manager.
things ought to be).
2. Generate alternative solutions. Satisficing
The second stage of decision-making
✓ is choosing the first option
links problem diagnosis to the
that is minimally acceptable,
development of alternative courses
although not necessarily the
of action aimed at solving the
best or perfect, the choice
problem. Managers generate at least
appears to meet a targeted
some alternative solutions based on
goal or criterion. When you
past experiences.
satisfice, you compare your
3. Evaluate alternatives.
choice against your goal, not
✓ The third stage of decision
against other options, and
making involves determining the
you end your search for
value or adequacy of the
alternatives at the first one
alternatives that were
that is okay.
generated. In other words,
which solution will be the best? Optimizing
✓ Obviously, alternatives should
be evaluated more carefully. ✓ means achieving the best
Fundamental to this process is possible balance among
to predict the consequences several goals. Perhaps, in
that will occur if the various purchasing equipment, you
options are put into effect. are interested in quality and
Managers should consider durability as well as price.
several types of consequences. Instead of buying the
They include quantitative cheapest piece of
measures of success, such as equipment that works, you
lower costs, higher sales, lower buy the one with the best
employee turnover, and higher combination of attributes,
profits. even though some options
4. Make the choice. may be better on the price
Maximizing criterion and others may
✓ is achieving the best offer better quality and
possible outcome, the one durability.
that realizes the greatest 5. Implement the decision.
positive consequences and ✓ Determine how things will
the fewest negative look when the decision is
consequences, a decision fully operational.
realizing the best possible ✓ Chronologically order,
outcome. In oher words, perhaps with a flow
maximizing results in the diagram, the steps
greatest benefit at the necessary to achieve a fully
lowest cost, with the largest operational decision.
expected total return.t ✓ List the resources and
activities required to
implement each step.
 ✓ Estimate the time needed managers’ choices. Managers may also frame a
for each step. problem as similar to problems they have
✓ Assign responsibility for already handled, so they don’t search for new
each step to specific alternatives.
individuals.
Discounting the Future
6. Evaluate the decision.
✓ Implementation will require In all these cases, avoiding short-term costs or
more time, resources, effort, seeking short-term rewards yields problems in
or thought. the long term. Discounting the future partly
explains government budget deficits,
Human Nature erects barriers to good
environmental destruction, and decaying urban
decisions.
infrastructure.
Vigilant and full execution of the six-stage
Time Pressures
decision-making process is the exception rather
than the rule. But when managers use such To make decisions quickly, many managers rely
rational processes, better decisions result. on simple rule-of-thumb techniques that have
Managers who make sure they engage in these worked in the past and in so doing, reduce the
processes are more effective. amount of time they spend analyzing
information relevant to the decision. These
Psychological Barriers
strategies may speed up decision making, but
Decision makers are far from objective in the way they reduce decision quality.
they gather, evaluate, and apply information in
Social Realities
making their choices. People have biases that
interfere with objective rationality. Here are Many decisions are made by a group rather
just a few of the many documented subjective than by an individual manager. Even the
biases: manager acting alone is account-able to the
boss and to others and must consider the
Illusion of Control
preferences and reactions of many people.
A belief that one can influence events even when Important managerial decisions are marked by
one has no control over what will happen. Such conflict among interested parties.
over-confidence can lead to failure because
Group makes many decisions.
decision makers ignore risks and fail to evaluate
the odds of success objectively. In addition,
they may believe they can do no wrong, or hold
a general optimism about the future that can
lead them to believe they are immune to risk
and failure.

Framing Effects

Phrasing or presenting problems or decision

alternatives in a way that lets subjective Group Decision Making
influences override objective facts. The choices Is a process in which multiple individual collect
had equivalent chances of success; the way the ideas, analyze solutions or situations, consider
options were expressed determined the
and evaluate alternative courses of action and members can be destructive, leading to
select which alternative is a solution. groupthink, uncreative solutions, and a waste
of the knowledge and diverse viewpoints that
Groups can Help.
individuals bring to the group.
✓ More information is available when
Enhancement of creativity: To “get” creativity
several people are making the decision.
out of other people, give creative efforts the
✓ A greater number of perspectives on the credit they are due, and don’t punish creative
issues, or different approaches to solving failures.
the problem, are available.
ENTREPRENEURSHIP
✓ Group discussion provides an
Entrepreneurs differ from managers generally.
opportunity for intellectual stimulation.
An entrepreneur is a manager but engages in
✓ People who participate in a group
additional activities that not all managers do.
discussion are more likely to understand
Traditionally, managers operate in a formal
why the decision was made.
management hierarchy with well-defined
✓ Group discussion typically leads to a authority and responsibility.
higher level of commitment to the
In contrast, entrepreneurs use networks of
decision.
contacts more than formal authority. And
Groups can Hurt. although managers usually prefer to own assets,
entrepreneurs often rent or use assets on a
✓ Sometimes one group member temporary basis. Some say that managers often
dominates the discussion. are slower to act and tend to avoid risk, whereas
✓ Satisficing is more likely with groups. entrepreneurs are quicker to act and actively
manage risk.
✓ Pressure to avoid disagreement can lead
to a phenomenon called groupthink. Entrepreneurship

✓ Goal displacement often occurs in the process by which enterprising individuals

groups. initiate, manage, and assume the risks and
rewards associated with a business venture

Independent Entrepreneur

an individual who establishes a new organization

Groups must be well Led.
without the benefit of corporate sponsorship
Appropriate leadership style: The group leader
Intrapreneur
must try to keep process-related problems to a
minimum by ensuring that everyone has a new venture creators working inside big
chance to participate, not allowing the group to companies.
pressure individuals to conform, and keeping
An entrepreneur’s organization may be small,
everyone focused on the decision-making
but it differs from a typical small business:
objective.
A small business has fewer than 100 employees,
Constructive use of disagreement and conflict:
is independently owned and operated, is not
Total and consistent agreement among group
dominant in its field, and is not characterized by What does it take to succeed?
many innovative practices. Small business
Successful entrepreneurs are innovators and also
owners tend not to manage particularly
have good knowledge and skills in management,
aggressively, and they expect normal, moderate
business, and networking.
sales, profits, and growth.

An entrepreneurial venture has growth and high

profitability as its primary objectives.
Entrepreneurs manage aggressively and develop
innovative strategies, practices, and products.
They and their financial backers usually seek
rapid growth, immediate and high profits, and
sometimes a quick sellout with large capital
What Business should you start?
gains.
The Idea
MYTHS ABOUT ENTREPRENEURSHIP
Many entrepreneurs and observers says that in
Simply put, entrepreneurs generate new ideas
contemplating your business, you must start
and turn them into business ventures. But
with a great idea. A great product, a variable
entrepreneurship is not simple, and it is
market, good timing are essential ingredients in
frequently misunderstood.
any recipe for success.
✓ Anyone can start a business.
The Opportunity
✓ Entrepreneurs are gamblers.
✓ Entrepreneurs want the whole show to Entrepreneurs spot, create and exploit
themselves. opportunities in a variety of ways.
✓ Entrepreneurs are their own bosses and Entrepreneurial companies can explore domains
independent. that big companies avoid and introduce goods or
✓ Entrepreneurs work harder than services that capture the market because they
managers in big firms. are simpler, cheaper, more accessible, or more
✓ Entrepreneurs experience a great deal of convenient.
stress.
✓ Entrepreneurs are motivated solely by 6 Different examples or following possibilities
the quest for the dollar. that you can use to spot an opportunity:
✓ Entrepreneurs seek power and control 1. Technological discoveries
over other.
✓ If an entrepreneur is talented, then 2. Demographic changes
success will happen quickly. 3. Lifestyle and taste changes
✓ Any entrepreneur with a goof idea can
raise venture capital. 4. Economic dislocations
✓ If an entrepreneur has enough start-up
5. Calamities
capital, s/he can’t miss.
✓ Unless you attained a high score on your 6. Government initiatives and rule changes
SATs or GMATs, you’ll never be a
successful entrepreneur.
Franchises 4. Affiliate model - Sites pay commissions
to other sites to drive business to their
One important type of opportunity is the
own sites.
franchise. You may know intuitively what
franchising is, or at least you can name some 5. Subscription model - The website
prominent franchises like, Jollibee, McDonalds charges a monthly or annual fee for site
and many more. visits or access to site content.

Franchising is an entrepreneurial alliance Side Streets

between two parties:
Trial and error can also be useful in starting new
1. Franchisor businesses. This method is risky, of course, and
an innovator who has created at least should be done only if you can afford the risks.
one successful store and seeks partners But even if the original idea doesn’t work, you
to operate the same concept in other may be able to capitalize on the side street effect.
local markets. as you head down a road, you come to unknown
2. Franchisee places, and unexpected opportunities begin to
the operator of one or more stores appear. And while you are looking, prepare so
according to the terms of the alliance. you can act quickly and effectively on any
opportunity that presents itself.
The next Frontiers
Business Incubators
When a business magazine asked prominent
investors in new business to name the best ideas The need to provide a nurturing environment for
for a new start up. fledgling enterprises has led to a creation of
business incubators. Business incubators, often
The Internet
located in industrial parks or abandoned
The internet is a business frontier that continues factories, are protected environments for new
to expand. With internet commerce, as with any small businesses.
start-up, entrepreneurs need sound business
Common Management Challenges
models and practices.
As an entrepreneur, you are likely to face several
5 Successful business models have proven
common challenges that you should understand
successful for e-commerce:
before you face them, and then manage
1. Transaction fee model - Companies effectively when the time comes.
charge a fee for goods or services.

2. Advertising support model - Advertisers

pay the site operator to gain access to
the demographic group that visits the
operator’s site.

3. Intermediary model - A website brings

buyers and sellers together and charges
a commission for each sale.
Common Management Challenges

✓ You might not enjoy it.

✓ Survival is difficult.
✓ Growth creates a new challenge.
✓ It is hard to delegate.
✓ Misuse of funds
✓ Poor controls
✓ Mortality
✓ Going public

Planning

✓ the act or a process to develop a strategy

to achieve desired objectives, to solve
problems, and to facilitate action.

✓ established a SMART goal for us to

achieve a desired outcome.
Opportunity Analysis
Business Plan
✓ It helps determine the viability of your
✓ a documented strategy for a business enterprise.
that highlights its goals and its plans for
achieving them. It outlines a company’s ✓ It guides you as you plan and organize.
go-to-market plan, financial projections, ✓ It helps you obtain financing.
market research, business purpose, and
mission statement. Key Planning Elements

✓ a formal planning step that focuses on ✓ The People – The new organization’s
the entire venture and describes all the people should be energetic and have
elements involved in starting it. skills and expertise directly relevant to
the venture.
Business Plan serves several purposes: ✓ The Opportunity – You need a
✓ It helps determine the viability of your competitive advantage that can be
enterprise. defended. The focus should be on
customers.
✓ It guides you as you plan and organize. ✓ The Competition – The plan must
✓ It helps you obtain financing. identify current competitors and their
strengths and weaknesses, predict how
they will respond to the new venture,
indicate how the new venture will
respond to the competitors’ responses,
identify future potential competitors,
and consider how to collaborate with or
face off against actual or potential
competitors.
 ✓ The Context – The environment should Advisory Boards
be favorable from regulatory and
An advisory board is a group of experts who lend
economic perspectives. Such factors as
their skills, guidance, and knowledge to an
tax policies’, rules about raising capital,
organization (corporation, non-profit, or
interest rates, inflation, and exchange
association). In short, an advisory board serves
rates will affect the viability of the video
the purpose of its name to offer advice that helps
new venture.
an organization grow and achieve its goals.
✓ Risk and Reward – The risk must be
understood and addressed as fully as Partners
possible.
is a business entity formed by two or more
Selling the Plan individuals, or partners, each of whom
contributes something such as capital,
Your goal is to get investors to support the plan.
equipment, or skills. Partners can help one
The elements of a great plan, as just described,
another access capital, spread the workload,
are essential. Also important is whom you decide
share the risk, and share expertise.
to try to convince to back your plan.

Non-Financial Resources
Corporate Entrepreneurship
Legitimacy
We define the term as the process by which
people’s judgment of a company’s acceptance,
teams within an established company conceive
appropriateness, and desirability, generally
foster launch and manage a new business that is
stemming from company goals and methods that
distinct from the parent company but leverages
are consistent with societal values.
the parent’s assets, market position, capabilities
Networks or other resources. It differs from corporate
venture capital, which predominantly pursues
The entrepreneur is aided greatly by having a
financial investments in external companies.
strong network of people. Social capital being
part of a social network and having a good 1. Build support for your ideas.
reputation helps entrepreneurs gain access to A manager with an idea to capitalize on
useful information, win trust and cooperation a market opportunity will need to get
from others, recruit employees, form successful others int the organization to buy in or
business alliances, receive funding from venture sign on. In other words, you need to
capitalists, and become more successful. build a network of allies who support
and will help implement the idea.
Top Management Teams
• Clearing Investments
is a group of senior leaders responsible for the • Make Cheerleaders
company's overall strategy and direction, making • Horse Trading
key decisions to shape the future of the business. 2. Build intrapreneurship in your
They would be capable of identifying time, organization.
resources, and actions for implementation. Skunkworks
are project teams designated to
produce a new product and Innovate
 product. A team is formed with a specific EXHIBIT 7.1 A conventional organization chart.
goal within a specified timeframe.
Bootlegging
refers to informal efforts as opposed
to official job assignments in which
employees work to create new products
and processes of their own choosing and
initiative.
3. Managing Intrapreneurship is risky.
The most dangerous risk in
intrapreneurship is the risk of over
relying on a single project. Many
companies fail while awaiting the
completion of one large, innovative
project. The successful intrapreneurial
organization avoids over commitment to Mechanistic Organization
a single project and relies on its
entrepreneurial spirit to produce at least a formal structure intended to promote
one winner from among several internal efficiency.
projects.
Organic Structure
4. Entrepreneurial Orientation
is the tendency of an organization to an organizational form that emphasizes
engage in activities designed to identify flexibility.
and
EXHIBIT 7.2 Comparison of Mechanistic and
capitalize successfully on opportunities
Organic Organizations.
to launch new ventures by entering new
or established markets with new or
existing goods or services.
• Independent Action
• Innovativeness
• Risk Taking
• Proactiveness
• Competitive Aggressiveness
Differentiation means the organization is
ORGANIZING FOR ACTION composed of many different units that work on
different kinds of tasks, using different skills and
Fundamentals of Organizing
work methods.
We often begin to describe a firm’s structure by
Integration means these differentiated units are
looking at its organization chart. The organization
put back together so that work is coordinated
chart depicts the positions in the firm and the
into an overall product.
way they are arranged. The chart provides a
picture of the reporting structure (who reports to Within an organization’s structure,
whom) and the various activities that are carried differentiation is created through division of
out by different individuals. labor and job specialization. Division of labor
means the work of the organization is subdivided ✓ Top management team— CEOs may
into smaller tasks to be performed by individuals share their authority with other key
and units throughout the organization. members of the top management team.
Specialization means different people or groups
Division of labor - the assignment of different
perform specific parts of the larger task.
tasks to different people or groups.
The specialized tasks in an organization cannot
Specialization - a process in which different
be performed completely independently; they
individuals and units perform different tasks.
require some degree of communication and
cooperation. Integration and its related concept, Coordination - the procedures that link the
coordination, refer to the procedures that link various parts of an organization to achieve the
the various parts of the organization to achieve organization’s overall mission.
the organization’s overall mission.
Authority - the legitimate right to make decisions
The Vertical Structure and to tell other people what to do.
Four dimensions of a firm’s vertical structure 2. Span of Control Determines a Manager’s
Authority
✓ Authority
✓ Span pf Control The number of people under a manager is an
✓ Delegation important feature of an organization’s structure.
✓ Centralization The number of subordinates who report directly
to an executive or supervisor is called the span of
1. Authority is Granted Formally and Informally
control.
At the most fundamental level, the functioning of
The optimal span of control maximizes
every organization depends on the use of
effectiveness by balancing two considerations:
authority , the legitimate right to make decisions
Determines a Manager’s Authority
and to tell other people what to do.
1. It must be narrow enough to permit
The structure of top management has several
managers to maintain control over
components:
subordinates.
✓ Board of directors— In corporations, the 2. It must not be so narrow that it leads to
owners are the stockholders. But overcontrol and an excessive number of
because there are numerous managers overseeing a few
stockholders and these individuals subordinates.
generally lack timely information, few
The optimal span of control depends on several
are directly involved in managing the
factors. The span should be wide under the
organization.
following conditions:
✓ Chief executive officer— The authority
The work is clearly defined and unambiguous.
officially vested in the board of directors
is assigned to a chief executive officer ✓ Subordinates are highly trained and have
(CEO), who occupies the top of the access to information.
organizational pyramid. ✓ The manager is highly capable and
supportive.
 ✓ Jobs are similar, and performance
measures are comparable.
✓ Subordinates prefer autonomy to close
supervisory control.

3. Delegation is How Managers use other’s

Talents

As we recognize that authority in organizations is

spread out over various levels and spans of
control, we see the importance of delegation,
the assignment of authority and responsibility to
a subordinate at a lower level.

Responsibility means that a person is assigned a

task that he or she is supposed to carry out. Decentralization Spreads Decision-Making
Authority means that the person has the power Power
and the right to make decisions, give orders, In a centralized organization, important
draw on resources, and do whatever else is decisions usually are made at the top. In
necessary to fulfill the responsibility. decentralized organizations, more decisions are
Accountability means the subordinate’s made at lower levels.
manager has the right to expect the subordinate
to perform the job, and the right to take
corrective action if the subordinate fails to do so.

The Horizontal Structure

As the tasks of organizations become

Through delegation, the organization also increasingly complex, the organization inevitably
receives payoffs. When managers can devote must be subdivided—that is, departmentalized.
more time to important managerial functions ✓ Line departments are those that have
while lower-level employees carry out responsibility for the principal activities
assignments, jobs are done more efficiently and of the firm.
cost-effectively.
✓ Staff departments are those that
provide specialized or professional skills
that support line departments.

Three basic approaches to departmentalization

• Functional

• Divisional

• Matrix
Functional Organizations Foster Efficient Organization can create a divisional structure in
Experts several ways:

In a functional organization , jobs (and Product divisions - All functions that contribute
departments) are specialized and grouped to a given product are organized under one
according to business functions and the skills product manager.
they require: production, marketing, human
Customer divisions—Divisions are built around
resources, research and development, finance,
groups of customers. Pfizer recently replaced
accounting, and so forth.
divisions based on location with three based on
The Traditional functional approach to customer groups: primary care, specialty care,
departmentalization has several advantages. and emerging markets.

1. Economies of scale can be realized. Geographic divisions—Divisions are structured

2. Monitoring of the environment around geographic regions. Geographic
3. Performance standards distinctions include district, territory, region, and
4. Specialized training and in-depth skill country.
development
Matrix Organizations Try to be the Best of Both
5. Free of administrative work
Worlds
6. Decision making and lines of
communication. A matrix organization is a hybrid form of
organization in which functional and divisional
forms overlap. Managers and staff personnel
report to two bosses—a functional manager and
a divisional manager—creating a dual line of
command.

Divisional Organizations Develop a Costumer

Focus

As organizations grow and become increasingly

diversified, their functional departments have
difficulty managing a wide variety of products,
customers, and geographic regions.
Matrix Survival Skill

To a large degree, problems can be avoided if the

key managers in the matrix learn the behavioral
skills demanded in the matrix structure. These
skills vary depending on the manager’s job. The
top executive must learn to balance power and
emphasis between the product and functional
orientations.
The Matrix Form Today whose collective expertise could be focused on a
particular good or service.
Recently the matrix form has been regaining
some of its popularity. Reasons for this Process engineering role. The broker serves as a
resurgence include pressures to consolidate network cooperator who takes the initiative to
costs and be faster to market, creating a need for lay out the flow of resources and relationships
better coordination across functions in the and makes certain that every-one shares the
business units, and a need for coordination same goals, standards, payments, and the like.
across countries for firms with global business
Nurturing role. The broker serves as a network
strategies.
developer who nurtures and enhances the
Network Organizations are built on network (like team building) to make certain the
Collaboration. relation-ships are healthy and mutually
beneficial.
In contrast, a network organization is a collection
of independent, mostly single-function firms that Organizational Integration
collaborate to produce a good or service.
Standardization Coordinates Work Through
Rules and Routines

Standardization constrains actions and

integrates various units by regulating what
people do. People often know how to act—and
how to interact—because standard operating
procedures spell out what they should do.

Formalization

the presence of rules and regulations governing

how people in the organization interact.

Plans Set a Common Direction

A very flexible version of the network Coordination by plan does not require the same
organization is the modular network —also high degree of stability and routinization
called the virtual corporation. It is composed of required for coordination by standardization.
temporary arrangements among members that
Mutual Adjustment Allows Flexible Coordination
can be assembled and reassembled to meet a
changing competitive environment. Coordination by mutual adjustment involves
feedback and discussions to jointly figure out
The role of managers shifts in a network from
how to approach problems and devise solutions
that of command and control to more like that of
that are agreeable to everyone.
a broker. Broker/managers serve several
important boundary roles that aid network Coordination Requires Communication
integration and coordination:
To cope with high uncertainty and heavy
Designer role. The broker serves as a network information demands, managers can use the
architect who envisions a set of groups or firms two general strategies:
 Best Alliance

The best alliance are true partnerships that meet

these criteria:

1. Individual excellence: Both partners add

value, and their motives are positive
(pursue opportunity) rather than
negative (mask weaknesses).
2. Importance: both partners want the
relationship to work because it helps
them meet long-term strategic
Organizational Agility objective.
3. Interdependence: The partners need
The Responsive Organization
each other; each helps the other reach
Mechanistic Organization its goal.
4. Investment: The partners devote
A form of organizational that seek to maximize
financial and other resources to the
internal efficiency.
relationship.
Organic Structure 5. Information: The partners communicate
openly about goals, technical data,
An organizational form that emphasizes problem, and learn from each other.
flexibility 6. Integration: The partners develop
Organizing around core competencies shared ways of operating; they teach
each other and learn from each other.
✓ Identify existing core competencies. 7. Institutionalization: The relationship has
✓ Acquire/build core competencies formal status with clear responsibilities.
important for future. 8. Integrity: Both partners are trustworthy
✓ Invest in competencies so company stays and honorable
competitive.
✓ Extend competencies to find new The Learning Organizations
application and opportunities for future. An organization skilled at creating, acquiring
Managing Resources for Competitive knowledge, and at modifying its behavior to
Advantage reflect new knowledge/insight.

1. Accumulate the right resources. Becoming a Leaning Organization

2. Combine resources to produce ✓ Disciplined thinking
capabilities. ✓ Attention to details.
3. Leverage Resources. ✓ Decisions based on data and evidence
Strategic Alliances rather than guesswork and assumptions.
✓ Search for new knowledge and ways to
A formal relationship created among apply it.
independent organization with the purpose of ✓ Review successes and failures to find
joint pursuit of mutual goals. lessons.
 ✓ Benchmark-identify & adopt best Being Big and Small
practices.
Downsizing
✓ Share ideas throughout organization.
✓ The planned elimination of position or
The high involvement organization
jobs.
A type of organization in which top management ✓ Survivor's syndrome - Loss of
ensures that there is consensus about the productivity and morale in employees
direction in which the business is heading. who remain after a downsizing.

Organizational Size and Agility Rightsizing

✓ Large organization tend to be less ✓ A successful effort to achieve an

organic and more bureaucratic. appropriate size at which the company
✓ Jobs tend to become more specialized in performs most effectively.
large organizations.
Costumer and the Responsive Organization
✓ With size comes greater complexity and
a need for increased control. The point of structuring a responsive, agile
✓ Organization can still find ways to remain organization lies in enabling it to meet and
agile despite these challenges. exceed the expectations of its customers.
The Case for Big Managers must stay focused in three key
ingredients - the strategic triangle.
✓ Larger size helps create economies of
scale. 1. The company itself
✓ Larger size helps develop economies of 2. Competition
scope. 3. The customer
✓ Economies in which materials and
processes employed in one product can Total Quality Management
be used to make other related products An integrative approach to management that
Larger organizations can have difficulty supports the attainment of customer satisfaction
managing relationships with customers through a wide variety of tools and techniques.
and among its own units .
✓ Large organizations are more difficult to ISO 9001
coordinate and control. ✓ A series of quality standards
The Case for Small ✓ Developed by committee under
international organization for
Smaller organizations can: standardization.
✓ Move fast. ✓ To improve total quality in all business.
✓ Provide quality goods and services to ✓ For the benefit of producers and
targeted market niches. consumers
✓ inspire greater involvement from their ISO 9001 Eight Principles
people.
✓ Being small can avoid diseconomies of 1. Customer focus
scale. 2. Leadership
3. Involvement of people
4. Process approach
 5. System approach to management Lean Manufacturing
6. Continual improvement
operations that eliminate unnecessary steps in
7. factual approach to decision making.
the production process and continually striving
8. Supplier relationship
for improvement.
Types of Technology Configuration
Organizing for Speed Time-based Competition
Small Batch (TBC)

Technology that produces goods and services in Logistics

low volume.
The movement of resources into the
Large Batch organization (inbound) and products from the
organization (outbound).
Technologies that produce goods and services in
high volume. Just in Time (JIT)

Continues Process Manufactures in very small lots and delivers

them to the next stage in the process precisely at
A process that is highly automated and has a
the time needed.
continues production flow.
Concurrent Engineering
Key features in Mass Customization
A design approach in which all relevant functions
cooperate jointly in a maximum effort aimed at
producing high quality products that meets
customer needs.

Manufacturing

Computer-Integrated Manufacturing (CIM)

Use of computer-aided design and computer-

aided manufacturing to sequence and optimize
several production processes.

Flexible Factories

Manufacturing plants with short production

runs, are organized around products, Use
decentralized scheduling.