1

Chapter one: Basic Management Concepts

and Industrial Organization

2
 1.1. Introduction
• Industrial Management is a branch of engineering that focuses on creating efficient
management systems and integrating diverse engineering processes within industries.
It involves planning, organizing, and overseeing operations within businesses or
production processes to achieve optimal efficiency, productivity, and profitability.

Responsibilities of Industrial Managers:

 Industrial Managers oversee the interaction of the 4Ms: Man, Material, Machine,
and Method (essential for any organization).

 They study both machine and human performance.

 Specialists maintain machines and ensure production quality.

 Supervision ensures minimal downtime for workers and machines.

 Constant inspection maintains output standards

3
…
 Many industrial units are coming up fast due to many
inventions, innovations and discoveries in the field of science
and technology. Hence, technology-driven system is not
uncommon now a days.

 Machine earning, IOT… are some of the technologies.

 To make the above successful, technically trained managers

should take the lion’s share.

4
Definition of Industry & Management
 An industry is a group of related manufacturers or businesses
that produce a particular kind of goods or services.

 Management is the process of planning, organizing, staffing,

directing and controlling to accomplish organizational objectives
through the coordinated use of human and other resources.

5
Nature of Management

 Universality of Management: Principles of management are

universal in the sense that these can be applied in different
situations e.g. business, government, military, hospitals,…

 Dynamic Nature of Principles: Principles of management are

not rigid or static. Rather they change with environment.
Nothing is permanent in management.

6
…
 Social Process: Mgt is done by people, through people and
for people. It is social process because it is concerned with
interpersonal relations.
 Multi disciplinary: Management has to deal with human
behavior under dynamic conditions. Therefore, it depends
upon wide knowledge derived from several disciplines like
engineering, sociology, psychology, economics etc.

7
 …
 Management: Science as well as an Art
It contains a systematic body of theoretical knowledge as well as the practical
application of such knowledge.
I. Management as Science
Universally acceptance principles and facts about a particular field of enquiry
Experimentation & Observation
Cause & Effect Relationship
Test of Validity & Predictability
II. Management as Art
➢ Practical Knowledge
➢ Personal Skill(style and approach)
➢ Creativity ➢ Perfection through practice
it is an art that how s/he manage every problem of organization in
every environment. “ when science ends, art begins”

8
Industrial Revolutions

1st Industrial Revolution

 The use of steam power and mechanization of production.
 The use of steam power for industrial purposes was the
greatest breakthrough for increasing human productivity.
2nd Industrial Revolution
 The discovery of electricity and assembly line production
 The idea of mass production by Henry Ford (1863-1947)
 Characterized by significantly faster production at lower
cost.

9
…
3rd Industrial Revolution
 The partial automation using memory-programmable controls and
computers, followed by full automation of the entire production
 E.g. Robotics
4th Industrial Revolution
 The application of ICT to industry and is also known as
"Industry 4.0“
 Production systems use a network connection and have a
digital twin on the Internet so to speak
 The networking of all systems leads to "cyber-physical
production systems"
 E.g. smart factories
10
Efficiency and Effectiveness

11
12
Planning

 If you fail to plan, you plan to fail.

 People never plan to fail, people
only fail to plan!
Planning and Decision Making
 Defining goals, establishing strategy
and developing sub plans to choose
alternatives and coordinate activities

13
 …
• Planning is the process of setting objectives for the future and developing courses of
action to accomplish them.
 Its purpose is to facilitate programs and improve performance.
 It allows integrated, consistent, and purposeful action.
 Planning must be based on prudent /careful, discreet, practical/ forecasts and reasonable
premise.
• koontz and O ‘Donnell defines as planning is deciding in advance what to do, how to
do it, when to do it and who is to do it. Planning bridges the gap from where we are to
where we want to go.

14
…
Managers plan for three reasons
1. Establish an overall direction for the organization’s future
2. Identify and commit resources to achieving goals
3. Decide which tasks must be done to reach those goals

15
 Organizing
•Itis the process of arranging people and physical resources to carry
out plans and accomplish organizational objectives.
 What activities are required to implement the plan?
 How many organizational levels are needed to perform all the required tasks?
 How should these positions be organized?
 How can these activities be effectively coordinated?
 How many layers of management are required to coordinate them?
 How many people should a manager supervise directly?

16
…
• Is a process of deciding:
• Where decisions will be made
• Who will do what jobs and
• tasks
• Who will work for whom

Includes creating departments and

job descriptions

17
Staffing

 Staffing is the process of matching jobs and people.

 It is the process of identifying human resource
needs, procuring the necessary employees, training,
utilization, and separation of those employees.

 It includes:
 Human resource planning
 Job design
 Recruiting and selecting
 Developing and retaining qualified workers

18
Leading/Directing

 Leading (Influencing) means guiding the

activities of the organization members in
appropriate directions.
 Its objective is to improve productivity.

• Getting others to perform

• the necessary tasks by
• Motivating and coaching them
to achieve the organization’s goals
It is the crucial element in all functions

19
 Controlling

 Controlling is the process by which managers determine whether

organizational objectives are achieved and whether actual operations are
consistent with plans.
 Monitoring progress towards goal achievement and taking corrective
action when needed
Steps in the Control Process
1. Establishing standards or targets
2. Measuring Actual Performance
3. Comparing Performance Against Standards
4. Taking Corrective Action
20
…

21
Basic Levels of Management

22
Levels of Management
I)First-line Managers: have direct responsibility for producing
goods or services e.g Foreman, supervisors, clerical supervisors
II)Middle Managers:
• Coordinate employee activities
• Determine which goods or services to provide
• Decide how to market goods or services to customers
e.g Assistant Manager, Manager (Section Head)
III) Top Managers: provide the overall direction of an
organization e.g Chief Executive Officer, President, Vice
President

23
Common myths about management
Leaders are born, not made
Management is nothing more than common sense
Management is a “hit or miss” proposition

 Management Success depends on both a fundamental

understanding of the principles of management and on
the application of technical, human and conceptual
skills. What do we mean by these skills?

24
Mgt skill in relation to level of management

25
26
27
Management Level and Skills

28
Organizational structure
Stages in setting up effective organizational structure:

 Establish activities which achieve business objective's

 Group related activities together E.g production, marketing
 Particular dept. activities further divided into sections
 Organizational chart developed
 Based on work volume, stuff required determined
 Special talents or knowledge required at each level must be
identified
 Establish effective communication system

29
Types of organizational structure
There are 4 types of Organizations
1. Line Organization:
• Simplest & efficient in small and medium-size enterprises
• Also called military organization
• Because there is a clear ‘line’ of responsibility and
• authority
• Chain of command is direct and decisions made quickly and
implemented rapidly

30
…

31
32
33
3. Line and Staff Organization:
• A combination of line & functional organization
• Specialist act as advisers and have no executive authority outside their dept.
• Ensures clear line of authority

34
4. Matrix Organization (Project Organization):
• Temporary organizational structure for specific project within specific time
period.
• When the project completed specialist go back to their respective duties.
• Specialist selected based on task-related skills & expertise
• E.g. the renaissance dam

35
Span of control

• Is the number of people reporting directly to one

supervisor.
• Also called span of management
• The main concern is to determine how many individuals a
manager effectively supervise
• It depends on:
oSimilarity of function
oGeographic contiguity
oComplexity of functions
oCoordination
oplanning
36
 Basics of Productivity
Productivity can be defined in many ways. Some of
them are as follows:
– Productivity is the reduction in wastage of resources such as labor, machines, materials, power,
space, time, capital, etc.

– Productivity can also be defined as human endeavor

(effort) to produce more and more with less and less
inputs of resources so that the products can be purchased by a large number of people at affordable
price.
– Productivity is a combination of both effectiveness and efficiency
– Productivity implies development of an attitude of mind and a constant urge to find better, cheaper,
easier, quicker, and safer means of doing a job, manufacturing a product and providing service.

37
…
• Efficiency: ratio of actual output attained to standard
output expected.
• Effectiveness: degree of accomplishment of objectives.
In other words:
• how well a set of results accomplished reflects
effectiveness,
• how well the resources are utilized to accomplish the results
refers to the efficiency.

38
 Difference Between Production and Productivity

 production is an organized activity of transforming raw materials

into finished products which have higher value.

 Production: concerned with the activity of producing goods

and/or services.
 Productivity: is concerned with the efficient utilization of
resources (inputs) in producing goods and / or services (output)

In quantitative terms:
 Production: quantity of output produced
 Productivity: Ratio of the output produced to the input(s) used.

39
…
 Production in an industry can be increased by employing
more labor, installing more machinery, and putting in more
materials, regardless of the cost of production.
 But increase of production does not necessarily mean
increase in productivity.
Example: Suppose that a company manufacturing electronic
calculators produced 10,000 calculators by employing 50
people at 8 hours/ day for 25 days.

40
Then:
• Production = 10,000 calculators
• Productivity (of labor) = (10,000 calculators)/(50 X
8 X 25 man-hour) = 1 calculator/man-hour
• If the company increased its production to 12,000 calculators by
hiring 10 additional workers at 8 hours/day for 25 days.
• Production= 12,000 calculators
• Productivity (of labor) = (12,000 calculators )/ (60 X 8 X 25 man-
hour) = 1 calculator/man-hour

41
Types of Productivity
1. Partial Productivity
• Partial productivity is the ratio of output to one
class of input.
2. Multi-Factor Productivity
• This productivity measurement technique is
used when the firm is interested to know the
productivity of a group of input factors but not
all input factors.
3. Total Productivity
• is the ratio of total output to the sum of all input
factors.
42
…
• E.g. Consider the ABC Company. The data for output
produced and inputs consumed for a particular time
period are given below:
• Output= $1000
• Human input= 300
• Material input= 200
• Capital input= 300
• Energy input= 100
• Other expense input= 50
• assume the company purchases all its material,
machine,equipment,energy.
• assume that these values are in constant dollars
43
44
45
46
47
48