Eight Business Function Essay

This article throws light upon the top eight functions of management. The functions are: 1. Planning 2. Organising 3. Staffing 4. Directing 5. Motivating 6. Controlling 7. Co-Ordination 8. Communication.

Function # 1. Planning:

When management is reviewed as a process, planning is the first function performed by a manager. The work of a manager begins with the setting of objectives of the organisation and goals in each area of the business.

This is done through planning. A manager probes the present to find where he is and he then forecasts future objectives which will indicate where he wants to be, i.e., the destination to be reached. The alternatives to achieve the objectives are evaluated and the selected alternative becomes the plan of action.

Once the plan is formulated, the manager has to indicate the objectives of the plan and steps to be taken by his subordinates. By communicating he makes the objectives effective. In practice, planning function is all-pervading.

It is involved in all other managerial functions. For example, budget is a part of planning as well as an instrument of control. Planning makes things happen that would not otherwise occur. Planning includes objectives, strategies, policies, procedures, programmes, etc., as it involves making choices, decision making is the heart of planning.

Function # 2. Organising:

Managing a business is not just planning. It includes putting life into the plan by bringing together the executive personnel, workers, capital, machinery, materials, physical facilities and other things or services to execute the plans. When these resources are assembled the enterprise comes to life.

Organising involves determining and noting activities needed to fulfil the objectives, grouping these activities into manageable units or departments, and assigning such groups of activities to managers. Delegation of authority creates an organisation. It determines authority-responsibility relationship. These relationships must be properly co-ordinated to secure unity of organisation.

Function # 3. Staffing:

Staffing involves filling the positions needed in the organisation structure by appointing competent and qualified persons for the jobs. This needs man-power planning and man-power management. We have scientific selection and training of personnel.

We have to provide suitable methods of remuneration and performance appraisal. Much of the work relating to human resource planning and management is delegated to a personnel manager. However, top management is ultimately responsible for all activities relating to staffing.

Function # 4. Directing:

Some management experts prefer leading in place of directing particularly under a democratic managerial set up. The function of leading has been termed motivating, directing, guiding, stimulating and actuating. This managerial function is directly concerned with the human factors of an organisation.

A manager by leadership and motivation has to direct and guide all subordinates and get the work done through people. Direction involves managing managers, managing workers and the work through the means of motivation, proper leadership, effective communication as well as co-ordination.

A manager must develop the ability to command. He must know how to direct others, i.e., how to issue orders and instructions, without arousing resentment or offence and he must be able to secure willing obedience from his subordinates without destroying their initiative and creativity.

Function # 5. Motivating:

This managerial function is fully reflected when we define management as the art of getting things done willingly through and with other people.

Management is interested in two primary elements:

(1) Things, i.e., material resources and

(2) Men and women, i.e., human resources.

Thing is subject to the laws of mechanics and it is susceptible to scientific or machine-like treatment. But human beings cannot be subjected to scientific or machine­like treatment. However, through the power of leadership and the science of co-operation, we can evolve a suitable method of integrating the interests of individuals and the organisation.

The power of management exists with or through people, but never over them, at least in a democratic society. Authority may be imposed from above but it must be supported, nourished and recognised from below, i.e., from the subordinates. Then only the authority is meaningful and it can work smoothly.

The managerial power has its source in the methods of leading, motivating, appraising, teaching, influencing, counseling, coaching, delegating and setting an example. So the manager plans, organises, directs, and motivates the people working with him. Motivation and leadership are the master keys to successful management of any enterprise.

They are also responsible to ensure productivity of human resources. Motivation can set into motion a person to carry out certain activity. Motivation assumes unique importance in modern business management. Democratic leadership heavily relies on motivation of employees, through financial and non-financial incentives.

Human relations in industry have accorded special emphasis to this managerial function. Effective communication and participation enhance the power of motivation. Feedback of information (upward communication) is necessary for effective motivation and direction.

Function # 6. Controlling:

Controlling is the last phase of the management process. Control is the process of measuring actual results or present performance, comparing those results to plans or some standard of performance, finding the reason for deviations of actual from desired result and taking corrective action when necessary.

The corrective action may lead to a change in the method of implementation of the plan or change in the plan itself or even a change in the objective. Usually our desired performance standards are the objectives, policies, programmes, procedures and budgets.

There are three important elements in the total management cycle or system:

(1) Planning,

(2) Implementation (action) of the plan and

(3) Control.

The entire planning-action-control process in management is repetitive. The control process generates information for modification or even creation of new plans.

Planning is followed by action, then by review and control in order to achieve the desired result.

Complete operating cycle or planning control cycle includes:

(1) Objectives,

(2) Planning,

(3) Action,

(4) Accomplishment,

(5) Feedback of Information and

(6) Mechanism of Control. Good management adopts this cycle and assures not only survival but also promotes growth.

Control Mechanism:

A manager must adopt the following steps in controlling:

(1) Identify potential problems,

(2) Select mode of control,

(3) Audit, measure and evaluate performance in terms of planning,

(4) Spot significant deviations.

(5) Ascertain causes of deviations,

(6) Take remedial measures,

(7) Ensure accomplishment of targets.

Function # 7. Co-Ordination:

Each managerial function is an exercise in co-ordination. It is said that co-ordination is the essence of management. It is an integral plan of direction. Co­ordination is concerned with harmonious and unified action directed toward a common objective. It involves inter-relating various parts of the work or organisation.

It is not a separate activity but a condition that should diffuse itself through all phases of the management process. Co-ordination is an orderly arrangement of group efforts to provide unity of action.

It ensures that all groups and persons work efficiently, economically and in harmony. Co-ordination can be accomplished automatically if we have sound objectives, policies, procedures and programmes and a sound organisation structure.

Coordination is essential in a large organisation because we have:

(1) Multiple and complex activities,

(2) Complex and elaborate organisation structure,

(3) Multiple levels of management due to limited span of control, and

(4) Acute division of labour leading to increasing use of specialists.

A manager must co-ordinate the work for which he is accountable by balancing, timing, and integrating the work. Such efforts at co-ordination are required at all levels of management.

Board of Directors, managing directors, heads of divisions and/or departments are the usual agencies of co-ordination to develop an orderly and integrated pattern of group efforts in proper sequence and at proper time. Co-ordination requires effective channels of communication. Person-to-person communication is most effective for co-ordination.

Function # 8. Communication:

In its broadest sense, communication is the transmission of meaning to others. It means transfer of information and understanding from person to person a flow of information from the top to the bottom and from the bottom to the top as well as horizontal or sideways on the same level of organisation.

In formal communication we have dissemination of information primarily. In biter-personal communication between two or more persons we have transmission of information as well as flow of understanding based on two-way traffic of communication.

Personal or face-to-face communication is the best form of communication. Managerial leadership depends upon upward communication to the leader in the form of feedback so that he can understand the feelings, emotions, motives and problems of subordinates and his power will have support and acceptance from below.

Communication also leads to sharing of information, ideas and knowledge. Communication is the cement that makes organisations. It enables a group to think together, and act together. Society’s very existence is dependent upon communication, i.e., passing of information and understanding from one person to another.

Communication may be through:

(i) Actions, e.g., smile, frown, facial expressions;

(ii) Spoken words, e.g. talk;

(iii) Written or printed words;

(iv) Graphs, diagrams, figures, models, pictures, charts and tables;

(v) Silence can also communicate at times.

The elements of management —planning, organising, staffing, directing, motivating and controlling — rare universally applicable to all joint or collective enterprises.

In short management involves:

(1) Managing the enterprise;

(2) Managing the managers, and

(3) Managing the workers and the work.

Central Framework of Management system:

1. Top Bar — Organisation.

2. Right Bar — Communication.

3. Left Bar — Human Relation.

No organised activity could exist for long without the holy three of the Bicycle. A manager has to use the central frame effectively.

Supporting Mechanism to Management System:

(1) Rear Wheel:

It represents Technical know how — administrative office, plant, personnel, marketing, purchasing, finance, planning and research

(2) Front Wheel:

It represents managerial function — planning, organising, directing, controlling, etc., the manager provides the motive power to run the wheels of business enterprise. He is also the coordinating and controlling authority.

(3) The Head-lamp represents goals and objectives to be achieved.

(4) On the carrier we have goods and services required in the market.

(5) Roadway for business journey indicates economic, social and political factors.

Planning concentrates on setting and achieving objectives of an organisation. Planning is the first management function to be performed in the process of management. It governs survival, growth and prosperity of any organisation in a competitive and ever-changing environment the planning function is performed by managers at every level of management. It is necessary for discharging all other management functions also.

Chapter 12

Information Systems for Business Functions

12.1 Supporting Business Functions in an Enterprise with Information

The principal business functions in a business firm are:

1. Marketing and sales

2. Production

3. Accounting and finance

4. Human resources

Figure 12.1: Outlines a general view of information systems supporting a company's operations and management. Emphasize that management support systems (MRS), decision support systems (DSS), and executive information systems (EIS), rest on the foundation of transaction processing systems (TPS) that support business operations. TPSs are the major source of data used by the higher-level systems to derive information. Professional support systems (PSS) and office information systems (OIS), which support individual and group knowledge work, are also a part of this foundation.

12.2 Marketing Information Systems [Figure 12.2 & Figure 12.3]

Marketing activities are directed toward planning, promoting, and selling goods and services to satisfy the needs of customers and the objectives of the organization.

Marketing information systems support decision making regarding the marketing mix. These include:

1. Product

2. Price

3. Place

4. Promotion

Figure 12.3 illustrates the structure of the entire marketing information system. In order to support decision making on the marketing mix, a marketing information system draws on several sources of data and information.

Sources of Data and Information for Marketing: Boundary-Spanning and Transaction Processing Subsystems

A marketing information system relies on external information to a far greater degree than other organizational information systems. It includes two subsystems designed for boundary spanning - bringing into the firm data and information about the marketplace.

The objective of marketing research is to collect data on the actual customers and the potential customers, known as prospects. The identification of the needs of the customer is a fundamental starting point for total quality management (TQM). Electronic commerce on the WEB makes it easy to compile statistics on actual buyer behaviour.

Marketing research software supports statistical analysis of data. It enables the firm to correlate buyer behaviour with very detailed geographic variables, demographic variables, and psychographic variables.

Marketing (competitive) intelligence

is responsible for the gathering and interpretation of data regarding the firm's competitors, and for the dissemination of the competitive information to the appropriate users. Most of the competitor information comes from corporate annual reports, media-tracking services, and from reports purchased from external providers, including on-line database services. The Internet has become a major source of competitive intelligence.

Marketing Mix Subsystems

The marketing mix subsystems support decision making regarding product introduction, pricing, promotion (advertising and personal selling), and distribution. These decisions are integrated into the sales forecast and marketing plans against which the ongoing sales results are compared.

Marketing mix subsystems include:

1. Product subsystem

2. Place subsystem

3. Promotion subsystem

4. Price subsystem

5. Sales forecasting

Product Subsystem

The product subsystem helps to plan the introduction of new products. Continually bringing new products to market is vital in today's competitive environment of rapid change. The product subsystem should support balancing the degree of risk in the overall new-product portfolio, with more aggressive competitors assuming higher degrees of risk for a potentially higher payoff.

Although decisions regarding the introduction of new products are unstructured, information systems support this process in several ways:

1. Professional support systems assist designers in their knowledge work

2. DSSs are used to evaluate proposed new products

3. With a DSS, a marketing manager can score the desirability of a new product.

4. Electronic meeting systems help bring the expertise of people dispersed in space and time to bear on the problem

5. Information derived from marketing intelligence and research is vital in evaluating new product ideas.

Place Subsystem

The place subsystem assists the decision makers in making the product available to the customer at the right place at the right time. The place subsystem helps plan the distribution channels for the product and track their performance.

The use of information technology has dramatically increased the availability of information on product movement in the distribution channel. Examples include:

1. Bar-coded Universal Product Code (UPC)

2. Point-of-sale (POS) scanning

3. Electronic data interchange (EDI)

4. Supports just-in-time product delivery and customized delivery

Promotion Subsystem

The promotion subsystem is often the most elaborate in the marketing information system, since it supports both personal selling and advertising. Media selection packages assist in selecting a mix of avenues to persuade the potential purchaser, including direct mail, television, print media, and the electronic media such as the Internet and the WEB in particular. The effectiveness of the selected media mix is monitored and its composition is continually adjusted.

Database marketing

relies on the accumulation and use of extensive databases to segment potential customers and reach tem with personalized promotional information.

The role of telemarketing, marketing over the telephone, has increased. Telemarketing calls are well supported by information technology.

Sales management is thoroughly supported with information technology. Customer profitability analysis help identify high-profit and high-growth customers and target marketing efforts in order to retain and develop these accounts.

Sales force automation

, involves equipping salespeople with portable computers tied into the corporate information systems. This gives the salespeople instantaneous access to information and frees them from the reporting paperwork. This increases selling time and the level of performance. Access to corporate databases is sometimes accompanied by access to corporate expertise, either by being able to contact the experts or by using expert systems that help specify the product meeting customer requirements.

Price Subsystem

Pricing decisions find a degree of support from DSSs and access to databases that contain industry prices. These highly unstructured decisions are made in pursuit of the companys pricing objectives. General strategies range from profit maximization to forgoing a part of the profit in order to increase a market share.

Information systems provide an opportunity to finely segment customer groups, and charge different prices depending on the combination of products and services provided, as well as the circumstances of the sale transaction.

Sales Forecasting

Based on the planned marketing mix and outstanding orders, sales are forecast and a full marketing plan is developed. Sale forecasting is an area where any quantitative methods employed must be tempered with human insight and experience. The actual sales will depend to a large degree on the dynamics of the environment.

Qualitative techniques are generally used for environmental forecasting - an attempt to predict the social, economic, legal, and technological environment in which the company will try to realize its plans. Sales forecasting uses numerous techniques, which include:

1. Group decision making techniques are used to elicit broad expert opinion

2. Scenario analysis in which each scenario in this process is a plausible future environment

3. Extrapolation of trends and cycles through a time-series analysis.

12.3 Manufacturing Information Systems

Global competitive pressures of the information society have been highly pronounced in manufacturing and have radically changed it. The new marketplace calls for manufacturing that are:

1. Lean - highly efficient, using fewer input resources in production through better engineering and through production processes that rely on low inventories and result in less waste.

2. Agile - fit for time-based competition. Both the new product design and order fulfilment are drastically shortened.

3. Flexible - able to adjust the product to a customer's preferences rapidly and cost effectively.

4. Managed for quality - by measuring quality throughout the production process and following world standards, manufacturers treat quality as a necessity and not a high-price option.

Structure of Manufacturing Information Systems

[Figure 12.5]

Information technology must play a vital role in the design and manufacturing processes. Manufacturing information systems are among the most difficult both to develop and to implement.

TPSs are embedded in the production process or in other company processes. The data provided by the transaction processing systems are used by management support subsystems, which are tightly integrated and interdependent.

Manufacturing information subsystems include:

1. Product design and engineering

2. Product scheduling

3. Quality control

4. Facilities planning, production costing, logistics and inventory subsystems

Product Design and Engineering

Product design and engineering are widely supported today by computer-aided design (CAD) and computer-aided engineering (CAE) systems. CAD systems assist the designer with automatic calculations and display of surfaces while storing the design information in databases. The produced designs are subject to processing with CAE systems to ensure their quality, safety, manufacturability, and cost-effectiveness. CAD/CAE systems increasingly eliminate paperwork from the design process, while speeding up the process itself. As well, the combined techniques of CAD/CAE and rapid prototyping cut time to market.

Product Scheduling

Production scheduling is the heart of the manufacturing information system. This complex subsystem has to ensure that an appropriate combination of human, machinery, and material resources will be provided at an appropriate time in order to manufacture the goods.

Production scheduling and the ancillary processes are today frequently controlled with a manufacturing resource planning system as the main informational tool. This elaborate software converts the sales forecast for the plants products into a detailed production plan and further into a master schedule of production.

Computer integrated manufacturing

(CIM) is a strategy through which a manufacturer takes control of the entire manufacturing process. The process starts with CAD and CAE and continues on the factory floor where robots and numerically controlled machinery are installed - and thus computer-aided manufacturing (CAM) is implemented. A manufacturing system based on this concept can turn out very small batches of a particular product as cost-effectively as a traditional production line can turn out millions of identical products. A full-fledged CIM is extremely difficult to implement; indeed, many firms have failed in their attempts to do so.

Quality Control

The quality control subsystem of a manufacturing information system relies on the data collected on the shop floor by the sensors embedded in the process control systems.

Total quality management

(TQM) is a management technique for continuously improving the performance of all members and units of a firm to ensure customer satisfaction. In particular, the principles of TQM state that quality comes from improving the design and manufacturing process, rather than Ainspecting out@ defective products. The foundation of quality is also understanding and reducing variation in the overall manufacturing process.

Facilities Planning, Production Costing, Logistics and Inventory Subsystems

Among the higher-level decision making supported by manufacturing information systems are facilities planning - locating the sites for manufacturing plants, deciding on their production capacities, and laying out the plant floors.

Manufacturing management requires a cost control program, relying on the information systems. Among the informational outputs of the production costing subsystem are labor and equipment productivity reports, performance of plants as cost centers, and schedules for equipment maintenance and replacement.

Managing the raw-materials, packaging, and the work in progress inventory is a responsibility of the manufacturing function. In some cases, inventory management is combined with the general logistics systems, which plan and control the arrival of purchased goods into the firm as well as shipments to the customers.

12.4 Accounting and Financial Information Systems

[Figure 12.9]

The financial function of the enterprise consists in taking stock of the flows of money and other assets into and out of an organization, ensuring that its available resources are properly used and that the organization is financially fit. The components of the accounting system include:

1. Accounts receivable records

2. Accounts payable records

3. Payroll records

4. Inventory control records

5. General ledgers

Financial information systems rely on external sources, such as on-line databases and custom produced reports, particularly in the areas of financial forecasting and funds management. The essential functions that financial information systems perform include:

1. Financial forecasting and planning

2. Financial control

3. Funds management

4. Internal auditing

Financial Forecasting

Financial forecasting is the process of predicting the inflows of funds into the company and the outflows of funds from it for a long term into the future. Outflows of funds must be balanced over the long term with the inflows. With the globalization of business, the function of financial forecasting has become more complex, since the activities in multiple national markets have to be consolidated, taking into consideration the vagaries of multiple national currencies. Scenario analysis is frequently employed in order to prepare the firm for various contingencies.

Financial forecasts are based on computerized models known as cash-flow models. They range from rather simple spreadsheet templates to sophisticated models developed for the given industry and customized for the firm or, in the case of large corporations to specify modeling of their financial operations. Financial forecasting serves to identify the need for funds and their sources.

Financial Control

The primary tools of financial control are budgets. A budget specifies the resources committed to a plan for a given project or time period. Fixed budgets are independent of the level of activity of the unit for which the budget is drawn up. Flexible budgets commit resources depending on the level of activity.

Spreadsheet programs are the main budgeting tools. Spreadsheets are the personal productivity tools in use today in budget preparation.

In the systems-theoretic view, budgets serve as the standard against which managers can compare the actual results by using information systems. Performance reports are used to monitor budgets of various managerial levels. A performance report states the actual financial results achieved by the unit and compares them with the planned results.

Along with budgets and performance reports, financial control employs a number of financial ratios indicating the performance of the business unit. A widely employed financial ratio is return on investment (ROI). ROS shows how well a business unit uses its resources. Its value is obtained by dividing the earnings of the business unit by its total assets.

Funds Management

Financial information systems help to manage the organization's liquid assets, such as cash or securities, for high yields with the lowest degree of loss risk. Some firms deploy computerized systems to manage their securities portfolios and automatically generate buy or sell orders.

Internal Auditing

The audit function provides an independent appraisal of an organization's accounting, financial, and operational procedures and information. All large firms have internal auditors, answerable only to the audit committee of the board of directors. The staff of the chief financial officer of the company performs financial and operational audits. During a financial audit, an appraisal is made of the reliability and integrity of the company's financial information and of the means used to process it. An operational audit is an appraisal of how well management utilizes company resources and how well corporate plans are being carried out.

12.5 Human Resource Information Systems

A human resource information system (HRIS) supports the human resources function of an organization with information. The name of this function reflects the recognition that people who work in a firm are frequently its most valuable resources. The complexity of human resource management has grown immensely over recent years, primary due to the need to conform with new laws and regulations.

A HRIS has to ensure the appropriate degree of access to a great variety of internal stakeholders, including:

1. The employees of the Human Resources department in performance of their duties

2. All the employees of the firm wishing ti inspect their own records

3. All the employees of the firm seeking information regarding open positions or available benefit plans

4. Employees availing themselves of the computer-assisted training and evaluation opportunities

5. Managers throughout the firm in the process of evaluating their subordinates and making personnel decisions

6. Corporate executives involved in tactical and strategic planning and control

Transaction Processing Subsystems and Databases of Human Resource Information Systems

At the heart of HRIS are its databases, which are in some cases integrated into a single human resource database. The record of each employee in a sophisticated employee database may contain 150 to 200 data items, including the personal data, educational history and skills, occupational background, and the history of occupied positions, salary, and performance in the firm. Richer multimedia databases are not assembled by some firms in order to facilitate fast formation of compatible teams of people with complementary skills.

Other HRIS databases include:

1. Applicant databases2. Position inventory3. Skills inventory4. Benefit databases5. External databases

Information Subsystems for Human Resource Management

The information subsystems of HRIS reflect the flow of human resources through the firm, from planning and recruitment to termination. A sophisticated HRIS includes the following subsystems:

1. Human resource planning2. Recruiting and workforce management3. Compensation and benefits4. Government reporting and labour relations support

Human Resource Planning

To identify the human resources necessary to accomplish the long-term objectives of a firm, we need to project the skills, knowledge, and experience of the future employees.

Recruiting and Workforce Management

Based on the long-term resource plan, a recruitment plan is developed. The plan lists the currently unfilled positions and those expected to become vacant due to turnover.

The life-cycle transitions of the firm's workforce - hiring, promotion and transfer, and termination - have to be supported with the appropriate information system components.

Compensation and Benefits

Two principal external stakeholders have an abiding interest in the human resource policies of organizations. These are:

1. Various levels of government2. Labor unions

12.6 Integrating Functional Systems for Superior Organizational Performance

Functional information systems rarely stand alone. This reflects the fact that the functions they support should, as much as possible, connect with each other seamlessly in order to serve the firms customers. Customers expect timely order delivery, often on a just-in-time schedule; quality inspection to their own standards; flexible credit terms; post-delivery service; and often, participation in the product design process.

Information technology provides vital support for integrating internal business processes, cutting across functional lines, and for integrating operations with the firm's business partners, its customers and suppliers.

 

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