INDUSTRIAL MANAGEMENT AND

ENGINEERING ECONOMY (IENG 5241)

Mengesha Wudu, [Link].

Aksum University
College of Engineering and Technology
Department of Mechanical Engineering
 CHAPTER ONE
BASIC MANAGEMENT CONCEPTS AND INDUSTRIAL
ORGANIZATION
DEFINITION

Managers use resources to attain organizational goals.

Management is the use of people and other resources to accomplish
objectives.

Objective:
Maximize the potential of their people and coordinate their efforts
to attain some predetermined goal.
DEFINITION….

Management
is the process of designing and maintaining an environment in
which individuals working together in groups efficiently to
accomplish the selected aim. Or
is the attainment of organizational goals in an effective and efficient
manner through integration of organizational resources (i.e. men,
machineries and materials).
DEFINITION….

Organization
An organization is a stable and formal social structure that takes
resources from the environment and processes them to produce
outputs.
DEFINITION….
Organizational Goals
Profit-oriented organization
 Return on investment
E.g. Almeda Textile S.C

Governmental Hospitals
 Patient Care

Educational Institutions
 Teaching – providing quality education
 Research
 Community Services
DEFINITION….

Resources
Human
 Skills
 Knowledge
Non-Human
Capital
Land
Plant and Equipment
Technology
MANAGEMENT AS A UNIFYING FORCE

Financial
Resources

Plant
&
Employees
Management Equipment

Land Management is the process of bringing

human and non-human resources
together and coordinating them to
accomplish organizational goals.
IMPORTANCE OF MANAGEMENT

Management
Puts together the factors of production to produce goods and
services
Make business decisions
Takes risks for which the reward is profit
Acts as an innovator by introducing new products, new
technology and new ways of organizing business
FUNCTIONS OF MANAGEMENT

Managerial functions involve making decisions regarding policy,

product, market and administration of the businesses that are
essential to the benefit and expansion of the industry.
FUNCTIONS OF MANAGEMENT…

The
Functions of
Management
FUNCTIONS OF MANAGEMENT…

Planning: is the process of setting objectives for the future and

developing courses of action to accomplish them.
Organizing: is the process of arranging people and physical resources
to carry out plans and accomplish organizational objectives.
There are five steps of organizing process. These are
Reflecting on plans and objectives,
Establishing major tasks,
Dividing major tasks into subtasks,
Allocating resources and directives for subtasks and
Evaluating results for organizing strategy
FUNCTIONS OF MANAGEMENT…

Staffing: is the process of matching jobs and people.

Leading: is the act of motivating or causing people to perform certain
tasks intended to achieve specific objectives. It is the act of making
things happen.
Controlling: is the process by which managers determine whether
organizational objectives are achieved and whether actual operations
are consistent with plans.
 CHARACTERISTICS OR FEATURES OF MANAGEMENT
Management
is getting things done: A manager does not do any operating work himself but gets
it done through others. He must motivate the subordinates for the accomplishment of
the task assigned to them.
is an activity: Management is a process of organized activity. It is concerned with the
efficient use of resources like men, money and materials in the organization.
is a group activity: Management cannot exist independent of the group or
organization it manages. It is a cardinal part of any group activity and inspires
workers to put forth their best efforts.
is purposeful: Management is a goal oriented activity. It is concerned with the
accomplishment of goals through its various functions like planning, organizing,
staffing, directing, and controlling.
CHARACTERISTICS OR FEATURES OF MANAGEMENT….
is an integrating process: Management integrates men, machines and materials for
performing various operations and accomplishing the stated goals. Thus, management
acts as a catalytic agent in getting maximum productivity from all the resources.
is intangible: Management is abstract and cannot be seen with the eyes. It is
evidenced by the quality of the organization and the results. Thus, feeling of
management is result-oriented.
is a science and an art: Management has developed certain principles and laws
which have wide applications. So it is treated as a science. It is also an art, because it
is concerned with the application of knowledge for the solution of organizational
problems.
involves decision-making: Management process involves decision-making at various
levels for getting things done by others. It involves selecting the most appropriate
alternative out of the several.
is concerned with direction and control:: Management is concerned with the
direction and control of the various activities. It deals particularly with the active
direction of the human effort.
MANAGEMENT ROLES

Interpersonal Roles
Figurehead: All social, inspiration, legal and ceremonial obligations. In
this light, the manager is seen as a symbol of status and authority.
Leader: Duties are at the heart of the manager-subordinate
relationship and include structuring and motivating subordinates,
overseeing their progress, promoting and encouraging their
development, and balancing effectiveness.
Liaison: Describes the role of managers in representing their
organization in different occasions.
MANAGEMENT ROLES…

Informational Roles
Monitor: Duties include assessing internal operations, a department’s
success and the problems and opportunities which may arise. All the
information gained in this capacity must be stored and maintained.
Disseminator: Highlights factual or value based external views into the
organization and to subordinates. This requires both filtering and
delegation skills.
Spokesman: Serves in a public relations capacity by informing and lobbying
others to keep key stakeholders updated about the operations of the
organization.
MANAGEMENT ROLES…

Decision Roles
Entrepreneur: Roles encourage managers to create improvement projects
and work to delegate, empower and supervise teams in the development
process.
Disturbance handler: A generalist role that takes charge when an
organization is unexpectedly upset or transformed and requires calming and
support.
Resource Allocator: Describes the responsibility of allocating and
overseeing financial, material and personnel resources.
Negotiator: Is a specific task which is integral for the spokesman, figurehead
and resource allocator roles.
MANAGEMENT HIERARCHY
MANAGEMENT HIERARCHY…

Top Management
Made up of individuals who have the possibility of making the
decisions and formulating policies that affect all aspect of the firm’s
operations.
President
Vice President
Chief Executive Officers
Executive Vice President
A manager’s assigned job duties and the authority needed to fulfill
those duties are what determine management level
MANAGEMENT HIERARCHY…

Middle Management
Includes all managers above the supervisory level but below the
level where overall company policy is determined.
Middle managers manage supervisors.
Regional Sales Manager
Academic Deans (Universities)
Director of Nursing (Hospitals)
MANAGEMENT HIERARCHY…

Supervisory Management
Supervisors manage workers who perform the most basic job
duties required in the business.
Sales Manager
Academic Department Chairperson (Universities)
Nursing Supervisors (Hospitals)
MANAGEMENT AND PRODUCTIVITY

 Management is concerned with productivity i.e. the effectiveness and efficiency.

 Productivity can be measured as the Output to Input ratios within a time period with due
consideration for quality.
Productivity = O P/I P (within time period and considered)
Productivity can be improved by
a. By increasing O/P with same I/P.
b. By decreasing I/P but maintaining same O/P.
c. By Increasing O/P and decreasing I/P to change the ratio favorably.
 The I/P can be labour, material capital etc.
 In the past productivity improvement program were mostly aimed at workers level but
now it is for the management also.
Organizational structure

Stages required for effectively setting up of an organizational structure

are:
The activities which will be necessary to achieve the objectives of the
business must be established.
The various related activities should be grouped together into
departments depending on their function (type of activity), production,
marketing, etc
The activities of a particular department will be further divided, and
grouped together into sections.
ORGANIZATIONAL STRUCTURE…

The number of staff required must be determined;

The numbers of supervisors, junior and middle managers per section
and department must be given consideration;
The special knowledge or talents required by departmental and
sectional managers must be laid down.
An organization chart should be produced
ORGANIZATIONAL STRUCTURE…

There are four different types of organizational structure. These are

1. Line Organization
It can be very efficient, particularly in small and medium-size
enterprise.
ORGANIZATIONAL STRUCTURE…

President

Vice President

Plant Manager

Foreman A Foreman B Foreman C

Staff
Staff Staff
ORGANIZATIONAL STRUCTURE…

2. Functional Organization
This is a type of organization in which it is the function (the type of
activity), which determines the areas of authority and responsibility.
An expert or specialist is placed in charge of each function, and will
have a direct control of that function wherever it is undertaken within
the enterprise.
ORGANIZATIONAL STRUCTURE…

BOSSES

I J K L

A B C D E F G H

OPERATOR
ORGANIZATIONAL STRUCTURE…

Functional organization makes control difficult as there are no clear

lines of authority and it is similarly difficult to establish responsibility
when things do not go right. Furthermore, staff as well as supervisors
and junior managers become confused at being subject to the
authority of more than one superior.
ORGANIZATIONAL STRUCTURE…

3. Line and Staff Organization

It is the combination of line and functional organization, which is
commonly used.
This type of organizational structure ensures that the lines of
responsibility and authority are still clear for all (managers,
supervisors and staff alike) to see, and understand, and that the line
managers keep full control of their respective departments or sections,
whilst having expert advice and assistance available in many subsidiary
areas.
ORGANIZATIONAL STRUCTURE…

Managing
director

Accounts Personnel
Works Manager Sales Manager
Manager Manager

Section Section Section

managers, Managers, managers, Employment
Training officer
supervisors supervisors supervisors officer
and Operators and salesmen and clerks

Supervisors Supervisors
and clerks and clerks
 ORGANIZATIONAL STRUCTURE…
4. Matrix or Project Organization
This type of organizational structures is temporary organizational
structures formed for specific projects for a specified period of time and
are dismantled, once the required goal is achieved.
For example, organizational structures for the goal to design and build a
new airport can be considered as such type of organizational structure. For
this project, the specialists from different functional departments will be
drawn to work together.
These functional departments are production, engineering, quality control,
safety, marketing research, etc. when the project is completed; these
specialists go back to their respective duties.
ORGANIZATIONAL STRUCTURE…

General Manager

Labor Research Finance Personnel Technical

Services

Project A Manager

Project B Manager

Project C Manager
End of Chapter One