MANAGEMENT Flashcards
1
Q
– act of giving employees reasons and incentives to work to achieve organizational objectives.
A
MOTIVATING
2
Q
process of activating behavior, sustaining it, and directing it toward a particular goal.
A
MOTIVATION
3
Q
FACTORS CONTRIBUTING TO MOTIVATION
A
- Willingness to do a job.
- Self-confidence in carrying out a task.
- Needs Satisfaction
4
Q
THEORIES OF MOTIVATION
A
- Maslow’s Needs Hierarchy Theory
- Herzberg’s Two-Factor Theory
- Expectancy theory
- Goal Setting Theory
5
Q
theorized that human beings have 5 basic needs: (Psychologist)
A
ABRAHAM MASLOW
6
Q
- a satisfied employee is motivated from within to work harder and that a dissatisfied employee is not self-motivated
A
FREDERICK HERZBERG
7
Q
2 CLASSES OF FACTORS ASSOCIATED WITH EMPLOYEE SATISFACTION AND DISSATISFACTION
A
- SATISFIERS OR MOTIVATION FACTORS
- DISSATISFIERS OR HYGIENE FACTORS
8
Q
2 CLASSES OF FACTORS ASSOCIATED WITH EMPLOYEE SATISFACTION AND DISSATISFACTION
A
- SATISFIERS OR MOTIVATION FACTORS
- DISSATISFIERS OR HYGIENE FACTORS
9
Q
factors responsible for job satisfaction
A
- Achievement
- Recognition
- Work Itself
- Responsibility
- Advancement
- Growth
10
Q
factors as responsible for job dissatisfaction:
A
- Company Policy or Administration
- Relationship with Supervisor
- Relationship with Peers
- Relationship with Subordinates
- Supervision
- Work Conditions
- Salary
- Personal Life
- Status
- Security
11
Q
- model based on the assumption that an individual will work depending on his perception of the probability of his expectations to happen.
- motivation is determined by expectancies and valences
A
EXPECTANCY THEORY
12
Q
- belief about the likelihood or probability that a particular behavioral act will lead to a particular outcome.
A
EXPECTANCY
13
Q
- value an individual places on the expected outcomes or rewards.
A
VALENCE
14
Q
EXPECTANCY THEORY IS BASED ON THE FOLLOWING ASSUMPTIONS:
A
- A combination of forces within the individual and in the environment determines behavior.
- People make decisions about their own behavior and that of organizations.
- People have different types of needs, goals, and desires.
- People make choices among alternative behaviors based on the extent to which they think a certain behavior will lead to a desired outcome.
15
Q
- refers to the process of “improving performance with objectives, deadlines, or quality standard.”
A
GOAL SETTING
16
Q
drawn goal setting model
A
EDWIN A. LOCKE
17
Q
GOAL SETTING MODEL/THEORY associates consists of the following components
A
- GOAL CONTENT
- GOAL COMMITMENT
- WORK BEHAVIOR
- FEEDBACK ASPECTS
18
Q
- To be sufficient in content, goals must be challenging, attainable, specific, and measurable, time-limited, and relevant.
- When goals are challenging, higher performance may be expected.
A
GOAL CONTENT
19
Q
USE OF CHALLENGING GOALS
A
- Goals must be attainable if they are to be set.
- Goals must be stated in quantitative terms whenever possible.
- There must be a time-limit set for goals to be accomplished.
20
Q
- individuals or groups are committed to the goals they are supposed to achieve, there is a chance that they will be able to achieve them.
A
GOAL COMMITMENT
21
Q
Goals influence behavior in terms of direction, effort, persistence, and planning.
A
WORK BEHAVIOR
22
Q
- provide the individuals with a way of knowing how far they have gone in achieving objectives
- also facilitate the introduction of corrective measures whenever they are found to be necessary.
A
FEEDBACK ASPECTS
23
Q
TECHNIQUES OF MOTIVATION
A
- Motivation through job design
- Motivation through rewards
- Motivation through employee participation
- Other motivation techniques for the diverse work force
24
Q
A person will be highly motivated to perform if he is assigned a job he likes.
A
MOTIVATION THROUGH JOB DESIGN
25
specifying the tasks that constitute a job for an individual or a group.
JOB DESIGN
26
2 APPROACHES IN MOTIVATING THROUGH USE OF JOB DESIGN
* FITTING PEOPLE TO JOBS
* FITTING JOBS TO PEOPLE
27
chronic dissatisfaction.
To avoid this, the following remedies may be adapted:
1. REALISTIC JOB PREVIEWS
2. JOB ROTATION
3. LIMITED EXPOSURE
28
consider changing the job.
This may be achieved with the use of the following:
1. JOB ENLARGEMENT
2. JOB ENRICHMENT
29
where management provides honest explanations of what a job entails.
REALISTIC JOB PREVIEWS
30
- where people are moved periodically from one specialized job to another.
2. JOB ROTATION
31
-where a worker's exposure to a highly fragmented and tedious job is limited.
3. LIMITED EXPOSURE
32
-where two or more specialized tasks in a workflow sequence are combined into a single job.
1. JOB ENLARGEMENT
33
-where efforts are made to make jobs more interesting, challenging, and rewarding.
2. JOB ENRICHMENT
34
Rewards consist of material and psychological benefits to employees for performing tasks in the workplace.
MOTIVATING THROUGH REWARDS
35
REWARDS MAY BE CLASSIFIED INTO TWO CATEGORIES:
EXTRINSIC
INTRINSIC REWARDS
36
-those which refer to payoffs granted to the individual by another party. (Ex. money, promotions, praise, etc.)
EXTRINSIC REWARDS
37
those which are internally experienced payoffs which are self-granted.
(Ex. are a sense of accomplishment, self-esteem etc.)
INTRINSIC REWARDS
38
MANAGEMENT OF EXTRINSIC REWARDS.
1. It must satisfy individual needs.
2. The employees must believe effort will lead to reward.
3. Rewards must be equitable.
4. Rewards must be linked to performance.
39
When employees participate in deciding various aspects of their jobs, the personal involvement, oftentimes, is carried up to the point where the task is completed.
MOTIVATION THROUGH EMPLOYEE PARTICIPATION
40
THE SPECIFIC ACTIVITIES IDENTIFIED WHERE EMPLOYEES MAY PARTICIPATE ARE AS FOLLOWS:
1. Setting Goals
2. Making Decisions
3. Solving Problems, And
4. Designing and Implementing Organizational
Changes.
41
THE MORE POPULAR APPROACHES TO PARTICIPATION INCLUDES THE FOLLOWING:
1. QUALITY CONTROL CIRCLES (QCC)
2. SELF-MANAGED TEAMS
42
method of direct employee participation
- objective of the QCC is to increase productivity and quality of output.
1. QUALITY CONTROL CIRCLES (QCC)
43
- also known as autonomous work groups or high-performance reams
- take on traditional managerial tasks as a part of their normal work routine
2. SELF-MANAGED TEAMS
44
- consists of “a group of three to ten employees.”
CIRCLE
45
REQUISITES TO SUCCESSFUL EMPLOYEE PARTICIPATION PROGRAM
1. A profit-sharing or gainsharing plan.
2. A long-term employment relationship with good job security.
3. A concerted effort to build and maintain group cohesiveness.
4. Protection of the individual employee’s rights.
46
OTHER MOTIVATION TECHNIQUES
1. FLEXIBLE WORK SCHEDULES (Flextime)
2. FAMILY SUPPORT SERVICES
3. SABBATICALS
47
- allows employees to determine their own arrival and departure times within specified limits.
1. FLEXIBLE WORK SCHEDULES (Flextime)
48
- progressive companies provide day care facilities for children of employees
2. FAMILY SUPPORT SERVICES
49
- is a leave given to an employee after a certain number of years of service
- for 2 months to 1 year with pay
3. SABBATICALS
50
- management function which involves influencing others to engage in the work behaviors necessary to reach organizational goals
LEADING (function)
51
- able to influence others because of the power they possess
POWER
- ability of a leader to exert force on another
LEADERS
52
BASE OF POWER
1. LEGITIMATE POWER
2. REWARD POWER
3. COERCIVE POWER
4. REFERENT POWER
5. EXPERT POWER
53
- occupies a higher position has legitimate power over persons in lower positions within the organization
1. LEGITIMATE POWER
54
- ability to give rewards to anybody who follows orders or requests
2. REWARD POWER
55
2 FORMS OF REWARDS
MATERIAL
PSYCHIC
56
tangible benefits or money
* MATERIAL
57
recognition or praises
* PSYCHIC
58
- through threats or punishment
(Demotion, dismissal, withholding of promotion, etc.)
3. COERCIVE POWER
59
- get compliance from another because the latter would want to be identified with the former
4. REFERENT POWER
60
- specialized information regarding their specific line of expertise
- possessed by people with great skills in technology
5. EXPERT POWER
61
- the process of influencing and supporting others to work enthusiastically toward achieving objectives
LEADERSHIP
62
TRAITS OF EFFECTIVE LEADERS
1. A high level of personal drive
2. The desire to lead.
3. Personal integrity
4. Self-Confidence
5. Analytical Ability or Judgment
6. Knowledge of the company, industry, or technology
7. Charisma
8. Creativity
9. Flexibility
63
- willing to accept responsibility, possess vigor, initiative, persistence, and heath.
PESONAL DRIVE
64
with high level of personal drive
-plant director of the Polo Plant of San Miguel Corporation between 1992 & 1994
PAUL MEDIARITO
65
- always have a reservoir of extra efforts
THE DESIRE TO LEAD
66
“Exercising his authority ang getting things done entirely by the use or threat of use of the coercive powers vested in him by virtue of the rank and position he occupies in the hierarchy.”
PERSONAL INTEGRITY
67
honesty, honor, incorruptibility, rectitude, righteousness, uprightness, and similar virtues.”
INTEGRITY BY V.K. SARAF
68
-found in a study the conducted that leaders of mid-sized, high growth companies were “almost inevitably consummate salesmen who radiate enormous contagious self-confidence.”
SELF-CONFIDENCE
MCKINSEY AND COMPANY
69
“A chieftain cannot win if he loses his nerve. He should be self-confident and self-reliant and even if he does not win, he will know he has done his best.”
WESS ROBERTS
70
desirable trait that a leader can use to tide him over many challenging aspects of leadership
ANALYTICAL ABILITY
71
has sufficient personal magnetism that leads people to follow his directives
CHARISMA
72
POSSESS CHARISMA
* Napoleon Bonaparte
* Julius Caesar
* Adolf Hitler
* George Washington
* Elvis Presly
73
the ability to combine existing data, experience, and preconditions from various sources in such a way that results will be subjectively regarded as new, valuable, and innovative, and as a direct solution to an identified problem situation.”
CREATIVITY
RONNIE MILLEVO
74
- adapt a different method from another person’s method
FLEXIBILITY
75
LEADERSHIP SKILLS
1. TECHNICAL SKILLS
2. HUMAN SKILLS
3. CONCEPTUAL SKILLS
76
– work processes, activities & technology
1. TECHNICAL SKILLS
77
– ability to deal with people.
2. HUMAN SKILLS
78
ability to think in abstract terms.
3. CONCEPTUAL SKILLS
79
BEHAVIORAL APPROACHES TO LEADERSHIP STYLES
1. According to the ways leaders approach people to motivate them.
2. According to the way the leader uses power.
3. According to the leader’s orientation towards task and people
80
WAYS LEADERS APPROACH PEOPLE TO MOTIVATE
1. POSITIVE LEADERSHIP
2. NEGATIVE LEADERSHIP
81
– leader’s approach emphasizes rewards.
1. POSITIVE LEADERSHIP
82
– punishment is emphasized by the leader
2. NEGATIVE LEADERSHIP
83
WAYS LEADERS USES POWER
AUTOCRATIC
PARTICIPATIVE
FREE-REIN
84
– make decision themselves without consulting subordinates.
1. AUTOCRATIC
85
invites subordinates to participate or share in decisions.
2. PARTICIPATIVE
86
set objectives and allow employees or subordinates relative freedom to do whatever it takes to accomplish objectives.
3. FREE-REIN
87
LEADER ORIENTATION TOWARD TASKS AND PEOPLE
1. EMPLOYEE ORIENTED
2. TASK ORIENTED
88
- considers employees as human beings of “intrinsic importance and with individual and personal need” to satisfy
EMPLOYEE ORIENTATION
89
- places stress on production and technical aspects pf the job and the employees
TASK ORIENTATION
90
- an effort determines through research which managerial practices and techniques are appropriate in specific situations
CONTINGENCY APPROACH
91
VARIOUS CONTINGENCY APPROACHES
1. Fiedler’s Contingency Model
2. Hersey and Blanchard’s Situational Leadership Model
3. Path-Goal Model of Leadership
4. Vroom’s Decision-Making Model
92
“leadership is effective when the leader’s style is appropriate to the situation.”
FRED FIEDLER
93
SITUATIONAL CHARACTERISTICS BY 3 PRINCIPAL FACTORS
1. The relations between leaders and followers
2. The structure of the task
3. The power inherent in the leader’s position
94
THE SITUATIONAL CHARACTERISTICS VARY FROM ORGANIZATION TO ORGANIZATION. TO BE EFFECTIVE, THE SITUATION MUST FIT THE LEADER. IF THIS IS NOT SO, THE FOLLOWING MAY BE TRIED.
1. Change the leader’s trait or behaviors.
2. Select leaders who have traits or behaviors fitting the situation.
3. Move leaders around in the organization until they are in positions that fit them.
4. Change the situation.
95
- most important factor affecting the selection of a leader’s style is the development (or maturity) level of subordinate
LEADERSHIP MODEL
96
TWO COMPONENTS OF MATURITY
1. Job Skills and Knowledge
2. Psychological Maturity
97
-elaborated on the leadership styles appropriate for the various maturity level of subordinates
BLANCHARD AND OTHERS
98
leadership styles various maturity level
STYLE 1 : DIRECTING
STYLE 2: COACHING
STYLE 3: SUPPORTING
STYLE 4: DELEGATING
99
lack competence but are enthusiastic and committed.
DIRECTING
100
have some competence but lack commitment.
: COACHING
101
have competence but lack of confidence or motivation.
SUPPORTING
102
have both competence and commitment.
DELEGATING
103
- stipulates that leadership can be made effective because the leaders can influence subordinate’s perceptions of their work goals, personal goals, and paths to goal attainment.
ROBERT J. HOUSE AND TERRENCE R. MITCHELL
104
USING PATH GOAL MODEL, ASSUMED THAT EFFECTIVE LEADERS CAN ENHANCE SUBORDINATE MOTIVATION BY:
1. Clarifying the subordinate’s perception of work goal
2. Linking meaningful rewards with goal attainment
3. Explaining how goals and desired rewards can be achieved.
105
leadership styles which may be used by path-goal proponents:
1. DIRECTIVVE LEADERSHIP
2. SUPPORTIVE LEADERSHIP
3. PARTICIPATIVE LEADERSHIP
4. ACHIEVEMENT-ORIENTED LEADERSHIP
106
LEADERSHIP STYLES
1. DIRECTIVE LEADERSHIP
2. SUPPORTIVE LEADERSHIP
3. PARTICIPATIVE LEADERSHIP
4. ACHIVEMENT-ORIENTED LEADERSHIP
107
leader focuses on the clear task assignments , standards of successful performance, and work schedules.
1. DIRECTIVE LEADERSHIP
108
subordinates are treated as equals in a friendly manner while striving to improve their well-being
2. SUPPORTIVE LEADERSHIP
109
leader consults with subordinates to seek their suggestions and then seriously considers those suggestions when making decisions.
3. PARTICIPATIVE LEADERSHIP
110
leader set challenging goals, emphasize excellence, and seek continuous improvement while maintaining a high degree of confidence that subordinates will meet difficult challenges in a responsible manner.
4. ACHIVEMENT-ORIENTED LEADERSHIP
111
- one that prescribes the proper leadership style for various situations, focusing on the appropriate degrees of delegation of decision-making authority.
VROOM'S DECISION-MAKING MODEL (VROOM’S MODEL OF LEADERSHIP)
112
process of ascertaining whether organizational objectives have been achieved.
- one of main functions of management.
CONTROLLING
113
STEPS IN THE CONTROL PROCESS
1. Establishing performance objectives and standards
2. Measuring Actual Performance
3. Comparing Actual performance to Objectives and standards
4. Taking necessary action based on the results of the comparisons.
114
ESTABLISHING PERFORMANCE OBJECTIVES AND STANDARDS
1. SALES TARGETS
2. PRODUCTION TARGETS
3. WORKER ATTENDANCE
4. SAFETY RECORD
5. SUPPLIES USED
115
quantity or monetary items
1. SALES TARGETS
116
– quantity or quality
2. PRODUCTION TARGETS
117
– terms of rate of absences
3. WORKER ATTENDANCE
118
– number of accidents for given periods.
4. SAFETY RECORD
119
- quantity or monetary terms for given periods.
5. SUPPLIES USED
120
- when shortcomings occur, adjustments could be made.
MEASURING ACTUAL PERFORMANCE
121
- will be compared with what the organization seeks to achieve
COMPARING ACTUAL PERFORMANCE TO OBJECTIVES ANND STANDARDS
122
-purpose of comparing actual performance with the desired result is to provide management with the opportunity to take corrective action when necessary
TAKING NECESSARY ACTION
123
ACTIONS MAY BE UNDERTAKEN
1. HIRE ADDITIONAL PERSONNEL.
2. USE MORE EQUIPMENT.
3. REQUIRE OVERTIME
124
TYPES OF CONTROL
1. FEEDFORWARD CONTROL
2. CONCURRENT CONTROL
3. FEEDBACK CONTROL
125
– anticipates problems and prevents their occurrence.
- provides assurance that the required human and nonhuman resources are in place before operations
FEEDFORWARD CONTROL
126
– when operations are already ongoing and activities to detect variances are made.
CONCURRENT CONTROL
127
– when information is gathered about a completed activity and in order that evaluation and steps for improvement are derived.
- validates objectives and standards
FEEDBACK CONTROL
128
COMPONENTS OF ORGANIZATINAL CONTROL SYSTEMS
1. STRATEGIC PLAN
2. THE LONG-RANGE FINANCIAL PLAN
3. THE OPERATING BUDGET
4. PERFORMANCE APPRAISALS
5. STATISTICAL REPORTS
6. POLICIES AND PROCEDURES
129
– provides basic control mechanism for the organization
STRATEGIC PLAN
130
– longer team financial plans
- long lead times needed for capital projects
THE LONG-RANGE FINANCIAL PLAN
131
-expenditures, revenues, or profits
-standard measurements for performance
THE OPERATING BUDGET
132
-measures employee performance
-guide on how to do their jobs better in the future
PERFORMANCE APPRAISALS
133
-measures employee performance
-guide on how to do their jobs better in the future
PERFORMANCE APPRAISALS
134
contain data on various developments within the firm
STATISTICAL REPORTS
135
INFORMATION MAY BE FOUND IN STATISTICAL REPORT
* Labor Efficiency Rates
* Quality Control Rejects
* Accounts Receivable
* Accounts Payable
* Sales Reports
* Accident Reports
* Power Consumption Report
136
the framework within which the objectives must be pursued.
POLICIES
137
– plan that describes the exact series of actions to be taken in a given situation.
PROCEDURE
138
- to be able to assure the accomplishment of the strategic objectives of the company
STRATEGIC CONTROL SYSTEMS
139
STRATEGIC CONTROL SYSTEMS
1. FINANCIAL ANALYSIS -
2. FINANCIAL RATIO ANALYSIS
140
2. FINANCIAL RATIO ANALYSIS / FINANCIAL HEALTH CLASSIFIED INTO:
* Liquidity
* Efficiency
* Financial leverage
* Profitability
141
assess the ability of a company to meet its current obligations.
LIQUIDITY RATIOS
142
LIQUIDITY RATIOS
CURRENT RATIOS
ACID-TEST RATIO
143
current assets of the company can cover its current liabilities.
CURRENT RATIOS
144
ability to pay off short-term obligations.
ACID-TEST RATIO
145
how effectively assets or liabilities are being used in the production of goods & services.
EFFICIENCY RATIOS
146
EFFICIENCY RATIOS
INVENTORY TURNOVER RATIO
FIXED ASSET TURNOVER
147
– the number of times an inventory is turned over each year.
INVENTORY TURNOVER RATIO
148
– measure utilization of the company’s investment in its fixed assets
FIXED ASSET TURNOVER
149
assess the balance of financing obtained through debt and equity sources.
FINANCIAL LEVERAGE RATIOS
150
FINANCIAL LEVERAGE RATIOS
DEBT TO TOTAL ASSETS RATIO
TIMES INTEREST EARNED RATIO
151
measures number of times that earnings before interest and taxes cover or exceed the company’s interest expense.
TIMES INTEREST EARNED RATIO
152
how much of the firm’s assets are financed by debt
DEBT TO TOTAL ASSETS RATIO
153
measures how much operating income or net income a company is able to generate in relation to its assets, owner’s equity, and sales.
PROFITABILITY RATIOS
154
PROFITABILITY RATIOS
PROFIT MARGIN RATIO
RETURN ON ASSETS RATIO
RETURN TO EQUITY RATIO
155
compares the net profit to the level of sales.
PROFIT MARGIN RATIO
156
how much income the company produces for every peso invested in assets.
RETURN ON ASSETS RATIO
157
measures the returns on the owner’s investment
RETURN TO EQUITY RATIO
158
recognizing the need for control is one thing, implementing it is another.
IDENTIFYING CONTROL PROBLEMS
159
ENGINEER MANAGER MUST CONSIDER USEFUL STEPS IN CONTROLLING (KREITNER)
1. EXECUTIVE REALITY CHECK
2. COMPREHENSIVE INTERNAL ADULT
3. GENERAL CHECKLIST OF SYMPTOMS OF INADEQUATE CONTROL
160
management imposes certain requirements that are not realistic.
EXECUTIVE REALITY CHEC
161
– to determine efficiency and effectively of the activities of organization.
COMPREHENSIVE INTERNAL ADULT
162
SYMPTOMS OF INADEQUATE CONTROL (KREITNER)
1. An unexplained decline in revenues and profits
2. A degradation of service (customer complaints)
3. Employee dissatisfaction (complaints, grievances, turnover)
4. Cash shortages caused by bloated inventories or delinquent accounts receivable.
5. Idle facilities or personnel
6. Disorganized operations (workflow bottlenecks, excessive paperwork)
7. Excessive costs
8. Evidence of waste and inefficiency (scrap, rework)
163
designed mainly to produce products or services.
ORGANIZATIONS
164
– any process that accepts inputs and uses resources to change those inputs in useful ways
- activity that needs to be managed by competent persons
-changing of inputs into useful outputs
OPERATIONS
165
– must be performed in coordination with the other functions like those for marketing and finance.
OPERATIONS MANAGEMENT
166
define operation management “the process of planning, organizing, and controlling operations to reach objectives efficiently and effectively.”
ALDAG AND STEARNS
167
the cost of doing something or the utilization involved.
EFFICIENCY
168
– goal accomplishment
EFFECTIVENESS
169
* Land
* Labor
* Capital
* Entrepreneurship
INPUTS
170
TRANSFORMATION PROCESS CONVERTS THE INPUTS INTO FINAL GOOD OR SERVICES
1. Industrial Chemicals
2. Services like those for the construction ports
3. Electrical products
4. Electronic Products
5. Mechanical Devices
6. Engineering Consultancy Services
171
– produce some output at whatever management level he is
ENGINEER MANAGER
172
determine and define the equipment, tools, and processes required to convert the design of the desired product into reality in an efficient manner.
MANUFACTURING ENGINEER
173
– contribute to the production of quality goods or services and the reduction of costs in his department.
-plan, organize, and control operations to achieve objectives efficiently and effectively
OPERATION MANAGER
174
TYPES OF TRANSFORMATION PROCESS
MANUFACTURING PROCESSES
SERVICE PROCESSES
175
making of products by hand or with machinery.
MANUFACTURING PROCESSES
176
TYPES OF MANUFACTURING PROCESSES
*JOB SHOP
*BATCH FLOW
*WORKER-PACED LINE FLOW
*MACHINE-PACED LINE FLOW
*BATCH/CONTINUOUS FLOW HYBRID
*CONTINUOUS FLOW
177
TYPES OF SERVICE PROCESSES
* SERVICE FACTORY
* SERVICE SHOP
* MASS SERVICE
* PROFESSIONAL SERVICE
178
limited mix of services
SERVICE FACTORY
179
– diverse mix of services
- job shops or fixed position
SERVICE SHOP
180
– services to a large number of people simultaneously
MASS SERVICE
181
– specialized services to other firms or individuals
PROFESSIONAL SERVICE
182
EXAMPLE OF FIRMS
1. Engineering or management consulting services which help in improving the plant layout or the efficiency of a company
2. Design Services which supply designs for a physical plant, products, and promotion materials
3. Advertising agencies which help promote a firm’s products
4. Accounting Services
5. Legal Services
6. Data processing services
7. Health Services
183
-diverse mix of services
-lower utilization of capital equipment compare to service factory and service shop
-process pattern used is very loose
-process layout is identical to the job shop
PROFESSIONAL SERVICE FIRMS
184
STRATEGIES MAY BE USED DEPENDING ON SITUATION (delivery problems brought about by nonuniform demend)
1. The use of staggered work-shift schedules
2. The hiring of part-time staff
3. Providing the customer with the opportunity to select the level of service
4. Installing auxiliary capacity or hiring subcontractors
5. Using multiskilled floating staff
6. Installing customer self-service
185
IMPORTANT PARTS OF PRODUCTIVE SYSTEMS
1. PRODUCT DESIGN
2. PRODUCTION PLANNING AND SCHEDULING
3. PURCHASING AND MATERIALS MANAGEMENT
4. INVENTORY CONTROL
5. WORKFLOW LAYOUT
QUALITY CONTROL
186
– the process of creating a set of product specifications appropriate to the demands of the situation
PRODUCT DESIGN
187
– forecasting the future sales of a given product, translating this forecast into the demand it generates for various production facilities, and arranging for the procurement of these facilities
-helps managements to make decisions regarding capacity
PRODUCTION PLANNING
188
phase of production control involved in developing timetables that specify how long each operation in the production process takes
SCHEDULING
189
assures the optimization of the use of human and nonhumans resources.
EFFICIENT SCHEDULING
190
– must be undertaken with a high degree of efficiency and effectiveness especially in firms engaged in high volume production
PURCHASING AND MATERIALS MANAGEMENT
191
approach that seeks efficiency of operation through integration of all material acquisition, movement, and storage activities in the firm
MATERIALS MANAGEMENT
192
process of establishing and maintaining appropriate levels of reserve stocks of goods
INVENTORY CONTROL
193
ACHIEVING PROPER INVENTORY CONTROL:
o DETERMINING REORDER POINT AND REORDER quantity
o Determining economic order quantity
o The use of just-in-time (JIT) method of inventory control
o The use of the material requirement planning (MRP) method of planning and controlling inventories
194
process of determining the physical arrangement of the production system
5. WORKFLOW LAYOUT
195
GOOD WORKFLOW LAYOUT WILL HAVE THE FF. BENEFITS
o Minimize investment in equipment
o Minimize overall production time
o Use existing space most effectively
o Provide for employee convenience, safety and comfort
o Maintain flexibility of arrangement and operation
o Minimize material handling cost
o Minimize variation in types of material-handling equipment
o Facilitate the manufacturing (or services) process
o Facilitate the organizational structure
196
IN TRANSFORMATION PROCESS, FLOW WORK MAY BE FONE:
haphazardly or orderly
197
measurement of products or services against standards set by the company.
QUALITY CONTROL
198
– designed to facilitate and expedite the selling of goods and services
MARKETING
199
– engineer must try to satisfy the needs of his clients by means of a set of coordinated activities
MARKETING CONCEPT
200
THE ENGINEER AND THE FOUR P’S OF MARKETING
THE PRODUCT OR SERVICE
THE PRICE
THE PLCAE
THE PROMOTION
201
MEANS TO ELIMINATE EFFECTS OF THE PROBLEM
o Hiring sales agents to cover specific areas
o Selling to dealers in particular areas
o Establishing branches where customers are located
o Establishing franchises in selected areas
202
tangible or intangible item and its capacity to satisfy a specific need
-services provided will be evaluated whether or not exact needs are met
THE PRODUCT OR SERVICES
203
– money or other considerations exchanged for the purchase or use of the product, idea or service.
-competitive tool, to convince customer to buy
THE PRICE
204
– informed, persuaded and influenced
THE PROMOTION
205
define promotion “communicating information between seller and potential buyer to influence attitudes and behavior
MCCARTHY AND PERREAULT
206
PROMOTIONAL TOOLS
ADVERTISING
PUBLICITY
PERSONAL SELLING
SALES PROMOTION
207
make sure that the marketing objectives of the firm are achieved.
STRATEGIC MARKETING
208
TYPES OF STRATEGIC MARKETING
1. SELECTING A TARGET MARKET
2. DEVELOPING A MARKETING MIX
MARKETING MIX
209
– has option of serving entirely or just a portion of its chosen market
SELECTING A TARGET MARKET
210
STEPS IN SELECTING TARGET MARKET
o Divide the total market intro groups of people who have relatively similar product or service needs
o Determine the profit potentials of each segment
o Make a decision on which segment or segments will be served by the company
211
– must have the ability to satisfy the profit objectives of the company
TARGET MARKET
212
FACTORS TO CONSIDER IN SELECTING A TARGET MARKET
o the size of the market
o the number of competitors serving the market
213
must be created and maintained
DEVELOPING A MARKETING MIX
MARKETING MIX
214
FOUR VARIABLES OF MARKETING MIX
1. The product
2. The price
3. The promotion
4. The place (or distribution)
215
– important management responsibility that deals with the “procurement and administration of funds with the view of achieving the objectives of business
FINANCE FUNCTION
216
3 BASIC MANAGEMENT FUNCTIONS
1. Finance Function
2. Production
3. Marketing
217
THE DETERMINATION OF FUND REQUIREMENTS
1. To finance daily operations
2. To finance the firm’s credit services
3. To finance the purchase of inventory
4. To finance the purchase of major assets
218
– day-to-day operations of the engineering firm will require funds to take cake of the expenses
FINANCING DAILY OPERATIONS
219
Money must be available for the payment of the ff:
1. Wages and salaries
2. Rent
3. Taxes
4. Power and light
5. Marketing expenses
6. Administrative expenses
220
– unavoidable for firms to extend credit to customers
FINANCING THE FIRM’S CREDIT SERVICES
221
– maintenance of adequate inventory is crucial to many firms
-require sufficient funding and this must be secured
FINANCING THE PURCHASE OF INVENTORY
222
-long-term sources
FINANCING THE PURCHASE OF MAJOR ASSET
223
SOURCES OF FUNDS
1. Cash Sales
2. Collection Of Accounts Receivables
3. Loans And Credits
4. Sales Of Assets
5. Ownership Contribution
6. Advances From Customers
224
Loans and Credits may be classified as:
short-term
medium-term
Long-term.
225
-with repayment schedules of less than one year
SHORT-TERM SOURCES OF FUNDS
226
ADVANTAGES OF SHORT-TERM CREDITS
1. They are easier to obtain
2. Short-term financing is often less costly
3. Short-term financing offers flexibility to the borrower
227
DISADVANTAGES OF SHORT-TERM CREDITS
1. Short-term credits mature more frequently
2. Short-term debts may, at times, be more costly than long-term debts.
228
SUPPLIES OF SHORT-TERM FUNDS
1. TRADE CREDITORS
2. COMMERCIAL BANKS
3. COMMERCIAL PAPER HOUSES
4. FINANCE COMPANIES
5. FACTORS
6. INSURANCE COMPANIES
229
-suppliers extending credit to a buyer for use In manufacturing, processing or reselling good for profit
TRADE CREDITORS
230
INSTRUMENTS USED IN TAKE CREDIT
o Open-book credit
o Trade acceptance
o Promissory notes
231
source of short-term financing
COMMERCIAL BANKS
232
TWO TYPES OF SHORT-TERM LOANS
o Those which require collateral
o Those which do not require collateral
233
sold to investors
COMMERCIAL PAPER HOUSES
234
– financial institutions
FINANCE COMPANIES
235
– buy the accounts receivable of firms
FACTORS
236
possible sources of short-term funds
INSURANCE COMPANIES
237
LONG-TERM SOURCES OF FUNDS
1. LONG-TERM DEBTS
2. COMMON STOCKS
3. RETAINED EARNINGS
238
– sub-classified into term loans and bonds
LONG-TERM DEBTS
239
– commercial or industrial loan from a commercial bank, commonly used for plant and equipment, working capital or debt repayment” -maturities of 2 – 30 years
TERM LOANS
240
certificate of indebtedness issued by a corporation to a lender
BONDS
241
third source of long-term funds consists of the issuance of common stocks -can be cheaper and more stable sources of long term fund
COMMON STOCKS
242
CORPORATE EARNINGS NOT paid out as dividends
RETAINED EARNINGS
243
ADVANTAGES OF TERM LOANS AS A LONG-TERM SOURCE OF FUNDS
1. Funds can be generated more quickly than other long-term sources
2. They are flexible, i.e., they can be easily tailored to the needs of the borrower
3. The cost of issuance is low compared to other long-term sources
244
THE BEST SOURCE OF FINANCING (SCHALL AND HALEY)
1. FLEXIBILITY -
2. RISK
NCOME
3. CONTROL
4. TIMING
5. OTHER FACTORS LIKE COLLATERAL VALUES, FLOTATION COSTS, SPEED AND EXPOSURE
245
– subjects the borrowing firm to more risk than does financing with long-term debt
SHORT-TERM DEBT
246
-foregoing objectives have better chances of achievement if the engineering firm is financially healthy and has a capacity to be so on a long-term basis
THE FIRM’S FINANCIAL HEALTH
247
OBJECTIVES OF ENGINEERING FIRMS
1. To make profits for the owners
2. To satisfy creditors with the repayment of loans plus interest
3. To maintain viability of the firm so that the customers will be assured of a continuous supply of products or services, employees will be assured of employment, suppliers will be assured of a market, etc.
248
3 BASIC FINANCIAL STATEMENTS
1. Balance Sheet (statement of financial position)
2. Income statement (statement of operations)
3. Statement of changes in financial position
249
– very important concept that the engineer manager must be familiar with
-uncertainty concerning loss or injury
-confront people everyday
RISK
250
SOME LIST OF EXPORSURE TO RISKS
1. Fire
2. Theft
3. Floods
4. Accidents
5. Nonpayment of bills by customers (bad debts)
6. Disability and death
7. Damage claim from other parties
251
TYPES OF RISKS
1. PURE RISK
2. SPECULATIVE RISK
252
– there is only a chance of loss
PURE RISK
253
chance of either loss or gain
SPECULATIVE RISK
254
– organized strategy for protecting and conserving assets and people
-important aspect of managing the finance function
-deal with pure risks
RISK MANAGEMENT
255
– choose intelligently from among all the available methods of dealing with risk in order to secure the economic survival of the firm
PURPOSE OF RISK MANAGEMENT
256
METHODS OF DEALING WITH RISK
1. The risk may be avoided
2. The risk may be retained
3. The hazard may be reduced
4. The losses may be reduced
5. The risk may be shifted
257
VARIOUS METHODS/WAYS OF HANDLING RISK
1. Risk Avoidance
2. Risk retention
3. Hazard Reduction
4. Loss reduction
5. Risk Shifting
258
– method of handling risk wherein the management assumes the risk
RISK RETENTION
259
– shifting it to another party (Ex. Hedging, subcontracting, incorporation and insurance)
RISK SHIFTING
260
– making commitments on both sides of a transaction so the risks offset each other
HEDGING
261
– conscious and deliberate assumption of a recognized risk
PLANNED RISK RETENTION (SELF-INSURANCE)
262
– management does not recognize that a risk exists and unwisely believe that no loss could occur
UNPLANNED RISK RETENTION
263
2 TYPES OF RISK RETENTION
PLANNED RISK RETENTION
UNPLANNED RISK RETENTION
264
REDUCING THE CONCENTRATION OF EXPOSURES (EFFORTS ON LOSS REDUCTION)
1. Physically separating building to minimize losses in case of fire
2. Using fireproof materials on interior building construction
3. Storing inventory in several locations to minimize losses in cases of fire and theft
4. Maintaining duplicate records to reduce accounts receivable losses
5. transporting goods in separate vehicles instead of concentrating high values in single shipments
6. Prohibiting key employees from traveling together
7. Limiting legal liability by forming several separate corporations
265
CERTAIN INDICATORS OF FINANCIAL HEALTH CLASSIFIED INTO:
1. Liquidity
2. Efficiency
3. Financial leverage
4. Profitability
