BasicManagementSkills.docx
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BasicManagementSkills.docx
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BasicManagementSkills
BASIC
MANAGEMENT
SKILLS
Thebasicfunctionsofmanagementincludethefollowings:
∙Forecasting;
∙Planning;
∙Organizing;
∙Coordinating;
∙Controlling;
∙Staffing;
∙Communicating;
∙Leading;
∙Decision-making;
∙Motivatingetc.
Themeaningofthesefunctionsarehighlightedasfollows:
1.1.FORECASTING
Forecastingisameansofreducinguncertaintythatsurroundsthemakingofbusinessandeconomicdecisions.Inaworldwherethefutureisnotknownwithcertainty,virtuallyeverybusinessandeconomicdecisionrestsuponaforecastoffutureconditions.Successfulforecastingaimsatreducingtheareasofuncertaintythatsurroundmanagementdecisionmakingwithrespecttocosts,profits,sales,production,pricing,capitalinvestmentandsoforth.Ifthefuturewereknownwithcertainty,forecastingwillbeunnecessary.Decisionscouldbemadeandplansformulatedonaonce-for-allbasis.Futureoutcomesarerarelyassured,andtherefore,anorganizedsystemofforecastingisnecessary.
WhyForecasting?
Forecastingaimsatcalculatingorpredictingsomefutureeventsorconditions.Itisaservicewhosepurposeistoofferthebestavailablebasisformanagementexpectationsofthefutureandtohelpmanagementunderstandtheimplicationsforalternativecoursesofaction.
Forecastingisinevitableinallaspectsofbusinessactivities.Fromthemomentanideaisconceived,whetheritistobuyortosell,manufactureorofferaservice,thereisconsciouslyorsubconsciouslyanattemptmadetoassessprobablequantities,prices,costsandrelateddetails.
Whenforecastingisgivenformalrecognition,thenitisusualtopreparestatementsintermsofquantitiesandvalues.Eitherthesalesforecastorproductionforecastisgenerallythestartingpointandthiswouldbefollowedbyforecastsforcosts,finance,purchases,capitalexpenditureandprofitandloss.Thesystememployedisknownas“budgetarycontrol”.
TypesOfForecasting
(a)EconomicForecasting
Asitsnameimplies,aneconomicforecastisaprojectionoflevelofeconomicactivityforaparticulartimeperiod.TheforecastmeasureofthelevelofeconomicactivityistheGrossDomesticProduct
Economicforecastingisimportantbecausethesalesofvirtuallyeveryproductorserviceisinsomewayrelatedtothelevelofeconomicactivity.Oncetheeconomicforecastinghasbeenmadethesalesforecastforthecompanycanbedeveloped.
(b)SalesForecasting
Therearemanywaysofdevelopingthesalesforecast.Oneofthesimplestmethodsistocarefullystudythehistoricalrelationshipbetweenthesalesofacompanyandsomeeconomicindicatorsuchas“machinery”ordersbybusiness.Whydomanagersneedsalesforecast?
Thefundamentalreasonsarethatinthelongrunthecompany’sexistencedependsonacontinuedhealthydemandforitsproducts.Thuseventhemostefficientlymanagedstreetcarcompanyprobablycouldnothavesurvivedaftermostpeoplehadtransferredtheirbusinesstoautosandbuses.
Salesforecastingalsoservesasecondpurpose:
itisthefoundationonwhichallotherforecastsarepredicted.Forexample,salesforecastcanbeusedtodevelopprojectionsofproductionrequirements(innumberofunits)Thenbasedontheseprojections,forecastcanbedoneforwhatmaterialsneedtobepurchased,howmanyemployeeswillhavetoberecruitedandwhatexpense(suchasthoseforadvertisingandrunningtheplant)shouldamountto.
1.2.PLANNING
Planningisoneofthemostimportantfunctionsofmanagement.Theessenceofplanningistoprepareforandpredictfutureevents.Planninggoesbeyondattemptingtoattainstatedorganizationalobjectives.Itinvolvesthedevelopmentofstrategyandproceduresrequiredforeffectiverealizationoftheentireplan.Itentailsdeterminationofcontrol,directionandmethodofaccomplishingtheoverallorganizationalobjectives.
Planninginvolvestheestablishmentofobjectives,strategiestoachievetheobjectivesandastepbydeterminationoftheactivitiesandresourcesnecessarytoachievethem.
NatureAndVarietyOfPlans
MajorkindsofPlansasfollows:
Objectives,Policies,Procedures,BudgetsandProgrammes
(a)Objectives
Thebasicplanistheenterpriseobjectiveorobjectives.Thisisthegoalofthefirm.Whiletheseareordinarilysubjecttosimplestatementandareessentialtotheproperplanning,organization,staffing,directingandcontrollingofanyenterpriseoranypartofit,oneoftenfindsthatabusinessorotherenterprisehasnotconsideredwhatitsbasicobjectivesare
Startingwithsettinggoalsinacorporation,oneimmediatelyencounterstheissueofmaximizationofprofits.Researchsuggeststhattheissueofthemaximizationthatallfirmsaimatmaximizingprofitsisanoversimplification.Somefirmsapparentlysacrificeprofitstoachieveadesiredmarketingposition,tomaintainapredeterminedshareofmarket,andrateofgrowth.Firmshavebeenknown,atleastinshortperiods,toplaceloyaltytotheworkforceaheadofprofits
(b)Policies
Policiesarelikewiseplans.Theyaregeneralstatements,orunderstandings,whichguideorchannelorchannelthethinkingandactionofsubordinatesinanenterpriseoroneofitsdepartments.Itcanbeseenthatenterpriseobjectivesarepoliciessincetheyfurnishthebasicguidetothinkingandaction.
Thevarietiesofpoliciesinpracticearelegion.Itmaybeacompany’spolicytopromotefromwithin,toconformstrictlytoahighstandardofbusinessethics,tocompeteonapricebasis,toinsistonpricingatfixedprices,toforsakecivilianbusinessformilitaryortoshunpublicity.
Policiesbeingguidestothinkingandactionareseldomspecific.Itisthetaskofsubordinates,therefore,tointerpretepolicythroughtheexerciseofinitiative,discretionandjudgement.Policiesmusthowever,beconsistentandmustbeintegratedinsuchawayastocontributetotherealizationofenterpriseobjectives.
©Procedures
Proceduresarealsoplans,fortheyinvolvetheselectionofacourseofactionandapplytofutureactivities.Theydetailtheexactmannerinwhichacertainactivitymustbeaccomplished.Theessenceischronologicalsequence.Theimportantfactisthatprocedureexistthroughoutanorganization,eventhoughasonemightexpect,theybecomemorereactingandnumerousinthelowerlevelslargelybecauseofthenecessityformorecarefulcontrol,thelesserneedfordiscretioninactionordecision-makingandthefactthatthethingsdonelendthemselvestoobtaininggreaterefficiencythroughprescriptionoftheonebestway.
Justaspolicieshaveahierarchyofimportance,sodoprocedures.Proceduresoftencutacrossdepartmentallines.Forexample,theprocedureforaccomplishingtheorderhandlingofaproductinalargemanufacturingcompanywillalmostcertainlyencompasstheSalesDepartment,theFinanceDepartment,theAccountingDepartment,theProductionDepartmentandtheTrafficDepartment.
Incomparingproceduresandpolicies,BillyE.Costshassaid,”Policiesarerelativelygeneral,reasonablypermanentmanagerialplans.Proceduresarelessgeneralbutcomparablypermanent.Apolicymapsoutafieldofaction.Itdeterminesobjectivesandlimitstheareaofaction.Proceduresarestipulatedsequencesofdefiniteacts.Proceduresmarkapaththroughtheareaofpolicy.Theymaywork,generallywithadequatecluestodetermineclericalchoiceofthepath;theymaycontaintrivialgapstobefilledinatthediscretionofaclerk;butthereislittlethatresemblestheextensionofapolicy.Proceduresarenotmultidimensional;theydonotcoverareasofbehaviour;theyhaveonlychronologicalsequence.Policyalwayssetsanobjectivethroughthearea.
(d)Budgets
ABudgetisessentiallyaplan,astatementofexpectedresultexpressedinnumericalterms.Itmaybeentirelyexpressedinfinancialtermsoritmaybeastatementofresultsanticipatedintermsofman-hours,unitsofproducts,machinehours,oranyothermeasurementthatcanbereducedtonumericalexpression.
Conceivedascontroldevices,asindeedtheyare,themakingofabudgetisclearlyplanning.Infact,itisoftenthefundamentalplanninginstrumentinmanycompanies.Thebudgetcannotbeusedforcontroluntilitisinexistence,anditcannotbeinexistenceasasensiblestandardofcontrolunlessitreflectsplans.
ABudgetmaybedesignatedtodealwithoperations,suchasthebudgetofexpenseandrevenue,itmaybedesignedtoreflectexpectedcapitaloutlays,suchasthecapitalexpenditureBudget,oritmaybeformulatedtoshowexpectedflowofcashsuchasthecashbudget.
(e)Programmes
Programmesarecomplexpoliciesandprocedures,ordinarilysupportedbynecessarycapitalandoperatingbudgetsanddesignedtoputintoeffectacourseofaction.
Whileabudgetofonekindoranotherisusuallyaninstrumenttoimplementaprogramme,itmayactuallyserveasaprogramme.Furthermore,abudgetmayalsoencompasstheentireprogramme,withallotherprogrammescontainedinit.Thus,onefindsthataprogrammeofanyimportanceinbusinessplanningseldomstandsbyitself.Itisusuallypartofacomplexstructureofprogrammes,dependinguponsomeprogrammesandaffectingothers.
StepsInthePlanningProcess
ThePlanningProcessinvolvesthefollowingsteps:
-
1.TheDefinitionOfACompany’sConcept
Thisconceptwillhelpanswerthequestion“Whatbusinessarewein”ItwillhelptoclearlydefinetheFirm’sproductorserviceandthecorporatecompetitive(ifany)advantage-e.g.producthighqualityandlowcost.
Inaddition,thisdefinitionwillenhancethe:
∙Needtorecognizecausesnotsymptoms;
∙Needtoknowandunderstandhowsituationhasarisen;
∙Needtorecognizewhattheorganizationshouldbeandmust
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