MS-01/Management Functions and Behaviour/TMA-1/SEM-II/2005

Question 1. What is professional management? Discuss, how professional managers

manage survival and growth of the organisation you are working in or familiar with.
Give three ideas which you think can improve organisation efficiency. Briefly
describe the organisation you are referring to.
Answer. The term ‘professional management’ has become glamorous expression in
corporate management in India. There is so much fascination that every company takes
pride in decorating itself as professionally managed even though sometimes in total
disregard to its professional alignment. The concept of professional management has
become synonym of progressive and efficient management and since no one likes to be
backward an inefficient. The claim of several organizations that they have professionalised
their management is NOT true because the mere appointment of some persons with
professional degrees will not necessarily lead to professionalisation of management unless
there is a change in management process. According to a leading author:

“Professionalisation does not come automatically by employment of people with

professional degrees, unless the professionals have the necessary authority and use their
professionals have the necessary authority and use their professionalism in decision
making. We employ MBAs and other technocrats in the purchase and sales departments,
but if buying and selling is to be done through family forms, where is the scope for
professionalism? More that professional degrees what matters most is professional
ethics.”

Managers are essentially given a portfolio of the following tasks in varying depending on
their position and departments.
 Providing purposeful direction to the firm.
 Managing survival and growth
 Maintaining firm’s efficiency of profit generation
 Meeting the challenge of increasing competition
 Managing the innovation
 Building human organization, retaining talent and inculcating sense of loyalty

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 Sustaining leadership effectiveness
 Maintaining balance between creativity and conformity
 Postponing managerial obsolescence, meeting the challenge of change
 Coping with growing technological sophistication, with increasing levels of aspiration
 Maintaining relations with various society segments

Managers should also be made conscious of their responsibilities towards customers,

shareholders, employees, suppliers, distributors and retailers, industry and competition,
union, government, and to Society.

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A large Australian MNC Company has its subsidiary in India which manufacturers and
markets a popular line of toys and medication it maintains are large shop in Mumbai for
production of a medicinal plant which is an active ingredient in all its medication. To
derive further cost advantage it was proposed that the company set up its own toy raw
materials and own packaging labels. However raw material was not such a critical activity
that it required the company to have full control over it.

The key point is that all movements and actions must be consistent with achievement of
the objectives. To ensure consistency it is important that the manager carefully thinks
through each alternative course of action, to evaluate its potential to contribute towards
attainment of objectives. Ensuring survival of the firm is a critical task of the manager. But
that alone is not enough. The manager has also to actively seek growth. No matter how big
or powerful a firm may be today, it is sure to be left behind in the race by newer, healthier
and more efficient firms if it does not pursue growth.

Two factors impinge upon the firm's survival and growth. The first is the set of factors,
which are internal to the firm and are largely controllable. These internal factors are choice
of technology, efficiency of labour, competence of managerial staff, company image,

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financial resources, etc. The second set of factors influencing the firm's ability to ensure
survival and growth are those which are external to the firm and over which it has little or
no control. These external environmental factors refer to government policy, laws and
regulations, changing customer tastes, attitudes and values, increasing competition, etc.
Protector &Gambel [P&G] is a subsidiary of a multinational company which till some
years ago, was manufacturing and marketing soaps (Hammam, marvel) and refined oils
and agro products. Most of these are low technology lines being a foreign exchange
regulation act (FERA) unless P&G diluted its foreign equity to 50 percent. P&G sold off
its line of refined oils to Tata India and diversified into the production of basic chemical of
high technology area where foreigners are allowed to invest and grow as per FERA. Thus
by changeover from low-tech to hi-tech area P&G has ensured its future in India.
Efficiency is the ratio of output to the input. To produce results a manager requires inputs
in the form of money, men, materials and machines. The more output that the manager can
produce with the same input, the greater will be the profit generated. A manager may
decide to forego some profit today for the profits, which he is seeking tomorrow but in the
long run he must understand that no business can survive if it does not make profits.
Business activity is undertaken to satisfy a need of the society in a manner, which yields
profits. A business is not a philanthropic or charitable activity, which is run merely to
provide some goods and services irrespective of whether it is making a profit.

Profit generated can be used for expansion, upgrading the technology, growth or paying
dividends. Profits are one of the cheapest sources of financing growth, as they involve no
interest liability not putting the freedom at stake by having representatives of financial
institutions sit on your board of directors.

We have e.g. traditional garment mills became unprofitable and the fate they eventually
met. A similar fate awaits all non profitable businesses. In contrast companies such as
HLL, Godrej, Polaris software engineering, Ray Ban limited etc. have been showing
sufficiently good profits.
Competition is increasing in terms of more competitors, more products, wider variety of
products, and better quality of products. The manager today has more potential customers
to sell to and easy access to these customers yet the market is crowded with many
competitors wooing the same customers.

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Till a date ago, the Statesmen group of newspapers and magazines reigned supreme in the
magazine market with its "specimen weekly of India' being the only Indian family
magazine and "Manikchand" the only notable film magazine for people interested in films.
The introduction of 'Grahalaxmi today' and 'zee dust' brought about a redical change.
Starting in a modest fashion. 'Grahalaxmi today' is probably the most widely read general
interest magazine while 'Zeedust' has blazed its own unique trend-setting trail of
popularity. In the wake of the success of these two magazines, many other magazines
followed, such as general interest magazines, Art magazines, Men magazines, children's
magazines, special interest magazines, etc. All these new magazines have better reading
content, better layout and are very glossy and attractive to look at. Unable to match these
new magazines the circulation of the "Illustrated Weekly of India' and "'Manikchand'
slumped. However, in the last years these two magazines have been attempting to regain
the lost ground and have succeeded to some measure. But they can certainly never again
enjoy the leading position, which they once did. In developed countries the concept of
competition is very closely linked to that of obsolescence. Companies keep introducing
successively new models of cars, washing machines, refrigerators, etc., with minor
variations, and persuading the customers to discard their older models for the newer ones.

I am familiar with the Moonlight Communications. The company produces fibre optic
cables. I suggest the following to improve the organizational efficiency:

• Look at the business from the outside-in, from the customer's perspective, as well as
from the inside-out.
• Tightly integrate strategy with enterprise business processes.
• Articulate strategy to inspire, from the boardroom to the lunchroom.
• Design enterprise business processes to deliver on strategic goals.
• Ensure that organization design enables enterprise business process execution.
• Deploy enabling technology based on the value added to enterprise business process
performance.
• Hard wire the enterprise performance measurement system to budgets and operating
reviews.

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• Sustain focus and alignment.

Question 2. Distinguish between the mission, objectives and goals of an organization.

Explain the process of strategy formulation being followed in your organisation or
any organisation you are familiar with. Briefly describe the organisation you are
referring to.
Answer. Mission, Objectives and Goals of an Organization.
The mission or purpose identifies the basic functions or task of an enterprise or agency or
any part of it. The mission may be described as the scope of operation in terms of products
and markets or of service and client. An organizations mission statement tells what it is?
Why it exists? And the unique contribution it can make. The mission statement may
include the following:
• The basic product or service to be offered.
• The fundamental concern of the survival through sustained growth and
profitability.
• The public image to be sought
• The managerial philosophy
• The ‘self concept’ that people affiliated should have of the firm.

For example, the BHEL, a large public sector company has defined its mission as: “To
achieve and maintain a leading position as suppliers of quality equipment, systems and
services to serve the national and international markets in the field of energy. The areas of
interest would be the conversion, transmission, utilization and conservation of energy for
applications in power, industrial and transportation fields. To strive for technological
excellence and market leadership in these areas.”

The organizational objectives are defined as ends, which the organization seeks to achieve,
by its existence and operation. The objectives may be classified into two categories:

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(i) External institutional objectives: These objectives define the impact of the organization
on environment, e.g., to develop a high degree of customer confidence by sustaining high
standards of excellence in product quality.
(ii) Internal objectives: These objectives define how much is expected to be achieved with
the resources that the organization commands, e.g., to raise the average rate of return on
investment to 15% per annum.
Organizational objectives define the future state of the affairs, which the organization
strives to realize. Strategic objectives define the organization’s position in its environment.
Stated objectives govern the behaviour of employees by directing their attention to
desirable conduct and behaviour.

The terms ‘objectives’ and ‘goals’ are sometimes differentiated by analysts on the basis of
generality and specificity of what an organization seeks to achieve, to become, and to
attain. According to one viewpoint, objectives are desired future positions or destinations
stated in board timeless statements, e.g., “to ensure consistently increasing earning per
share to attain a satisfactory return on shareholders equity”. Goals are specific; time based
points of measurement that the organization wants to meet in the pursuit of its objectives.
Goals are to be stated specifically and as quantitatively as possible while objectives may be
stated in quantitative or qualitative terms. The emphasis in goals is on measurement of
progress towards the achievement of objectives. For instance, if a firm has an objective of
achieving a 15% return on investment, it may establish goals indicating the revenue
earnings and investments necessary to attain the objective.

There is another point of view that runs diametrically opposite to the viewpoint written
above. According to the second viewpoint, goals are broad general guidelines to thinking
which provide levels of attainment that are relatively that are relatively timeless.
Objectives, on the other hand, are statements of end results or the end-state, which are time
limited, measurable and quantifiable. Goals are aimed at the broad purpose and mission of
the organization, while objectives guide the activities of groups and members toward the
overall progress.

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Strategy Formulation
Strategy formulation is the process of determining appropriate courses of action for
achieving organizational objectives and thereby accomplishing organizational purpose.

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I am familiar with the Asian development bank. The Asian Development Bank (ADB) is a
multilateral development finance institution dedicated to reducing poverty in Asia and the
Pacific. It was founded in 1966 with 31 members states and has now grown to include 63.
The headquarters is at 6 ADB Avenue, Mandaluyong City, Metro Manila, Philippines.
ADB has offices around the world. The bank is led by a President, who is always from
Japan and appointed by the Japanese government.

Recent “Development Performance” Strategy Formulation Process at ADB Bank

1. The Asian Development Bank (ADB) has undertaken significant analytic work in
preparation for development strategy, to better understand recent development
performance in the Pacific and to guide more effective approaches for the future. In
accordance with ADB's Poverty Reduction Strategy, ADB carried out extensive work to
improve awareness of the extent and nature of poverty in the Pacific
2. ADB staff has been extensively involved in the preparation of the strategy, commencing
with a 2-day Pacific Department retreat. Small group meetings after the retreat further
developed the objectives and the necessary conditions to achieve those conditions, and
began the process of defining key result areas (KRAs). This work contributed to the
preparation of a Strategy Initiating Paper.
3. The Pacific Strategy 2005 - 2009 has been significantly strengthened by inputs received
during a 3-month consultation phase involving Pacific developing member country
(PDMC) governments, private sector groups, civil society organizations, Pacific regional
organizations, key development partners in the Pacific, and direct feedback via ADB's web
site.
4. In addition to face-to-face consultations, feedback was gathered through an email
address established for this purpose and linked to the discussion paper on ADB's web site.
Thirteen submissions were received in this form, some facilitated by PARD staff.
5. A brief summary of the key messages received and proposed ADB responses was
presented to PDMC Governors at the Forum Economic Ministers Meeting in June, and
subsequently posted on the ADB web site and distributed by email.
6. Further ADB staff involvement was facilitated during the drafting of the Pacific Strategy
2005 - 2009, including through a retreat for PARD staff and interested colleagues on 26
July. This retreat sought to further define KRAs for the strategy and to discuss

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implementation requirements, including how PARD might be organized to delivery the
strategy.
7. While a broad approach to managing for development results is in place, development of
the strategy results framework has emerged as an iterative process requiring further staff
and perhaps external expert inputs. This task will be ongoing.
8. The draft strategy has been circulated to PDMC Governments for comment prior to
discussion by the ADB Board of Directors.

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