Chapter 2

Challenges to industrial organization and

management

Introduction

The business executive with the coordination problem in its

most practical aspects. From the inception of an enterprise there is a
continuing challenges to balance the need for and use of land, labor,
plants, equipment and capital. If the production department turns out
more goods than the sales department cancel, inventories rise up.
Cost rise and loses set-in. If equipment is not properly maintained
and if flow carefully of production is not well planned, waste,
stoppage, and breakdown result. If finances are not carefully
planned, the enterprise may fall into a distress.

As well be seen, a considerable amount of coordination is

achieved as a routine part of good management. If the company is
soundly organized and officials merely carry out their regular
departmental functions in an alert an intelligent manner. Certainly,
this is true in the case of the enterprise.

Four consciously policies:

1. Management must have the vision to see the coordinating its

activities with events and conditions in the boarder filed
outside the company’s special operations.
2. It must adopt a deliberate policy employing the will to
coordinate.
3. It must encourage company officers and department heads to
organization.
4. Unifying the enterprise as a producing mechanism may be
approach as a problem of “internal coordination” as one of
 external coordination” fitting the enterprise into the outer
world.

Internal coordination

The problem of internal coordination is a manageable one.

Every industrial enterprise is something of a little word of its own.
Although outside forces of various kinds do affect the internal,
operation is exercised by management.

 The internal operation is exercised by management

 This is the simple rule of profit and itself a guiding and
unifying elements for the enterprise.

Within certain limits, executives can plan production, speed up

slow or slow operations, and change the quality, nature and style of
the product. They can change working condition, hire better people,
carry on in-factory training and discharge incompetents. They can
set up administrative and operations committees and memoranda,
records, and reports. Its essence lies in the constant experimentation
will all phases of company organizations and operations. It can be
fairly that management is thoroughly familiar with this problem of
internal coordination and it strives constantly to solve it by study,
planning and experimentation.

There are of course, the usual meetings of the board of

director, periodic meeting of department and division heads, and
meeting of official personnel. Most of these meetings are rather
formal relatively short, and often devoted to special problems of
policy and operations. Supplementary devices are required. One of
these is a weekly “management newsletter” which would deal with
executive matters and not allowed to change into general company
bulletin or magazine. Another is regular “progress report’ from top

66
officials to the board. These re[orts should deal with policies,
problems, special feature of operations.

External coordination

External coordination deals with problems which are generated

n the world outside factory doors which vitality affect the conduct of
every industrial enterprise. Every enterprise must keep a breast of
advance science and technology. The aim of external coordination to
the individual company to its industrial groups and to the national
economy. To fit into life in the community; in short, to provide for a
two-way passage of information between the individual enterprise
and them outer world and to bring about mutual understanding of the
problems in each sphere.

Entering the factory door, so to speak, are the, many worlds

with which managers must maintain relationship.
a) First, at the picture as later describes its parts in detail, we
start at the focal point with the EZR company.
b) Second, is the world of the “National Economy”. The
company and the industry of which it is a functional part
comprises a small section of the larger field of
“manufacturing” which is itself a small branch of the whole
national economy.
c) Third, ring shows the “Geographical World” which is in
the physical setting every enterprise.
d) Fourth, outer most ring we find the world of thought,
ideas and resources.

The external to the enterprise is true not a simple, single

enterprise most maintain contact. The company can approach and
solve some of its own. But there will be other problems in each of
which the company cannot solve by its own efforts. To make

67
headway on such problems, the company must act indirectly with
others in group operations.

The industrial world immediately surrounding the individual

company is the world best known to it because the company is a
function part of it. We also find the vast network of associated
industries and activities which cooperate with the company and with
which the company cooperates in turn the individual enterprise.
They are so essential to it that they are in fact, but external part of it.
The individual cannot function and purchasing department of a
company, for example, establish relations with those who supply raw
materials, machinery, and other equipment, and productions services.

The sales department makes contact with various outlets for

the product, and the attention of the others in the industry. The
managing officers of the company build us relationship with
assurance, banking, and other service agencies. The national
coordinating process is aided by a large and varied literature
pertaining to industry – catalogue, directories, statistical reports, and
other material issued by government and private organizations. The
se connections are upon the conduct of business: with health, safety,
and moral of the population and by coordinating channels within the
economic system as a whole.

Coordination with the national economy

Each department of the enterprise is linked with the

national economy through function, specialization and such
“Institutional transportations” as the great network of finance,
marketing, transportations, the price system which regulate s
the relationship among commodities, producers, sellers, and
buyers, and all other economic activities.

Coordination with the geographical world

68
 Every enterprise has a physical setting in a local
community and relationship with another geographical setting,
the company can determine how best to approach the problems
that arise. The problems here usually have to do with local
taxation. With ordinances bearing upon the conduct of
business: with health, safety, and moral of the population: with
housing and community, with relief of workers in time of
unemployment. Every official of every department of the
company finds it necessary to keep informed of conditions and
events in the local community.

Coordination with the world of thought ideas and

resources

At the outermost are of the external relationship of the

industrial enterprise lies the world of thoughts, ideas, and
resources. Here, we find the forces of science and technology
at work. Every field in this outer world are has its concrete
aspects, which seems to lie beyond practical affairs. This is
because they enter the immediate world of the industry and
directly touch the interest of every industrialist and business
person.

The Idea of Social Security

It was an abstraction to be fondled by dreams,

philosophers, and humanitarians. Whether we look into distant
past or scan the promising future, ideas generated in the
“Intellectual climate” seemingly remote from practical
operations bear fruit of enormous importance to practical
business.

69
Network of coordinating channels for group actions

The single enterprise has varied many means direct

coordination of its activities and interest with each of the
sphere external to the enterprise. Beyond that limit it must join
others in collective actions to solve its problems.
To deal with all these broad problems particular industry
in which an enterprise is classified, and by coordinating
channels within the economic system as a whole. There is an
elaboration network of coordinating channels for “group
action”.

Trade association as coordinators

Among the organization directly serving branches of

industry. A trade association is voluntary non-profit
organization of business competitors established to look after
the common interest of all members in an industry. The trade
association assists its members in matters of accounting
practices, business trade promotion, and in relations with
governments’ labor, and the general public. The trade
association, in short, is a powerful instrument directly
concerned with coordinating the firms in a particular industry
and relating them to all other industries.

Regional and special – interest association as

coordinators

This industrial enterprise whose problems involves

regional and special interest will find many association at hand
whose purpose is to coordinate these interest and assist in
solving problems by group. Example is the Midwest shippers

70
 board the 70 commodity exchanges with the western
petroleum refiners association.

National business service and technical organization as

coordinators

Beyond the association connected with specific trades,

industries, regional and special interest. There is a wide range
of other organization whose functions include the coordination
of common interest of their member for group action.

The range of organization of this groups includes

business and industrial interest like the national associations
and manufacturers and American Association of Small
Business. Service club like the Rotary, Kiwanis, Lions and
other professional organization. The range also covers
educational and scientific association. Charitable research
foundations, cooperative societies, foreign-trade associations
foreign government agencies, association of many racial
minorities, political and religious bodies’ recreation and
special welfare groups. These organization represented a blur
in the distance as the factory executive looked out of his office
window.

The Activities of non-business group

In some cases, they permitted their publicity

departments to use these groups for propaganda purposes
favorable to the industry alone.

Industry relation with government agencies

In addition to working with scientific , commercial, and

social organization, practical business people might also make

71
 better use of government agencies at their disposal. Where the
agency is close at hand or serving the direct functional needs of
the enterprise, company officials. But the most part, individual
enterprise leaves relations with government agencies to their
group associations.

All governing bodies, from the smallest local community

to the federal government, are organized primarily along
functional lines. This means that there are government
department and officials responsible for specific activities
bearing upon many phase of the private economy, such as public
works, finance, industry, domestic and foreign trade, and
national defense. Except where the political appointments have
lowered standards, government employees high qualifications
and gain their post through competitive level service
examination. Official in-charge functional activities within the
company might well maintain continuing contacts with the
government agencies whose work bears upon company
operations.

Cherrington (1983), Human resource planning must be related

to overall business plans to make it more meaningful and responsive
to the needs of the organization. The size of the work force level of
skills and occupational mix should match those required in the
corporate plans.

As indicate on the figure below is all about the interaction

between business planning and human resource planning.

72
Source: David J. Cherrington. Personnel Management. Iowa: WM. C.
Brown Company Pub. 1983.

Job enrichment and development

The management will also find methods of work which

increase employee satisfaction to be advantageous, because those
methods are more readily accepted by their workforce, and they may
make it easier to recruit and retain personnel, reduce absenteeism and
tardiness, increase the quality of output, reduce the occurrence of
avoidable delays, and result in higher operating efficiencies.

Mayer, (1982) to increase employees responsibilities vertically

and other is to do so horizontally.

73
 A vertical expansion of responsibilities is said to take place
when more decision making is required of the employee. For
example, instead of having to be told by a dispatcher or a supervisor
what order is to be process next, a milling machine operator may now
be responsible for making this decision himself after having
examined the orders that remain to be processed, their schedule
completion dates, the estimated operating times, and so on.

A horizontal expansion of responsibilities occurs when an

employee is asked to carry out greater variety of tasks. To illustrate,
instead of having to add only one component to a partially assembled
thermostats as it progresses along an assembly line, an employee may
now be required top assemble the entire thermostat. Incidentally, a
horizontal expansion of duties is something said to represent job
enlargement, and the term job enrichment is applied only in those
instances in which a vertical expansion of duties is introduce.

Feraren (1999). Stated that in the industry, top management

executive will always expect for the human Resource Management
Department to hire only those who are qualified for the position.
Most of the time, vacant management position require competence
and experience in the field of management. At least the applicant or
the one to be promoted should have the necessary management skills
and know-how technology as fundamental background. Moment the
applicants are hired, it is expected that they are competent for the
said position although further training development is still necessary
for such an executive position.

The Human Resource Management Information System and

Technology which the main core of every organization in order for
the department and the whole institution attain total quality education
(TQE) through total quality management(TQM).

74
 It is being hoped that the industrial setting and management
system can be applied in the academe starting from the tip level
management down to the department or vice-versa. Only then, that
we can professionalize the management position in schools, colleges
and universities.

Broader difficulties in the problem of external

coordinators

The external coordinators appear to serve adequately

where the problems are social. They concern improvement in
the general welfare of the people, where benefits have been
sought for each group as consumers, wage workers, the aged,
and the under privileged.

Where changes have been sought in the established ways

in business in the rest of full employment of work forces and
resources with the object of higher standards of living for all the
people. Coordination is lacking seems to be improved by
frequent economic crises of increasing severity, by bitter
controversies between industry and labor between industry and
government and by prolonged resistance to social betterment.

In all large populous country like our own in modern

times. It is perhaps inevitable that special – interest groups will
be formed. That these groups disseminate one – sided
propaganda and exert pressure upon the government, and others
in order to obtain laws and conditions favorable to their
members seems equally inevitable and understandable. It is
precisely at the point that the serious objection must be entered
against self-interest groups. The struggle between them does
lead to compromise, but is not always in the direction of social
progress. Delay in adjustments is permitted until the struggle

75
 between elf-interest groups either approximates domestics
warfare, as in strikes and lockout, or reaches the arena of politics
and government of function that might have been better
performed by private enterprise.

Multinational operations

The initiation and operation of worldwide branches of

U.S. business striking examples of the difficulties and
opportunities of external coordination. Where once the
movement was limited mainly to arranged for distribution and
sales abroad of American export. To a few enterprises
concerned with the exploitation of natural resources in foreign
countries.

American products, it is now concerned not only with

these developments, but also with industrial and business
enterprises covering the whole field of economics activity.

The organizational forms include whole international

division of diversified activities, branch plants and subsidiaries,
international corporations, trade and product royalty licenses,
acquisitions. The production, distributions, and sale of products
abroad, and arrangements in the government.

Managing the inter national operations

In many area of management there is no difference in

principle or practice or between domestic and foreign
enterprise. Basic principles of management are universal. But
when a company and its foreign affiliates are related in one
enterprise, certain differences become apparent. The domestic

76
 company is physically removed from its overseas subsidiaries
and affiliates.

In general, the wider the scope of overseas, operations,

the greater is the degree of autonomy according to international
division management. The international division management
tends to become a link between the overseas line-and-staff
executives and their counterparts in the domestic company. The
traditional old world paternalistic attitude, however, has been
receding as specialization, in management becomes better
understood.

Another area in which international management differs

from chat of domestic enterprise is in the types of problems
encountered in overseas operations. The managers of domestic
enterprises must be familiar with the federal state relations in
the problems which arise in these relations.

“According to Charles E. Allen”, Director of

International Operations for Hill and Knowlton Inc., American
business overseas faces.

The broad public relations problems:

1. The fear that American companies are displacing foreign
and local industries.
2. The suspicion that United States Companies are exploiting
the economic growth of other areas for American rather than
the local citizens.
3. The feeling that American companies exert political
influence for preserving the “Status Quo” and thereby
frustrate popular demands for economics and social
progress.

77
 4. The resentments of high-pressure American business
methods abroad and the fear of “Americanizing” traditional
foreign cultures.
5. The wide spread criticism that most American personnel do
not assimilate well with foreign communities in matters of
language, local customs, and personal relations.

Competition at home and abroad

The rebuilding of European and Japanese Industry

following world War II eventually led to a much more intensive
competitive climate for American industry at home and abroad.
Many of these industries were built or modernized with
American money and equipment.

In many cases, they enjoy markets better protected by

tariffs, quotas, licenses and exchange restrictions than does the
United States. They enjoy lower shipping cost with the passing
of the “Dollar Gap” foreign competitions attained a surplus of
dollars and other hard currency.

The development of common markets has intensive

Many m of these conditions. The results has been to increase
European competitions with the United States in the world
markets and to increase competitive imports in the American
home market.

The industrial field most of the imported products come

from France, Great Britain, West Germany, Italy, Sweden,
Switzerland, Japan and Canada. The older the invasion of
American market products such as glass, china pottery watches,
leather goods, textiles, and wide variety of hand made
specialties. There have now been added automobiles, tires,
bicycles, typewriters, and office Machines, steel cutlery, nuts

78
 and bolts, barbed wire, machine tools, hand tools, form
Machinery, electrical and electronic equipments, sewing
machines, photographic equipment, optical instruments, radios,
hardboard, and clothing.

Adapting the enterprise to changing conditions

Change is the one indisputable law of the of the universe.

The passing of the moment, nothing remains the same as we
have seen or known it. Change is growth, it is decay and it is
the constant mutation of living things and inanimate matter,
into different forms and qualities.

The greatest economic depression in modern history

compelled us to make the most fundamentals alterations or lives
and work. Our productivity has brought us to the brink of the
greatest achievement since the dawn of civilization – the
abolishment of poverty.

The meaning that affect of these great developments

knock at factory doors and make themselves felt in every
department of the enterprise. The enterprise has to become a
dynamic and as fluid as the world in which in functions.

It must be ready at all times to cut out, trim, and, make

over its organization and operation. Many of the great changes
today revolved around the problem of reconciling the freedom
and interests of the individual person and enterprise will have to
reexamine its policies and operations to see how best it can
serve all the people-stockholders, workers, and consumers.

Challenging of the immediate future

79
 In a dynamic society, the future will always raise broad
challenging problems for management, and solutions will be
sought to suit changing times. No one can read the future so as
today with certainly that these are the most important problems
or that other and different problems will not be arise.

These are the important challenges facing the industrial

organization:

1. To recognize legitimate interest directed by the

operations of an enterprise.
This is the basis on which labor, government, and the
consumer claim a share in management along with
stockholder and hired managers.
2. To respond appropriately to domestic social issues such
as employment for the disadvantaged, eliminating
discrimination, and financial support for social causes.
The executive have been asked to do more than
defend their financial management at manual corporate
meeting.
3. To respond appropriately to international issues such as
altering company policies to conform to then political
strategy of the nation.
Unmistakable sign of worldwide trend toward
economic expansion and investment in developing countries
seem to be in progress.
4. To conduct research and development leading to
improved production methods and products.
Research expressly dedicated to improved
productivity and inspired leadership to implement
productivity improvement are vitally needed.
5. To improved the quality of working life.
Great strides have been made in making the work
environment safer and more pleasant. More can be done,

80
 but in some industries continued improvements particularly
in progress of safety.
6. To support and operate according to the highest
standards of business ethics.
The U.S. public has long shown some distrust of big
business. In recent years distrust has apparently increased
due to investment of international bribery.
7. To act n the best interest of consumers.
The complex products on the markets shelves are
beyond the understanding of most layman buyers.
8. To promote activities that serves the total populace.
It is doubtful if the public will ever again permit the
outrageous speculate of the great depression during 1930’s
in which factories operated at half and even quarter of
normal capacity while people walked the streets looking for
work and the public suffered for want of goods these
factories could have produced but did not produce.

Summary

The business executive with the coordination of problem in

its most practical aspects. From the inception of an enterprise there
is a continuing challenges to balance the need for and use of land,
labor, plants, equipment and capital. If the production department
turns out more goods than the sales department cancel, inventories
rise up. Cost rise and loses set-in. If equipment is not properly
maintained and if flow carefully of production is not well planned,
waste, stoppage, and breakdown result. If finances are not carefully
planned, the enterprise may fall into a distress.

The four consciously policies for industrial organization and

management :

81
 1. Management must have the vision to see the coordinating its
activities with events and conditions in the boarder filed
outside the company’s special operations.
2. It must adopt a deliberate policy employing the will to
coordinate.
3. It must encourage company officers and department heads to
organization.
4. Unifying the enterprise as a producing mechanism may be
approach as a problem of “internal coordination” as one of
external coordination” fitting the enterprise into the outer
world.

Problem exist in the internal coordination but it is

manageable. Every industrial enterprise is something of a little word
of its own. Although outside forces of various kinds do affect the
internal, operation is exercised by management.
 The internal operation is exercised by management
 This is the simple rule of profit and itself a guiding and
unifying elements for the enterprise.

External coordination deals with problems which are generated

n the world outside factory doors which vitality affect the conduct of
every industrial enterprise. Every enterprise must keep a breast of
advance science and technology. The aim of external coordination to
the individual company to its industrial groups and to the national
economy.

All governing bodies, from the smallest local community to

the federal government, are organized primarily along functional
lines. This means that there are government department and officials
responsible for specific activities bearing upon many phase of the
private economy, such as public works, finance, industry, domestic
and foreign trade, and national defense. Except where the political
appointments have lowered standards, government employees high

82
qualifications and gain their post through competitive level service
examination. Official in-charge functional activities within the
company might well maintain continuing contacts with the
government agencies whose work bears upon company operations.

A horizontal expansion of responsibilities occurs when an

employee is asked to carry out greater variety of tasks. To illustrate,
instead of having to add only one component to a partially assembled
thermostats as it progresses along an assembly line, an employee may
now be required top assemble the entire thermostat. Incidentally, a
horizontal expansion of duties is something said to represent job
enlargement, and the term job enrichment is applied only in those
instances in which a vertical expansion of duties is introduce.

In many area of management there is no difference in

principle or practice or between domestic and foreign enterprise.
Basic principles of management are universal. But when a company
and its foreign affiliates are related in one enterprise, certain
differences become apparent. The domestic company is physically
removed from its overseas subsidiaries and affiliates.

In general, the wider the scope of overseas, operations, the

greater is the degree of autonomy according to international division
management. The international division management tends to
become a link between the overseas line-and-staff executives and
their counterparts in the domestic company. The traditional old world
paternalistic attitude, however, has been receding as specialization, in
management becomes better understood.

Change is the one indisputable law of the of the universe. The

passing of the moment, nothing remains the same as we have seen or
known it. Change is growth, it is decay and it is the constant mutation
of living things and inanimate matter, into different forms and
qualities.

83
 The greatest economics depression in modern history
compelled us to make the most fundamentals alterations or lives and
work. Our productivity has brought us to the brink of the greatest
achievement since the dawn of civilization – the abolishment of
poverty.

The meaning of change that affect of these great developments

knock at factory doors and make themselves felt in every department
of the enterprise. The enterprise has to become a dynamic and as
fluid as the world in which in functions.

In a dynamic society, the future will always raise broad

challenging problems for management, and solutions will be sought
to suit changing times. No one can read the future so as today with
certainly that these are the most important problems or that other and
different problems will not be arise.

Self assessment question

1. From the inception of an enterprise there is a continuing

challenges to balance the needs for and use of land, labor
a. plants
b. equipment
c. capital
d. all of the above
2. If equipment is not properly maintained and if flow carefully
of production is not well planned
a. Waste
b. Stoppage
c. breakdown result
d. all of the above.
3. If finances are not carefully planned, the enterprise may fall
into a
a. distress.

84
 b. fruitful
c. happiness
d. waste
4. External coordination deals with problems which are generated
n the world outside factory doors which vitality affect the
conduct of every
a. industrial enterprise
b. economic industry
c. population
d. Internal coordination
5. An expansion of responsibilities occurs when an employee is
asked to carry out greater variety of tasks.
a. Vertical
b. Horizontal
c. Diagonal
d. Perpendicular
6. Is the one indisputable law of the of the universe. The passing
of the moment, nothing remains the same as we have seen or
known it.
a. Balanced
b. Positive
c. Change
d. Active
7. The greatest events in modern history compelled us to make
the most fundamentals alterations or lives and work.
a. economic upliftment
b. economics depression
c. economic sabotage
d. economic boom
8. Our productivity has brought us to the brink of the greatest
achievement since the dawn of civilization
a. the abolishment of industry.
b. the abolishment of economy
c. the abolishment of poverty

85
 d. all of the above
9. The meaning that affect of these great developments knock at
factory doors and make themselves felt in every department of
the enterprise.
a. Balanced
b. Positive
c. Change
d. Active
10.The enterprise has to become a dynamic and as fluid as the
world in which in functions.
a. enterprise
b. company
c. manufacturing
d. industry

86