managing a new enterprise author: alpana trehan chapter-4 © 2011, dreamtech press :: chapter 4 1

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MANAGING A NEW ENTERPRISE

AUTHOR: ALPANA TREHAN

CHAPTER-4

© 2011, Dreamtech Press :: Chapter 4

In a startup enterprise, the entrepreneur performs the functions of both, an owner and manager.

As a manger, he/she performs two types of management functions: Managerial Functions

Planning Organizing Staffi ng Directing Controlling

Operative Functions Human Resource Management Marketing Management Financial Management Production And Operation Management

MANAGEMENT FUNCTIONS OF AN ENTREPRENEUR

© 2011, Dreamtech Press :: Chapter 4 2

Planning Involves determining goals and objectives of the enterprise

Organizing Refers to the process of integrating, balancing, unifying, and

coordinating activities of employeesStaffi ng

Refers to the process of employing right type of individuals for the right job

Directing Involves influencing, motivation, encouraging, counseling,

mentoring, and guiding the employees to achieve the goalsControlling

Involves establishing performance standards, determining the gap between set standards and achieved results, and rectifying the gap

MANAGERIAL FUNCTIONS OF AN ENTREPRENEUR


Human resource is considered to be the most valuable asset of an enterprise as it utilizes the various resources, such as raw materials and machinery, of the enterprise and converts them into final products.

A new enterprise needs HRM due to the following reasons: Building and maintaining cordial relations among

employees working at different levels of the enterprise Ensuring effective utilization of available human resources Providing fair working conditions, wages and salaries, and

amenities to employees Achieving the development of each individual employee to

his/her fullest potential

HUMAN RESOURCE MANAGEMENT IN A NEW ENTERPRISE


Human Resource Planning (HRP)•A systematic process of identifying and evaluating human resource requirements of an enterprise

Recruitment•A process of identifying and attracting efficient candidates for vacant positions in the enterprise

Selection•A process of staffing the right type of candidates for various positions in the enterprise

Induction and Orientation•A process of providing information to the new employees about the enterprise’s background and introducing a new employee to his/her profile in the enterprise

Placement•A process of assigning a specific job and its associated grade and responsibility to each of the selected candidates

Training•A process of enhancing the knowledge, skills, aptitude, and abilities of an employee for doing a specific job in an efficient manner

Performance appraisal•A mechanism that helps the enterprise to understand the abilities and competencies of its each employee

ACTIVITIES OF HRM PROCESS


Preliminary Interview

Application Blank

Employment Tests

Employment

Interviews

Reference Checks

Physical Examinati

on

Appointment Letter

Final Selection

THE SELECTION PROCESS


On- the- job training method Coaching and Mentoring Understudy Job Rotation Apprenticeship Training Special Project Assignments Self-Instructional Mode

Off-the- job training method Special Courses Classroom Training Case Study Role Playing Vestibule Training Programmed Instructions Simulation Exercises Sensitivity Training In-Basket Exercise

TRAINING METHODS


Performance appraisal includes all formal procedures used to evaluate personalities and contributions and potentials of group members in a working organization. It is a continuous process to secure information necessary for making correct and objective decisions on employees. --- Dale Yoder

Performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job. --- Flippo

Performance appraisal is a method of acquiring and processing the information needed to improve an individual employee’s performance and accomplishments. --- Douglass

PERFORMANCE APPRAISAL


Establishing performance

standards

Communicating the standards

Determining the person

responsible to conduct the

appraisal

Measuring the actual

performance

Communicating the results of

appraisal to the concerned employee

Taking corrective actions

THE PERFORMANCE APPRAISAL SYSTEM


A monetary value or non-monetary reward that an enterprise off ers to its employees in exchange of services rendered by them.

The diff erent types of compensation provided by the enterprise are: Skill-based Pay

Refers to the compensation that depends not only on the job but also on the potential of the employee

Team-based Pay Refers to the remuneration that is given to teams where a group

of people work together Variable Pay

Refers to the reward that is based on the performance of the employee on his/her job

COMPENSATION


A monetary form of compensation given to workers in exchange of services rendered by them.

The diff erent types of wages are: Minimum Wage Living Wage Fair Wage Need-based Minimum Wages

WAGES


Basis Wages Salaries

Hours Amounts paid per hour

Paid on a monthly basis

Contract base Wages are not based on contracts

Salaries are based on contract

Type of workers Paid to blue collar workers

Paid to white collar workers

Type of work Paid for physical labor Paid for mental Labor

DIFFERENCES BETWEEN WAGES AND SALARIES


It is described as a process of creating, building, and maintaining beneficial products.

A market consists of diff erent types of customers; therefore, an enterprise divides the market as per the customers’ gender, age, tastes, attitudes, and personalities.

It includes: Market Segmentation Marketing Mix Marketing Research Branding

MARKETING MANAGEMENT IN A NEW ENTERPRISE


Market segmentation is a natural result of the vast diff erences among people. --- Donald Norman, a Doctorate of Philosophy

The following figure shows the bases of market segmentation adopted by enterprises:

MARKET SEGMENTATION


It is defi ned as a collection of tools that can be used in achieving marketing objectives.

It uses four Ps as its tools to decide the marketing strategy for a product: Product

Includes the goods, services, events, persons, places, ideas, and information offered to the customers by producers

Price Implies the monetary value given by a buyer to a seller to get a

product Place

Involves a decision about the location of the product from where it can be purchased

Promotion Involves the use of communication tools to increase the awareness

of the customer about the product

MARKETING MIX


Advertising Refers to a promotional technique of marketing communication that

is used to target a huge number of geographically dispersed audiences.

Direct Marketing Refers to the type of marketing in which the enterprises reach

customers directly without any intermediary. Personal Selling

Refers to face-to-face selling in which a sales representative tries to convince the customer to purchase a product by explaining or demonstrating its features.

Public Relations (PR) Refers to the process in which enterprises maintain a relationship

with the customers, shareholders, employees, distributors, partners, competitors, and the government.

Sales Promotion Refers to a traditional element of marketing communication.

PROMOTIONAL TECHNIQUES OF MARKETING


Defining a Problem

Designing Research

Collecting Data

Interpreting

Research Findings

Reporting Research Findings

PROCESS OF MARKETING RESEARCH


Financial Management is an area of financial decision making, harmonizing individual motives and enterprise goals. ---- Weston and Brigham

The various elements of Financial Management are: Financial Planning Financial Decision-Making Financial Control

FINANCIAL MANAGEMENT IN A NEW ENTERPRISE


It is a process of supervising and monitoring the financial operations of an enterprise.

The various tools of financial control are: Financial Statements

Contains detail regarding the financial activities, such as total income, expenditures, and cash inflows and outflows, of the enterprise

Financial Audits The formal investigations to ensure that financial management

practices follow accepted accounting procedures, policies, laws, and ethical guidelines

Financial Ratio Analysis The systematic use of ratios to assess the performance and

status of the enterprise

FINANCIAL CONTROL


It is the field of management that deals with supervising, designing, and redesigning business operations in the production of goods and services.

Operations management is the field concerned with managing and directing the physical and/or technical functions of a fi rm or organization, particularly those relating to development, production, and manufacturing. --- The U.S. Department of Education

PRODUCTION AND OPERATIONS MANAGEMENT IN A NEW

ENTERPRISE


Characteristics Production Management Operations ManagementNature of Output Involves the production of

tangible productsInvolves production of intangible goods, such as services and utilities

Consumption of Output There is a time gap between production and consumption

The output is consumed immediately after it is produced

Nature of Work Need land, labor, machinery, and capital on large scale

Need comparatively less land, labor, machinery, and capital

Degree of Customer Contact There is no direct contact with customers

In almost every case, there is direct customer contact

Customer Participation in Conversion

There is no participation of customer in conversion process. For example, during the production of steel, customer has no role in converting iron ore into steel.

There is frequent customer contact in conversion process. For example, when a sick child goes to hospital for treatment, the child goes through conversion process, he/she is being cured.

DIFFERENCE BETWEEN PRODUCTION AND OPERATIONS

MANAGEMENT


Output/Labor Ratio The ratio of output produced to input of labor. It is measured for an enterprise, a process, an industry, or a

country. The two major problems associated with output/labor ratio

are: This ratio uses labor as the only input It ignores other important factors of production, such as

equipment and raw materials

Multifactor Productivity (MEP) The ratio of the real value of output to the collective labor

and capital input The formula of calculating the MFP is:MFP =

METHODS FOR MEASURING PRODUCTIVITY


The long-term survival of an enterprise requires an effi cient management of its business.

Managing an enterprise involves several interrelated functions, such as searching the market for profi table business opportunities and formulating marketing, financial, and human resource strategies.

The effi ciency and productivity of employees is directly linked with the type of work environment.

RECAP


managing a new enterprise author: alpana trehan chapter-4 © 2011, dreamtech press :: chapter 4 1

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