PHARMACEUTICAL INDUSTRIAL MANAGEMENT

BY MOHD IRSHAD REZA

& DIVYA GOEL B PHARM (3RD YEAR)

GALGOTIAS UNIVERSITY

CONTENTS• ADMINISTRATIVE MANAGEMENT• ELEMENTS OF MANAGEMENT • PLANNING• ORGANIZING • STAFFING • DIRECTING • CONTROLLING • ENTREPRENEURSHIP DEVELOPMENT• OPERATIVE MANAGEMENT• PRINCIPLE OF MANAGEMENT• SCIENTIFIC MANAGEMENT • MARKETING RESEARCH• MEASURING AND FORECASTING MARKET DEMAND

ADMINISTRATIVE MANAGEMENT

• Definition-• Management is a technique using which the

purposes and the objectives of a particular group are determined, classified and effectuated.

• Management is forecasting, planning, organizing, commanding, coordinating and controlling.

ELEMENTS OF MANAGEMENT• The six elements of management are as follows:• 1. Determine objectives—planning• 2. To setup an organization and assign responsibility—

organizing• 3. To interrelate and direct activities—command• 4. To set standards and effect control accordingly—controlling• 5. To motivate and socialize the employee groups—motivation• 6. To cause cooperation among various factors of production

and organized groups of personnel—• coordination

PLANNING

• Definition-• It is a mental process requiring the use of

intellect, foresight, imagination and a sound judgment. Planning is deciding in advance what is to be done, when, where, how and by whom it is to be done

Elements of Planning• The following are the important elements of planning:• a. Objectives-The objectives determine the goals on the basis of

which the action of an enterprise is projected

• b. Policies-Policies provide guidance to the subordinates and enlist their cooperation on the guided lines

• c. Procedure-Procedure charts out the specific manner in which the actions are to be taken and the work accomplished.

• d. Programme- Programmes are meant for assembling all plans into one in a workable form for a complete and an orderly course of action

• e. Budget-Budgets are said to be the statement of numerical facts designed to attain the desired results.

Importance of Planning• 1. Improves competitive strength• 2. Improves motivation:• 3. Encourages innovations and creativity• 4. Planning off sets future uncertainty and change• 5. Planning helps in management by defining

objectives:• 6. Better coordination• 7. Economy in operation• 8. Helps in control

Steps in Planning• Following are the important steps in the process of planning• 1. Determination of objectives• 2. Establishment of planning premises• 3. Determination of alternative courses• 4. Evaluation of alternatives and selection of the course of action• 5. Preparation of derivative plans• 6. Timing and sequence of operations• 7. Securing participation of employees• 8. Considering the strategy• 9. Providing follow-up to the proposed course of action

Limitations of Planning

• The following are the obstacles to the process of planning

• 1. A costly proposition• 2. Planning fails with big and regular changes• 3. Inelastic administration• 4. Unreliable estimates• 5. Initiative, originality and individuality yield

to planned efforts

ORGANIZING

• Definition• Organizing is a process of dividing and

combining efforts of a working group to make the joint efforts more productive and fruitful.

• Organizing establishes a pattern of relationships among the efforts to be put, jobs to be done and work to be performed.

Elements of organization:• There are three important elements of an organization• 1. Division of work-An effective division of work between personnel

selected to do a particular job(s) is the foremost function of an organization

• 2. Interrelationship-Establishment of interrelationships between jobs, duties, responsibilities and authority either in a formal or in an informal way

• 3. Individual performances-Individuals do the assigned jobs. Whether an individual or a group of individuals is doing the assigned duties and carrying out the responsibilities in accordance with the instructions or not

Types of Organization (Patterns)• 1. Line organization a. Pure line organization b. Departmental line organization• 2. Functional organization• Line Organization• It is also known as vertical organization or departmental

organization or scalar organization. This organization is based on the superior–subordinate relationship. When a superior delegates authority to a subordinate, he in turn does so to another subordinate thus forming a line from the top to bottom of the organizational structure.

Pure line organization

• Pure line organization is simple in form and seen in small units that produce only one item and where activities can be grouped according to their nature.

Departmental line organization• In departmental line organization, the

business unit is divided into departments that are headed by department heads

Advantages of Line Organization

• Line organization is easy to establish and very simple for the employees.

• It leads to better coordination and stability. • It ensures strong discipline because of the

unity of command. • The authorities of various personnel are well-

defined hence, noconflict in their powers and authority.

Disadvantages of Line Organization

• All the decisions are taken by the single boss and the success and growth of the whole department depends on his abilities only.

• The boss is overloaded with work and he may not direct the efforts of his subordinates properly

Functional Organization

• In functional organization, the whole task of management is classified according to the type of work involved. The normal operations performed in a business house are production, research, personnel, purchasing, finance, etc.

Advantages of Functional Organization

• It ensures higher degree of efficiency as the workers get instructions from experts they

• have to perform a limited number of tasks. • It ensures a greater division of labourDisadvantages of Functional Organization• Conflict in authority• Discipline is slackened• Lack of coordination• Complication procedure

STAFFING

• Definition• Staffing is the procurement of efficient people

for the organization. It is a process of matching the jobs with the individuals.

• by means of staffing, the management recruits, selects and trains the employees

Staffing is related to the following functions-

• 1. Forecasting the manpower requirements• 2. Establishing job specifications and job descriptions• 3. Determining the sources of recruitment• 4. Recruitment• 5. Selection and placement• 6. Training and educating the employees• 7. Coordinating, promotions, transfers etc.• 8. Maintenance of necessary records for the

efficient manpower management

Importance of Staffing

• Staffing injects life into the organization by providing the right person for every job.

• The effectiveness of directing and the control functions also depend on staffing.

• Employees in the organization are the most valuable asset of an organization.

• Staffing helps to build a healthy organization where the job performance and satisfaction for every employee is high.

DIRECTING

• Definition• Directing consists of the processes and

techniques utilized in issuing instructions and making certain that operations are carried out as originally planned. In simple words, directing is guiding the subordinates in their work.

The function of direction has three essential components

• 1. Function of command: It is the issuing of instructions and orders.

• 2. Guiding the people: It is the responsibility of a manager to guide and teach the subordinates the proper methods of work.

• 3. Supervising the people: The management has to supervise the subordinates to ensure that their performance conforms to the plans.

Principles of Direction

• principles can be divided into two parts• 1. Order• 2. Supervision• Order- An order is a command by a superior

requiring a subordinate to act or refrain from acting in a given circumstance. It is usually an instruction given by a superior to his subordinate

Characteristics of a Good Order

• A good order has the following characteristics:• 1. The order must be reasonable• 2. The order must be compatible with the purposes

and the objectives of the enterprise.• 3. The order should be intelligible, complete and clear.• 4. The tone of the order should be appropriate. It

should stimulate ready acceptance.• 5. It must specify the deadline of completing the

instruction.

Techniques of Orders

• Following are the important techniques of issuing orders-

• General or specific orders• Written or oral orders• Conformality• Timing• Follow-up orders

SUPERVISING• Supervision is overseeing the subordinates at work. It is

an important part of direction for every manager. Functions of a supervisor-• 1. To schedule work for its even and steady flow• 2. To assign work to different workers according to their

abilities.• 3. To provide proper working environment to the workers• 4. To provide leadership to the workers• 5. To elicit their willingness to work for the achievement

of the group objectives• 6. To control the performance of the workers

CONTROLLING

• Control is checking the current performance against the predetermined standards contained in the plans with a view to ensure adequate progress and satisfactory performance.

Salient features (characteristics) of controlling

• 1. An end itself: Control is an end function of the process of management

• 2. A forward looking process: Even though it lives in the present, it is related to the future

• 3. A dynamic process: Control is a dynamic process. And the management functions are flexible

• 4. A continuous process: Control is a continuous activity. It does not stop

• 5. Operation at all levels: Controlling is done at all the levels of management.

Steps in the Process of Control

• 1. Well-defined objectives and goals• 2. Determination of strategic point of control• 3. A predetermined criterion• 4. Determination of controllable cost and control

period• 5. Strengthening the organization• 6. Measurement of performance• 7. Comparison of actual performance with standards• 8. Correction of deviations

Entrepreneurship development

Definition Entrepreneurship is neither a science nor a art. It is

a practice. It is not just about making money. It is all about imagination, flexibility, creativity, willingness to think conceptually, readiness to take risk.

• The word is derived from the French word ‘entreprendre’ which means ‘undertakers’.

• The word referred to those who undertook the risk of starting a new enterprise

STAGES OF ENTREPRENEURSHIPFundamentally there are five (often overlapping) stages:1. Discovery: In which the entrepreneur generates ideas, recognizes

opportunities, and determines the feasibility of ideas, markets, and ventures;

2. Concept development: In which the entrepreneur plans the venture, identifies needed resources using a business plan, and identifies strategies for penetrating markets or protecting intellectual property;

3. Resourcing: In which the entrepreneur identifies and acquires the financial, human, and capital resources needed for the venture start-up,

4. Actualization: In which the entrepreneur operates the venture and utilizes resources to achieve its goals and objectives

5. Harvesting: In which the entrepreneur decides on the venture’s growth, development, or even demise.

BENEFITS OF ENTREPRENEURSHIP

• Opportunity of huge personal financial gain.• Scope of high order of Job satisfaction, sense of

achievement, self employment.• Generation of employment / income for others.• Contribution to overall growth in the region/

nation /world• Encourages higher quality products.• Development of new products and markets.

OPERTIVE MANAGEMENT

• Operations management is defined as the, and improvement of the system design, operations that create and deliver the firm’s primary products and services

Importance of management

OperationsManagement

Business Education/Career Opportunities

Systematic Approachto Org. Processes

Increase Competitive Advantage/Survival

Cross-FunctionalApplications

3

QualityManagement

StatisticalProcess Control

Just in Time

Materials Requirement Planning

Inventory Control

AggregatePlanning

Operations Management - Overview

ProjectManagement

Supply Chain Management

Process Analysisand Design

Process Controland Improvement

Waiting Line Analysis and Simulation

Services

Manufacturing

OperationsStrategy

Facility Layout

Consulting andReengineering

Process Analysis

Job Design

Capacity Management

Planning for Production

Supply ChainStrategy

Operations Strategy

Customer Needs

Corporate Strategy

Operations Strategy

Decisions on Processes and Infrastructure

ExampleStrategy Process

More Product

Increase Org. Size

Increase Production Capacity

Build New Factory

PRINCIPLE OF MANAGEMENT

• Management is a science. Management has to perform a number of functions, such as planning, organizing, coordinating, directing, control ling, etc., for the purpose of achieving its objectives

• The principles of management are statements of fundamental facts. These principles serve as guidelines for decisions and actions of managers

Need of principle of management

• 1. To increase efficiency• 2. To highlight the true nature of management• 3. To aid in the training of managers• 4. To improve research• 5. To attain social goals

SCIENTIFIC MANAGEMENT

• Various thinkers have contributed to the development of modern management. F.W. Taylor and Henry Fayol are two outstanding names in the field of management.

• According to F.W. Taylor, ‘Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and the cheapest way’.

• His philosophy of scientific management is based upon the following principles:

• 1. Development of true science for each element of work

• 2. Scientific selection, training and development of workers

• 3. Close cooperation between workers and management

• 4. Equal division of work and responsibility• 5. Maximum prosperity for both the employers and the

employees• 6. Mental revolution

HENRY FAYOL’S PRINCIPLES OF MANAGEMENT

• Henry Fayol was a French industrialist. He classified all business activities into six categories.

• 1. Technical (production or manufacturing)• 2. Commercial (buying, selling and exchange)• 3. Financial (search for optimum use of capital)• 4. Security (protection of property and people)• 5. Accounting• 6. Managerial

• According to Fayol, the first five groups of activities are quite well known and therefore, he concentrated his attention on the analysis of the sixth group, i.e. managerial activities. Fayol suggested the following 14 principles of management in order to make the job of managing more effective:

• 1. Division of work• 2. Authority and responsibility• 3. Discipline• 4. Unity of command

• 5. Unity of direction• 6. Subordination of individual interest to general

interest• 7. Remuneration of personnel• 8. Centralization and decentralization• 9. Scalar chain• 10. Order• 11. Equity• 12. Stability of tenure of personnel• 13. Initiative• 14. Esprit de corps

MARKETING RESEARCH

• Definition-• Marketing research is the collection, summary

and analysis of the data regarding the goods and services so that the behaviour of the consumers may be understood and maximum satisfaction may be provided to them.

SCOPE OF MARKETING RESEARCH

• The scope of marketing research is very wide.• The scope of marketing research may be

explained as follows:• 1. Research of products and services• 2. Research on markets• 3. Research on sales methods and policies• 4. Advertising research• 5. Research on miscellaneous activities

ADVANTAGES OR IMPORTANCE OF MARKETING RESEARCH

• Production of New Products• New Uses of Products• Important Information About Customers• Selection of the Channels of Distribution• Existence in Competitive Situation• Knowledge of Demand• Planned Production• Improvement in the Quality of Products• Discovery of Potential Markets

TYPES OF MARKETING RESEARCH• Product Analysis-Product analysis is a detailed and a

thorough study of the popularity of products among consumers of an enterprise

• Market Analysis-Market analysis is the study of markets available for a particular product of an enterprise.

• Distribution Analysis-Distribution analysis is related with the analysis of different problems related to the physical distribution of goods and services, such as storage, transportation, advertisement, sales promotion, pricing policy, etc.

• Competition Analysis-Competition analysis is the analysis of the competitive situations prevailing in the market.

• Consumer Research-Consumer research is the research on the present and the potential consumer of the enterprise.

• Sales Analysis-Sales analysis is an important tool to measure the effectiveness of the sales organization of an enterprise.

• Motivational Research-Motivational research is the study of the reaction of consumers or society towards the products of an enterprise or the enterprise itself.

• Advertisement Research-The evaluation of the effectiveness of advertising programmes and sales promotion campaign is much more important. Advertising research undertakes this responsibility.

NEED OF MARKETING RESEARCH• Marketing research is not only desirable but has become

a necessity of all the business and industrial enterprises of today.

• Market research is necessary in the following conditions:• 1. When a new product is to be launched into the market• 2. When adequate data are not available with respect to

the demand of a product• 3. When there are fast changes in the habits, tastes and

attitudes of the consumers• 4. When there are fast changes in fashion

• 5. When the sale of a particular enterprise goes on declining

• 6. When adequate data is not available about the consumers of a particular group

• 7. When adequate data is not available about a particular market segment

• 8. When the data of consumer reactions to the packing or utility or price of a product are to be collected

• 9. When the effectiveness of an advertising campaign is to be evaluated

• 10. When the possibilities of developing a new products are to be explored

MEASURING AND FORECASTING MARKET DEMAND

• Market measuring and forecasting requires an analysis of the market with an aim of expressing it in quantitative (numeric) quantities both present and in the future

Measuring Current Market Demand

• Marketers will want to estimate three different aspects of current market demando Total market demando Area market demando Actual sales and market shares

Estimating Total market demand

• The total market demand for a product or service is the total volume that would be bought by a defined consumer group in a defined geographic area in a defined time period in a defined marketing environment under a defined level and mix of industry marketing effort

• Q = n x q x p Where,

Q = total market demand n = number of buyers in the market q = quantity purchased by an average buyer per

year p = price of an average unit

A common way to estimate total market demand is as follows:

Estimating Area Market Demand

• Two major methods are availableoMarket buildup method – used primarily by

business goods firmsoMarket-factor index method – used primarily by

consumer goods firms.

Market-Buildup Method

• Calls for identifying all the potential buyers in each market and estimating their potential purchases.

• Mining instruments that test the actual proportion of gold content in gold-bearing ores.

• Price of instrument $1,000. The company wants to determine the market potential.

• To estimate the market potential the manufacturer can consult the Standard Industrial Classification (SIC).

SIC (1)Number of employee

s

(2)Number of mines

(3)Potential

Number of instruments

per size class

(4)Unit

market potentia

l(2 x 3)

(5)Dollar market

potential (at $1,000

each)1042(lode deposits)

Under 1010 to 50Over 50

805020

150

124

8010080

260 $260,000

1043(placer deposits)

Under 1010 to 50Over 50

40201070

123

404030

110 110,000$370,000

Market-Factor Index Method

• Identifies market factors that correlate with market potential and combines them into weighted index.

• A manufacturer of men’s dress shirts wishes to evaluate its sales performance relative to market potential in several major market areas

ESTIMATING ACTUAL SALES AND MARKET SHARES

• Besides estimating total and area demand, a company will want to know the actual industry sales in its market. Thus, it must identify its competitors and estimate their sales.

• Industry’s trade associations often collect and publish total industry sales,

• although not individual company sales. In this way, each company can evaluate its performance against the industry as a whole. Suppose the company’s sales are increasing at a rate of five percent a year and industry sales are increasing at 10 percent. This company actually is losing its relative standing in the industry.

FORECASTING FUTURE DEMAND

• Forecasting is the art of estimating future demand by anticipating what buyers are likely to do under a given set of future conditions.

• Companies commonly use a three-stage procedure to arrive at a sales forecast. First they make an environmental forecast, followed by an industry forecast, followed by a company sales forecast.

• Companies use several specific techniques to forecast their sales.

• All forecasts are built on one of three information bases-

1- What people say2 -What people do3 -What people have done

What people say• Surveys of buyers’ • intentions Composite sales force opinions • Expert opinion

What people do• Test markets

What people have done• Time-series analysis• Leading indicators• Statistical demand analysis

SURVEY OF BUYERS’ INTENTIONS

• One way to forecast what buyers will do is to ask them directly. This suggests that the forecaster should survey buyers.

COMPOSITE OF SALES-FORCE OPINIONS• When buyer interviewing is impractical, the

company may base its sales forecasts on information provided by the sales force.

EXPERT OPINION• Companies can also obtain forecasts by turning

to experts. Experts include dealers, distributors, suppliers, marketing consultants, and trade associations.

TEST MARKETING• A direct test market is especially useful in

forecasting new-product sales or established product sales in a new distribution channel or territory

Time-series analysis• Time-series analysis consists of breaking down

past time series into four components (trend, cycle, seasonal, and erratic) and projecting these components into the future

LEADING INDICATORS• Many companies try to forecast their sales by

finding one or more leading indicators other time series that change in the same direction but in advance of company sales.