Unit 1 Company Structure
1 How are companies organized?
; The first step in organizing a business enterprise.
– Who will do what job?
– How people doing the jobs are grouped together?
; Job Specialization is a process in job design whereby a firm’s overall job is broken down
into smaller parts. Each part is then given to an individual who is specialized in doing that
bit of the job.
; Specialization can increase efficiency, and in case an employee leaves, make the training
of the replacement easier.
; But if the specialization goes too far, the job would be too narrow in scope and
monotonous in nature, which will cause boredom, dissatisfaction, low efficiency and even
; Departmentalization can be accomplished along:
– functional lines (e.g.marketing, production, finance),
– geographic areas (e.g.Harbin, South China, East Asia),
– goods and services produced (e.g.microcomputers and mainframe computers in
the case of a computer manufacturer; life insurance and automobile insurance in
the case of an insurance company),
– manufacturing process (e.g.spinning, weaving and dying in textile industry) and
– customers (e.g.personal loan and institutional loans in the case of a commercial
; The next step in organizing is to determine:
– Who reports to whom and
– Who calls the shots?
1-1 A line and Staff Authority
; A line organization based on line authority is one in which all authority flows in a direct
chain of command from the top of the organization to the bottom.
; As an organization grows larger and its operations become more complex, the staff
departments are set up to aid the line departments but the former have no authority to
make final decisions for the later.
; Such a structure has been widely adopted, particularly in large companies. Advantages and disadvantages:
– The authority and responsibility are clearly defined, and the everyone has one
and only one boss. Therefore, decisions can be made and carried out quickly.
– High cost of maintaining staff departments and the occasional resentment from
the line departments for having to listen to the staff specialists.
1-2 Functional Organization
Advantages and disadvantages:
– The main strength of such an organizational structure is that, by placing like
specialists in the same department, it can minimize duplication of personnel and
equipment and increase efficiency.
– In pursuing functional goals, different departments often lose sight of the
organization’s goals, and no one is totally accountable for the final outcome as a
whole. Besides, functional managers working in their own departments do not
get adequate training which would prepare them as future senior managers who
need a much broader perspective on the organization.
1-3 A Divisional Organization
Advantages and disadvantages:
– The division managers enjoy a high degree of autonomy and are totally
responsible for the performance of their divisions. Compared with functional
managers, division managers are better candidates for senior managers.
– It causes duplication of activities and resources.
1-4 Matrix Organization
Advantages and disadvantages:
– A matrix organization is cost-effective for work on new products.
– It may cause confusion because one employee has more than one superior.
Moreover, such an organization is temporary in nature and, therefore, long-term
working relationship are difficult to develop.
1-5 Committee Organization
; A committee organization is an organization in which people from different areas are
brought together to study problems and make decisions on them.
; A committee which is established on a permanent basis known as a standing committee,
and one which is set up to solve a specific task and then dissolved is called an ad hoc
; Committee could be independent organizations, but most of them work in combination
with one of the above discussed forms of organization.
Advantages and disadvantages:
; It usually takes a longer time for a committee to make a decision and the decision
may result from compromises. For problems involving complex issues, however,
committee organization is often the most desirable form because it draws on the
expertise of all its members and can tackle the problems in greater depth.
1-6 Informal Organization
; Communication in a company, a grapevine.
; Grapevine can facilitate the communication networking of a company. Advantages and disadvantages:
– The grapevine can spread information more rapidly than formal channels.
– It can also help build rapport among people within and across their work units,
which will in turn foster team spirit, and facilitate coordination and cooperation
within the company.
Unit 2 Labor-Management Relations
2-1 Labor Unions
What are labor /trade unions?
Labor unions or trade unions are organizations that attempt to represent worker’s interests.
They negotiate with employers about the wages, working hours and working conditions
of their members.
What can they do?
They can defend members who have individual grievances. If dissatisfied, they can take “industrial action” such as going on strike or operating a go-slow or a work-to-rule.
During a strike they can picket their place of work and try to prevent other workers or delivery drivers entering the premises.
What are the functions of labor unions?
Labor unions are a necessary voice for the interests and needs of workers, and that in many countries they have played an enormous dynamic political and economic role.
Governments and employers that want social peace, and a team-working and dynamic economy, should encourage the existence of trade unions.
2-2 Management Rights
What are the management rights?
Management rights is a term which defines those areas over which management exercises exclusive decision-making authority.
Two categories of management rights:
There are two categories of management rights, mandatory or reserved rights, permissive rights.
Mandatory or reserved rights refer to the right to determine mission, budget,
Permissive rights are those rights (e.g., numbers, types and grades of employees
assigned to an organizational subdivision, work project, or tour of duty) that
management may bargain, but is not statutorily required to do so.
2-3 Employee Rights
Employees have the right to form, join or assist a union or to refrain from doing so.
Employees shall be free to exercise this right without fear of penalty or reprisal
and shall be protected in exercising this right.
Employees have the right to:
Act as a union representative, and in that capacity, to present union views to
agency management, the Congress or other authorities.
Negotiate over conditions of employment through their chosen representative.
2-4 Collective Bargaining (Negotiating)
Negotiating or collective bargaining is the mutual obligation of management and the union to meet at reasonable times and bargain in a good faith effort to reach agreement with respect to conditions of employment affecting employees represented by the union.
Conditions of employment is a broad term which encompasses personnel policies, practices, and matters affecting working conditions. Certain matters are specifically excluded by law from being considered a condition of employment (e.g., the classification of a position).
2-4-1 Collective Bargaining (Negotiating) Process
The negotiating process is designed to promote the balancing of the rights and interests of employees, the union, and management, and to foster a two-way flow of communication. Most employees, supervisors and managers are not directly involved in negotiating the collective bargaining agreement. The negotiating team is usually comprised of a small group of management and union officials.
The goal of labor-management relations is for the union and management to strive for a sound and constructive relationship - a relationship which fosters effective resolution of issues.
The formal phase of contract negotiations begins when:
– The union requests to meet with management to discuss a written agreement or
– Management requests to meet with the exclusive representative to discuss a
written agreement or submits proposals.
– Within the time specified in the existing agreement, either party notifies the other
of its intent to renew, extend, or renegotiate the existing agreement.
– The parties jointly agree to discuss their actual interests and how to satisfy those
interests through a written agreement.
2-4-2 Impact and Implementation Bargaining
When management wants to make a change affecting unit employees conditions of employment, the union may be entitled to negotiate on the substance of the change itself (substantive bargaining) or may be precluded from doing so because of law, rule, regulation, or management rights.
Even where the union cannot bargain on the change itself, management must give the union reasonable advance notice of the proposed change and the right to request impact and implementation (I & I) bargaining. This type of bargaining concerns procedures that management will use to effectuate the proposed change and appropriate arrangements for employees adversely affected by the change.
Management is normally required to give sufficient written notice to the appropriate union representatives of the proposed change and be available, upon request, to bargain over the change prior to its effectuation. If the union does not respond, or does not respond in a timely fashion, it has waived its right to bargain and the proposal can be implemented as outlined in the formal notification. If the union does request negotiations, management must, to the extent possible, maintain the status quo until agreement is reached through the negotiating process.
2-5 Interest-Based Bargaining
What is interest-based bargaining?
Interest-Based Bargaining (IBB) (also sometimes called mutual gains bargaining or win-win bargaining) is a term that refers to a form of negotiating where the parties look for common ground and attempt to satisfy mutual interests within the framework of a collaborative, problem-solving relationship through the bargaining process.
The differences of IBB and traditional negotiating techniques?
IBB differs substantially from traditional negotiating techniques in its reliance upon a variety of techniques to promote open communication, (such as brainstorming, facilitation), and information sharing.
The purpose of exchanging ideas and information is to develop options. Those options are then evaluated both in terms of their effectiveness in resolving the problem and their acceptability to the parties.
The objective of the entire process is to reach agreement by consensus. In consensus decision making, the intent is to achieve a resolution that everyone can accept and support
even though that course of action might not be their first choice.
– To establish cooperative labor-management relations,to reinvent
labor-management relations and turn adversaries into partners with a common
Advantages of labor-management partnerships:
Cooperation between labor and management can enhance effectiveness and efficiency, cut down the number of employment-related disputes, and improve working conditions, all of which contribute to the kind of performance and results sought by governments.
Labor-Management partners can expect the following from their partnership:
– Increased commitment to achieving the agency's mission.
– Better customer service, productivity, and work product quality.
– Joint resolution of problems.
– Shared responsibility and accountability for results.
– A more constructive relationship between labor and management.
– Enhanced employee morale and job satisfaction.
– Increased communication and information sharing that fosters support for
– Recognition of the Government as a model employer.
?Partnerships vary by organization, but one characteristic exists in all - a changed
?A successful partnership is characterized by:
Increased commitment to achieving the agency's mission.
A willingness to share power.
Respect and trust for all or the desire to work to this goal.
Open and candid sharing of information.
Joint decision-making on issues of common concern and agreement reached through consensus.
Cooperation even though some may disagree on specific issues.
Patience for and commitment to partnership for the long haul.
Problems identified and solved jointly to better serve customers and achieve the mission.
Recognition of the Government as a model employer.
2-7 Case Study: TOYOTA
Toyota's labor-management relations are based on mutual trust between labor and management. Following a labor dispute in 1950, mutual trust between labor and management was adopted as the foundation of labor-management relations in the joint labor and management declaration concluded in 1962. Since then, repeated discussions have led to deeper understanding and trust between labor and management.
Mutual Trust Between Labor and Management
The basic concepts of mutual trust between labor and management are:
improvements in the lives of employees are realized through the prosperity of the
company, and labor and management thus share the same goal of company
prosperity as a common value; management will take into consideration to the
greatest possible extent stable employment and will continuously strive to
improve working conditions; and employees will cooperate with the company's
policies in order to promote the company's prosperity.
In the Labor and Management Resolutions for the 21st Century signed by labor
and management representatives in 1996, mutual respect was added to mutual
trust as a foundation of labor-management relations, and this is reflected in the
current Guiding Principles at Toyota Motor Corporation.
Labor and Management Resolutions for the 21st Century (Summary)
Basic Principles of Personnel Management
In order to create a relationship of mutual trust and respect between labor and
management, personnel management is conducted in accordance with four basic
Employment that avoids simple layoffs and terminations is a key pillar in the relationship of mutual trust between labor and management. In addition, the Toyota management system is based largely on bringing out to the greatest extent employee abilities, reasoning skills and creativity. Consequently, the simple disposal of human resources, a major management asset, not only damages the relationship of trust, but also hinders the spontaneous display of ability by employees. Accordingly, Toyota always takes a medium- to long-term management perspective and has made the realization and continuation of stable employment through all possible employment policies the fundamental basis of its management philosophy.
Creating Good Workplace Environments
In order to reflect the ideas and opinions of employees in corporate activities, in addition to promoting communication between employees of different rank within the company, Toyota has also established a Toyota Creative Suggestion System and started QC circle activities.
Toyota has established a number of hotlines for the fast and fair resolution of issues related to compliance, gender harassment, mental health and working conditions. The employee awareness survey conducted every year indicates that "pride in the company" and "employee satisfaction" remain high.
2-8 Text Learning
1. What does the text suggest about newspaper managements and the printers’ trade union
at the time?
Bryson shows that newspaper managements were not very efficient and that the printers’ trade union had been able to negotiate ridiculously uneconomical conditions. They have excessively high staffing levels ( so that The Daily Telegraph was actually paying 300 people who didn’t even come in to work), high salaries (plump means fat, or in this case, high), and excessive bonus payments, so that they got paid extract for setting pages with editors’ marks on them, for setting foreign words, etc. they even got compensated for not setting the type for advertisements that were done elsewhere.
2. What does the first sentence –“to say that Fleet Street … was out of control barely hints at the scale of matter’ – mean?
He means that the situation was so serious (for the newspapers, not for their printers) that to describe the situation as “out of control” isn’t nearly strong enough. The situation was so bad it could not continue.
3. Bryson makes one statement that probably isn’t true, i.e. is a deliberate exaggeration.
Which do you think it is?
The statement about senior printers being among the top two per cent of British earners is apparently true. I suspect that the bit about printers receiving special bonus payments for the white space at the ends of lines (where they did not have to set any type) is a humorous exaggeration. But I am not certain.
4. Do you know what happened to the printers at British newspapers soon after the period Bryson is writing about?
All the newspapers started using a computerized system that allowed them to create pages
from articles typed by the journalists on their own computers, so that type-setting became
unnecessary, and all the printers lost their jobs. There were huge demonstrations by trade
unions and sympathizers outside the new printing works of The Times for several months
in 1986, which is where the photograph on page 50 was taken.
1. What are frequent causes of bad labor relations?
Bad communication; an adversarial (management versus workers) attitude; a lack of consultation; and unions defending uneconomic working practices.
2. What have the consequences of labor-market deregulation been?
Working conditions of many people getting much worse; the creation of many unskilled, casual, part-time jobs done by non unionized workers.
3. Why can these consequences be a problem for management?
If worker are not represented by a union, there is no one representing the workers for management to negotiate with before or during a dispute.
Peter Drucker says “Management is and has to be a power.” What does this mean?
He means that management has a distinctive role, which is quite simply to manage – to
decide what the company is going to do, today and in the future, how it is going to
allocate its resources, and so on – without unnecessary outside interference. But by saying
that power without any restraint or control becomes tyranny, he implies that unions have a
legitimate right to defend the interests of workers.
Should they be allowed to close the factory as soon as the subsidies end?
Large companies sometimes receive fiscal advantages (such as reduce taxes) from
governments if they open a factory and create jobs in an area with high unemployment. In
these cases they perhaps should not be allowed to close the factory as soon as the
In your opinion, should unions be consulted before management makes decisions
about the following?
Manufacturing new products or offering new services
Opening new factories, shops, and so on
Closing existing factories, shops, and so on
Changing working hours
Hiring new staff
Unit 3 Production and Operation Management
3-1 Brief Introduction
; "The Industrial Revolution did not end agriculture because we still have to eat and the
Information Revolution will not end industry because we still need a can to hold beer."
; For a manufacturing company, production is obviously one of the four key functions,
along with human resources, marketing and finance.
; What is operation management?
; Operations management is defined as the design, operation, and improvement of the
systems that create and deliver the firm's primary products and services.
3-2 Function of Production & Operation Management
( 1 ) The Operations Function (2？Operations Strategy ；3？Product Design
；4？Process Selection (5？Service Process Desig ；6？Choice of Technology
；7？Process-Flow Analysis ；8？Managing Quality (9 ) Quality Control and Improvement
；10？Supply Chain Management ；11？Forecasting ；12？Facilities and Aggregate Planning
；13？Scheduling Operations ；14？Project Scheduling ；15？Independent-Demand Inventory
；16？Materials Requirements Planning ；17？Just-In-Time Manufacturing
3-3 Key elements of operation management:
; 1. Product Selection and design:
; The right kind of products and good design of the products are crucial for the success of
an organization. A wrong selection of the product and poor design of the products can
render the company’s operation ineffective and non-competitive.
; Techniques like value engineering may be employed in creating alternate designs which
are free from unnecessary features and meet the intended functions at the lower cost.
; 2. Process selection and planning:
; Process selection decisions include decisions concerning choice of technology, equipment,
machines, material handling systems, mechanization and automation.
; Process planning involves detailing of process of resources conversion required and their
; Selection of the optimal “Conversion system” is an important as choice of
products/services and their design.
; 3. Facilities Location:
; Location decisions involve evaluation to location alternatives against multiplicity of
relevant factors considering their relative importance to the organization and selecting
those which are operationally to the organization.
; Plant location decision are strategic decision and once plant is set up at a location, it is
comparatively immobile and can be shifted later only at a considerable cost and
interruption of production.
; 4. Capacity Planning:
; Capacity planning concerns determination and acquisition of productive resource to
ensure that their availability matches the demand.
; Excess capacity results in low resource productivity while inadequate capacity
leads to poor customer service.
; Capacity planning decision can be short-term as well as long-term decisions.
; Long-term capacity planning decisions concern expansion/contraction of major
facilities required in the conversion process, economics of multiple shift
operation, development of vendors for major components etc.
; Short-term capacity planning decisions concern issues like overtime working,
sub-contracting, shift adjustments etc.
; Break-even analysis is a valuable tool for capacity planning.
; 5. Production planning and control:
; Production planning is the system for specifying the production procedure to obtain the
desired output in a given time at optimum cost in conformance with specified standard of
; Production control is essential to ensure that manufacturing takes place in the manner
stated in the plan.
; Production planning - a pre-production activity, a centralized activity. ; Production control - a complementary activity, a diffused activity (in the shops) and it
includes functions such as dispatching, progressing and expediting.
; 6. Inventory Control:
; Inventory control deals with determination of optimal inventory levels of raw materials,
components, parts, tools, finished goods, spares and supplies to ensure their availability
with minimum capital lock up.
; Material requirement planning (MRP) and Just-In-Time (JIT) are the latest techniques
that can help the firm to reduce inventory.
; 7. Quality assurance and control:
; Quality is an important aspect of production system and it must ensure that services and
products produced by the company conform to the declared quality standards at the
; A total quality assurance system includes such aspects as setting standards of quality,
inspection of purchased and sub-contracted parts, control of quality during manufacture
and inspection of finished product including performance testing etc. ; 8. Maintenance and replacement:
; Maintenance and replacement involve selection of optimal maintenance policy to ensure
higher equipment availability at minimum maintenance and repair cost.
; Preventive maintenance, which includes preventive inspection, planned
lubrication, periodic cleaning and upkeep, planned replacement of parts,
condition monitoring of the equipment and machines, etc. is most appropriate for
; Replacement decisions concerning machines are basically financial investment
decisions but have major influence on the efficiency of the production system.
; Other types of replacement decisions concern parts of machines and most
common problem is to decide between their “individual replacement” and “group
; 9. Cost reduction and cost control:
; Effective production management must ensure minimum cost of production and in this
context cost reduction and cost control acquires significant importance.
3-4 Text Learning
; 1a Discussion
; What particular skills do you think production and operations managers require? ; Production and operations managers should presumably be interested in making products
or providing services rather than simply making money. They usually need a lot of
technical knowledge (about manufacturing processes) and mathematical abilities. Good
human relations skills are also a clear advantage.
; What do you think the objectives of a production department usually are? ; The objectives of the production department are usually to produce a specific product, on
schedule, at minimum cost. But there may be other criteria, such as concentrating on
quality and product reliability; producing the maximum possible volume of output; fully