Management for Engineers, Scientists and Technologists / Edition 2

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Overview

Significantly revised and updated, this second edition of Management for Engineers, Scientists and Technologists is vital reading for all students of any of these subjects hoping to make it in the real world.

 Increasingly, students of engineering, science and technology subjects are finding that their success depends as much on general management skills and understanding operational systems, as on their technical expertise. This book offers students that all important, firm foundation in management training.

 Management for Engineers, Scientists and Technologists offers a practical and accessible introduction to management and provides a comprehensive guide to the management tools used in managing people and other resources.  Part 1 includes a series of chapters on management applications and concepts, starting with basic issues such as ‘What is a business?’ and ‘What is management?' continuing through management of quality, materials and new product development and concluding with examples of successful companies who provide good models of management.  Part 2 starts with chapters on human resource management, and communication, and goes on to provide some tools and techniques, such as critical path networks, discounted cash flow, inventory control, concluding with a new chapter on the management of SMEs.

 The authors’ significant experience in both teaching and industry provides valuable lessons in business management, and allows them to give real life, insightful case studies.

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Product Details

  • ISBN-13: 9780470021262
  • Publisher: Wiley
  • Publication date: 11/22/2004
  • Edition description: REV
  • Edition number: 2
  • Pages: 560
  • Product dimensions: 9.69 (w) x 7.44 (h) x 1.14 (d)

Read an Excerpt

Management for Engineers, Scientists and Technologists


By John V. Chelsom Andrew C. Payne Lawrence R. P. Reavill

John Wiley & Sons

ISBN: 0-470-02126-8


Chapter One

Business Basics

Don't skip this chapter! It may be basic = simple, but it is also basic = provides a framework or base for your better use of the rest of the book.

1.1 INTRODUCTION

This chapter identifies the basic business functions and shows how they relate to each other to form a 'system' that leads from the idea - the concept of a product or service - to satisfying the customers for that idea. It identifies the need to find funds - that is, money - to get the business started, and to generate more funds by operating the system so that the business can be sustained and expanded. The first part of the chapter describes 'management' and the various roles of managers. The basic business functions are then introduced, and the way they relate to each other to form the 'business chain' or business system is outlined. The chapter concludes with a description of some of the ways in which the performance of business systems may be measured.

1.2 ABSOLUTE BASICS

In absolutely simple terms, businesses, and many other organizations, are concerned with obtaining reward from an idea. How this is done is the task of management, as shown in Figure 1.1.

What is management? This question can be answered by considering first what it is that managers manage - that is, the inputs to the business system- and secondly the roles of managers as they help to transform the inputs to outputs, products or services, through the business process.

So, what are the inputs? Through the nineteenth century it was normal to consider three inputs to a business system:

land;

labour;

capital.

This has its roots in agriculture-based economies, where the capital was used to provide tools for the labour to work the land, plus 'material' in the form of livestock, feed and seed. As economies became more industrialized, the emphasis moved away from land and capital became a more important element, to provide more equipment for the labour as well as a wider range of material inputs. Even in manufacturing, labour was the most important cost element from the late nineteenth century until the mid-twentieth century. At this point, mechanization was supplemented by automation and labour's share of total costs fell rapidly. Mechanization had increased labour productivity through devices such as the moving assembly line, which was introduced in the automotive industry in 1913 by Henry Ford I, initially for the assembly of magnetos in the Highland Park plant in Detroit and subsequently for the assembly of the complete vehicle. Automation, through numerically or computer-controlled machines for cutting, shaping and joining materials, through materials handling equipment and through reprogrammable universal transfer devices (UTDs) - better known as robots - has accelerated this decline in labour's share of cost. As a result, material and equipment costs have become progressively more significant.

Managing materials and equipment requires a lot of data about them and about the companies that supply them. Managers also need to know what is going on inside their own organization, and what is happening outside in the marketplace and general environment. So, by the 1980s a new input became a vital part of many businesses: information. Developments in information technology (IT) and the advent of the Internet have increased the importance of information management as a means of optimizing business performance. Some organizations, for example Asea Brown Boveri (ABB), have used their IT skills as a source of competitive advantage (see Chapter 8).

Thus there are now four inputs or factors to be managed: land, labour, capital and information. But what does it mean, 'to manage'?

From the 1950 edition of Chambers' Dictionary, 'to manage' means: 'To have under command or control; to bring round to one's plans; to conduct with great carefulness; to wield; to handle; to contrive; to train by exercise, as a horse', or the intransitive form, 'To conduct affairs.'

Some of these terms are rather militaristic or dictatorial, but most of the elements of later definitions of management are there. Note that the manager has 'plans' and brings others round to them, and that 'training' is included. These are elements that have grown in importance.

The 1993 edition of Chambers adds: 'to administer, be at the head of; to deal tactfully with; to have time for; to be able to cope with; to manipulate; to bring about.' This suggests that the world outside business and industry has detected little change in management in more than 40 years, and still sees it as a form of constraint or control. Some authorities closer to the action share this view. Stafford Beer, a deep thinker and prolific writer on the subject, described management as 'the science and profession of control'. As shown briefly below and in more detail in Chapter 3, these definitions are too restrictive - good management entails more positive features, such as initiative and leadership.

Mintzberg quotes a definition from 1916 by a French industrialist, Henri Fayol, who said that the manager 'plans, organizes, coordinates and controls' but goes on to show that managers actually do rather different things most of the time. Mintzberg defines a manager as a 'person in charge of an organization or one of its subunits'. From his own observations and from studies by others in the US and the UK, Mintzberg concluded that managers spend their time in ways that can be grouped into three separate roles: interpersonal, informational and decisional. Elements of each role are shown in Figure 1.2.

While some of the old dictatorial terms from the dictionary definition are still there in Mintzberg's analysis - 'figurehead', 'monitor', 'handler', 'allocator' - there are some important softer additions - 'disseminator', 'negotiator' and, most important, 'leader' and 'entrepreneur'.

Within the role of leader, Mintzberg notes, 'Every manager must motivate and encourage his employees, somehow reconciling their individual needs with the goals of the organization.' This is more like the style that most organizations aim for today. It recognizes that employees are individuals, with needs that may sometimes conflict with corporate goals, and that corporations do have goals.

Setting corporate goals, and encouraging and enabling all employees to share them and work towards their achievement, is one of top management's major tasks.

Mintzberg also states, 'As entrepreneur, the manager seeks to improve his unit, and adapt it to changing conditions in the environment ... is constantly on the lookout for new ideas ... as the voluntary initiator of change.' Many organizations are still striving to realize this image of the manager at all levels, and to create a working environment where constant improvement and new ideas are encouraged by involvement and empowerment of all employees, not just managers, to the limits of their abilities.

So, today's manager is enabler, coach and counsellor, as well as leader, entrepreneur, communicator, planner, coordinator, organizer and controller. The manager performs these roles within the business system, and in some cases in setting up the business system.

1.3 THE BUSINESS SYSTEM

The manager performs within an environment and manages resources to achieve some end or objective. Whatever the resources and the objective, there are some features common to the route from the idea or concept to the end result. The sequence of processes and the functions to be performed are similar whether the product is a dynamo or a doughnut, software or a symphony, a car or a cure. A chart identifying the major functions is shown in Figure 1.3.

What the organization does (i.e. what is to be produced, where it is to be sold, where the facilities are to be located) is largely determined in the 'corporate' box.

'Design' is concerned with what the product or service or system contains, what its dimensions are, what it is made from and how it performs to meet the market requirement. 'Production engineering' is concerned with developing how - how the components of the product or service or system are made and assembled. The production, distribution and support functions are concerned with when operations are performed - when material, labour or information is brought in, when production, distribution and service activities are performed. A more detailed list of the decisions and actions in each of these groups of functions is shown in Figure 1.4.

The collection of processes and functions can be regarded as a system, or a business or a business system, through which the idea is turned into a design, which is turned into a product, which is made, sold, distributed, serviced and eventually replaced and scrapped or recycled. Figure 1.5 represents such a system.

Within the system, the core functions of design, sales and production are supplemented by analysts, advisers and scorekeepers concerned with financial, legal and personnel matters. In Figure 1.3 these are contained in the remote 'corporate' box, which is sadly realistic - one of the most difficult management tasks is to close the gap between advisers and monitors in one group, and 'doers' in other parts of the organization.

1.4 HOW THE SYSTEM WORKS

The entrepreneur, or research team, with a brilliant idea may find that a great deal of waste is avoided if the appeal of the idea is checked first with potential users or buyers. This may be done by market research through specialists, or by the entrepreneur, or by the organization's own sales and marketing activity. This is not an infallible process. One of the most famous market failures was the Ford Edsel, a car introduced for the US market in the 1950s, which was also one of the most expensively researched. As at election times, what the pollsters think the public say they will do is not always what they in fact do. Internal committees may be no better - the video cassette recorder was invented in the Victor company of the USA, but its management thought it had no market. The idea was only brought to market by Matsushita, through its ownership of the Japanese Victor Company (JVC). The Sony Walkman, on the other hand, was the result of logical and lateral thinking rather than third-party market research, and was enormously successful.

Market tested or not, the idea will need design and development to turn it into something fit for production. The production processes have to be developed, production personnel put in place with any necessary equipment, materials procured and the completed product delivered to the customer. The customer in most cases has to be charged, and suppliers of goods and services paid. Some products need support or service after they have been sold and taken into use, and disposal or recycling at the end of the product life have to be considered.

Many of these activities have to be performed, and paid for, before payments are received from customers, so the idea needs backing with money to bring it to market or into use. This may be the entrepreneur's own money, or it may be borrowed - in which case the lender will require a return in the form of interest - or it may be subscribed in exchange for a share in the business. Shareholders will require either interest payments or dividends - that is, a share of profits - as reward for risking their capital. In Figure 1.6, the shaded lines represent flows of information, product or funds, or actions that have to be completed before money starts to flow into the organization as payments from customers.

The first few months in the life of any business are critical, as the owners wait for the inflow of payments for sales to overtake the outflow of payments for costs. Of course these 'cash flows' have to be carefully considered at all times, not just at start-up. Cash-flow management through the 'working capital cycle', as described in Chapter 14, is vital to a company's survival. Lack of control in this activity is the most frequent cause of failure in start-up companies - the enterprise runs out of money before it is firmly established in the marketplace. Cash-flow problems can also create difficulties for large, well-established concerns - see the example of ABB in Chapter 8.

For short-term success, the entrepreneur has to meet all the organization's costs from sales of the product, and have something to spare to make it all worthwhile. Longer term, the 'something to spare' has to cover continual generation of more and better ideas, the maintenance and renewal of facilities, development of personnel, and reaction to competitors and other external factors. Long-term success comes from doing all these things better than other organizations in the same or a similar business - that is, better than the competition.

The more successful the original idea turns out to be, and the more successful the company becomes, the greater the likelihood that competitors will appear. A management tool for dealing with competitive threats - Porter's Five Forces analysis - is shown in Chapter 22.

1.5 MEASURING PERFORMANCE Managers need to measure several aspects of company performance. Where 'other people's money' is involved, those other people will want to know how 'their' company is doing.

Some measures come from the financial accounts that most companies are required by law to keep. The accounts comprise two major elements - the profit and loss (P&L) accounts and the balance sheet (described in more detail in Chapter 14).

A very simple indication of what appears in P&L and balance sheets is shown below. The P&L accounts show revenues - the value of sales - and the costs incurred in making those sales. The difference between revenue and costs is the profit (if revenue exceeds costs) or loss (if costs exceed sales revenue). The trend of profit or loss in successive accounting periods is one important performance measure.

The balance sheet shows the company's assets on one side and its liabilities on the other. The total value of the assets equals the total of the liabilities - hence the name 'balance sheet'. Growth in the balance sheet total is normally seen as 'a good thing', but much depends on why the figure has grown, and what use has been made of the investment or assets.

Two of the most common performance measures that can be derived from the accounts and give an indication of how well the assets have been used are return on capital employed (ROCE) and return on sales.

Return on capital employed is calculated as

profit before tax / capital employed

The normal target is 10% or more.

Continues...


Excerpted from Management for Engineers, Scientists and Technologists by John V. Chelsom Andrew C. Payne Lawrence R. P. Reavill Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

Acknowledgements.

Introduction to the second edition.

Preface.

PART I: BUSINESS BASICS.

1. Business basics.

2. The business environment.

3. Management styles: From Taylorism to McKinsey’s 7Ss.

4. Management of quality.

5. Materials management.

6. Managing design and new product development.

7. Organizations.

8. Managing to succeed.

PART II: MANAGING ENGINEERING RESOURCES.

9. Human resource management – the individual.

10. Groups of people.

11. Communication.

12. Work study.

13. Costing and pricing.

14. Measuring financial performance.

15. Project investment decisions.

16. Maintenance management.

17. Project management.

18. Networks for projects.

19. Project management – managing construction procurement.

20. Inventory management.

21. Management of the supply system.

22. Marketing.

23. A case study in starting an SME.

Appendix 1: A guide to writing a business plan.

Appendix 2: Quality management tools.

Appendix 3: Case study: Developing a network.

Appendix 4: DCF tables.

Index.

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