Lesson 8. Basic concepts and terms the functions of planning and organization in a foreign language.

THE READING MODULE

Read the text №1: Read the text: Organizations

Organizations need to be understood and intelligently managed because they are an ever-present feature of modern life. When people gather together and formally agree to combine their efforts for a common purpose, an organization is the result. All organizations, whatever their purpose, have four characteristics: (1) coordination of effort, (2) common goal or purpose, (3) division of labor, and (4) hierarchy of authority. If one of these characteristics is absent, an organization does not exist. Coordination of efforts multiplies individual contributions. A common goal or purpose gives organization members a rallying point. By systematically dividing complex tasks into specialized jobs, an organization can efficiently use its human resources. Division of labor permits organization member to become more proficient by repeatedly doing the same specialized task. Organization theorists have defined authority as the right to direct the action of others. Without a recognized hierarchy of authority, coordination of effort is difficult, if not impossible, to achieve.

Organizational classifications aid systematic analysis and study of organizations. There is no universally accepted classification scheme among organization theorists. Two useful ways of classifying organizations are by purpose and technology. In regard to purpose, organizations can be classified as business, not-for-profit service, mutual benefit, or common weal. In regard to technology, there are long-linked, mediating, and inten sive technologies. Each of these technologies has characteristic strengths and weaknesses.

Modern organization theorists tend to prefer open-system thinking because it realistically incorporates organizations' environmental dependency. Early manage ment writers proposed tightly controlled authoritarian organizations. Max Weber, a German sociologist, applied the label bureaucracy to his formula for the most rationally efficient type of organization. Bureaucracies are characterized by their division of labor, hierarchy of authority, framework of rules, and impersonality. Unfortunately, in actual practice, bureaucracy has become a synonym for a red tape and inefficiency. The answer to this bureaucratic paradox is to understand that bureaucracy is a matter of degree. When bureaucratic characteristics, which are present in all organizations, are carried to an extreme, efficiency gives way to inefficiency.

Barnard’s acceptance theory of authority and growing environmental complexity and uncertainty questioned traditional organization theory. Open-system thinking became a promising alternative because it was useful in explaining the necessity of creating flexible and adaptable rather than rigid organizations.

Read the text №2: Planning

Planning has been labeled the primary management function because it sets the stage for all other aspects of management. Recent research has uncovered the following trends in corporate planning: more planners with actual management experience; greater teamwork, customizing, and flexibility; and more translation of broad strategies into how-to-do-it plans. Along with many other practical reasons for planning, two conceptual reasons for planning are limited resources and an uncertain environment. To cope with environmental uncertainty, organizations can respond as defenders, prospectors, analyzers, or reactors.

A properly written plan tells what, when, and how something is to be accomplished. Clearly written organizational mission statements tend to serve as a useful focal point for the planning process. Strategic, intermediate, and operational plans are formulated by top, middle, and lower-level management, respectively. Objectives have been called the single most important feature of the planning process. Well-written objectives spell out in measurable terms what should be accomplished and when it is to be accomplished. Good objectives help managers by serving as targets, acting as measuring sticks, encouraging commitment, and strengthening motivation. Objective setting begins at the top of the organization and filters down, thus forming a means-ends chain. Priorities affect resource allocation by assigning relative importance to objectives. Plans are formulated andexecuted as part of a more encompassing planning/control cycle.

Management by objectives (MBO) is an approach to planning and controlling that is based on measurable and participatively set objectives. MBO basically consists of four steps: (1) set objectives participatively, (2) develop action plans, (3) periodically reevaluate objectives and plans and monitor performance, and (4) conduct annual performance appraisals. Objective setting in MBO flows from top to bottom. MBO has both strengths and limitations and requires a supportive climate favorable to change, participation, and the sharing of authority.

Break-even analysis, or cost-volume-profit analysis, can be carried out algebraically or graphically. Either way, it helps planners gauge the potential impact of price changes and profit objectives on sales volume. A major limitation of break-even analysis is that specialized accounting knowledge is required to identify relevant fixed and variable costs.

I. Reading Exercises:

Exercise 1. Answer the questions:

1) Why has planning been labeled the primary management function?

2) What are two conceptual reasons for planning?

3) Who formulates intermediate plans?

4) What is management by objectives based on?

5) Why do organizations need to be understood and intelligently managed?

6) What systems do modern organization theorists tend to prefer?

7) What are bureaucracies characterized by?

8)When does efficiency give way to inefficiency?

Exercise 2. Match the left part with the right:

Exercise 3. Open brackets choosing the right words:

Good objectives (hamper/help) managers by serving as targets, act ing as measuring sticks, (encouraging/discouraging) commitment, and strengthening motivation.

Exercise 4. Read and memorize using a dictionary:

Exercise 5. Complete this newspaper article with correct form of the words from ex.2 opposite. One expression is used twice.

Exercise 6. Before reading the text answer the following question using the active vocabulary.

Is total perfection possible?

The Unforgiving Demands of ‘Six Sigma’ Process Controls

The term ‘six sigma’ is one familiar to statisticians. In practical terms, it means reducing the defects in a process to just over three per million. It is thus an extremely demanding target for quality control.

The term was thought up 10 years ago by the US electronics group Motorola, based on Japanese methods of total quality management. The approach is particularly suited to the high-volume, high-precision electronics industry. For example, a mobile phone such as Motorola produces might contain 400 components. If the company operates to two sigma – 45,000 defects per million – on each part, the chances of the phone being defective are far too high.

General Electric is now in its second year of applying six sigma across its businesses. Last year, it spent $200m on the initial parts of the programme.

This years, it aims to spend $300m and expects cost savings in the year of $400m – $500m: that is, a profit of $100m – $200m. Six sigma is by no means confined to manufacturing. GE Capital, the financial services division of General Electric, applies it to processes ranging from billing to various kinds of customer service. Denis Nayden, president of GE Capital, says that in practical terms the hard part of applying six sigma is obtaining real data. ‘It’s highly dependent on the data you have,’ he says. ‘And given all the businesses we’re in, the data are all different.’ Thereafter, he says: ‘The real question is whether you can put the right model in place, so the process has fewer moving parts and less things to break down. It’s very important to change the process fundamentally. You need to change the whole behaviour of the company, to become more responsive to the customer.’

This last part is crucial. GE Capital surveys its customers regularly – some weekly, some monthly or quarterly, depending on their business – to check its performance. ‘It’s very important that the customer is engaged in this,’ Nayden says. ‘We use a score card, whereby customers identify what’s going wrong and what we should focus on.’

From the Financial Times

Exercise 6. Complete these statements.

a) Figures and information are ……..

b) Preparing and sending invoices to customers is ………..

c) A way of doing something that can be used in different situation is a…….

d) The way that someone acts, does things, etc. is their ………...

e) If something is only used in a particular situation, it is ………. To that situation.

f) If you use something in a situation, you ……….. it to that situation

Exercise 7. True or false about General Electric. Correct the false statements.

General Electric

a) has been using six sigma for three years.

b) spent $200m on it in the first year.

c) expects to save over $400m in the second year by using it.

d) only uses six sigma in manufacturing.

e) has found it easy to apply to different activities.

f) changes the way it does things when it applies six sigma.

g) says six sigma makes it more aware of customers’ needs.

Exercise 8. Use the words and phrases separated by slashes and add the missing words to make complete sentences about GE, based on the article. Each slash indicates one missing word, and the words in brackets have to be put into their correct grammatical form.

a) / involvement / customers / extremely /.

b) GE Capital (question) / customers regularly – some / week, some / month, some / three months: / (depend) / their type / business – / order / check how it / (do).

c) Mr Nayden (think) it / very important / customers should / (involve) / the process.

d) GE uses / score card, where customers (show) what (need) (improve) / what it / concentrate /.

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