WORKSHOP ORGANISATION AND MANAGEMENT

Course Outline

Management Concepts
 Definition of management
 Functions of management
 Contribution of pioneers of management
 Role of industries in society
Production, Planning and Control
 Distinction between production, planning and control
 Types of production, planning and control
 Objectives of production, planning and control
 Documents in production, planning and control
 Stages in production, planning and control
 Factors to maximize productivity
Work Study
 Definition of work-study
 Techniques of work-study
 Objectives of work-study
 Operating time and comparative time processes
 Factors affecting plant and machinery layout
Quality Control and Inspection
 Principles of quality control
 Objectives of inspection
 Importance of inspection
 Inspection methods
Procurement
 Direct costs
 Indirect costs
 Job costing
 Functions of purchasing
 Elements of stock control
 Tendering process
Marketing
 Definition of marketing
 Importance of marketing
 Distribution and sales promotion methods
 Factors determining consumer behavior
Company Law and Industrial Relations
 Legislation on company
 Law of contracts
 Law of torts
 Historical development of industry
 Legal requirements of industry in Kenya
 Wages and working conditions

1
 Management Concept

Introduction

Controlling a complex organization so as to achieve desired goals resulted in the evolution of the
concept of management. Management includes all those people who are concerned with managing
an organization. It is a sum of organized activities by a group of people. Management involves
decision making at various levels of organization for getting things done by others.

Definition of Management

Different experts have defined the term “Management”. Some of these definitions are given
below:-
“To manage is to forecast and plan, to organize, to co-ordinate and to control.” – Henry Fayol

“Management is a distinct process consisting of planning, organizing, activating and

controlling to determine and accomplish the objectives by the use of people and
resources.”- G.R. Terry

“Management is simply the process of decision making and control over the action of
human beings for the express purpose of attaining pre-determined goals.”- Stanley Vance

“Management is the art of getting things done through and with the people in formally
organized groups.”- Harold Koontz

Functions of Management

Different experts have classified functions of management. According to Henry Fayol, “To
manage is to forecast and plan, to organize, to command, & to control”. Whereas, Luther
Gullick has given a keyword ‘ POSDCORB’ where ‘P’ stands for Planning, ‘O’ for
Organizing, ‘S’ for Staffing, ‘D’ for Directing, ‘C’ for Co-ordination, ‘R’ for reporting &
‘B’ for Budgeting. But the most widely accepted are functions of management given by
Koontz and O’Donnell i.e. Planning, Organizing, Staffing, Directing and Controlling;
which are described below:-

1. Planning.The function of management of systematically making decisions about

the goals to be achieved and activities or actions needed to achieve those that an
individual, a group, a work unit, or the overall organization will pursue in the future.
Plans are developed for the entire organization unit and individuals for certain
period of time. Its activities include:-

2
 (a) Analyzing the current situation.

(b) Anticipating the future.

(c) Determining the organizational objectives.

(d) Deciding the activities to be involved.

(e) Choosing strategies.

(f) Determining resources to achieve organizational goals.

Every plan has to contribute positively towards the accomplishments of the objectives.
Efficiency is measured by the contribution of the plan to objectives implementing the plan.
Planning is the primary prerequisite for all other function of management. Every action of
the manager follows a planning step. If more people in an organization use common and
consistent planning premises, the enterprise planning will be more coordinated. Planning
covers a period over which commitment of resources can be clearly visualized. Building
flexibility in planning beneficial, but cost of building flexibility needs to be evaluated
against the benefits. Manager needs to periodically check events of the plan and redraw
plans to maintain the move towards a desired goal.

2. Organizing.The management function of assembling and coordinating human,

financial, physical, information and other resources needed to achieve
organizational goals. Its activities include:-

(a) Specifying Job responsibilities.

(b) Grouping jobs into work units.

(c) Resource allocation

An organization is effective is effective if it as a whole, and every part of it, makes possible
accomplishment of individuals in contributing towards the attainment of objectives. There
is a limit at each managerial position on the number of persons an individual can effectively
manage. Maintenance of authority delegation requires that decisions within the authority
competence of an individual manager be made by him and not referred upward in the
organization. The better an organizational structure reflects a classification of the tasks and
activities required for achievement of objectives and assists their coordination through
creating a system of interrelated roles; and the more these roles are designed to fit the
capabilities and motivations of people available to fill them, the more effective and
efficient an organization structure will be. The more a position or a department has clear
definition of results expected, activities to be undertaken, organization authority delegated,
and authority and informational relationships with other positions, the more adequately
individual responsible can contribute toward accomplishing objectives.

3
 3. Staffing. It consists of the process of acquiring, deploying and retaining a
workforce of sufficient quantity and quality to create positive impacts on the
effectiveness of the organisation.
The quality of management personnel can be ensured through proper definition of
the job and its appraisal in terms of human requirements, evaluation of candidates
and incumbents, and appropriate training. Specifications for the job rest on
organization requirements and on provision for incentives to induce effective and
efficient performance of the tasks involved. Performance must be appraised against
the management action required by superiors and against the standard of adherence
in practice to managerial principles. Managers should be selected from among the
best available candidates for the job, whether they are inside or outside the
enterprise. The objective of management development is to strengthen existing
managers. The most effective means of developing managers is to have the task
performed primarily by a manager's superior.

4. Directing.It is the process in which the managers instruct, guide and oversee the
performance of the workers to achieve predetermined goals. It involves the
manager's efforts to stimulate high performance by employees and includes
directing, motivating and communicating with employees, individually and in
groups. Its activities include:

(a) Directing the workforce.

(b) Motivating your subordinates.

(c) Communicating with employees

(d) Leadership

Effective directing depends on the extent to which individual objectives in cooperative

activity are harmonized with group objectives. The more completely an individual has a
reporting relationship to a single superior, the less the problem of conflict in instructions
and the greater the feeling of personal responsibility for results. Effective direction requires
that management supplement objective methods of supervision with direct personal
contact. Since people, tasks, and organizational environment vary, techniques of
supervision will be most effective if appropriately varied. At one time there was a
management emphasis on directing in the directorial (autocratic) sense, but in recent times,
the concept of directing has become more congruent with leading than with pushing. Thus
today, directing is more related to leading and leadership styles. Leadership in this context
means the process whereby a work environment is created in which people can do their
best work and feel an interest in producing a quality product or service.

5. Controlling.It involves monitoring what is the work actually being done and the
results being achieved, comparing this with what was planned, and taking
corrective action.
It involves monitoring progress and making needed changes to make sure that the
organizational goals are achieved. Its activities include:

4
 (a) Setting performance standards that indicate progress toward long-term
goals.

(b) Monitoring staff performance through performance data evaluation.

(c) Identifying performance problems by comparing performance data against

standards and take corrective actions.

The task of control is to assure accomplishment of objectives by detecting potential or

actual deviation from plans early enough to permit effective corrective action. The primary
responsibility for the exercise of control rests in the manager charged with the execution
of plans. The more controls are designed to deal with and reflect the specific nature and
structure of plans, the more effective they will serve the interests of the enterprises and its
managers. The more controls are designed to reflect the place in the organization structure
where responsibility for action lies, the more they will facilitate correction of deviation of
events from plans. Controls have to be consistent with the position, operational
responsibility, competence, and needs of the individuals who have to interpret the control
measures and exercise control. Effective control requires objective, accurate, and suitable
controls. Effective control requires attention to those factors critical to appraising
performance against an individual plan. Control is justified only if indicated or experienced
deviations from plans are corrected through appropriate planning, organizing, staffing and
directing.

Conclusion

In conclusion, “Management” is an individual or group of individuals that accept

responsibilities to run an organization. Management brings together all six M’s i.e. Men
and Women, Money, Machines, Materials, Methods and Markets.

Contribution of pioneers of management

Peter Drucker
His people-centered approach to business management became the foundation of both his
writing and his consulting practice. He believed that management has an obligation to
people that goes far beyond just meeting the bottom line. Peter Drucker taught that the
most durable organizations were the ones who developed individuals both intellectually
and morally.

Peter Drucker believed in the guiding principles of ethics and morals in business.

Drucker taught that management is a liberal art and is about much more than
productivity. To be an effective manager you must understand things like psychology,
science, religion, and the other things that go into that subject.

Drucker observed that often managers would try to take charge of everything. This was
usually out of a desire for control or the belief that they were the only person who could

5
accomplish a task correctly. Because of this, he advocated strongly for the
decentralization of management. He taught that managers needed to delegate tasks to
empower their employees.

Rensis Likert Management

The management theory of Rensis Likert brought a new dimension to organizational

development theory.

The Likert system made it possible to quantify the results of all the work various theorists
had been doing with group dynamics. Likert theory also facilitated the measurement of
the "soft" areas of management, such as trust and communication.

Additionally, Likert delineated the characteristics of high- and low-producing

organizations and identified the problems with traditional organizational structures.
Rensis Likert recognized four management styles, or systems.

1. Exploitative-authoritative: The first system of Rensis Likert theory is characterized by

decision-making in the upper echelons of the organization, with no teamwork and little
communication other than threats.

2. Benevolent-authoritative: This Likert system is based on a master-servant relationship

between management and employees, where rewards are the sole motivators and both
teamwork and communication are minimal.

3. Consultative: In this style, managers partly trust subordinates, use both rewards and
involvement to inspire motivation, foster a higher level of responsibility for meeting
goals, and inspire a moderate amount of teamwork and some communication.

4. Participative-group: This system is based on managerial trust and confidence in

employees; collectively determined, goal-based rewards; a collective sense of
responsibility for meeting company objectives; collaborative teamwork and open
communication.

Chris Argyris Maturity Theory

Argyris Maturity Theory, presented by Chris Argyris in Personality and Organization, is

one of the many theories that seek to explain the human nature and behavior. According
to this theory, a persons’ development is processed along a continuous break of an
immaturity situation to a maturity situation. A mature person is characterised for being
active, independent, self-confident and self-controlled. On the contrary, an immature
person is passive, dependant, has lack of confidence and feels need of control by others.

Agryis believed that managers who treat people positively, and are responsible adults,
will achieve the highest productivity. He thought that common problems of employee
avoiding work, lack of interest, alienation and low morale may be signs of mismatch
between management practice and mature adult personality. His solution to the problem

6
is to expand job responsibilities; allow more task variety and adjust supervisory styles to
allow more participation and promote better human relations.

According to Argyris, seven changes should take place in the personality of individuals if
they are to develop into mature people over the years. The seven changes are:

1. Individuals move from a passive state as infants to a state of increasing activity as

adults
2. Individuals develop from a state of dependency upon others as infants to a state of
relative independence as adults
3. Individuals in only few ways as infants, but as adults they are capable of behaving in
many ways
4. Individuals have erratic, casual, and shallow interests as infants but develop deeper
and stringer interests as adults
5. The time perspective of children is very short, involving only the present, but as they
mature, their time perspective increases to include past and future
6. Individuals as infants are subordinate to everyone, but they move to equal or
superior positions with others as adults
7. As children, individuals lack an awareness of a “self”, but as adults not only they are
aware of, but they are able to control “self”

In Argyris opinion, these changes reside on a continuum and that the “healthy”
personality develops along the continuum from “immaturity” to “maturity”. These
changes are only general tendencies, but they do give some light on the matter of
maturity.

A big limitation of this theory is that it relies on each individual’s personality, therefore
given that everyone is different there can be so many different results as when someone
will reach all the seven stages . Also another important limitation is that the theory is
based on the development of healthy child, and does not take into account those with
disabilities and their development.

Herzberg’s Motivation Theory – Two Factor Theory

Herzberg’s Motivation Theory model, or Two Factor Theory, argues that there are two
factors that an organization can adjust to influence motivation in the workplace.
These factors are:
Motivators: Which can encourage employees to work harder.
Hygiene factors: These won’t encourage employees to work harder but they will cause
them to become unmotivated if they are not present.
Herzberg believed in a two-factor theory of motivation. He argued that there were certain
factors that a business could introduce that would directly motivate employees to work
harder (motivators). However there were also factors that would de-motivate an employee
if not present but would not in themselves actually motivate employees to work harder
(hygiene factors)
Motivators are more concerned with the actual job itself. For instance how interesting the
work is and how much opportunity it gives for extra responsibility, recognition and
promotion. Hygiene factors are factors which 'surround the job' rather than the job itself.

7
For example a worker will only turn up to work if a business has provided a reasonable
level of pay and safe working conditions but these factors will not make him work harder
at his job once he is there.
Herzberg believed that businesses should motivate employees by adopting a democratic
approach to management and by improving the nature and content of the actual job
through certain methods. Some of the methods managers could use to achieve this are:
Job enlargement – workers being given a greater variety of tasks to perform (not
necessarily more challenging) which should make the work more interesting.
Job enrichment - involves workers being given a wider range of more complex and
challenging tasks surrounding a complete unit of work. This should give a greater sense
of achievement.
Empowerment means delegating more power to employees to make their own decisions
over areas of their working life.

QN: Explain the role of industry in the society

Importance of Industries

i)Rapid growth of income

The first and the foremost argument in favor of industrialization is that it can provide a
base for rapid growth of income. It is because of the fact that that productivity rates are
higher in industry than in agriculture. Industries mainly depend on man’s effort while
agriculture is restricted by the limiting factor of the nature. It is also seen that the
Industrialized nations have a high per capita income.

ii)Employment
Industries provide job opportunities to the locals which in turns improves their livelihood.
With the increasing population agriculture is unable to provide for employment. Hence it
is very important to set up industries to absorb this surplus labor. Hence industries can
solve the problem of unemployment.

iii) Exploitation of resources

Industries are capable of utilizing all the resources present in the economy. They can
even make use of scraps and waste materials.

iv) Foreign exchange

Products produced from the industries can be exported acting as a source of foreign
exchange to a country.

v)Development of agriculture
The requirements of agriculture are met by the industries in large. Agriculture requires
improved farm machinery, chemical fertilizers and pesticides. It also requires storage and

8
transport facilities. All these are adequately provided by industries.

vi)Balanced development
Establishment of industries in a region ensures that regional disparities in development
are removed.

vii)Self-sustained growth
The rapid development of capital goods industries promote the growth of agriculture,
transport and communication. It also enables the country to produce a variety of
consumer goods in large quantities and at low costs.
It also eliminates our dependence on other countries for the supply of essential goods.

9
 Production Planning and Control
Production is the method of turning raw materials or inputs into finished goods or
products in a manufacturing process. In other words, it means the creation of something
from basic inputs.
Production planning
Is the planning of production and manufacturing modules in a company or industry
(Production planning is concerned with the determination, acquisition and arrangement
of all facilities necessary for future operations.”) It utilizes the resource allocation of
activities of employees, materials and production capacity, in order to serve different
customers
Production control
It’s the systematic planning, coordinating, and directing of all manufacturing activities
and influences to ensure having goods made on time, of adequate quality, and at
reasonable cost (“The production control function involves the co-ordination and
integration of the factors of production for optimum efficiency.)
“The highest efficiency in production is obtained by manufacturing the required quality
of product, of required quantity, at the required time by the best and cheapest method” -
Hence,
PPC is a tool to coordinate all manufacturing activities in a production system.

The Types of Production Planning

Production planning involves scheduling, estimating, and forecasting the future

demands for products. This takes into account customer orders, production capacities
and capabilities, forecasting of future trends, and inventory levels. Once that is done,
there are five main types of production planning: Job, Method, Flow, Process and
Mass Production methods. Each is based on different principles and assumptions. Each
has their own merits and demerits.

Job Method

Under this method, the complete task of manufacturing a product is handled either by a
single worker or by a group. The type of jobs using this method could be small scale or
complex. This method is usually incorporated when customer specifications are
essential in the production. Tailors, cooks, and hairdressers are all examples of
professionals who use the Job method of production planning. Small scale jobs are
those for which production is relatively easy, as the worker has the required skill-set for
the job. Also relatively little specialized equipment is usually needed in such tasks. Due
to those considerations, the customer’s specific requirements can easily be included at
anytime during the progression of the job. Complex jobs involve the use of high
technology, making project control and management essential. Construction businesses,
for example, are complex operations that still use the Job method of production
planning.

Batch Method

10
As businesses grow, and their production volumes grow with them, the Batch method
of production planning becomes more common. It requires the division of work into
parts. For a part of work to proceed it is essential that the previous part gets completed.
Electronic parts manufacturing businesses use the batch method. The Batch method
requires specialization of labor for each division.

Flow Method

This method is similar to the batch method. Here the aim is to improve material and
work flow, reduce labor and labor costs and finish the work faster. Unlike the batch
method, where one batch is completed after another, in this method, work progresses as
a flow. Assembly lines that make televisions typically use this method. The product is
manufactured by a number of interconnected operations in which the material moves
one stage to the second without time lags and interruptions.

Process Method

Here the product is produced using a uniform and standardized sequence. Highly
sophisticated machinery is used here. The production is continuous.

Mass Production Method

In this method, goods are produced using standardized techniques like balanced
production and product-wise layout.

Objectives of Production Planning and Control

 To deliver required goods in required quantities to the customer in the required
delivery schedule to achieve maximum customer satisfaction and minimum cost
 To ensure maximum utilization of the available resources
 To ensure production of quality products
 To minimize the manufacturing time
 To maintain optimum inventory (a complete list of items such as property, goods
in stock) levels
 To maintain flexibility in manufacturing operation
 To coordinate between labor and machines and various supporting documents
 To plan for plant capacities for future requirements
 To remove bottle neck at all stages of production and to solve problems related to
production
 To ensure effective cost reduction and cost control

11
Documents in production, planning and control
Work Order
A work order is a document that provides all the information about a maintenance task
and outlines a process for completing that task. Work orders can include details on who
authorized the job, the scope, who it’s assigned to, and what is expected.
Work orders are crucial to an organization’s maintenance operation. They help everyone
from maintenance managers to technicians organize, assign, prioritize, track, and
complete key tasks. When done well, work orders allow you to capture information, share
it, and use it to get the work done as efficiently as possible.

Route card
Route cards are more like guides. They detail the sequence of events and necessary
materials for a production, and are more useful for planning than for tracking. A route
card does not necessarily mean a particular physical path or direction of travel; we might
better describe them as "sequence" cards. They are essentially handed down from
someone who has knowledge of the process to someone who is going to actually execute
it.

Delivery note
A delivery note is a document that is included with a shipment of goods sent out to a
customer. It lists the description and amount of goods enclosed in the shipment. The
delivery note does not usually list the price of the goods being delivered, that information
will be on the invoice which follows shortly after.

Demand Note
A document promising to pay back a loan when the lender asks for it. A demand note is a
note payable on demand from the lender. It has no fixed term or set duration of
repayment. It can be recalled upon the lenders request, anticipating that the notice
requirements of the loan are satisfied. Usually a demand note does not require a show-
cause notice to be given to a delinquent (somebody who has failed) borrower. A demand
note provides flexibility for the borrower, as long as the lender does not wish to call back
the loan. However, a demand note can be a poor choice for a loan, if the lender does not
have enough resource and ability. It is also called as a demand loan or a call loan.
Demand notes can be used for short or long term

Control sheet
A control sheet, also called a "case control form," is used by interviewers in in-person
(face-to-face) surveys to record information about the contact attempts they make with
households or persons who have been sampled.
Progress Note
A doc showing the progress of activities of a certain job

Stages in PPC
There are four stages or essential elements in the process of production planning and
control. These are as follows:

12
1. Routing
Routing determines the path from which the raw materials flow within the factory. Once,
the sequence is followed, raw materials are transformed into finished goods.
Setting up time for every step is important to measure the overall duration of the
production process. Simply saying, routing in manufacturing states the sequence of work
and operations. Routing throws light on the quantity and quality of materials to be used,
resources involved (men, machine, and material), the series of operations and place of
production.
Routing manages “How”, “What”, “How much”, & “Where” to produce in a
manufacturing company. It systematizes the process and nurtures optimum utilization of
resources to get the best results.

2. Scheduling
Scheduling is the second step that emphasizes on “When” the operation will be
completed. It aims to make the most of the time given for completion of the operation.
As per Kimball and Kimball, scheduling is defined as –
“The determination of the time that should be required to perform the entire series as
routed, making allowance for all factors concerned.”
Organizations use different types of schedules to manage the time element. These
include Master Schedule, Operation Schedule, Daily Schedule and more.

3. Dispatching
The third step ensures that operations are done successfully and everything is loaded on
the software. Dispatching includes the release of orders, in accordance with the scheduled
charts.
Here are the points that encapsulate “Dispatching”
 Issue of materials or fixtures that are important for the production
 Issue of orders or drawings for initiating the work
 Maintain the records from start to end
 Initiate the control procedure
 Cascade (pass) the work from one process to another

4. Follow-up
Also known as expediting, follow-up is the final step that finds faults or defects,
bottlenecks and loopholes in the entire production process. In this step, the team
measures the actual performance from start till the end and then compares it with the
expected one.
Expediters or stock chasers are responsible for performing follow-up process. It is quite
obvious that any of the processes may undergo break-downs or machine failure. Follow-
up promotes smooth production by eliminating these defects.

Ways to Increase Productivity in the Workplace

1. Be Efficient
Consider how your business is currently operating, and be open to the potential of
changing the way you work. Remember that it’s equally as important to make short-term
and long-term lists as it is to prioritise tasks, especially in a small business.

13
Is there a better way that staff members could structure their day to enable them to
achieve their daily goals? Provide each member of staff with a plan and encourage each
to make a list to ensure he or she completes prioritised jobs on time and stays on task all
day, resulting in efficient working.

2. Delegate
Delegation comes with an element of risk, but increased responsibility is important for
improving the morale and job satisfaction of your staff. Give responsibilities to qualified
employees that have a proven track record with success in a certain field, and trust that
they will perform the tasks well.
If you allow employees the chance to gain skills and leadership experience, it will benefit
the company and provide your employees with a sense of achievement and direction in
their own careers.

3. Reduce Distractions
Social media can be a huge productivity killer, but it isn’t practical to have a no-phone
policy. Instead, try to keep employees focused and engaged while allowing them
breathing room.
Encourage employees to turn off their mobiles but take regular breaks during which they
can be free to check their phones. This will ensure that the time spent at their desk is
more productive.

4. Have the Right Tools and Equipment

Providing employees with the right tools and equipment is important so they can perform
their duties efficiently and on time. There’s nothing more counterproductive than
spending time waiting for paperwork to print because you haven’t got a fast printing
device.
High-quality, modern programs and equipment make a massive difference not only to the
workforce but also to how your company is perceived. Save time and effort by using
good and better equipment.

5. Improve workplace conditions

A comfortable working temperature is between 68 and 70 degrees F (20-21 C). An
environment that’s too hot or too cold distracts from concentration, as employees will
spend more time walking around to get their coats or an electric fan. Ensure both heating
and air-conditioning systems are in working order for when the relevant season comes
around.

6. Offer Support and Set Realistic Goals

A common problem for managers is having no clear, strong sense of whether their
employees are high-performing or not.
Do your employees need an incentive to stay on track? Help them by offering goals that
are achievable. Provide clear direction to supervisors and employees to help clarify
expectations. This will help to increase their productivity, as they will have a clear focus
and clear goals.

7. Practice Positive Reinforcement

14
Encourage, motivate and reward. Tell employees they are doing a good job and give
constructive criticism. Most importantly, offer personal incentives for doing the job well
– could they get a free holiday or a free takeout coffee for performing above and beyond
their roles?
You should clearly indicate success of one employee to other staff to cultivate a sense of
fulfilment to motivate others. When you motivate your employees to work harder and
receive rewards in return, they’re more likely to put increased productivity high up on
their to-do list.

8. Ensure Employees Are Happy

A stressful workplace will not yield results. Workers that constantly operate under highly
stressful conditions are found to be less productive and have higher levels of
disengagement and absenteeism.
Showing employees how much the company appreciates, respects and values them on a
personal level is gratifying – and often overlooked.
If you want your staff to work to the best of their ability, try out a few of these tips and
enjoy the benefits.

15
 WORK STUDY
Work study is “a term used to embrace the techniques of method study and work
measurement which are employed to ensure the best possible use of human and material
resources in carrying out a specified activity.” In other words, “work study is a tool or
technique of management involving the analytical study of a job or operation.”

A systematic examination or investigation of system or method of organization for

work done to improve the utilization of resources like men, machine, material etc
and setup standard for all activities of organization for improving productivity
(investigating technique to improve the productivity)

Role/purpose of Work Study:

 To standardise the method of doing a work,
 To minimise the unit cost of production,
 To determine the standard time for doing a task,
 To minimise the material movement, and operators movement,
 To eliminate unnecessary human movements,
 To utilise facilities such as man, machine and materials most effectively,
 To a systematic investigation of all factors.

Steps to be followed in performing a complete work-study.

1) Select the task to be studied

2) Record by collecting data at source & by direct observation
3) Examine by challenging the purpose, place, sequence & method of work
4) Develop new methods, drawing on contribution of those concerned
5) Evaluate Results of alternative solutions
6) Define new methods & present findings
7) Install new methods & train those involved
8) Maintain & Establish control procedure

Techniques of Work Study:

Work study is a technique which deals with the following problems:
(a) As to how should a job be done, and

(b) How much time a job should take for completion.

16
METHOD STUDY
Method study is the systematic recording and critical examination of the present and
proposed ways of doing work, as a means of developing and applying easier and more
effective methods to reduce costs. (Determination of the best method for a particular
work or job in a production)
Objectives of method study:
 To improve the manufacturing processes and procedures.
 To improve factory, office and work place layout.
 To improve plant and equipment design. To reduce human fatigue and effort in
performance of work.
 To improve the use of man power, machine power and material.
 To improve physical working conditions.
 To develop effective material handling.
 To ensure safety in all activities.

Work Measurement (Time Study)

Work measurement can be defined as the implementation of a series of techniques which

are designed to find out the work content, of a particular task or activity, by ascertaining
the actual amount of time necessary for a qualified worker, to perform the task, at a
predetermined performance level. (Determination of time a worker is allocated to
complete a given job)

Objectives of Work Study:

The following are the objectives of work study:
 Increased efficiency,
 Better product quality,
 To choose the fastest method to do a job,
 To improve the working process,
 Less fatigue to operators and workers,
 Effective labour control,
 Effective utilisation of resources,
 To decide equipment requirements,
 To pay fair wages,
 To aid in calculating exact delivery,
 To formulate realistic labour budgeting, and
 To decide the required manpower to do a job.

Operating time and comparative time processes

Standard time is the time required by an average skilled operator, working at a normal
pace, to perform a specified task using a prescribed method. It includes appropriate
allowances to allow the person to recover from fatigue and, where necessary, an
additional allowance to cover contingent elements which may occur but have not been
observed.

17
Standard time =normal time +allowance Where; normal time =avg time *rating factor.
(take rating factor between 1.1 and 1.2)

Rating Factor:

Time study engineer multiplies actual time with a factor known as “Rating Factor” or
“Levelling Factor” to get the average time which a normal worker would take. This is
expressed as a percentage of the efficiency of representative operator, which indicates
how efficient an operator is in comparison to some of his average fellow workers.

(Problem)

Factors to be considered for plant and Machinery Layout

i) Type and purpose of machines
ii) Size and cost
iii) Space
iv)Flow of materials
v) Transport entry and exit
vi)Power and water resource
vii) Noise segregation

(Bottleneck is one process in a chain of processes, such that its limited capacity reduces
the capacity of the whole chain. The result of having a bottleneck are stalls in production,
supply overstock, pressure from customers and low employee morale)

Problem solving
Performance management
1. Calculating normal and standard times
On average, a task takes 22 minutes for a worker whose performance level (P) is judged to be 90%.

a) Compute the normal time. Tn = …………………. mins

b) Calculate the performance level of worker ’j’ who performs the same task in 19 minutes.
P j = …………………. %
c) How fast may the same task be performed by a worker with a performance level of 130%-os?

Tobs = …………………. mins

d) Calculate the standard time if the total time allowance (APFD) is 15%.

Tstd = …………………. %

Solution

18
a) Tn = 22.00 ∙ 0.90 = 19.80 mins.
b) Pj = 19.80 / 19.00 = 104.21%
c) Tobs = 19.80 / 1.30 = 15.23 mins
d) Tstd = 19.80 (1.00 + 0.15) = 22.77 mins

2. Calculating normal and standard times

4 workers are employed in a workshop. The time need for a given task is measured for all of them.
1st worker: 15 mins; 2nd worker: 16 mins; 3rd worker 20 mins; 4th worker: 10 mins. The performance of
the 1st worker is considered to be 100%.
a) Determine the normal time (Tn) of the task.
b) Compute the performance rate for all the workers (Pi) based on the normal time.
c) Calculate the standard time (Tstd) if the personal time allowance is 5%, the fatigue time allowance is 7%
and the delay allowance is 5%.
d) How many times will it take to repeat the task 20 times for a worker with 100% performance?

SOLUTION
a) Tn = 15 mins.
b) Tn = Tobs(P) so that P1 = 15/15 = 100%, P2 = 15/16 = 94%, P3 = 15/20 = 75%, P1 = 15/10 = 150%.
Where Tobs is the observed task time and Pi is the performance rate of worker ’j’..
c) Tstd = Tobs(P)(1+APFD) = Tn(1+APFD), where APFD = (0.05 + 0.07 + 0.05) = 0,17. Thus Tstd = 17.55 mins.
Where APFD (personal, fatigue, and delay allowance) is the sum of the 3 allowances.
d) Total time for 20 repetitions = 20(Tstd) = 351 minutes.

3. Calculating normal and standard times

1st worker: 16 mins; 2nd worker: 15 mins; 3rd worker 15 mins; 4th worker: 18 mins. The average of the four
workers’ observed task times is assigned to the 100% performance level.
a) Determine the normal time (Tn) of the task.
b) Compute the performance rate for all the workers (Pi) based on the normal time.
c) Calculate the standard time (Tstd) if the personal time allowance is 5%, the fatigue time allowance is 7%
and the delay allowance is 3%.
d) How many minutes does it need for each of the four workers to perform the given task 25 times?
e) Calculate the standard time for the 25 repetitions.
SOLUTION
a) Tn = (16+15+15+18)/4 = 16 mins.
b) P1 = 16/16 = 100.00%, P2 = 16/15 = 106.67%, P3 = 16/15 = 106.67%, P1 = 16/18 = 88.89%.
c) Tstd = Tobs(P)(1+APFD) = Tn(1+APFD), where APFD = (0.05 + 0.07 + 0.03) = 0,15. Thus Tstd = 18.40 mins.
d) Total time for 205 repetitions for a worker is 25(Tobs)(1 + APFD). Thus, for worker 1 it is 25(16)(1.15) =
460 mins; for worker 2 and 3 it is 431.25 mins; for worker 4 it is 517.50 mins.

19
e) 25(Tstd) = 25(18.40) = 460 mins = 7 hrs 40 mins

4. Calculating normal and standard times

1st worker: 100 mins; 2nd worker: 120 mins; 3rd worker 90 mins; 4th worker: 110 mins. The mean of the
four workers’ observed task times is assigned to the 100% performance level.
a) Determine the normal time (Tn) of the task.
b) Compute the performance rate for all the workers (Pi) based on the normal time.
c) Calculate the standard time (Tstd) if the personal time allowance is 5%, the fatigue time allowance is 7%
and the delay allowance is 10%.
d) Calculate the standard time for 200 repetitions.

e) How many minutes does it need for each of the four workers to perform the given task 200 times?
f) Calculate the normal time, the standard time and the performance rates of all the four employees if the
normal time is increased to the work performance of the fastest working employee.
SOLUTION
a) Tn = (100+120+90+110)/4 = 105 mins.
b) P1 = 105/100 = 105.00%, P2 = 105/120 = 87.50%, P3 = 105/90 = 116.67%, P1 = 105/110 = 95.45%.
c) Tstd = 105(1.22) = 128.10 minutes = 2 hours and 8.1 minutes
d) 200(128.10) = 25,620 minutes
e) 1st: 200(100)(1.22) = 24,400 mins; 2nd: 200(120)(1.22) = 29,280 mins; 3rd: 200(90)(1.22) = 21,960
mins; 4th: 26,840 mins
f) Tn = Tobs(3rd) = 90 mins; Tstd = 90(1.22) = 109.8; P1 = 90/100 = 90.00%, P2 = 90/120 = 75.00%, P3 = 90/90
= 100.00%, P1 = 90/110 = 81.82%.

20
 Quality Control and Inspection
Quality control
(QC) is a process through which a business seeks to ensure that product quality is
maintained or improved. Quality control requires the business to create an environment in
which both management and employees strive for perfection. This is done by training
personnel, creating benchmarks (A benchmark is a standard against which the
performance of a security, mutual fund or investment manager can be measured.) for
product quality and testing products to check for statistically significant variations.
Quality control involves testing of units and determining if they are within the
specifications for the final product. The purpose of the testing is to determine any needs
for corrective actions in the manufacturing process. Good quality control helps
companies meet consumer demands for better products.

Objectives of quality control

i. To establish the desired quality standards which are acceptable to the customers?
ii. To discover flaws or variations in the raw materials and the manufacturing
processes in order to ensure smooth and uninterrupted production.
iii. To evaluate the methods and processes of production and suggest further
improvements in their functioning.
iv. To study and determine the extent of quality deviation in a product during the
manufacturing process.
v. To analyze in detail the causes responsible for such deviation.
vi. To undertake such steps which are helpful in achieving the desired quality of the
product.

Inspection:

An item or component or product which is manufactured is required to perform certain

functions. The act of checking whether a component actually does so or not is called
Inspection. In other words, Inspection means checking the acceptability of the
manufactured product.

Inspection measures the qualities of a product or service in terms of pre-decided

standards. Product quality may be specified by its strength, hardness, shape, surface
finish, chemical composition, dimensions, etc.

Purpose of Inspection
 To distinguish good lots from bad lots.
 To distinguish good pieces from bad pieces.
 To determine if the process is changing.
 To determine if the process is approaching the specification limits.
 To rate quality of product.
 To rate accuracy of inspectors.
 To measure the precision of the measuring instrument.
 To secure products-design information.

21
  To measure process capability.

Importance of inspection
1. Encourages quality consciousness:
The most important advantage derived by introducing quality control is that it

develops and encourages quality consciousness among the workers in the factory
which is greatly helpful in achieving desired level of quality in the product.

2. Satisfaction of consumers:
Consumers are greatly benefited as they get better quality products on account of
quality control. It gives them satisfaction.

3. Reduction in production cost:

By undertaking effective inspection and control over production processes and

operations, production costs are considerably reduced. Quality control further checks the

production of inferior products and wastages thereby bringing down the cost of
production considerably.

4. Most effective utilization of resources:

Quality control ensures maximum utilization of available resources thereby minimizing
wastage and inefficiency of every kind.

5. Reduction in inspection costs:

Quality control brings about economies in inspection and considerably reduces cost of
inspection.

6. Increased goodwill:
By producing better quality products and satisfying customer’s needs, quality control

raises the goodwill of the concern in the minds of people. A reputed concern can easily
raise finances from the market.

7. Higher morale of employees:

22
An effective system of quality control is greatly helpful in increasing the morale of

employees, and they feel that they are working in the concern producing better and higher
quality products.

8. Improved employer-employee relations:

Quality control develops to better industrial atmosphere by increasing morale of

employees which ensures cordial employer-employee relations leading to better

understanding and closeness between them.

9. Improved techniques and methods of production:

By supplying technical and engineering data for the product and manufacturing
processes, improved methods and designs of production are ensured by quality control.

10. Effective advertisement:

Organizations producing quality products have effective advertisement. They win the
public confidence by supplying those better quality products.

11. Facilitates price fixation:

By introducing quality control measures, uniform products of same quality are produced.

This greatly facilitates the problem of price fixation. One price of standard products
becomes prevalent in the market.

12. Increased sales:

Quality control ensures production of quality products which is immensely helpful in

attracting more customers for the product thereby increasing sales. It is greatly helpful in

maintaining existing demand and creating new demand for the product. It has been

rightly pointed out that quality control is a powerful instrument with the help of which
markets both at home and abroad can be expanded.

23
 Objectives of Inspection

 Inspection separates defective components from non-defective ones and

thus ensures the adequate quality of products.
 Inspection locates defects in raw materials and flaws in processes which
otherwise cause problems at the final stage. For example, detecting the parts
not having proper tolerances during processing itself, will minimize the
troubles arising at the time of assembly.
 Inspection prevents further work being done on semi-finished products
already detected as spoiled.
 Inspection makes sure that the product works and it works without hurting
anybody, i.e., its operation is safe.
 Inspection detects sources of weakness and trouble in the finished products
and thus checks the work of designers.
 Inspection builds up the reputation of the concern as it helps reducing the
number of complaints from the customers.

Types of Inspection in Production Management

Types of inspection are:
1. Floor inspection
2. Centralized inspection
3. Combined inspection
4. Functional inspection
5. First piece inspection
6. Pilot piece inspection
7. Final inspection
1. FLOOR INSPECTION
In this system, the inspection is performed at the place of production. It suggests the
checking of materials in process at the machine or in the production time by patrolling
inspectors. These inspectors move from machine to machine and from one to the other
work centers. Inspectors have to be highly skilled. This method of inspection
minimize the material handling, does not disrupt the line layout of machinery and
quickly locate the defect and readily offers field and correction.

Advantages
1. Detection of errors of the source reduces scrap and rework.
2. Correction is done before it affects further production, resulting in
saving cost of unnecessary work on defective parts.
3. Material handling time is reduced.

24
 4. Job satisfaction to worker as he can’t be held responsible for bad work
at a later date.
5. Greater number of pieces can be checked than a sample size.
6. Does not delay in production.
Disadvantages
1. Delicate instruments can be employed.
2. Measuring or inspection equipment have to be recalibrated often as
they are subjected to wear or dust.
3. High cost of inspection because of numerous sets of inspections and
skilled inspectors.
4. Supervision of inspectors is difficult due to vibration.
5. Pressure on inspector.
6. Possibility of biased inspection because of worker.
Suitability
1. Heavy products are produced.
2. Different work centers are integrated in continuous line layout.
2. CENTRALISED INSPECTION
Inspection is carried in a central place with all testing equipment; sensitive equipment
is housed in air-conditioned area. Samples are brought to the inspection floor for
checking. Centralized inspection may locate in one or more places in the
manufacturing industry.

Advantages
i. Greater degree of inspection due to sensitive equipment.
ii. Less number of inspectors and tools.
iii. Equipment needs less frequency of recalibration.
iv. Cost of inspection is reduced.
v. Unbiased inspection.
vi. Supervision of inspectors made possible.
vii. No distraction to the inspector.
Disadvantages
i. Defects of job are not revealed quickly for prevention.
ii. Greater material handling.
iii. High cost as products are subjected to production before they are
prevented.
iv. Greater delay in production.
v. Inspection of heavy work not possible.
vi. Production control work is more complicated.
vii. Greater scrap.
3. COMBINED INSPECTION
Combination of two methods whatever may be the method of inspection, whether
floor or central. The main objective is to locate and prevent defect which may not
repeat itself in subsequent operation to see whether any corrective measure is required
and finally to maintain quality economically.
4. FUNCTIONAL INSPECTION
This system only checks for the main function, the product is expected to perform.

25
 Thus an electrical motor can be checked for the specified speed and load
characteristics. It does not reveal the variation of individual parts but can assure
combined satisfactory performance of all parts put together. Both manufacturers and
purchasers can do this, if large number of articles is needed at regular intervals. This is
also called assembly inspection.
5. FIRST PIECE OR FIRST-OFF INSPECTIONS
First piece of the shift or lot is inspected. This is particularly used where automatic
machines are employed. Any discrepancy from the operator as machine tool can be
checked to see that the product is within in control limits. Excepting for need for
precautions for tool we are check and disturbance in machine set up, this yields good
result if the operator is careful.
6. PILOT PIECE INSPECTION
This is done immediately after new design or product is developed. Manufacturer of
product is done either on regular shop floor if production is not disturbed. If
production is affected to a large extent, the product is manufactured in a pilot plant.
This is suitable for mass production and products involving large number of
components such as automobiles aero planes etc., and modification are design or
manufacturing process is done until satisfactory performance is assured or established.
7. FINAL INSPECTION
This is also similar to functional or assembly inspection. This inspection is done only
after completion of work. This is widely employed in process industries where there
are not possible such as, electroplating or anodizing products. This is done in
conjunction with incoming material inspection.
Methods of Inspection
There are two methods of inspection. They are: 100% inspection and sampling
inspection.
1. 100% INSPECTION
This type will involve careful inspection in detail of quality at each strategic point or
stage of manufacture where the test is involved is non-destructive and every piece is
separately inspected. It requires more number of inspectors and hence it is a costly
method. There is no sampling error. This is subjected to inspection error arising out of
fatigue, negligence, difficulty of supervision etc.

Hence, completer accuracy of influence is seldom attained. It is suitable only when a

small number of pieces are there or a very high degree of quality is required. Example:
Jet engines, aircraft, medical and scientific equipment.
2. SAMPLING INSPECTION
In this method randomly selected samples are inspected. Samples taken from different
patches of products are representatives. If the sample proves defective, the entire
concerned is to be rejected or recovered. Sampling inspection is cheaper and quicker.
It requires less number of Inspectors. It is subjected to sampling errors but the
magnitude of sampling error can be estimated.

26
 In the case of destructive test, random or sampling inspection is desirable. This type of
inspection governs wide currency due to the introduction of automatic machines or
equipments which are less susceptible to chance variable and hence require less
inspection, suitable for inspection of products which have less precision importance and
are less costly. Example: Electrical bulbs, radio bulbs, washing machine etc.

Drawbacks of Inspection
Following are the disadvantages of inspection:
1. Inspection adds to the cost of the product but not for its value.
2. It is partially subjective, often the inspector has to judge whether a products passes or
not.
3. Fatigue and Monotony may affect any inspection judgment.
4. Inspection merely separates good and bad items. It is no way to prevent the production
of bad items.

27
 Procurement
Procurement is the act of obtaining goods or services, typically for business purposes.
Procurement is most commonly associated with businesses because companies need to
get services or purchase goods, usually on a relatively large scale.
Direct costs
Direct costs are business expenses that can be directly applied to producing a specific
cost object, like a good or service. Cost objects are items that costs are assigned to.
Examples of direct costs include labor, materials, and manufacturing supplies.
Let’s say you have an employee who puts together toys. The employee’s work is
considered direct labor. To create the toys, the employee needs wood, which is
considered a direct material. And, the employee must use wood glue, which is a
manufacturing supply.
Indirect costs
Indirect costs are expenses that apply to more than one business activity. Unlike direct
costs, you cannot assign indirect expenses to specific cost objects. Examples of indirect
costs include rent, utilities, general office expenses, salaries, storage, administration, and
other overhead costs (Overhead costs, often referred to as overhead or operating
expenses, refer to those expenses associated with running a business that can’t be linked
to creating or producing a product or service. They are the expenses the business incurs to
stay in business, regardless of its success level e.g. Insurance)
For example, you make rent and utility payments to keep your business going. And, you
must buy computers. These costs are not directly related to producing a specific product
or performing a service, so they are indirect costs. Indirectly, they help you produce
goods and perform services, but you can’t directly apply them to a specific product or
service.
Total cost in economics, the sum of all costs incurred by a firm in producing a certain
level of output.
Job costing is accounting which tracks the costs and revenues by "job" and enables
standardized reporting of profitability by job.
Process costing refers to a cost accounting method that is used for assigning production
costs to mass-produced goods. For instance, large manufacturing companies that mass-
produce inventory might use process costing to calculate the total amount of direct and
indirect costs associated with products that are completed and left in-process at the end of
a given time period.

Purchasing
All organizations need specific goods, materials and equipment to manufacture
products, offer goods for sale to customers, or perform the services they are selling.
Someone has to ensure that these goods are bought into the company, in the right
volume and at the right time, to meet the company's requirements. That role falls to the
purchasing, or purchase, department.
The department acts as the primary buyer of goods and services in private sector
companies, government agencies, educational institutions, or any other type of
organization

Functions of a Purchasing Department

Procuring Raw Materials and Other Resources

28
One role of the purchasing department is to procure all necessary materials needed for
production or daily operation of the company or government organization. For a
manufacturing company, this might include raw materials such as iron, steel, aluminum
or plastics, but it also might include tools, machinery, delivery trucks or even the office
supplies needed for the secretaries and sales team.
Achieving the Best Possible Price
A purchasing department also is charged with continuously evaluating whether it is
receiving these materials at the best possible price in order to maximize profitability.
Purchasing department staff may communicate with alternate vendors, negotiate better
pricing for bulk orders or investigate the possibility of procuring cheaper materials
from alternative sources as part of their daily activities.
Paperwork and Accounting
Purchasing departments handle all of the paperwork involved with purchasing and
delivery of supplies and materials. Purchasing ensures timely delivery of materials from
vendors, generates and tracks purchase orders and works alongside the receiving
department and the accounts payable department to ensure that promised deliveries
were received in full and are being paid for on time.
Compliance with Business Protocols
The purchasing department also must ensure that it is complying with all company
policies. For example, in a small business, individual staff members may communicate
with the purchasing department about purchasing needs for things such as office
supplies or computers. Before making a purchase, the purchasing department must
ensure that it heeds the proper protocols for purchase and budget approval and must
ensure that any items are purchased in accordance with the overall purchasing policy of
the organization.
Qualities of a good purchasing officer
POs work in both private and public firms where they are in charge of undertaking
purchasing transactions for services and products. However, before conducting such
transactions, they need to identify what the company needs. Afterward, they will review
the needs then proceed to award supply tenders to the best suppliers.
Interpersonal skills
The professionals rely on their ability to relate with people easily to ensure they deliver
their duties efficiently. Thanks to how they communicate clearly, they can engage
stakeholders and team members during the purchasing process.
Negotiation skills
These specialists find it easy to negotiate for contracts because of their natural or
acquired communication skills. Through negotiating, this officer aims to iron out any
conflicting tender requirements to procure a deal that is in line with the needs of the
company.
Result-oriented
Another important skill that these leaders have is the ability to predict the outcome of
deals. Such a vision helps in making the right decisions and determining the appropriate
steps to take to achieve the desired outcome.
Good financial understanding
It is not by fluke that most purchasing managers have a degree in accounting and
business courses. That is so because to be an excellent PO; you need to understand the
finances of your company before making any purchasing decision.
Project management

29
One also needs to be a good project manager to succeed as the head of the purchasing
department. You will use your skills, techniques, and knowledge to execute projects to
benefit your firm. Read more:
Technological know-how
Technology is ever-changing, and it is affecting how businesses conduct their
procurement deals. Bearing that in mind, successful POs tend to be tech-savvy and
updated regarding any developments in the purchasing industry.
Risk manager
Tenders seem to carry some level of risk, and that is why companies want to hire
purchasing specialists who understand how to manage risks. As such, they should strike
deals objectively while ensuring low risk but promising successful returns.
Analytical and presentation skills
These professionals are great at solving complex matters because of their ability to
collect as much information as possible to help them make the most informed decision.
After that, they can present their findings in a clear, confident, and professional way.

Stock Control/inventory control

Stock control, also known as inventory control, is the process of maintaining the
appropriate quantity of stock, so a business can meet customer demand without delay
while keeping the costs of holding stock to a minimum.
Businesses dealing with physical products need stock to sell. The purpose of stock
control is to make sure the business always has enough stock for their customers, while
balancing the amount spent on acquiring and storing stock. Though this might seem
simple in theory, it can involve factors outside of the business’ control such as the
weather, economic downturns, union action and more.
Stock control is important because it can be the difference between loss and profit. Done
right, it keeps costs down while increasing your profitability on every sale.
Elements and functions of inventory control
Main functional aspects of inventory control include:
 Specification Of Goods, Their ID Numbers And Their Types;
 Keeping Information On Goods Serial Numbers;
 Barcodes Implementation And Control;
 Managing Inventory Lists;
 Real-Life Real-Time Warehouse Reports;
 Real-Time Goods Location Tracking;
 Inventory Storage Oversight;
 Accounting And Tax Operations Associated With Warehouse Management;
 Synchronizing Warehouse Stock With Sales.

Tendering Process
A tender document is a request written by buyers detailing the goods, works or services
that they require and the criteria on which they will award the contract to a supplier or
suppliers.

Methods of tenders/types of Tenders

30
Advantages of open tendering
• Very competitive tenders are obtained
• Only interested firms will submit tenders
• New firms are able to obtain work and prove themselves.
Disadvantages of open tendering
• Some firms may not be well-equipped, either materially or financially, to execute the
work
• If a very low tender is submitted and accepted, it may cause difficulties throughout the
contract
• Submitting tenders costs time and expense, and this cost needs to be recovered.

Restrictive open tendering

The method of restrictive open tendering also uses advertisements which invite
applications from firms that wish to be considered for tendering. From these applicants a
selection list is chosen and tenders are invited.
Advantages of restrictive open tendering
• Only interested firms will apply
• Only suitable firms are asked to submit tenders
• Less overall expense for tenderer
• New firms may be able to obtain work and prove themselves.

31
Disadvantages of restrictive open tendering
• Less competitive
• Can lead to cover pricing being submitted.

Bid Document
A Bid Document is an output of the Plan Procurement Management process. This
document is used when requesting proposals from potential suppliers to the project. The
document will contain a description of the products or services that are to be procured.
The same document can be issued to several potential suppliers so that responses can be
compared in order to select the best supplier for the products or services that are being
requested.
The Bid Document can have different forms depending on the nature of the products and
services that are being requested.

Bid Evaluation
Bid evaluation is the organized process of examining and comparing bids to select the
best offer in an effort to acquire goods, works and services necessary to achieve the goals
of an organization. The best offer recommended as a result of bid evaluation is referred to
as the lowest responsive evaluated bid. It may also be called the most economically
advantageous tender (MEAT).

Bid evaluation is the responsibility of a body known as the Bid Evaluation Panel. How
this panel is called depends on the organization. Synonymous terms are quotation review
panel, bid review board or tender review committee, to name a few.

32
 MARKETING
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.
Or simply put, marketing is the action or business of promoting and selling products or
services, including market research and advertising.

Importance of marketing
1. Marketing Is an Effective Way of Engaging Customers
It’s important for a business to engage its customers. Marketing is a tool to keep the
conversation going.
Engaging involves furnishing customers with relevant information about your products
and your business as well.
Tell your customers what they don’t know. Let it be interesting and worth their time.
Social media is one of the best platforms where you can engage your customers. Some
organizations use short videos and other humor-laden tricks to engage their customer
base.
By engaging your customers, marketing gives them a sense of belonging.
2. Marketing Helps to Build and Maintain the Company’s Reputation
The growth and life span of a business is positively correlated to the business’s
reputation. Hence, it’s fair to say your reputation determines your brand equity.
A majority of marketing activities are geared towards building the brand equity of the
company.
A business’s reputation is built when it effectively meets the expectations of its
customers. Such a business is considered a responsible member of the community. The
customers become proud to be associated with its products.
Marketers use effective communication, branding, PR to ensure that a business’s
reputation is maintained.
3. Marketing Helps to Build a Relationship between a Business and Its Customers
Businesses need to build a relationship of trust and understanding with their customers.
How does marketing establish this relationship?
Marketing research segments should be based on demographics, psychographics, and
consumer behavior.
Segmentation helps the business meet the needs of its customers hence gaining their trust.
The product team ensures the business delivers what’s promised at the right time. This
makes the customers brand loyal.
Loyal customers will have the confidence to buy more products from you. The trust and
understanding between the business and its customers make your commercial activities
more fruitful.
4. Marketing Is a Communication Channel Used to Inform Customers
Marketing informs your customers about the products or services you’re offering them.
Through marketing, the customers get to know about the value of the products, their
usage and additional info that might be helpful to the customers. It creates brand
awareness and makes the business stand out.
There’s stiff competition in the market and the company needs to be a constant voice to
convince the customers. Inform the customers of discounts and other competitive tricks
you intend to use.
Through communication, marketing helps the business become a market leader.

33
5. Marketing Helps to Boosts Sales
Marketing utilizes different ways to promote a products or services. Once a product has
been advertised, it’s already on the radar and this increases the chances of selling it.
Customers may want to try the products or services and this will trigger a purchase
decision.
When customers are happy about your products or services, they become your brand
ambassadors without your knowledge. They will spread the word and the sales will start
to increase.
Ensure you offer high-quality products and services to complement your marketing
efforts.
6. Marketing Aids in Providing Insights about Your Business
Every marketer understands the need for targeting the right audience. However, one must
have the right content to share with such an audience. The company’s marketing
strategies can help it establish what business messaging will convince the target audience.
At this point, you have to test different messages and see what works.
Once you have tested different sets of messaging on the target audience, you will find a
viable baseline for your marketing efforts.
It acts as a metric and provides the insight needed to make you avoid guesswork.
7. Marketing Helps Your Business to Maintain Relevance
Most businesses assume that they will always remain the client’s favorite brand because
up to now the client has never complained. This is the wrong mindset. One needs to find
ways to remain at the top of the client’s mind.
Every relationship needs to be maintained. Marketing helps your business to maintain a
good relationship with customers by making you remain relevant.
Don’t focus on gaining new customers before addressing the need to retain the present
ones.
8. Marketing Creates Revenue Options
During the startup phase, options are sparse due to limited cash. This limits its options.
As its marketing strategies generate more customers and revenue opportunities, it’ll begin
having options.
Having options will give it the courage it needs to penetrate new markets. It will have the
freedom to start letting go of customers who are too demanding to its sanity and well-
being.
Without marketing, the company/business will be forced to continue working with clients
who you have outgrown and are paying you peanuts.
9. Marketing Helps the Management Team to Make Informed Decisions
Every business is confronted with problems such as to what, when, for whom and how
much to produce. A complex and tedious process determine your business’s survival. As
a result, businesses heavily rely on marketing mechanisms to make these decisions.

Sales and Distribution

Distribution
Distribution entails making a product available for purchase by dispersing it through the
market. It involves transportation, packaging, and delivery. Distribution is fundamental to
a company’s sales.
A distributor is defined as someone who purchases products, stores them, and then sells
them through a distribution channel. They are in between manufacturers and retailers or

34
consumers, working on behalf of a particular company as opposed to representing
themselves. Usually, distributors partake in collaborative relationships with clients and
manufacturers.

Distribution Channels
A distribution channel refers to the flow of business that occurs between a manufacturer
and a consumer. It is the path that a transaction follows. Distributors are the
intermediaries that deliver and house products for producers to sell to retailers. These
channels can be relatively simple or increasingly complex.
There are direct and indirect channels. In a direct channel, the producer works directly
with the consumer. An indirect channel, on the other hand, incorporates intermediaries
into the sales flow. There are four levels that break down the flow between manufacturers
and consumers. When looking to expand into new markets or switch up your distribution
strategy, you need to know the different levels of distribution.
Channels Of Distributions
Level Zero: A level zero distribution channel is the simplest. It involves a direct sale
from manufacturers to consumers with no intermediary.
Level One: A level one channel has one intermediary as the middleman between the
producer and consumer. An example is a retailer between manufacturer and consumer.
Level Two: When thinking about levels, associate the number to the number of
intermediaries. In this case, a level two channel involves two intermediaries between
producer and consumer. An example here would be a company sells to a wholesaler, who
sells to a retailer who then sells to the consumer.
Level Three: Here’s where an agent or broker comes in. Agents work on behalf of
companies and deal primarily with wholesalers. From here, the wholesalers sell to
retailers who then sell to consumers.

Types of Distribution
Intensive Distribution: As many outlets as possible. The goal of intensive distribution is
to penetrate as much of the market as possible.
Selective Distribution: Select outlets in specific locations. This is often based on a
particular good and its fit within a store. Doing this allows manufacturers to pick a price
point that targets a specific market of consumer, therefore providing a more customized
shopping experience. Selective distribution caps the number of locations in a particular
area.
Exclusive Distribution: Limited outlets. This can mean anything from luxury brands that
are exclusive to special collections available only in particular locations or stores. This
method helps maintain a brand’s image and product exclusivity. Some examples of
companies that enact exclusive distribution would be high-end designers like Chanel or
even an automotive company like Ferrari.
Sales Promotion
Sales promotion is the process of persuading a potential customer to buy the product.
Types/Methods of Consumer Sales Promotion:
The consumer sales promotion involves application of the following tools:
i. Samples:
Samples are offers of a free amount or a trial of a product for consumers. The sample
might be delivered door to door, sent in the mail, picked up in a store found attached to

35
another product or featured in an advertising offer. Sampling is the most effective and
most expensive way to introduce a new product.
ii. Coupons:
Coupons are certificates which entitle a consumer to buy the product at reduced prices.
These coupons can be mailed, enclosed in other products or attached to them or inserted
in magazines and newspapers. Coupons are accepted as cash by retailers.
iii. Cash refund
Cash refund provides a price reduction after the purchase rather than at the retail shop.
The consumer sends a specified ‘proof of purchase’ to the manufacturer, who ‘refunds’
part of the purchase price. It is a good device for creating new user and to strengthen the
brand loyalty.
iv. Price Packs:
Price Packs (also called cents-off deals) are offers to consumers as discount. Price Packs
are very effective in stimulating short- term sales, even more than coupons. The price
pack may be in the form of a reduced price pack (20 per cent extra Five-star at the same
price) or a banded pack (tooth brush and tooth paste together).
v. Premiums:
Premiums (or gifts) are merchandise offered at a relatively low cost or free, as an
incentive to purchase a particular product. Reusable jars, key chains, containers.
vi. Prizes (Contests, Sweepstakes, Games):
Prizes are offers of the chance to win cash, trips or merchandise as a result of purchasing
something. A contestant calls for consumers Co., submit an entry — a jingle, estimate,
suggestion to be examined by a panel of judges who will select the best entries. A game
presents consumers with some puzzle or missing letters. All of these tend to gain more
attention than coupons and premiums.
vii. Patronage Award (Trading Stamps):
These are values in cash or other forms. Such awards are given to those customers who
shop only at a particular place. i.e., when the customers are loyal to a particular shop,
then they are treated as patrons.
viii. Free Trials:
Free trials consist of inviting prospective purchasers to try the product without cost in the
hope that they will buy the product.
ix. Product Warranties:
Product warranties are important promotional tools in sensitive consumer markets.
x. Tie-In-Promotions:
They involve two or more brands or companies that team up on coupons, refunds and
contests to increase their pulling power.
xi. Point-of-Purchase and Demonstration:
POP displays and demonstrations take place at the point of purchase or sale.

Factors influencing consumer behavior

What affects consumer behavior?
Consumer behavior is the study of consumers and the processes they use to choose, use
(consume), and dispose of products and services, including consumers’ emotional,
mental, and behavioral responses.
Many things can affect consumer behavior, but the following are the most frequent
factors influencing consumer behavior:
1. Marketing campaigns

36
Marketing campaigns influence purchasing decisions a lot. If done right and regularly,
with the right marketing message, they can even persuade consumers to change brands or
opt for more expensive alternatives.
Marketing campaigns can even be used as reminders for products/services that need to be
bought regularly but are not necessarily on customers’ top of mind (like insurance for
example). A good marketing message can influence impulse purchases.
2. Economic conditions
For expensive products especially (like houses or cars) economic conditions play a big
part. A positive economic environment is known to make consumers more confident and
willing to indulge in purchases irrespective of their personal financial liabilities.
Consumers make decisions in a longer time period for expensive purchases and the
buying process can be influenced by more personal factors at the same time.
3. Personal preferences
Consumer behavior can also be influenced by personal factors, likes, dislikes, priorities,
morals, and values. In industries like fashion or food, personal opinions are especially
powerful.
Advertisements can, of course, help but at the end of the day consumers’ choices are
greatly influenced by their preferences. E.g. vegan
4. Group influence
Peer pressure also influences consumer behavior. What our family members, classmates,
immediate relatives, neighbors, and acquaintances think or do can play a significant role
in our decisions.
Social psychology impacts consumer behavior. Choosing fast food over home-cooked
meals, for example, is just one of such situations. Education levels and social factors can
have an impact.
5. Purchasing power
Our purchasing power plays a significant role in influencing our behavior. Unless you are
a billionaire, you will take your budget into consideration before making a purchase
decision.
The product may be excellent, the marketing could be on point, but if you don’t have the
money for it, you won’t buy it.
Segmenting consumers based on their buying capacity will help marketers determine
eligible consumers and achieve better results.

37
 Company Law and Industrial Relations

Forms of businesses
Sole proprietorship
The sole proprietorship is the simplest business form under which one can operate a
business. The sole proprietorship is not a legal entity. It simply refers to a person who
owns the business and is personally responsible for its debts. A sole proprietorship can
operate under the name of its owner or it can do business under a fictitious name, such as
Nancy's Nail Salon. The fictitious name is simply a trade name--it does not create a legal
entity separate from the sole proprietor owner.
Advantages of a Sole Proprietorship
It’s simple and affordable
Operating freedom and flexibility
Decision making is fast
Disadvantages of Sole Proprietorship
Unlimited liability
Difficulty raising capital
Lack of financial control and difficulty tracking expenses

Partnership
A partnership is a formal arrangement by two or more parties to manage and operate a
business and share its profits.
There are several types of partnership arrangements. In particular, in a partnership
business, all partners share liabilities and profits equally, while in others, partners
have limited liability. There also is the so-called "silent partner," in which one party is
not involved in the day-to-day operations of the business.
Causes of general dissolution
The general dissolution of a partnership will usually be instigated as a result one of the
following events:
1. The mutual agreement of the partners – which may be an agreement enshrined in
the partnership agreement (where, for example, it was agreed that the partnership
would be dissolved after a particular date, or after a certain event).
2. By the serving of a notice by a partner where such an action provided for in
partnership agreement
3. The exercise of a specific power in the partnership agreement – where, for
example, the partnership agreement allowed a majority of the partners to seek
dissolution.
4. The exercise of a power in the legislation
5. One of the events provided for in the legislation (e.g., the death or bankruptcy of a
partner) – subject to contrary agreement
6. Fraud, misrepresentation, rescission or illegal activity
7. By an order of court (following, for example, the mental incapacity or other ill-
health of a partner
8. Where the business may only be carried on at a loss

Corporation

38
A corporation is a legal entity created by individuals, stockholders, or shareholders, with
the purpose of operating for profit. Corporations are allowed to enter into contracts, sue
and be sued, own assets, remit federal and state taxes, and borrow money from financial
institutions.

Limited liability Company (LLC)

A limited liability company (LLC) is a business structure whereby the owners are
not personally liable for the company's debts or liabilities. Limited liability companies are
hybrid entities that combine the characteristics of a corporation with those of a
partnership or sole proprietorship.

Differences between a partnership and a limited liability company.

i. A company should be compulsorily registered under the Companies Act. Its
formation is very difficult. But registration of a partnership firm is not
compulsory under the Partnership Act.
ii. Shares of a company are freely transferable unless restricted by the Articles. But a
partner cannot transfer his share without the consent of all other partners.
iii. A member of a company can enter into a contract with the same company. But a
partner of a firm cannot enter into contract with the same partnership firm.
iv. A private company should have a minimum of 2 members and can have a
maximum of 50 members. A public company should have a minimum of 7
members and there is no maximum limit. But a partnership should have a
minimum of 2 and can have a maximum of 20 persons [10 in the case of banking
business].
v. A company is a mere abstraction of law. So its existence is not affected by the
change of membership or death or insolvency of its members. But a partnership is
a mere aggregation of individuals. So the life of a partnership ends on the death or
insolvency or insanity of any one partner.
vi. The accounts of a company should be audited by a qualified auditor. But in the
case of a partnership, the accounts need not be audited.

What Is a Company?
A company is a legal entity formed by a group of individuals to engage in and operate
a business—commercial or industrial—enterprise.
Company formation
Company formation is the process of incorporating (registering) a business as a limited
company. When this happens, the business becomes a distinct legal entity; an individual
‘person’ in the eyes of the law. Essentially, this means that the company is completely
separate from its owners in terms of finances, liabilities, contractual agreements, and
ownership of property and assets.
The law does not view unincorporated businesses like sole traders as distinct legal
entities. When you operate as a sole trader, there is no separation between the business
and the owner in terms of finances, assets, and liability.
Documents required during registration:
Memorandum of Association

39
The document contains the objectives of the company and includes its current share
structure, subscribers, rules, and the authorized share capital.
A Memorandum of Association (MOA) is a legal document prepared in the formation
and registration process of a limited liability company to define its relationship with
shareholders. The MOA is accessible to the public and describes the company’s name,
physical address of registered office, names of shareholders and the distribution of
shares.
Articles of association
The Articles of Association is one of the important documents required to register a
company in Kenya. The document outlines a company’s rules and regulations framed to
manage internal affairs. It contains company name, the company's purpose, the share
capital, the company's organization, and provisions regarding shareholder meetings.

Statement of Nominal Capital

It is a document that states the company’s nominal capital, number of shares, and price of
each share. You file this statement with the memorandum of association document or any
other incorporation document during registration.

Tax PIN Certificates

During registration, one must produce a photocopy of tax PIN certificates of each
shareholder or director of the company. You can only acquire the certificates from the
Kenya Revenue Authority (KRA). The laws that govern the incorporation of companies
in Kenya mandates that foreign nationals must possess an alien card or a Foreign
Registration Certificate to get a Tax PIN Certificate.
Passport-sized photos
All directors or shareholders must produce their passport-sized photos when registering.
The photo must not be more than six months old from when you are registering the
company.
ID or passport
One must also produce a scanned copy of their government-issued ID card or passport.
The photocopy of the passport should also bear all the important information.
Methods of raising capital
i. From early-stage investors;
ii. By reinvesting profits;
iii. By borrowing through banks or bonds;
iv. By selling stock.

Law of contracts
A contract is an agreement between two private parties that creates mutual legal
obligations. A contract can be either oral or written. However, oral contracts are more
challenging to enforce and should be avoided, if possible.
Elements of a valid contracts
i. An offer (I will pay you 1,000 for 100 cupcakes);
ii. And acceptance of the offer presented with (Other person accepts 1,000 for 100
cupcakes);
iii. A promise to perform (Other person says they will perform);

40
 iv. A valuable consideration (1000);
v. A time or an event of when the performance must be made (100 cupcakes exactly
2 weeks from now);
vi. Terms and conditions for the performance (The cupcakes must be chocolate); and
vii. Performance (The 100 cupcakes are delivered and the person is paid 1,000).

Type of contract
Valid Contracts
If a contract has covered all of the required elements, it is valid and enforceable in a court
of law. Example: A homeowner (who is over the age of 18 and sound mind) signed a
contract with the store to buy a refrigerator. The homeowner pays for the refrigerator, and
the appliance store presents the refrigerator for the homeowner to take home.
Void Contracts –
A void contract is not considered as a contract and has no effect in a court of law and
cannot be enforced in a court of law. Most commonly, a void contract will be missing out
one or all of the essential elements needed for a valid contract. Neither party needs to
take action to terminate it, since it was never a contract, to begin with. Example: An
agreement between an illegal drug dealer and an illegal drug supplier to purchase a
specified amount of drugs for a specified amount. Either one of the parties could void the
contract since there is no lawful objective and hence missing one of the elements of a
valid contract.
Voidable Contracts –
A voidable contract is a contract which may appear to be valid and has all of the
necessary elements to be enforceable under the act, but has some flaws which could
cause one or both of the parties to void the contract. The contract is legally binding but
could become void. If there is an injured party involved, the injured party or the
defrauded must take action; otherwise, the contract is considered valid. Example: A
contract entered into with a minor (under 18 years) could be voidable.
Unenforceable Contracts –
An unenforceable contract is a contract which cannot be enforced in a court of law. This
could happen because the terms of the contract are ambiguous (unclear), if one party has
a voidable contract or if the Statute of Limitations has expired. Example: Clint bought a
property from Harry through a written contract for sale. Seven years after the purchase,
Harry wanted to claim that the contract was unenforceable. The statute of limitations for
written contracts in Oregon is six years, and Harry would not be able to challenge the
contract.
Negotiable Instruments
Negotiable Instruments are written contracts whose benefit could be passed on from its
original holder to a new holder. In other words, negotiable instruments are documents
which promise payment to the assignee (the person whom it is assigned to/given to) or a
specified person. These instruments are transferable signed documents which promises to
pay the bearer/holder the sum of money when demanded or at any time in the future.

Types of Negotiable Instruments

Promissory notes

41
A promissory note refers to a written promise to its holder by an entity or an individual to
pay a certain sum of money by a pre-decided date. In other words, Promissory notes
show the amount which someone owes to you or you owe to someone together with the
interest rate and also the date of payment.
Bill of exchange
Bills of exchange refer to a legally binding, written document which instructs a party to
pay a predetermined sum of money to the second (another) party. Some of the bills might
state that money is due on a specified date in the future, or they might state that the
payment is due on demand.
Cheques
A cheque refers to an instrument in writing which contains an unconditional order,
addressed to a banker and is signed by a person who has deposited his money with the
banker. This order, requires the banker to pay a certain sum of money on demand only to
the bearer of cheque (person holding the cheque) or to any other person who is
specifically to be paid as per instructions given.
Characteristics of a Negotiable Instrument

1. Freely transferable. The property is a negotiable instrument passes from the one
person to another by delivery, if the instrument is payable to bearer, and endorsement and
delivery if it is payable order……..

2. The title of holder free from all defects .a person taking in an instrument bona fide and
for value, known as the holder in due course, gets the instrument free from all defects in
the title of the transferor. He is not in any way affected by any defect in the title of the
transferor of any prior party .he is not affected by certain defense which might be
available against the previous holder, for example, fraud, provided he himself is not a
party to it

3. Recovery, the holder in due course can sue upon a negotiable instrument in his own
name for the recovery of the amount further he need not give notes of the instrument to
pay

4. Presumption. The Certain presumption applies to all negotiable instruments unless the
contrary is provided. Eg

(a) Consideration. Every negotiable is presumed to have been made drawn, accepted,
indorsed, negotiable or transferred for consideration. This would help a holder to get a
decree from a court without any difficulty.

(b) Date. Every negotiable instrument bearing a date is presumed to have been made or
drawn on such date.

(c) Time of acceptance. When a bill of exchange has been accepted, it is presumed that it
was accepted within a reasonable time of its date and before its maturity

(d) Time of transfer. Every transfer of negotiable instrument is presumed to have been
made before its maturity.

42
(e) Order of endorsements. the endorsement appearing upon a negotiable are presumed
to have been made in the order in which they appear thereon

(f) Stamp. When an instrument has been lost it is presumed that it duly stamped.

(g) Holder a holder in due course. Every holder of a negotiable instrument is presumed
to be holder in due course (sec 118)

(h) Proof of protest .in a suit upon an instrument which has been dishonor, the court, on
proof of the protest presumes the fact of dishonor, unless and such fact is disproved (sec
119).
Law of torts
A tort is an act or omission, other than a breach of contract, which gives rise to injury or
harm to another, and amounts to a civil wrong for which courts impose liability. In other
words, a wrong has been committed and the remedy is money damages to the person
wronged.
Joint Tortfeasor
Two or more individuals with joint and several liability in a tort action for the same injur
y to the same person or property.
To be considered joint tortfeasors, the parties must act together in committing the wrong,
or their acts, if independent of each other, must unite in causing a single injury. All who a
ctively participate in the commission of a civil wrong are joint tortfeasors. Persons respon
sible for separate acts of negligence that combine in causing an injury are joint tortfeasors
. The plaintiff has the option of suing one or more of the tortfeasors, either individually or
as a group.

Parties to tort
Plaintiff – Injured party
Tortfeasor/defendant – one who led to the occurrence of the injury / Negligent party.

Elementsof a tort case

There are four elements to every successful tort case: duty, breach of duty, causation
(the action of causing something) and injury.
For a tort claim to be well-founded, there must have been a breach of duty made by the
defendant against the plaintiff, which resulted in an injury.
Types of torts:
i. Intentional torts
ii. Negligence torts
iii. Strict liability torts
Intentional Torts
An intentional tort is an act that is intentionally committed against another person with
the aim of causing harm. There are several intentional torts that fall into this category,
like assault, battery, conversion, fraud, false imprisonment, trespassing and invasion of
privacy
Negligence Torts
There is a specific code of conduct which every person is expected to follow and a legal
duty of the public to act a certain way in order to reduce the risk of harm to others.

43
Failure to adhere to these standards is known as negligence. Examples of Negligence
Torts include Slip and fall accidents, Car accidents, Truck accidents, Motorcycle
accidents, Pedestrian accidents, Bicycle accidents, Medical malpractice
Strict Liability
Strict, or “absolute,” liability applies to cases where responsibility for an injury can be
imposed on the wrongdoer without proof of negligence or direct fault.
What matters is that an action occurred and resulted in the eventual injury of another
person.
Defective product cases are prime examples of when liability is maintained despite intent.
In lawsuits such as these, the injured consumer only has to establish that their injuries
were directly caused by the product in question in order to have the law on their side. The
fact that the company did not “intend” for the consumer to be injured is not a factor.
Examples of Strict Liability Torts
Defective products (Product Liability)
Animal attacks (dog bite lawsuits)
Abnormally dangerous activities
General Defences
When a plaintiff brings an action against the defendant for a tort committed by him, he
will be held liable for it, if there exists all the essential ingredients which are required for
that wrong. But there are some defences available to him using which he can absolve
himself from the liability arising out of the wrong committed. These are known as
‘General defences’ in the law of tort.
The defences available are given as follows:
i. Volenti non fit injuria or the defense of ‘Consent’ - In case, a plaintiff
voluntarily suffers some harm, he has no remedy for that under the law of tort
and he is not allowed to complain about the same eg If you have agreed to a
surgical operation then you cannot sue the surgeon for it
ii. The wrongdoer is the plaintiff
iii. Inevitable accident
iv. Act of god
v. Private defense
vi. Mistake
vii. Necessity
viii. Statutory authority

Remedies in Tort Law

A victim of a tort may have several possible remedies available under tort laws. There are
three basic types of remedies in tort law: Legal Remedies (“damages”), Restitutionary
Remedies, and Equitable Remedies. Each of these is discussed briefly below:
i. Legal Remedies for Torts: Also known as “damages”, these are monetary
payments made by the defendant for the purpose of compensating the victim
for their injuries, losses, and pain/suffering. These are calculated according to
the victim’s losses rather than the tortfeasor’s gains.
ii. Restitutionary Remedies: These are also meant to restore the plaintiff to a
position of “wholeness”, as close as possible to their state before the tort
occurred. These can include:

44
 Restitutionary damages: These are similar to damages, except that they are
calculated based on the tortfeasor’s gain rather than the plaintiff’s losses.
Replevin: Replevin allows the victim to recover personal property that they
may have lost due to the tort. For example, they may recover property that
was stolen. Replevin can be coupled with legal damages in some cases.
Ejectment: This is where the court ejects a person who is wrongfully staying
on real property owned by the plaintiff. This is common in instances of
continuing trespass.
Property Lien: If the defendant cannot afford to pay damages, a judge may
place a lien on their real property, sell the property, and forward the proceeds
to the tort victim.
iii. Equitable Remedies: These are available where monetary damages will not
adequately restore the victim to wholeness. These can include:
Temporary Restraining Order: Victims of physical harm or harassment may
obtain a restraining order, which prevents the defendant from making contact
with or coming near to the plaintiff.
Temporary or Permanent Injunction: An injunction may either prohibit
unlawful activity by the defendant or it may order them to take affirmative
steps. Injunctions are common in trespassing and nuisance tort claims.

Trade Unions
A trade union is an organization made up of members (a membership-based organization)
and its membership must be made up mainly of workers.
One of a trade union's main aims is to protect and advance the interests of its members in
the workplace.
Most trade unions are independent of any employer. However, trade unions try to
develop close working relationships with employers. This can sometimes take the form of
a partnership agreement between the employer and the trade union which identifies their
common interests and objectives.
Roles of Trade unions:
i. negotiate agreements with employers on pay and working conditions
ii. discuss major changes to the workplace such as large scale redundancy
iii. discuss members' concerns with employers
iv. accompany members in disciplinary and grievance meetings
v. provide members with legal and financial advice
vi. provide education facilities and certain consumer benefits such as discounted
insurance

Industrial Dispute
Industrial dispute means any dispute of difference between employees and employers or
between employers and workmen or between workmen and workmen, which is
connected with the employment or non-employment of the terms of employment or the
conditions of work of any person
Causes of Industrial Disputes:
The common causes of industrial disputes can be grouped into four as follows:
Psychological Causes:

45
(i) Authoritarian leadership (nature of administration).
(ii) Clash of personalities.
(iii) Difficulty in adjusting in given conditions or with each other (employee and
employer).
(iv) Strict discipline.
(v) Demand for self-respect and recognition by workers.

Institutional Causes:
(i) Non recognition of trade/labour union by the management.
(ii) Matters of collective bargaining.
(iii) Unfair conditions and practices.
(iv) Pressure on workers to avoid participation in trade unions.

Economic Causes:
(a) Terms and conditions of employment.
(i) More work hours.
(ii) Working in night shifts.
(iii) Disputes on promotions, layoff, retrenchment and dismissal etc.
(b) Working conditions.
(i) Working conditions such as too hot, too cold, dusty, noisy etc.
(ii) Improper plant and work place layout.
(iii) Frequent product design changes etc.
(c) Wages and other benefits.
(i) Inadequate wages.
(ii) Poor fringe benefits.
(iii) No bonus or other incentives etc.

Denial of Legal and other Right of Workers:

Proceeding against labour laws and regulations.
(ii) Violation of already made agreements i.e., between employees and employers.

Methods of Settlement of Disputes

A dispute needs to be settled as early as possible. Various methods are available for
resolving disputes. They include:
1: Collective bargaining
2: Grievance procedure
3: Arbitration
4: Conciliation
5: Adjudication
6: Consultative machinery
7: Code of discipline
Collective bargaining
Collective bargaining is probably the most effective method of resolving industrial
disputes. It occurs when representatives of a labour union meet management
representatives to determine employees’ wages and benefits, to create or revise work
rules, and to resolve disputes or violations of the labour contract.

46
The bargaining is collective in the sense that the chosen representative of the employees
(i.e. the union) acts as a bargaining agent for all the employees in carrying out
negotiations and dealings with the management. The process may also be considered
collective in the case of the corporation in which the paid professional managers
represent the interests of the stockholders and the board of directors in bargaining with
the union leaders
Collective bargaining benefits both employees as well as employers. This means that the
basic interests of the management are protected and also the rights of the employees. The
two sides have a responsibility towards each other. For example, unions should not
expect the management to concede on issues which would ultimately impair the
company’s ability to stay in business. Likewise, the management must recognize the
rights of employees to form unions and to argue for improved wages and working
conditions.
Collective bargaining infuses democratic principles into the industrial world. Workers
participate in decisions that affect their work and work life. Thus, collective bargaining
may be viewed as a form of participative management.
Grievance procedure
All labour agreements contain some form of grievance procedure. And if the procedure is
followed strictly, any dispute can easily be resolved.
A grievance may be understood as an employee’s dissatisfaction or feeling of personal
injustice relating to his or her employment relationship. A grievance is generally well-
defined in a collective-bargaining agreement. It is usually restricted to violations of the
terms and conditions of employment.
When an employee believes that the labour agreement has been violated, he or she files a
grievance. The grievance needs to be ‘resolved according to a set procedure.
Grievance procedures generally establish the following:
l. How the grievance will be initiated?
2. The number of steps in the process.
3. Who will represent each party?
4. The specified number of working days within which the grievance must be taken to the
next step in the hearing.

There may be variations in the procedures followed for resolving employee grievances.
Variations may result from such factors as organizational or decision-making structures
or size of the plant or the company. Larger organizations do tend to have more formal
procedures involving a succession of steps. Some general principles which should guide
any procedure are:
l. Grievance must be addressed promptly.
2. Procedures and forms airing grievances must be easy to utilize and well-understood by
employees and their supervisors.
3. Ego clashes should not be allowed to impede the resolution of disputes.
4. Occurrence of similar grievances must be avoided.
Arbitration
Arbitration is a procedure in which a neutral third party studies the bargaining situation,
listens to both the parties and gathers information, and then makes recommendations that
are binding on the parties. Arbitration is effective as a means of resolving disputes
because it is:

47
I. Established by the parties themselves and the decision is acceptable to them, and
2. Relatively expeditious when compared to courts or tribunals. Delays are cut down and
settlements are speed up.
Conciliation
Conciliation is a process by which representatives of workers and employers are brought
together before a third party with a view to persuade them to arrive at an agreement by
mutual discussion between them. The third party may be one individual or a group of
people. The alternative name for third party is mediators.
It may be stated that the conciliator has no power to force a settlement, but can work with
the parties separately to determine their respective positions, explains a position more
fully to the opposition, points out bases for agreement that may not have been apparent
previously, helps in the search for solutions, and generally facilitates the reach of an
agreement.
In effect, mediators act as communications catalyst, and their effectiveness depends on
their impartiality and on their capacity to win the trust of both parties
Adjudication
Adjudication means a mandatory settlement of an industrial dispute by a labour court or a
tribunal. Generally, the government refers a dispute or adjudication depending on the
failure of conciliation proceedings.
Disputes are generally referred to adjudication on the recommendation of the conciliation
officer who had dealt with them earlier. However, the government has discretionary
powers to accept or reject recommendations of the conciliation officer. It is obvious that
once a dispute is referred for adjudication, the verdict of a labour court or tribunal is
binding on both the parties.
The system of adjudication is the most significant instrument of resolving disputes. But,
it has been criticized because of the delay involved in resolving conflicts. Continued
dependence on adjudication deprives the trade unions of their right to recognize and
consolidate their strength.
Consultative machinery
The main function of consultative machinery is to bring the parties together for mutual
settlement of differences in a spirit of co-operation and goodwill. A consultative
machinery operates at the plant, industry, state and the national levels. At the plant level,
there are works committees and joint management councils.
Code of discipline
The code of discipline defines duties and responsibilities of employers and workers. The
objectives of the code are:
1. To ensure that employers and employees recognize each other’s rights and obligations
2. To promote constructive co-operation between the parties concerned at all levels;
3. To secure settlement of disputes and grievances by negotiation, conciliation and
voluntary arbitration
4. To eliminate all forms of coercion, intimidation, and violence in industrial relations;
5. To avoid work stoppages;
6. To facilitate the free growth of trade unions; and
7. To maintain discipline in industry

48
 Wages and Remunerations
A wage is compensation paid to employees for work for a company during a period of
time. Wages are always paid based on a certain amount of time. Other forms of
compensation include salary and commissions.
Remuneration is the money and other types of compensation an employee or of a
company receives for their work. It typically includes base salary or
wages, bonuses, and commissions.
Types of Remuneration
The type of remuneration or compensation an employee receives depends on the type of
worker they are and/or the type of work they're responsible for.
Salaries
A salary is a fixed amount payable at regular intervals and can be weekly or monthly
payments straight into an employee’s bank account. Executive, administrative,
professional, computer, and outside sales employees who are exempt from overtime pay
under the Fair Labor Standards Act are paid a salary for the work they do. A salary is
usually expressed in annual terms, such as 1,500,000 a year, but is generally paid out
weekly, monthly or semimonthly (24 times a year). Salaries are paid even during
vacations, holidays, and paid leaves of absence but not during unpaid leaves.
Wages
Wages are hourly or daily payments for work carried out during the working day. Some
employees are paid at an hourly rate and only for hours that they actually work. Their
employers are required to pay them overtime for any hours worked beyond their standard
workweek, and they are classified as non-exempt employees.
What the labourer earns by working in a factory or office is called wages. The labourers
are generally paid a certain sum of money per day or week, etc. The amount of money
paid is called the money wages.
The worker, however, is more interested in the goods and services which he can get with
his money wages or otherwise. The amount of goods and services which the labourer
actually gets is called his real wages. The standard of living and the prosperity of a
labourer depend not on his money wages but on his real wages.

Commissions
Salespeople are usually paid on a commission basis. They're compensated based on their
sales over a period of time, usually as a percentage of sales.
Bonuses and Incentives
Employees might be paid bonuses at various times and for various reasons. Some
bonuses are performance-related while others are given to all employees in the company
or to a workgroup at the end of a big project or a particularly good year. End-of-year
holiday bonuses are also common.
Incentive programs are a common method used to motivate salespeople, and they can
include non-cash gifts such as trips or wellness programs. Many companies offer both
cash and non-cash incentives to executives, including stock options.

Factors influence the determination of wage rate

1. Ability to Pay:
The ability of an industry to pay will influence wage rate to be paid, if the concern is
running into losses, then it may not be able to pay higher wage rates. A profitable
enterprise may pay more to attract good workers. During the period of prosperity,

49
workers are paid higher wages because management wants to share the profits with
labour.
2. Demand and Supply:
The labour market conditions or demand and supply forces to operate at the national and
local levels and determine the wage rates. When the demand for a particular type of
skilled labour is more and supply is less than the wages will be more. One the other hand,
if supply is more demand on the other hand, is less then persons will be available at lower
wage rates also.
According to Mescon,” the supply and demand compensation criterion is very closely
related to the prevailing pay comparable wage and on-going wage concepts since, in
essence to all these remuneration standards are determined by immediate market forces
and factors.
3. Prevailing Market Rates:
No enterprise can ignore prevailing wage rates. The wage rates paid in the industry or
other concerns at the same place will form a base for fixing wage rates. If a unit or
concern pays low rates then workers leave their jobs whenever they get a job somewhere
else. It will not be possible to retain good workers for long periods.
4. Cost of Living:
In many industries wages are linked to enterprise cost of living which ensures a fair
wages to workers. The wage rates are directly influenced by cost of living of a place. The
workers will accept a wage which may ensure them a minimum standard of living.
Wages will also be adjusted according to price index number. The increase in price index
will erode the purchasing power of workers and they will demand higher wages. When
the prices are stable, then frequent wage increases may not be required
5. Bargaining of Trade Unions:
The wage rates are also influenced by the bargaining power of trade unions. Stronger the
trade union, higher will be the wage rates. The strength of a trade union is judged by its
membership, financial position and type of leadership.
6. Productivity:
Productivity is the contribution of the workers in order to increase output. It also
measures the contribution of other factors of production like machines, materials, and
management .Wage increase is sometimes associated with increase in productivity.
Workers may also be offered additional bonus, etc., if productivity increases beyond a
certain level. It is common practice to issue productivity bonus in industrial units.
7. Government Regulations:
To improve the working conditions of workers, government may pass a legislation for
fixing minimum wages of workers. This may ensure them, a minimum level of living. In
under developed countries bargaining power of labour is weak and employers try to
exploit workers by paying them low wages. In India, Minimum Wages Act, 1948 was
passed empower government to fix minimum wages of workers. Similarly, many other
important legislation passed by government help to improve the wage structure.
8. Cost of Training:
In determining, the wages of the workers, in different occupations, allowances must be
made for all the exercises incurred on training and time devoted for it.
Features of a good wage system
1. The system should be fair both to the employer and the employee. It should be based
upon scientific time and motion study to ensure a standard output to the employer and a
fair amount of wages to the workers.

50
2. The worker should be assured of a guaranteed minimum wage at satisfactory level
irrespective of the work done by him.
3. Workers should be paid according to their merits. Efficient workers should be able to
earn more wages as compared to the inefficient workers.
4. Skilled workers should be paid more as compared to the unskilled workers. Skilled
workers are to be compensated for the efforts put in by them to acquire the skill.
5. The system should ensure equal pay for equal work.
6. The system should be flexible to allow necessary changes which may arise.
7. The system should be such as to minimise labour turnover, absenteeism and late
attendance.
8. The system should not violate any local or national trade union’s agreements.
9. The system should keep in view the wage rate in the same area or industry.
10. In order to protect the real wages from erosion, the level of money wages should be
adjusted to price changes. Workers should be paid dearness or dear food allowance over
and above the basic pay to take account of an increase in prices. Thus, a system of wage
payment should keep in view the price changes.
Employee motivation
Employee motivation is key to an organization’s success. It’s the level of commitment,
drive and energy that a company’s workers bring to the role everyday. Without it,
companies experience reduced productivity, lower levels of output and it’s likely that the
company will fall short of reaching important goals too.
Benefits of employee motivation
1. Higher productivity levels
If people are motivated to work faster and more efficiently, this will lead to more output.
This can enable your company to do more, and even sell more.
2. More innovation
Not only will they produce more, but motivated employees are also more likely to make
the offering even better. Being highly focused on the product or service, motivated
employees will see areas for improvement and will be driven to work to enhance these.
3. Lower levels of absenteeism
Motivated employees are happier with their working lives and have a goal that they are
working towards. These employees are less likely to miss work without good reason as
they feel that this could delay their progress.
4. Lower levels of staff turnover
Motivated employees are more likely to stay in their roles as they can see the effects of
their work and feel that there is an ongoing difference that they can make in the company.
This can lead to lower training and recruitment costs for the company as employee churn
is reduced.
5. Great reputation and stronger recruitment
As we will all be familiar with, people talk about the things they enjoy, and more notably,
the things they don’t. Satisfied workers spread the word and in turn, give the firm a good
reputation as an employer. As a result, it becomes easier to recruit the leading talent.

51
52