Assignment Principle Management.docx

BBPP1203 PRINCIPLES OF MANAGEMENT FOR NON BUSINESS JANUARY SEMESTER 2 2019

MATRICULATION NO: 910707045417001 IDENTITY CARD NO:

910707-04-5417

TELEPHONE NO:

014-9601087

E-MAIL:

[email protected]

LEARNING CENTRE:

MALACCA

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CONTENT

 Page 3

1.0 Introduction 

2.0

nature

of

 Page 4 , page 5, page 6

organisation 

2.1 Company profile



2.2

Company

organisation structure 

3.0 The basic control

 Page 7, page 8,page 9, page 10,page

method 

11, page 12

3.1 Basic control method applied by PKT



3.2Feed forward control method (method 1)



3.3Concurrent

control

(method 2) 

3.4 Feedback (method 3) 4.0 Relationship between

 Page 13,page14

the basic method

5.0 Conclusion

 Page 15

6.0 Reference

 Page 16,page 17

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1.0

INTRODUCTION

This assignment is to capture the basic organizational control methods applied by the organization and its’ relationship between the practices of the managers as part of management control. According to Finkel (2015), controls are a subset of business systems which specifically help protect a company from careless, costly, or uninformed decisions or behaviours. Any business requires carefully planned structure to ensure the operation is managed smoothly while assuring success and team satisfaction. Such controls in place catalyst the problem-solving process and lead towards discovering the apt solution (University of Washington, 2001). The following section will describe the nature of reference organization in detail.

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2.0

NATURE OF ORGANISATION

In this assignment, PKT Logistics Group Sdn. Bhd. Company will be the main reference point in elaborating and analysing the three basic control methods practised by the organization.

2.1

COMPANY PROFILE

PKT Logistics Group Sdn. Bhd. (PKT) offers logistics services via air and ocean. The company was formerly known as Port Klang Trading Sdn Bhd. PKT Logistics Group Sdn. Bhd. was founded in 1974 and is based in Shah Alam, Malaysia with its Headquarters located strategically along Consortium Expressway Shah Alam Selangor (KESAS) highway (Bloomberg, 2019). The company started off as a custom brokerage and forwarding service provider and later diversified downstream to provide complimentary services such as NVOCC (Non-Vessel Operating Common Carrier), container haulage, warehouse and distribution, all under separate legal entities. PKT was incorporated as a private company under the Malaysia Companies Act 1965 to function as a holding company to manage all the various services providers under one umbrella body (Infotoday Sdn Bhd, 2016). Today, PKT is a socially responsible company providing logistics services by utilizing local human resources, building environmentally friendly warehouses, open engagement with the communities, inspire other businesses to provide positive impact to people and communities through its activities (PKT Logistics Group, 2019). Over an area of over 27 acres of land, PKT has budgeted RM160 million as investment in One Logistics Hub which consists of The Ship, The Waves, The Lighthouse and The Sea of Pineapples within its’ corporate compound. In the early 21st century, as warrant by dynamic business landscape, to mitigate the risks on overly dependent on Automotive business verticals and over-relying on Malaysia geographically, PKT has developed 60:40, ASEAN30, 5M5 and 1B Wawasans (PKT Logistics Group, 2019). 4

Wawasan 60:40 is the revenue contribution ratio of 60:40 between Automotive and NonAutomotive segment. Non-automotive will be driven primarily by FMCG. PKT targets to realize this objective by the year 2020. Moving on, Wawasan ASEAN30 targeting revenue contribution of 30% by other Asean countries plus India, Korea and Taiwan by the year 2020 whereas Wawasan 5M5 is about warehouse ownership area of 5 million square feet in Asia by the year 2020 and Wawasan 1B aiming at a revenue target of RM1 billion by the year 2020 (PKT Logistics Group, 2019). 2.2

COMPANY ORGANIZATION STRUCTURE

Currently, PKT is presided by the Managing Director, Dato’ Dr Michael Tio, whose father was the founder of this group of companies. With more than 1,000 workers, encompassing both local and foreign workers, he oversees the business development and operation of the company. PKT applies the divisional organizational structure in managing the organization as depicted below.

Extracted from UK Essays. (2019). Types of Organizational Structures Commerce Essay. Retrieved March 4, 2019, from https://www.ukessays.com/essays/commerce/types-oforganizational-structures-commerce-essay.php Within a divisional structure, each organizational function has its own division which corresponds to either products or geographies. Each division contains the necessary resources and functions needed to support the product line and geography. Dividing the whole organisation according to the major products to be manufactured by them is known as Divisional Organizational Structure. For example, Samsung, Reliance etc. This type of 5

structure is devised by the business firms when they are dealing in different categories of products. It helps in coping with the emerging complexities due to diversification of products (Kalpana, no date). Similarly, in reference to PKT, under its’ wings, it has The Waves (warehouse), The Ship (operational building) and The Lighthouse (college) within its’ headquarters ground. Each entity is being managed by different sets of teams and supervised by PKT arm. As claimed by Kalpana (no date), in her article published in Business Management Ideas, in a divisional structure, the various departments or divisions are created based on different products manufactured in the enterprise. In each department or division, different functions like production, purchase, finance, sales etc. are performed in order to achieve organisational goals. Each division has a divisional manager who is responsible for the working of his division and has full authority over it. In each department, functional structure automatically develops. However, functions of each division are different, depending upon the nature of the product to be produced. Also, the divisional head of each division is responsible for the profit or loss of his division so that each division acts as a profit centre. The next section will discuss in the detail the basic control methods applied by PKT.

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3.0

THE BASIC CONTROL METHODS

As discussed in depth by CliffsNotes (2016), organizational control is the process of assigning, evaluating, and regulating resources on an ongoing basis to accomplish an organization's goals. To successfully control an organization, managers need to not only know what the performance standards are, but also figure out how to share that information with employees. Control can be defined narrowly as the process a manager takes to assure that actual performance conforms to the organization's plan, or more broadly as anything that regulates the process or activity of an organization. The following content follows the general interpretation by defining managerial control as monitoring performance against a plan and then adjusting either in the plan or in operations as necessary. Moving further, Kuratko, et. al. (2001) as cited in University of Minnesota (2015) elaborated the fourth facet of P-O-L-C, organizational control, refers to the process by which an organization influences its subunits and members to behave in ways that lead to the attainment of organizational goals and objectives. When properly designed, such controls should lead to better performance because an organization is able to execute its strategy better. P-O-L-C refers to planning, organizing, leading, and controlling as illustrated below.

P-O-L-C framework

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In general, application of controlling in organization is beneficial as catalyst in making effective plans, ensuring organizational activities are consistent, enable to obtain feedback on project status as well effective decision-making (CliffsNotes, 2016).

3.1

BASIC CONTROL METHODS APPLIED BY PKT

In general, bureaucratic control uses formal systems to influence employee behaviour and help an organization achieve its goals. Bureaucratic control is the use of rules, policies, hierarchy of authority, written documentation, reward systems, and other formal mechanisms to influence employee behaviour and assess performance. Bureaucratic control can be used when behaviour can be controlled with market or price mechanisms (Strategic Management, 2018). The control methods adopted by PKT are the Three Types of Control, consist of Feedback, Concurrent Control, and Feedforward as depicted below.

The Three Types of Control 3.2

FEED FORWARD CONTROL (METHOD I)

In the most ideal situation, feedforward control can eliminate the effect of the measured disturbance on the process output. Even when there are modelling errors, feedforward control can often reduce the effect of the measured disturbance on the output better than that achievable by feedback control alone. However, the decision as to whether to use feedforward control depends on whether the degree of improvement in the response to the measured disturbance justifies the added costs of implementation and maintenance. The economic benefits of feedforward control can come from lower operating costs and/or increased saleability of the product due to its more consistent quality. Feedforward control is always used along with 8

feedback control because a feedback control system is required to track setpoint changes and to suppress unmeasured disturbances that are always present in any real process (Ben-GurionUniversity of Negev, 2016, pp.221-240). Besides that, the Strategic Management (2018) expressed feedforward as the control focuses on the regulation of inputs (human, material, and financial resources that flow into the organization) to ensure that they meet the standards necessary for the transformation process. Feedforward controls are desirable because they allow management to prevent problems rather than having to cure them later. Unfortunately, these controls require timely and accurate information that is often difficult to develop. Feedforward control also is sometimes called preliminary control, pre - control, preventive control, or steering control. However, some authors use term "steering control" as separate types of control. These types of controls are designed to detect deviation some standard or goal to allow correction to be made before a sequence of actions is completed. In brief, feedforward controls are future-directed as they attempt to detect and anticipate problems or deviations from the standards in advance of their occurrence at various points throughout the processes (Manvi Sharma, no date). PKT recently joined hands with Daiso Industries in setting up regional distribution centre for ASEAN and MiddleEast at Port Klang, with an investment cost of RM 250M. A regional distribution centre (RDC) is a collection and consolidation centre for finished goods, components and spare parts produced by its own group of companies for its own brand to be distributed to dealers, importers or its subsidiaries or other unrelated companies within or outside the country. Among the activities involved are bulk breaking, repackaging and labelling (MIDA, 2012). Therefore, in this million-ringgit worth project, PKT bound to take the necessary feedforward measures. This could be in term of the logistics needs in establishing the centre, to ensure reliability and long-term sustainability. Additionally, PKT needs to study thoroughly the incentives and expectations to be met before planning prudently on the execution process. Failing to do could affect their credibility status in the said project. However, this is just one of their many other commitments which involves plenty other types of businesses such as education, tiling etc. therefore, this is where the divisional organizational practice will play a major role. 9

3.3

CONCURRENT CONTROL (METHOD II)

It is an approach to controlling the performance of an operating system that attempts to bring together the monitoring of performance, comparison with parameters, and acting stages. Thus, in total quality management members of staff take responsibility for the quality of every stage of a process as they are performing it, in contrast to a feedback control system, in which the quality would not be inspected until the process had been completed. In some specialist environments the use of electronic data-capture has enabled the feedback cycle to become very short. Processes can be adjusted within milliseconds, thus minimizing any cost penalties (Oxford References, 2019). Manvi Sharma in her article published in Business Management Ideas (no date) called steering control because it allows people to act on a process or activity while it is proceeding, not after it is proceeding, nor after it is completed. Corrections and adjustments can be made as and when the need an elevation. Such controls focus on establishing conditions that will make it difficult or impossible for deviations from norms to occur. She further elaborated by citing an example of concurrent control which is the development by companies of job descriptions and job specifications. It may be recalled that job description identifies the job that must be done, thus clarifying working relationships, responsibility areas, and authority relationships. It thus assists in preventing unnecessary duplication of effort (work) and potential organisational conflict. This method allows one to take preventive measures as the project is in on-going stage. For example, PKT develops and lay down precise job descriptions and specifications to assist the macro-managing of the overall organization operation resourcefully. In addition, these descriptions and specifications are later supported with simplified Standard Operating Procedure (SOP) to guarantee the outcome quality in desired format. It thus assists in preventing unnecessary duplication of effort (work) and potential organisational conflict. In a like manner job specification identifies the abilities, training, education and characteristics needed of an employee to do the work. It is control device inasmuch as it works to prevent a person who is totally unqualified and unfit from being selected for the job, thereby saving money and time, and thus precluding potential poor performance (Manvi Sharma, no date).

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Such practices allow one to monitor the process of work and easily detect any unforeseen error or gap. With that detection, remedy procedure can be applied at instant and minimise the loss incurred.

3.4

FEEDBACK (METHOD III)

In reference to Strategic Management (2018), feedback control focuses on the outputs of the organization after transformation is complete. Sometimes called post action or output control, fulfils several important functions. For one thing, it often is used when feedforward and concurrent controls are not feasible or are too costly. Sometimes, feedback is the only viable type of control available. Moreover, feedback has two advantages over feedforward and concurrent control. First, feedback provides managers with meaningful information on how effective its planning effort was. If feedback indicates little variance between standard and actual performance, this is evidence that planning was generally on target. If the deviation is great, a manager can use this information when formulating new plans to make them more effective. Second, feedback control can enhance employee’s motivation. The major drawback of this type of control is that, the time the manager has the information and if there is significant problem the damage is already done. But for many activities, feedback control fulfils a few important functions. On the hand, lumenlearning.com defined feedback is a process in which information about the past or the present is used to influence the present or future. As part of a chain of cause-and-

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effect that forms a circuit or loop, actions are said to “feedback” into themselves. Feedback helps an organization seeking to improve its performance make the necessary adjustments. Feedback serves as motivation for many people in the workplace. When employees receive negative or positive feedback, they decide how to apply it in their daily work. Feedback for the system also provides common points of discussion for management and allows for a holistic appraisal of how processes can be improved. For example, PKT exercise a scheduled audit process, both internal and external, for all the organizations under its arm to review the current practices and to obtain an insight on further improvements on areas deemed necessary. The following section will focus on the relationships between the above-mentioned control method and organization and those methods applied by managers.

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4.0

RELATIONSHIP BETWEEN THE BASIC METHODS

To ultimately achieve the desired control, every manager needs a working system that supports his or her managerial style, which collectively helps in fulfilling organizational objective and long term as well as short term goals. Top managers control their organizations by establishing certain performance standards (Shuttle, 2019). The managers under PKT arm of companies also adapts to these three basic methods of control. The diagram below illustrates of how a feedback process is applied. Similarly, the PKT managers follows the feedforward and concurrent methods before following the feedback method.

For example, the Warehouse Manager will study the kind of materials to held under his or her control and later decide on the suitable SOP and later frame the job specifications into Gantt Chart. This chart will assist the employee to carry out the task within the stipulated duration and undertaking the correct steps in task completion. This step indicates ‘feedforward’ action. Moving further, the Warehouse Manager will require his subordinates to maintain an action plan and call for scheduled short meetings to keep track of the job process and assist wherever 13

necessary. During this process, which known as ‘concurrent’, progressive updates can help both parties (both manager and employee) to monitor the work and take necessary recovery or preventive measures. Upon completion of task, feedback obtained from quality inspection as well as clients will assist everyone to take upgrade the quality of their work for betterment and optimal satisfaction.

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5.0

CONCLUSION

All the forms of controls described above are useful. Feed forward and prevention controls are sufficiently timely to permit management to make corrective changes and still achieve objectives. So, they have great appeal to management. But there are certain defects of these two forms of control. Firstly, they are costly. Secondly, there are so many activities that do not lend themselves to frequent or continuous monitoring. Thirdly, at some point excessive control becomes unproductive, as in the case of sales representatives who spend their time filling out control reports for the regional office instead of meeting customers. So, it may be suggested that management must, therefore, use the control system that is most appropriate for the given situations.

(2764 words)

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6.0

REFERENCE LIST

Ben-Gurion-University of Negev. (2016). Feedforward Control. Negev, Israel. Bloomberg. (2019). Company Overview of PKT Logistics Group Sdn. Bhd. Retrieved March 4,

2019,

from

https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=50275851 CliffsNotes. (2016). Organizational Control Objectives. Retrieved March 8, 2019, from https://www.cliffsnotes.com/study-guides/principles-of-management/control-the-linkingfunction/organizational-control-objectives Finkel, D. (2015). The 3 Types of Business Controls. Retrieved March 6, 2019, from https://www.inc.com/david-finkel/the-3-types-of-business-controls.html Infotoday Sdn Bhd. (2016). PKT LOGISTICS SDN BHD. Retrieved March 4, 2019, from http://pkt.infotoday.com.my/ Kalpana, R. (no date). Organisational Structure: Functional Structure and Divisional Structure.

Retrieved

March

4,

2019,

from

http://www.businessmanagementideas.com/organisation/organisational-structure-functionalstructure-and-divisional-structure/2334 lumenlearning.com (no date). Types of Control. Retrieved March 8, 2019, from https://courses.lumenlearning.com/boundless-management/chapter/types-of-control/ Malaysian Investment Development Authority (MIDA). (2012). Guidelines for application for status and/or incentive for setting up a regional distribution centre. Retrieved March 8, 2019, from http://www.mida.gov.my/env3/uploads/Forms/Services/03072012/GD-RDC.pdf Manvi Sharma. (no date) Types of Control in an Organisation: 3 Types | Management. Retrieved

March

4,

2019,

from

http://www.businessmanagementideas.com/management/controlling/types-of-control-in-anorganisation-3-types-management/7941 Oxford References. (2019). Concurrent Control. Retrieved March 8, 2019, from http://www.oxfordreference.com/view/10.1093/oi/authority.20110803095630901

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PKT Logistics Group. (2019). One Logistics Hub. Retrieved March 4, 2019, from https://pktgroup.com/index.php/l-e-a-n/ Strategic Management. (2018). Formulation and Implementation. Retrieved March 8, 2019, from https://www.strategic-control.24xls.com/en107 Suttle, R. (2019). What Are the Main Methods Top Managers Use to Control the Organization? Retrieved March 8, 2019, from https://smallbusiness.chron.com/main-methods-top-managersuse-control-organization-32342.html UNIVERSITY OF MINNESOTA. (2015). Principles of Management. Minneapolis.

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