LECTURE NOTE ON

CIVIL ENGINEERING PRATICES

AND ENTERPRENUERSHIP II

BY

DR. UZOR ONYIA

THE MANAGEMENT OF ENVIRONMENT
George Bernard Shaw:
“The reasonable man adopts himself to the world, the unreasonable man
persists in trying to adopt the world to himself. Therefore, all progress depends
on the reasonable man.”
“progress is impossible without change, those who cannot change their minds
cannot change anything.”

KEY DEFINITIONS
Environment: is everything around you, both biotic and abiotic. Humans, animals,
naturals, chemical, mechanicals. In South Africa a legal definition is provided by the
National Environmental Management Act 107 of 1998—(NEMA) which defines the
environment as the surroundings within which humans exist and that are made up
of:· Land, water and atmosphere of the earth,· Micro-organisms, plant and animal
life,· Any part or combination of the above, and the interrelationships among and
between them and,· The physical, chemical, aesthetic and cultural properties and
conditions of the foregoing that influence human health and well-being.

Environmental Challenges are Issues of pollution, mining dumps, natural resource

depletion, deforestation, and land degradation. drought, agriculture, politics and land
resettlement

Engineering: is proffering solutions to human, societal and environmental

challenges and needs (Agunwamba et al, 2008)
Entrepreneurship: Entrepreneurial Engineering is the cultivation of innovative
talents to accelerate change for local economic construction and development
(Wang, 2020). Sustainable and entrepreneurial engineering is a controlled and
guarded indigenous development through innovative creations. Management has
been at the core of the barriers and challenges to sustainable engineering
implementation (De-Souza-Dutra et al. 2017).
Project: researched, designed and planned interrelated tasks to be executed and
completed within a scheduled time, budgeted cost and specified quality.
Construction/ project management: The planning, organisation, monitoring,
controlling and the application of skills, knowledge tools and competences to
construction processes to achieve the project objectives within scheduled criteria of
Time, Cost quality, performance.
UN describe Sustainable Development as development that meets the needs of the
present without compromising the ability of the future generations to meet their own
needs, it is the inclusivity of wealth generation and distribution for the nurturing of
nature and humanity.
Construction/ Project/ Engineering Manager: is an organiser, planner, facilitation
and leader of processes and activities for the successful deliverables and
performance of the project life cycle.

Environmental Pollution: is a human-induced or natural process which negatively

affects the environment to function ineffectively within an ecosystem while
accepting, storing and recycling water, energy and nutrients. humans extract benefits
from nature to improve their chances of survival and quality of life, yet this is done
in ways that harm and reduce local ecosystems’ capacities to provide them in the
future.

Environmental Management is defined as keeping control of the community’s

activities so that communities do what they can to conserve the physical resources
and to avoid polluting them. The focus of environmental management is to manage
the behaviour of humans and performance of organisations in line with
environmental principles, criteria, standards and legislation. Environmental
principles and prevention supported by corrective actions is the centre of
environmental management.

Environmental Principles: help guide and shape the way people interact with the
environment as nations develop. These principles that include the polluter pays
principle, the precautionary principle, the prevention principle, the integration
principle, the public participation principle and the sustainability principle. The
principles are an anchor of sustainable development and ensure that the environment
is not sacrificed on the altar of economic development.

The polluter Pays Principle:

The polluter pays principle (PPP) dictates that anyone who disturbs or spoils the
environment in any way must take the necessary corrective measures to rectify the
environment or pay for the cost of remediation (Environmental Management
Agency, 2014). It is based on the moral basis of responsibility bearing in mind that
the environment has so many uses to different people hence their ability to meet their
needs must not be compromised by other people’s activities. The PPP promotes
economic efficiency in the implementation of pollution control policies and
encourages business to control pollution in their activities. The PPP is one of the
core principles of sustainable development and recognises that the polluter should
pay for any environmental damage created and that the burden of proof in
demonstrating that technology, practice or product is safe should lie with the
developer, not the general public. For example, if a company pollutes a river which
is a source of domestic, agricultural or recreational water for a given community
then that company should either pay for the cost of cleaning up the river or the cost
of the provision of the substitute sources of water such as the drilling of boreholes
in the affected community (Environmental Management Agency, 2014).
The Precautionary Principle:
The precautionary principle approach is useful for social development as well as
environmental issues. In developing countries like Nigeria, rural people have little
in the way of security to fall back on if things like land reform or agricultural
innovation fail. This means that developmental efforts in the country have to be right
and there are preparations in place should there be problems. The principle of
precautionary is constructed around the goal of preventing, rather than reacting to
environmental harm. Using this principle, it is important to take preventive action in
the event of uncertainty, explore a wide range of alternatives to try and avoid
unwanted impacts and to increase public participation in decision making. The
principle demands ‘upstream thinking’, that is, looking for underlying causes of
problems rather than fixing on symptoms. Further, it is important to ensure that a
substance or activity posing a threat to the environment is prevented from adversely
affecting the environment, even if there is no conclusive scientific proof of linking
that substance or activity to environmental damage·
The Integration Principle:
The principle of integration is at the core of sustainable development. It encourages
organisations to integrate environmental considerations into economic and other
development (Rio Declaration, 1992; Stockholm Declaration, 1972). Environmental
management must be integrated, acknowledging that all elements of the environment
are linked and interrelated, and it must consider the effects of decisions on all
components of the environment and all people in the environment. This principle
has led many organisations to integrate environmental considerations into their
decision-making processes through environmental impact assessment mandates·
The Sustainability Principle:
The sustainability principle encourages humans to develop their economic activities
in such a way that the desired quality of life is secured or even raised while
simultaneously reducing the use of natural resources. In this way, the basis of life
for future generations could be preserved while opening up globally viable paths of
development. It is not enough for a country’s economy continues to develop, it now
increasingly important to ensure that it does so in a sustainable way and that at the
same time, issues of poverty and inequality are effectively addressed. Therefore, it
is important to note that it’s not just the quantity of growth that matters, but also it
is quality. Human well-being and sustainable living are at the core of many
countries’ environmental agendas.

FORMATION OF COMPANY-
Company formation is the process of incorporating (registering) a business as a
limited company. Which enables the business to becomes a distinct legal entity;
which infers an individualistic entitlement before the law. Essentially, this implies
that the company is completely separate from its owners in terms of contractual
agreements, liabilities, finances and ownership of property and assets.
The main purpose of registering a limited company is to limit the financial
responsibility of the company owners. This protection is known as ‘limited liability’.
Private companies can be either limited by shares or limited by guarantee.

The owners of a company limited by shares are only liable for the value of their
shares. The owners of a company limited by guarantee are only liable only for the
value of their guarantees. Their personal assets and finances are insulated beyond
the limit of their liabilities.

The Primary Functions of Corporate Affairs Commission

1. Incorporating and dissolving limited companies
2. Receiving information about all registered companies transacting in Nigeria
3. Ensuring all corporate information on past and present incorporated
businesses is available to the public.

a) Step by Step on how to Register a Company (Private or Public)

• Check for availability of proposed company name and reserve a new Name
• Complete pre-registration form and upload relevant documents (Online
using Company Registration Portal)
• Pay filing and Stamp duty fees
Now registration is end-to-end on the COMPANY REGISTRATION
PORTAL (CRP) with electronic Certificate of Registration and Certified
Extract of Registration information

b) Step by Step on how to Register a Limited by Guarantee

• Reserve a Name
• Fill Registration Form and upload relevant documents (Online using
Company Registration Portal)
• Pay filing fee and Stamp Duty
The Commission is obliged to obtain approval of the Attorney General of
the Federation before registration of the Company Limited by Guarantee.

c) Conversion and Re-registration of Private Company as Public

d) Re-registration of company Limited by Shares as unlimited Company
e) Change of Name
f) Re-registration of Unlimited Company as Limited by Shares
 g) Registration of Mortgages, Debentures and Charges
h) Increase in Share Capital
i) Company Searches
j) Obtaining Certified True Copies (CTC) of filed Documents
k) CTC OF Certificates
l) Other Statutory Filings
(www.cac.gov.ng)
Registration of a private company limited by shares or guarantee requires:
1. a unique company name
2. a registered office address in Nigeria
3. a minimum of two directors
4. a minimum of two shareholder or guarantor (owners)
5. Memorandum and Articles of Association (governing documents)
6. share capital of at least one issued share (limited by shares companies only)
7. information about People with Significant Control (PSCs)

Common Reasons for Rejection of Company Formation Applications

The most common reasons why company formation applications are rejected
involved but not limited to:

1. the company name contains a ‘sensitive’ word or expression

2. the company name is unavailable, incomplete, or missing from the application
3. the company name requires supporting evidence
4. supporting evidence for the proposed company name has been incorrectly
presented
5. incomplete details are provided for a director or company secretary
6. a residential address is flagged as being a commercial property
7. the company share structure is incorrect
8. a company director does not meet the minimum age requirement of 18
9. a director is registered as an undischarged bankrupt or a disqualified director
10.a registered office address has not been included, or it is situated in the wrong
country
 11.the Statement of Capital (which contains information about share capital) is
incomplete or missing (limited by shares companies only)
12.the articles of association have not been included

ENTERPRENEURSHIP BUSINES PLAN (ESP):

• A business plan is a well-documented strategy for turning idea into reality. It
gives an outline of the business, the market in which the business will operate
and how it aims to generate profits. EBP is about effectively starting- up and
communicating the business idea to the outside world to attract and sustain
investment (finance) and customers (clients).
• EBP is effectively used by the companies to organize their goals and
objectives into a coherent format.
• Not a start-up or investment tool, but a continuous working document for re-
evaluating progress and clarify goals for the future. It is designed to address
both internal benefits and external functions.
CONTRIBUTIONS OF EBP
1. Research and understanding for preliminary business and industry intelligence.
2. Identifies potential challenges.
3. To stay focused on goals and objectives.
4. Develop operation framework and guidelines.
5. Improve internal operations.
6. Demonstrate potential to succeed.
7. Communication and marketing tool and feedbacks.
8. and appropriation of financial resources.
COMPONENTS OF EBP
1. Business Description: this describes the products or services your company will
deliver or provide. How and where the business will operate.
2. Personal Details: this will include all relevant experience and trainings.
3. Market Description: details of your market customers and competitions.
4. Market Plan: this sets out how you will promise your business and stand out
from the competitors.
5. Pricing and Sales Analysis – here, you will decide your pricing policy and set
sales targets.
6. Finances- this includes the equipment you will need to buy. The personal
income you will need to draw from for your company ad your first year
cashflow.
7. EBP should provide clarity of your idea, market potential, financial projections
and capital requirements, thereby providing investors with the necessary
information to make judgments about the financial feasibility of a venture.
8. Average of 30- 40 pages including supporting documents.
9. Write your EBP yourself, but have it reviewed by an expert.
10.Describe the new ventures creation as “a dynamic process in which activities
such as obtaining resources developing new products, seeking funding, doing
sales and hiring employees take place at different times and different orders.
This requires constant rebalancing and fit between the environment and the
ventures.
11.EBP should provide a semblance of internal consistency and coherence of the
founder’s message and vision, thereby gaining legitimacy in the eyes of external
stakeholders facilitating the development of social ties and interest from key
employees and investors.
12.To sustain a company, make a sustained development is development that meets
the needs of the present without compromising the ability of the future
generation to meet their needs.

Environmental sustainability is protecting our environment for future

generations.
Provide a meaningful balance between profit the environment and social causes
must satisfactorily be maintained.

Environment Economics

Sustainability
Society
SUSTAINING YOUR COMPANY
1. Identify an opportunity.
2. Develop the concept
3. Determine and acquire the required resources
4. Implement and manage
5. Focus on quality and innovation
6. Building the culture
7. Managing the company’s finances
8. Minimizing harm to the society
9. Harvest the ventures- exit strategies.

SOURCES OF FINANCE.
Sources of finance for business are equity, debt, debentures, retained earnings, term
loans, working capital loans, letter of credit, euro issue, venture funding etc. These
sources of funds are used in different situations. They are classified based on time
period, ownership and control, and their source of generation. It is ideal to evaluate
each source of capital before opting for it. Sources of finance for business are equity,
debt, debentures, retained earnings, term loans, working capital loans, letter of
credit, euro issue, venture funding etc. These sources of funds are used in different
situations. They are classified based on time period, ownership and control, and their
source of generation. It is ideal to evaluate each source of capital before opting for
it.
Internal sources and external sources are the two sources of generation of capital.
All the sources have different characteristics to suit different types of requirements.
The type of financing sources used by an entrepreneurial engineer or a company is
dependent on the company’s life stage.
Company’s life stages are:
1. Launching/start-up
2. Growth } internal resources
3. Maturity } external resources
4. Decline internal sources
All of them have different finances sources.
 Years
Sources 18- 24 25-34 35- 64
Internal `sources
1. Personal funds 51% 52% 52%
2. Family funds 22% 18% 15%
External sources
1. Friends 3% 3% 3%
2. Banks and other institutions 19% 23% 25%
3. Other sources 5% 5% 5%

Sources: Global Entrepreneurship Monitor (GEM 2015)

Factors that influence sources of finances
1. Ages
2. Stages of development
3. Entrepreneur’s gender
4. Financial markets

Internal Sources:
The internal source of capital is the one which is generated internally by the business.
These are as follows:
• Retained profits
• Reduction or controlling of working capital
• Sale of assets etc.
The internal source of funds has the same characteristics of owned capital. The best
part of the internal sourcing of finance is that the business grows by itself and does
not depend on outside forces. Disadvantages of both equity and debt are not present
in this form of financing. Neither ownership dilutes nor fixed obligation/bankruptcy
risk arises.
External Sources:
An external source of finance is the capital generated from outside the business.
Apart from the internal sources of funds, all the sources are external sources.
Deciding the right source of funds is a crucial business decision taken by top-level
finance managers. The adoption of the wrong source increases the cost of funds
which has a direct impact on the feasibility of the project under consideration.
Improper match of the type of capital with business requirements will go against the
smooth business operations.
According to Time Period:
Sources of financing a business are classified based on the time period for which the
money is required. The time period is commonly classified into the following three:

Long-term financing: sources require for a period of more than 5 years to 10, 15, 20
years or maybe more depending on other factors. Capital expenditures in fixed assets
like plant and machinery, land and building, etc of business are funded using long-
term sources of finance. Part of working capital which permanently stays with the
business is also financed with long-term sources of funds. Long-term financing
sources can be in the form of any of them:
Share Capital or Equity Shares
Preference Capital or Preference Shares
Retained Earnings or Internal Accruals
Debenture / Bonds
Term Loans from Financial Institutes, Government, and Commercial Banks
Venture Funding
Asset Securitization etc.

Medium term financing: is for a defined period of 3 to 5 years and is used generally
for two reasons. One, when long-term capital is not available for the time being and
second when deferred revenue expenditures like advertisements are made which are
to be written off over a period of 3 to 5 years. Medium term financing sources can
in the form of one of them:
Preference Capital or Preference Shares
Debenture / Bonds
Medium Term Loans from
Financial Institutes
Government, and
Commercial Banks
Lease Finance
Hire Purchase Finance

Short term financing: is financing for a defined period of less than 1 year. The need
for short-term finance arises to finance the current assets of a business like an
inventory of raw material and finished goods, debtors, minimum cash and bank
balance etc. Short-term financing is also named as working capital financing. Short
term finances are available in the form of:
Trade Credit
Short Term Loans like Working Capital Loans from Commercial Banks
Fixed Deposits for a period of 1 year or less
Advances received from customers
Creditors
Payables
Factoring Services
Bill Discounting etc.

Sources of Finance According to Ownership and Control:

Sources of finances are classified based on ownership and control over the business.
These two parameters are an important consideration while selecting a source of
funds for the business. Whenever we bring in capital, there are two types of costs –
one is the interest and another is sharing ownership and control. Some entrepreneurs
may not like to dilute their ownership rights in the business and others may believe
in sharing the risk.

Owned Capital
Owned capital also refers to equity. It is sourced from promoters of the company or
from the general public by issuing new equity shares. Promoters start the business
by bringing in the required money for a start-up. Following are the sources of Owned
Capital:

Equity
Preference
Retained Earnings
Convertible Debentures
Venture Fund or Private Equity
Further, when the business grows and internal accruals like profits of the company
are not enough to satisfy financing requirements, the promoters have a choice of
selecting ownership capital or non-ownership capital. This decision is up to the
promoters. Still, to discuss, certain advantages of equity capital are as follows:

It is a long-term capital which means it stays permanently with the business.

There is no burden of paying interest or instalments like borrowed capital. So, the
risk of bankruptcy also reduces. Businesses in infancy stages prefer equity for this
reason.

Borrowed Capital
Borrowed or debt capital is the finance arranged from external sources. These
sources of debt financing include the following:

Financial institutions,
Commercial banks or
The general public in case of debentures
In this type of capital, the borrower has a charge on the assets of the business which
means the company will pay the borrower by selling the assets in case of liquidation.
Another feature of the borrowed fund is a regular payment of fixed interest and
repayment of capital. Certain advantages of borrowing are as follows:
• There is no dilution in ownership and control of the business.
• The cost of borrowed funds is low since it is a deductible expense for taxation
purpose which ends up saving on taxes for the company.
• It gives the business the benefit of leverage
NEED:
Government must intervein in entrepreneurial process through supports of grants
and providing securities for loans.

EXISTING CHALLENGES:
Broadening financing options to entrepreneurs is a key challenge for policy makers
in question to foster entrepreneurial developments OECD (2015)
FINDINGS
Recent studies confirmed that majority of entrepreneurs indicated that the main
source of financing was internal financing from retained earnings and savings,
followed by equity financing and later external source which is short-term and long
bank loans.

ORGANIZATIONAL MANAGEMENT
Principle and Elements of Organization:
Business models (according to Baden-Fuller and Morgan, 2010) plays a crucial role
in designing activities of businesses. It is used to describe and classify businesses.
They are used as scientific research and are recipe for creativity and innovations.
Business models provide principles and elements of the business organization.
Business models (according to Zott & Amit, 2010) is defined as a system of
independent activities that transcends the focal firm/company and spans its
boundaries.
An activity is defined as the engagement of human, physical and/or capital resources
to the business model.

BACKGROUND OF BUSINESS MODEL

1. Purpose: Creates and organization that creates positive environment social
and economic value throughout its value network. This draws an economic,
 environment and social aspects of sustainability in defining an organizations
purpose.
2. Infrastructure: Consider the needs of all stakeholders rather than giving
priority to shareholder’s expectation. Engage in partnerships to enhance
resources and capabilities for corporate sustainability and supply claim
management.
3. Interface: treat nature as a stakeholder and promote environment stewardship,
motivate and help customers to take care for the effect of their consumption
and consider extended product responsibility.
4. Financial: develop inclusive pricing models and use triple- bottom-line
according and reporting approach (in-profit): this is calculated as the net sum
of the costs (harms) and revenues (benefits) arising because of
firm/company’s activities in each of the environmental social and economic
contexts.
5. Leadership: leaders or champions drive the cultural and structural changes
necessary to implement business goals with sustainability.

BUSINESS MODEL DEVELOPMENT:

1. Need to integrate external resources and knowledge is increasing due to an
increasing specialisation of knowledge.
2. Social interaction helps integrate information and knowledge and provide the
directional orientation firms need to define and execute their development and
innovation programmes. It serves to reduce technological and market risks.
3. Different stakeholders pursue different values and different interests and
goals, conflicts are unavoidable in complex social systems. Interactions can
lead to tensions, but, more importantly, it is also their solution. Business
model must be designed to use interaction to rescue conflicts and align the
interests and goals of different actors.
PRINCIPLES OF ORGANIZATION:
are forms of guidance and heuristic to help entrepreneurs and managers. They
provide means of designing business model. It is a check list of issues that any
entrepreneurial development must address.

PRINCIPLES TABLE(SUMMARY)
S/N PRINCIPLES IMPLICATION
Facilitates interactions between
1 company and its stakeholders and
Spanning organisational boundaries integrates their activities.

2. Integrating internal and external Provide access to internal and

resources. external resources and capabilities
including information, knowledge.
3. Provide for directional orientation Defines direction and reduces risk
based on actor’s interaction and
integration of knowledge.
4. Resolving conflicts and aligning Identifies and resolves tensions
interests between actors and to align their
interests.
5. Reflecting differences between Reflects the difference between
planned and realised business models planned and realised business
models as well as unrealised and
emergent activities.

PRINCIPLE I: Sustainability Orientation

This is a key requirement for an engineering enterprise. Based on the theoretical
understanding of business models as boundary and interactive systems, this
orientation provides a shared normative reference for the interactive parties. It is
innovative and provides for value based management approach vision and mission
statement are designed with references to sustainability goal and values.
PRINCIPLE II: Extended Value Creation.
Theoretical considerations and modelling tools alike emphasis an orientation
towards total sustainable value creation.
Entrepreneurial engineering development is different from conventional business
approaches due to its aim to create sustainable value e.g. social value added, triple
bottom line. Instead of generating value for a single companies their customers and
stakeholder, it should be guided by the principles of extended value creation and
generate value for the market and non-market actors in both monetary and non-
monetary terms.
PRINCIPLE III: Systemic Thinking
This principle puts emphasis on interaction and bidirectional relations. The
interaction economic perspective makes clear that due to increasing specialisation in
economic activities and division of labour in innovation process, the need to
integrate their internal and external resources and knowledge also increases.
• Life cycle thinking
• Product-service system
• Reflecting outcomes
PRINCIPLE IV: Stakeholder Integration
A stakeholder is any group or individual who can affect or is affected by the
achievements of a corporation’s purpose (Fressman, 1984). This definition puts
stakeholders in an important role of an organisation’s orientation and its pursuit of
social environmental and economic goals. Social responsiveness and cultural
competences are important element in pursuing the principles of stakeholder’s
integration.

ELEMENTS OF ORGANISATION
Where guiding principles provide reference points to work towards elements
describe how to get there and inform the design of suitable tools. The elements
provide the minimum requirements that every process and tool for entrepreneurial
engineering development.
ELEMENT I: Reframing an extended set of business model components.
Components based approaches to modelling new business have been widely
adopted, but when modelling an engineering enterprise, all components need to be
put into a sustainability perspective, that is, the specification of each component
needs to consider with respect to its sustainability impact and potentials.
ELEMENT II: Context- Sensitive modelling
Boundary spanning and interactive business model innovation for sustainable value
creation need to demonstrate contextual sensitivity, eg. By making boundary-
spanning interactions and relations explicit and concrete. Specific contexts such as
different regions and confirms as well as diverse size and maturity and companies
(incumbents, start-ups etc.) will help to specify sustainability challenges to be
addressed within each domain. It implies awareness of different user groups, stages
and maturity levels of the entrepreneurial journey to model and implement new
business.
ELEMENT III: Collaborative Modelling
Systemic thinking and the integration of diverse stakeholders and sources of
knowledge lead to collaborative setting as a default mode of modelling new
business. While the element of context-sensitivity modelling requires adequate
consideration and representation of different contexts in the process, the element of
collaboration defines who is actively involved in the process and how its participates
interact.
ELEMENT IV: Management impacts and outcomes
Reflecting upon and managing impacts and outcomes is crucial since the result of
planning typically differ from those of implementation just as intended models differ
from realised business. After every interaction, participants are left with no mapped
projection of components and relations, no instructions and evidence on how to
proceed or how the discussions impact entrepreneurial collation, potential deviation
from directional orientation and potential tension tensions between stakeholders.
Element iv is simply a follow-up work in business model development and empirical
studies of users interactions and their outcomes.
Henri Fayols 14 Principles of Management
A principle refers to a fundamental truth. It establishes cause and effect relationship
between two or more variables under given situation. They serve as a guide to
thought & actions. Therefore, management principles are the statements of
fundamental truth based on logic which provides guidelines for managerial decision
making and actions. These principles are derived: -
a. On the basis of observation and analysis i.e. practical experience of managers.
b. By conducting experimental studies.
There are 14 Principles of Management described by Henri Fayol.

Henri Fayol (1841-1925) was a French management theorist whose theories in

management and organization of labour were widely influential in the beginning of
20th century. He was a mining engineer who worked for a French mining company
Commentry-Fourchamboult-Decazeville, first as an engineer. Then he moved into
general management and became Managing Director from 1888 to 1918. During his
tenure as Managing Director he wrote various articles on 'administration' and in 1916
the Bulletin de la Société de l’ Industrie Minérale, printed his "Administration,
Industrielle et Générale – Prévoyance, Organisation, Commandement, Coordination,
Contrôle". In 1949 the first English translation appeared: ‘General and Industrial
Management’ by Constance Storrs.

The 14 Management Principles from Henri Fayol (1841-1925) are:

1. Division of Work. Specialization allows the individual to build up experience,
and to continuously improve his skills. Thereby he can be more productive.
hen employees are specialized, output can increase because they become
increasingly skilled and efficient.
2. Authority. The right to issue commands, along with which must go the
balanced responsibility for its function. Managers must have the authority to
give orders, but they must also keep in mind that with authority comes
responsibility.
3. Discipline. Employees must obey, but this is two-sided: employees will only
obey orders if management play their part by providing good leadership.
Discipline must be upheld in organizations, but methods for doing so can vary.
4. Unity of Command. Each worker should have only one boss with no other
conflicting lines of command. Employees should have only one direct
supervisor.
5. Unity of Direction. Teams with the same objective should be working under
the direction of one manager, using one plan. This will ensure that action is
properly coordinated. People engaged in the same kind of activities must have
the same objectives in a single plan. This is essential to ensure unity and
coordination in the enterprise. Unity of command does not exist without unity
of direction but does not necessarily flows from it.
6. Subordination of individual interest to the general interest. Management must
see that the goals of the firms are always paramount. The interests of one
employee should not be allowed to become more important than those of the
group. This includes managers.
7. Remuneration. Employee satisfaction depends on fair remuneration for
everyone. This includes financial and non-financial compensation. Payment
is an important motivator although by analysing a number of possibilities,
Fayol points out that there is no such thing as a perfect system.
8. Centralization (or Decentralization). This is a matter of degree depending on
the condition of the business and the quality of its personnel. This principle
refers to how close employees are to the decision-making process. It is
important to aim for an appropriate balance.
9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of
direction. But lateral communication is also fundamental, as long as superiors
know that such communication is taking place. Scalar chain refers to the
number of levels in the hierarchy from the ultimate authority to the lowest
level in the organization. It should not be over-stretched and consist of too-
many levels. Employees should be aware of where they stand in the
organization's hierarchy, or chain of command.
10. Order. Both material order and social order are necessary. The former
minimizes lost time and useless handling of materials. The latter is achieved
 through organization and selection. The workplace facilities must be clean,
tidy and safe for employees. Everything should have its place.
11. Equity. In running a business, a ‘combination of kindliness and justice’ is
needed. Treating employees well is important to achieve equity. Managers
should be fair to staff at all times, both maintaining discipline as necessary
and acting with kindness where appropriate.
12. Stability of Tenure of Personnel. Employees work better if job security and
career progress are assured to them. An insecure tenure and a high rate of
employee turnover will affect the organization adversely. Managers should
strive to minimize employee turnover. Personnel planning should be a
priority.
13. Initiative. Allowing all personnel to show their initiative in some way is a
source of strength for the organization. Even though it may well involve a
sacrifice of ‘personal vanity’ on the part of many managers. Employees
should be given the necessary level of freedom to create and carry out plans.
14. Team Spirit (Esprit de Corps). Organizations should strive to promote team
spirit and unity. Management must foster the morale of its employees. He
further suggests that: “real talent is needed to coordinate effort, encourage
keenness, use each person’s abilities, and reward each one’s merit without
arousing possible jealousies and disturbing harmonious relations.”

Fayol's definition of management roles and actions distinguishes between Five

Elements:
1. Provident (Forecast & Plan). Examining the future and drawing up a plan of
action. The elements of strategy.
2. To organize. Build up the structure, both material and human, of the
undertaking.
3. To command. Maintain the activity among the personnel.
4. To coordinate. Binding together, unifying and harmonizing all activity and
effort.
5. To control. Seeing that everything occurs in conformity with established rule
and expressed command.

USAGE OF THE 14 MANAGEMENT PRINCIPLES. APPLICATIONS

• Change and Organization.
• Decision-making.
• Skills. Can be used to improve the basic effectiveness of a manager.
• Understand that management can be seen as a variety of activities, which can
be listed and grouped.

OFFICE AND PRODUCTION (OPERATION) MANAGEMENT

Operation Management is the activity of managing the resources that create and
deliver services and products. Operation is part of every organization, because every
organization creates and offers one form of services and or products. Operation
managers are the officers who have the particular responsibility for managing the
resources for operation functions. Different organizations have different names and
roles for these department and the officers that oversee them in their organizations.
For instance, they are called fleet managers in a transport and logistics company,
administrative manager in a hospital or hospitality company, store manager in a
supermarket, a project manager in a construction company.

MANAGEMENT BY OBJECTIVES (STRATEGY)

Organizations need to plan every detail of their strategic direction to benefit from
the ideas of their future and how to get there. Once operation functions and its roles
in the company are understood, its performance objectives need to be articulated,
then it will need to formulate a set of general principles to guide its decision making.
This is the management strategy of the company.
Operations Strategy or Management by Objectives concerns the pattern of strategic
decisions and actions which set the role, objectives and activities of operation. Take
note of the difference between operations which are the resources that create goods
and service, and operational which is the opposite of strategic, meaning day-to-day
running.
Strategy is linguistically derived from a Greek word “strategos” meaning “leading
an army”. Both military and business strategy can be described in similar ways and
include the following:
1. Setting broad objectives that direct an enterprise towards its overall goal.
2. Planning the path (in general rather than specific terms) that will achieve these
goals.
3. Stressing long-term rather than short-term objectives.
4. Dealing with the total picture rather than stressing individual activities.
5. Being detached from, and above, the confusion and distraction of day-to-day
activities.

Strategic Planning: is a process of describing the company’s destination, assessing

barriers standing in the way of that destination, selecting approaches for moving
forward. The aim of strategic planning is to allocate resources in a way that gives
the company competitive advantage. In all, Strategic plan is a blueprint that defines
how a company will allocate resources in pursuit of its goals and vision.
Strategic Plan: Purposes
1. Helps define the company’s identity.
2. Helps organizations prepare for the future.
3. Enhance ability to adapt to environmental changes.
4. Provide focus and allows for better allocation of resources.
5. Produces an organizational culture of cooperation.
6. Allows for the consideration of new options and opportunities.
7. Provides employees with information to direct daily activities.
 Operation’s strategic plan
Mission
Vision
Goal
Strategies

Unit’s Strategic plan

Mission
Vision
Goals
Strategies

Job description
Tasks
Knowledge
Skills
Abilities

Individual and Team Performance

Results
Behaviours
Developmental plan
Link between organization and unit strategic plans, job description and individual
and team performance.

Hayes and Wheelwright’s Four Stages of Operations Contribution

Prof. Hayes and Wheelwright of Harvard University developed a four-stage model
which can be used to evaluate the role and contribution of operations function. The
model traces the progression of the operations function from what is the largely
negative role of stage 1 operations to its becoming the central element of competitive
strategy in excellent stage 4 operations.
Stage 1: Internal Neutrality – this is the poorest level of contribution by the
operations function. It holds the company back from competing effectively. It is
inward looking and, at best, reactive with little positive to contribute towards
competitive success. It attempts to improve by avoiding making mistakes.
Stage 2: External Neutrality – this is the first step to breaking out of stage 1. Here,
the operations functions begin to compare itself with similar companies in the
outside market (that is being externally neutral). This may not immediately take it to
the first division of companies in the market, but at least it is measuring itself against
its competitors’ performance and trying to implement best practice.
Stage 3: Internally Supportive – stage 3 operations are amongst the best in their
market. Yet stage 3 operations still aspire to be clearly and unambiguously the very
best in the market. They achieve this by gaining a clear view of the company’s
competitive or strategic goals and supporting it by developing appropriate operations
resources. The operation is trying to be internally supportive by providing a credible
operations strategy.
Stage 4: Externally Supportive – here the company views the operations functions
as providing the foundation for its competitive success. Operations look to the long
term. It forecasts likely changes in markets and supply, and it develops the
operations-based capabilities which will be required to compete in the future market
conditions. Stage 4 operations are innovative, creative and proactive and are driving
the company’s strategy by being one step ahead of competitors – which is what
Hayes and Wheelwright call being “externally supportive”.
Four – Stage of Operations Contributions

ORGANIZATIONAL CHART (STRUCTURE)

Organisation chart often called “organisation” is a diagram illustrating the structure
of an organisation as well as power distribution and relationship between positions
in an organisation.
 TYPES OF ORGANISATION CHART
1. FUNCTIONAL TOP-DOWN

PRS

VP VP VP

Manager Manager Manager

Manager Manager Manager

This is a traditional business structure showing top management, middle and low
management. Here employees with similar skills and competence are grouped
together.

2. DIVISIONAL ORGANISATIONAL CHART: shows structuring of a company

along product lines or specific geography. Here, every divisional set-up is
independent from another.

PRS

Building Highway Water

IT IT IT

Research and Research and Research and

Development Development Development

Production Production Production

Marketing
3. MATRIX ORGANISATION CHART:
This reflects where employees are grouped into teams by project, product or task
assigned to them and are led by a project manager.

General
Manager

Deputy Deputy Deputy

Manager Manager Manager
Project
manager

Project Name of Name of Name of

manager Team Team Team

Project
manager Name of Name of Name of
Team Team Team

4. FLAT ORGANIZATION CHART:

This shows few or no level of management between executives and other employees.
Tis structure encourages self-management decision-making and leadership among
all employees. It suits small business and start-up organisation.

Managing Director

Employer Employer Employer Employer

FUNCTIONS
1. Shows management of organisation
2. Shows other organisational structure
3. It a planning tool
 4. An employee reference
5. An employee directory
TYPES OF STRUCTURE
1. Vertical
2. Bureaucratic organisation
3. Decentralised organisation
4. Network organisation