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Management is the process of organizing and coordinating the activities of an organization in order to achieve specific objectives. Its size ranges from single person in a small company to hundreds of managers in multinational organizations. The basic functions of management include controlling, leading, organizing and planning.
Planning forms a foundation pillar of management; it provides a base, on which other areas of management are built. Managers face the responsibility for determining the goals of the organization and the way these goals can be achieved. They also require assessing the position of the company at present and after a given period of time. Planning is a continuous process, which never ends. It is usually based on some assumptions, which may or may not happen, and, therefore, managers are supposed to modify and adjust their plans when circumstances may not seem to be consistent. Planning is also an intellectual process, which is dynamic in nature. Management team takes a number of steps in deciding the future course of action. A huge loss may occur if planning is delayed, and since fashion trends change every day, they are taken into consideration while carrying out the planning process. Organization will fail to continue its existence if it does not change with the current trend.
The second function of management is called organizing. It is a process, by which the resources of the organization are deployed in order to achieve strategic goals. Managers arrange people and resources required to accomplish certain tasks. According to DuBrin (2008), “through organizing function, the concern is able to define the role positions, the jobs related and the co-ordination between authority and responsibility. Hence, a manager always has to organize in order to get desired results”. Without proper organization, there will be many conflicts in the company, and the success of the organization will be compromised.
The third function of management is leading. It involves giving people a direction to perform certain duties by influencing their behavior through incentives, motivation, encouraging teamwork and disciplining those employees, who do not comply with the rules of the company. The main purpose of leadership is to channel the behavior of employees into the attainment of company’s objectives. Leadership is important in the creation and maintenance of organizational culture.
The last of the four functions of management is controlling. It involves verifying whether things happen in accordance with the adopted plans, issued instructions or principles that have been established. It ensures the proper utilization of organization’s resources with the aim of achieving the set targets. It also measures the variations between standard performance and actual outcome, finds out the reasons of these differences and helps take remedial actions.
The manufacturing option decision reached in this case is outsourcing the entire manufacturing process to an offshore company. This is the practice of contracting the work to a third party in another country. The main reasons why this manufacturing decision was taken are lowering the cost of production, advantage of the vendor’s expertise, economies of scale and large labor pool. The practice of offshore outsourcing is associated with certain merits and demerits. The main advantage is that the practice helps in cost reduction, especially in manufacturing situations, that enables companies to produce goods at lower cost in countries, where the tax laws and regulations are less strict. The practice also allows companies to benefit from lower labor costs that would be incurred if domestic production was carried out.
Offshore outsourcing is associated with various setbacks. Language barrier can affect the whole process negatively. For example, people, who may be trying to get service and support from customer service line, may become upset if they cannot get reply from support personnel. Companies, which choose to use offshore outsourcing, also create poor public relations with other companies operating in the same industry as it is seen as one way of reducing the country’s ability to carry out the production of goods internally. The primary direct impacts of offshore outsourcing are related to the transition of management costs due to changes in personnel, layoffs of managers and downsizing issues in addition to the costs of actual management of an offshore contract.