Management

Management
Introduction

Management is a distinct process consisting of activities of planning, organizing, actuating, and

controlling, performed to determine and accomplish stated objectives with the use of human beings
and other resources

Definition of Management

It is difficult to define Management; in fact no definition has been universally accepted. One
popular definition is
‘Management is the Art of getting things done through people’.
-Mark Parker Follett

There are some suggested definitions by experts.

- “Management is conduct of affairs of business, moving towards its objectives through a

continuous process of improvement and optimization of resources.”
– Henry Foyal

- “Management is a process consisting of planning, organizing, actuating and controlling,

performed to determine and accomplish the objectives by use of people and resources.”
– George R. Terry

- “Management is the complex of continuously co-ordinated activity by means of which any

undertaking administration/public or private service conducts its business.”
- ILO

Table below represents the definition of management

Basic Resources FundamentalFunctions Stated Objectives
The 6 M’s The process of management

Men, Material, Planning ,Actuating End results

Machines, Methods,
Money, Markets. Organizing, Controlling

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Historical Perspective:

Even the earliest civilizations required management skills wherever groups of people share a
common purpose: tribal activities, estates of the rich, military ventures, governments or organized
religion. The standing examples are pyramids of Egypt, Great Wall of China, temples, roman
church etc.

Industrial Revolution and growth of factory system

Before the industrial revolution there was no manufacturing industry, there were only few
handicrafts and craftsmen like the spinner, the weaver, the potter, the cobbler who carried the
production of the commodity in his home and with the help of members of the family. They utilized
very small hand tools like the spinning wheel, potter wheel, handloom etc. The production was
small quantity.

During the latter half of the 18th century the developments began which revolutionized the
character of production by the end of this century. Spinning jenny, water frame, steam engine by
James watt brought the factory system of production in place of domestic system. Further growth
of factory system was made possible by the development of transport by canal, railways, roads etc.
The factory system startedin 1780’s for cotton textile manufacture the came to be known as
‘Modern Industry’. A mass movement of workers from the farms and villages from the new
industrial was centered.

Nature and Characteristics of Management

Management is essential for any organization

Management applies to small and large organizations, to profit and not for profit enterprises, to
manufacturing as well as service industries. Effective managing is the concern of corporation
president, the government supervisor, hospital administrator, scout leader, the bishop in the church,
baseball manager, university president etc.

Some of the typical characteristics are

1. Management is universal process.

It applies to social, religious, political, military, commercial, institutions, etc.
2. Management is goal oriented.
It is directed towards achieving effectiveness and efficiency.
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3. Management is a social process.

Managing human beings and their emotions, talents, attitude, culture.
4. Management is a coordinating force.
Combines individual goals with the organizational goals. Integrates human and physical
resources.
5. Management is intangible.
It does not have physical presence; its presence can be felt by results of tits efforts such as
orderliness, efficiency, profits, employee satisfaction, etc.
6. Management is dynamic.
Management is a journey not a destination, cycle of management continues to operate so long
as there is organized action.
7. Management is multi- disciplinary.
Contribution form disciplines like phycology, Sociology and anthropology
8. Management is creative activity.
Provides creative ideas and new imagination apart from giving progressive vision to group
efforts.
9. Management is Decision making
It involves making choice between alternatives.
10. Management is Profession.
Peron can be trained and tuned to become management professional
11. Management is a social process.
It involves managing human beings and their emotions, talents, attitude and culture.
12. Management is dynamic and ongoing process.
Management is a journey and not destination, cycle of management continues to operate so
long as there is organized activity.
13. Management is a coordinating force.
Combines individual goals with organizational goals. It integrates human and physical
process.
14. It should be stable and transparent.
It should last for a period of time and transparent.

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Scope

Every business needs direction. This direction is given by the management. The scope of
management is not limited only to business organizations, but it is extended to business
establishment, security organizations, financial organizations, hospitals, educational
organizations, service sectors, etc. The scope of management can also be extended to

- Developing management.
- Distribution management.
- Personnel management.
- Production management.
- Transport
- Sales
- SCM, etc.

Functional areas of management

There are 5 essential functions of management, i.e., Planning, Organizing, Staffing,

Directing and Controlling.

Planning

Controlling Organising

Management Cycle

Direcing Staffing

(1) Planning: Planning is the primary function of management. It is looking ahead and preparing
for the future. It determines in advance what should be done. It is conscious determination of future
course of action. This involves determining why to take action? What action? How to take action?

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When to take action? Planning involves determination of specific objectives, programs, setting
policies, strategies, rules and procedures and preparing budgets. Planning is a function which is
performed by managers at all levels – top, middle and supervisory. Plans made by top management
for the organization as a whole may cover periods as long as five to ten years, whereas plans made
by low level managers cover much shorter periods.

(2) Organizing: Organizing is the distribution of work in group-wise or section- wise for effective
performance. Once the managers have established objectives and developed plans to achieve them,
they must design and develop a human organization that will be able to carry out those plans
successfully. Organizing involves dividing work into convenient tasks or duties, grouping of such
duties in the form of positions, grouping of various positions into departments and sections,
assigning duties to individual positions and delegating authority to each position so that the work
is carried out as planned. According to KoonzO’Donnel, “Organization consists of conscious
coordination of people towards a desired goal”. One has to note that different objectives require
different kinds of organization to achieve them. For example, an organization for scientific
research will have to be very different from one manufacturing automobiles.

(3) Staffing: Staffing involves managing various positions of the organizational structure. It
involves selecting and placing the right person at the right position. Staffing includes identifying
the gap between manpower required and available, identifying the sources from where people will
be selected, selecting people, training them, fixing the financial compensation and appraising them
periodically. The success of the organization depends upon the successful performance of staffing
function.

(4) Directing: Planning, organizing and staffing functions are concerned with the preliminary
work for the achievement of organizational objectives. The actual performance of the task starts
with the function of direction. This function can be called by various names namely “leading”,
“directing”, “motivating”, “activating” and so on. Directing involves these sub functions:

(a) Communicating: It is the process of passing information from one person to another.

(b) Leading: It is a process by which a manager guides and influences the work of his
subordinates.

(c) Motivating: It is arousing desire in the minds of workers to give their best to the enterprise.

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(5) Controlling: Planning, organizing, staffing and directing are required to realize organizational
objectives. To ensure that the achieved objectives confirm to the pre- planned objectives control
function is necessary. Control is the process of checking to determine whether or not proper
progress is being made towards the objectives and goals and acting if necessary to correct any
deviations. Control involves three elements:

(a) Establishing standards of performance.

(b) Measuring current performance and comparing it against the established standard.

(c) Taking action to correct any performance that does not meet those standards.

(6) Innovation: Innovation means creating new ideas which may be either results in the
development of new products or finding new uses for the old ones. A manager who invents new
products is an innovator. A salesman who persuades Eskimos to purchase refrigerator is an
innovator. One has to note that innovation is not a separate function but a part of planning.

(7) Representation: A manager has to spend a part of his time in representing his organization
before various groups which have some stake in the organization. A manager has to be act as
representative of a company. He has dealings with customers, suppliers, government officials,
banks, trade unions and the like. It is the duty of every manager to have good relationship with
others.

Management – A Science, an Art or Profession?

What makes a discipline science? We can call a discipline scientific if its

a. Methods of inquiry are systematic and emperical.
b. Information can be ordered and analysed.
c. Results are cumulative and communicable.

Being systematic means being orderly and unbiased. Empirical means not based on
speculation but facts. All scientific information collected as raw data is finally ordered and
analyzed with the help of statistical tools. Science is also cumulative in that what is
discovered is added to what has been found before.

We will compare this with management. Management is not like the exact or natural
sciences such as physics, chemistry. Biology etc. there sciences are called exact because it
is possible to study any one of the many factors affecting a phenomenon by making the
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other factors constant or inoperative. But this is not possible in management as human
aspects are combined with several other factors.

For example, it is not possible to study the effect of , say only monetary incentives on a
worker’s productivity, because the effect will always be mixed with other effects such as
leadership style of the worker’s supervisor, hierarchy, pressure of co-workers etc. the
findings in management are not going to be as accurate and dependable as those of physical
sciences. They are only going to be probabilities or tendencies. We may therefore place
management in the category of ‘Behavioral Sciences’. It can also be considered as ‘ Social
Science’.

Management as an Art

In science one normally learns ‘why’ of a phenomenon, under ‘Art’ one learns ‘how’ of it.
Art is thus concerned with the understanding of how a particular work can be
accomplished. Management in this sense is more an Art. It is the art of getting things done
through others in dynamic and mostly in non repetitive situations. Whether it ia a factory
or farm or a domestic kitchen, the resources of men, machine, money have to be
coordinated against several constraints to achieve the given objectives in the most efficient
manner.

Management has the following

1. Systematic body of knowledge, knowledge of management theory and principles is there.

2. Case studies are available in applying the management theories for these situations.
3. It has to be practiced by managers, doctors, lawyers.

We may conclude that management involves both elements – those of science and art.
While certain aspects of management make it science like systematic body of knowledge,
certain others which involve the application of skill and behavior make it an art.

Management is like the art of a musician or the art of a painter who seeks to achieve the
desired effect with colors or instrument, but mainly with his/her skills.

Management as profession

A profession like that of doctors, lawyers, chartered accountants etc, have the following
aspects to carry out their profession.
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1. Well defined knowledge.

2. Formal education and training.
3. Service motto or ethical code.
4. Charging of fees based on service.

Management by and large cover all the above aspects and hence it can be called a
profession particularly in the present context.
However , there is no universal agreement on whether management is a profession or not.
There is no uniform code or conduct of licensing managers. Some times the phrase
‘Professional Management’ is used as an antithesis to ‘family management’. Management
does not yet completely fulfill all the criteria of a profession.

Difference between Administration and Management

According to Peter Drucker,

Managing of business enterprises is called management an managing non-business enterprises is

called administration.

Administration- Top level function-Plans, rules, policies and objectives.

Set 1 Writers

Management- Lower level function-Execution & direction & operations.

Administration - is part of management.

Set 2 Writers

Planning Controlling Is an entire process of P. O. D. C

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Table: Difference between Administration and Management

Characteristics Administration Management

Main function Planning, Organization and Leading, motivating and
staffing. Controlling.
Status Acts as owner Agency
Skills Require good administrative Require good technical skill
skills
Level Top level Lower level
Position MD, Owner, CEO Manager, Supervisors,
Foreman
Objectives Making policies and goals Implements plans and policies
Involvement No direct involvement in Directly involved in execution
productions/services of plans and goals

Role of Management (Managers)

According to Harry Mintzberg, the major role of management consists of

Inter-personnel role- These includes figure head, leader and liaison role.

i) Figurehead- In this role manager performs duties that are informal and casual.

e.g., Receiving and greeting dignitaries, attending social functions of employees, parties, lunches.

ii) Leader- manager motivates, direct and encourage his subordinates.

iii) Liaison- Works as Liaison officer between top management and sub-ordinate staff. He also
develops contacts with outside people and collects information for the well-being of organization.

Decision roles- Managers plays 4 decision roles, they are:

iv) Resource allocator- Divides work, provides required resources and facilities

v) As Arbitrator-Works as a problem solver.

vi) As an entrepreneur- A manager looks for new ideas and tries to improve the organization.

vii) Negotiator- Resolves any internal problems like trade, agreements, strikes and grievances.
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Information roles:A manager plays

viii) Monitor- Monitors his environment and collects information through his personal contacts
with colleagues and sub-ordinates.

ix) Spokesman- Communicates information/goals of organization to staff and progress of work to

superiors.

x) Disseminator- Passes some of the information directly to his sub-ordinates and to his bosses.

Levels of management

Although all managers perform the same function planning, organizing, directing and controlling,
these are the levels among them.

1. First line management(Lower): Foremen and white collar supervisors(one step above
rank and file).
2. Middle level management: Sales managers, Plant managers, Personnel managers,
Department head.
3. Top management: Men and women who make policies for the company as a whole.
Board, Chairman, company presidents, executive vice presidents.

Conceptual and design skills

Human skills

Technical skills

Fig: Skills at different management levels

Management Approaches:

- Early management approach

- Modern management approach

Early management approach

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Management history is as old as man. Evidence of which is seen in ancient Greece and India. The
process of early management approaches are:

1. Psychological development.
2. Scientific management.
3. Administrative management.
4. Human relation movement.

Psychological development (Before 17th century): In olden days when there was no experience
and knowledge of business, they depended on inborn abilities.

This gave rise to management that was totally based on psychological process. It was believed that
managers are born and cannot be made such as kings, poets, artists, etc.

Scientific management (18th to 19th century):Tow important factors lead to development during
this time are:

- Effort of scientist to demonstrate the application of science and scientific methods.

- The effort of establishing standard practices.
During this development, Management was adopted with scientific approach. Fredrick
Winslow Taylor (1856-1915) has been considered as father of scientific management. He
had conducted series of experiments and promoted the development of management
through his experiments and writings. Some of the contributions are explained here:
1. Work study- It includes tome and motion study. Taylor observed that the workers were not
producing their full capacity for the fear that their piece rate would be cut with rice in
production. Hence he started time study. Time required for each motion of a job was recorded
shorter and fewer motions were developed unwanted motions were eliminated. The time
required to complete one job was calculated called “Standard time”
2. Differential payment- Motion and time study and establishment of standard time helped in
arriving at the production rate of a particular piece of job. Taylor introduced “Differential piece
work.” As per this, a worker gets a minimum guaranteed wage if he produces standard number
of pieces and produces more, he is paid incentive.

3. Reorganization of supervision: Taylor observed workers planning and doing the job. He
supervisors work was to allocate the work to be done. Taylor allocated that planning and

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selection of tools and sequence of doing the work are done by the foreman and worker had to
simply had to carry put the work without wasting time.

4. Scientific requirement and training: Taylor also suggested need for scientific training and
development of workers, Gantt and Gilhert had modified and improved the Taylor’s concepts
further. Gantt suggested that a foreman gets same incentive for each worker works under him
completes the day’s target. He developed bar hart to record day-vise performance of each
worker for better monitoring. He also extended concept of bar chart for production control.

Gillbert conducted motion study with the help of motion pictures. He had identified motions
of work and classified them into 18 basic types called therbligs. His contributions are listed
below:

1. Develop motion study with an idea to minimize waste movements and develop SIMO
charts.
2. Evolved principle of motion economy.
3. He established therbligs (18 motions).
4. Carried out study on fatigue due to repetitive work.

Administrative Management:

Henri Foyal (1841- 1925) is considered father of administrative management. He had

suggested 14 principles of management as a guideline to the process of management practice.

They are given below:

(i) Division Of Work: Work should be divided among individuals and groups to ensure that effort
and attention are focused on special portions of the task. Fayol presented work specialization
as the best way to use the human resources of the organization.
(ii) Authority: The concepts of Authority and responsibility are closely related. Authority was
defined by Fayol as the right to give orders and the power to exact obedience. Responsibility
involves being accountable, and is therefore naturally associated with authority. Whoever
assumes authority also assumes responsibility.
(iii) Discipline: A successful organization requires the common effort of workers. Penalties should
be applied judiciously to encourage this common effort.
(iv) Unity Of Command: Workers should receive orders from only one manager.

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(v) Unity Of Direction: The entire organization should be moving towards a common objective
in a common direction.
(vi) Subordination Of Individual Interests To The General Interests: The interests of one
person should not take priority over the interests of the organization as a whole.
(vii) Remuneration: Many variables, such as cost of living, supply of qualified personnel, general
business conditions, and success of the business, should be considered in determining a
worker’s rate of pay.
(viii) Centralization: Fayol defined centralization as lowering the importance of the subordinate
role. Decentralization is increasing the importance. The degree to which centralization or
decentralization should be adopted depends on the specific organization in which the manager
is working.
(ix) Scalar chain- Means hierarchy of authority (pass through superiors) from highest
executive to the lowest one. In case there is a need for swift action, proper channel will
be short circuited.

B M
C N
D O
E P

(x) Order- Management should obtain orderliness in work through suitable organization
of men and material
(xi) Equity- means equality of fair treatment
(xii) Stability of tenure of personnel- workers should be assured security of job in order to
motive and better work.
(xiii) Initiative-Freedom to think out and execute a plan.
(xiv) Esprit Decorps- Means team spirit. Since “Union is strength”, the management should
create team spirit among the employees.

Human relations movement- Taylor’s and fayor’s management techniques did not completely
achieve efficient production and harmony at work place. These two theories did not focus on

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human side of organization. Elton Mayo conducted series of experiments at Western electric
company, also known as Hawthorne experiments.

They are broadly classified as:

(a) Illumination experiments: Two set of workers tried in different buildings. One group under
constant level of illumination and under challenging levels. The post-test productivity was
compared and illumination effected production only marginally
(b) Relay assembly test room: The subject of study was broadened. It aimed not only the
illumination but also factors as lengthof working day, rest pauses, their frequency and
duration and other physical conditions. Surprisingly the researchers found that production
had no relation with working conditions.
(c) Interviewing programme: In this phase researchers interviewed 20,000 workers. At first
direct questions were asked relating to the type of supervision, working conditions, so on.
Later on they changed to non-directive type of interviewing, in which workers were free to
talk about their favorite topics related to their work environment. The study revealed that
the workers social relations inside the organization had an un-mistakable influence on their
attitudes and behaviors.
(d) Bank wiring observation room: This phase involved a in-depth observation of 14 men
making terminal banks of telephone wiring assemblies to determine the effect of informed
groups norms and formal economic incentives on productivity

Modern management approaches

There are four important modern management approaches.

(i) Behavioral approach

(ii) Quantitative approach
(iii) System approach
(iv) Contingency approach

Behavioral approach: Is concerned with the applications of method and finding of psychology
and sociology for the purpose of undertaking organizational behavior, motivation theory,

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leadership, communication and employee motivation and development are some of the important
behavioral theories of management.

Behavior scientists regarded the classical approach as highly mechanical and routine and resulting
in demoralizing human respect.

They insisted for a more flexible structure of organization rather than traditional or hierarchal types
of authority.

Importance to participative management was given to solve problems in better way and result in
human satisfaction.

Quantitative approach: It is also known a management science approach which was developed
during world war II to find solutions to some complex new problems in war fare, as a result it was
called operations research (OR) which deals with formulating a mathematical model to simulate a
given problem that includes the feasibility, constraints, cost of events, etc. An optimum mix of
these variables is arrived at by wither minimizing time and cost or by increasing profits. E.g.,
Project planning and control.

Provides the integrated approach of problem solving. A system is defined as a set of individual
parts together form a unitary whole that performs defined tasks. Organization is a system that
consists of people, task, structure and technology. A system approach tries to emphasize to regard
the organization as a whole rather than dealing with parts separately.

1. Open system 2. Closed system

System approach:

Information Goods & products

Equipment Goal
Material
INPUT Services OUTPUT
Man System Profits
power
Energy Satisfaction
Technology

Contingency approach: This attempt to integrate all the management approaches. There is no
one best way of doing things under all conditions in all organizations. The technique and methods
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that are highly effective under one particular situation may be a failure in similar situation in any
other area. In this it is the task of the mangers to identify the correct techniques that will suite a
particular situation and apply them to solve a problem. This is helpful to prepare organizational
structure deciding degree of decentralization, motivational and leadership approaches, resolving
conflicts, etc.

Scope of Management and scope in various Functional Areas.

1. Economic activity- To utilize effectively and efficiently the 5 resources men, material,
money, machine and methods.
2. Management is a system of authority - It is a rule making and rule enforcing authority.
3. Production/Operations management – Concerned with work analysis, planning,
scheduling, routing, quality control, inventory control and work study.
4. Financial Management – Deals with economic forecasting, cost accounting, budgeting,
insurance and financial statistics.
5. Human resource management – Deals with recruitment, placement, training, transfer,
promotion and welfare.
6. Marketing Management – Performance of business activities that direct the flow of goods
and services from the producer to consumer. It is the process of getting right product to the
right place in the right quantity at the right price at the right time.
7. Materials Management – Expenditure on materials is around 40% to 60% or more
depending on product or service. Materials management is concerned with efficient use of
materials.
8. Systems management – It is coordinating the projects by splitting projects into modules,
delegate duties to different groups, communicate with client, integrate all modules, meet
schedule. It is concerned with management which is separate from software.
9. Transport management – Transportation of raw materials as well as finished goods needs
to be professionally managed to keep optimum cost. It includes studies on transportation
by rail, road, water and warehousing.
10. Rural management – It deals with water resources management, forest and forest product
management, rural manpower and transportation management. IIRDA, Gujarat is one of
the institute which offers specialization in rural management.

Contribution of Various Management Guru’s:

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1. Taylor F.W (USA)

He is well known as the father of scientific management. He published his famous book ‘The
principles of scientific management’ in the year 1911. The principles are

• Replace rules of thumb by science.

• Obtain harmony in group action rather than discord.
• Achieve cooperation of the people involved.
• Work for maximum output with minimum input.
• Develop all workers both for their own and for the company’s prosperity.

Taylor began as an apprentice machinist on 1875. He then joined Midvale steel works at
Philadelphia, as machine shop labourer. With hard work he became shop clerk, then passed
through different managerial positions and finally became the chief engineer. His contributions to
the management field are:

a. He developed time study and developed the principle of breaking a job into elements.
b. He developed the concept of analyzing work scientifically.
c. Workers efficiency improvement is important. The labour difficulties, its causes have to
be understood.
d. Suggested preplanning of work and allotting fixed time for a particular job.
e. Developed functional organization at the foreman level. Analyzed the duties of an average
foreman and divided the work into number of functions, each being allotted to a functional
foreman.
f. Developed a wage incentive scheme known as Taylor’s differential piece rate plan.
g. First person to contribute for the management by exception in which he states that only
unusual or exceptional items or major deviations should be brought to the manager’s
attention and non deviations should not be brought to his notice.

2. Henry Fayol (France)

He is known as the real father of ‘the modern admin management theory’. He became a mining
engineer in 1860 and joined coal mining company which was bankrupt. He became its MD in 1888
by that time it was earning record profits. He divided industrial activities into 6 groupsnamely
technical, commercial, financial, security, accounting and managerial. According to Fayol the first
5 activities are well known, so he emphasized more on the analysis of managerial activities. This

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activity id divided into 5 as planning, organizing, commanding, cooperating and controlling.

Emphasis on prevoyance(looking ahead) or forecasting is essential.

Management should be flexible and no rigid. His 14 principles of administrative management are:

i. Division of work.
ii. Authority and responsibility.
iii. Discipline.
iv. Unity of command.
v. Unity of direction.
vi. Subordination of individual interest to the general interest.
vii. Remuneration.
viii. Centralization.
ix. Scalar chain hierarchy of authority.
x. Order.
xi. Equity.
xii. Stability.
xiii. Initiative.
xiv. Esprit de corps (team spirit).

PLANNING

Definition:“Planning is informed anticipation of the future”

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- Haimann.

Planning is the most basic function of management. It is referred to as “Deciding in advance”.

Any Planning involves 4 essential qualities.

1. It must contribute to accomplish purpose and objectives.

2. It must be considered as parent exercise in all processes.
3. It must be spread through all management functions.
4. It must be efficient to achieve goals at any cost.

Importance of Planning

Planning is the beginning of all the other functions of management. Planning is important because
of the following 5 things:

(a) Reduces uncertainty and minimises risk

Planning provides logical facts and procedures to managers for making decision. The
logical decision making based on plans to organization minimizes uncertainty & risk.
(b) Effective control
Planning sets goals, targets and means to accomplish these goals. These goals and plans
become standards or bench marks against which performance can be measured. Thus good
plans help effective control on the activities.
(c) Focuses attention and concentration on the objectives of the enterprise.
Planning helps the mangers to focus their attention on the goal and activities of
organization. This makes the entire organization to walk towards the goals & create co-
ordination.
(d) Economic operation and leads to success
Planning in advance reduces confusions and things will happen as per plan and achieve
goals. This results in economical operation & reduces unquoted expenditure.
(e) Bridge between present and future
There is a vast gap between what we are today and what we want to be in the future. A
proper and systematic plan forms the bridge between these two.

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Without planning, business decisions would become random, adhoc choices. Four important
reasons for paramount importance of planning are

1. Minimizes risk and uncertainty: Manager will be in control if he has anticipated some
of the possible consequences and planned for them.
2. Leads to success: Companies which plan outperform the non planners.
3. Focuses attention on the organization goals: It enables the manager to chalk out ideas
and focus on the established goals.
4. Facilitates control: The function of the control is to ensure activities conform to the plans.
5. Trains executives: Executives become involved in various aspects of planning and thus
get trained.

Planning is the beginning of the process of management. A manager must plan before he can
possibly organize staff, direct, or control. Planning is an intellectual process. It involves thinking
in advance, decision making a continuous process.

Nature or Features or Characteristics of Planning

1. Planning is goal-oriented
In order to seek certain predetermined goals.
2. Planning is a primary function
It precedes all other managerial actions. It provides the basics for subsequent functions of
O, S, D, C.
3. Planning is a thinking process
Involves imagination, foresight & sound judgment. It calls for intellectual abilities to
anticipate opportunities & threats that come in the way.
4. Planning is all pervasive.
Means it is an ongoing activity at all levels.
5. Planning is a continuous process
Never ending activity. It involves continuous assessment & reassessment of resources,
directions, opportunities and problems of organization.
6. Panning involves choice
From various available alternatives, a manager chooses the best after analysis and
evaluation.
7. Planning is flexible

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Done after forecasting future events, hence made flexible.

8. Planning is rational
It is a purposeful and conscious managerial function, backed by adequate information,
knowledge and understanding.
9. Planning is an integrated process
Lower level plans serves as a means to accomplish higher level plans. They are interrelated,
interdependent and mutually supportive.
10. Planning is futuristic
Peep into future; Analyze and prepare for it.

Types of Plans

1. Single use plans: As the name suggests plans are developed to achieve specific end, when
the end is reached, the plan is dissolved. Themajor types of single use plans are programs
and budgets. Constructing a building is a typical example.
Single use plans: Programs, Schedule & budgets.
2. Standing plans: Are plans that are designed for situations that recur often enough to justify
a standard approach. For eg: It would be inefficient for a bank to develop a single use plan
for processing a loan application for each client. Instead it uses one standing plan that
anticipates in advance whether to approve or turn down request based on information
furnished credit rating, etc. The major types of standing plans are policies, procedures,
rules.

These are the policies, procedures, rules and methods of any organization.

(i) Policies- It is general guideline for decision making. They deal with “How to do” the
work. There are several policies in different functions of any organization like
personnel policy, promotion policy, marketing policy, recruitment policy, wages, etc.
(ii) Procedures- Procedures are detailed guidelines that are used to carry out the policies.
It provides a detailed set of instructions for performing a sequence of operations
involved in doing a certain piece of work.
(iii) Rules- are detailed & recorded instructions that a specific action must or must not be
done under given instructions.

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E.g. reporting time to office, lunch time, availing of leaves, etc.

(iv) Methods- A method is a prescribed way in which one step of a procedure is to be carried
out. Thus a method is a part of procedure.

Planning can also be classified as strategic planning and tactical planning (Short range).

Table: Difference between strategic & tactical planning.

Strategic planning Tactical Planning
1. It is a long term 1. It is a short term
2. Done at top management 2. Done at lower levels of management.
3. It consists of major goals & objectives of 3. It consists of use of facilities & resources.
an organization & resources & facilities.
4. It is less detailed, focuses only on long term 4. It is more detailed since it caters to day-to-day
goals. operations & activities of organization.
5. It is based on long term goals & is more 5. It is based on performance & is less uncertain.
uncertain.

Steps in Planning and Planning Premises

The main steps involved in planning are as follows:

1. Being aware of opportunities: This will help to think of realistic objectives.

2. Establishing objectives: It’s very important to establish objectives for the entire enterprise
and the objectives for each subordinate work units. It is a very crucial step in planning.
3. Developing planning premises:
It is a process of creating assumptions about the future on the basis of which the plan will
be ultimately formulated. Planning premises reveal the facts and information relating the
future, such as economic conditions, production cost competition, availability of material,
resources & capital, policies, population trends, etc.
There are 3 types of planning premises:
a. Internal and external premises:Internal premises include sales forecast, policies and
programs of the organization, capital investment etc. external premises may include

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general business and economic environment ex: technological changes, government

policies and regulations, demand for industries product.
b. Tangible and intangible premises: Tangible premises are those which are
quantitatively measured. Ex population growth, industry demand etc. intangible
premises are those which are qualitative in nature. Ex: attitude, philosophy and behavior
of owners of organization.
c. Controllable and non-controllable premises: Controllable resource factors are
advertisement policies, availability of resources. Uncontrollable factors are strikes,
wars, emergencies, natural calamities.
4. Determination of alternative course: Next step is to search and identify some
alternative courses of action. It is very rare that for a plan there will be no alternatives.
In this step alternatives are listed.
5. Evaluating the alternatives and selecting the best course action: Once the
alternatives are found, then the next step is to evaluate then with respect to the premises
and goals. A desired and best suitable alternative is selected by comparative analysis
with reference to cost, risk and gain, etc.
6. Formulating derivative plan: The selected plans must be translated into programs,
working plans and financial requirements in the sub-units. These sub-derived plans from
the main plan are termed as derivative plans.
7. Monitoring and controlling the plan: Each activity of plan is monitored on a
continuous basis and if any deviation or shortfall is noticed, then the manager will
initiate suitable corrective action.

Objectives

Objectives are goals or aims which the management wishes the organization to achieve. These are
the end points or pole star towards which all the business activities organizing, staffing and
controlling are directed.

Ex: The overall objectives of the university areAttracting highly qualified students, Offering basic
training in science, Art and professional [Link] Ph.D degrees to qualified
[Link] a highly regarded facultyDiscovering and organizing new knowledge
through research.

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Characteristics of Objectives

1. Objectives are multiple in numbers as depicted above.

2. Objectives are either tangible or intangible.
3. Objectives have priority.
4. Objectives are generally arranged in hierarchy
5. Objectives sometimes clash with each other

Requirements of Sound Objectives

1. Objective must be both clear and acceptable.

2. Objectives must support one another.
3. Objectives must be precise and measurable.
4. Objectives should always remain valid.

Advantages of Objectives

1. They provide a basis for planning.

2. They act as motivators.
3. They eliminate haphazard action.
4. They facilitate coordinated behavior
5. They function as a basis for managerial control
6. They provide legitimacy to the organization activities.

Decision Making

Planning is an intellectual process, which requires a manager to think before acting. Through
planning, managers of any organization decide what to do, when to do, hoe to do and who has to
do. Decision making is an integral part of planning. It is defined as “The process of choosing
among alternatives”

Making poor decisions is one of the deadliest threats to the success of the organization and to one’s
career. When they act haphazardly without regard to the values and goals of an organization people
fail. It is best to use problem solving method as given below.

1. Being aware of the problem.

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2. Defining the problem

3. Obtaining facts.
4. Solution identification
i. Past experience
ii. Internal expertise.
iii. Groups/committees.
iv. Outside expertise.

Implementation of decision should be based on developing proper guidelines for implementing the
choices. Follow up procedure is an important part of implementation.

Impediments to effective decision making

i. Perception: stereotype and halo effects.

ii. Intuition: belief without conscious analysis.
iii. Political forces and coalitions.
iv. Escalation of commitment.

Major challenges

Dealing with a complexity of factors affecting decision ex: multiple criteria, risk of uncertainty,
pooled decision making, intangibles, value judgments.

Types of Decisions

1. Programmed decisions
2. Routine, structured
3. Unstructured
4. Non-programmed- unique.

Decisions are classified as:

1. Pragmatic and non-pragmatic Decisions

Pragmatic are those taken with the purview of policies, rules and procedures. These are
also called programmed and routine decisions. These are taken frequently & are repetitive
in nature.
Non-pragmatic decisions are otherwise called as strategic decisions or non-programmed
decisions. These decisions involve huge expenditure & are taken by top management.
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2. Individual and collective decisions

Decisions taken by a single person are called individual decisions. It is taken where the
problem is of routine nature, and definite rules and procedures exist.
Decisions taken by a committee or group of people are called collective decisions. Inter
departmental decisions and important strategic decisions are taken by a group. They have
advantages like increased acceptance, better communication & better co-ordination.
3. Minor or major decisions
Minor are related to day-to-day and periodic occurrences like purchase stationary, granting
of leaves, permissions, etc.
Major are those taken by top management.
E.g., purchase of new machinery, hiring of people, etc.
4. Strategic and routine decisions
Strategic decisions are similar to major decisions and are generally taken by top
management.
E.g., Price increase/discount, change in product, etc.
Routine decisions are decisions related to day-to-day operations of an organization that are
routine.
5. Simple and Complex
If related variable to a problem are few, it is simple. When there are many variables, the
decision making is complex.
6. Temporary and permanent decisions
Temporary are taken depending on situation till solution is found usually by shop
managers. Permanent decisions are taken on permanent basis.

STEPS IN DECISION MAKING

Recognition of problem

Deciding priorities among problems

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Problem diagnosis

Development of alternative solutions

Studying and comparing the effect of alternatives

Implement the decision into action

Study the result

Fig: Steps in Decision making

Decision Making Process: Steps in Rational Decision Making A decision is rational if appropriate
means are chosen to reach the desired end. The following steps are involved in the process decision
making.

(1) Recognizing the problem.

(2) Deciding priorities among the problems.

(3) Diagnosing the problem.

(4) Developing alternative solutions or courses of activities.

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(5) Evaluating alternatives.

(6) Converting the decision into effective action and follow up of action.

(1) Recognizing the problem: When a manager makes a decision it is in effect the organization’s
response to a problem. Hence it is necessary to search the environment for the existence of a
problem. A problem is said to exist;

(a) When there is deviation from past experience. For example the present year’s sales are lower
than previous year, the expenses are more than previous years etc.,

(b) When there is deviation from plan. For example sales are lower than anticipated, expenses are
more than expected etc.,

(c) When competitors outperform. For example other companies manufacture the goods of same
quality at lower costs.

(d) When people bring problems to the manager, For example workers may complain about poor
ventilation.

(2)Deciding priorities among problems: A manager might have identified a number of

problems. All these problems vary in their importance. He may find that some of the problems are
such that they can be solved by their subordinates because they are closest to them. All such
problems should be passed on to them. Some problems may need information available only at
higher level or affecting other departments. Such problems are referred to higher level managers.
And those problems which can be best solved by him are to be focused.

(3) Diagnosing the problems: Symptoms of the problem that are observed by the manager may
sometimes mislead him. The symptom may lead manager to suspect one part when the defect may
lie hidden in another part. For example if there is decline in sales, the management may think that
the problem is one of poor selling procedure orthe saturation of the old market. But the real
problem may be inability to move quickly to meet changing needs of the customers. For diagnosing
the problem a manager should follow the systems approach. He should study all the sub-parts of
his organization which are connected with the sub-part in which the problem seems to be located.

(4) Developing alternative solutions or courses of action: A problem can be solved in several
ways; however all the ways cannot be equally satisfying. If there is only one way of solving a
problem, then no question of decision arises. Therefore decision maker must identify various
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alternatives available in order to get most satisfactory result of a decision. It should also be borne
in mind that it is not possible to consider all alternatives either because information about all
alternatives may not be available or some of the alternatives cannot be considered because of
limitations Alternatives used by successful decision makers can be thought of alternatives of
decision making. Creative ideas of individuals or groups help in developing alternatives. One
popular group technique is brain storming. The brain storming group consists of 5 to 10 people.
The best idea behind brain storming is to think of as many alternatives as possible without pausing
to evaluate them.

(5) Measuring and comparing consequences of the alternative solution: Once various
alternatives are developed, the next step is to measure and compare their consequences of
alternatives using quality and acceptability. The quality of a decision must be determined
considering both tangible and intangible consequences.

(6) Converting the decision into effective action and follow up of action: This step involves
communication of decisions to the employees. Decision must be communicated in clear and
unambiguous terms. All necessary efforts should be made to secure employees participation in
some stages of decision making..

(7) Study the results:After having implemented the decision, the manager has to carry out the
follow up action. If the result is not satisfactory, the manager had to take necessary corrective
action or modify his decisions.

The Hierarchy of Plans

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Goals
Top Management
and
Objectives

Strategies Middle Management

Single use Standing

plans plans

Action plans Foreman & Supervisors

Fig: Hierarchy of Plans

The Plans are generally arranged in a hierarchy within any organization. It starts at the top with
objectives & goals of an organization. The second level is strategies, they are 2 types, namely
single use plans & standing plans. The third level is action plans.

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