Management Process - Unit 3 - Notes - 1st Year BBA

Unit 3

Planning

Planning is deciding in advance what to do and how to do it. It is one of the basic
managerial functions. Before doing something, the manager must formulate an idea
of how to work on a particular task.

Importance of Planning

1. Planning provides directions: By stating in advance how work is to be done

planning provides direction for action.

2. Planning reduces the risks of uncertainty: Planning is an activity that enables

a manager to look ahead and anticipate changes. By deciding in advance the
tasks to be performed, planning shows the way to deal with changes and
uncertain events.

3. Planning reduces overlapping and wasteful activities: Planning serves as the

basis for coordinating the activities and efforts of different divisions,
departments, and individuals. It helps in avoiding confusion and
misunderstanding.

4. Planning promotes innovative ideas: New ideas can take the shape of
concrete plans. It is the most challenging activity for the management as it
guides all future actions leading to growth and prosperity

5. Planning establishes standards for controlling: The entire managerial

process is concerned with accomplishing predetermined goals through
planning, organizing, staffing, directing, and controlling
 Management Process - Unit 3 - Notes - 1st Year BBA

Features of Planning

1. Planning focuses on achieving objectives: Specific goals are set out in the
plans along with the activities to be undertaken to achieve the goals. Thus,
planning is purposeful.

2. Planning is a primary function of management: Planning lays its own base for
other functions of management. All other managerial functions are performed
within the framework of the plans drawn

3. Planning is pervasive: Planning is required at all levels of management as

well as in all departments of the organization

4. Planning is continuous: Plans are prepared for a specific period of time,

maybe for a month, a quarter, or a year. At the end of that period, there is a
need for a new plan to be drawn on the basis of new requirements and future
conditions.

5. Planning is futuristic: Planning essentially involves looking ahead and

preparing for the future.

6. Planning is a mental exercise: Planning requires application of the mind

involving foresight, intelligent imagination, and sound judgment

Limitations of Planning

1. Planning leads to rigidity: In an organization, a well-defined plan is drawn up

with specific goals to be achieved within a specific time frame.

2. Planning may not work in a dynamic environment: The business environment

is dynamic, nothing is constant

3. Planning reduces creativity: Planning is an activity that is done by the top

management. As a consequence, middle management and other
decision-makers are neither allowed to deviate from plans nor are they
permitted to act on their own.

4. Planning involves huge costs: When plans are drawn up huge costs are
involved in their formulation.

5. Planning is a time-consuming process: Sometimes plans to be drawn uptake

so much time that there is not much time left for their implementation.

6. Planning does not guarantee success: The success of an enterprise is

possible only when plans are properly drawn up and implemented.
 Management Process - Unit 3 - Notes - 1st Year BBA

Planning Process

1. Setting Objectives: The first and foremost step is setting objectives.

Objectives or goals specify what the organization wants to achieve.

2. Developing premises: The manager is required to make certain assumptions

about the future.

3. Identifying alternative courses: Once objectives are set, assumptions are

made. Then the next step would be to act upon them. All the alternative
courses of action need to be identified

4. Evaluating alternative courses: The next step is to weigh the pros and cons of
each alternative. Each course will have many variables which have to be
weighed against each other.

5. Selecting an alternative: The best plan has to be adopted and implemented.

The ideal plan, of course, would be the most feasible, profitable, and with the
least negative consequences

6. Implementing the plan: the step is concerned with putting the plan into action.

Decision Making

Decision-making is the process of making choices by identifying a decision,

gathering information, and assessing alternative resolutions.

Using a step-by-step decision-making process can help you make more deliberate,
thoughtful decisions by organizing relevant information and defining alternatives.
This approach increases the chances that you will choose the most satisfying
alternative possible.
 Management Process - Unit 3 - Notes - 1st Year BBA

Steps in Decision Making

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature of the
decision you must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what information
is needed, the best sources of information, and how to get it. This step involves both
internal and external “work.” Some information is internal: you’ll seek it through a
process of self-assessment. Other information is external: you’ll find it online, in
books, from other people, and from other sources.

Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths of action,
or alternatives. You can also use your imagination and additional information to
construct new alternatives. In this step, you will list all possible and desirable
alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you
carried out each of the alternatives to the end. Evaluate whether the need identified
in Step 1 would be met or resolved through the use of each alternative. As you go
through this difficult internal process, you’ll begin to favor certain alternatives: those
that seem to have a higher potential for reaching your goal. Finally, place the
alternatives in a priority order, based upon your own value system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the alternative that
seems to be best one for you. You may even choose a combination of alternatives.
Your choice in Step 5 may very likely be the same or similar to the alternative you
placed at the top of your list at the end of Step 4.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the
alternative you chose in Step 5.

Step 7: Review your decision & its consequences

In this final step, consider the results of your decision and evaluate whether or not it
has resolved the need you identified in Step 1. If the decision has not met the
 Management Process - Unit 3 - Notes - 1st Year BBA

identified need, you may want to repeat certain steps of the process to make a new
decision. For example, you might want to gather more detailed or somewhat
different information or explore additional alternatives.

Types of Decision Making

The managers or non-managers have to make decisions at some point to get their
organizational goals done. These decisions are categorized further. The types of
decision making in an organization are as follows:

1. Programmed And Non-Programmed Decisions:

Programmed decisions are routine and repetitive in nature. These decisions deal
with common and frequently occurring problems in an organization such as buying
behavior of consumers, sanctioning of different types of leave to employees,
purchasing decisions, salary increments, etc.

Non-programmed decisions are not routine or common in nature. These are related
to exceptional situations in which guidelines or routine management is not set. For
example, problems arising from a decline in market share, increasing competition in
the business environment. The majority of the decisions taken by managers do fall in
this nonprogrammed category.

2. Operational and Strategic Decisions:

Operational decisions are just the normal functioning of the organization. These
decisions do not require much time and take a shorter time as compared to other
decisions taken.

Strategic decisions include all present issues and problems. The main idea is to
achieve better working conditions, better equipment, and efficient use of existing
 Management Process - Unit 3 - Notes - 1st Year BBA

equipment, etc. These all fall under this category. Usually, strategic decisions are
taken by top-level management.

3. Organizational and Personal Decisions:

If the decision is taken collectively keeping in mind the organizational goal, it is

known as the organization goal, and if the manager takes any decision in a personal
capacity (affecting his/her life). It is known as personal decisions.

4. Major and Minor Decisions:

These are classified as the type of decision-making in management where decision

related to purchasing of new premises is a major decision. These are taken by top
management whereas the purchase of stationery is a minor decision. Minor
decisions can be taken by the superintendent.

5. Individual and Group Decisions:

When the decision is taken by an individual, it is categorized as an individual

decision. Usually, routine decisions are taken by individuals within the policy
framework of the organization.

Group decisions are taken by a group of individuals in the form of a standing

committee. Generally, important types of decisions in management are shifted to
this committee. The main aim of a group decision is to involve the maximum number
of individuals in the process of decision making.

6. Tactical and Operational Decisions:

Decisions that are pertaining to various policy matters in the organization are known
as policy decisions. These are taken by top management and do have a long-term
impact on the organization. For example, decisions regarding the location of the
plant or volume of production. These are tactical decisions
 Management Process - Unit 3 - Notes - 1st Year BBA

Operational decisions are all day-to-day decisions that need to be taken for the
proper functioning and operation of the organization. These can be taken by middle
or lower-level managers. For example, the Calculation of bonuses given to each
individual is an operational decision and is performed by middle or lower-level
managers.

Public Utilities

Public utilities are those business undertakings that provide necessary services to
society. The undertakings dealing with the supply of electricity, gas, power, water,
transport, etc. are all covered under public utility services. All these things are
needed in the day-to-day life of the people.

The undertakings dealing with public utilities

● It requires large-scale capital investments.

● It is expected that the services should be provided at reasonable rates.
● Public utilities tend to be monopoly concerns - The entry of other
entrepreneurs in these fields is generally barred by the government.

Characteristics of Public Utilities

1. Protection of Consumers:
Public utilities are meant for serving the consumers. The supply of services like
electricity, water, power, transport should be adequately maintained. The public
cannot do without these services. These services should also be provided at
reasonable rates.

2. Monopoly Position:
Public utility enterprises are given a monopoly in a particular area. These
undertakings are the outcome of special legislation. The entry of other concerns is
barred to these fields. A monopoly position is necessary to avoid duplication in
providing these services.
 Management Process - Unit 3 - Notes - 1st Year BBA

3. Special Franchise:

Public utility concerns are given special powers and privileges so that a regular and
satisfactory supply is maintained. The privileges and special status are conferred by
the legislation passed for creating those concerns.

4. Large Investments:

Public utility concerns require large investments of capital. The investments are
more in fixed assets. In the case of railways, large amounts are spent on providing
railway lines, purchase of engines and wagons and constructing railway stations.

5. Public Regulations:

Public utility undertakings are generally created by special legislation of Parliament

and state legislature. Indian Railways are set up under a special act of Parliament.

6. No Business Risks:

The demand for public utility always remains. So there is no risk on this score. There
is no fear of competition because of monopolistic conditions. The demand for these
services is both direct and derived.

7. Pricing Policies:

The primary aim of public utility services is to help the society in getting essential
services at reasonable prices. The prices are also affected by the nature of demand
and laws of returns. These concerns operate under decreasing cost conditions. So,
they should charge reasonable prices.