Syllabus.

Planning- meaning – nature – importance – types of plans – planning process- barriers to

effective planning- MBO- features- steps- coordination- meaning and importance – techniques for
effective coordination.

Planning.

Planning means deciding in advance what is to be done, when it to done , how is to

be done and by whom it is to be done.

Planning is thinking before doing. A plan is a blue print for future course of action.

Planning is a thinking process and making decisions relating to the future course of action.

Planning is deciding the best alternative among others to perform different

managerial operations in order to achieve the pre defined goals.

Nature / features of planning.

1) Goal oriented.

Planning is goal oriented . All plans originate from objectives . It is a means towards
the accomplishment of objectives.

2) Intellectual process.

Planning is a mental work. Mental exercise is needed for planning. Managers has to
think well before taking the final decisions.

3) Primary function of management.

Planning is the first function of management process. It lays down foundation for all
other managerial function. Without planning there is nothing to coordinate , nothing to organise and
nothing to control.

4) Flexibility.

Plans are prepared for future. Future is uncertain. Actual situation may different
from our expectation. So plans must be flexible so as to adjust with future changes.

5) Continuous process.

Planning is a never ending activity of a manager. When situation changes ,old plans
must be revised. So planning is an ongoing process.

6) Forward looking.

Planning involves looking ahead and preparing for future to achieve certain
objectives . No plans can be prepared without knowledge of the future.
 7) Involves choices.

Planning means select the best course of action available. There is no need for
planning if there is only one way of doing something.

8) Integrated process.

Planning is a structured process . Different plans set up by different departments in

an organisation are independent and interrelated.

9) Based on planning premises.

Basic assumption in planning is known as planning premises. The plans are built
based on some assumptions. When planning premises changes , the plans will also be selected.

Three types of planning premises.

 Non – controllable premises.

 Semi controllable.

 Controllable premises

Importance of planning ( Objective/purpose)

Among all the managerial functions , planning is considered to be the most

basic function of management . Planning doesn't guarantee success . But companies which plan ,
perform better than those which do not . Planning is important from business point of view because
of the following reasons.

1) Reduce the uncertainty and risk.

With the help of planning , an enterprise can predict future events and make
provisions for them . It also helps to identify potential threats and opportunities .

2) Focus attention on objectives.

Planning concentrate on the organisational objectives . Planning forces the members

in the organisation to work hard to achieve organisational objectives.

3) Facilitate control.

Planning provide a basis for control. Plans serves as a standard for evaluation of
performance. Taking plans as a base , comparison can be done and corrective measures can be
taken.

4) Guides in decision making.

Planning helps in decision making by selecting the best alternative among various
alternatives. Planning tries to predict future and helps in taking future oriented decisions.
 5) Encourages innovation and creativity.

Planning is thinking in advance. So there is a chance for finding better and different
methods to achieve the desired objectives. this makes managers innovative and creative in thinking.

6) Helps in coordination.

Planning determines the activities of each departments and individuals. The overall
plan in the organisation helps to harmonise the efforts of all other departments and divisions.

7) Improves motivation.

Planning improves the motivation and morale of all employees by providing target
of performance. It serves as a good training device fro future managers.

8) Provide a sense of direction

Planning direct human efforts into activities that contribute to accomplishment of

goals . Planning makes work more meaningful.

9) Provide efficiency and economy in operations.

Planning ensures optimum utilization of available resources. It helps to reduce cost

and increase efficiency . Through planning ,the best method of doing a work can be developed . So it
saves time, effort nd money.

Planning process / Steps in planning.

Planning process is a combination of information handing and

system based on information inputs , output and feedback. Planning includes the following steps:-

1) Setting up objectives

Plans are formulated to achieve certain objectives . So as a first step in the planning
process , specific and clear objectives should be established. The objective of the organisation set
first.

Eg. Target a profit of Rs.1000000. ( Organisation )

How much to be produced ( Production)

How many units to be sold ( Marketing)

How much finance to be raised.( Finance)

2) Develop planning premises.

Planning premises are the anticipated environment in which plans are expected to
operate. While formulating a plan , the manager is required to make certain assumption about the
future. These assumptions are called planning premises.

Eg: Firm expect high sales on the assumption that tax rate may reduced in future.
 3) Develop alternative course of action.

An action can be performed in several ways. But there is a particular way which is
most suitable for the organisation . Organisation should identify the best alternatives.

Eg. To increase sales:

Improve quality of the product.

Reduce price.

Increase advertisement

4) Evaluation of alternatives.

Here an analysis is done for evaluating various alternatives . The strong and week
points of every alternatives should be analysed.

5) Selection of best alternative

After evaluating all the alternatives , the best actual decision is taken. After
analysing the merits and demerits of each alternative. The most suited one is selected.

6) Formulation of derivative plans.

In order to support the main plan , various sub plans are required . These sub plans
called derivative plans

Main plan – Produce a new product.

Sub plans- Acquisition of raw materials, selection of labour, sources of funds,

channels of distribution etc.

7) Implementation of the plan.

Means putting plans into action so as to achieve the objectives of the business.
Proper implementation leads to the success of plans. Plans should be communicated and explained
in details to the employees.

8) Follow up.

Plans are evaluated regularly to check whether they are moving to right direction .
This helps in detecting shortcomings and taking remedial measures before it is too late.

Limitations of planning. ( Barriers of Planning)

1) Lack of accurate information

The quality of planning depends up on the accuracy of information. Decisions base

on unreliable information will be wrong.
 2) Time consuming.

Collection of data and preparation of plans involved considerable time and effort.

3) Expensive.

Collection of information and testing of alternatives course of action involve huge

expenses.

4) Rigid.

Planning may result in internal rigidity in managerial work.

5) False sense of security.

A manager may feels that once the plans are formulated , action will automatically
be efficient.

6) Environmental constrains.

Managers have no control over social , technological , legal, economic and other
outside factors . As the conditions changes frequently , errors of judgement may occur.

7) Delay in action .

Planning is a time consuming process. So there is delay in executing actions.

8) Reduce creativity

Employees are bound to obey policies and procedures of management. It reduces

creativity of employees.

Types of plans.

A plan is a blue print for future course of action for the attainment of a specific objective.
Plans may be classified on the basis of

Use

Time

Organisational set up

Importance.
 Classification of plans on the basis of USE.

a) Single use plans

b) Multi use plans.

a) Single use plans or adhoc plans

Plans formulated to meet unique or non repetitive situations are called

single use or adhoc plans. It is of short duration. It is discarded when the particular problem is
solved. It includes

1) Programmes.

A programme is a scheme of action designed to accomplish a particular task.

Programme is a plan designed to implement the policies and accomplish the objectives.

Eg. Expansion programme of a steel mill.

2) Budget.

A budget is a plan which expressed the expected results in numerical terms

like time , money or other units for a definite future period of time.

Eg. Sales budget, cash budget.

3) Schedules.

Schedule is a time table of work. It shows the time of beginning and end of a
task. Scheduling is the process of establishing a time sequence for the work to be done.

4) Projects.

A project is a plan for the job to be done in connection with a programme .it
involve time bound activities.

Eg. Construction of a Dam.

5) Methods.

A method is a standardised way of performing a job. It provide guidance for

day to day action.

Eg. Method of wage payment.

 b) Multiuse plans.( Standing Plans)

Plans used repeatedly in similar situations are called Multiuse plans.

They are the standing answers to recurring problems. It includes:-

1) Objectives.

Objectives are the aim or purpose for which an organisation is set up and operated.
Objectives are the goals, aims or purpose that organisation wishes achieve over varying periods of
time. The term objectives ,mission goals ,target , standards etc are used interchangeably in
management.

Eg: The objective of an organisation may be fixed as increase in sales by 10% or

reduce quality rejects to 1%.

Importance of objectives.

 Lawfulness

 Direction

 Unified planning.

 Individual motivation.

 Co ordination.

 Performance control.

2) Strategies.

A strategy is a plan prepared to meeting the challenge of competitors and other

environmental forces. Strategies are long term in nature. Strategies ensure efficient utilisation of
resources.

Eg. If the management expects a price cut by competitors , it may start advertising campaign
to convince the customers about the superior quality of our products.

3) policies.

A policy is a statement providing guidance in decision making. It defines the area or limits
decisions can be made.

Eg. Promotion is based on merit only. ( While taking decision on promotion merit will be the
sole criterion)
4) Procedure.

Procedure are the steps to be undertaken to enforce a policy . It explains the

manner in which a task is to be performed. Procedures are derived from policies.

Eg: Implementing the policy of selecting fresh graduates.

Procedure should be developed consists of

 Inviting application.

 Conducting test and interview.

 Checking reference

 Preparing the list of selected candidates.

5) Rules.

Rules are used for guiding what may or may not be done. Rules demand strict
obedience. Their violation is generally associated with some sort of disciplinary actions. It facilitates
discipline and uniformity in action in the organisation.

Eg: office opens at 9 A.M

Smoking is prohibited in the factory premises.

Classification of Plans based on Time.

1) Short term plans

Short term plan is a plan for a period up to One year.

2) Medium term plan.

A plan for a period between one to five years is medium term plan.

Eg. Purchase of materials.

3) Long term plans

A long term plan is a plan for a period beyond five years. It may be for a period of 10
-20 years.

Eg. Man power planning.

 Classification of plans based on organisational set up.

1) Corporate plans

A plan prepared for the whole organisation is known as corporate plans .It is for long
term and is done by top management.

2) Functional plans .

A functional plan is a plan prepared for each main function of an organisation.

Eg. Production plan, marketing plans

3) Divisional plan.

A divisional plan is a plan prepared for each division of an enterprise.

Eg. Divisions of different types of mobile phones of a company.

4) Geographic or regional plans.

A plan prepared for various regions or zone of an organisation is known as regional

plans.

Classification of the basis of importance

1) Strategic plans

A plan designed for the achievement of organisational objective with the available
resources is termed as strategic plans. It is formulated by top management for a period up to 10
years.

2) Operational plans.

It is a plan for the efficient use of resources allocated . It is prepared by middle and
lower level management for a period up to One year.

Management By Objectives ( MBO)

MBO is a new concept in the field of management. It is a process by which

the management intents to achieve the best results through the active participation of all the
workers.

Under MBO superiors and subordinates jointly determine the common

objectives. They also set the results to be achieved by the subordinates through their active
participation.
 MBO is a management model that aims to improve performance of an
organisation by clearly defining objectives that are agreed by the management and employees.

( MBO is also known as management by results, goals management, work planning

and review)

Objectives.

 To measure and judge performance.

 To relate individual performance to organisational goals.

 To enhance communication between superiors and subordinates.

 To stimulate motivation of workers.

 To act as a basis for judgement about salary and promotion.

 To develop subordinates.

Features of MBO.

1) Goal oriented.

MBO is goal oriented than work oriented . It focuses attention on what is to be

achieved rather than method of doing.

2) Participative management.

MBO ensures participation of subordinates in the goal setting process.

3) Dynamic system.

MBO is dynamic system which integrate the company’s needs. ( achieve its
objectives) with managers needs ( develop himself)

4) Management philosophy.

MBO is a management philosophy that allows management to attain maximum

results from available resources.

5) Continuous process.

MBO is a continuous process of goal setting , periodic appraisals , and modification

of goals and performance.

6) Key result area (KRA)

MBO gives importance on measurable and verifiable goals in the key result areas.
 Process of MBO ( Steps)

The process of MBO consists of the following steps.

1) Setting objectives at the top.

The first step in MBO process is to analyse the purpose of the organisation . This is
done at the top level. This may be modified after discussing with subordinates . The objectives
should e SMART. Subordinates opinion must also be considered while setting objectives.

2) Clarifying organisational roles.

The role of each managers and their responsibilities should also be clearly fixed or
described.

3) Recycling of objectives.

In MBO a network of objectives is created . Goal setting is a joint and interactive

process. Every lower level objectives contribute effectively of the objective next to it.

Eg. The objective of marketing department should reconcile with those of

manufacturing department.

4) Action planning.

After setting objectives at all levels , action plans must be developed to achieve the
goals . Detailed procedures are to be developed for utilisation of resources.

5) Periodic performance review.

The performance at all levels to be reviewed periodically . This helps to identify

short comings and take corrective steps to improve results.

6) Final appraisal

At the end of the year , organisation must evaluate the overall performance of each
individual . Achievements are analysed based of standards . Rewards are decided on the basis of
such appraisal.

Advantages of MBO (Benefits)

1) Improved planning.

MBO sets clear and measurable performance goals. Suitable action plans are
formulated for goal achievement.

2) Team work.

MBO results in better communication between superiors and subordinates which

reduce conflicts. The whole management team is involved in goal setting.
 3) Self control.

MBO ensures self control from all employees because each and every individual in
the organisation clearly known what the organisation expect from him.

4) Better management.

BY MBO , managers are well aware about the goals of the organisation. They can
systematically devise ways and means for achieving goals.

5) Effective control.

In MBO , standards are set. The actual performance can be evaluated to find out
deviations if any. This helps in controlling the activities.

6) Motivation.

Participative goal setting and two way communication improve the commitment and
motivation of employees.

7) Better personal commitment.

Each employee participates in setting the objectives of the organisation . So he will

try his best to achieve the goals of the organisation.

Limitations of MBO

1) Difficulty in goal setting.

Setting of verifiable and measurable goals is a difficult task. Lots of information is

required for arriving at conclusions.

2) Time consuming.

Several meetings have to be held to create confidence in subordinates. It is a time

consuming process.

3) Increased paper work.

A number of newsletters, instruction booklets , training manuals and performance

reports are to be prepared.

4) Pressure oriented.

A fundamental change is required in the thinking and acting style of managers which
is not easy.
 5) Undermining leadership.

If the personal relationship between superiors and subordinates is not good , the
participative approach of leadership may fail to work.

6) Not flexible.

Once goals are set , the superior may not like to modify them due to the fear of
resistance from subordinates.

Suggestions for making MBO effective.

 Clearly defined purpose.

 Top management support.

 Training to all employees.

 Adequate time and resources.

 Decentralisation.

 Feed back.

 Effectively handling problems.

Coordination

Coordination means unifying the actions of a group of people.

Bringing together the activities and resources and bringing harmony in them
is known as Coordination.

Coordination is the process of synchronising activities of various persons in the

organisation to achieve the goals. It refers to create a link between various activities of the
organisation for obtaining the desired results.

Features.

 It is a function of management.

 It is the responsibility of managers.

 It provide unity in action.

 It is a continuous process.

 Group efforts – Group effort rather than individual efforts are necessary to bring
coordination.

 It is needed at all levels of management.

 Types of coordination

1) Internal and External coordination.

Coordination between various departments or divisions of an organisation is known

as internal coordination.

Coordination between a organisation and external groups ( Customers ,

suppliers , dealers , government) is called external coordination.

2) Vertical and horizontal coordination.

Coordination between the different levels of management hierarchy is called vertical

coordination.

Eg. Coordination between branch and head office.

Coordination between the activities at the same level of authority is referred as

horizontal coordination.

Eg. Coordination between two branches.

3) Procedural coordination and substantive coordination.

Procedural coordination is the description of the behaviour and relationship of the

organisation.

Substantive coordination is concerned with the content of activities in an

organisation.

Eg. In an Automobile plant, organisation chart is procedural coordination and blue

print for the engine block of a car manufactured is substantive coordination.

Need and Importance of coordination.

1) Unity in diversity

There are a large number of employees having different ideas , opinions and
activities in a large organisation. These diversified activities will be inefficient in the absence of
coordination.

2) Unity in direction.

Only through coordination , the efforts and skills of various persons in the
organisation can be integrated as group efforts to achieve the objectives.

3) Team work.

Through coordination , team work and team spirit among all employees can be
improved.
 4) Specialisation.

There is a high degree of specialisation in the modern industrial world. Sometimes

there may be chances of dispute among these specialists. This disputes can solved through
coordination.

5) Large number of employees.

In large organisation , the number of jobs and employees are large . Communication
is difficult. So coordination is required.

6) Conflicting goals.

Coordination is required to harmonise departments and personal goals with the

goals of the organisation.

Techniques of effective coordination

The techniques used for effective coordination are :

1) Well defined goals .

The goals of the organisation should be clear and well defined. Every employee in
the organisation should know the overall objectives and his contribution towards its achievements.

2) Well defined authority and responsibility

By defining the authority and responsibility in the organisation , the conflicts among
different positions can be reduced.

3) Simplified organisation structure.

A good organisation structure with clearly defined authority and responsibilities is

an effective means of coordination.

4) Co operation

Coordination become easy when individuals in the organisations are willing to help
each other voluntarily.

5) Committee.

Committee facilitates coordination by bringing together representatives of

conflicting goals.

6) Effective leadership and supervision.

Effective leadership and supervision ensures coordination in both at the planning

and implementing stages.
 7) Proper communication.

Regular communication among various persons helps in resolving conflicts and

thereby increase coordination.

Coordination and cooperation

Coordination Cooperation

 It is the integration of various It is the willingness of individual

factors of production in the to help each other.

organisation.

 It is a wider term It is not a wider term.

 It requires efforts of the manager. It is voluntary.

 It is an essence of management It does not enjoy the status

of the essence of management.