Technological Innovation Management & Entrepreneurship MODULE-1

Syllabus:
Management: Nature and Functions of Management – Importance, Definition, Management Functions, Levels of
Management, Roles of Manager, Managerial Skills, Management & Administration, Management as a Science, Art &
Profession (Selected topics of Chapter 1, Text 1).
Planning: Planning-Nature, Importance, Types, Steps and Limitations of Planning; Decision Making – Meaning, Types
and Steps in Decision Making( Text 1).
MODULE – 1a
MANAGEMENT
Definition of management:

Management is a function of guidance and leadership control of efforts of a group or

individuals in order to achieve goals/objectives of an organization.

Simplest definition is that it is defined as the art of getting things done through people.
Management can also be defined as The process consisting of planning, organizing,
actuating, and controlling performed to determine and accomplish the use of people and
resources.

Is systematic way of doing things.

Putting together 4Ms- Money, Men, Material, and Machines together is management

Management is the life giving element of an organization.

Management is the creative process which integrates and utilizes various available
resources effectively and efficiently to accomplish the goal of an organization.

The person who is responsible to develop the ideas to plan and to get things done through
the workers is titled as “Manager”

A manager is one who contributes to the organizational goals indirectly by directing the

efforts by others not performing the task by himself

A person who is makes his contribution to the organizational goals directly by performing
the task by himself is the worker
Before the industrial revolution, there were no manufacturing industries. There were few
individuals who were carrying out the production of the commodities. This was mostly family
oriented and head of the family was managing the business. During the later half of 18th
century, industrial revolution had started and factory systems had evolved. Then on,
management became necessary.

MEANING
Managing is one of the most important activities of human life. To accomplish aims that could
not be achieved individually, people started forming groups. Managing has become essential to
ensure the coordination of individual efforts. Management applies to all kinds of organizations
and to managers at all organizational levels. Principles of management are now used not only
for managing business but in all walks of life viz., government, military, social and educational
institutions. Essentially, management is same process in all forms of
organization. But it may vary widely in its complexity with size and level of organization.
Management is the life giving element of any organization.
1/21
Technological Innovation Management & Entrepreneurship MODULE-1
Definitions suggested by some of the management experts are presented below:
Henri Fayol: "Management is conduct of affairs of business, moving towards its objective
through a continuous process of improvement and optimization of resources".
Koontz: "Management is the process of designing and maintaining an environment in
which individuals, working together in groups, efficiently accomplish selected aims".
Mary Parker Follett: "Management is the art of getting things done through people".
George R. Terry: "Management is a process consisting of planning, organizing, actuating
and controlling, performed to determine and accomplish the objectives by use of people and
resources".

ILO: "Management is the complex of continuously coordinated activity by means of

which any undertaking administration/public or private service conducts its business".
Lawrence A. Appley: "Management is guiding human and physical resources into a
dynamic, hard hitting organization until that attains its objectives to the satisfaction of those
served and with a high degree of morale and sense of attainment on the part of those
rendering the service".

The need of management are given below.↓

1. Optimum utilisation of resources,
2. Expansion and diversification,
3. Reduction of employers absenteeism and turnover,
4. Utilises the benefits of science and technology,

2/21
Technological Innovation Management & Entrepreneurship MODULE-1
5. Encourages initiative and innovation,
6. Minimises wastages,
7. Team work,
8. Motivation,
9. Reduction in labour turnover,
10. Higher efficiency,
11. Improves the quality of life of the workers,
12. Cordial industrial relations,
13. Corporate image,
14. Promotes national development,
15. It helps society.

Importance of management are discussed below.↓

1. Optimum utilisation of resources

Management brings all the available resources together. All these available resources are
important for achieving the objective of the organization which are:

 Men,
 Money,
 Machines,
 Methods,
 Optimum (best)
 Utilization (use)

2. Expansion and diversification

Management helps the organization to achieve its objectives efficiently, systematically,

easily and quickly. It helps the organization to face the cut- throat competition to grow,
expand and diversify.

3. Reduction of employers absenteeism and turnover

Management motivates people. It provides different incentives to the employees. This

includes positive, negative, monetary and non financial incentives. These incentives
increase the willingness and efficiency of the employees. This increases the productivity
and profitability of the organization.

Management also develops team spirit and increases the efficiency within the organization. It in
addition reduces labor turnover and absenteeism.

4. Utilises the benefits of science and technology

Man has made rapid progress within the field of Science and Technology. Management
utilizes the benefits of this progress. It provides industries with the latest machines. It provides
the consumers with the newest products.

5. Encourages initiative and innovation

Management spurs initiative. This means it initiative the employees to make their own plans
and to execute these plans. It inspires the employees to give their suggestions. Initiative
gives satisfaction to the laborers and success to the organization.

Management in addition encourages innovation. It brings innovative ideas, modern methods,

latest techniques to the organization.

3/21
Technological Innovation Management & Entrepreneurship MODULE-1
6. Minimises wastages
Management minimizes the wastages of human, waste materials and monetary resources.
Work is done through arrangement, proper manufacturing and Control. Managers motivate
subordinate to reduce wastages. Reduction in wastage's brings a higher return to firm.

7. Team work

Management always builds a team spirit in the organization. The combine effort of work and
unity lead to the prosperity within the organization. Team work plays an important part in the
success of organization.

8. Motivation

Management motivates employees by sharing their profits by the mean of bonus.

They also give a good amount of incentives to the employees. This motivation zeal the
employee to work harder, which results in higher efficiency in production.

9. Reduction in labour turnover

Management helps to reduce labor turnover in the organization. Employee turnover takes
place when some employees leave the organization, and others join in their place. Frequent
labor turnover increases selection and training cost.

Management creates a sense of responsibility among the employees who brings down labor
turnover.

10. Higher efficiency

Management always wants that his employees should produce higher efficiency. Productivity
is the relationship between returns and costs. Higher returns at minimum investment then the
organization is said to be more proficient.

11. Improves the quality of life of the workers

Management provides bonus and incentive to the employees for their work. It gives a healthy
work environment to the workers. It also provides medical and insurance faculties to worker
and their families. It provides a financial stability which helps in boosting life of the workers.

12. Cordial industrial relations

Management ensures industrial peace. It gives more importance to the ‘Human Element’ in
business. It applies positive motivation. All this improves the relations between the
employees and the employers.

13. Corporate image

Efficient and effective management maintains a good image and goodwill of organization. This is
because of quality of products and services offered by the organization and also due to the
social responsibility of organization towards society.

14. Promotes national development

Management is regarded as a key to the economic development of nation. It puts resources
to the optimum use. It leads to capital formation and tech advancement. It generates
handsome revenue for government. It increases national income and standard of living of
people. Thus, it leads to development across all sectors, and significant growth throughout
the nation.

4/21
Technological Innovation Management & Entrepreneurship MODULE-1
15. It helps society

In management, profit is not only the objective of business. Today, the managers are
combining profit objective with social purposes. They are providing society with a regular
supply of good quality goods and services at reasonable prices. They are also providing
employment opportunities to people. They in addition pay high taxes to the government. These
taxes are used for improving nations. Nowadays, managers are using part of their profits to
build hospitals, schools, colleges, etc. for civilization. So it is helping humanity in many
ways.

Conslusion: The need and importance of Management are universally accepted.

The survival progress and success of an organization greatly depend on its management.
There is a wide gap between Europe and Asia. This gap is called the ‘Science and
Technology Gap.’ Even so, in reality, it is the ‘Management Gap.’ Japan and Germany
were totally destroyed in the second world war but today these countries are highly
developed. This is because these countries are well managed.

So, management is required in all aspects of life.

FUNCTIONS OF MANAGEMENT
Though many authors have defined several functions of management, there are five
essential and well accepted functions of management. They are:
> Planning.
> Organising.
> Staffing.
> Directing (leading) and
> Controlling.
PLANNING:
Planning is an executive function that is referred to as decision making. It involves
missions and objectives and the actions to achieve them. This requires decision
making, that is, choosing future courses of action from available alternatives. This
involves the following:
> Setting short and long term goals for organization.
> Selecting objectives, strategies and policies for accomplishing the planned goals.
> Deciding in advance what to do, how to do, who has to do, when to do and
where to do.
> Planning bridges the gap from where we are now to where we want be in future.
ORGANIZING:
Organizing is a part of management that involves in establishing an intentional structure
of roles for people to fill in an organization. To organize a business well, it is required to
provide all the useful things for its proper functioning. They are raw materials, tools, capital
and personnel. The purpose of an organization structure is to help in creating an environment
for human performance. This involves in:
> Determination of activities required to achieve goals.
> Grouping these activities into department.
> Assigning such groups of activities to managers.
> Forming delegation of authority.

5/21
Technological Innovation Management & Entrepreneurship MODULE-1
> Making provisions for coordination of activities.

STAFFING:
Staffing is considered as an important function which makes provision for man power to
fill different positions. It involves in building the human organization by filling, and keep filling
the staff. This is done by identifying work- force requirements, taking inventory of people
available, recruiting new staff, selecting, placing, promoting, apprising, planning their career,
training the staff to accomplish their tasks effectively and efficiently. This involves in:
> Finding the right person for right job.
> Selecting the personnel.
> Placement, training and developing new skills required for present and future jobs.
> Creating new positions.
> Apprising the staff and planning their growth and promotions etc.

DIRECTING:
After planning, organizing and staffing, the next important function of management is
directing or leading the people towards the defined objectives. Directing involves three sub-
functions namely communication, leadership and motivation. Communication is the process of
passing information and understanding from one person to another. Leadership is the process
by which a manager guides and influences the work of his subordinates. Motivation means
arousing desire in the minds of employees of an organization to perform their best. If properly
motivated, the employees will put their best efforts with dedication, loyalty and carry out the
assigned task effectively. There are two types of motivations viz., financial and non-financial.
Financial motivations are in the form of salary, bonus, profit-sharing, rewards etc. The
common non-financial motivations are job security, promotions, recognition, praise, felicitation
etc.
CONTROLLING:
Controlling is measuring and correcting of activities of subordinates to make sure that the
work is going on as per the plans. It measures performance against goals and plans, shows
where short falls or deviations exist and takes necessary corrective actions to achieve the
goals. Controlling generally relates to the measurement of achievement. This involves three
elements.
> Establishing standards of performance.
> Measuring performance and comparing with established standards.
> Taking necessary corrective action to meet the set standards.
With accomplishment of this function, the "Management Cyele" is said to be complete.

6/21
Technological Innovation Management & Entrepreneurship MODULE-1

ROLES OF MANAGER
Manager in any organization plays variety of roles responding to a particular situation. The
three important roles played by a manager are Interpersonal roles, Decision roles and
Informational roles.
(i) Interpersonal roles: These includes figurehead, leader and liaison roles:
In figurehead role, the manager will perform some duties that are casual and informal ones
like, receiving and greeting visiting dignitaries, attending to social functions of employees,
entertaining customers by offering parties and lunches etc.
As a leader, managers motivate, direct and encourage his subordinates. He also
reconciles the needs with the goals of the organization.
In the role of liaison, the manager works like a liaison officer between top management
and the subordinate staff. He also develops contacts with outside people and collects
useful information for the well being of the organization.

(ii) Decision roles: There are four decision roles played by a manager. They are resource
provider, arbitrator, entrepreneur and negotiator.
As a resource allocator, the manager divides the work, provides required resources and
facilities to carryout the allocated work and delegates required authority among his
subordinates. He decides who has to do what and who gets what.
As a arbitrator, a manager works like a problem solver. He finds solutions of various un-
anticipated problems both within and outside the organization.
As an entrepreneur, a manager continuously looks for new ideas and tries to improve the
organization by going along with changing work environment.
He also acts as a negotiator negotiates with the employees and tries to resolve any internal
problems like trade agreements, strikes and grievances of employees.

(iii) Information roles: A manager plays as monitor, spokesman and disseminator.

A manager monitors his environment and collects information through his personal
contacts with colleagues and subordinates.
As a spokesman, he communicates the information/goals of organization to his staff, and
the progress of work to his superiors. He also communicates the performance of
company to shareholders and the rules and responsibilities to his subordinates.
As a disseminator, the manager passes some of the information directly to his subordinates and to
his bosses.

LEVELS OF MANAGEMENT
Although all managers perform almost the same functions of management - planning,
organizing, directing and controlling, there are levels among them. These are top
management, middle management and first line or supervisors. The top management
consists of Chairman, Directors, Company Presidents, Vice- Presidents, CEO's. These are the
people who make policies for the company, set goals and targets. They should possess
conceptual and design skills.
Middle management is essentially a vast and diverse group that include finance manager,
sales manager, marketing manager, personnel manager, departmental heads etc.
The lower level managers are the supervisors and foremen. They are basically one step
above the workers

The various levels and skilled required at different management levels are shown below.

7/21
Technological Innovation Management & Entrepreneurship MODULE-1

MANAGERIAL SKILLS
To be a successful manager, you’ll have to master a number of skills. To get an entry-
level position, you’ll have to be technically competent at the tasks you’re asked to perform.
To advance, you’ll need to develop strong interpersonal and conceptual skills. The relative
importance of different skills varies from job to job and organization to organization, but to
some extent, you’ll need them all to forge a managerial career. Throughout your career, you’ll
also be expected to communicate ideas clearly, use your time efficiently, and reach sound
decisions.
Technical Skills

You’ll probably be hired for your first job based on your technical skills—the ones you need to
perform specific tasks—and you’ll use them extensively during your early career. If your college
major is accounting, you’ll use what you’ve learned to prepare financial statements. If you have
a marketing degree and you join an ad agency, you’ll use what you know about promotion to
prepare ad campaigns. Technical skills will come in handy when you move up to a first-line
managerial job and oversee the task performance of subordinates. Technical skills, though
developed through job training and work experience, are generally acquired during the
course of your formal education.

Interpersonal Skills

As you move up the corporate ladder, you’ll find that you can’t do everything yourself:
you’ll have to rely on other people to help you achieve the goals for which you’re
responsible. That’s why interpersonal skills—the ability to get along with and motivate other
people—are critical for managers in mid- level positions. These managers play a pivotal role
because they report to top- level managers while overseeing the activities of first-line managers.
Thus, they need strong working relationships with individuals at all levels and in all areas. More
than most other managers, they must use “people skills” to foster teamwork, build trust,
manage conflict, and encourage improvement.

Conceptual Skills

Managers at the top, who are responsible for deciding what’s good for the organization from
the broadest perspective, rely on conceptual skills—the ability to reason abstractly and
analyze complex situations. Senior executives are often called on to “think outside the box”—to
arrive at creative solutions to complex, sometimes ambiguous problems. They need both strong

analytical abilities and strong creative talents.

Communication Skills

8/21
Technological Innovation Management & Entrepreneurship MODULE-1
Effective communication skills are crucial to just about everyone. At all levels of an
organization, you’ll often be judged on your ability to communicate, both orally and in writing.
Whether you’re talking informally or making a formal presentation, you must express yourself
clearly and briefly. Talking too loudly, confused, and using poor grammar reduce your ability
to influence others, as does poor written communication. Confusing and error-riddled
documents, and they will reflect poorly on you.

Time-Management Skills

Managers face multiple demands on their time, and their days are usually filled with
interruptions. Ironically, some technologies that were supposed to save time, such as
voicemail and e-mail, have actually increased workloads. Unless you develop certain time-
management skills, you risk reaching the end of the day feeling that you’ve worked a lot but
accomplished little. What can managers do to ease the burden? Here are a few common-
sense suggestions:

Decision-Making Skills

Every manager is expected to make decisions, whether alone or as part of a team.

Drawing on your decision-making skills is often a process in which you must define a
problem, analyze possible solutions, and select the best outcome

MANAGEMENT AND ADMINISTRATION

There is lack of concurrence among management writers over the meaning and use of
the words management and administration.
One group of management writers feels that administration involves "thinking". It is a
top level function that centers around the preparation of plans, rules, policies and objectives
of an organization. Where as management involves "doing" and is a lower level function,
concerning with execution and direction of policies and operations. Hence, administration is
more important at lower levels.
Another group of management writers feels management as comprehensive general term that
includes administration. Management is regarded as comprehensive general function covering
entire process of planning, organizing, directing and controlling. Administration is regarded as a
branch of management that comprises of two functions - planning and controlling. According to
them, the function of management is divided into two categories - the upper level management
usually called as administrative management and the lower level management which is termed
as operative management.
According to Peter Drucker, the basic difference between management and
administration lies in use of these terms in different fields. According to him, managing of
business enterprises is called management and managing non business organizations is
called administration. Hence financial performance plays key role in management. But in
managing non business organizations
like educational institutions, government offices, military etc., administration is more priority
than financial decisions.
Administration is the function in industry concerned with determination of the corporate policy,
the coordination of finance, production and distribution, the settlement of compass of the
organization under the ultimate control of the executives".
"Management is the function in industry concerned with the execution of polity within the limits setup
by the administration and the employment of the organization for the particular objects set before it".
(Oliver Sheldon)
"Administration is primarily the process and the agency used to establish the object or
9/21
purpose which an undertaking and its staff are to achieve, secondarily, administration has to plan
Technological Innovation Management & Entrepreneurship MODULE-1
and stabilize the broad lines of principles which will govern action. These broad lines are in turn
called policies. Management is the process and the agency through which the execution of policy
is planned and supervised". (G.E. Milward)
"Administration is that phase of business enterprise that concerns with overall
determination of institutional objectives and the policies necessary to be followed in achieving
those objectives. Administration predetermines the specific goals and lays down the broad
areas within which those goals are to be attained. Administration is a determinative function,
management on the other hand is an executive function - which is primarily concerned with the
carrying out of the broad policies laid down by the administration. (William R. Spriegal)
Thus administration is a "thinking" function and management is a "doing" function.
According this concept, managers get salary and administration staff get dividends.

Administration determines the policies upon which the enterprise is to be conducted while
the function of management is to carry out the policies that are laid down by the
administrative group.

The differences between administration and management are listed below:

Characteristic Administration Management
1. Main functions Planning, Organizing Leading, motivating and
and Staffing controlling.
2. Status Acts as owner Acts as an agency
3. Skills Requires good Requires more technical
administrative skills skills.
4. Level in the Top level Lower level
organization
5. Position Managing Director, Managers, Supervisors,
Owner, CEO, etc., Foremen etc.,
6. Objectives Makes the policies, Implements the plans and
objectives and goals to be policies
achieved.
7. Involvement No direct involvement Directly involves in the
in production or services execution of plans
and achieving goals.

MANAGEMENT AS A SCIENCE, ART OR PROFESSION

Managing, like any other practice - whether medicine, music composition, engineering,
accounting or even cricket - is an art. It is a know-how. It is doing things in the light of the
realities of a situation. Under 'art' one normally learns the "how" of a phenomenon. It is the
art of getting things done through others in dynamic and mostly non-repetitive situations.
Science is an organized knowledge. A discipline can be called scientific if its methods of
inquiry are systematic and practical, information can be accumulated and analysed and
results are commutative and communicable. The essential feature of any science is the
application of scientific methods to the development of knowledge. Being systematic means
being orderly and unbiased. All the scientific information collected first as raw data is finally
arranged in order and analysed with the help of statistical tools. Science is also cumulative in that
what is discovered is added to that which has been found before. We learn from past
mistakes and go in right direction in future. On the basis of the above discussions of
science, it can be accepted that management is also a science.

It is seen that management is partly an art and partly a science. Management

10/21
Technological Innovation Management & Entrepreneurship MODULE-1
does not possess the characteristics of a profession. A profession is expected to have
organized and systematic knowledge, formalized methods of acquiring training and
experience, ethical code to regulate the behavior of the members of the profession, charging
of fees based on service etc. Unlike medicine and law, the management does not have
any fixed norms of managerial behavior. There is no uniform code of conduct or licensing of
managers. Lawyers and doctors take up profession after obtaining a valid academic
qualification where as a manager job is not restricted to individuals with a special academic
degree only. Based on this, it can be concluded that management is not a profession. However,
the present trend is towards the professionalisation of management.
Nowadays, it has become essential to acquire management degrees or training in
management to be called as good manager. There is increased demand for qualified
managers with M.B.A degree after graduation. This gave scope for establishment of large
number of business schools in India. Managing a business is no longer just a matter of a
family or institution. In this contest, one should remember Peter Drucker's opinion on
management. "A degree in management does not by itself make an individual a professional
manager any more than does a degree in philosophy make an individual a philosopher". By
insisting on holding a degree, we are over emphasizing knowledge and completely over
looking skill. This leads to loosing of good and skilled managers who do not have required
degree. There have been good examples of efficient managers without any professional
managerial degree. Some of them are, Ford of Ford Motors, Bill Gates of Microsoft,
Jemshedji Tata, Birla, Dhiru Bhai Ambani of Reliance group etc.
But nowadays, management has become a profession than art or science.
---------------------------------------------------------------------------------------------
REVIEW QUESTIONS
1. Define Management. List and explain the functions of Management?
2. What are nature and characteristics of Management?
3. Explain the scope of Management?
4. Differentiate between administration and management?
5. Write about roles of management?
6. What are different levels of management? Explain them?
7. Is management a science, art or profession? Explain.
8. Explain top Management. What are its roles and functions?
9. Discuss in brief the nature of management.
10. Explain early management approaches.
11. Explain the modern management approaches.
12. Explain briefly the contingency approach of management.
13. What are the objectives of scientific management?

11/21
Technological Innovation Management & Entrepreneurship MODULE-1
MODULE – 1b

PLANNING

NATURE OF PLANNING
Planning is the most basic function of management. It is referred to as "deciding in advance"
as to what to do, how to do, when to do and who has to do it etc. It is an intellectual process,
which requires a manager to think before acting. It is nothing but thinking in advance. As
regarded by Koontz and O'Donnell, planning is a continuous process. A manager should
continuously watch the progress of the plans like a navigator who constantly checks where his
ship is going in the vast ocean. Planning involves selection of objectives and goals and
determines the ways and means of achieving them. Thus planning bridges the gap from where
we are to where we want to be. A plan is to be rigid in the sense that it should not be modified or
altered under the influence of local disturbances. A plan should be flexible to change to adapt to
the changing situating without undue cost. This calls for flexibility in the areas like technology,
market, finance, personnel and organization. Planning is vital at all levels of an organization. Top
level managers are concerned with long range planning involving 2 to 5 years, middle level
managers are concerned with medium range planning involving few months to one year and
lower level managers are concerned with planning the activities of daily or week or up to a
month, where as a worker plans his day's work.
Nature of planning indicates essential quality or general characteristics of planning. Any
planning involves four essential qualities:
(i) It must contribute to accomplish purpose and objectives.
(ii) It must be considered as parent exercise in all processes.
(iii) It must spread through all management functions and
(iv) It must be efficient in such a manner so as to achieve the designed goals at the
least cost.
Planning is non-static and is basically a discrete exercise. It is dynamic in nature. It is a
blue print to which the accomplishment must confirm.

IMPORTANCE OF PLANNING
Without planning, business decisions would become difficult. Planning is the beginning of all other
functions of management. Planning is important because:
(i) It overcomes uncertainty and change and minimizes risk.
(ii) It facilitates effective control.
(iii) It focuses attention and concentration only on the objectives of
enterprise.
(iv) It makes economic operation and leads to success.
(v) It forms the bridge between the present and the future.

(i) Uncertainty and minimize risk

In the today's complex organizations, decision making cannot be relied only upon
intuition, planning plays a vital role in decision making in such complex situations. Planning
provides logical facts and procedure to managers for making decisions. This logical decision
making based on plans to organization minimizes uncertainty and risk. In

12/20
Technological Innovation Management & Entrepreneurship MODULE-1
a developing country like India, with rapidly changing social and economic conditions,
planning helps the managers to cope up with uncertainty and risk.

(ii) 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.
helps the manager to
Focuses attention and concentration on the objectives of the enterprise Planning
focus their attention on the goals and activities of organization. This makes the entire
organization to walk towards the goals and create coordination in accomplishing the goals.

(iii) Economic operation and leads to success

Mere planning does not ensure success, but planning leads to success. This is because
if the work is planned in advance, there will be no confusions arising and things will happen
as per plan and achieve goals. This results in economical operation and reduces uncoated
expenditure.

(iv) Bridge between present and future

Plans bridge gap between present and future. There is a vast gap between what we are today
and what we want to be in future. A proper and systematic plan forms the bridge between these
two. Without plans, it is very difficult to accomplish goals. Hence planning is very important for
success of any organization.

TYPES OF PLANS
Based on nature of planning, the planning is classified as strategic planning (long range
planning) and tactical planning (short range planning). The strategic plans are done at top
level of management and are generally long term plans, where as tactical plans and done at
lower levels and are of short term in nature.

The differences between strategic and tactical planning are given below.
Strategic planning Tactical planning
1. It is long term. 1 It is short term.
.
2. Done at top management. 2. Done at lower levels of
management.
3. It consists of major goals and
3. It consists of use of facilities
policies of an organization and
resources and facilities to resources.
accomplish the goals.

4. It is less detailed, focuses only 4. It is more detailed since it caters

on long term goals. today-to-day operations
and activities of the
organization.
5. performance and
5. It is based on long term goals. It is based on
and is more uncertain. less uncertain.

For example, Tatas idea of marketing a car at a price of Rs. 1 lakh is a strategic
plan. How to make that, what resources are required, how and where to manufacture,

13/20
Technological Innovation Management & Entrepreneurship MODULE-1
how to assemble, etc., are tactical plans.
Based on their use, plans are classified as single use plans and standing plans. Single
use plans are developed to achieve a specific end. After reaching that target, that plan
becomes useless. On the other hand, standing plans are designed for situations that often
repeat. These plans can be used again and again.

Standing plans:
These are the policies, procedures, rules and methods of any organization.
(i) Policies:
As defined by Terry, "Policy is a verbal, written or implied overall guide, setting up
boundaries that supply the general limits and direction in which managerial action will take
place". Thus a policy is a general guideline for decision-making. They deal with "how to do" the
work. They only provide a framework within which decisions must be made by the management
in different areas of organization. There are several policies in different functions of any
organization like personal policy, promotion policy, marketing policy, purchase policy, pricing
policy, training policy, recruitment policy, distribution policy, payment policy, wages and
incentives policy etc.
The policies are classified on the basis of sources like original policies, appealed policies,
implied policies and externally imposed policies, or are classified on the basis of functions like
personnel policy, promotion policy, pricing policy, distribution policy, investment policy etc., or may
be on the basis of level of organization like: top level policy, departmental policy, shop level
policy etc.

(ii) Procedures:
Procedures are the detailed guidelines that are used to carry out the policies. A procedure
provides a detailed set of instructions for performing a sequence of actions involved in doing a
certain piece of work. Procedures are to be followed every time when that activity is performed.
Procedures may also exist for conducting meetings of board of directors, shareholders, issuing
raw materials from stores, packaging of finished goods, inspection etc.

The difference between policy and procedures are given below:

Policy Procedure
1. General guidelines of the 1. General guidelines at the action
organization. level.
2. Top level activity. 2. Departmental activity.
3. Policies fulfill the objectives of 3. Procedures guide the way to
an organization. implement the policies.
4. Policies are often made 4. Procedures are always made
without after
any study or analysis. thorough study and analysis of
work.

(iii) Rules:
Rules are detailed and recorded instructions that a specific action must or must not be
done under the given instructions. Reporting time to office, lunch time, availing of leaves,
use of LTC facility etc., are some of the examples that follow rules. A rule is different from
a policy or procedure.

14/20
Technological Innovation Management & Entrepreneurship MODULE-1
Since it does not give a guide to thinking, it is not a policy. Since it is not a sequential
procedure hence it is not a procedure.

(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. A procedure has a number of steps, each step may have
number of methods to do it. Methods help in increasing the effectiveness of a procedure.

STEPS IN PLANNING AND PLANNING PREMISES

The main steps involved in planning are as follows:
1. Being aware of opportunities: This is very first step and starting point for planning. Once
we are aware of opportunities, we can think of setting realistic objectives.
2. Establishing objectives: It is very important to establish objectives for the entire enterprise
and the objectives for each subordinate work units. That is, the major objectives are
broken down into departmental and individual objectives. It is a very crucial step in
planning.
3. Developing planning premises: The third step in planning is to establish planning
premises. It is the process of creating assumptions about the future on the basis of
which the plan will be ultimately formulated. Planning premises are important for the
success of planning as they reveal facts and information relating to the future such as
economic conditions, production costs competition, availability of material, resources
and capital, government policies, population trends etc. This tells about which plan is to
be carried out. There three types of planning premises:
(i) Internal and external premises: Internal premises are premises within the
organization. Some of the examples are: policies, forecasts, investment, availability
of equipment, capability of work force, funds flow etc. External premises are
premises outside the organization. They include: Government policies,
technological changes, business environment, economic conditions, population,
buying power, political stability, sociological factors, demand etc.
(ii) Tangible and intangible premises: Tangible premises are the measurable premises. For
example, population, investment, demand etc., are tangible premises. Intangible
premises are those which cannot be quantitatively measurable. Examples of this are:
business environment, economic conditions, technological change etc.
(iii) Controllable and uncontrollable premises: Some of the premises are controllable like,
technical man power, input technology, machinery, financial investment etc. Some other
premises like, strikes, non-availability of raw material, change in government policies,
socioeconomic changes, phase-shift in technology, wars etc., are uncontrollable by the
organization.
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 of action:

Once the alternatives are found, then the next step is to evaluate them 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., keeping in mind the goals and objectives.
6. Formulating derivative plan: In order to complete the task, the selected plan must be
15/20
Technological Innovation Management & Entrepreneurship MODULE-1
translated into programs, working plans and financial requirements in the sub-units. These
sub-derived plans from main plan are termed as derivative plans.
7. Monitoring and controlling the plan: This is the last step in planning. 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.

HIERARCHY OF PLANS(STEPS)
The plans are generally arranged in a hierarchy within any organization. It starts at the top
with objectives and goals of an organization. The second level is strategies. As discussed
earlier, there are two types of strategies namely single use plans and standing plans. The third
level is action plans. The hierarchy of plans is shown bel

The top management sets the goals and objectives. These occupy the top priority. The goals or
objectives include long-term plans and strategies of an organization. For example, a company
aims to improve their production by 20% during next 2 years. Such objectives are very broad
ideas and are achieved by strategies. Strategies are carried out by means of two types of plans
known as single-use-plans and standing plans. Single use plans are developed to achieve a
specific goal after reaching the goal, the plan is dissolved. Examples of single use plans are
budgets, construction of a bridge, dam or a shopping complex etc. Whereas standing plans are
developed for projects that happen again and again. Admission procedure in a college,
overhauling procedure of an aircraft, recruitment procedure of an organization etc., are some of
the examples of standing plans. Action plans are the plans executed by the lower level
organization. These are routine plans executed by the foreman and supervisors of the shop.

LIMITATIONS OF PLANNING

16/20
Technological Innovation Management & Entrepreneurship MODULE-1
1. Time Consuming

Planning involves the collection of data, analysis of data, forecasting, etc. All this consumes a lot of
precious time. Therefore, planning is a time-consuming activity.

2. Costly
Planning is the work of experts. They get paid very high salaries to make good plans. Companies
spend an enormous amount of money in collecting and analysing data. Therefore, planning is a
costly affair.

3. Rigid

Most plans are very rigid. They don't change as per the changing environment. They neither get
revised nor modified. The non-flexibility of plans creates many problems for the organisation.

4. Gap between Plans and Achievement

The workers do not make any plans. The managers make plans. The workers only execute these plans.
So the workers are not entirely interested in achieving these plans. Therefore, there is a gap between
plans and achievement.

5. Problem for Technical Staff

The technical or creative staff do not like planning. They feel it is only paperwork. It is so, since, it limits
their creativity.

6. Resistance to Change

Planning brings many changes in the organisation. However, people do not like changes. So, they do
not give full cooperation. Without their cooperation, the plans cannot succeed.

7. Paperwork

Planning requires a lot of paperwork. The plans are made and again remade. Copies of finalised plans
are given to the top management and subordinates. Thereis also a need to prepare many reports.

8. Causes Frustration

Sometimes managers fail to achieve the planned targets despite putting their best efforts. This failure can
frustrate them and lower their level of motivation. It can cause the managers to lose their initiative.
9. Dangers of Over-Targeting

Some managers do over-targeting. That is, they fix very high targets that are almost impossible to
achieve. Such over expectations cause many problems.

10. Dangers of Under-Targeting

Some managers do under-targeting. That is, they fix lower targets that are easy to achieve. Such under
expectations hinders the growth and performance of the organization. The under targeting happens in
the government institutions.

11. Danger of Human Error

Plans depend on forecasts. Forecasting requires a lot of experience and judgement.If the manager has
less experience and is poor in judgement, then the predictions will be wrong. If the forecasts are wrong,

17/20
Technological Innovation Management & Entrepreneurship MODULE-1
it is obvious that the plans will fail. Evenexperienced managers make errors while forecasting and
planning. So, there is a danger of human error.

12. Inter-Departmental Rivalries

Planning requires coordination and cooperation of all the departments. If there exist any inter-
departmental rivalries and disputes, then the plans will fail. For example, Production Department wants to
produce Product A, but the Marketing Department insists on selling Product B

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, how to demand who has
to do. Hence decision-making is an integral part of planning. It is defined as "the process of
choosing among alternatives". Decision-making occurs at many stages of planning process.
Decision-making and choosing the best alternative is probably the most important activity of the
planning process.
Decision-making is part of all the functions of the management. In planning, through
decision-making, objectives and goals are prepared. In organizing, the managers decide upon
the choice of structure, type of organization, work allocation, delegation of authority and
responsibility etc. In directing, managers decide the course of action, the instructions to be given,
providing directions etc. In controlling the managers decide on fixing the standards, how to
control, what to control etc.

Types Of Decisions
Decisions are classified as follows:
(i) Pragmatic and non-pragmatic decisions
(ii) Individual and collective decisions
(iii) Minor and major decisions
(iv) Strategic and routine decisions
(v) Simple and complex decisions
(vi) Temporary (Adhoc) and permanent decisions etc.

(i) Pragmatic decisions are those decisions taken within the purview of the policies, rules or
procedures. These are also called programmed or routine decisions or structured decisions.
These types of decisions are taken frequently and are repetitive in nature. Sanctioning an hour's
permission, placing purchase order etc., are some examples of pragmatic decisions.
Non-pragmatic decisions are otherwise called as strategic decisions or non programmed decisions
or policy decisions. These decisions involve heavy expenditure and are generally taken by top
management.
(ii) Individual and collective decisions:
Decisions may be taken by an individual or a group of individuals. If the decisions are taken by single
person, they are called individual decisions and if taken by a committee or group of people, than they
are called collective decisions. Individual decisions are taken where the problem is of routine nature,
and definite rules and procedures exist. Inter departmental decisions and important strategic
decisions are generally taken by a group. Group decision-making has advantages like increased
acceptance, better communication and better co-ordination. It has some disadvantages also like,
delay in arriving at decision, groups may be indecisive, and groups may compromise or dominate. To
utilize the advantages of group decisions and avoid its disadvantages, two new techniques are
18/20
Technological Innovation Management & Entrepreneurship MODULE-1
proposed known as 'Nominal group techniques' and Delphi Techniques.
nominal group technique, the members independently generate their idea and give in writing. The
ideas are summarised and discussed for clarity and evaluation. Finally each member silently gives his
rating and opinion about each idea through voting system. The one with maximum vote is selected
as the group's decision.
Delphi technique, persons who are physically dispersed and anonymous to one another are asked
to send their opinion on a topic through mail. A carefully designed questionnaire is circulated for this
purpose. The responses are summarized into a feedback report and sent back to them with a
second questionnaire. A final summary is developed on the basis of replies received second time.
(iii) Minor and major decisions: Minor decisions are those decisions related to day-to-day and periodical
occurrences. Purchase of stationary, granting leave and permissions etc., are some examples of
minor decisions. Major decisions are those decisions generally taken by top management LIKE
purchasing new machinery, employing new technology, hiring new people etc
(iv) Strategic and routine decisions: Strategic decisions are similar to major decisions and are
generally taken by top management. Some examples are price increase/discount, change in product
range etc. Routine decisions are decisions related to day-to-day operations of an organization that
are routine in nature.
(v) Simple and complex decisions: A simple decision is one that is related to a problem with
few number of variables. When there are many variables, the decisions making will be
complex.
(vi) Temporary and permanent decisions: Some decisions are to be taken depending on
situation till the solution is found. A decision is taken to meet an unexpected solutions are
temporary in nature. These are generally taken by shop managers. Permanent decisions are
taken on a permanent basis.
STEPS IN DECISION MAKING:

(i) Recognition of problem:

The first step in decision-making is the problem recognition. A problem may exist either due to a
deviation from the past experience, a deviation from the plan, people bringing problems to the
manager or problems arising from competition.
(ii) Deciding priorities among problem:
The manager should identify the problems which he can solve, the problems which he feels that
his subordinates can solve and the problems which are to be referred to the higher officers. With this
decision, the manager is left with very few problems to solve.

19/20
Technological Innovation Management & Entrepreneurship MODULE-1

(iv) Problem diagnosis:

Correct diagnosis of the problem is very important for any manager. Managers should follow
systems approach in diagnosing a problem. He should make a thorough study of all the sides of a problem
coupled with organization before arriving at solution. If the diagnosis is made correctly, then finding
solution becomes easy.

(iv) Development of alternate solutions:

After having diagnosed the problem, the next step is to find alternate solutions. For every problem
there will be some alternate solutions. It is very rare that there is a problem with only unique solution.
Alternatives do exist. Sometimes, in the absence of past history of alternate solutions, the manager
has to depend only on his own ability in finding alternatives.

(v) Studying and comparing the affect of alternatives:

The alternative solutions are measured and compared for their consequences. This involves a
comparison of the quality and acceptability of these alternatives.

(vi) Implementation of the decision into action:

The next step is to convert the decision into action. This requires the communications of the
decisions to the concerned employees in clear and simple terms. If there is any opposition or non-
acceptance from the employees, steps should be taken to convince them to accept the same.

(vii) Study of result:

After having implementing the decision, the manager has to carry out the follow up action. If the
result is not satisfactory, the manager has to take necessary corrective action or modify his decision.

During the process of decision-making, the managers face many difficulties. Some of them
are:
1. Incomplete information 2.Non-conducive environment 3.Opposition by subordinates
4. Improper communication 5. Wrong timing 6.Statutory regulations
7. Government policies 8.External influence 9.Lack of support.
-------------------------------------------------------------------------------------------------------------------------------------------
REVIEW QUESTIONS
1. What is planning? Explain the steps involved in planning.
2. State and explain importance and purpose of planning process.
3. What are the objectives of planning? Explain.
4. Briefly explain the types of planning.
6. What is nature and purpose of planning?
7. Differentiate between strategic and tactical planning.
8. Explain process of decision-making.
9. State and explain the steps in decision-making.
10. Explain the difficulties faced by manager in decision-making process.
11. What are planning premises?
12. Explain hierarchy of plans.
13. What are different decisions taken by a manager?

20/20