UNIT II FUNCTIONS OF MANAGEMENT

Planning – Nature and Purpose – Objectives – Strategies – Policies

and Planning Premises – Decision Making – Organizing – Nature
and Process – Premises – Departmentalization – Line and staff –
Decentralization – Organizational culture, Staffing - selection and
training – Placement – Performance appraisal – Career Strategy –
Organizational Development. Managing human factor –Controlling
- Process of Controlling – Controlling techniques, productivity and
operations management – Preventive control, Industrial Safety.
PLANNING
 Functions of management

• we are already aware that

management consists of five
important functions such as
planning, organizing, staffing,
leading(directing), controlling.

• Planning is one of the major

functions of management.

Among this planning and

controlling are inter related and
almost integrated.
• Planning is looking a head where
as controlling is looking behind.
 Contents
• Planning- Definition and Importance
• Features of a good plan
• Hierarchy of plans
• Steps in planning
• Advantages
• Limitations
• Types of plans
 Planning

Planning is crystallizing the objectives, collecting and

synthesizing business information, develop alternative

courses of action, compare alternatives in terms of

business objectives, feasibility and consequences.

It also involves establishing business policies, procedures,

methods, schedules, programs, systems, standards and

budgets.
 Planning-the concept
• Plan is a commitment to a particular course of action
necessary to achieve specific results
• Planning is determination of future course of action
• It occupies the first position in the management process
• Without a plan
1. There can be nothing to organise,
2. Managers can’t lead with confidence
3. No way to see the path of achieving objectives
• Planning is deciding in the present, what to do in the future.
• It is a process by where companies accomadate their resources with their
objectives and opportunities
- Philip Kotler

A goal without a plan is just a wish.

 Features of Planning
• Process rather than just a behaviour- decides future course of
action
• Needs forecasting
• Involves selection of suitable course of action
• Undertaken at all levels of management- role increases at
• higher levels
• Flexible principle- since it is based on future, which is dynamic
• A continuous management function- involves perception,
analysis, communication, decision and action

A good plan, violently executed now,

Is better than a perfect plan next week.
 Features of a good plan
• Linked to long term objectives
• Provide clear and specific direction (for future course of
action)
• Consistency- Alignment with the behaviour of external and
internal factors
• Feasible- Not too ambitious, not set too low
• Simplicity- to understand by all, encourages least
• communication between 2 groups of personnel
• Flexible

Plans are only good intentions unless they immediately

degenerate into hard work.
Hierarchy of plans
• Koontz-planning involves selecting missions and
objectives and the actions to achieve them.
• It ends with decision-making.
• Hierarchy of plans involves planning areas,
types of planning or to be precise the level of
planning.
• They are classified as purpose of mission,
objectives, strategies, policies (major and minor
policies), procedures and rules, programs,
budgets.
• Policies are plans in that they are general statements or understandings that
guide or channel the thinking of managers in decision making.
• Procedures are plans that establish a required method of handling future
activities. They are guides to actions rather than to thinking. They are
chronological sequences of required actions.
• Rules spell out and insist specified action or non action allowing no
discretion. They are the simplest types of planning. Eg: No Smoking
• Programs are a set of clear instructions in a logical sequence to perform a
particular task.
 Types of plans
• Short term plans
• Medium term plans
• Long term plans
• Formal and Informal plans
• Specific and Routine plans
• Strategic planning
• Functional plans
• Operational plans

It is a bad plan that admits of no modification.

 Purposes or missions

• Purpose of Mission: This is the basic function of an

organization.
• Missions of companies:

• Mission involves the overall big picture an organization can

aim.

Happy people plan -actions, they don't plan results.

 Objectives
• They are the ends towards which activity is aimed.

• They not only represent the end point of planning.

• Objectives: Objectives are little farther away goals and they

are the ends towards which every activity is aimed.
Objectives are of two types. a) verifiable objective and b) non
verifiable objective.

To be prepared is half the victory

 Strategies
• A strategy is a plan of action designed to achieve a
particular goal.
• Before some years military people alone use the word
strategy.
• But now managers should follow some strategy in this
competitive world.
• Strategies – Organisation or SWOT and PEST analysis

• P-Political, E-Economical S-Social, T-technical

He who fails to plan, plans to fail

 Policies
• Policies are plans in that they are general statements or
understandings that guide or channel the thinking of
managers in decision making.
• All companies have certain policies which help to decide
issues before becoming problem.

A good plan today is better than a perfect plan tomorrow

 Types of Business Policies are
• Short Term and long Term.
• Production policy.
• Marketing policy.
• Financial policy.
• HR policy.
• Recruitment policy.
• Man power planning policy.
• Explicit planning policy : TCS not recruiting part
time/correspondence.
• Implied planning policy.
• Planning is Looking ahead whereas controlling is Looking Behind.
 Procedures
• Procedures are plans that establish a required method of handling future activities.
They are guides to actions rather than to thinking.
• They are chronological sequences of required actions.
• In a manufacturing company there is a procedure to handle orders.
• Relationship between policy and procedure.

Unless commitment is made, there are only promises

and hopes, but no plans.
 Rules
• Rules spell out and insist specified action or non action
allowing no discretion.
• People confuse rules with procedures and policies.

• They are the simplest types of planning.

– No Smoking

– Don’t use cell phone inside

Plan always ahead

 Programs
• Programs are a set of clear instructions in a logical sequence
to perform a particular task.
• Programs are complex of goals policies and other
elements require to carry out a given course of action.
• A primary program may call for many supporting
programs.

Let our advance worrying become advance thinking and planning

 Budgets
• Budget is a statement of expected results expressed in
numerical terms.
• Types of budgets

1.Variable budget

2.Program budget

3. Zero based budget

Planning is bringing the future into the present

so that you can do something about it now
Steps in planning

Life is what happens to you while you're busy making other plans
 Advantages
• Quick achievement of objectives

• Unity in purpose and direction

• Optimum utilization of resources

• Increases efficiency of managers

• Assists in controlling organizational activities/functions

• Reduces chances of inconsistency

• Reduces wrong decision making

To accomplish great things, we must not only act,

but also dream; not only plan, but also believe.
 Limitations

• Time consuming and costly

• Change in situation makes planning ineffective

• Internal inflexibility-Psychological, Policy, capital

• External inflexibilities- Political Climate, Trade Unions,

• Technological changes

In preparing for battle I have always found that plans are useless,
but planning is indispensable.
 Summary
• Planning involves selecting missions and objectives and
actions to achieve them
• Types of plans such as purpose and mission, policy,
procedure ,etc.
• Steps in planning
• Advantages and limitations

In order to plan your future wisely, it is necessary that you

understand and appreciate your past.
 Business Strategies
• Business Strategies is defined as the determination of basic long
term objections, courses of a string of actions and allocation of
resources to achieve business objectives by analysis of
environments, both internal and external.
• Analysis - SWOT (Strength, Weakness, Opportunities, Threats)

• PEST (Political, Economic, Social, Technical)

• It consists of PEST and SWOT analysis and mostly they are long
term (more than 3 yrs).
 Porter’s Three Grand Strategies
1. Overall cost Leadership Strategy.

2. Differentiation Strategy.

3. Focussed Strategy.
• Overall cost Leadership - It consists of cost cutting measures, increasing
profits and decreasing losses, cost on R&D. Cost on R&D, Sales & Service,
Cost on Ads, Merges and Acquisition
• Differentiation St: Uniqueness in product and service.
• Focused Strategy: It is a combination of overall cost in differentiation
strategies. It consists of catering to special group of customers, special
regions and special time.
 Premises - Assumptions
• Being aware of opportunities.

• Setting objectives or goals.

• Considering planning premises (assumptions Eg: type of environment)

• Identifying alternatives.

• Comparing alternatives in the light of goals sought.

• Choosing the right alternative.

• Formulating supporting of plans.

• Budgeting of plans to make it happen.

• Implementation of planned activity, evaluation & feedback

 A few assumptions made in planning
(Planning Premises)

• Selection of premises that has a bearing on programs.

• Development of alternative premises for contingency

planning.
• Verification of consistency of assumptions.

• Communication of the premises to every team member.

 Decision Making:
• Decision Making is a selection of a course of
action among alternatives and is seen as the
core of planning.
Steps in Decision Making.
• Premising (Making good assumptions).
• Identification of alternatives.
• Evaluating alternatives.
• Choosing an alternative.
 Techniques used for Decision Making
• Marginal analysis - It is comparing alternatives and choosing the
correct one.
• Selecting and alternativeone is also and important factor.

Different approaches help in selecting an alternative.

• Experience.

• Experimentation.

• Research based analysis.

• Cost Effective Analysis - It consists of making decisions based on the

cost and benefits such as BC ratios, profit and loss calculations, break
even analysis.
 Modern Approaches to Decision Making in organizations

• There are always mathematical, Statistical tools that always help avg-minded
managers to make better decisions in their workplace.
• Instead of experience & research, these tools will always supplement the
planning for better decisions. A few of them are

1) Risk Analysis: Eg Mathematical calculation such as finding our failure rate,

probability theory, operation management, FMEA (failure mode event
analysis)

2) Decision Trees and Operations Research Techniques based on economics.

3) Preference Theories : It takes into account the concept, the manager’s

willingness to take risk for e.g.: Some managers take business risk and some
may not take it in similar conditions.
 Factors that determine Decision Making

• Size of commitment by the organization.

• Certainty and uncertainty of goals.

• Flexibility or non-flexibility of plans.

• Degree to which planning variables can be measured.

• Impact on people (customers & employees)

• Personal values, organizational culture, group decision making,

creativity and innovation are other factors that influence
decision making at organizations.
• Budgeting
 Concept of Budgeting:
• Budgeting is the formulation of plans for a given
future period in numerical terms.
• As such budgets are statements of anticipated
results either in financial terms (revenue,
expenditure budgets, etc.)
• Non-financial terms (budgets of direct labour
hours, materials, physical sales volumes or units
of production)
 Types of Budgets
• Revenue and expense budget (financial)
• Time, Space, material & product budgets (Non financial)
• Capital Expenditure Budget
• Cash Budget
• Management Information systems (MIS)
• Decision Support system (DSS)

Data

Process

Info

Process

Knowledge
 Management Information System
• MIS is a system which helps managers on decision makers to make
better decisions.

• DSS is decision support system which helps managers and other

decision makers to provide them with processed information in
knowledge packets which helps them to make better decisions.

• MIS can be handled even by non technical people and not necessarily
by managers.

• However, DSS should be necessarily handled by managers themselves

because they directly get their knowledge regarding business decisions.
Thank you