MODULE 2

FUNCTIONS OF MANAGEMENT
 PLANNING
Planning is deciding in advance what to do
and how to do. 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.
Thus, planning is closely connected with
creativity and innovation.
 Importance of Planning
• Planning provides directions:
• Planning reduces the risks of uncertainty:
• Planning reduces overlapping and wasteful
activities:
• Planning promotes innovative ideas:
• Planning facilitates decision making:
• Planning establishes standards for controlling:
 Benefits of Planning
• Planning offsets future uncertainty and change
• It tackles increasing complexity in modern business
• It helps in coordination
• It helps in exercising effective control
• Best utilization of company's resources
• It helps in avoiding business failures
• Focuses attention on organizations goals
• Guides decision making
 Disadvantages
• Strict adherence to pre determined policies
• Planning is expensive
• Time consuming task
• Planning may sometime generate peoples
resistance to it.
 Types of planning :
• Standing plans
• 1. objectives
• 2. Policies
• 3. Procedures
• Single use plans
• 1. Programmes
• 2. Project
• 3. Budget
 Essentials of Good Plan

• It should define objectives

• It should be simple
• It should be clear
• It should be comprehensive
• It should be flexible
• It should be economical
• It should establish standards
• It should be balanced
PLANNING TOOLS AND TECHNIQUES

-Forecasting
- Contingency planning
- Scenarios
- Bench marking-
- Participative planning
- Use of staff planners-
 Importance of organization
• A tool to achieve objectives
• Facilitates administration and management
• Ensures optimum use of resources
• Enhances creativity
• Prevents corruption
• Fosters growth of the enterprise
• Eliminates overlapping and duplication of work
• Co ordination
 Types of Organisation and their Structure

There are two broad categories of

organisation, which are:
• 1. Formal Organisation
• 2. Informal Organisation
• Formal Organisation: Formal organisation is
that type of organisation structure where the
authority and responsibility are clearly
defined. The organisation structure has a
defined delegation of authority and roles and
responsibilities for the members.
• There are several types of formal organisation based
on their structure, which are discussed as follows:
• 1. Line Organisation
• 2. Line and Staff Organisation
• 3. Functional Organisation
• 4. Divisonal organisation
• 5. Project Organisation
• 6. Matrix Organisation
• 7 . Network organisation
 Line Organisation
  In this type of organisational structure, the
authority is well defined and it flows vertically
from the top to the hierarchy level to the
managerial level and subordinates at the
bottom and continues further to the workers
till the end.
 Line and Staff Organisation:
Line and staff organisation is an improved
version of the line organisation. In line and
staff organisation, the functional specialists
are added in line. The staff is for assisting the
line members in achieving the target
effectively.
 Functional Organisation
 Functional organisation structure is the type
of organisation where the task of managing
and directing the employees is arranged as per
the function they specialise.
 Divisional organisation structure
• The division organization structure is
organized on 4 criteria's:
• Product
• Market
• Location
• Process
Divisional organisation structure
 Project Organisation
A project organization is a temporary form of
organization structure that is formed to
manage projects for a specific period of time.
This form of organization has specialists from
different departments who are brought
together for developing a new product.
• Matrix Organisation: Matrix organisation is
the latest form of organisation that is a
combination of functional and project
organisation. In such organisations there are
two lines of authority, the functional part of
the organisation and project management
part of the organisation and they have vertical
and horizontal flow of authority
• Informal Organisation: Informal organisations
are those types of organisations which do not
have a defined hierarchy of authority and
responsibility. In such organisations, the
relationship between employees is formed
based on common interests, preferences and
prejudices.
Leading/Directing
 Definition:
According to Keith Davis, leadership is the
process of influencing and supporting others
to work enthusiastically towards achieving
objectives.
 Characteristics of leader
1.Integrity
2.Ability to delegate
3.Communication
4.Self awareness
5. Optimistic
6. Self confidence
7.Drive
8. Intelligence
9.Tolerance
10.Emotional maturity
11.Empathy
 Need /Importance
• Initiates action
• Effective utilisation of resources
• Motivation
• Helps to achieve organisational objectives
• Responding to change
• Organisational stability
• Maintaining integrity
 Leadership Styles
• Laissez-faire (abdicratic) leadership The laissez-fair approach
to leadership is the idea that the participants should be able
to work problems out and make their way through an
expedition without too much extra guidance. These kinds of
leaders would provide very little guidance when dealing with
group issues on the expedition and would allow group
members to come up with decisions on their own. The
abdicratic leader would take an extremely “hands-off”
approach to leading in order to encourage group problem-
solving and critical thinking, without allowing participants to
depend on the leader for the final word
 Autocratic leadership

• This is defined by a top-down approach when it comes to all

decision-making, procedures and policies within an
organisation. An Autocratic Leader focuses less on collecting
input from team members and tends to make executive
decisions that others are expected to follow.
• The phrase most illustrative of an Autocratic Leadership
style is “Do as I say”. This command-and-control approach is
used less and less in organisations today, however, it may be
appropriate in certain situations. You might use an
Autocratic Leadership style when crucial decisions need to
be made as a matter of urgency and there’s no time to wait.
 Democratic leadership

• This is the most participative leadership style. A Democratic Leadership

style gets people to do what you want to be done but in a way that they
want to do it. It motivates individuals by empowering them to take a full
part in the decision-making process. Ideas and suggestions can be
brought forward by any team member, and the Democratic Leader
facilitates and asks questions until there is consensus in decision-making.
• The Democratic Leader is still the one making the final decision or
approving the decision of the team. The phrase most illustrative of a
Democratic Leadership style is “All for one and one for all”. An example
of when this leadership style is most effective is when you want to
generate trust and promote team spirit and cooperation from
individuals, such as when reviewing and improving business processes
and gaining “buy-in” for change.
 Coaching leadership

• A Coaching Leader gives people direction to help them

develop and utilise their abilities to achieve their full
potential. They are focused on bringing out the best in
their teams by guiding them through obstacles to achieve
their goals.
• Coaching Leadership depends heavily on the leader’s
ability to direct and support. They will give directions to
help team members develop their skills, and this takes
time and excellent communication skills to provide
constructive feedback on the individual’s performance,
which is a core part of Coaching Leadership.
 Pacesetting leadership

• Pacesetting Leadership focuses on performance and

achieving goals. Leaders expect excellence from
themselves and their teams, and will often jump in to
make sure that goals are met.
• Whilst the pacesetter style of leadership is effective in
getting things done and driving for results, it is an
approach that can cause stress to the leader and team
members in the long run working under this kind of
pressure. Pacesetters set the bar high and push their
team members to run hard and fast to the finish line.
 Major theories of leadership
•  Great Man Theory of Leadership: Leaders are born, not made
• The great man theory is one of the earliest ways to look at leadership. It states that
some people are born with the traits of a leader; they have the gift of unique qualities.
These attributes separate them from the masses and make them reach the position of
power and authority. For example, people like Mahatma Gandhi, Abraham Lincoln,
Joseph Stalin did not receive leadership training. However, they took on leadership
roles and captured the imagination of the masses. These leaders had an unexplained
tenacity to rise to the top when a lot of similar people were experiencing almost
identical circumstances.
• However, Herbert Spencer, a noted philosopher, was not in favor of this theory. He
said, leaders are the result of their conditions; before they alter society, society has to
make them.
• For instance, people like Mahatma Gandhi, who were not trained in leadership but
became great leaders, had leadership styles that were an extension of their personal
experiences and life story.
 Trait Theory of Leadership: Measure your leadership potential

• The theory states that the comparison of your

leadership characteristics to the list of the
traits of many successful and unsuccessful
leaders can be used to predict your leadership
effectiveness.
• The following figure gives us a list of a few
traits of great leaders:
 Contingency Theory of Leadership: Match your leadership style to the situation

• Contingency theory, developed by Fred Fielder

in 1958, assumes that leaders are either task-
oriented or relationship-oriented. Task-
oriented leaders assign tasks, set deadlines,
and follow structural processes. Relationship-
oriented leaders focus on people and are
considerate.
 Managerial Grid Theory
• Robert Blake and Jane Mouton(1960)
proposed a graphic portrayal of leadership
styles which depicts two dimensions of leader
behaviour
Transformation leadership style
 Transactional leadership style
4 dimensions:
• 1.contingent rewards
• 2.Active management by exception
• 3.Passive management by exception
• 4.Laissez Faire
 Controlling
• Controlling is the measurement and correction
of performance in order to make sure that
enterprise objectives and the plans devised to
attain them are accomplished
-koontz and O Donnell
 Steps in control process
• Establish objectives & standards
• Measure actual performance
• Comparing actual performance against
established standards
• Corrective actions
 Types of control
• On the basis of time
• 1.Feed forward control
• 2. concurrent Control
• 3. Feedback Control
• On the basis of designing control systems
• 1. Market control
• 2. Bureaucratic control
• 3. clan control
• On the basis of management levels:
• 1. Operational control
• 2. Tactical control
• 3. strategic control
 On the basis of designing control systems

• Market control-the use of external market

mechanism such as price competition, market share
etc are used in the control system
• Bureaucratic control-which emphasis on
organizational authority and relies on administrative
mechanisms
• Clan control-approach to control in which employee
behavior is regulated by the shared
values,norms,traditions,rituals,beliefs and informal
relationships to achieve organisational goals.
 On the basis of Management levels:

• Operational control-control that involves

supervising the implementation of day to day
plans ,monitoring day to day results, and taking
corrective actions
• Tactical control-assessing and implementation
of tactical plans at departmental levels
• strategic control-is the control system that
involves monitoring environmental factors that
could affect the viability of plans.
 Design of effective control system
• Objective oriented
• Suitability-internal environment, employee requirements, nature
of business etc
• Flexibility
• Quick action
• Economical
• Capability to foresee
• Enables feedback
• Provides suggestions
• Timely revisions
• Employee participation
 Resistance to control
• Many people are resistant to the concept of
control for the following reasons:
• 1. Excessive control-reduces productivity
• 2.unachievable standards of performance
• 3. Rewards not based on efficiency
• 4.uncontrollable variables
• 5. cordinating than controlling
 Control Techniques
FINANCIAL CONTROLS NON FINANCIAL CONTROLS
FINANCIAL AUDITS MARKET RESEARCH
FINANCIAL STATEMENTS TEST MARKETING
RATIO ANALYSIS HR CONTROL
BUDGETORY CONTROLS PRODUCTION CONTROL
BREAK EVEN ANALYSIS DIRECT SUPERVISION
ACCOUNTING MANAGEMENT AUDIT
ROI CPM/PERT,
 Financial controls:
• FINANCIAL AUDIT-Internal audit and external
audit
• FINANCIAL STATEMENTS-monitoring
liquidity,financial condition and profitability
• RATIO ANALYSIS-Liquidity,profitability,turnover
ratios etc
• Budgetary Control:
• “Budgetary control is a system of controlling
costs which includes the preparation of
budgets, coordinating the departments and
establishing responsibilities, comparing actual
performance with the budgeted and acting
upon results to achieve maximum
profitability”
• BREAK EVEN ANALYSIS-it determines the point
at which revenue equals the cost.
• ACCOUNTING-Is the measurement ,processing
and communication of fiscal data about
commercial units
• ROI=
• Net income_ X __Sales___
• sales Total Investment
 Non financial controls
• Market research –focused on gathering target
customer information
• Test marketing –Evaluates performance of the
product ,product acceptance and product
distribution for full launch.
• HR Control-performance appraisals, training
programmes
• Production control-managing schedules ,
deadlines,quality,inventory control techniques
• Direct supervision and observation-oldest
technique where the managers monitors and
controls his subordinates.
• Management Audit-examines control on the
overall performance of organisation
• CPM/PERT:used to plan,schedule and control
many task associated with projects
THANK YOU