Unit-III

(Management and Planning)

 Concept of management
Management may be defined in many different ways:
• The art of getting things done through others.
• Whatever work is done by the manager.

According to Lawrence A Appley, “Management is the

development of people and not the direction of things”.

According to Joseph Massie, “Management is defined as

the process by which a co-operative group directs action
towards common goals”.
In the words of Henry Fayol, “To manage is to
forecast and to plan, to organize, to command,
to co-ordinate and to control”.

According to Peter F Drucker, “Management

is a multi-purpose organ that manages a
business and manages managers and manages
worker and work”.
 Planning
• It is the basic function of management. It deals with chalking out a future
course of action & deciding in advance the most appropriate course of
actions for achievement of pre-determined goals.

• According to KOONTZ, “Planning is deciding in advance - what to do, when to

do & how to do. It bridges the gap from where we are & where we want to
be”.

• A plan is a future course of actions. It is an exercise in problem solving &

decision making.

• Planning is determination of courses of action to achieve desired goals. Thus,

planning is a systematic thinking about ways & means for accomplishment of
pre-determined goals.
• Planning is necessary to ensure proper utilization of human & non-human
resources. It is all pervasive, it is an intellectual activity and it also helps in
avoiding confusion, uncertainties, risks, wastages etc.
 Organizing
• It is the process of bringing together physical, financial and human
resources and developing productive relationship amongst them for
achievement of organizational goals.

• According to Henry Fayol, “To organize a business is to provide it with

everything useful or its functioning i.e. raw material, tools, capital
and personnel”.

• To organize a business involves determining & providing human and

non-human resources to the organizational structure. Organizing as a
process involves:
• Identification of activities.
• Classification of grouping of activities.
• Assignment of duties.
• Delegation of authority and creation of responsibility.
 Staffing
• It is the function of manning the organization structure and keeping it
manned. Staffing has assumed greater importance in the recent years due to
advancement of technology, increase in size of business, complexity of human
behavior etc.

• The main purpose of staffing is to put right man/woman on right job.

• According to Koontz & O’Donell, “Managerial function of staffing involves

manning the organization structure through proper and effective selection,
appraisal & development of personnel to fill the roles designed un the
structure”. Staffing involves:
 Manpower Planning (estimating man power in terms of searching, choose
the person and giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer
 Directing
• It is a function of management where in real sense the instructions are given to
the employees and whatever has planned is communicated to the staff.

• Direction is that inter-personnel aspect of management which deals directly

with influencing, guiding, supervising, motivating sub-ordinate for the
achievement of organizational goals. Direction has following elements:
• Supervision- implies overseeing the work of subordinates by their superiors. It
is the act of watching & directing work & workers.
• Motivation- means inspiring, stimulating or encouraging the sub-ordinates with
zeal to work. Positive, negative, monetary, non-monetary incentives may be
used for this purpose.
• Leadership- may be defined as a process by which manager guides and
influences the work of subordinates in desired direction.
• Communications- is the process of passing information, experience, opinion etc
from one person to another. It is a bridge of understanding.
 Controlling
• It implies measurement of accomplishment against the standards and
correction of deviation if any to ensure achievement of organizational goals.

• The purpose of controlling is to ensure that everything occurs in conformities

with the standards. An efficient system of control helps to predict deviations
before they actually occur.
• According to Theo Haimann, “Controlling is the process of checking whether or
not proper progress is being made towards the objectives and goals and acting
if necessary, to correct any deviation”.
• According to Koontz & O’Donell “Controlling is the measurement & correction
of performance activities of subordinates in order to make sure that the
enterprise objectives and plans desired to obtain them as being accomplished”.
Therefore controlling has following steps:
• Establishment of standard performance.
• Measurement of actual performance.
• Comparison of actual performance with the standards and finding out deviation
if any.
• Corrective action
▶ Planning is deciding in advance what to do?, how to do
it?, when to do it? and who to do it?.

 It involves anticipating the future and consciously

choosing the future course of action.
“Planning is the function that
determines in advance what should
be done.”
▶ Planning is most basic function of management.
▶ Planning referred as “deciding in advance”.
 Planning
Where we are Where we want to
be
• Planning is purposeful : it is objective oriented. It
is directed towards efficiency.

• Planning is a primary function : It is the basic

level of management process.

• Universal process : Many people believe in

planning. It is the job of all the managers in all
types of organizations.
• Intellectual process : A process involving
imagination, foresight and knowledge but not
• guesswork.
Continuous process : An on-going/dynamic exercise
as old assumptions change, old plans are revised or
• new ones are
Forward prepared.
process : Planning is always for the future
and may be based on past and experiences.
• Involves choice : Decision making is core of
planning
▶ Focuses attention on objectives and result
▶ Reduces uncertainty and risk: Managers try to foresee the future by
making some assumptions while planning.
▶ Provides direction: like what to do, how to do etc.
▶ Encourages innovation and creativity: e.g.. Touch screen, 360
rotatable laptops
▶ Facilitates decision-making: it is a goal oriented so helps mangers to
take right decisions on right time
▶ Provide effectiveness in operation:
▶ Provide economy in operation: Reduces the cost by eliminating
excess activities
▶ Effective Control: Actual performance is compared with planed targets.
▶ Bridge between present and future
 Analyzing Establishing Determining
opportunities objectives Planning
premises

Reviewing the
Identification of
plans
alternatives

Formulating of Choice of Evaluation of

Supporting plans Alternative plans alternatives
1.
▶ Not a step of Planning, It is pre-step of planning.

▶ Essential to make a successful plan.

▶ SWOT analysis
SWOT Analysis
● Strengths - the positive internal attributes of the
organisation

● Weaknesses - the negative internal attributes of the

organisation

● Opportunities - external factors which could improve the

organisation’s prospects

● Threats - external factors which could undermine the

organisation’s prospects

16
Example SWOT Analysis: Vehicle Company
M LTD.

Strength Weakness
Accumulated high technology Poor reputation among
customers
Motivated young staff
Slow decision making
Global network to distribute
Old fashioned style
Cost efficiency manufacture
Weaker brand images

Opportunity Threat
Huge market in China/India High oil price
More global cooperation High material price
Foreign exchange
Other competitive companies

8
2.
• First and real starting point of planning.
• Deciding what to be achieved.
•
Management has to define objectives in clear manner by
considering organizational resources and opportunities because
a minor mistake in setting objectives might affect in
implementation of plan.
• Objectives must be specific, clear and practical.

• Objectives should be time bound

Eg: objective is you want to increase

the profit of the organisation.
 3.
• It is the boundary/ Situation under which plans will
operate.
• Taking some assumptions about the market conditions.
• It is anticipating future events
• Factors affecting the plan need to be
forecasted
• Accuracy of forecasting will determine the success of
planning

There are 3 types of planning premises

▶ Internal and external premises

▶ Tangible and intangible

▶ Controllable and uncontrollable

▶ Internal premises with in the organization
( Policies, investment, availability of equipments,
funds etc)

▶ External premises means out side the organization

(Govt policies, Economic conditions, population ,
demand)
▶ Tangible premises are the measurable premises like

population, investment, demand etc.

▶ Intangible premises are those which cannot be

measured like business environment,
economic conditions etc
▶ Controllable premises like technical man power ,
input technology, financial investment etc

▶ Uncontrollable premises like strikes, change of govt

policies, wars etc.
4. Identification of Alternatives
There are many ways of doing
a work
• Identifying different
methods to achieve the
objectives.
• Various alternatives can be
identified based on the
organisational objectives
• Best results will be achieved
only when best way of doing a
work is selected
• All the pros and cons of
methods should be weighed
before a final selection
 5. Evaluation of Alternatives
• The various alternative should be
analysed in the light of premises and
goals
• Every alternative has merits and
demerits
• A course of action may be suitable
but it may involve huge investments
and the other may involve less
amount but it may not be very
profitable
• To find out both negative and positive
points of each identified method.
6. Formulating Supportive plans
• Subsidiary plans are needed to
support the main plan
• These subsidiary plans are not
independent plans but only a
reflection of the main plan
• Examples: buying raw
materials, recruiting and
training personal, developing
new product etc
 7. Implementing the plans:
• The planning should be put into action so that business
objectives may be achieved
• Top level management will communicate the plan to the
middle level management for the implementation.
• Arrangement of necessary resources and defining
individual working areas are necessary to put the plan
into reality.
 8. Reviewing plans
• Implementing the plan is
not the end of the process.
• Constant monitoring of
plans is needed to ensure
success in the uncertain
future
• Plans should be improvised
according to change in
internal or external
environment.
▶ Resource: what can be used to meet the scope.
▶ Time: what tasks are to be undertaken and when.
▶ Quality: the spread or deviation allowed from a desired standard.

▶ Risk: defines in advance what may happen to drive the plan off
course, and what will be done to recover the situation.
ADVANTAGES OF PLANNING
 Focuses Attention on Objectives
 Ensures Economical Operation
 Reduces Uncertainty
 Facilitates Control
 Encourages Innovation and Creativity
 Improves Motivation
 Improves Competitive Strength
 Achieves Better Coordination
 LIMITATIONS OF PLANNING
 Lack of reliable data: At times reliable data to make plans is unavailable

 Costly process: Intellectual process and companies need to hire experts along with very
high salaries where a lot of time, money and efforts are spent.

 Rigidity in organizational working

 Non-acceptability of change: Planning does not work in dynamic environment.

Frequent change in economic, Political, social and Legal environment etc. may lead to
failure of planning.

 External limitations: Natural Calamity, Change in competitors' policies, change in

fashion, Change in technology, change in government policies

 Time consuming process: It takes long time to evaluate alternatives and select best one.
Time is needed in developing plan premises.

 Does on guarantee success: Plans which have worked in the past may not work in
present due to dynamic nature of business environment.
Set the standards to Provide
facilitate control direction

Managers
engage in
planning to:

Minimize uncertainty Reduce the impact

of change
▶ Strategic plan
▶ Tactical plan
▶ Single use plan
▶ Standing plan
▶ Long Range plan
▶ Short Range plan
▶ Proactive Plan
▶ Reactive Plan
 is a action plan to achieve the objectives.
▶ Strategy

It consists of major task and policies of an organization

resources and facilities to accomplish the
objectives

▶ Used by community groups, government departments,

organizations and businesses to develop blueprint for action
and change.

 Long term plans

 Benefits of Strategic Planning
• Defines mission, vision & • Provides base to measure
values progress
• Establishes realistic • Develops future direction
objectives • Solves major problems
• Ensures effective use of
resources
Vision
◦ What is your organization’s vision of excellence
◦ Has to be realistic and not something impractical

Mission
• Core purpose of your organization
• Presented in a clear, short statement that focuses on attention in one
clear direction by stating purpose of the group’s uniqueness.

Values
◦ What are the principles, standards, and actions considered
worthwhile in the organization
◦ Includes how people treat each other, how groups conduct
business and what is most important to the organization
▶ Its a short time planning
▶ Tactical plan are immediate decisions based on the executive’s

judgment and experience in facing an actual situation

▶ It consists of use of facilities and resources

▶ It is day-to-day operation and activities of the organization

▶ At lower level management

helps in creating short-term and distinct plans that help fulfil the
long-term plans of a business. Tactical plans translate broad
strategic goals and plans into specific goals and plans. It mainly
focuses on functional areas of the organization. Middle level
managers who are responsible for major division or branches in an
organization develop the tactical plan. Tactical plans focus on the
major actions that a unit must take to fulfill its parts of the strategic
plan.
▶ Standing Plans ▶ Single Use plans
◦ Developed for activities ◦ Developed to carry out a
that occur regularly course of action that is
over a period of time not likely to be
repeated in future
▶ Ex: ▶ Ex:
◦ Objectives, Policies, ◦ Projects
Procedures, Rules
 Long range plan Point of Short range plan
distinction

Covers many years & affects Meaning Covers less than one year and is
many departments of an more specific & detail
organization
5 yrs or more Time 2 to 5 Years

Organizations linkage with Primary focus Linkage with various parts of an

external factors organization

long term objectives and Deals with Current operations of organization

strategies

Top management Prepared by Lower level executives

▶ Proactive Planning:
◦ Managers challenge the future, anticipating future and get
ready with alternative routes for unseen circumstances

▶ Reactive Planning:
◦ Organizations react to events as and when they arise

40
Decision-making
 SITUATION
It is recess. Everyone is out on the playing fields, including the teacher.
You have to go the toilet. On the way to the toilet, you pass your class
and notice that there is someone in the room. You stop and peek in out
of curiosity. Just as you do, you see one of your best friends reach into
another person’s desk and take something out of it. You quickly move
past the door before you are seen.

Just before the lunch bell rings, the students whose desk you saw your
friend reach into, walks up to the teacher. A moment later the teacher
announces that this student’s entire pencil case with pencils, pens and
lunch money in it has been stolen. What do you do?
 Concept
• Decision-making is the act of making a choice among available
alternatives.
• There are innumerable decisions that are taken by human beings
in day-to-day life.
• Managerial functions like planning, organizing, staffing, directing,
co­ordinating and controlling are carried through decisions.
• Decision making is possible when there are two or more
alternatives to solve a single problem or difficulty.
• It is believed that the management without a decision is a man
without a backbone. Therefore, decision making is a problem-
solving approach by choosing a specific course of action
among various alternatives.
 Definition
“Decision-making involves the selection of a
course of action among two or more possible
alternatives in order to arrive at a solution for a
given problem”

“Decision making process can be regarded as

check and balance system that keeps the
organisation growing both in vertical and linear
directions.”
Decision-making Environment
Decision-making Environment
Decision-making Environment
•
The situation
Your company was no exception right now, with the economic slowdown and the
rising costs of materials and wages, your profits are going down and is at an all-
time low. Because of these unfortunate happenings, you have to let some
employees go. The senior management team, of which you are a member has
prepared a list of employees whose employment will be terminated within two
weeks from today. It is kept confidential and the people on the list will not know
until the day of the termination.
• You have called a meeting of your department managers and supervisors. The
managers and supervisors are not aware that a termination list has been prepared,
so you will need to let them know this at some point in the meeting. Also, they will
not be able to see the list until the day of the terminations. Apparently, this is a very
confidential topic and must not be shared with anybody outside of this meeting.
• Your purpose of today’s meeting is to tell the group and convince them that none of
them are on the list. You also want to get their responses & feedback on how the
affected general employee will react to the termination in two weeks. Next, you’d
like to understand and anticipate any questions that they believe will arise so that
appropriate answers can be prepared.
 Contd…
• Finally, you would like to prepare an action
plan for the day after the event. What you can
tell the managers is the number of people they
will each be losing. Here is the breakdown:
• Marketing and Order Processing department
will lose 5 of its 12 people
• Finance and Human Resources will lose three
of its six people
• Operations & Production will lose eight of its
40 people.
 Questions
• Q1: Critically examine the situation in this case
and its impact on the company.
• Q2: How will the management decision impact
the functioning of the company? Justify it.
• Q3: What steps should be undertaken by
departmental managers for an effective plan?
 Process of Decision making
1. Defining and analysing the problem: you want to purchase a
car?
But which Car?
Which brand?
What will be the specification?
2. Developing Alternative Solutions: see the different cars
available.
Tata, Hyundai, Mahindra
3. Evaluation of alternative solutions
In Terms of price, comfort, size etc.
4. Selecting the best solution: e.g. Punch
5. Implementation of the decision:
6. Follow Up:
 Types of Decision-making
 Programmed Decisions
− Managers take decisions for simple and straightforward
problems (structured problems).
1.These are for solving day to day and routine problems and are repetitive in
nature.
2. Rules and procedures are described for taking these decisions.
3. These decisions remains consistent for a relatively longer period of time and over
many situations.
4. These decisions are made for solving both simple and complex problems.
5. Decisions are of routine nature requiring no judgment.
 Non-programmed Decision
− Managers have to take decisions which are not routine but
unique in nature for unstructured problems and are not
supported by proper information and bear certain risks.
 Strategic Decisions
− Decisions taken by the top-level management to fulfill
organizational goals and objectives.

 Tactical Decisions
− Taken by the middle-level management and constitute
allocation of roles and responsibilities to employees
and formulating the budget for the department.
 Major and Minor Decisions
− Major Decisions include acquisitions of organizations or
mergers or diversifying into other business area
− minor decision might range from granting leave to an
employee to preparing monthly budget for the unit’s
expenditure .
 Individual and group Decisions
− Group Decision-making generally outperforms individual
who make decision in isolation, but in some instances,
individual decision-making can work wonders in an
organization when group fails to arrive at a consensus.
 Difference between programmed and non-
programmed
Programmed Decisions: Non-Programmed Decisions:
1.These are for solving day to day and 1. These are for solving non-repetitive
routine problems and are repetitive in tactical or unique problems.
nature.
2. Every decision will have to be taken
2. Rules and procedures are described for separately by analyzing and evaluating
taking these decisions. each problem.

3. These decisions remains consistent for 3. Every decision is different and there
a relatively longer period of time and is no consistency.
over many situations.
4. Such decisions are for solving
4. These decisions are made for solving complex.
both simple and complex problems.
5. Such Decisions require judgment in
5. Decisions are of routine nature each case.
 Problems in decision making
• When the information is inadequate or incomplete
 Problems in decision making
• When there is lack of information on political,
social and economic variable
 Problems in decision making
• To arrive at a rational decision, it is mandatory for a
decision maker to be an expert in respective
domain, should be highly intelligent and have
farsightedness for future situation which generally is
rarer.
• Decision should be impartial and closely align to
organization’s goal and objectives. Individual
preferences and attitude often come in way of
decision-making
 Decision-making Styles
• Autocratic:
The leader takes up the entire responsibility of making the decisions and
will be held responsible for the outcome being good or bad. Generally, who
imbibe autocratic style do not take suggestion from others.
Advantage: Quick decision-making .
Disadvantage: Solely depends on the decision-making ability of that individual.
• Participative
The leader involves the members of his team to take decision, though
the total control resides with him. He makes the teams feel of actually
taking ownership for finding solution to the problem.
Advantage: Group participation and involvement.
Disadvantage: Slow and time-consuming process and is somewhat less
secured.
• Consultative:
When a leader gives up total control of the decision to his team.
Now if the entire team agrees to the decision, then the decision is
said to be taken on consensus.
Advantage: Group consensus is 100%.
Disadvantage: Lot of effort is put in getting the employees to
collaborate and work together
• Democratic
In this style of decision making, a leader allows his team to vote
for a decision. The alternative which gets the majority of the votes
is taken as the final alternative.
Advantage: Faster decision-making and certain amount of group
participation.
Disadvantage: Any individual is not responsible for the outcome
 Decision-making Models
 Classical Model:
− Managers have access to all possible types of information to
reach a decision.
− If there is more than one alternative, the manager ranks the
alternatives.
− Manager implement the best alternative and
− it is assumed that the manager knows what is best for the
organization.
 Rational Model:
− This model assumes that there exits a problem, for which a
decision has to be taken by
− first understanding the problem
− identifying alternative constrained by legal and ethical
norms, and technology, resource and budget constraint.
− An evaluation of these alternatives is done by
considering the feasibility, satisfaction, and affordability
parameters and the consequences of implementing the
alternative
• Administrative Model:
Decisions are limited by people’s cognitive limitations and are
known as bounded rationality, which means that leaders tend to
take decisions based on choosing solutions that meet
requirements and are good enough.

• Political Model:
An individual seeks to take decisions with an aim to satisfy their
own or organization’s interest or goals such as the stakeholders of
the company. The outcome of the decision is always in their
favour.
 MCQ
1. Opening of new branch is an example of
___________.
A. programmed decision.
B. non-programmed decision.
C. individual decision.
D. non-economic decision.
• ANSWER: B
2. Non-programmed decision is also called
_____________.
A. routine decisions.
B. structured decisions.
C. strategic decisions.
D. operative decisions.
• ANSWER: C
3. _________ is the general guideline for
decision-making.
A. Policy.
B. Strategy.
C. Procedure.
D. Programme.
• ANSWER: A
4. A solution to a problem that is arrived at
through an unstructured process of decision
making
is called a:
(a) Bounded rationality
(b) Programmed decision
(c) Non-programmed decision
(d) Uncertainty
• Answer -C