P16MBA1- MANAGEMENT CONCEPTS

MBA – I Year
Unit - I
Management : Definition – Nature – Scope and functions – Evolution of management thought –
Relevance of management to different type of organization like, Insurance, Hospitals,
Universities, Hotels, Social Service Organization.

INTRODUCTION:
In today’s unpredictable economies, every organization needs strong managers to lead its people
towards achieving the business objectives. A manager’s primary challenge is to solve problems
creatively and plan effectively. Managers thus fulfill many roles and have different
responsibilities within the various levels of an organization.

MEANING OF MANAGEMENT

“Management is the process of planning, organizing, leading and controlling the efforts of
organization members and of using all other organizational resources to achieve stated
organizational goals”.

DEFINITIONS:
“Management is the art of getting things done through people” - According to Mary Parker
Ex: Human Resource Management, Financial Management.

MANAGEMENT CONCEPT:
Concept is the idea or image or understanding about things, activity or a person that emerges in
the mind of a person. There are several different concepts about management.
There are two basic concepts of Management

Management

Group of People
Discipline

1. Management as a Discipline:

 It is refer to management as a discipline,

 It is include in it the various relevant concepts and principles,
 The knowledge of which aids in managing

2. Management as a Group of People:

Management as a group of people in which it is includes all those personnel who perform
managerial functions in organizations.

There are two groups of personnel in the organization.

 To responsible for managerial functions and

 Non-managerial personnel.

MANAGEMENT AS A PROCESS:
Management is considered a process because it involves a series of interrelated functions. It
consists of getting the objectives of an organization and taking steps to achieve objectives. The
management process includes, planning, organizing, staffing, directing and controlling
functions.

Management as a process has the following implications:

 Social Process
 Integrated Process
 Continuous Process
(i) Social Process: Management involves interactions among people. Goals can be achieved only
when relations between people are productive. Human factor is the most important part of the
management.
(ii) Integrated Process: Management brings human, physical and financial resources together to
put into effort. Management also integrates human efforts so as to maintain harmony among
them.
(iii) Continuous Process: Management involves continuous identifying and solving problems. It
is repeated every now and then till the goal is achieved.

NATURE OF MANAGEMENT

Nature and Characteristics of Management

The salient features which highlight the nature of management are as follows:

(i) Management is goal-oriented:

Management is not an end in itself. It is a means to achieve certain goals. Management has no
justification to exist without goals. Management goals are called group goals or organizational
goals.

(ii) Management is universal:

Management is an essential element of every organized activity irrespective of the size or type of
activity. Wherever two or more persons are engaged in working for a common goal, management
is necessary. All types of organizations, e.g., family, club, university, government, army, cricket
team or business, require management.

(iii) Management is an Integrative Force:

The essence of management lies in the coordination of individual efforts in to a team.

Management reconciles the individual goals with organizational goals.

(iv) Management is a Social Process:

Management is done by people, through people and for people. It is a social process because it is
concerned with interpersonal relations. Human factor is the most important element in
management.
(v) Management is multidisciplinary:

Management has to deal with human behaviour under dynamic conditions. Therefore, it depends
upon wide knowledge derived from several disciplines like engineering, sociology, psychology,
economics, anthropology, etc.

(vi)Management is a continuous Process:

Management is a dynamic and an on-going process. The cycle of management continues to

operate so long as there is organized action for the achievement of group goals.

(vii) Management is Intangible:

Management is an unseen or invisible force. It cannot be seen but its presence can be felt
everywhere in the form of results.

(viii) Management is an Art as well as Science:

It contains a systematic body of theoretical knowledge and it also involves the practical
application of such knowledge.

IMPORTANCE OF MANAGEMENT

1. It helps in Achieving Group Goals

2. Optimum Utilization of Resources
3. Reduces Costs
4. Establishes Sound Organization
5. Establishes Equilibrium
6. Essentials for Prosperity of Society

1. It helps in Achieving Group Goals

 To arrange the factors of production, assembles and organizes the resources,
integrates the resources in effective manner
 To direct group efforts towards achievement of pre-determined goals.
 To define clear objective of organization.
 Management converts disorganized resources of men, machines, money etc.
into useful enterprise.
 To attainment of goal of resources are coordinated, directed and controlled in
such a manner that enterprise work.
2. Optimum Utilization of Resources
 It utilizes all the physical & human resources productively this leads to value in
management.
 It provides maximum utilization of scarce resources by selecting its best
possible.
 The services lead to use of experts, professional of their skills, knowledge, and
proper utilization and avoids wastage.
3. Reduces Costs
 It gets maximum results through minimum input by proper planning, and
 By using minimum input & getting maximum output.
 Management uses physical, human and financial resources in such a manner
which results in best combination.
 This helps in cost reduction.
4. Establishes Sound Organization
 No overlapping of efforts.
 To establish sound organizational structure is one of the objectives of
management.
 It establishes effective authority & responsibility relationship (who are
superiors & who are subordinates).
 Management fills up various positions with right persons, having right skills,
training and qualification
5. Establishes Equilibrium
 It enables the organization to survive in changing environment.
 It keeps in touch with the changing environment.
 With the change is external environment, the initial co-ordination of
organization must be changed.
 It is responsible for growth and survival of organization.
6. Essentials for Prosperity of Society
 Efficient management leads to better economical production.
 Increase the welfare of people.
 Difficult task is easier by avoiding wastage of scarce resource.
 Improves standard of living.
 Organization comes with new products and researches beneficial for society.

SCOPE OF MANAGEMENT

Generally, the scope of management hovers around the following functional areas
  Production management
 Marketing management
 Financial management
 Personal management

1. PRODUCTION MANAGEMENT

Production means creation of utilities by converting raw material into final product by various
scientific methods and regulations

 Plant lay out and location

 Production planning
 Material management
 Research and Development
 Quality Control

2. MARKETING MANAGEMENT

Marketing management involves distribution of the product to the buyers. It may need
number of steps..

 Advertising
 Sales management
 Market research

3. FINANCE AND ACCOUNTING MANAGEMENT

Financial and accounting management deals with managerial activities related to procurement
and utilization of fund for business purpose. Its sub areas are as follows

 Financial accounting
 Management accounting
 Taxation
 Costing

4. PERSONNEL MANAGEMENT

Personnel management is the phase of management which deals with effective use and control
of manpower. Following are the sub areas of personnel management.

 Personnel planning
 Recruitment and selection
  Training and development
 Wage administration
 Industrial relation

FUNCTION OF MANAGEMENT

According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to
control”.
But the most widely accepted are functions of management given by KOONTZ and
O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

1. Planning

Planning is the basic function of the management and involves deciding in advance what is to be
done, how, where, and by whom. Planning is advanced in nature. It is a continuous process that
fills the gap between where we are and where we want to reach. It involves:

 To establishment of objectives and determining to achieve organization goal

 In order to carry on manufacturing of paper, a manager has to think about the supplier of
raw material, tools and equipment required quality to be maintained etc.

2. Organizing

After deciding the organizational objectives, the management has to determine the various
activities and the resources required to achieve the same.

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

3. Staffing

Finding the right man and placing him to the right job is known as staffing. It is the most
important function of the management and involves:

 Manpower Planning
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.
 4. Directing

Directing involves leading, guiding, supervising and motivating the employees to perform their
jobs efficiently in order to achieve organizational goals.
Its main elements are:
 Supervision
 Motivation
 Leadership
 Communication

Supervision - involves managing 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 enthusiasm 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.

Its most important Advantage is that it cultivates in the employee’s the sense of oneness
belonging with their employer.

5. Controlling

It is the last but very important key function of management.

Control takes place in a four-step process: it involves

 Establish performance standards based on organizational objectives

 Measure and report on actual performance
 Compare results with performance and standards
 Take corrective or preventive measures as needed

LEVELS OF MANAGEMENT:
There are several types of managers. However it is useful to divide them on the basis of three
managerial levels.
 Strategic Level

Top level
management Technical Level
(BOD, CEO, MD, GM etc.)

Middle level management Operational Level

(Branch Managers and Departmental

Managers )

Lower level management

(Supervisors, Foreman, Section Officers, and
Superintendent etc.)

There are three levels of management:

1. Top Level: (Strategic level)

Top management sets the mission and goals, develops policies, evaluates the overall
performance of various departments, responsible for the business as a whole and is concerned
mainly with long-term planning.
It consists of Board of directors, Chief Executive or Managing Director. The top
management is the ultimate source of authority and it manages goals and polices for an
organization.

2. Middle Level: (Technical level)

Middle level management develops departmental goals, executes the policies, plans and
strategies determined by top management, develops medium- term plans and supervises and
coordinates lower-level managers’ activities
The Branch Managers and Departmental Managers constitute middle level. They are
responsible to the top management for the functioning of their department. They devote more
time to organizational and directional functions.

3. Lower (Supervisory, frontline) Level: (Operational level)

Lower level management takes charge of day-to-day operations, is involved in preparing detailed
short-range plans, is responsible for smaller segments of the business, executes plans of middle
management, guides staff in their own subsections and keeps close control over their activities.
Lower level is also known as supervisory / operative level of management. It consists of
Supervisors, Foreman, Section Officers, and Superintendent etc.

MANAGEMENT IS AN ART, A SCIENCE AND A PROFESSION:

Management is treated as art, science and profession because it has some characteristics of an
art, a science and a profession.

MANAGEMENT IS AN ART
Art is personal skill. It is created by nature. It does not possess by all. Art is bringing about
desired results with the help of skills. Management is one of the most creative arts. It requires a
lot of knowledge. Management is an art because:
1. It is creative
2. It involves use of skill.
3. It involves use of technical knowhow.
4. It is directed towards getting results.
5. It is personalized.

MANAGEMENT AS A SCIENCE:-
Science is a systematic body of knowledge based on certain principles and which are
universally approved. F. W. Taylor was the first person who considered management as a
science. Science is divided into two parts (i) Physical science, and (ii) Social science.
Management is a social science because it deals with human being.

Management is a social science due to the following reasons:-

1. Systematic collection and processing of information:-
Management collects information either by observation or experiment and practice.
2. Output may change though the inputs are same:-
In management the output may change even when the input remains the same because it deals
with human being.
3. Principles of Management are universally accepted:-
All successful organizations must follow established principles of management, such as division
of work, unity of command, authority and responsibilities, discipline etc.
MANAGEMENT IS A PROFESSION
Profession is an occupation carried by professionals like doctor, lawyer, architect, chartered
accountant, cost accountant etc. It involves knowledge and application of it. Management as a
profession is modern concept different from traditional one.
Characteristics of a profession:-
1. Systematic body of knowledge:-
Professionals require expert knowledge in a particular discipline.
E.g. a doctor requires knowledge of medicine; Chartered Accountant needs to have knowledge of
Income Tax.
2. Formal Education:-
A true professional needs to have formal education from the institution.
E.g. Lawyer needs degree of law.
3. Social Responsibility:-The professional are socially responsible while handling their tasks
and responsibilities. Their aim should not be only profit maximization, but they have to follow
certain rules for social responsibilities.
4. Independent Office:-
Normally professionals practice from their independent office.
5. Specialization:-
The professionals may specialize in a particular field.
E.g. heart specialist, child specialist and ENT surgeon.
6. Fees:-
The professionals required license or a permission to practice.
E.g. a doctor requires license to practice as a medical practitioner.

MANAGERIAL SKILLS
They are having skills are follows
 Conceptual Skills
 Analytical Skills
 Human relation Skills
 Administrative Skills
 Technical Skills
  Computer Skills
 Communication Skills

1. Conceptual Skills:-
Conceptual skills are the abilities to think about the creative terms understand and visualize the
future, to organize and translate observation into ideas & concepts.

2. Analytical Skills: - [It s a decision making]

Analytical skills mean ability to work out a complex problem or situation into component.
Analytical skills are required for solving problems and decision making. This is also helpful for
evaluation of performance and arriving at judgment.

3. Human relation Skills:-

Human relation skills represent the ability to understand the behavior of people, their problems,
their needs, working conditions and motivation to people. These skills are essential in directing
the people and for better coordination.

4. Administrative Skills:-
It involves the implementation of plan and use of available resources to get the desired output
that is profit and to regularize a performance in orderly manner. It is also helpful in co-ordination
of activities.

5. Technical Skills:-
These skills are essential for first line managers. He requires knowledge of a job, ability to apply
the methods and techniques of job. He is responsible for providing technical guidance and
instructions to subordinates.

6. Computer Skills:-

Computer knowledge is essential for today’s manager i.e. knowledge of hardware & software.
Hardware is technical term & software is ability to adopt the system in an organization to
attempt goals. In modern days computer is widely used in organization. Hence today’s’ manager
should possess the knowledge of computer. This is helpful in decision making. It also helps to
increase the productivity in the organization.
7. Communication Skills:-
Communication is systematic process of telling, listing and understanding. This skill requires the
ability of listening and speaking in an effective manner. The manager is responsible for getting
the things done by others. He should be expert in oral and written communication.

DISTINGUISH BETWEEN: MANAGEMENT AND ORGANIZATION

Points Management Organization

It is an executive function which is It is an organic function of putting

Meaning:
primarily concerned with getting together the different parts of an
the things done by others. enterprise into working order.

Planning, organizing, staffing,

Types: motivation, direction, co- Organization is one of the
ordination and control are the important functions of
functions of management. management.

Nature: It is like the entire body of human It is like a nervous system of

being. human body.

There are different levels in

Levels:
management, e.g. top, middle and There are no such levels in
lower level. organization.

Management uses the

Scope:
organization. Organization is the machine of
management.

DISTINGUISH BETWEEN: MANAGEMENT AND ADMINISTRATION

Points Administration Management

It is concerned with policy

Management is concerned with the
Policy making: making; it determines the goals to
implementation of the policy.
be achieved.

Implementation It is not directly concerned with It is directly concerned with the

of the policies : the implementation of policies. implementation of policies.

Functions:
Its functions are legislative. Its functions are executive.
 Main functions: Planning and organizing Motivation and controlling

Management It relates to apex or top level It relates to middle and lower level
level: management. management.

It is mostly used in government or It is mostly used in the private

Sector:
public sector. sector.

Collectors, commissioner, Vice General manager, managing

Illustrations: chancellor, registrar, sales tax and director, director etc.
income tax officer etc.

EVOLUTION OF MANAGEMENT THOUGHT

INTRODUCTION
Management started when man started living in groups. It relates to achieve certain objectives.
According to George management begins in family, and after that it is expanded in tribes &
finally the scope was increased up to urbanization. Greek provides extensive documentation of
management principles. These principles of management are worldwide famous. It is considered
as management is an art. It includes employees’ selection, delegation of authority, time study,
motion study etc.
It grows accordingly to changes in the social & political & economic changes. There are five
stages of evolution of management thoughts.

Evolution of management thought

Pre – Industrial
Historica Organize Revolutio Toward Recent
l d Society n Consolidation Development
Period Church Administrative
Villag
Forecasting
es Military Management as a science

 Authority  Controlling
 Responsibility  Problem
  Delegation  solving
 Centralization  PERT
 Division of  CPM
Work

1. Pre – Historical Period:-

Management is as old as man. Awareness of needs & satisfaction of needs is the part &
parcel of management. In the ancient time in the villages, head of the village plans for the
villages. There was a good labor planning. Villages were isolated. The basic needs in the
villages were satisfied by the persons in the villages. Responsibilities were distributed
among the people to satisfy the basic needs.

2. Organized Society:- (Church & Military)

The next contribution to the development of organization & management was by roman
church. 1500 years ago Chinese ruler advised government about management of human
institutions. The German public gives contribution towards management thoughts. During
this period management techniques were largely developed in administrative military &
state administration.

3. Industrial Revolution:-
This period is known as the period of scientific management. It is proved that management
is related with enterprise & business. In this period lots of technological changes took
place. With the industrial revolution the question of traditional management appears. The
traditional management concept was replaced by professional management.

4. Towards Consolidation:-
This stage mark the beginning of the work of investigation of principles of management i.e.
division of work, authority, responsibility, discipline, scalar chain. These ideas were
developed by ‘Henry Fayol’.

5. Recent Development:-
Recently management concepts are based on mathematical analysis. They are based on
linear programming, operational research, PERT (Programme Evaluation and Review
Technique), CPM (Critical Path Method). These techniques are useful in decision
making, controlling, problem solving etc. In today’s competitive world these techniques are
 essential for controlling the cost that is why management is called as a separate profession.

CONTRIBUTION OF F.W. TAYLOR

(SCIENTIFIC MANAGEMENT)

Scientific management is a part of early management approaches. The chief contributor of

scientific management is F. W. Taylor. He is known as Father of Scientific Management (1856
to 1915) was born in USA.

He did most of his schooling in France & Germany. He couldn’t finish his graduation & join
Midvale Co. (Steel Work). He worked there for 6 years. In 1884 he raised to the position of
Chief Engineers, as mean while he obtained Masters Degree in Physics, Mathematics &
Engineering.

DEFINITION:-

Scientific management is concern with exactly knowing what you want men to do & then see
that they are doing in best & cheapest way.

Contribution of F. W. Taylor:-
1) At Midvale Steel Co. he improved proper distribution of work for each worker.
2) In Midvale Steel Co. he analyzed the work done by workers in specific job &
allotted standard time.
3) He also made experiments on time study & motion study to decide the work load
of each worker.
4) In Bethlehem Steel Co. he had made experiments with material handling
equipment for increasing the capacity of each worker.
5) In 1901, he presented a paper on differential piece rate system.
6) In 1906, he published article on art of cutting metals.
7) In 1903, he presented important paper on shop management – In that he explained
gang boss, speed boss, repair boss & inspector.
8) In 1911, he gave the principles of scientific management, for which he is
remembered as ‘Father of Scientific Management’. In that he has explained:-
a) Friendly relationship between workers & management.
 b) Scientific education to the workers.
c) Scientific selection of workers so that each worker could be given
responsibility for the task.
d) Development of the true science of management with proper analysis in the
organization.
Mechanism of Scientific Management:

Workshop Manager

Planning Department Production Department

Speed Repair
Route Time & Inst. Disciplinarian Super Gang
boss boss
clerk cost card visor boss

clerk clerk

Works

Mechanism:-
1. Separation of Planning & Doing:-
Before Taylor’s scientific management a worker used to plan about his work &
instruments necessary for that. Supervisors’ job was to see how the workers were
performing. This creates a lot of problems. So Taylor has separated planning & doing
authority.
2. Functional Foremanship:-
Separation of planning from doing resulted into development of supervision system. In
this system 8 persons were engaged, out of that 4 persons were engaged in planning
department. They are time & cost clerk, routine clerk, instruction card clerk &
disciplinarian. In production process 4 personnel were engaged, they are speed boss,
repair boss, supervisor & gang boss.
3. Job Analysis:-
 It is related with finding out best way of doing. It means that least movements in doing
job. It will lead to complete production in less time & lesser cost. It includes:-
 Time Study:-
It means determining time required to complete a job in a particular time. The movement
which takes minimum time is the best one.
 Motion study:-
It means study of movement while performing a job i.e. elimination of wasteful
movement in performing a job, only necessary movements are engaged.
 Fatigue Study:-
It shows the amount & frequency of rest required, while completing the work. After
certain period of time workers feel fatigue & can’t work with full capacity..
 Standardization:-
As far as possible standardization should be maintained in respect of instruments & tools,
period of work, amount of work, working conditions, cost of production etc.
 Scientific Selection & Training of Workers:-
Taylor has been suggested that worker should be selected on scientific basis taking into
account their education, work experience, attitude & physical strength.
 Financial Incentives:-
Financial incentives help to motivate workers in maximum efforts. Higher wages lead to
increase in efforts.
 Economy:-
Techniques of cost estimated & control should be adopted. Waste should be controlled
properly. Profit will be achieved with elimination of wastage.
 Mental Revolution:-
Scientific management depends upon mutual co-operation between workers &
management. Taylor say’s great revolution takes place in the mental attitude of two
parties under scientific management.

CONTRIBUTION OF HENRY FAYOL

HENRI FAYOL 14 GENERAL PRINCIPLES OF MANAGEMENT:
Henri Fayol (1841-1925) the first foundations were laid for modern management. These first
concepts, also called principles of management are the underlying factors for successful
management. Henri Fayol explored this comprehensively and, as a result, he synthesized the 14
principles of management. Henri Fayol ‘s principles of management and research were published
in the book ‘General and Industrial Management’ (1916)
The principles are:

1. Division of work
2. Authority and responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual interest into common interest
7. Remuneration
8. Centralization
9. Scalar chain
10. Order
11. Equity
12. Stability of tenure of personnel
13. Initiative
14. Espirt decorps

Fayol's principles are listed below:

1. Division of Work – When employees are specialized, output can increase because they
become increasingly skilled and efficient.
2. Authority – Managers must have the authority to give orders, but they must also keep in
mind that with authority comes responsibility.
3. Discipline – Discipline must be upheld in organizations, but methods for doing so can vary.
4. Unity of Command – Employees should have only one direct supervisor.
5. Unity of Direction – Teams with the same objective should be working under the direction
of one manager, using one plan. This will ensure that action is properly coordinated.
6. Subordination of Individual Interests to the General Interest – The interests of one
employee should not be allowed to become more important than those of the group. This
includes managers.
7. Remuneration – Employee satisfaction depends on fair remuneration for everyone. This
includes financial and non-financial compensation.
8. Centralization – This principle refers to how close employees are to the decision-making
process. It is important to aim for an appropriate balance.
9. Scalar Chain – Employees should be aware of where they stand in the organization's
hierarchy, or chain of command.
10. Order – The workplace facilities must be clean, tidy and safe for employees. Everything
should have its place.
11. Equity – Managers should be fair to staff at all times, both maintaining discipline as
necessary and acting with kindness where appropriate.
12. Stability of Tenure of Personnel – Managers should strive to minimize employee turnover.
Personnel planning should be a priority.
13. Initiative – Employees should be given the necessary level of freedom to create and carry out
plans.
14. Esprit de Corps – Organizations should strive to promote team spirit and unity.

2 marks
Scalar Chain: - (Straight line & Command)

It shows the straight line of authority from highest level to lower level for communication.
Scalar chain is the extract of organization chart & shows the responsibility or position of
everybody in an organization.

A X

B
Y
C
Z
D
M
E
P
 F

.
According to the principle of organization the proper way of communication order.

UNIT_II
PLANNING:

Planning is the pre determined course of action for future activity.

Planning is deciding in advance what to do, how to do, when to do, and who is to do it.
Planning is a future course of action

Definitions

According to Hodge and Johnson "Planning is the determination in advance of a line of action
in order to achieve better performance".

According to R.N. Farmer and B.M. Richman, "Planning is essentially decision-making since it
involves choosing from among alternatives".

PURPOSE or NEED OF PLANNING:

Achieving the pre determined Bring co operation and

Co ordination

Reduce uncertainty Planning based on objectives

And policies.

Planning is directed towards reduce competition

efficiency.

Achieving the pre determined goals:

The ultimate goal of planning in each and every company preparing planning to achieve the desired
goal.

Bring co-operation and co-ordination:

Planning can bring co operation and co ordination among various departments and it reduces problem
among departments. Besides this planning avoids duplication of work.

Reduce uncertainty:

Future is uncertain in nature. we don’t know what is going to be happen but when we do proper plan,
it will reduce uncertainty.

Planning is based on objectives and policies:

 Planning is prepared based on the objectives of organization and policies of the organization.

Planning is directed towards efficiency:

Planning is directed to increase the efficiency of the firm and directed organization to do things in a
best way.

Reduce competition:

Good planning enable companies to get high growth hence it reduce competition in market.

These forces of challenges can be met by management only through proper planning. Business
activities without proper planning are likely to be ineffective, and may fail to achieve success.
So, planning is a must for every business organization.

Nature and Characteristics of Planning

Primacy of planning or primary function: .Planning is a primary function. That is, it is a

primary requisite to the managerial functions of organizing, staffing directing, motivating,
coordinating, communicating and controlling. A manager must do planning before he can
undertake the other managerial functions.
Goal-oriented or focus on objectives: Planning is goal-oriented. That is, planning is linked
with certain goals or objectives. A plan starts with the setting of objectives; and then, develops
policies, procedures, strategies, etc. to achieve the objectives.
Pervasiveness of planning: Planning pervades all levels of management. That is planning is
done at all levels of .management. In other words, every manager, whether he is at the top, in
the middle or at the bottom or organizational structure, plans.
Essentially a decision-making process: Planning is essentially a decision-making process,
since it involves careful analysis of various alternative courses of action and choosing the best.
Integrated process: Planning is an integrated process. That is it facilitates and integrates all
other functions of management.
Selective Process: Planning is a selective process. That is, it involves the selection of the best
course of action after a careful analysis of the various alternative courses of action.
Flexible: Planning must be flexible. That is, generally, the process of pi3nning must be capable
of being adapted to the changes in the environment. In fact, successful planning should be
flexible.
Formation of premises: Planning requires the formation of premises (i.e., assumptions). It is
only on the basis of premises or assumptions regarding the future (i.e., the future political, social
and economic environments) that the plans will be ultimately formulated.
Directed towards efficiency: The main purpose of planning is to increase the efficiency of the
enterprise. That means, planning is directed to wards efficiency.
Continuous Process: Planning is a continuous process. That is, the management has to keep
itself engaged in planning at the times because ~f the uncertainties of the future.
Planning and control are inseparable: Planning, which is looking ahead, and control, which Is
looking back, are inseparable. They are the Siamese twins of management. Unplanned action
cannot be controlled, for control involves keeping activities in course by correcting deviations
from plans.
Future Oriented: Planning is future-oriented. 1ts essence is looking ahead. It is undertaken to
handle future events effective and achieve some objectives in the future.
Action oriented: Planning is action-oriented. That is, planning should be undertaken in the light
of organizational preferences. The course of action determined must be realistic. That is it
should be neither impossible nor too easy to achieve.
Inter-dependent process: Planning is an inter-dependent process. It requires the Co-operation
of the various sections and sub-sections of the organization.
Involves participation: Planning involves the participation of all the managers as well as the
subordinates. In the words of Koontz and O'Donnell, "Plans must be formulated in an
atmosphere of close participation and high degree of concurrence".

Importance and Advantages of Planning

 TYPES OF PLANS:

1.Standing plan 2.Single use plan. 3.Contingency plan.

1. Standing plans:

Otherwise called as repeated use plans. Once this plans framed, company will use it for long period.
These plans are prepared by managers at different levels. These standing plans will guide when problem
is arised standing plan includes:-

Objectives.

Policies

Procedure.

Rules.

Objectives:

Here company will decide the objectives of the organization.It may be to earn high profit,want to be a
number one leader or to expand business in other countries.

Policies:

Policies denote company HR policies and financial policies.

Procedure:

Procedure denote working procedure of the organization or plan for the process of work.

Rules:

Rules denote company norms, rules and regulation to be followed by employees in day to day working
practices. And it tells that what is to be done and what is to be done in a company.

SINGLE USE PLANS:

Otherwise called as operating plans. These plans can be used of single period and for certain time. At
the end of single use plans, again new plans will be prepared.

Once the plan is over or met, a new plan is prepared for next period. Such plans are:

1.Programs. 2.Budget. 3,Project.

Programs:
 Programs are precise plan of action followed in proper sequence in accordance with the
procedure.

Budget:

It is the estimation of men, machines, and money for future period in numerical terms.

Money plan for future activities or income and expenses estimation. It covers a particular period and
when the period is over new or fresh budgets will be prepared for next period.

Projects:

Here a certain project work will be undertaken and make plan to complete this project work is very
successful manner. Once the project work is over again new project work will be prepared. It may be
connected with general public program.

3.Contingency plans:

These are the plans which are formulated in some condition. The plan is very short term in nature. It is
suddenly happened in nature. Decision makers responsible for success and failure for the plan.

Other planning types:

Functional plans.

Time period planning.

Degree of formulation planning.

Functional planning:

Each and every department manager will do the plan for their department is known as functional
department such as finance department,sales department and HR department.

Time period planning:

Time period planning can be divided as two types:

Long term goal.

Short term goal.

Long term planning:

The period is for long term.Planning is 3 to 5 years.

Short term goals:

Otherwise called as operational plan.

Period for short term planning is usually covers one year.

Degree of formalization:
 It can be divided as two types:

formal planning.

Informal planning.

Formal planning:

This planning is done with all level of people and proper steps.Applicable to large scale companies.

Informal planning:

Here people will not be involved in planning it is a short term in nature and steps also will not be
followed.

OBJECTIVE:

Meaning:

Objectives are the goals, aims or purpose that organization wish to achieve in certain periods.

Nature of objectives

Multiplicit of Hierarch of

Objectives objectives

Periodicity of Flexibility of

Objectives objectives

Measurability of Network of

Objectives objectives

Have a priority

Multiplicity of objectives:

Business objectives are multiple. Each and every organization does have many objectives to satisfy
customers, creditors, employees and society.

Hierarchy of objectives:
 Objectives also written based on the hierarchy levels. The most important objectives is written first
and least important objectives is written last.

Periodicity of objectives:

Based on the time period objective will be classified into two types

LONG TERM OBJECTIVES---Objectives made for long period. It may be for five year or more.

SHORT TERM OBJECTIVES--Objectives made for short period that is for one year.

Flexibility:

Business is running based on the objectives. Objectives are flexible, business also more flexible. If the
objectives are not flexible the business will not survive.

Measurability of objectives:

Objectives will be fixed for every employees and it also measurable one. Here company will measure
the each employees performance. EXAMPLE: fixing target for salesman.

Network of objectives:

Network means inter connection between system the same objectives also inter connected with
individual objectives, department objectives and group objectives.

Have a priority:

All objectives are given important and objectives are completed within short period.

TYPES OF OBJECTIVES:

Primary objectives:

A primary objective of the organization is to fulfillment of consumer needs and they need to satisfy the
entire customer.

Secondary objective:

Secondary objective of the organization is to satisfy their employees by giving good salary, bonus,
favorable working condition and fulfillment of employee’s expectations.

Short term objectives:

These objectives completed within one year.

Long term objectives:

 These objectives are completed within 5 years. But sometime 20 years duration is also counted in long
term.

Improvement objectives:

Every organization wants to do some new or innovative changes in product and technique. These
objectives will be called as improvement objectives. Otherwise called as innovative objectives.

Social objectives:

These objectives are determined for social benefit such as providing employment, pollution, reduce
poverty etc...

Individual objectives:

These objectives are determined for organization members such as reward, recognition and post.

Official objectives:

These objectives are ordinary goals of an organization.

MBO: (Management By Objective)

MBO is a process of defining objectives within an organization so that management and employees agree
to the objectives and understand what they are in the organization.

Process of MBO

1. Organizational goal

2. Joint goal setting

3. Performance review

4. Set check posts

5. Feedback

Self organizational goal:

The first step is to establish the goals for each sub ordinate to attain. Sometime both superior and
subordinator work together to establish goals.

In other, superior establish goals for sub ordinate.

Joint goal setting:

In this step there is a conference between superiors and subordinates. Here Superiors explain the role
and responsibility of subordinator and manager or senior ask low level employees to write down their
responsibilities.

Performance review:

In this stage previous performance of subordinator will be analyzed and they measure what has been
done by subordinator and what remains to be done.

Set check post:

At this level actual performance of the employees measured with standard performance.

Feedback:

Senior employees received feedback about performance of sub ordinate .The person who are getting
continuous feedback highly motivated than those who do not feedback.

This feedback which helps to mold the employees.

Features of MBO:

Good interaction with organization and employees.

MBO combine the long range goals of firm and short range goals.

High degree of motivation and satisfaction for employees through MBO.

Increase the organizational capability of achieving goals at all levels.

Tries to relate organizational goals with society goal.

Strategies:
The strategies may be defined as an overall long term plan for the organization to accomplish its
objectives.

Types of strategies:
1.Stability 2.Product development

3.Market development 4.Vertical integration

 5.Merger 6. other strategies

Stability Strategies:

If the organization satisfies with their profit and activities, it may follow the stability strategy. Stability
strategy means maintain the profitability position for long period.

Product development strategy:

Product development strategy means developing a new product for existing markets. The main
purpose of this strategy is to beat or meet the competitors more effectively.

Market development:

Market development strategy means company plan to sell their existing product in new product in old
market is known as market development strategies.

Vertical integration:

As per this strategy, company may decide to produce raw material for its production in company itself.
It may also decide to develop own sales outlet in order to better serve the consumers.

Merger:

Merger denotes the combining of several business units. Which means one business may joint with
another business is known as merger.

Other strategies:

An organization may also adopt various other strategies such as distribution strategy, financial
strategy, product design strategy etc…

Levels of strategies:

1. Corporate strategy
 2. Business unit strategy

3, Functional strategy

Marketing HR research and development

finance

POLICIES

Policies are general documents or understanding which guide or channel thinking in decision
making of workers.
Policies is a guide for workers to claim their rights and making decision.
Types of policies:

Organizational policies.
Department policies.
Written policies.
Oral policies.
Implied policies.
General policies.
Specific policies.
Imposed policies.
Organizational policies:

These policies are apply to the entire organization and these policies formulated by the top level
managers.

EXAMPLE: Promotional policies.

Functional policies/department policies:

These policies are formulated for the special functions of business or department heads.

EXAMPLE: Production policies ,Marketing policies, Finance policies, Cost reduction policies.

Written policies:

These policies are written in paper to clarify.

Oral policies:

These policies are expressed through spoken words.

Implied policies:

These policies are either may in written or oral mode.

General policies:

Under general policies the subordinate have comparatively more freedom to take decision.

EXAMPLE: under sales policy of the organization the goals can be sold on credit.

Specific policies:

Here specific policy will be formed. EXAMPLE:Sales of good in credit should not be more than
Rs.50,000.

Imposed policies:

These policies are formulated by government and business organization.

DECISION MAKING:

Decision making is the process of selecting best opinion among the various opinion received
from various peoples.
Decision making is the process of selecting best choice of alternative among the alternatives.
 Types of decision:

1. Programmed decision:

These decisions were taken with preplanned and proper procedure.

EXAMPLE: Granting leave to an employee, purpose of materials.

2. Non-programmed decisions:

These decisions will be taken in certain situation/reasons.

EXAMPLE: Reopening of a new branch and introducing a new product.

3. Routine decision:

These types of decisions taken for day operation of business.

Mostly these are repetitive in nature and do not require much analysis and evaluation and can be
made quickly.
4. Strategic decision:

This decision accured when they have planned to invest their money. These decisions are mostly non-
repetitive in nature.

5. Major decision/minor:

Decision can be classified as mayor and minor.

MAJOR: Decision means decision regarding purchase of big machine worth say in crore of rupees.

MINOR: Decision means purchase of ink pen and paper

6. Individual/group decision:

Individual decision taken by a single individual.Group decision taken by a group of people.

7. Long term and departmental:

Decision may be classified long term and departmental decision,long term decision is for long period
taken by top level management .Department decision taken by department heads or managers.

8.Policies and operative decisions:

Decision regarding policy making by top level management.Operative decision relate to day to day
operation of the enterprise.

9.Crisis and research decisions:

Crisis decision taken based on immediate situation.

Research decision means such decision taken after through analysis of advantages and
disadvantages.
10.Problem and opportunity decision:

Problem decision means taking decision to resolve all the problems.

Opportunity decision taken for improving profit,growth and name.
DECISION MAKING PROCESS AND STEPS:

Step1: state the situational goal:

Decision making process begins with setting goal. This goal may be for department or for particular
situation.

Step2: identify the problem:

Decision making process important step is identification of problem tht means recognition of a
problem. Problem mostly arises due to gap between what is what should be or gap between standard
and desired. To identify the problem manager must scan and monitor the working environment.

Step3: analysis of the problem:

After identified a problem manager must find the reason and causes of problem. For finding reason of
the problem manager must obtain all fact information. Simply this phase problem will be analyzed by
gathering information from employees.

Step4:Search for alternatives:

The next step of the decision making process is to search alternatives. Decision makers will generate
all the possible alternatives solution of the problem. When he generate or search alternatives he/she
can seek information from other people such as peers, subordinates and supervisors.

Step5:Evaluate alternatives:

* Evaluation is the process of measuring benefits and disadvantages of each alternative. Some
alternatives offer maximum benefits than others. An alternatives is compared with the other.

The alternatives measurement or evaluation will be done based on following criteria:-

Outcome or benefits of alternatives.

Cost, time and efforts in each alternative.
Resources of each alternative.
Step6:Selecting an alternative:

In this stage the decision maker can select the best alternative. The alternative which maximize the
result in given condition is selected. Before selecting the best alternative each alternatives outcomes
will be compared with each other. Finally the best alternative will be selected which is giving more
outcomes.

Step7:Implement the plan:

Implement puts the decision into action. Once an alternative is selected it is part into action in a
systematic way. Implementation of alternatives involves several steps:
The steps are followed in sequence as follows:
Decision communicated to those responsible people for implementation.
Acceptance should be obtained from them.
Procedure and time scheduled prepared for implementation.
Resource allocated.
Step8:Follow up:

Once the decision is implemented it has to be monitored. When a decision is put into action it
may yield certain results. These results provide the indication whether decision making and its
implementation is proper.
If it is not giving any return necessary changes should be made in decision.