Module – 1

Introduction - Meaning, nature and characteristics of management, scope and Functional

areas of management, goals of management, levels of management, brief overview of

evolution of management theories, Planning - Nature, importance, types of plans, steps in

planning, Organizing - nature and purpose, types of Organization, Staffing - meaning,

process of recruitment and selection.

Meaning of management

Management is the act of getting people together to accomplish desired goals and objectives using
available resources efficiently and effectively.

Management comprises planning, organizing, staffing, directing, coordinating and controlling an

organization for the purpose of accomplishing a goal.
 Management as a Process.
 Management as an Activity.
 Management as a Profession.

Definitions of Management

“Management is the art of getting things done through and with formally organized groups”. - Harold
Koontz

“A Multipurpose organ that manages a business and manages managers and manages workers and works”.
- Peter F. Drucker

“Management is the development of people and not the direction of things”. - Lawrence Appley

Nature of Management

 Universal Process: Wherever there exists human pursuit, there exists management. Without effective
management, the intentions of the organization cannot be accomplished.

 The factor of Production: Equipped and experienced managers are necessary for the utilization of
funds and labour.

 Goal-Oriented: The most significant aim of all management is to achieve the purposes of a firm. The
aims must be practical and reachable.

 Supreme in Thought and Action: Managers set achievable goals and then direct execution on all
aspects to achieve them. For this, they need complete assistance from middle and lower degrees of
management.
 The system of authority: Well-defined principles of regulation, the regulation of proper power and
efficiency at all degrees of decision-making. This is important so that each self must perform what is
required from him or her and to whom he must report.

 Profession: Managers require controlling managerial expertise and education, and have to adhere to a
verified law of conduct and stay informed of their human and social responsibilities.

 Process: The management method incorporates a range of activities or services directed towards an
object.

Characteristics of Management

 Goal-oriented process: An essential aspect of management is to combine individual efforts and direct
them towards achieving organizational goals. These goals differ from organization to organization.

 Multidimensional: Management is called as multidimensional since it has three dimensions namely

work management, management of people and management of operations.

 Continuous Process: Management has various functions they are- planning, organising, directing,
staffing and controlling. As a matter of fact, a manager performs all these functions simultaneously.
Although these functions are separate, management is concerned with performing all of them
simultaneously all the time.

 Group Activity: An organisation consists of a large number of individuals having different reasons
and purposes to join. Again these individual differ based on their needs and behaviours. However, it is
important to realise that these diverse individuals work together towards the achievement of the
organisational goals.

 Dynamic Function: An organisation has to adapt to the environment in order to succeed. Thus
management is dynamic in nature and adapts to the ever-changing social, economic and political
conditions.

Scope of Management

 Financial Management: Every enterprise prioritizes financial management because finances can get
extremely tricky if not managed properly. Effective financial management ensures there are fair
returns to stakeholders, proper estimation of capital requirements and laying down optimal capital. It
 includes preparation and examination of financial statements, creating proper dividend policies and
negotiations with external stakeholders.

 Marketing Management: The scope of management in marketing extends to planning, organizing,

directing and controlling activities in the marketing department. Identifying customer requirements is
crucial for providing business solutions. When a manager is fully aware of the benefits of the products
and/or services the organization provides, they achieve better results. Marketing management ensures
that available resources are properly utilized and the best possible outcomes are achieved.

 Personnel Management: Personnel management as the name suggests it deals with personnel or
individuals in a business environment. It includes the recruitment, transfer, termination, welfare and
social security of employees. This aspect of management is extremely important as employees form
teams and teams drive an organization‟s goals. Individual productivity also contributes to overall
efficiency. Without attending to employee needs and wants, an organization is likely to struggle.

 Production Management: This type of management refers to the process of creating utilities. When
you convert raw materials to finished products and oversee the planning and regulation, you‟re
engaging in production management. Without production, there isn‟t any finished good or service and
without it, organizations can‟t generate interest or profits. The final product must fulfill customer
requirements. The process includes quality control, research and development, plan layout and
simplification.

 Office Management: This includes controlling and coordinating all office activities to achieve an
organization‟s goals and targets. For example, an administration‟s efficiency impacts a business
significantly. The more organized the departments and responsibilities are, the more effective an
organization is.

Functions of Management

 Planning: Planning is the primary function of management. It involves determination of a course of

action to achieve desired results/objectives. Planning is the starting point of management process and
all other functions of management are related to and dependent on planning function. Planning is the
key to success, stability and prosperity in business. It acts as a tool for solving the problems of a
business unit.
 Organizing: Organizing is next to planning. It means to bring the resources (men, materials, machines,
etc.) together and use them properly for achieving the objectives. Organization is a process as well as
 it is a structure. Organizing means arranging ways and means for the execution of a business plan. It
provides suitable administrative structure and facilitates execution of proposed plan. Organizing
involves different aspects such as division of work, span of control delegation of authority,
establishment of superior-subordinate relationship and provision of mechanism for co-ordination of
various business activities.
 Staffing: Staffing refers to manpower required for the execution of a business plan. Staffing, as
managerial function, involves recruitment, selection, appraisal, remuneration and development of
managerial personnel. The need of staffing arises in the initial period and also from time to time for
replacement and also along with the expansion and diversification of business activities.
 Directing: Directing as a managerial function, deals with guiding and instructing people to do the work
in the right manner. Directing/leading is the responsibility of managers at all levels. They have to work
as leaders of their subordinates. Clear plans and sound organization set the stage but it requires a
manager to direct and lead his men for achieving the objectives. Directing function is quite
comprehensive.
 Controlling : Controlling is an important function of management. It is necessary in the case of
individuals and departments so as to avoid wrong actions and activities. Controlling involves three
broad aspects: (a) establishing standards of performance, (b) measuring work in progress and
interpreting results achieved, and (c) taking corrective actions, if required. Business plans do not give
positive results automatically.

Goals of Management

 Achieving the organizational objectives: Management plays an important role in the achievement of
objectives of an organization. Objectives can be achieved only when the human and non-human
resources are combined in a proper way Management is goal oriented. With a view to realize the pre-
determined goals managers plan carefully, organize the resources properly, hire competent people, and
provide necessary guidance.
 Optimum Use of Resources: Management ensures optimum utilization of resources by attempting to
avoid wastage of all kinds. It helps in putting the resources to the best advantage within the limitations
set by organization and its environment. A right climate is created for workers to put in their best and
show superior performance.
 Reducing the cost: Management helps with the effective utilization of resources, reducing unwanted
expenses.
 Establish sound working environment: A dynamic and progressive management guarantees
development of sound Organization, which can face any situation - favorable or unfavorable with ease
and confidence.
 Reduces turnover and absenteeism: Efficient management reduces labor turnover and absenteeism
and ensures continuity in the business activities and operations.
 Brings stability and prosperity: Efficient management brings success, stability and prosperity to a
business enterprise through cooperation among employees.
 Expansion of business: Expansion, growth and diversification of a business unit are possible through
efficient management.

Levels of Management

Management is a group activity, which means that every organization has a number of individuals
placed at different positions and are provided with different responsibilities according to their skills,
education, etc. For the fulfillment of the responsibilities given to the members of an organization, they are
also provided with the required authority. Based on the amount and extent of responsibility and authority
given to these members, a chain of superior-subordinate relationships is formed. This chain of superior-
subordinate relationships is known as the Levels of Management. There are three levels of management;
viz., Top Level Management, Middle Level Management and Operational Level Management.

Top Level Management: They comprise of the senior-most executives of the company. They are
normally regarded as the Chairman, the Chief Executive Officer (CEO), the Chief Operating Officer
(COO), President and Vice-president (VP). Top management is a team consisting of managers from
various operational levels, managing marketing, finance, etc., For instance, Chief Finance Officer (CFO),
Vice President (marketing) whose primary task is to combine various components and regulate the actions
of different units according to the overall objectives of the company.

Functions performed at top level of management are :

 Making strategies and goals for the organization.

 Taking decisions regarding activities to be performed.
 Framing policies for the organization.
 Responsible for welfare and survival of the organization.

Middle Level Management: It is the connection between top and lower level managers. They are lower
to the top managers and above to the first line managers. They are normally called as division heads, for
instance, Production Manager. Middle management is accountable for executing and regulating systems
generated by the top management.

Functions performed at the middle level of management are:

 Interpret the policies to lower management.
 Taking decisions regarding the number of personnel in the department.
 Assigning duties and responsibilities to employees in their department.
 Convey suggestions and grievances of the supervisory level to the top level for the overall smooth
functioning of the organization.
 Liable for the ultimate production of respective departments.
 To act as a link between the lower level and the management.

Lower Level Management: Managers and supervisors make up the lower level of the management in the
hierarchy of the business. Supervisors immediately manage the efforts of the workforce. Their power and
ability are defined according to the maps drawn by the top management.

Functions performed at the lower level of management are:

 Providing on the job training to the workers.
 Ensuring the good performance of the workers.
 Giving feedback to the workers.
 Influence others to work more by setting an example.
 Responsible for group unity.
 Act as a link between the management and the workers.

Brief overview of evolution of management theories

1. Scientific management theory
Began in the closing decades of the 19th century after the Industrial Revolution. Small workshops
were replaced with 100+ person factories. Managers were unprepared for this rapid change due to social
problems that occur when people work together in large groups. They focused on how to increase
efficiency of employee-task mix.

a. Job Specialization & Division of Labor (Adam Smith)

Adam Smith, the father of economics, compared two different methods of manufacturing. In one, 1
employee dealt with all the tasks associated with producing a product (he used the example of a pin). In
the other, employees performed only 1 or a few of the multiple tasks. He found that employees who were
specialized in a task or two were far more efficient. This is due to the fact that job specialization (process
by which a division of labor occurs as different employees specialize in separate tasks over time) allows
employees to practice & develop on one skill.

b. Scientific Management (F.W. Taylor; Father of Management Though)

Frederick W. Taylor defined the techniques of scientific management (the study of relationships
between people and tasks, to redesign the work process to increase efficiency). He developed 4 principles
to increase efficiency:
 Study workers doing tasks, gather informal job knowledge from workers & experiment with ways
of improving the way tasks are performed.
 Codify the new methods of doing tasks into written rules & standard operating procedures.
 Carefully select workers that possess skills & abilities that match the needs of the task, and train
them to perform the task according to the established rules & procedures.
 Establish a standard level of performance for a task & reward performance above that level.

Followers of Taylor, Frank & Lillian Gilbreth refined Taylor‟s analysis of work movements. They
contributed to the idea of time-and-motion study (the study of time and motion when going through a
task). They would:
 Break up tasks into individual actions.
 Find better ways to perform each step.
 Reorganize each step so that it could be done with less effort and in less time.

Scientific Management brought employees hardships: lack of reward for increased productivity,
dissatisfaction with work due to repetitiveness caused by job specialization, and increased chance of
layoffs as fewer employees were needed. This caused employees to often retaliate by purposefully
reducing their efficiency to sabotage a manager‟s efforts.

2. Administrative management theories

This theory study‟s of how to structure an organization‟s administration for maximum efficiency.
Organization structures are systems of tasks & authority relationships that control how employees use
resources to achieve an organization‟s goals.

a. The Theory of Bureaucracy (Max Weber)

5 Principles of Bureaucracy (formal system of administration designed to ensure efficiency):
 A manager‟s formal authority comes from the position they hold, not from their traits.
 People should occupy positions because of performance, not social standing or personal contacts.
 Each position‟s responsibilities & authority (power to hold other accountable & allocate
organization‟s resources) should be clearly defined.
 Arrange a management hierarchy (employees know whom to report to & who reports to them).
 Create a well-defined system of rules (written instructions & restrictions), standard operating
procedures (SOPs; written instructions on how perform each aspect of a task), & norms (unwritten
rules & SOPs) to control behavior.

b. Henri Fayol’s 14 Principles of Management

Henry Fayol, also known as the ‘father of modern management theory’ gave a new perception
of the concept of management. He introduced a general theory that can be applied to all levels of
management and every department. The Fayol theory is practiced by the managers to organize and
regulate the internal activities of an organization. He concentrated on accomplishing managerial
efficiency. The fourteen principles of management created by Henri Fayol are as follows.

1) Division of Work - He believed that segregating work in the workforce amongst the worker will
enhance the quality of the product. Similarly, he also concluded that the division of work improves the
productivity, efficiency, accuracy and speed of the workers. This principle is appropriate for both the
managerial as well as a technical work level.

2) Authority and Responsibility - These are the two key aspects of management. Authority facilitates
the management to work efficiently, and responsibility makes them responsible for the work done
under their guidance or leadership.
3) Discipline - Without discipline, nothing can be accomplished. It is the core value for any project or
any management. Good performance and sensible interrelation make the management job easy and
comprehensive. Employee‟s good behavior also helps them smoothly build and progress in their
professional careers.

4) Unity of Command - This means an employee should have only one boss and follow his command. If
an employee has to follow more than one boss, there begins a conflict of interest and can create
confusion.

5) Unity of Direction - Whoever is engaged in the same activity should have a unified goal. This means
all the person working in a company should have one goal and motive which will make the work
easier and achieve the set goal easily.

6) Subordination of Individual Interest - This indicates a company should work united towards the
interest of a company rather than personal interest. Be subordinate to the purposes of an organization.
This refers to the whole chain of command in a company.

7) Remuneration - This plays an important role in motivating the workers of a company. Remuneration
can be monetary or non-monetary. However, it should be according to an individual‟s efforts they
have made.

8) Centralization - In any company, the management or any authority responsible for the decision-
making process should be neutral. However, this depends on the size of an organization. Henri Fayol
stressed on the point that there should be a balance between the hierarchy and division of power.

9) Scalar Chain - Fayol on this principle highlights that the hierarchy steps should be from the top to the
lowest. This is necessary so that every employee knows their immediate senior also they should be
able to contact any, if needed.

10) Order - A company should maintain a well-defined work order to have a favourable work culture. The
positive atmosphere in the workplace will boost more positive productivity.

11) Equity - All employees should be treated equally and respectfully. It‟s the responsibility of a manager
that no employees face discrimination.

12) Stability - An employee delivers the best if they feel secure in their job. It is the duty of the
management to offer job security to their employees.
13) Initiative - The management should support and encourage the employees to take initiatives in an
organization. It will help them to increase their interest and make then worth.

14) Esprit de Corps - It is the responsibility of the management to motivate their employees and be
supportive of each other regularly. Developing trust and mutual understanding will lead to a positive
outcome and work environment.

These 14 principles of management are used to manage an organization and are beneficial for
prediction, planning, decision-making, organization and process management, control and coordination.

3. Behavioral management theory

It studies of how managers should behave in order to motivate employees to perform efficiently &
be committed to the organization‟s goals.

a. The Work of Mary Parker Follett (Mother of Management Thought)

Believed that Taylor was ignoring the human side of organization. Also believed that power should
come from knowledge & expertise, and not formal authority.

b. The Hawthorne Studies & Human Relations

The Hawthorne Studies demonstrated the importance of understanding that feelings, thoughts &
behavior of workplace members & managers affect performance. This is because as time goes on, an
informal organization (system of rules & norms that emerge in a group‟s behavior) is developed. In the
Hawthorne Studies, the researchers found making any chance in light levels increased efficiency. This is
because, every time the lights changed, employees were reminded that they were being observed & felt
incentivized to increase their productivity. They also conducted interviews where employees were allowed
to give their feedback about their jobs. They found that after the interviews, productivity increased. This is
because the employees felt like they were important & had a say in the organization‟s future.

c. Theory X & Theory Y (Douglas McGregor)

Douglas McGregor proposed that managers had 2 dominant ways of thinking:
Theory X - Employee is lazy, dislikes work, will try to do as little as possible, have little ambition, & will
avoid responsibility. In this way of thinking, managers must supervise closely & control behavior via
rewards/punishments.
Theory Y - Employees are not inherently lazy, do not naturally dislike work, will do what is good for
organization. According to this thinking, work setting determines whether employees are satisfied or not.
Managers do not need to control employees‟ behavior closely; managers must create a work setting that
encourages commitment to organization‟s goals & provide employees opportunities to be imaginative,
excursive initiative & self-direction.

4. Management science theory

Management Science Theory uses rigorous quantitative techniques to help managers make full use
of organizational resources. An extension of scientific management. Branches:

a. Quantitative Management uses math techniques to help managers make decisions

b. Operations management (or operations research) provides managers with analytical tools to analyze
any aspect of an organization‟s production system to increase efficiency.
c. Total quality management (TQM) focuses on analyzing input conversion & output activities to
increase product quality.
d. Management information systems (MIS) help managers‟ present information that is vital for
effective decision making technologically.

5. Organizational environment theory

Organization Environment Research looks at an organization‟s relationship with its external
environment. Organizational environment is anything that operates beyond an organization but still affects
a manager‟s decision making, and acquiring & using resourcing.

a. The Open-Systems View

Daniel Katz, Robert Kahn, & James Thompson viewed organizations as open systems (a system
that is open to the environment; takes in resources from the external environment & converts them into
goods/services which are sent back to the customer). Organization‟s that operate as closed systems
experience entropy & fail due to lack of control. Researchers studying this are interested in synergy
(performance gains that result when individuals & departments coordinate their actions to maximize
efficiency).

b. Contingency Theory
Tom Burns, G.M. Stalker, Paul Lawrence & Jay Lorsch developed the contingency theory; the
idea that managers‟ choice of organizational structures & control systems is contingent on (depend on)
characteristics in which the organization operates. Simply put, this theory states that there is no one best
way to design or lead an organization because each choice is contingent on its external environments &
contexts.
Principles of Scientific Management by Taylor:

F.W. Taylor or Fredrick Winslow Taylor, also known as the ‘Father of scientific management’
proved with his practical theories that a scientific method can be implemented to management. Taylor
gave much concentration on the supervisory level of management and performance of managers and
workers at an operational level. Let‟s discuss in detail the five principles of management by F.W Taylor.

1. Science, not the Rule of Thumb-

This rule focuses on increasing the efficiency of an organization through scientific analysis of
work and not with the „Rule of Thumb‟ method. Taylor believed that even a small activity like loading
paper sheets into boxcars can be planned scientifically. This will save time and also human energy. This
decision should be based on scientific analysis and cause and effect relationships rather than „Rule of
Thumb‟ where the decision is taken according to the manager‟s personal judgment.

2. Harmony, Not Discord-

Taylor indicated and believed that the relationship between the workers and management should
be cordial and completely harmonious. Difference between the two will never be beneficial to either side.
Management and workers should acknowledge and understand each other‟s importance. Taylor also
suggested the mental revolution for both management and workers to achieve total harmony.

3. Mental Revolution-
This technique involves a shift of attitude of management and workers towards each other. Both
should understand the value of each other and work with full participation and cooperation. The aim of
both should be to improve and boost the profits of the organization. Mental Revolution demands a
complete change in the outlook of both the workers and management; both should have a sense of
togetherness.

4. Cooperation, not Individualism-

It is similar to „Harmony, not discord‟ and believes in mutual collaboration between workers and
the management. Managers and workers should have mutual cooperation and confidence and a sense of
goodwill. The main purpose is to substitute internal competition with cooperation.

5. Development of Every Person to his Greatest Efficiency-

The effectiveness of a company also relies on the abilities and skills of its employees. Thus,
implementing training, learning best practices and technology, is the scientific approach to brush up the
employee skill. To assure that the training is given to the right employee, the right steps should be taken at
the time of selection and recruiting candidates based on a scientific selection.

Planning
Making decisions about what to do, why to do it, and when to do it necessitates preparation.
Before beginning a task, management must plan out how to complete it. As a result, creativity and
innovation are inextricably linked to this management function.

Setting goals allows a manager to know where he needs to go because planning bridges the gap
between where we are now and where we want to be. The actions taken by managers at all levels are
central to planning. It necessitates deciding because it involves choosing one course of action over
another.

Definitions of Planning

“Planning is the selecting and relating of facts and the making and using of assumptions regarding the
future in the visualization to achieve desire results.” - George Terry

“Planning is informed anticipation of future” - Haimann.

“Planning is „anticipatory‟ decision-making” - R.L. Ackoff.

Nature of Planning

 Planning is goal-oriented: Every plan must contribute in some positive way towards the
accomplishment of group objectives. Planning has no meaning without being related to goals.

 Primacy of Planning: Planning is the first of the managerial functions. It precedes all other
management functions.

 Planning occurs at every level of organization: Planning is found at all levels of management. Top
management looks after strategic planning. Middle management is in charge of administrative
planning. Lower management has to concentrate on operational planning.

 Efficiency, Economy and Accuracy: Efficiency of plan is measured by its contribution to the
objectives as economically as possible. Planning also focuses on accurate forecasts.
 Planning is an intellectual process: The quality of planning will vary according to the quality of the
mind of the manager.

 Limiting Factors: A planner must recognize the limiting factors (money, manpower etc) and
formulate plans in the light of these critical factors.

 Flexibility: The process of planning should be adaptable to changing environmental conditions.

 Co-ordination: Planning co-ordinates the what, who, how, where and why of planning. Without co-
ordination of all activities, we cannot have united efforts

 Planning is a rational approach: Planning is a future course of action where one wants to reach.
Depending upon your objective time period may vary in the planning process.

 Planning is an open system: As organization is open system and it is impacted with changes in the
environment, therefore changes in the environment may impact the planning. For example Change in
technology, socio-cultural change, political, legal changes to cope up with these changes one has to
make these changes in planning also.

Purposes / Importance of Planning

 Planning provides direction: Planning provides direction to managers and non- managers alike.
When employees know what their organization or work unit is trying to accomplish and what they
must contribute in order to reach goals, they can coordinate their activities, cooperate with each other
and do what it takes to accomplish those goals. Without planning, department and individuals might
work at cross-purpose and prevent the organization from efficiently achieving goals.

 Planning reduces / Offset uncertainty and change: Planning reduces uncertainty by forcing
managers to look ahead, anticipate change, consider the impact of change, and develop appropriate
response. Although planning won‟t eliminate uncertainty, managers plan so they can respond
efficiently. Future is always full of uncertainties and changes. Planning foresees the future and makes
the necessary provisions for it.

 Planning Minimizes waste and redundancy: Planning Minimizes waste and redundancy. When
work activity is coordinated around plans, inefficiency becomes obvious and can be corrected and
eliminated.
 Planning establishes the goals or standard to make control effective: When managers plan, they
develop goals and plan. When they control they see whether the plans have been carried out and the
goals met. Without planning there would be no goals against which to measure or evaluate work
effort. The controlling function of management relates to the comparison of the planned performance
with the actual performance. In the absence of plans, a management will have no standards for
controlling other's performance.

 To manage by objectives: All the activities of an organization are designed to achieve certain
specified objectives. However, planning makes the objectives more concrete by focusing attention on
them.

 To help in co-ordination: Co-ordination is, indeed, the essence of management, the planning is the
base of it. Without planning it is not possible to co-ordinate the different activities of an organization.

 To secure economy in operation: Planning involves, the selection of most profitable course of action
that would lead to the best result at the minimum costs.

 To increase organizational effectiveness: Mere efficiency in the organization is not important; it

should also lead to productivity and effectiveness. Planning enables the manager to measure the
organizational effectiveness in the context of the stated objectives and take further actions in this
direction.

Classification of Planning / Types of Planning

Planning is a complex and comprehensive process involving a series of overlapping and
interrelated elements or stages, including strategic, tactical, and operational planning.

I. On the basis of content, Plans can be classified as:

A. Strategic Planning
B. Tactical Planning
C. Operational planning

Strategic planning establishes master plans that shape the destiny of the firm. An example of strategic
planning is when the executive team at Harley-Davidson Inc. planned how to deal with the demographic
shift of their customer base becoming much older. Strategic plans set broad, comprehensive, and longer-
term action directions for the entire organization.
  It is the process of deciding on Long-term objectives of the organization.
 It encompasses all the functional areas of business
 It decides major goals and policies of allocation of resources to achieve these goals.
 Done at higher levels of management
 Less detailed because it is not involved with the day to day operations of the organization

Tactical planning translates strategic plans into specific goals and plans that are most relevant to a
particular organizational unit. The tactical plans also provide details of how the company or business unit
will compete within its chosen business area. Middle level managers have the primary responsibility for
formulating and executing tactical plans. These plans are based on marketplace realities when developed
for a business. Conditions can change rapidly in competitive fields such as a Korean company suddenly
developing a substantially lower-price sports bike. It involves conversion of detailed and specific plans
into detailed and specification plans.
 It is the blue print for current action and it supports the strategic plans.
 It is Mid-term term.
 It is more detailed because it involves with day to day operations of the organization.
 It is done at middle level of management.

Operational planning identifies the specific procedures and actions required at lower levels in the
organization. If Harley- Davidson wants to revamp an assembly line to produce more sports bikes,
operational plans would have to be drawn. In practice, the distinction between tactical planning and
operational planning is not clear-cut. However, both tactical plans and operational plans must support the
strategic plan such as revamping manufacturing and marketing to capture a larger group of young cyclists.
 It is short term.
 It is more detailed because it is involves with day to day operations of the organization.
 Done at lower level of management.
 Define what needs to be done in specific areas to implement strategic plans.
– Production plans
– Financial plans
– Facilities plans
– Marketing plans
– Human resource plans

II. On the basis of time period

 Long term planning: Long term Plans are focused for more than 5years. It specifies what the
organization wants to become in long run. It involves great deal of uncertainty. Higher management
levels focus on longer time horizons.
 Intermediate term/ Midterm planning: Time frame between two and five years. It is designed to
implement long term plans.
 Short term planning: Time frame of one year or less. It provide basis for day to day operations. Meet
a particular objective in the near future.

Process or Steps of Planning

 Setting the Objectives: The manager of the planning function begins by establishing the goals
because all policies, procedures, and methods are designed solely to achieve the goals. When
establishing the company's objectives, the managers carefully considered the company's ambitions, as
well as its physical and financial resources. Managers tend to set goals that can be completed quickly
and within a specific time frame. After the goals have been established, they are communicated to all
employees.

 Making Assumptions about the future is referred to as premises. On-site plans are created from
the ground up. It is a type of forecast that is created by taking current plans and any prior knowledge
about various policies into account. There should be a complete agreement on every premise. The
assumptions are established based on forecasting. Forecasting is the method of gathering information.
Forecasts are commonly used to determine the demand for a product, a change in a competitor's or
government policy, the tax rate, and so on.

 A List of the Various Options for Achieving the Objectives: After establishing the organization‟s
goals, managers develop a list of alternatives because there are numerous ways to achieve a goal, and
managers must be aware of these options.

 Evaluation of Numerous Alternatives: The manager begins by compiling a list of potential options
and the underlying assumptions. The manager then begins evaluating each alternative, noting its
benefits and drawbacks. When the manager begins to exclude those with greater negative aspects, the
option with the greatest positive aspect and the most plausible assumption is chosen as the best
alternative. When evaluating each alternative, its viability is taken into account.

 Follow-up: Because planning is a continuous process, the manager's job does not end with the plan's
execution. The plan's execution is closely monitored by management. Monitoring a plan is critical
 because it confirms whether or not the assumptions made about the conditions and outcomes are still
valid today. If these predictions do not come true, the strategy is immediately modified.

Organizing Meaning
Organizing is the second key management function, after planning, which coordinates human
efforts, arranges resources and incorporates the two in such a way which helps in the achievement of
objectives. It involves deciding the ways and means with which the plans can be implemented. Organizing
is the establishment of an effective authority relationship that is created among the selected group of
persons who are assigned in doing a specified work.

Organizing Definitions
"Organization involves the grouping of activities necessary to accomplish goals and plans, the
assignment of these activities to appropriate departments and the provision of authority, delegation and co-
ordination." - According to Koontz and O'Donnell

Organization involves division of work among people whose efforts must be co-ordinate to
achieve specific objectives and to implement pre-determined strategies.

Nature of Organizing

 Division of Work: Division of work is the basis of an organization. In other words, there can be no
organization without division of work. Under division of work the entire work of business is divided
into many departments .The work of every department is further sub-divided into sub works.
 Structure: The function of organizing is the creation of a structural framework of duties and
responsibilities to be performed by a group of people for the attainment of the objectives of the
concern. The organization structure consists of a series of relationships at all levels of authority.
 Process: Organization is a process of defining, arranging and grouping the activities of an enterprise
and establishing the authority relationships among the persons performing these activities. It is the
framework within which people associate for the attainment of an objective.
 Accomplishment of Goals or Objectives: An organization structure has no meaning or purpose
unless it is built around certain clear-cut goals or objectives. In fact, an organization structure is built-
up precisely because it is the ideal way of making a rational pursuit of objectives.
 Authority-Responsibility Relationship: An organization structure consists of various positions
arranged in a hierarchy with a clear definition of the authority and responsibility associated with each
 of these. An enterprise cannot serve the specific purposes or goals unless some positions are placed
above others and given authority to bind them by their decisions.
 Human and Material Aspects: Organization deals with the human and material factors in business.
Human element is the most important element in an organization. To accomplish the task of building
up a sound organization, it is essential to prepare an outline of the organization which is logical and
simple.
 Organization is a Universal Process: Organization is needed both in business and non-business
organizations. Not only this, organization will be needed where two or mom than two people work
jointly. Therefore, organization has the quality of universality.

Purpose or importance of organizing

 It facilitates the growth of the enterprise by increasing efficiency.

 It encourages specialization.
 It ensures diversification of activities.
 It promotes technological improvements.
 It helps innovations.
 It encourages the optimum use of resources.
 It motivates the workers through decentralization.
 It stimulates creative thinking and initiative among the workers.
 It provides training facilities and chances of initiative among the workers.
 It creates team spirit among the workers.
 It develops healthy human relations in the enterprise.

Types of Organization
There are two broad categories of organization, which are:
1. Formal Organization
2. Informal Organization

Formal Organization: Formal organization is that type of organization structure where the authority and
responsibility are clearly defined. The organization structure has a defined delegation of authority and
roles and responsibilities for the members.

The formal organization has predefined policies, rules, schedules, procedures and programs. The
decision making activity in a formal organization is mostly based on predefined policies.
 Formal organization structure is created by the management with the objective of attaining the
organizational goals. There are several types of formal organization based on their structure, which are
discussed as follows:

1. Line Organization: Line organization is the simplest organization structure and it also happens to be
the oldest organization structure. It is also known as Scalar or military or departmental type of
organization. In this type of organizational 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.
2. Line and Staff Organization: Line and staff organization is an improved version of the line
organization. In line and staff organization, the functional specialists are added in line. The staff is for
assisting the line members in achieving the target effectively.
3. Functional Organization: Functional organization structure is the type of organization where the task
of managing and directing the employees is arranged as per the function they specialize. In a
functional organization, there are three types of members, line members, staff members and functional
members.
4. Project Organization: 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.
5. Matrix Organization: Matrix organization is the latest form of organization that is a combination of
functional and project organization. In such organizations there are two lines of authority, the
functional part of the organization and project management part of the organization and they have
vertical and horizontal flow of authority, respectively.

Informal Organization: Informal organizations are those types of organizations which do not have a
defined hierarchy of authority and responsibility. In such organizations, the relationship between
employees is formed based on common interests, preferences and prejudices.

Staffing

Staffing is a basic function of management. It is referred to as the process of obtaining and hiring
of manpower for the various business requirements. Staffing is regarded as an essential managerial
function. Staffing is the process of recruiting employees who are eligible for certain positions in a
company. Steps involved in the staffing process are 1.Manpower Planning, 2.Recruitment, 3.Selection, 4.
Placement, 5.Training, 6.Development, 7.Promotion, 8.Transfer, 9.Appraisal, 10.Determination of
Remuneration.

Process of Recruitment and Selection

• A recruitment policy.
• Development of sources of recruitment.
• Selection of recruitment sources.