TIME Module1

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TECHNOLOGICAL INNOVATION
MANAGEMENET & ENTREPRENEURSHIP – 21EC61
Module 1
Management & Planning
Management: Nature and Functions of Management – Importance, Definition,
Management Functions, Levels of Management, Roles of Manager, Managerial
Skills, Management & Administration, Management as a Science, Art & Profession.
Planning: Planning - Nature, Importance, Types, Steps and Limitations of Planning;
Decision Making – Meaning, Types and Steps in Decision Making.
Nature & Functions of Management
Importance of Management
Management is a critical element in the economic growth of a country: By
bringing together the four factors of production (viz., men, money, material and
machines), management enables a country to experience a substantial level of
economic development. A country with enough capital, manpower and other
natural resources can still be poor if it does not have competent managers to
combine and coordinate these resources.
Management is essential in all organised efforts, be it a business activity or
any other activity: Principles of management are now universally used not just
for managing business organisations; they are also applied to various other types
of organisations, such as educational, social, military and government. The
management of a big multinational company to a small partnership firm, follows
the same general pattern.
Management is the dynamic, life-giving element in every organisation: This
element coordinates current organisational activities and plans future ones. It
arbitrates disputes and provides leadership. In a competitive economy, the
quality and performance of the management determine the success of an
organisation; indeed, they determine its very survival.
Definition of Management
Mary Parker Follett definition: “Management is the art of getting things done
through people."
A manager is one who contributes to the organisation's goals indirectly by
directing the efforts of others-not by performing the task himself. On the other hand,
a person who is not a manager makes his contribution to the organisation's goals
directly by performing the task himself. Sometimes, a person in an organisation may
Mr. Mohammed Saleem Department of EC PACE, Mangalore

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play both these roles simultaneously. For example, a sales manager is performing a
managerial role when he is directing his sales force to meet the organisation's goals,
but when he himself is contacting a large customer and negotiating a deal, he is
performing a non-managerial role.
Two weaknesses of Mary Parker Follett's definition are:
1. It uses the word "art" in defining management. Art deals with the application of
knowledge. Management is not merely application of knowledge. It also involves
acquisition of knowledge i.e., science, Management.
2. This definition does not throw light on the various functions of a manager.
George R. Terry definition: “Management is a process consisting of planning,
organising, actuating and controlling, performed to determine and accomplish the
objectives by the use of people and resources”. According to this definition,
management is a process-a systematic way of doing things. The four management
activities included in this process are: planning, organising, actuating and
controlling.
Management Functions or the Process of Management
1. Planning: Planning is the function that determines in advance what should be
done. It is looking ahead and preparing for the future. It is a process of deciding the
business objectives and charting out the methods of attaining those objectives. In
other words, it is the determination of what is to be done, how and where it is to be
done, who is to do it and how results are to be evaluated.
The planning is a function which is performed by managers at all levels-top,
middle and supervisory. Plans made by top management may cover periods as long
as five or ten years and plans made by middle or first line managers, cover much
shorter periods.
2. Organizing: To organize a business is to provide it with everything useful to its
functioning: personnel, raw materials, tools, capital. All this may be divided into two
main sections: Human organization and Material organisation.
The managers must design and develop a human organisation that will be
able to carry out the plans successfully.
Staffing is an important function involved in building the human
organisation. In staffing, the manager attempts to find the right person for each job.
Staffing fixes a manager's responsibility to recruit and to ensure that there is enough

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manpower available to fill the various positions needed in the organisation. Staffing
involves the selection and training of future managers and encouraging a highly
disciplined approach to work among them, even if it requires taking punitive
measures. It also necessitates a suitable system of compensation.
3. Directing: Directing involves three sub-functions namely communication,
leadership and motivation.
Communication is the process of passing information and understanding
from one person to another. Leadership is the process by which a manager guides
and influences the work of his subordinates. Motivation means arousing desire in
the minds of workers to give their best to the enterprise. It is the act of stimulating
or inspiring workers. If the workers of an enterprise are properly motivated they will
pull their weight effectively, give their loyalty to the enterprise, and carry out their
task effectively.
Two broad categories of motivation are: financial and non-financial. Financial
motivation takes the form of salary, bonus, profit-sharing, etc. while non-financial
motivation takes the form of job security, opportunity of advancement, recognition,
praise, etc.
4. Controlling: The manager must ensure that performance occurs in conformity
with the plans adopted, the instructions issued and the principles established. This
is the controlling function of management, and it involves three elements:
1. Establishing standards of performance
2. Measuring current performance & comparing it against the established standards
3. Taking action to correct any performance that does not meet those standards.
Two additional managerial functions are:
i. Innovating: Innovation means creating new ideas which may improve a product,
process or practice. Thus, HUL's inexpensive single-use shampoo sachets, Eureka
Forbes' direct-to-house sales force and ITC's e-Choupals, are examples of
innovations in packaging, distribution and business models, respectively.
ii. Representing: A manager shall spend a part of his time in representing his
organisation before various outside groups which have some stake in the
organisation. These stake-holders can be government officials, labour unions,
financial institutions, suppliers, customers, etc. A manager must win their support
by effectively managing the social impact of his organisation.

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Every function has two a circular continuous movement as
dimensions: substantive and shown in figure 1.1.
procedural. Substantive dimension is
what is being done, process is how it is
done. The above definitions and
functions of management only help us
identify what a manager does but they
tell us little about how he does. A
highly useful way to capture the
essence of "how" is to think of
management as an operational process
and its functions as sub-processes in
Levels of Management
There are levels among managers like first-line, middle and top managers.
The lower (or first-line) management group is made up of foremen and white
collar supervisors, men and women who are only one step above the rank and file.
The middle management, is a vast and diverse group that includes sales managers,
plant managers, personnel managers and many other department heads. The top
management consists of the board chairman, the company presidents, the executive
vice-presidents, i.e., and the men who coordinate all the specialities and make
policies for the company as a whole.
Managerial Skills
A manager should possess three major skills: Conceptual skill, Human relations
skill and Technical skill. Conceptual skill deals with ideas, technical skill with things
and human skill with people. While both conceptual and technical skills are needed
for good decision-making, human skill is necessary for a good leader.
Conceptual skill refers to the ability of a manager to take a broad view of the
organisation and its future, his ability to think in abstract, his ability to analyse the
forces working in a situation, his creative and innovative ability and his ability to
assess the environment and the changes taking place in it. This skill seems to
increase in importance as a manager moves up to higher positions of responsibility
in the organisation.

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Technical skill is the manager's understanding of the nature of job that
people under him have to perform. It refers to a person's knowledge and proficiency
in any type of process or technique. In a production department, this would mean
an understanding of the technicalities of the process of production.
Human relations skill is the ability to interact effectively with people at all
levels. This skill develops in the manager sufficient ability: (a) to recognise the
feelings and sentiments of others, (b) to judge the possible reactions to, and
outcomes of various courses of action he may undertake; and (c) to examine his own
concepts and values which may enable him to develop more useful attitudes about
himself. This type of skill remains consistently important for managers at all levels.
Figure 1.2 gives an idea about
the required change in the skill-mix of
a manager with the change in his level.
At the top level, technical skill becomes
least important. That is why, people at
the top shift with great ease from one
industry to another without an
apparent fall in their efficiency. Their
human and conceptual skills seem to
make up for their unfamiliarity with
the new job's technical aspects.
Roles of a Senior Manager
Interpersonal Roles
Figurehead In this role, every manager has to perform some duties of a ceremonial
nature, such as greeting the touring dignitaries, attending the wedding of an
employee, taking an important customer to lunch and so on.
Leader As a leader, every manager must motivate and encourage his employees. He
must also try to reconcile their individual needs with the goals of the organisation.
Liaison In this role of liaison, every manager must cultivate contacts outside his
vertical chain of command to collect information useful for his organisation.
Informational Roles
Monitor As monitor, the manager has to perpetually scan his environment for
information, interrogate his liaison contacts and his subordinates, and receive

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unsolicited information, much of it as a result of the network of personal contacts
he has developed.
Disseminator In the role of a disseminator, the manager passes some of his
privileged information directly to his key subordinates who would otherwise have no
access to it.
Spokesman A manager is also required to spend a part of his time in representing
his organisation before various outside groups, which have some stake in the
organisation. These stakeholders can be government officials, labour unions,
financial institutions, suppliers, customers, etc. They wield influence over the
organisation. The manager must win their support by effectively managing the social
impact of his organisation.
Decisional Roles
Entrepreneur In this role, the manager proactively looks out for innovation to make
things happen & to improve his organisation. Innovation means creating new ideas.
Thus, when demand for his product falls off the manager does not cut back his
production but seeks new outlets or new products in order to maintain production.
Disturbance Handler In this role, the manager has to work reactively like a fire
fighter. He must seek solutions of various unanticipated problems - a strike may
loom large, a major customer may go bankrupt, a supplier may renege on his
contract, and so on.
Resource Allocator In this role, the manager must divide work and delegate
authority among his subordinates. He must decide who will get what
Negotiator The manager at all levels has to spend considerable time in negotiations.
Thus, the president of a company may negotiate with the union leaders a new strike
issue, the foreman may negotiate with the workers a grievance problem, and so on.
Management and Administration
Administration involves "thinking". It is a top level function which centres on the
determination of plans, policies and objectives of a business enterprise. On the other
hand, management involves "doing". It is a lower level function which is concerned
with the execution and direction of policies and operations. No two separate sets of
personnel are required, however, to discharge administrative and managerial
functions. Each manager performs both activities and spends part of his time
administering and part of his time managing. As shown in Fig. 1.3 at the top level

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more time is spent in administrative activity and as one moves down in the
organisation more time is spent in management activity
According to the second view management is a comprehensive generic term

which includes administration. Management is a comprehensive generic function
embracing the entire process of planning, organising, directing and controlling.
Administration, is only a branch of management which encompasses two of its
functions - planning and controlling. According to this view, the functions of
management can be divided into two categories: (a) administrative management and
(b) operative management. The upper level of management is usually called
administrative management and the lower level is known as operative manager.
The differences between administration and management are listed below:
Characteristic Administration Administration

1. Main functions Planning, Organizing and Leading, Motivating and
Staffing Controlling.
2. Status Acts as owner Acts as an agency
3. Skills Requires good administrative Requires more technical
skills skills.
4. Level in the Top level Lower level
organization
5. Position Managing Director, Owner, Managers, Supervisors,
CEO, etc. Foremen etc.
6. Objectives Makes the policies, objectives Implements the plans and

and goals to be achieved. policies
7. Involvement No direct involvement in Directly involves in the
production or services execution of plans

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According to another view, the basic difference between management and
administration lies is the use of these words in different fields. The governance of
non-business institutions is generally called administration while the governance of
business enterprises is called management. A manager of a business enterprise
must always, in every decision and action put economic consequences first. On the
other hand, in governing non-business institutions, the economic consequences of
decisions are only secondary for an administrator. For e.g., chief of small a military
organisation has to put military security first & economic considerations next.
Management - A Science or an Art?
Management as a Science
We can call a discipline scientific if its:
1. methods of inquiry are systematic and empirical
2. information can be ordered and analysed
3. results are cumulative and communicable.
All scientific information collected first as raw data is finally ordered and
analysed with the help of statistical tools. It thus becomes communicable and
intelligible. Communication of results also permits repetition of the study, if needed,
by the original investigator or others.
Science is also cumulative in that what is discovered is added to that which
has been found before. We learn from past mistakes and obtain guides for the
future. We build upon the base that has been left by others. On the basis of the
above definition of science, we may presume that management is also a science.
The word "science" is used to denote two types of systematic knowledge:
natural or exact and behavioural or inexact. But management is not like the exact
or natural sciences (such as physics, chemistry). These sciences are called "exact"
because here it is possible for us to study the effects of anyone of the many factors
affecting a phenomenon individually by making the other factors inoperative for the
time being. Thus, in physics it is possible for anyone to study in a laboratory, the
effects of, say, only heat on the density of air by holding other factors (such as
humidity) constant for the duration of the experiment. But the same thing is not
possible in management where we have to study man and a multiplicity of factors
affecting him. For example, it is not possible to study the effect of, say, only
monetary incentives on a worker's productivity because this effect will always be

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found to be mixed with and inseparable from other effects such as the leadership
style of the worker's supervisor, worker's need hierarchy, the pressure of his co-
workers, etc.
Management as an Art
Under "science" one normally learns the "why" of a phenomenon, whereas under
"art" one learns the "how" of it. Art is thus concerned with the understanding of how
a particular work can be accomplished. Management in this sense is more an art.
It is the art of getting things done through others in dynamic and mostly non-
repetitive situations. Whether it is a factory or a farm or a domestic kitchen, the
resources of men, machine, and money have to be coordinated against several
constraints to achieve given objectives in the most efficient manner. The manager
has to constantly analyse the existing situation, determine the objectives, seek
alternatives, implement, coordinate, control and evaluate information and make
decisions. Knowledge of management theory and principles is indeed a valuable aid
and kit of the manager but it cannot replace his other managerial skills and
qualities. This knowledge has to be applied and practised by the manager just as
the medical or legal practitioners practise their respective sciences. In this sense,
management in an art.
Management - A Profession?
The characteristics of a profession are:
1. Existence of an organised and systematic knowledge.
2. Formalised methods of acquiring training and experience.
3. Existence of an association with professionalization as its goal.
4. Existence of an ethical code to regulate the behaviour of the members of the
profession.
5. Charging of fees based on service, but with due regard for the priority of service
over the desire for monetary reward.
Management, does not possess all the above characteristics of a profession.
Unlike medicine or law, management does not have any fixed norms of managerial
behaviour. There is no uniform code of conduct or licensing of managers. Further,
the entry to managerial jobs is not restricted to individuals with a special academic
degree only. In the light of this analysis we can conclude that management cannot
be called a profession.

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However, it is becoming increasingly essential nowadays to acquire some
professional knowledge or training. Managing a business is no longer just a matter
of intuition or a family ability. It has now come to be studied and taught as a subject
by itself.
1. A degree in management does not by itself make an individual a professional
manager. The essence of professional management is achievement, not knowledge;
results not logic. By insisting on holding a degree, we are overemphasising
knowledge and completely overlooking skill. This will eliminate those individuals
who, though highly skilled, do not have the required degree.
2. People once certified as professionals based on academic degrees would always
remain professionals, despite their knowledge becoming obsolete in later years.
PLANNING: Nature of Planning
Planning is the beginning of the management process.
Planning is an intellectual process which requires a manager to think before
acting. It is thinking in advance. By planning managers of organisations decide what
is to be done, when it is to be done, how it is to be done, and who is to do it. Decision-
making is thus an integral part of planning.
Planning is a continuous process. A manager should constantly watch the
progress of his plans. He must constantly monitor the conditions, both within and
outside the organisation to determine if changes are required in his plans.
A plan should be flexible to change to adapt to the changing situations
without undue cost. It should possess flexibility in the areas like technology,
market, finance, personnel and organization.
Planning is an all-pervasive function. Planning is important to all managers
regardless of their level in the organization. Top level managers are concerned with
long range planning involving 2 to 5 years, middle level managers are concerned
with medium range planning involving few months to one year and lower level
managers are concerned with planning the activities of daily or week or up to a
month, where as a worker plans his day's work.
Importance of planning
1. Minimises Risk and Uncertainty: In today’s increasingly complex organisations,
intuition alone can no longer be relied upon as a means for making decisions. This
is one reason why planning has become so important. Planning allows managers

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and organisations to minimise risk and uncertainty, Planning helps the manager to
cope with and prepare for the changing environment.
2. Leads to Success: Planning does not guarantee success. Companies that plan
not only outperform the no planners but also outperform their own past results.
Planning leads to success by doing beyond mere adaptation to market fluctuations.
3. Focuses Attention on the Organisation’s Goals: Planning helps the manager
to focus attention on the organisation’s goals and activities. This makes easier to
apply and coordinate the resources of the organisation more economically. It
enables manager to chalk-out sequence of steps for the realization of organizations
goals and to avoid overlapping of activities.
4. Facilitates Control: In planning, the manager sets goals and develops plans to
accomplish these goals. Then these goals and plans are becomes standards or
benchmarks against which performance can be measured. The function of control
is to ensure that the activities conform to the plans.
5. Trains Executives: Planning is also an excellent means for training executives.
They become involved in the organizational activities and the plans arouse their
interests in various aspects of planning.
Types of Planning
Plans are arranged in hierarchy within an organisation as shown in figure 1.4.

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Vision: Vision is the dream that an entrepreneur creates about the direction that
his business should pursue in future. It describes his aspirations, beliefs, & values
and shapes organizations strategy.
Vision should be brief, focused, clear and inspirational to an organizations
employees. It should be linked to customers need s and convey a general strategy
for achieving the mission.
Mission: Mission is the unique aim of an organization that sets it apart from others
of its type. It is an organizations specialization in some areas like service, product
or client which decides the organizations scope of business.
A firm’s mission statement may also mention its cultural values. A firm’s
mission also guides the development of strategies.
Objectives: Objectives are goals or aims which the management wishes the
organization to achieve. These are end points towards which all business activities
like organizing, staffing, directing and controlling are directed. Objectives are the
specific targets to be reached by the organization. They are the translation of
organizations mission into concrete terms against which results can be measured.
Characteristics of objectives
1) Objectives are multiple in numbers: This implies that every business enterprise
has a package of objectives set out in various key areas. There are eight key areas
in which objectives of performance and results are set which are: Market standing,
Innovation, Productivity, Physical & financial resources, Profitability, Manager
Performance & development, Worker performance, Attitude & public responsibility.
2) Objectives are either tangible or intangible: For some of the objectives such
as in the areas of market standing, productivity, and physical and financial
resources there are quantifiable values available. Other areas of objectives are not
readily quantifiable and are intangible, such as manager’s performance, workers
morale, public responsibility etc.
3) Objectives have priority: This implies that at a given point of time, the
accomplishment of one objective is relatively more important than others. Priority
of goals says something about relative importance of certain goals regardless of time.
4) Objectives are generally arranged in a hierarchy: This means that we have
corporate objectives of the total enterprise at the top, followed by divisional or
departmental objectives, then each section and finally individual objectives.

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5) Objectives sometimes clash with each other: The process of breaking down
the enterprise into units requires that objectives be assigned to each unit. Each unit
is given the responsibility of attaining an assigned objective.
Advantages of objectives:
1. They provide a basis for planning and for developing other type of plans.
2. They act as motivators for individuals and departments.
3. They eliminate haphazard action which may result in undesirable consequences.
4. They facilitate coordinated behaviour of various groups.
5. They function as a basis for managerial control.
6. They facilitate better management
7. They lessen misunderstanding and conflict among people.
8. They provide legitimacy to organisation's activities.
Strategies
Strategy is a plan that takes the environmental opportunities & threats and the
organisational strengths & weaknesses into account and provides an optimal match
between the firm and the environment. Two important activities involved in strategy
formulation are:
Environmental Appraisal Corporate Appraisal.
i. Environmental Appraisal: An analysis of the relevant environment results in the
identification of threats and opportunities. Some of the key environment factors are:
Political and legal factors Competitive factors
Economic factors Social and cultural factors
ii. Corporate Appraisal: This involves an analysis of the company’s strengths and
weaknesses.
Operational Plans
These plans act as means of implementing the organisation's strategy. There are
two main types of operational plans:
Standing plans Single-use plans.
1. Standing Plans The major types of standing plans are:
Policies Methods
Procedures Rules
Policies: A policy is a general guideline for decision-making. It sets up boundaries
around decisions including those that can be made and shutting out those that

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cannot. In other words, “Policy is verbal, written or implied overall guide, setting up
boundaries that supply the general limits and directions in which managerial action
will take place”. Policy deals with “how to do” the work.
Advantages of policies
1. Policies ensure uniformity of action and makes actions more predictable.
2. Policies speed up decisions at lower levels.
3. Policies make it easier for the superior to delegate more and more authority to his
subordinates.
4. Policies give a practical shape to the objectives.
Types of Policies
Policies may be classified on the basis of sources, functions or organizational level.
1. Classification on the basis of sources
On this basis, policies may be divided into originated, appealed, implied and
externally imposed policies.
(a) Originated policies: These are policies established formally and deliberate by
top managers for the purpose of guiding the actions of their subordinates and also
their own. These policies are generally set down in print and embodied in a manual.
(b) Appealed policies: Appealed policies are those which arise from the appeal made
by a subordinate to his superior regarding the manner of handling a given situation.
(c) Implied policies: There are also policies which are stated neither in writing nor
verbally. Only by watching the actual behaviour of the various superiors in specific
situations can the presence of the implied policy be ascertained.
(d) Externally imposed policies: Policies are sometimes imposed on the business
by external agencies such as government, trade associations and trade unions.
2. Classification on the basis of functions
On the basis of business functions, policies may be classified into production, sales,
finance, personnel policies, etc. Every one of these functions will have a number of
policies.
3. Classification on the basis of organisational level
On this basis, policies range from major company policies through major
departmental policies to minor or derivative policies applicable to the smallest
segment of the organisation.

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Guidelines for effective policy-making
The guidelines for making effective policies are as follows
1. Policies should be in writing and should be clearly understood.
2. Policies should reflect the objectives of the organization.
3. Top managers and subordinates must participate in the formation of policies.
4. Policy must strike a reasonable balance between stability and flexibility.
5. Policies in the organization should not pull in different directions.
6. Policies should not be detrimental to the interest of society.
7. Policies must be comprehensive to cover as many contingencies as possible.
8. Policies should be periodically reviewed.
Procedures
Policies are carried out by means of more detailed guidelines called "procedures". A
procedure provides a detailed set of instructions for performing a sequence of
actions involved in doing a certain piece of work. The same steps are followed each
time that activity is performed.
Difference between policy and procedure:
1. Policies are general guides to both thinking and action of people at higher levels.
Procedures are general guides to action only usually for people at lower levels.
2. Policies help in fulfilling the objectives of the enterprise. Procedures show us the
way to implement policies.
3. Policies are generally broad and allow some latitude in decision making.
Procedures are specific and do not allow latitude.
4. Policies are often established without any study or analysis. Procedures are
always established after thorough study and analysis of work.
Methods
A method is a prescribed way in which one step of a procedure is to be performed.
Thus a method is a part of procedure. A procedure has a number of steps, each step
may have number of methods to do it. Methods help in increasing the effectiveness
of a procedure.
Rules
Rules are detailed and recorded instructions that a specific action must or must not
be performed in a given situation. Rules ensure that a job is done in the same
manner every time, bringing uniformity in efforts and results.

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Single-use Plans
The single use plans are developed to achieve a specific end; when that end is
achieved, the plan is dissolved. The major types of these plans are:
Programmes Budgets
Programmes: Programmes are precise plans or definite steps in proper sequence
which need to be taken discharge a given task. Programmes are made up of policies,
procedures, budgets, etc.
Budgets: Budget is a “financial and/or quantitative statement prepared prior to a
definite period of time, of the policy to be pursued during that period for the purpose
of obtaining a given objective." Budgets are plans for a future period of time
containing statements of expected results in numerical terms, i.e. rupees, man-
hours, product-units etc.
Steps in Planning
1. Establishing Verifiable Goals or Set of Goals to be achieved: The first step in
planning is to determine the enterprise objectives. These are most often set by upper
level or top managers. The type of goal selected will depend on a number of factors:
the basic mission of the organisation, the actual & potential abilities of the
organisation etc.
2. Establishing Planning Premises: The second step in planning is to establish
planning premises, i.e. certain assumptions about the future on the basis of which
the plan will be ultimately formulated. Planning premises are vital to the success of
planning as they supply pertinent facts and information relating to the future.
Planning premises can be variously classified as under
(a) Internal and external premises
(b) Tangible and intangible premises
(c) Controllable and non-controllable premises
3. Deciding the Planning Period: Once upper level managers have selected the
basic long-term goals and the planning premises, the next task is to decide the
period of the plan. In some instances plans are made for a year only while in others
they span decades. The factors which influence the choice of a period are as follows:
(a) Lead time in development and commercialisation of a new product.
(b) Time required to recover capital investments or the pay-back period.
(c) Length of commitments already made.

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4. Finding Alternative Courses of Action: The fourth step in planning is to search
for and examine alternative courses of action. For example, products may be sold
directly to the consumer by the company's salesmen or through exclusive agencies.
5. Evaluating and Selecting a Course of Action: Once the alternatives are found,
then the next step is to evaluate them with respect to the premises & goals and
select the best course or courses of action
6. Developing Derivative Plans: Once the plan for the organisation has been
formulated, middle and lower level managers must draw up the appropriate plans
for their sub units. These are the plans required to support the basic plan
7. Establishing and Deploying Action Plans: The action plans identifies particular
activities necessary to turn the derivative plans into action and specifies the who,
what, when, where and how of each action item.
8. Measuring and Controlling the Progress: The process of controlling is a critical
part of any plan. Manager need to check the progress of their plans so that they
can: (a) Take whatever remedial action is necessary to make the plan work (b)
Change the original plan if it is unrealistic.
Limitations of Planning
1. Planning is an expensive and time-consuming process. It involves significant
amounts of money, energy and also risk, without any assurance of the fulfilment
of the organisation's objectives.
2. Planning sometimes restricts the organisation to the most rational and risk-free
opportunities. It curbs the initiative of the manager and forces him to operate
within the limits set by it.
3. The scope of planning is said to be limited in the case of organisations with
rapidly changing situations.
4. Establishment of advance plans tends to make administration inflexible. When
unforeseen changes in the environment, the original plan loses its value and
there is need to draw up a fresh plan.
5. There is the difficulty of formulating accurate premises.
6. Planning may sometimes face people's resistance to it.

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Decision Making
A decision is a choice between two or more alternatives. This implies three things:
1. When manager make decisions they are choosing - they are deciding what to do
on certain basis.
2. Managers have alternatives available when they are making a decision. It
requires wisdom and experience to select best one.
3. Managers have a purpose in mind when they make decision.
Types of Decisions
1. Programmed and Non-Programmed Decisions
Programmed decisions are those that are made in accordance with some policy, rule
or procedure. These decisions are generally repetitive, routine and are obviously the
easiest for managers to make. Examples: Pricing ordinary customers’ orders,
determining salary payments to employees who have been ill, recording office
supplies, and so on. Non-programmed decisions are novel and non-repetitive. If a
problem has not arisen before or if there is no cut and dry method for handling it,
it must be handled by a non-programmed decision. Problems like how to allocate
an organisation's resources, what to do about a failing product line, will usually
require non-programmed decisions for which no definite procedure exists.
In the case of programmed decisions, it is not possible for two managers to
reach different solutions to the same problem. But in the case of non-programmed
decisions, since each manager may bring his own personal beliefs, attitudes and
value judgements, it is possible for two managers to arrive at distinctly different
solutions to the same problem. The ability to make good non-programmed decisions
helps to distinguish effective managers from ineffective managers. As one moves up
in the hierarchy, the ability to make non-programmed decisions becomes important.
2. Major and Minor Decisions
Some decisions are considerably more important than others. We can measure the
relative significance of a decision in four ways:
i. Degree of Futurity of Decision: For how long into the future does a decision
commit the company? A decision which has a long-range impact (purchase of
new machinery), must be rated as major decision and the decision which does
not have a long-range impact ( storing raw material), may be rated as minor
decision.

19
ii. Impact of the Decision on other Functional Areas: If a decision affects only
one function, it is a miner decision while decision affects many functions can be
termed as a major decision.
iii. Qualitative Factors that Enter the Decision: A decision which involves certain
subjective factors is an important decision. These subjective factors include basic
principles of conduct, ethical values, social and political beliefs, etc.
iv. Recurrence of Decisions: Decisions which are rare and have no precedents as
guides may be regarded as major decisions and may have to be made at a high
level. Decisions which recur very often, become minor & routine decisions and
may be taken at a lower level.
3. Routine and Strategic Decisions
Routine, tactical or housekeeping decisions are those which are supportive of the
company's operations. They relate to the present. Their primary purpose is to
achieve a high degree of efficiency in the company's ongoing activities. Provision for
air conditioning, better lighting, parking facilities, cafeteria service, etc. are all
routine decisions. On the other hand, lowering the price of the product, changing
the product line etc., are strategic decisions.
4. Individual and Group Decisions
Individual decisions are taken where the problems is of a routine nature, where the
analysis of variable is simple and where definite procedure to deal with the problem
already exist. Important and strategic decisions which may result into some change
in the organization are generally taken by a group.
Advantages of group decisions are:
1. Increased acceptance by those affected
2. Easier coordination 3. Easier communication
4. More information processed
Disadvantages of group decisions:
1. Group decisions take longer 3. Groups can compromise
2. Groups can be indecisive 4. Groups can be dominated
5. Groups may have a prior commitment to a particular solution
5. Simple and Complex Decisions
When variables to be considered for solving a problem are few, the decision is simple,
when there are many, the decision is complex. When we combine these two types of

20
with the low or high certainty of their outcomes, we get four types of decisions:
1. Decisions in which the problem is simple and the outcome has a high degree of
certainty. These are called mechanistic or routine decisions.
2. Decisions in which the problem is simple but the outcome has a low degree of
certainty. These are called judgemental decisions.
3. Decisions in which the problem is complex but the outcome has a high degree of
certainty. These are called analytical decisions.
4. Decisions in which the problem is complex and the outcome has a low degree of
certainty. These are called adaptive decisions.
Steps in Rational Decision-Making
A decision is rational if appropriate means are chosen to reach desired ends.
Following are the seven steps involved in the process of rational decision-making:
as portrayed in Fig. 1.5.
1. Recognising the problem
2. Deciding priorities among problems
3. Diagnosing the problem
4. Developing alternative solutions or courses of action
5. Measuring and comparing the consequences of alternative solutions
6. Converting the decision into effective action
7. Follow-up
Recognising the problem: First it is necessary to search the environment for the
existence of a problem. A problem exists:
When there is a deviation from past experience
When there is a deviation from the plan
When other people being problems to the manager
When competitors outperform the managers organization

21
Deciding Priorities among Problems: The manager should identify the problems
which he can solve, the problems which he feels that his subordinates can solve and
the problems which are to be referred to the higher officers. With this decision, the
manager is left with very few problems to solve.
Diagnosing the Problem: Every problem should be correctly diagnosed. Managers
should follow systems approach in diagnosing a problem. He should make a
thorough study of all the sides of a problem coupled with organization before
arriving at solution. If the diagnosis is made correctly, then finding solution becomes
easy.
Developing Alternative Solutions or Courses of Action: After having diagnosed
the problem, the next step is to develop alternative solutions. For every problem
there will be some alternative solutions. It is very rare that there is a problem with
only unique solution. Alternatives do exist. Sometimes, in the absence of past
history of alternate solutions, the manager has to depend only on his own ability in
finding alternatives.
Measuring and Comparing the Consequences of Alternative Solutions: The
alternative solutions are measured and compared for their consequences. This
involves a comparison of the quality and acceptability of various solutions.
Converting the Decision into Effective Action: The next step is to convert the
decision into action. This requires the communications of the decisions to the
concerned employees in clear and simple terms. If there is any opposition or non-
acceptance from the employees, steps should be taken to convince them to accept
the same.
Follow up of Action: In the final step, the action should be continuously followed
up, to ensure whether the decision has achieved the desired result and whether the
forecasts & assumptions upon which the decision was based are still valid.

22
Assignment Questions:
1. Define Management. Explain the various functions of Management.
2. Explain different managerial levels and skills using a skill-mix diagram.
3. Describe the various roles of a manager.
4. Distinguish between Management & Administration. Draw the diagram for time
spent in administrative and managerial functions at different levels.
5. Define planning. Describe the importance of planning.
6. Explain the hierarchy of organizational plans with the help of a diagram.
7. How are policies classified? Explain.
8. Bring out the differences between Policies and Procedures.
9. Discuss various steps involved in planning.
10. Briefly explain different types of decisions.
11. Explain all the steps in rational Decision making with a neat diagram.

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Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

According to the second view management is a comprehensive generic term

Characteristic Administration Administration

6. Objectives Makes the policies, objectives Implements the plans and

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

Mr. Mohammed Saleem Department of EC PACE, Mangalore

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