Notes TIME Module1 2023 24 Even DR - SVR 45pages

Module 1 Management; Subject: Technological Innovation Management & Entrepreneurship-Dr.
SVR
Module 1: Management
Q1. Explain the Importance of Management.
The word Management was used earlier in relation to circuses and restaurants.
But nowadays, it has acquired more importance.
1. Management is a critical element in the economic growth of a country.
 The four factors of production namely men, money, material and
machines help 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 the resources.
 Without management, a country's resources of production remain
resources and never become production. (Peter Drucker)
2. Management is essential in all organized efforts, be it a business activity
or any other activity.
 Principles of management are now universally used not just for
managing business organization; they also applied to various other
types of organizations, such as educational, social, and military and
government.
3. Management is the dynamic, life-giving element in every organization.
 Management coordinates current organizational activities and plans
future ones.
 It arbitrates disputes and provides leadership.
 It adapts the organization to its environment and often shapes the
environment to make it more suitable to the organization.
In a competitive economy, the quality and performance of the management
determine the success of an organization; indeed, they determine its very survival.
Nowadays, no organization can hold its monopoly on capital or technology. But
good management can definitely become its monopoly and give it a competitive
edge over its rivals.
Management is "the central core of our national as well as personal activities, and
the way we manage ourselves and our institutions reflects with alarming clarity
that we and our society will become. (Claude S. George)
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Module 1 Management; Subject: Technological Innovation Management & Entrepreneurship-Dr.SVR
Q2. Explain various Definition of Management

It is difficult to define management. In fact, no definition of management has
been universally accepted.
One popular definition is by Mary Parker Follet. Management, she says, is the
"art of getting things done through people".
This definition calls attention to the fundamental difference between a manager
and other personnel(staff) of an organization.
A manager is one who contributes to the organization'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
organization's goals directly by performing the task himself.
Sometimes, however, a person in an organization may 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 organization's goals. Therefore, he is directing
the efforts of others and is contributing to the organization's goals indirectly.
But when he himself is contacting a large customer and negotiating a deal, he is
performing a non- managerial role. Therefore, he is directly utilizing his skills as
a salesman to meet the organization's objectives.
Two weaknesses of Mary Parker Follett's definition are:
 It uses the word "art" in defining management. To say that management is
merely an art is to state a half-truth.
 Art deals with the application of knowledge.
 Management is not merely application of knowledge. It also involves
acquisition of knowledge i.e., science.
 Management based on rules of thumb or intuition/perception is not correct
management.
 This definition does not throw light on the various functions of a
manager.
A somewhat more elaborate definition of management is given by George
R.Terry. He defines management as a process "consisting of planning,
organizing, actuating and controlling, performed to determine and accomplish the
objectives by the use of people and resources."
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 According to this definition, management is a process- a systematic way of

doing things. The four management activities included in this process are:
planning, organizing, actuating and controlling.
 Planning means that managers think of their actions in advance. Their
actions are usually based on some method, plan, or logic, rather than on a
hunch/guess.
 Organizing means that manager coordinates the human and material
resources of the organization.
 Actuating means that managers motivate and direct subordinates.
 Controlling means that managers attempt to ensure that there is no
deviation from the norm or plan. If some part of their organization is on the
wrong track, managers take action to remedy the situation.
This definition also indicates that managers use people and other resources, such
as, finance, equipment, etc. in attaining their goals.
For example, a manager who wishes to increase sales might try not only
motivating the sales force also to increase the advertising budget.
Finally, this definition states that management involves the act of achieving the
organization's objective.
These objectives will, of course, vary with each organization.
The objective of a hospital might be to provide comprehensive medical care to a
community.
The object of a university might be to give students a well-founded education in
a congenial/friendly environment.
Whatever the objectives of particular organization, management is the process by
which the objectives are achieved.
Q3. Explain Functions of Management
OR
Q4. Explain Process of Management
There is enough disagreement among management writers on the classification
of managerial functions. Some classify these functions into four types, some into
five and some into six or seven. The terminology is also not always alike/similar,
different authors offering different names for the same functions of management.
Newman and Summer' recognise only four functions, namely, organising,
planning. leading and controlling.
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Henri Fayol identifies five functions of management, viz., planning, organising,

commanding, coordinating and controlling.
Luther Gulick states seven such functions under the catch word "POSDCORB"
which stands for planning, organising, staffing, directing, coordinating, reporting
and budgeting.
Warren Haynes and Joseph Massic classify management functions into decision-
making, organising, staffing, planning, controlling, communicating and directing.
Koontz and O'Donnell divide these functions into planning organising, staffing,
directing and controlling.
For our purpose, we shall designate the following four as the functions of a
manager: planning, organising, directing, and controlling. Also "innovation"
and "representation" as two additional managerial functions considered
important by Ernest Dale. 10
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.
 This is done not only for the organisation as a whole but for every division,
department or sub-unit of the organisation.
 Thus, planning is a function which is performed by managers at all levels
top, middle and supervisory.
 Plans made by top management for the organisation as a whole may cover
periods as long as five or ten years.
 Plans made by middle- or first-line managers, cover much shorter periods.
Such plans may be for the next day's work, for example, or for a two-hour
meeting to take place in a week.
Organising
 To organise 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, the human organisation and
the material organisation.
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 Once managers have established objectives and developed plans to achieve

them, they must design and develop a human organisation that will be able
to carry out those plans successfully.
 According to Allen, this organisation refers to "the structure which results
from identifying and grouping work, defining and delegating(giving)
responsibility and authority, and establishing relationships."
Staffing may also be considered 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 make certain that
there is enough 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/disciplinary measures.
 It also necessitates a suitable system of compensation.
 Staffing obviously cannot be done once and for all, since people are
continually leaving, getting fired, retiring and dying.
 Often too, the changes in the organisation create new positions, and these
must be filled.
It should be noted that different objectives require different kinds of
organisation to achieve them.
For example, an organisation for scientific research will have to be very different
from one for manufacturing bicycles. Producing bicycles requires assembly-line
techniques, whereas scientific research requires teams of scientists and experts in
various disciplines. Such people cannot be organised on an assembly-line basis.
Directing
 After plans have been made and the organisation has been established and
staffed, the next step is to move towards its defined objectives.
 This function can be called by various names: "leading", "directing",
"motivating", "actuating", and so on.
 But whatever the name used to identify it, in carrying out this function the
manager explains to his people what they have to do and helps them do it
to the best of their ability.
 Directing thus involves three sub-functions-communication, leadership
and motivation.
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 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/moving 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.
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 and comparing it against the established
standards
3. Taking action to correct any performance that does not meet those standards
In the absence of sound control, there is no guarantee that the objectives which
have been set will be realised. The management may go on committing mistakes
without knowing them. Control compels events to conform to plans.
Innovating
 These days, it is not necessary for an organisation to grow bigger. But it is
necessary that it constantly grows better.
 This makes innovation an important function of a manager.
 Innovation means creating new ideas which may improve a product,
process or practice.
 Thus, HUL's (Hindustan Unilever Limited) inexpensive single-use
shampoo sachets/packets,
 Eureka Forbes'(Eureka Forbes provides health & safety solutions for your
home & offices. Buy India’s best water purifiers, air purifiers, vacuum
cleaners and other water solutions at Eureka) direct-to-house sales force
and
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 ITC's e-Choupals, which now benefit hundreds of Indian farmers across

the country by providing them real-time information and higher farm gate
prices of their commodities, are examples of innovations in packaging,
distribution and business models, respectively.
 e-Choupal is an initiative of ITC Limited, a unique web-based page, to
link directly with rural farmers via the Internet for procurement
of agricultural and aquaculture products like soybeans, wheat, coffee, and
prawns.
Representing
 A manager is also required nowadays 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/exert influence over the
organisation.
 A manager must win their support by effectively managing the social
impact of his organisation.
It should be understood that every function has two dimensions:
substantive/practical and procedural/technical. 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' (but not its
details) is to think of management as an operational process and its functions as
sub-processes in a circular continuous movement (Fig. 1.1).
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We must keep in mind that the relationship among the six sub-processes, shown
in this figure is by no means as straightforward as the figure implies.
These sub-processes have no clear-cut separate entity or a line of demarcation
where one ends and the other begins.
Hence, except when a new organisation is being formed, they blend/mixture into
each other like the flowing water of a river. In fact, many combinations of these
sub-processes usually go on simultaneously in an organisation.
Thus, for example, in the course of planning when a manager asks his
subordinates to make derivative plans the sub-process is one of direction and
when he establishes standards of performance it is one of control, although the
degree of his involvement with each of these sub-processes may vary.
Q5. Explain the Levels of Management

 Although all managers perform the same functions of planning, organizing,
directing. controlling, innovating and representing, there are levels among
them.
 There are, in any organization, the so called 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.
 Next come middle management, a vast and diverse/varied group that
includes sales managers, plant managers, personal managers and many
other department heads.
 Finally, there is the top management consisting of the board chairman,
the company presidents, and the executive vice-presidents, i.e., the men
who coordinate all the specialties and make policies for the company as a
whole.
 White collar jobs are characterized by clerical, administrative, or
managerial work. These roles include strategizing, planning, overseeing
business operations, managing staff, and processing information.
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Q6. Roles of a Senior Manager

The idea of a role comes from sociology and is the pattern of action expected of
a person in his activities involving others. A senior manager regarded as playing
the following ten different roles (According to Minzberg).
1. Interpersonal Roles
a) 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.
b) Leader
As a leader, every manager must motivate and encourage his employees.
He must also try to reconcile (bring together) their individual needs with
the goals of the organization.
c) Liaison
In this role of liaison, every manager must cultivate contacts outside his
vertical chain of command to collect information useful for his
organization.
2. Informational Roles
a) Monitor
As monitor, the manager has to perpetually (continuously) scan his
environment for information, interrogate (question) his liaison (link)
contacts and his subordinates, and unsolicited(unwanted) information,
much of it as a result of the network of personal contacts he has developed.
b) Disseminator
In this role of a disseminator(propagator/communicator), the manager
passes some of his privileged information directly to his subordinates who
would otherwise have no access to it.
c) Spokesman
A manager is also required nowadays, to spend a part of his time in
representing his organization before various outside groups, which have
some stake (venture/bet/risk/) in the organization.
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These stakeholders can be government officials, labour unions, financial

institutions, suppliers, customers, etc. they wield(exert) influence over the
organization.
The manager must win their support by effectively managing the social
impact of his organization.
Thus, he advises his shareholders about financial performance, assures
consumer group that the organization is fulfilling its social responsibilities
and satisfies government that the organization is abiding (surviving) by the
law.
3. Decision Roles
a) Entrepreneur (Capitalist/Industrialist)
In this role, the manager does not merely adapt (settle in) to his surrounding
situation but proactively (Practically) looks out for innovation
(novelty/improvement/originality) to make things happen.
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
(openings) or new products in order to maintain production.
b) Disturbance Handler
In this role, the manager has to work reactively like a fire fighter.
He must seek solutions of various unanticipated (surprising/unexpected)
problems a strike may loom (appear/emerge) large, a major customer may
go bankrupt (broke), a supplier may renege (break a promise) on his
contact, and so on.
c) Resource Allocator
In this role, the manager must divide work and delegate (hand over)
authority among his subordinates. He must decide who will get what.
d) Negotiator
The manager at all levels has to spend considerable time in negotiation
(cooperation/compromise).
Thus, the president of a company may negotiate with the union leaders a
new strike issue; the foremen may negotiate with the workers grievance
(complaint/objection) problems, and so on.
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Q7. Explain Managerial (Decision Making) Skills

 A skill is an individual's ability to perform physical or mental tasks with
a specified outcome.
 Skill is not necessarily inborn.
 It can be developed through practice and through translating one's
knowledge and experience into action.
 In order to successfully discharge his roles, a manager should possess
three major skills.
 These are conceptual skill, human relation 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
The conceptual skill refers to the ability of a manager to take a broad and
farsighted(wise) view of the organization 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.
In short, it is his ability to conceptualize the environment, the organization, and
his own job, so that he can set appropriate goals for his organization, for himself
and for his team.
This skill seems to increase in importance as manager moves up to higher
positions of responsibility in the organization.
Technical skill
The technical skill is the manager's understandings of the nature of the 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 productions.
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Whereas this type of skill and competence seems to be more important at lower
levels of management, its relative importance as a part of the managerial role
diminishes as the manager moves to higher positions.
In higher functional positions, such as the position of a marketing manager or
production manager, the conceptual component, related to these functional areas
becomes more important and the technical component becomes less important.
Human relations
Human relations skill is the ability to interact effectively with people at all
levels.
This skill develops in the manager sufficient ability
(a) to recognize 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 attitude about himself.
This type of skill remains consistently important for managers at all levels.
Figure 1.3 gives an idea about the required change in the skill-mix of a manager
with the change in his level (at different management levels).
At the top level, technical skill becomes least important. That is why, 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.
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Q8. Explain Managerial Effectiveness

 According to Peter Drucker, a manager's performance can be measured in
terms of two concepts: efficiency and effectiveness.
 Efficiency is the ability of a manager to do something correctly, i.e., at
the lowest possible cost or cost acceptable to the competitive environment.
 Effectiveness, on the other hand, is the ability of a manager to do
correct things, i.e., achieves high levels of value.
 We can metaphorically(figuratively) define value as quality divided by
price.
 If a car manufacturer can provide the customer a better car without
changing the price, the value has gone up. If he can give the customer a
better car at a lower price, the value goes way up.
Maximizing efficiency and effectiveness at the same time often creates
conflict between the two goals. We see this trade-off every day in our lives.
At the customer service counter at a local store or bank, being efficient means
using the fewest people possible at the counter. Being effective means minimizing
the amount of time that customers need to wait in line.
We must remember that no amount of efficiency on a part of a manager can
compensate for his lack of effectiveness. He needs both, but although efficiency
is important, effectiveness is critical.
Q9. Explain Management and Administration

There is lack of unanimity (agreement) among writers over the meaning and use
of the words "management" and "administration".
 According to one group of writers, administration involves "thinking".
It is a top-level function which canters on the determination of plans,
policies and objectives of a business enterprise (venture/project).
 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
administrating and part of his time managing.
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 As shown in Figure 1.4 at the top level more time is spent in administrative
activity and as one move down in the organization more time is spent in
management activity.
 Fig. 1.4 Time spent in administrative and managerial functions at different
levels
 According to the second view, management is a comprehensive generic

term which includes administration.
 Management is a comprehensive generic function embracing (accepting)
the entire process of planning, organizing, directing and controlling.
 Administration is only a branch of management which encompasses
(includes) two of its functions- planning and controlling.
 The functions of management can be divided into two categories: (a)
administrative and (b) operative management.
 The upper level of management is usually called administrative
(managerial/directorial/executive) management (supervision) and
 The lower level is known as operative (working) management.
According to another view, the basic difference between management and
administration lies in the use of these words in different fields. The
governance(power) of non-business institutions (such as government, army,
church, etc.) is generally called administration while the governance of
business enterprise is called management.
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This difference of emphasis(stress) in the governance of these two types of

organization is the reason why successful administrators sometimes fail as
managers and vice versa.
Q10. Explain about Management a Science or an art.
Management as a science
 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 study.
 Science is also a 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.
On the basis of the above definition of science, we may presume (assume) that
management is also a science. But since the word "science" is used to denote
two types of systematic knowledge: natural or exact (precise) such as physics,
chemistry and behavioural (performance) or inexact.
But the same thing is not possible in management where we have to study man
and factors affecting him. Therefore, we may place management in the category
of a behavioural science.
Management as an Art
 Whereas under "science" one normally learns "why" of a phenomenon,
under "art" one learns "how" of it.
 Art is thus concerned with the understanding of how a particular work can
be accomplished.
 The manager has to constantly analyse the existing situation, determine
the objectives, seek alternatives, implement, coordinate, control and
evaluate information and decisions.
 A theoretical concept learnt in the classroom will not achieve the aimed
results unless he has also the skill (or art) of applying such principles
to solve problem.
The conclusion involves both elements those of a science and an art. While
certain aspects(features) of management make it a science, certain other
which involves application of skill make it an art.
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Management as a profession
We have seen that management is partly an art and partly a science.
According to the view the following characteristics of a profession
1. Existence of an organized and systematic knowledge
2. Formalized methods of acquiring training and experience
3. Existence of an association with professionalism as its goal.
4. Existence of an ethical code to regulate the behaviour of the members of
the profession.
5. Charging of fees-based service, but with due regard for the priority of
service over the desire for monetary reward.
 Management, as we all know, does not possess all the above

characteristics of a profession.
 Unlike medicine, engineering 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 of this analysis, management cannot be called a
profession.
 There are however, certain unmistakable trends towards the
professionalism of management.
 It is becoming increasingly essential nowadays to acquire some
professional knowledge or training.
 There are a number of institutes which offer M.B.A. programs to
graduates to enable them to take up the profession of management.
Module 1 Planning
Q11. Explain the nature of planning.
 Planning is the beginning of the process of management.

 A manager must plan before he can possibly organise, staff, direct or
control. Because planning sets all other functions into action, it can be seen
as the most basic function of management.
 Without planning other functions become mere activity, producing nothing
but chaos(disorder/confusion).
 This has been called the principle of primacy(importance) of planning.
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 Planning is an intellectual(intelligent) process which requires a manager to

think before acting. It is thinking in advance.
 It is by planning that 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.
 It is defined as the process of choosing among alternatives.
 Obviously, decision-making will occur at many points in the planning
process.
 For example, in planning for their organisation, managers must first decide
which goal to pursue: "Shall we manufacture all parts internally or buy
some from outside?" In fact, deciding which goal to pursue is probably the
most important part of the planning process.
 Managers must also decide which assumptions about the future and about
the environment they will use in making their plans: "Will taxes on our
earnings increase, and thus strain our company's cash flow, or can we
expect taxes to remain at the present level?"
 In addition, managers must decide how they will allocate their resources
to attain their goals: "Should we fill up a senior position by promoting an
existing employee or should we hire someone from outside the
organisation?" Because decision-making is such an integral part of
planning.
Planning is a continuous process Koontz and O'Donnell' rightly observe that

like a navigator constantly checking where his ship is going in the vast ocean, 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. It is wiser for him to be right than merely being
consistent. They call it the principle of navigational change.
 As a corollary(consequence/result) to the above principle, it can be said

that a plan must be flexible. By flexibility of a plan is meant its ability to
change direction to adapt to changing situations without undue(excessive)
cost.
 Because circumstances change, it is simple common sense that a plan must
provide for as many contingencies(possibilities) as possible.
 It needs to possess a built-in flexibility in at least five major areas viz.,
technology, market, finance, personnel and organisation.
 Flexibility in technology means the mechanical ability of a company to
change and vary its product-mix according to the changing needs of its
customers.
 Flexibility in market means the company's ability to shift its marketing
geographically. The company should be able to penetrate(enter) into
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unserved areas as and when there is a sudden spurt(spray) of demand in

those areas.
 Flexibility in finance means the company's ability to obtain additional
funds on favourable terms whenever there is need for them.
 Flexibility in personnel means the company's ability to shift individuals
from one job to another.
 Flexibility in organisation means the company's ability to change its
organisation structure.
However, flexibility is possible only within limits. It is almost invariably true that
it involves extra cost. Sometimes it may be so expensive that its benefits may
not be worth the cost. Sometimes people may develop patterns of thought that
are resistant to change. Sometimes already established policies and
procedures may become so deeply ingrained in the organisation that changing
them may become difficult. In most cases irretrievable costs already incurred in
fixed assets, training, advertising, etc. may block flexibility.
 Planning is an all-pervasive function.

 In other words, planning is important to all managers regardless of
their level in the organisation.
 There are, however, some differences in involvement by managers at
different levels.
 One major difference concerns the time period covered.
 Top level managers are generally concerned with longer time periods.
Much of their planning involves activities that will take place six months
to five years later, or even after that.
 Lower-level managers are more concerned with planning activities for
the day, week, or the month.
 First-line supervisors, for example, plan the work activities for their
people for the day.
 They are not responsible for predicting sales levels and ordering materials
to produce products six months in the future. A second major difference
concerns the time spent on planning.
 Top managers generally spend more time on planning. They are more
concerned with establishing objectives and developing plans to meet those
objectives.
 Lower-level managers are more involved in executing these plans.
Q12. Explain the importance of planning.
Without planning, business decisions would become random(irregular), ad hoc

(hit or miss) choices. Four concrete reasons for the paramount importance of
the planning function are as follows.
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1. Minimises Risk and Uncertainty
 In today's increasingly complex organisations, intuition(perception) alone

can no longer be relied(trusted) upon as a means for making decisions. This
is one reason why planning has become so important.
 By providing a more rational(balanced), fact-based procedure for making
decisions, planning allows managers and organisations to minimise risk
and uncertainty.
 In a dynamic society social and economic conditions alter rapidly, planning
helps the manager to cope with and prepare for the changing environment.
Planning does not deal with future decisions, but with the futurity of
present decisions.
 For instance, if a manager does not make any provision for the replacement
of plant and machinery, the problems he will have to face after ten years
can well be imagined.
 The manager has a feeling of being in control if he has anticipated some of
the possible consequences and has planned for them.
 It is like going out with an umbrella in cloudy weather. It is through
planning that the manager relates the uncertainties and possibilities of
tomorrow to the facts of today and yesterday.
4. Leads to Success
 Planning does not guarantee success, but studies have shown that, often
things being equal, "chance favours the prepared mind". Companies that
plan not only outperform the nonplanners but also outperform their own
past results.
 This may be because when a businessman's actions are not random or ad
hoc, arising as mere reaction to the market place, i.e., when his actions are
planned, he definitely does better.
 Planning leads to success by doing beyond mere adaptation to market
fluctuations. With the help of a sound plan, management can act
proactively, and not simply react.
 It involves an attempt to shape the environment on the belief that business
is not just the creation of environment but its creator as well.
5. Focuses Attention on the Organisation's Goals
 Planning helps the manager to focus attention on the organisation's goals

and activities.
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 This makes it easier to apply and coordinate the resources of the

organisation more economically.
 The whole organisation is forced to embrace(hold) identical goals and
collaborate(cooperate) in achieving them.
 It also enables the manager to chalk-out in advance an orderly sequence of
steps for the realisation of an organisation's goals and to avoid a needless
overlapping of activities.
6. Facilitates Control
 In planning, the manager sets goals and develops plans to accomplish these
goals. These goals and plans then become standards or benchmarks
against which performance can be measured.
 The function of control is to ensure that the activities conform to the plans.
Thus, controls can be exercised only i there are plans.
7. Trains Executives
 Planning is also an excellent means for training executives.
 They become involved in the activities of the organisation, and the plans
arouse their interest in the multifarious(different) aspects of planning.
Q.13 Explain the types of plans.

In a large organisation, there are various types of plans that are arranged in a
hierarchy within the organisation. This means that plans at each level have to be
consistent with and contribute to the achievement of plans above them (Fig. 1.5).
Fig1.5 Hierarchy of organisational plans
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Vision
 At the top of this hierarchy is the vision.

 This is the dream that an entrepreneur creates about the direction that his
business should pursue in future.
 It describes his aspirations, beliefs and values and shapes organisation's
strategy.
 In fact, visioning is an ongoing process.
 As the organisation proceeds, the vision reshapes.
 Walchand Hirachand's belief, for example, that a cheap and efficient
transport system was necessary for India's rapid industrialisation resulted
in the establishment of the Scindia Shipping Company, Premier
Automobiles and Hindustan Aircraft Company. The Tata Group of
companies bear the stamp of the lofty ideas of Jamshetji N. Tata. Tata's
sense of trusteeship, his realisation that to survive and prosper, an
enterprise must serve the needs of Indian society, his emphasis on the
application of science and technology-all have been brought to bear on the
enterprises that bear his name.
 A vision should be brief, focused, clear and inspirational to an
organisation's employees. It should be linked to customers' needs and
convey a general strategy for achieving the mission.
Mission
 Next comes mission, which is the unique aim of an organisation that sets it
apart from others of its type.
 It is an organisation's specialisation in some area-service, product or client,
which decides the organisation's scope of business.
 Indeed, this may lead to ruling out a customer segment that would simply
be unprofitable or too hard to serve, given the organisation's capabilities.
 Thus, a university may have as its mission imparting education to women
only or a hospital may treat heart disorders only.
 For example, the mission of Asea Brown Boveri Ltd. (ABB) is as follows:
"... to be a global leader ... most competitive, competent, technologically
advanced and quality-minded electrical engineering company."
 In addition to describing the scope of business (i.e., products and services

the organisation provide: technologies used to provide these products and
services, types of markets, important customer need and distinctive
competencies or the expertise that sets the firm apart from others), the
firm's mission statement may also mention its cultural values.
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 For example, ABB sets out the following values to ensure that its
employees "pull in the same direction": corporate unity and a single sense
of purpose business ethics, customer focus, employee focus, quality,
environmental protection and action orientation, i.e., responding
quickly to changes in today's fast-changing world.
Like vision, a firm's mission also guides the development of strategies. It

establishes the context within which daily operating decisions are made and sets
limits on available strategic options. It is, therefore, necessary that it is not revised
every now and then in response to every new turn in the economy. But it may
change overtime to take advantage of new opportunities or respond to new
market conditions.
Objectives (purposes/aims)
 Objectives are goals or aims that the management wishes the organisation
to achieve in pursuit(chase) of its mission.
 These are the end points or pole-star towards which all business activities
like organising, staffing, directing and controlling are directed.
 Only after having defined these end points can the manager determine the
kind of organisation, the kind of personnel and their qualifications, the kind
of motivation, supervision and direction and the kind of control
techniques which he must employ to reach these points.
Objectives should be distinguished from the word "purpose". The purpose of

an organisation is its primary role defined by the society in which it operates.
 For example, the purpose of every university is to impart education or the
purpose of every hospital is to provide health care.
 Purpose is therefore a broad aim that applies not only to a given
organisation but to all organisations of its type in that society.
 Objectives are the specific targets to be reached by an organisation.
 They are the translation of an organisation's mission into concrete terms
against which results can be measured.
 For example, a university may decide to admit a certain number of students
or a hospital may decide to admit: certain number of indoor patients.
Characteristics of Objectives
Some important characteristics of objectives are as under:
1. Objectives are multiple in number
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 This implies that every business enterprise has a package objective set out
in various key areas.
 As pointed out by Peter Drucker, there are eight key areas in which
objectives of performance and results have to be set. These are: market
standing, innovation productivity, physical and financial resources,
profitability, manager performance and development worker
performance and attitude and public responsibility.
 Thus, for example, a fertiliser manufacturing and marketing company may
have the following objectives:
(a) a specified capacity utilisation
(b) specified costs and return on capital,
(c) specified quality of the product,
(d) specified marketing services,
(e) extension and market development,
(f) serving remote and virgin areas,
(g) maintaining the desired network of retail outlets,
(h) extension of warehouse facilities and ex-warehouse sales to small
retailers and farmers close to consumption points.
2. Objectives are either tangible or intangible

 For some of the objectives (such as in the area of market standing,
productivity, and physical and financial resources) there are quantifiable
value available.
 Other areas of objectives are not readily quantifiable and are intangible,
such as manager performance, workers' morale, public responsibility,
etc. But in these areas also objectives become more and more specific and
capable of implementation at lower levels in the organisational hierarchy.
3. Objectives have a priority

 This implies that at a given point in time, the accomplishment of on
objective is relatively more important than of others.
 For example, the goal of maintaining a minimum cash balance may be
critically important to a firm having difficulty in meeting pay rolls and due
date on accounts.
 Priority of goals also says something about the relative importance of
certain goals regard less of time. For example, the survival of the
organisation is a necessary condition for the realisation of all other goals.
The establishment of priorities is extremely important in that the resources of any

organisation must be allocated by rational means. At all points in time, managers
are confronted with alternative goals which must be evaluated and ranked.
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Managers of non-business organisations are particularly concerned with the

ranking of seemingly independent goals. For example, a university vice-
chancellor must determine implicitly, or explicitly, the relative importance of
teaching, research and extension goals. Of course, the determination of goals and
priorities is often a judgemental decision and, therefore, is difficult.
4. Objectives are generally arranged in a hierarchy

This means that we have overarching(main) corporate objectives of the total
enterprise at the top, followed by divisional or departmental objective:
 Overarching corporate (business, company). Process (development)
 Next come objectives of each section and finally individual objectives.
 Objectives at all levels (except at the top) are "process-level"

objectives. They provide indications of whether core business processes
are performing well in support of near-term achievement of corporate
objectives and serve both as a end and as a means. They are the ends of a
unit and they are also the means of the next higher unit.
5. Objectives sometimes clash with each other

1) The process of breaking down the enterprise into units, for example,
production, sales and finance, requires that objectives be assigned to each
unit.
2) Each unit is given the responsibility for attaining an assigned
objective.
3) The process of allocating objective among various units creates the
problem of potential goal conflict and suboptimization, wherein
achieving the goals of one unit may achieving the goals of another.
For example, the production goal of low unit cost achieved through mass
production of low-quality products may conflict with the Sales goal of
selling high quality products.
4) The resolution of this problem is a careful balance of the goal for each unit
with the recognition that the goal of neither unit can be maximised. The
result is Situation known as suboptimization of goals. The exact form and
relative weight to be given to a particular unit or interest group is precisely
the nature of management's dilemma(problem); yet it is precisely
management's responsibility to make these kinds of judgements.
Requirements of Sound Objectives

While laying down objectives there are certain requirements to the manager
should always keep in mind.
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1. Objectives must be both clear and acceptable

The ultimate test of clarity is the people's understanding of the objectives.
Unambiguous communication is helpful in ensuring clarity of
understanding.
The objectives must also be acceptable to the people, that is, they should
be compatible with their individual goals.
As Barnard pointed out, each participant in an organisation determines for
himself the range of acceptable behaviour, and if the activities required of
him are outside this range, will not pursue the objective. A production line
foreman can find all kinds of legitimate(genuine) means to production
schedule if the meeting of that schedule requires behaviour which he
considers unacceptable. For example, if the schedule requires a heavy-
handed approach to push his subordinates to production beyond those
which they themselves believe appropriate, the foreman can simply aim
that it is impossible to meet.
2. Objectives must support one another

Objectives could interlock or interfere with one another For example, the
goals of the production department in a company may be operating at cross
purpose with those of the marketing department. In view of this, there is
need for coordination and balancing the activities of the entire
organisation, otherwise its members may pursue different paths making it
difficult for the manager to achieve the company's overall objectives.
Further, there should be a close-knit(join) relationship between short-range

and long-range objectives What is to be done in the first year should
provide a foundation for what is to be done each successive year, and this
can be guaranteed only if short-range plans are part of the long-range plan.
3. Objectives must be precise and measurable

An objective must always be spelled out in precise measurable terms.
There are several reasons for this:
a) The more precise and measurable the goal, the easier it is to decide how
to achieve it. For example, the goal of "becoming more active in the
community" leaves managers in doubt as to how to proceed. If instead,
managers select as their goal "increasing profits by 10 per cent", they
have described their goals in much more meaningful terms.
b) Precise and measurable goals are better motivators of people than
general goals.
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c) Precise and measurable goals make it easier for lower-level managers

to develop their own plan: for actually achieving those goals. For
example, if a general manager is aiming for a 15 percent growth rate
over the next four years, the sales manager can determine how sales
must increase in order to meet this goal.
d) It is easier for managers to ascertain whether they are succeeding or
failing if their goals are precise and measurable. For example, if they
are aiming for a profit of Rs 15 lakh over the next two years, they can
check progress as profit and loss figures come in. They would then be
in a better position to take whatever corrective action may be necessary
to help them meet their goal.
e) Even objectives which are not immediately measurable can be made so
by using a quantifiable element that correlates with them. For example,
absenteeism(absence) may correlate closely with employee
morale(confidence), even though morale itself cannot be measured.
Hence the specific objective of reducing absenteeism by 50 per cent in,
say, a year provides a substitute measurable objective for improvement
of morale.
4) Objectives should always remain valid

This means that the manager should constantly review and adjust them
according to changed conditions. With the passage of time
stakeholder(investor) preferences change and it becomes necessary for the
manager to work out a new common minimum programme.
Advantages of objectives
Basically, the following benefits result from objectives:
1. They provide a basis for planning and for developing other type of plans such
as policies, budget and procedures.
2. They act as motivators for individuals and departments of an enterprise filling

their activities with a sense of purpose.
3. They eliminate random action which may result in undesirable consequences.
4. They facilitate coordinated behaviour of various groups which otherwise may

pull in different directions.
5. They function as a basis for managerial control by serving as standards against

which actual performance can be measured.
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6. They facilitate better management of the enterprise by providing a basis for

leading, guiding directing and controlling the activities of people of various
departments.
7. They lessen misunderstanding and conflict and facilitate communication

among people by minimising jurisdictional disputes.
8. They provide legitimacy(validity) to organisation's activities.
Q. Explain the important activities involved in strategies during planning.
 Strategy is a term originated in military, which means a response to a

competitive environment.
 In a competitive situation, it is not enough to build plans logically from
goals unless the plans take into account the environmental
opportunities and threats and the organisational strengths and
weaknesses.
 This is commonly referred to as SWOT (strength, weaknesses,
opportunities and threats) analysis.
 A corporate strategy is a plan that takes these factors into account and
provides an optimal match between the firm and the environment.
 Two important activities involved in strategy formulation are
environmental appraisal and corporate appraisal.
Environmental Appraisal
 An analysis of the relevant environment results in the identification of
threats and opportunities.
 Andrews defines the environment of a company as the pattern of all
external influences that affect(disturb) its life and development.
 While every company must define its own relevant environment, some key
environment factors which need to be studied are given below:
1. Political and legal factors:
(a) Stability of the government and its political philosophy

(b) Taxation and industrial licensing laws
(c) Monetary (Financial) and fiscal (Economic) policies
(d) Restrictions on capital movement, repatriation(return) of capital, state
trading, etc.
2. Economic factors:
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(a) Level of economic development and distribution of personal income

(b) Trend in prices, exchange rates, balance of payments, etc.
(c) Supply of labour, raw material, capital, etc.
3. Competitive factors:
(a) Identification of principal competitors
(b) Analysis of their performance and programmes in major areas,

such as market penetration, product life-cycle, product mix, distribution
channels and sales organisation, servicing, credit and delivery, advertising
and promotion, pricing and branding, labour unions, training of personnel,
technological development, productivity and efficiency in manufacturing,
financial strength, profitability and rate of return on sales and investment.
(c) Anti-monopoly laws and rules of competition
(d) Protection of patents(copyrights), trademarks(symbols), brand names

and other industrial property rights
4. Social and cultural factors:
(a) Literacy levels of population

(b) Religious and social characteristics
(c) Extent and rate of urbanisation
(d) Rate of social change
Corporate Appraisal
 This involves an analysis of the company's strengths and weaknesses.
 A company's strengths may lie in its outstanding leadership, excellent
product design, low-cost manufacturing skill, efficient distribution,
efficient customer service, personal relationship with customers, efficient
transportation and logistics, effective sales promotion, high turnover of
inventories and capital, ability to influence legislation, ownership of low-
cost or scarce(rare) raw materials, and so on.
 Any of these strengths that represent unique skills or resources that can
determine the company's competitive edge are called its core
competency.
 The company must plan to exploit these strengths to the maximum.
 Similarly, it may suffer from a number of weaknesses which it must try to
circumvent(avoid).
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 Thus, formulation of a strategy is like preparing for a beauty contest in

which a lady tries to highlight her strong points and hide her weak points.
Q. Explain the modes of strategy formulation.
Modes of Strategy Formulation Mintzberg has described three modes of

strategy making planning. entrepreneurial and adaptive.
The planning mode is systematic and rational.

 The essence of this mode is in being different, i.e., in combining activities
in such a way that they deliver a unique mix of values that are different
from rivals.
 It is not that the rivals cannot imitate this combination.
 But imitation of a combination of activities is certainly more difficult than
the imitation of one or two activities because it requires different
equipment, different employee behaviour, different skills, different
company image and different management systems.
Entrepreneurial mode is one in which a proactive

 Bold plan is drawn to seek new opportunities on the basis of
intuition(perception/awareness).
 Also known as the "inside-out" mode, it believes that the greatest
constraint on a company's performance is its own mindset. With enough
ambition or "stretch" and with the right core competencies, just about
anything is possible.
Adaptive mode (also known as the "outside-in" mode) is reactive and

timid(nervous).
 This mode is generally used to formulate strategies for solving problems
as they come.
 This mode believes that an organisation is a "prisoner of its environment"
and can do only what the world around it allows.
 The task of the managers is to create the best possible fit between their
organisation's internal strengths and weaknesses, and whatever
external opportunities and threats there may be.
In real life, however, we find organisations following a combination of all the

three modes. Thus, manufacturing company may use the planning mode to
formulate the strategy of its finance department the entrepreneurial mode to
formulate the strategy of its marketing department and the adaptive mode to
formulate the strategy of its personnel department.
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Whatever the mode, a strategy is optimum only for a particular point in time. It
should be remembered that to formulate a strategy consistent with rapidly
changing environment is like aiming at a moving target. In a world where strategy
life cycles are shrinking, creativity and innovation are the only way an
organisation can renew its lease on success.
Operational Plans
These plans act as means of implementing the organisation's strategy. They

provide the details of how the strategy will be accomplished. There are two main
types of operational plans: standing plans and single-use plans.
Standing Plans
These plans are designed for situations that repeat often enough to justify a
standardised approach.
For example, it would be inefficient for a bank to develop a new plan for
processing a loan application of each new client. Instead, it uses one standing
plan that anticipates in advance whether to approve or turn down any request
based on the information furnished, credit rating and the like.
The major types of standing plans are policies, procedures, methods and
rules.
1. Policies
 A policy is a general guideline for decision-making. It sets up
boundaries around decisions.
 In so doing, it channelises the thinking of the organisation members so
that it is consistent with and contribute to the organisational objectives.
 In the words of George R. Terry, "policy is a verbal, written or implied
overall guide, setting up boundaries that supply the general limits
and direction in which managerial action will take place.
 Although, policies deal with "how to do" the work, they do not dictate
terms to subordinates.
 They provide a framework within which decisions must be made by the
management in different spheres.
 Thus, we may hear that the recruitment policy of a company is to recruit
meritorious people through employment exchange; or the
advertisement policy of a company is to avoid cut-throat competition
its rivals in the field; or the distribution policy of a fertiliser company is
farmer-oriented.
 Cut- through competition is defined as the situation where competitor
try to eliminate others from the business by using destructive practices.
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 In all these examples, respective policies leave it to the discretion of the

subordinates, the decisions regarding which candidates are meritorious,
what is cut-throat competition and what is to be farmer-oriented.
 It should be noted that both policies and objectives guide thinking
and action, but with difference is the Objectives are end points of
planning while policies channelise decisions to these ends;
Advantages of policies
The advantages of policies are as follows:
1. Policies ensure uniformity of action in respect of various matters at
various organisational points. This makes actions more predictable.
2. Policies speed up decisions at lower levels because subordinates need not
consult their superiors frequently.
3. Policies make it easier for the superior to delegate more and more
authority to his subordinates without being unduly concerned because he
knows that whatever decision the subordinates make will be within the
boundaries of the policies.
4. Policies give a practical shape to the objectives by elaborating and
directing the way in which the predetermined objectives are to be
attained.
Q. Explain the different types of policies
Policies may be variously classified on the basis of sources, functions or

organisational 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 which are usually established formally and
deliberately 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(prescribed) 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.
When decisions are made by the superior on appeals made by the
subordinates, they become precedents(example) for future action.
For example, let us assume that a company allows a discount of 2 per
cent to its buyers. If any customer states that he is willing to purchase
in large quantities and is prepared to pay part of the price in advance,
Page 31 of 45
provided he is allowed 2% per cent discount, then the sales manager

not knowing what to do may approach the general manager for his
advice. If the general manager accepts the proposal for 2% per cent
discount, the decision of the general manager could become a
guideline for the sales manager in the future. This policy is appealed
policy because it comes into existence from the appeal made by the
subordinate to the superior.
c) Implied policies:
There are also policies which are stated neither in writing nor
verbally. Such policies are called implied policies.
Only by watching the actual behaviour of the various superiors in
specific situations can the presence of the implied policy be
ascertained(determined).
For example, if office space is repeatedly assigned to individuals on
the basis of seniority, this may become an implied policy of the
organisation.
d) Externally imposed policies:
Policies are sometimes imposed on the business by external agencies
such as movement, trade associations and trade unions.
For example, a policy might have been dictated by a government law
regulating prices or by a decision of a mill owners association
limiting production or by a decision of the trade union to fill up higher
posts only by promoting existing employees.
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. For example,
a) The sales function may have policies relating to market, price,
packaging, distribution channel, commission to middlemen, etc.;
b) The production function may have policies relating to the method of
production, output, inventory, research, etc.;
c) The financial function may have policies relating to capital structure,
working capital, internal financing, dividend payment, etc.;
d) The personnel function may have policies relating to recruitment,
training, working conditions, welfare activities, etc.
1) 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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Q. Explain briefly the guidelines for effective policy making.
The guidelines for making effective policies are as follows:
1) Policies should, as far as possible, be stated in writing and should be

clearly understood by those who are supposed to implement them.
2) Policies should make their purpose clear,
Define the appropriate methods, action and responsibilities and define the
limits of freedom of action permitted to those whose actions are to be
guided by them.
Thus, for the manager in charge of catering services of an airline
company, its safety policy must state clearly what is meant by safety.
If it means maintaining the quality of food to avoid customer
dissatisfaction or illness, then some of the crucial questions before the
manager are: How does he ensure that the food is of top quality? What
sorts of control points and checkpoints does he establish? How does he
ensure that there is no deterioration of food quality in flight? Who checks
the temperature of the refrigerators or the condition of the oven while the
plane is in the air?
3) To ensure successful implementation of policies, the top managers and
the subordinates who are supposed to implement them must participate in
their formulation. Participation is the best assurance of loyalty to a policy.
4) A policy must strike a reasonable balance between stability and
flexibility. Conditions change and policies must change accordingly. On
the other hand, some degree of stability must also prevail if order and a
sense of direction are to be achieved. There are no rigid guidelines to
specify the exact degree of the requisite flexibility; only the judgement
of management can determine the balance.
5) Different policies in the organisation should not pull in different
directions and should support one another. They must be internally
consistent. A family-owned organisation which is thinking to expand
rapidly and also to retain exclusive family control over the enterprise is
following an internally inconsistent policy because to achieve expansion,
outside finance will have to be raised which may involve loss of family
control.
6) Policies should not be harmful to the interest of society. They must obey
to the standards of ethical behaviour which succeed in society.
7) Policies must be comprehensive to cover as many possibilities as
possible. For example, the policy to hire people through employment
exchanges should also provide for a situation when adequate number of
persons are not so available.
Page 33 of 45
8) Policies should be periodically reviewed in order to see whether they are

to be modified, changed, or completely abandoned and new ones put in
their place.
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.
 For example, the procedure for purchasing raw material may be:
(i) requisition from the storekeeper to the purchasing department;
(ii) calling tenders for purchase of materials;
(iii) placing orders with the suppliers who are selected;
(iv) inspecting the materials purchased by the inspecting department;
and
(v) making payment to the supplier of materials by the accounts
department.
Similarly, the procedure for recruitment of personnel may be:
(i) inviting applications through advertisement;
(ii) screening the applications;
(iii) conducting written test;
(iv) conducting interview for those who have passed the written test; and
(v) medical examination of those who are selected for the posts.
Procedures may also exist for conducting the meetings of directors and
shareholders, granting loans to employees, issuing raw materials from
the stores department, granting sick leave to the employees, passing bills
by the accounts department, and so on.
Q. List out the difference between policy and procedure
Various points of distinction between the two are as under.
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Policies Procedures
Policies are general guides to Procedures are general guides to
both thinking and action of action only usually for people at
people at higher levels. lower levels.
Policies help in fulfilling the Procedures show us the way to
objectives of the enterprise. implement policies.
Policies are generally broad and Procedures are specific and do

allow some latitude(freedom) in not allow latitude.
decision making.
Policies are often established Procedures are always
without any study or analysis. established after thorough study
and analysis of work.
Q. What are the advantages and limitations of procedures
There are several advantages of procedures.

1. They indicate a standard way of performing a task. This ensures a high
level of uniformity of performance in the enterprise.
2. They facilitate executive control over performance. By laying down the
sequence and timing of each task, executive's dependence on the personal
attributes of his subordinates is reduced, supervision becomes more routine
and discipline is externalised.
3. Finally, they enable employees to improve their efficiency by providing
them with knowledge about the entire range of work,
There are two important limitations of procedures.
1. By prescribing one standard way of performing a task, they limit the scope
for innovation or improvement of work performance,
2. By cutting across department lines and extending into various other
departments they sometimes result into so much duplication, overlapping
and conflict that the actual work does not get done properly and resources
are wasted.
Thus, in the aforesaid example, the procedure for purchasing raw material almost
certainly encompasses the store department, the purchase department, the
inspection department and the accounts department.
Page 35 of 45
The above limitations can, however, be overcome if the management reviews

and appraises the procedures periodically with an intention to eliminate
unnecessary steps and overlapping and simplify work
Methods
 A method is a prescribed way in which one step of a procedure is to be

performed.
 The specified technique to be used in screening the applications or
conducting a written test is a method whereas the sequence of steps
involved in the recruitment of personnel constitutes a procedure.
 The method that is selected for discharging a particular step under the
existing conditions may become outdated in due course of time because of
the discovery of better and more economical methods.
 The need for better and more economical methods of operation is great
because of the pressure of competition in the markets for the products of
the concern.
 Methods help in increasing the effectiveness and usefulness of the
procedure.
 By improving the methods, reduced fatigue(weakness), better productivity
and lower costs can be achieved.
 Methods can be improved in a number of ways.
 Manual methods of performing a task can be replaced by mechanical
means, or the existing mechanised process may be improved, or work
simplified and unproductive efforts removes by conducting "motion
study".
Rules
 Rules are detailed and recorded instructions that a specific action must or
must not be performed in a given situation.
 In sanctioning overtime to workmen, in regulating travelling allowances,
in sanctioning entertainment bills and in other similar matters, a uniform
way of handling them or dealing with the case has to be followed.
 These are all covered by the rules of the enterprise, the objective of which
is to avoid repeated reference to higher levels for authorisation of routine
matters which occur frequently.
 Like procedures, rules also bring in predictability(certainty).
 They make sure that a job is done in the same manner every time, bringing
uniformity in efforts and results.
A rule is different from a policy, procedure or method.
Page 36 of 45
It is not a policy because it does not give a guide to thinking and does not leave
any discretion to the party involved.
It is not a procedure because there is no time sequence to a particular action.
It is not a method because it is not concerned with any one particular step of a
procedure.
Single-use Plans
These plans, as their name suggests, are developed to achieve a specific end when
that end is achieved, the plan is dissolved. The major types of these plans are
programmes and budgets.
Q. Explain the steps involved in and planning premises.
The main steps involved in planning are as follows:

1. Being aware of opportunities:
 This is very first step and starting point for planning.

 Once we are aware of opportunities, we can think of setting realistic
objectives.
2. Establishing objectives:
 It is very important to establish objectives for the entire enterprise and the
objectives for each subordinate work units.
 That is the major objectives are broken down into departmental and
individual objectives.
 It is a very crucial step in planning.
3. Developing planning premises:
 The third step in planning is to establish planning premises.

 It is the process of creating assumptions about the future on the basis of
which the plan will be ultimately formulated.
 Planning premises are important for the success of planning as they reveal
facts and information relating to the future such as economic conditions,
Page 37 of 45
production costs competition, availability of material, resources and

capital, government policies, population trends etc.
 This tells about which plan is to be carried out.
There three types of planning premises:
1. Internal and external premises: Internal premises are premises within the
organization. Some of the examples are; policies, forecasts, investment,
availability of equipment, capability of work force, funds flow etc.
External premises are premises outside the organization. They include:
Government policies, technological changes, business environment,
economic conditions, population, buying power, political stability,
sociological factors, demand etc.
2. Tangible and intangible premises: Tangible premises are the measurable
premises. For example, population, investment' demand etc., are tangible
premises. Intangible premises are those which cannot be quantitatively
measurable. Ex: -business environment, economic conditions,
technological change etc'
3. Controllable and uncontrollable premises: Some of the premises are
controllable like, technical man power input technology, machinery,
financial investment etc. Some other premises like, strikes, non-availability
of raw materials, change in government policies, socioeconomic changes,
phase-shift in technology, war etc are uncontrollable by the organization.
4. Determination of alternative course: Next step is to search and identify
some alternative courses of action. It is very rare that for a plan there will
be no alternatives. In this step alternatives are listed.
5. Evaluating the alternatives and selecting the best course of action:
Once the alternatives are found, then the next step is to evaluate them with
respect to the premises and goals. A desired and best suitable alternative is
selected by comparative analysis with reference to cost, risk, and gain etc.,
keeping in mind the goals and objectives 6. Formulating derivative plan.
In order to complete the task, the selected plan must be translated into
programs working plans and financial requirements in the sub-units. These
sub-derived plans from main plan are termed as derivative Plans.
6. Monitoring and controlling the plan: This is the last step in planning.
Each activity of plan is monitored on a continuous basis and if any
deviation or shortfall is noticed, then the manager will initiate suitable
corrective action.
Page 38 of 45
Q. Explain the limitations of planning.
A manager's plans are directed at achieving goals. But a planning effort

encounters some limitations, which are discussed below.
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. In view of this, many
organisations, particularly the smaller ones, are usually unable to afford a
formal planning programme.
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. Some- times planning may cause
delay in decision-making. In an emergency when there is need for the
manager to take a quick decision, he may be bogged down by rules and
procedures.
3. The scope of planning is said to be limited in the case of organisations
with rapidly changing situations. It is claimed that for industries
producing fashionable articles or for industries engaged in the publication
of textbooks, working on a day-to-day basis is more economical than on a
planned basis.
4. Establishment of advance plans tends to make administration
inflexible. When unforeseen(unexpected) changes in the environment,
such as a business recession, change in government policy, crop failure,
etc. take place, the original plan loses its value and there is need to draw
up a fresh plan. But there is a tendency to make the original plan work.
5. There is the difficulty of formulating accurate premises. Since these
premises are the background against which a set of plans is made, they
necessarily deal with the future. Since the future cannot be known with
accuracy, premising must be subject to a margin of error.
6. Planning may sometimes face people's resistance to it. In old,
established organisations, managers are often frustrated in instituting a new
plan simply by the unwillingness or inability of people to accept it.
Whatever be its limitations, planning is essential for every business
enterprise. Unplanned business operations produce disorder. Moreover, it
is always possible to overcome some of the limitations of planning. For
instance, the rigidity of a plan can be overcome by revising it periodically,
the expensiveness of a plan can be overcome by avoiding elaborate
processes and errors in premising can be overcome by entrusting the work
of planning to knowledgeable and competent staff.
Page 39 of 45
DECISION MAKING
 Planning is an intellectual (thinking) process, which requires a manager to

think before acting. Through planning, managers of any organization
decide what to do, when to do, how to do and who has to do.
 Decision-making is an integral part of planning. It is defined as "the

process of choosing among alternatives". Decision-making occurs at many
stages of planning process. Decision-making and choosing the best
alternative are probably the most important activity of the planning
process.
 Decision-making is part of all the functions of the management.

 In planning through decision-making, objectives and goals are prepared.
 In organizing, the managers decide upon the choice of structure, type of
organization, work allocation, delegation of authority and responsibility
etc.
 In directing, managers decide the course of action, the instructions to be
given etc.
 In controlling the managers decide on fixing the standards, how to control,
what to control etc.
Q. Explain the types of decisions
Decisions are classified as follows
1. Pragmatic (Practical/realistic/sensible) and non-pragmatic decisions

2. Individual and collective decisions
3. Minor and major decisions
4. Strategic and routine decisions
5. Simple and complex decisions
6. Temporary (Ad hoc) and permanent decisions etc.
Pragmatic and non-pragmatic decisions:
 Pragmatic decisions are those decisions taken within the purview of

policies, rules or procedures. These are called programmed decisions; each
manager is guided by the same set of rules & policies and is generally
repetitive. Obviously, it is possible for managers to reach their target easily.
 Non-pragmatic decisions are also called as non-programmed decisions. In
the case of non-programmed decisions, since each manager may bring his
personal beliefs, attitudes and value judgments on the decision process.
Page 40 of 45
 It is possible for two managers to arrive at distinctly different solution to

the same problem, each claiming that he is acting rationally.
 The ability to make good non programmed decisions helps to distinguish
effective managers from ineffective managers.
Individual and collective decisions:
 Decisions may be taken either by an individual or by a group.

 Individual decisions are taken where the problem is of a routine nature, and
where a definite procedure to deal with the problems already exists.
Interdepartmental decisions and important strategic decisions are generally
taken by a group.
 Group decisions have advantages like increased acceptance, better
communication and better coordination.
 It has some disadvantages like delay in arriving at decision, group may be
indecisive (unsure), and groups may be compromise or dominate.
 To utilize the advantages of group decisions and avoid its disadvantages
two new techniques are proposed known as "Nominal Group
Techniques" and "Delphi Techniques".
In Nominal Group Techniques, the members independently generate their idea

and give in writing. The ideas are summarized and discussed for clarity and
evaluation. Finally, each member silently gives his rating and opinion about each
idea through voting system. The one with maximum vote is selected as group's
decisions.
In Delphi techniques, persons who are physically dispersed and anonymous

(unnamed) to one other are asked send their opinion on a topic through mail. A
carefully designed questionnaire is circulated for this purpose. The responses are
summarizing into a feedback report and sent back to them with a second
questionnaire. The final summary is developed on the basis of replies received
second time.
Minor and major decisions:
 Minor decisions are those decisions related to day to day and periodical
occurrences. Purchase of stationary, granting leave and permissions etc.
 Major decisions are those decisions generally taken by top management.
Some of them are purchasing new machines, employing new technology,
recruiting new people etc.
Strategic and routine decisions:
Page 41 of 45
 Strategic decisions are similar to major decisions and are generally taken
by top management. Some examples are price increase/discount, change in
product range etc.
 Routine decisions are decisions related to day-to-day operations of an
organization that are routine in nature.
Simple and Complex decisions:
 A simple decision is one that is related to a problem with few numbers of

variables. When there are many variables, the decision making will be
complex. When two decisions (simple and complex) are considered with
the low or high certainty of their outcomes, we get four outcomes.
 Decision in which the problem is simple and the outcome has a high
degree of certainty. They are called routine decisions.
 Decision in which the problem is simple and the outcome has a low
degree of certainty. These are called judgmental decisions. Ex:
Marketing manager may have several alternative ways of promoting a
product, he may not be sure of their outcomes. Good judgment is needed
for such decisions.
 Decision in which the problem is complex and the outcome has a high
degree of certainty. These are called analytical decisions. Many
decisions in the area of the production are of this type. A variety of
computational techniques, such as linear programming, network analysis,
queuing theory etc., are used to arrive at such decisions.
 Decision in which the problem is complex and the outcome has a low
degree of certainty. These are called adaptive decisions. Changes in
corporate plans and policies to meet the changes in environment and
technology are decisions of this type. These decisions usually require the
contributions of the many people and diverse technical backgrounds, and
may even need frequent modifications to adapt the changing environment.
Temporary and permanent decisions:
 Some decisions are to be taken depending on situation till the solution is

found. A decision is taken to meet unexpected solutions are temporary in
nature. These are generally taken by shop managers. Permanent decisions
are taken on a permanent basis
Page 42 of 45
Q. Explain the steps in decision making
Steps in decision making are as mentioned below
Step 1: Recognizing the problem.

Step 2: Deciding priorities among the problems.
Step 3: Diagnosing the problem.
Step 4: Developing alternative solutions or courses of action.
Step 5: Measuring and comparing the consequences of alternative solutions.
Step 6: Converting decision into effective action and follow up of action.
Step 1: Recognizing the problem.
When there is a deviation from the past experience like

 Current year's sales are falling behind last's years.
 Expenses have suddenly increased.
 Employee's turnover has frown.
 Too many defective products are suddenly coming off the assembly line.
When there is a deviation from the plan

 Profit levels are lower than anticipated.
 Department is exceeding its budget.
 Project is off schedule.
When other people bring problems to the manager

 Customers may complain about late deliveries.
 A lower-level manager may complain about the high performance standard
set for him.
 Workers may complain about poor working conditions and so on.
When competitors outperform the manager's organization

 Other companies might develop new processes or improvements in
operating procedures.
**note
The first step in decision making is the problem recognition. A problem may exist
either due to deviation from the past experience, a deviation from the plan, people
bringing problems to the manager or problems arising from competitions.
Step 2: Deciding priorities among the problems.
A manager should not allow himself to be bogged down by all sorts of problems.
He has to identify the following
Page 43 of 45
 The manager should identify the problems which he can solve.

 Some problems can be solved best not by him but by his subordinates.
 Some problems should be referred to the higher officers because they affect
other departments or information available only at higher level.
Step 3: Diagnosing the problem.
 Every problem should be correctly diagnosed.

 The correct diagnosis of the problem is very important for any manager.
He should make a thorough study of a problem with organization before
arriving at solution.
 He should follow the system approach. If diagnosis is made correctly, then
finding solution becomes easy.
Step 4: Developing alternative solutions or courses of action.
After having diagnosed the problem, the next step is to develop alternative
solutions. Generally, for every problem there are alternative solutions.
Ex: to raise production, several alternatives like build a new plant or buy
better equipment or add an extra shift or authorize overtime.
 While developing various alternatives, manager should observe feasibility.
He should identify the limiting factor which may leads impossibility or
difficulty of accomplishment of alternative.
 Two simple ways of developing alternatives are to review the past
experience of a similar situation and to scrutinize the practice of other
companies.
 Alternatives do exist. Some times in the absence of past history of
alternative solutions, the manager has to depend only on his own ability in
finding alternatives.
Step 5: 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 these
alterative.
Step 6: Converting decision into effective action and follow up of action.

The next 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 apposition or non-acceptance from the employees, steps should be to be taken
to convince them to accept the same.
Page 44 of 45
After having implementing the decisions, the manager has to carry out the follow
up action. If the result is not satisfactory, the manager has to take necessary
corrective action or modify the decision.
Note
During the process of decision making the managers face many difficulties. Some
of them are
 Incomplete information
 Nonconductive environment
 Opposition by subordinates
 Improper communication
 Wrong timing
 Statutory regulations
 Government policies
 External influence
 Lack of support
--------------------------- EOM1 -----------------------
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Module 1 Management; Subject: Technological Innovation Management & Entrepreneurship-Dr.

Q2. Explain various Definition of Management

 According to this definition, management is a process- a systematic way of

Henri Fayol identifies five functions of management, viz., planning, organising,

 Once managers have established objectives and developed plans to achieve

 Communication is the process of passing information and understanding

 ITC's e-Choupals, which now benefit hundreds of Indian farmers across

Q5. Explain the Levels of Management

Q6. Roles of a Senior Manager

These stakeholders can be government officials, labour unions, financial

Q7. Explain Managerial (Decision Making) Skills

Q8. Explain Managerial Effectiveness

Q9. Explain Management and Administration

 According to the second view, management is a comprehensive generic

This difference of emphasis(stress) in the governance of these two types of

 Management, as we all know, does not possess all the above

 Planning is the beginning of the process of management.

 Planning is an intellectual(intelligent) process which requires a manager to

Planning is a continuous process Koontz and O'Donnell' rightly observe that

 As a corollary(consequence/result) to the above principle, it can be said

unserved areas as and when there is a sudden spurt(spray) of demand in

 Planning is an all-pervasive function.

Q12. Explain the importance of planning.

Without planning, business decisions would become random(irregular), ad hoc

1. Minimises Risk and Uncertainty

 In today's increasingly complex organisations, intuition(perception) alone

5. Focuses Attention on the Organisation's Goals

 Planning helps the manager to focus attention on the organisation's goals

 This makes it easier to apply and coordinate the resources of the

Q.13 Explain the types of plans.

Fig1.5 Hierarchy of organisational plans

 At the top of this hierarchy is the vision.

 In addition to describing the scope of business (i.e., products and services

Like vision, a firm's mission also guides the development of strategies. It

Objectives should be distinguished from the word "purpose". The purpose of

Some important characteristics of objectives are as under:

1. Objectives are multiple in number

2. Objectives are either tangible or intangible

3. Objectives have a priority

The establishment of priorities is extremely important in that the resources of any

Managers of non-business organisations are particularly concerned with the

4. Objectives are generally arranged in a hierarchy

 Overarching corporate (business, company). Process (development)

 Next come objectives of each section and finally individual objectives.

 Objectives at all levels (except at the top) are "process-level"

5. Objectives sometimes clash with each other

Requirements of Sound Objectives

1. Objectives must be both clear and acceptable

2. Objectives must support one another

Further, there should be a close-knit(join) relationship between short-range

3. Objectives must be precise and measurable

c) Precise and measurable goals make it easier for lower-level managers

4) Objectives should always remain valid

2. They act as motivators for individuals and departments of an enterprise filling

3. They eliminate random action which may result in undesirable consequences.

4. They facilitate coordinated behaviour of various groups which otherwise may

5. They function as a basis for managerial control by serving as standards against

6. They facilitate better management of the enterprise by providing a basis for

7. They lessen misunderstanding and conflict and facilitate communication