Technological Innovation and Management Entrepreneurship MODULE – 1

SYLLABUS:

Management – Definition, Importance - Nature and Characteristics of Management, Management

Functions, Roles of a Manager, Levels of Management, Managerial Skills, Management &
Administration, Management as a Science, Art & Profession.
Planning – Nature, Importance and Purpose of Planning, Types of Plans, Steps in Planning,
Limitations of Planning,
Decision Making – Meaning, Types of Decisions, Steps in Decision Making.

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MANAGEMENT

Definition of Management:
 Simplest definition is that it is defined as the art of getting things done through people.
 Management can also be defined as the process consisting of planning, organizing, actuating,
and controlling performed to determine and accomplish the use of people and resources.
 It is systematic way of doing things.
 A manager is one who contributes to the organizational goals indirectly by directing the
efforts others by not performing the task by himself
 A person who is not a manager makes his contribution to the organizations goals directing by
performing the task himself.
The definition involves the act of achieving the organizations objectives. Management involves the act
of achieving organizations objectives.

Important Management activities or functions included in this process are:

1. Planning: means thinking of their actions in advance.
2. Organizing: means that managers coordinate human and material resources of the organization.
3. Actuating: means that managers motivate and direct subordinates.
4. Controlling: means that mangers attempt to ensure that there is no deviation from the norm or
plan.
5. Innovating: means creating new ideas which may improve a product, process or practice.
6. Representing: means representing his/her organization before various outside groups which may
have some stake in the organization.

Nature of management:
1. All the managers carry out the managerial functions of planning, organizing, staffing leading
and controlling
2. management applies to any kind of organization
3. applies to managers at all organizational levels
4. the aim of the managers is same create the surplus
5. managing is concerned with productivity, which implies effectiveness and efficiency

Characteristics of management:
Management is:
1. Intangible (not measurable and cannot be seen) but its presence can be felt by efforts in the
production sales and revenues.
2. universal and it is applicable to all sizes and forms of organizations
3. a group activity and it involves getting things done with and through others
4. Is goal oriented and all actions of management are directed at achieving specific goals.
5. is science as well art and emerging now as a profession
6. is multidisciplinary and it has contributions from psychology, sociology, anthropology

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Scope of the management:

 The management is a must for every organization which encompasses for profit as well as non-
profit organizations, government as well as non-government organizations, and service as well
as manufacturing organizations.
 It is in fact difficult to find an area of activity where management is not applicable.
 Management is not only limited to business enterprises for profits but also to the for non-
profit organizations like educational institutions, health care organizations, financial
organizations, stores management for keeping their cost of the operation at the optimal
levels
 Government organizations like municipal corporations, water supply departments, electricity
boards in providing best possible services to the public
 Non-government agencies like environmental agencies benefit from management in achieving
their social objectives in cost effective manner
 Manufacturing organizations extensively use management to increase production to
enhance the quality of the products manufactured and similarly
 Service organizations benefit from management in providing an exemplary service experience
to the customers.

Management functions or The Process of Management

1. Planning is a function that determines in advance what should be done which is looking ahead
and preparing for the future
a. It is a process of determining the objectives and charting out the methods of attaining those
objectives.
b. It is determination of what, where and how it is to be done and how the results are to be
evaluated.
c. It is done for the organization as a whole but every division, department or subunit of the
organisation.
d. It is a function which is performed by the managers at all levels-top (which may be as long as
five years), middle (shorter may be week) and supervisory.

2. Organizing and staffing is a function which may be divided into two main sections namely the
human organization and material organization.
a. Once the plans have been developed and the objectives established they must design and
develop a human organization to carry out plans successfully.
b. It may defined as a structure which results from identifying and grouping work, defining and
delegating responsibility and authority and establishing the relationships.
c. Staffing is also considered an important function in building the human organization involves
building the right person for the right job.
d. Fixes responsibility for a manager to find the right person for the right job and ensures enough
manpower for the various positions needed for the organization which involves selection and
training of future managers and suitable system of compensation
e. Different objectives require different kinds of organizations.

3. Directing is the next step after planning, organizing and staffing

a. Involves three sub-functions namely communication, leadership and motivation.
b. Communication is the process of passing information from one person to another
c. Leadership is the process of guiding and influencing the work of his subordinates by the
manager.
d. Motivation is the arousing the desire in the minds of the workers to give their best to their
enterprise.
e. To pull out the weight effectively, to be loyal to their enterprise and carry out the task
effectively.
f. Has two types of motivation financial and nonfinancial

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g. Financial: takes the form of salary, bonus, profit-sharing etc.

h. Nonfinancial: takes the form of job security, opportunity of advancement recognition praise
etc.

4. Controlling is a function which ensures everything occurs in conformity with plans adopted and
involves three elements:
a. establishing the standards of performance
b. Measuring current performance and comparing it against the established standards.
c. taking action to correct any performance that does not meet the standards, management
process.

5. Innovating: It is very much necessary for an organization to grow better, for which INNOVATION
becomes very essential. A frequent catchphrase used in Organization is “Innovate or evaporate”.
Innovation means creating new ideas in the organization which may improve a product, process or
practice for their betterment.

6. Representing: A manager is also required to spend

a part of his/her time in representing his
organization before various outside groups which
may have some stake in the organization. These
stake-holders can be government officials, labour
unions, customers, suppliers, financial institutions,
etc. They have influence over the organization. A
manager must win their support by effectively
managing the social impact of the organization.

Management Process blends into each other like the flowing water of a river. These sub-processes
have no clear-cut separate entity or a line of demarcation where one ends & the other begins.

Roles of a Manager:
I. Interpersonal roles:
a) Figure head: performs duties of ceremonial nature such as greeting the touring dignitaries,
attending the wedding of an employee etc.
b) Leader: every manager must motivate and encourage their employees, try to
reconcile their individual needs with the goals of the organization.
c) Liaison: in this role, every manager must develop contacts outside the vertical chain of
command to collect information useful for the organization.

II. Informational roles:

a) Monitor: must perpetually scan his environment for information; interrogate his liaison
and subordinates to get any solicited information useful for the organization.
b) Disseminator: manager passes the privileged information directly to the subordinates who
otherwise would not have access to it.
c) Spokesman: may require spending a part of the time in representing the organization
before various outside groups having some stake in the organization such as
government officials, labour unions, and financial institutions.

III. Decisional roles:

a) Entrepreneur: in this role the manager proactively looks out for innovation to improve the
organization by means of means creating new ideas, development of new products or
services or finding new uses for the old ones.
b) Disturbance handler: must act like a fire-fighter to seek solutions to various unanticipated
problems

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c) Resource allocator: must divide work and delegate authority among his subordinates.
d) Negotiator: must spend considerable time in negotiations.
Example: the foreman negotiating with the workers for the grievance problems

Levels of Management:

The term “Levels of Management’ refers to a line of demarcation between various managerial
positions in an organization. The number of levels in management increases when the size of the
business and work force increases and vice versa. The level of management determines a chain of
command, the amount of authority & status enjoyed by any managerial position. The levels of
management can be classified in three broad categories:
1. Top level / Administrative level - consists of board chairman, the company presidents, and
the executive vice presidents.
2. Middle level / Executory - consist of vast and diversified group consisting plant managers,
personnel managers and department heads.
3. Low level / Supervisory / Operative / First-line managers - is made up of foreman and
white collared supervisors.

Managers at all these levels perform different functions. The role of managers at all the three levels is
discussed below:

Managerial skills:
The manager is required to possess three major skills: Conceptual skill which deals with ideas, human
relations skill which deals with people and technical skill which deals with things.
1. Conceptual skill: deals with the ability of manager to take a broad and farsighted view of
organization and its future, ability to think in abstract ability to analyse the forces working in a
particular situation.
2. Technical skill: are managers understanding of the nature of the job that people under him
have to perform. It refers to the person’s knowledge and proficiency in any type of process or
technique.
3. Human relations skill: is the ability to interact effectively with people at all levels and the
manager sufficient ability to:
a. to recognize the feelings and sentiments of others.
b. to judge the possible reactions to and the outcomes of various courses of action
c. to examine his own concepts and values which may enable to more useful attitudes and
about himself.

Skill mix of a manager with the change in his level:

a. Top level: technical skill becomes less important
b. Middle management: human relations skill become more important
c. Supervisory skill: technical skill becomes more important.

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Management & Administration:

Sl. Differences Administration Management
1 Nature of Work It is concerned about the It puts into action the policies and
determination of objectives and plans laid down by the administration
major policies of an organization.
2 Type of function It is a determinative function. It is an executive function.
3 Scope It takes major decisions of an It takes decisions within the
enterprise as a whole framework set by the administration.
4 Level of authority It is a top-level activity. It is a middle level activity.
5 Nature of status It consists of owners who invest It is a group of managerial personnel
capital in and receive profits from who use their specialized knowledge
an enterprise. to fulfil the objectives of an enterprise.
6 Decision making Its decisions are influenced by Its decisions are influenced by the
public opinion, government values, opinions, and beliefs of the
policies, social, and religious managers.
factors.
7 Nature of usage It is popular with government, It is used in business enterprises.
military, educational, and religious
organizations.
8 Main functions Planning and organizing functions Motivating and controlling functions
are involved in it. are involved in it.
9 Abilities It needs administrative rather It requires technical activities
than technical abilities

Management as a Science, Art & Profession –

Management is called SCIENCE if -

1. the methods of the inquiry are systematic and empirical
2. if the information can be ordered and analysed and
3. results are cumulative and communicable

Systematic means orderly and unbiased attempt to gain knowledge must be with the personal or
other prejudgment. Inquiry being empirical means that it is not an armchair speculation or priory
approach. the scientific information so collected as raw data must be finally ordered and analysed
with the statistical tools which makes the results. Communicable and intelligible which also permits
repletion of the study and the results in the sense that what is discovered is added to which has been
found before which helps us to learn from past mistakes and obtain guides for the future.

Management as ART -
1. As the science considers the why phenomena management as an art is concerned with the
understanding how a particular task can be accomplished which involves art of getting things done
through others in a dynamic and non-repetitive fashion and has to constantly analyse the existing
situation, determine the objectives, seek the alternatives, implement, coordinate, control and
evaluate information and make decisions.
2. As the knowledge of management theory and principles is a valuable kit of the manager but it
cannot replace his managerial skills and qualities which has to be applied and practiced which
makes us to consider manager as an art.
3. Like the art of a musician or the art of a painter who uses his own skill and does not copy the skills
of others

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Management is a PROFESSION-
 Characteristics of a profession:
a. existence of organized and systematic knowledge
b. Formalized methods of acquiring training and experience.
c. existence of an association with the professionalization as a goal
d. existence of an ethical code to regulate the behaviour of the members of the profession
e. Charging of fees based on service.

 Management as Profession:
a. Does not have fixed norms of managerial behaviour
b. no uniform of code of conduct or licensing of managers
c. entry of managerial jobs are not restricted to individuals with a special academic degree
only and hence management cannot be called a profession

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PLANNING

Meaning of Planning:
1. Planning is an intellectual process which requires manager to think before acting.
2. It is thinking in advance. it is planning that managers of organization decide what is to be done,
when it is to be done, how it is to be done, and how has to do it.
3. Decision making is an integral part of planning.
4. It is the process of choosing among alternatives. Obviously, decision making will occur at many
points in the planning process.
5. Planning is a continuous process like a navigator constantly checks where his ship in going in the
vast ocean, a manger must constantly watch his plans must constantly monitor the conditions,
both within and outside the organization to determine if changes are required in his plans.

Nature of Planning:
Planning involves selection of objectives, goals and determines the ways and means of achieving them.
Thus planning bridges the gap from ‘where the Organization is’ to ‘where it wants to be’. Planning is
dynamic in nature and is basically a discrete exercise. Nature of planning indicates essential quality or
general characteristics of planning. Planning involves four essential qualities:
1. Planning must contribute to accomplish purpose and objectives.
2. It must be considered as parent exercise in all processes.
3. It must spread through all management functions.
4. It must be efficient in such a manner so as to achieve the designed goals at the least cost.

Importance of planning:
1. Minimizes risk and uncertainty
a. By providing a more rational, fact-based procedure for making decisions, planning allows
managers and organizations to minimize risk and uncertainty.
b. Planning does not deal with future decisions, but in futurity of present decisions.
2. Leads to success:
a. Planning does not guarantee success but studies have shown that, often things being equal,
companies which plan not only outperform the non-planners but also their past results.
b. This may be because when a businessman’s actions are not random arising as mere reaction
to the market place
c. Planning leads to success by doing beyond mere adaption to market fluctuations.
d. With the help of a sound plan, management can act proactively and not simply react.
e. It involves to attempt to shape the environment on the belief that business is not just the
creation of environment but its creator as well.

3. Focus attention on the organizations goals:

a. Planning helps the manger to focus attention on the organizations goals and activities.
b. This makes it easier to apply and coordinate the resources of the organization more
economically.
c. The whole organization is forced to embrace identical goals and collaborate in achieving them.
d. It enables the manager to chalk out in advance an orderly sequence of steps for the realization
of organizations goals and to avoid needless overlapping of activities.

4. Facilitates control:
a. In planning, the manager sets goals and develops plans and to accomplish these goals.
b. These goals and plans then become standards against which performance can be measured.
c. The function of control is to ensure that activities conform to the plans.
d. Thus control can be exercised only if there are plans.

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5. Trains executives:
a. Planning is also an excellent means for training executives.
b. They become involved in the activities of the organization and the plans arouse their interest
in the multifarious aspects of planning.

Forms of planning:
1. There are many forms and styles of planning, and planning practices are likely to vary from
organization to organization.
2. One useful way of classifying them is to distinguish between strategic planning and tactical
planning.
3. About Strategic planning involves deciding what the major goals of the entire organization will
be and what policies will guide the organization in its pursuit of these goals and depends on the
data collect in the outside the organization such as market analysis, estimates of costs,
technological developments and so on and if the data being mostly imprecise make strategic
planning less certain.
4. About Tactical planning involves deciding specifically how the resources of the organization
will be used to help the organization achieve these strategic goals. for example if the
organization has prepared a ten-year strategic plan which envisages a profit rate of 25% on
capital employed in the tenth year, it also necessary to prepare a more detailed tactical plan for
the next year, with a specific target of 10% on the capital employed.
5. Contingency planning takes into account possible occurrences. It is planning for ‘what to do if
there is a recession or if there is a change in government policy and so on.

Sl. Strategic planning Tactical planning

1 decides the major goals and policies of decides the detail use of resources for
allocation of resources to achieve these goals achieving these goals
2 Done at higher levels of management. Middle is done at lower levels of management
managers sometimes may not even be aware
that strategic planning is being considered.
3 it is long term planning it is short term planning
4 Is generally based on long term forecasts is generally based on the past performance of
about technology, political environment and the organization and is less uncertainly
is more uncertain.
5 is less detailed because it is not involved with is more detailed because it is involved with
the day to day operations of the organization the day-to-day operations of the organization

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Types of plans:

1. Plans are arranged in a hierarchy within the organization

2. At the top of this hierarchy stand objectives.
3. Objectives are the broad ends of the organization which are achieved by means of strategies.
4. Strategies in their turn are carried out by means of the two major groups of plans. Single use
plans and standing plans.
5. Single use plans are developed to achieve a specific end and when the end is reached the plan is
dissolved.
6. The two major types of plans are single use plans are programmers and budgets.
7. Standing plans on the other hand are designed for situations that recur often to justify the
standardized approach.
8. For example, it would be inefficient for a bank to develop a single use plan for processing a loan
application for each new client.
9. instead it uses one standing plan that anticipates in advance whether to approve or turn down
the request based on the information furnished, credit rating, etc. the major types of plans are
policies, procedures methods and rules.

Vision:
1. At the top of the hierarchy is the VISION.
2. This is the dream that an entrepreneur creates about the direction that his business should
pursue in future.
3. It describes his aspirations, beliefs and values and shapes Organization’s strategy.
4. VISIONING is an on-going process.
5. A VISION should be brief, focused, clear and inspirational to an organization’s employees.
6. It should be linked to customers’ needs and convey a general strategy for achieving the
mission.

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Mission:
1. The unique aim of an organization that sets it apart from others of its type.
2. It is an organization’s specialization in some area – service, product or client, which decides the
organization’s scope of business.
3. In addition to describing the scope of business, the firm’s mission statement may mention its
cultural values.
4. Mission also guides the development of strategies.
5. It establishes the context within which daily operating decisions are made and sets limits on
available strategic options.

Objectives:
1. Are the goals of the organization which the management wishes the organization to achieve?
2. These are the end points or pole-star towards which all business activities like organizing,
staffing, directing and controlling are directed.
3. Only after having defined these end points the can determine the kind of organization the kind
of personnel and their qualifications, the kind of motivation, supervision and direction and the
control techniques which he must employ to reach these points.
4. Objectives are the specific targets to be reached by an organization.
5. They are the translation of the organization’s mission into concrete terms against which the
results can be measured.
6. Example:1)university decision to admit a certain number of students or the hospitals decision
to admit a certain number of indoor patients.

Characteristics of the objectives:

Some of the important characteristics of the objectives are:
1) Objectives are multiple in numbers:
 Implies that every business enterprise has a package of objectives set out in various key areas.
 There are eight key areas in which objectives of performance and results are set which are
(i) market standing (ii) innovation (iii) productivity (iv) profitability
(v) physical and financial resources (vi) Manager performance and development
(vii) worker performance (viii) attitude and public responsibility.

2) Objectives change over time: Considering the timely advancements, changes in the ecosystem –
internal & external, customers’ reactions over a product; it will be essential for the enterprise to
change its corporate objectives.

3) Objectives are either tangible or intangible:

 For some objectives such as in the areas of market standing, productivity, and physical and
financial resources) there are quantifiable values available.
 Other areas of objectives are not readily quantifiable and are intangible, such as manager’s
performance, workers morale, public responsibility etc.

4) Objectives have priority:

 Implies that at one particular given point of time, the accomplishment of one objective is
relatively more important than others.
 Priority of goals also says something about the relative importance of certain goals regardless
of time. For example, the survival of organization is necessary condition for the realization of
other goals.

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5) Objectives are generally arranged in a hierarchy:

 This means that we have corporate objectives of the total enterprise at the top, followed by
divisional or departmental objectives, then each section and finally individual objectives.
 Objectives at all levels serve as an end and as a means.

6) Objectives sometimes clash with each other:

 The process of breaking down the enterprise into units requires that objectives be assigned to
each unit.
 Each unit is given the responsibility of attaining an assigned objective.

The process of allocating objectives among various units creates the problem of potential goal conflict
and sub-optimization, where in achieving the goals of one unit may put in risk of achieving the goals of
the other.

Requirements of sound objectives:

a. Objectives must be clear and acceptable:
The objectives must be clear and understandable amongst people which could be achieved by
unambiguous communication, should be compatible with their individual goals.
b. Objectives must support one another:
Objectives could interlock or interfere with one another which require the need for
coordination and balancing the activities of the entire organization, otherwise its members
may pursue different paths making it difficult for the manager to achieve the company’s overall
objectives.
c. Objectives must be precise and measurable:
An objective must be spelled out in precise, measurable terms the reasons for which being
i. The more precise and measurable the goal, the easier it is to decide the way of achieving it.
ii. Precise and measurable goals are better motivators of people than general goals.
iii. Precise and general goals make it easier for lower level managers to develop their own
plans for actually achieving these goals.
iv. It is easier for managers to ascertain whether they are succeeding or failing if their goals
are precise and measurable.
d. Objectives should always remain valid:
The manager should constantly review, reassess and adjust them according to the changed
conditions.

Advantages of objectives:
The following are the benefits of objectives
1. They provide a basis for planning and for developing other type of plans such as policies,
budgets and procedures.
2. They act as motivators for individuals and departments of an enterprise by pointing the way to
desired performance.
3. They eliminate haphazard action which may result in undesirable consequences.
4. Facilitate coordinated behavior of various groups which otherwise may pull in different
directions.
5. Function as a basis for managerial control by serving as standards against which actual
performance can be measured.
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. Lessen misunderstanding and other conflict and facilitate communication among people by
minimizing jurisdictional disputes.
8. Provide legitimacy to organization’s activities.

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Strategies:
 A corporate strategy is a plan which takes these factors into account and provides optimal match
between the firm and the environment.
 Two important activities are involved in strategy formulation
A. Environmental appraisal
B. Corporate appraisal

A. Environmental appraisal:
By analyzing the relevant environment it results in identifying various threats & Opportunities.
Components of External environment are grouped into 4 categories namely -
a. Political and legal factors:
Key environment factors which need to be studied are
i. stability of the government and its political philosophy.
ii. taxation and industrial licensing laws
iii. monitory and fiscal policies
iv. Restrictions on capital movement, repatriation of capital, state trading etc.

b. Economic factors:
i. level of economic development and distribution of income
ii. Trend in prices, exchange rates, balance of payments.
iii. Supply of labor, raw, material, capital etc.

c. Competitive factors:
i. identification of principle competitors
ii. analysis of their performance and programmers in major areas
iii. antimonopoly laws and rules of competition
iv. protection of patents, trademarks, brand names and other industrial property rights

d. Social and cultural factors:

i. literacy levels of population
ii. religious and social characteristics
iii. extent and rate urbanization
iv. rate of social change

B. Corporate appraisal:
 Involves the analysis of company’s strengths and weaknesses.
 A company’s strength may lie in 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 etc.
 The company must plan to exploit these strengths to the maximum.

Standing plans:
Policies:
 A policy is a general guideline for decision making which sets up boundaries around decisions
including those that cannot be made and shutting out those that cannot.
 A policy can be considered as a verbal, written or implied overall guide setting up boundaries
that supply the general limits and the direction in which ,managerial action takes place Policies
suggest how to do the work.
 They do not dictate terms to subordinates and provide only a framework within which the
decisions must be made by the management in different spheres. For example:
1) Recruitment policy of a company is to recruit meritorious people through the employment
exchange

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2) Distribution policy of a fertilizer company is farmer oriented. Policies and objectives guide
thinking and action, but with a difference. Objectives are end points of planning while
policies channelize decisions to these ends.

Advantages of policies:
1) Policies ensure uniformity of action in respect of matters at various organizational points
which make actions more predictable.
2) Policies speed up decisions at lower levels because subordinates need not consult their
superiors frequently.
3) makes it easier for the superior to delegate more and more authority to the 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.

Disadvantages of policies: Policies with broad areas of discretion and initiative lead to inconsistent
interpretations and make the very delegation of authority difficult which they are intended to
implement.

Types of policies:
Can be classified on the basis of sources, functions or organizational levels

1. Classification on the basis of sources: three types originated, appealed, implied and imposed
policies
(a) Originated policies:
 Are usually established formally and deliberately by top managers for the purpose of
guiding of actions of their subordinates and also their own.
 These policies are set out in print and embodied in manual.
(b) Appealed policies:
 Are those which arise from the appeal made by a subordinate to his superior regarding
the manner of handling a given situation and comes into existence because of the appeal
made by the subordinate to the supervisor.
(c) Implied policies:
 Are also policies which are stated neither in writing nor verbally.
 Such policies are called implied policies.
 Only by watching the actual behavior of the various superiors in specific situations can
the presence of implied policy is ascertained.
(d) Externally imposed policies:
 Are the policies which are imposed on the business by external agencies such as
government trade associations, and trade unions. Example: policy dictated by the
government law.

2. Classification on the basis of functions:

 On the basis of business functions, policies may be classified into production, sales, finance,
and Personnel policies.
 Every one of these functions has number of policies.
For example: Sales function may have policies relating to market.
Production function: may policies relating to the method of production, output, inventory,
research.
Finance function: may have policies relating to capital structure, working capital, internal
financing etc.
Personal function: may have policies relating to recruitment, training, working activities,
welfare activities etc.

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3. Classification on the basis of organizational level:

 On this basis range from major company policies through major departmental policies to
minor or derivative polices applicable to the smallest element of organization.

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. The 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
v. Making payment to the supplier of materials by the accounts department.
 Similarly, the procedure for the 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 leaves to
the employees, passing bills by the accounts department.

Sl. Policies Procedures

1 Are the general guidelines to both thinking are the guidelines to action only usually for
and action of people at higher levels the people at the lower levels
2 Help in fulfilling the objectives of the show us the way to implement policies
enterprise.
3 are generally broad and allow some latitude Are specific and do not show latitude.
in decision making
4 are often established without any study or are always established after thorough study
analysis and analysis of work

Advantages and limitations of procedures:

Advantages:
1. They indicate a standard way of performing a task which ensures a high level of uniformity in
performance in the enterprise.
2. they result in work simplification and elimination of unnecessary steps and overlapping
3. they facilitate the executive control over performance by laying down the sequence and timing of
each task, executives dependence on the personal attributes of his subordinates is reduced
4. they enable employees to improve their efficiency by providing them with knowledge about their
entire range of work

Limitations:
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 in duplication, overlapping and conflict. These limitations can be overcome if
the management reviews and appraises the procedures periodically with an intention to improve
them.

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Methods: A Method is a prescribed way in which one step of a procedure is to be performed. Methods
help in increasing the effectiveness and usefulness of the procedure. Improving methods increases the
productivity, reduces fatigue in operation and reduction in costs can be achieved.

Rules: Rules are detailed and recorded instruction that a specific action must or must not be
performed in a given situation. Like procedures, RULES also bring in predictability. A rule makes sure
that a job is done in the same manner every time & brings in uniformity in efforts & results.
A rule is different from policy, procedure or method.
- Not a policy because it does not give a guide to thinking and does not leave any discretion to
the party involved.
- Not a procedure because there is no sequence to a particular action.
- Not a method because it is not concerned with any one particular step of a procedure.

Single use plans

Programmes:
 Programmes are precise plans which are made to discharge a non – routine or non –
repetitive task.
 The essential ingredient of every programme are time phasing and budgeting.
 Often a single step in a programme is set up as a project. The chief virtue of a project lies in
identifying, a relatively separate and clear–cut work package within array of activities involved
in a programme.
Example:
Programme → Opening a New branch of an enterprise
Project (1) → securing the necessary accommodation for the new branch.
Project (2) → Recruiting personnel to manage the branch.
Project (3), Project (4), Project (5) and so on many projects may exist.
 A schedule specifies the time when each of the series of actions should take place.

Budgets:
 A budget is a financial and/or quantitative statement prepared prior to a definite period of
time, of the policy to be pursued during that period, for the purpose of obtaining a given
objective.
 Budgets are useful plans for an enterprise, planned for a future period of time containing
statements of expected results in numerical terms. Example: Sales Budget. Expense Budget,
Production Budget.

Business plan:
 It is an important document prepared by an entrepreneur as a start-up strategy to prove to its
stake holders about the company’s position to articulate and manage diverse aspects of the
business.
 A good business plan must provide full information on all the topics readers may be interested
in; must have an objective tone; must not be over critical of past failures or mistakes if any;
should not be filled only with technical details.

Steps in planning:

The various steps involved in planning are as follows:

1) Establishing verifiable goals or set of goals to be achieved:
 The first step in planning is to determine the enterprise objectives which are often set up by
the upper level or top managers, usually after number of possible objectives have been
carefully considered.

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 There are many types of objectives managers may select: desired sales volume or growth rate,
the development of a new product or service or even a more abstract goal such as becoming
more active in the community.
 The type of goal selected will depend on a number of factors: the basic mission of the
organization, the value its mangers hold and the actual and the potential abilities of the
organization.

2) Establishing planning premises:

It is the second step in planning to establish planning premises which is vital to the success of
planning as they supply pertinent facts and information relating to the future such as population
trends, general economic conditions, production costs and prices, probable competitive behavior,
capital and material availability and government control and so on. Planning can be variously
classified as under
a. internal and external premises
b. tangible and intangible premises
c. controllable and non-controllable premises
a. Internal and external premises
 Premises may exist within and outside company.
 Internal premises include sales forecasts, policies and Programmes of the organization,
capital investment in plant and equipment, competence of management, skill of labor, etc.
 External premises can be classified into three different groups Business environment,
factors which influence the demand for the product, and the factors which affect the
resources available to the enterprise.

b. Tangible and non-tangible premises:

 Tangible premises: those which can be quantitatively measured while Intangible
premises are those which being qualitative in character and cannot be measured.
 Tangible examples: population growth, industry demand, capital and resources invested
in the organization are all tangible.
 Intangible examples: political stability, sociological factors, business and economic
environment are all tangible.

c. Controllable and non-controllable premises:

 Some of the planning premises are controllable and some are non-controllable and because
of the non-controllable factors there is need for the organization to revise the plans
periodically in accordance with the current development.
Examples of uncontrollable factors: strikes, wars, natural calamities, emergency,
legislation etc. Examples of controllable factors: company’s advertising agency,
competence of management member’s skill of the labour force, availability of resources in
terms of capital and labour, attitude and behavior of the owners of the organization.

3) Deciding the planning period:

 It is the next task once the upper level managers have selected the basic long term goals
and the planning premises.
 Business plans are made in some instances once for a year and plans are made for decades
based on some logic and future thinking.
 The factors which affect the choice of period are:
a. Lead time in development and commercialization of new product.
b. The time required to recover capital investments or the pay-back period and
c. Length of the commitments which are already made.

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4) Finding alternate courses of action: The fourth step of planning is to search for & examine the
alternate courses of action. Example: securing the technical knowhow by engaging a foreign
technician or by training staff abroad.

5) Evaluating and selecting the alternate courses of action: After listing the alternates, selecting
the best alternate or course of action is done with the help of quantitative techniques and
operations research.

6) Developing the derivative plans: Once plan formulated, its broad goals must be translated on
day to day operations of organization Middle level managers must draw up the appropriate plans,
programmes and budgets for their sub-units which are described as derivative plans.

7) Establishing and Deploying Action Plans: Action represents ‘the lowest level of execution’. The
action plan identifies particular activities necessary for this purpose and specifies the who, what,
when, where and how of each action. A draft version of the action plan should be communicated to
inform those directly involved & gain their cooperation.

8) Measuring and controlling the process: Plan cannot be run without monitoring its progress. The
managers must check the progress of their plans.
a. Take whatever remedial action is necessary to make the plan work
b. Change the original plan is it is unrealistic.

Limitations of planning:
1. Planning is expensive and time consuming process. it involves significant amount of money,
energy and also risk without any assurance of the fulfilment of the organizations objectives
2. Sometimes restricts the organization to the most rational and risk free opportunities. Curbs the
initiatives of the manager and forces him to operate within the limits set by it and sometimes
cause delay in decision making in case of emergency.
3. Scope of planning is limited with rapidly changing situations.
4. Establishment of advance plans tends to make administration inflexible. Example: business
changes, change in government policy, may make the original plan lose its value.
5. Another limiting factor in planning is the formulating of the accurate premises.
6. Planning may sometimes face peoples’ resistance to it.

To make planning effective, it requires Extent of detail, Coordination, communication,

participation, proper climate.

Planning skills:
1. Ability to think ahead
2. Ability to define company objectives
3. Ability to forecast future environmental trends
4. Ability to monitor the implementation of strategies
5. Ability to provide an appropriately timed, intermeshed network of derivative and supporting
programmes.

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DECISION MAKING AND PROBLEM SOLVING:

Definition: A decision is a choice between two or more alternatives. This implies three things:
1. When manager make decision they are choosing.
2. Managers have alternatives when they are making decision. [Evaluate several
alternatives and select the best one].
3. Managers have a purpose in mind when they are making a decision.
Types of Decision Making:
• Programmed and non-programmed decision.
• Major or minor decision.
• Routine and strategic decision.
• Individual and group decision.
• Simple and complex decision.
Programmed and non-programmed decision
• Programmed decisions are those that are made in accordance with some policy, rule
or procedure and they do not have to be handled each time they occur. They are
repetitive routine. Example: determining salary payment to employs who have been
ill.
• Non programmed decisions are natural and non-repetitive. If a problem has not
arisen
• before then it must be handled by a non-programmed decision. Example: What to
do about a failing product line, how community relations should be improved etc.
• In programmed decision, each manager is guided by some set of rules and policies.
• Therefore it is not possible for two different managers to arrive at different solution.
• In case of non-programmed decisions, each manager will be his own personal
beliefs, attitudes and value judgment to bear on decision process. Therefore two
different
• managers can arrive at two different solutions.
Major or Minor Decision:
• Degree of futurity of decision
• How long a decision in future will commit the company? .A decision which has long
range impact like replacement of men by machinery must be rated as major
decision.
• How to store raw materials may be taken as minor decision. Impact of the decision
on other functional areas
• If a decision affects only one function then it is a minor decision else it is a major
decision.
• Qualitative factors that enter the decision
• A decision which involves certain subjective factors is an important decision
• Example: Subjective factors are basic principles of conduct, ethical values etc.
Recurrence of decision
• Decisions which are rare considered as major decisions and decisions which
occur very often is minor decision.

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Routine and strategic decisions

• Routine and tactical or housekeeping decisions are those which are supportive.
They relate to the present.
• Their purpose is to achieve as high degree of efficiency possible in companies
ongoing activities
Example: providing Air conditioning (ac), better lighting etc. Lowering price of
product, changing the product line are strategic decisions.
Individual and group decisions
• Decision may be taken as either by an individual or by a group. Individual
decisions are taken where problem is of routine nature.
• Important and strategic decisions may result in some change in organisation is a
group decision.
Steps in Decision Making:
There are seven steps in decision making
1. Recognizing the problem.
2. Deciding Priorities among problems
3. Diagnosing the problem.
4. Developing alternative solutions or course of action.
5. Measuring and comparing sequences of alternative solutions
6. Converting the decision into effective action
7. Follow-up
1) Recognizing the Problem: It is the first step in decision making. A problem exists:
• When there is deviation from past experience.
• When there is deviation from plan
• When other people bring problems to the manager.
2) Deciding Priorities among problem: Manager should identify the problem which
• He can solve
• His subordinates can solve.
• Are to be referred to the higher officers.
3) Diagnosis problem:
• Manager should follow systems approach in diagnosing a problem.

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• He should make a thorough study of all sides of a problem along with organisation
before arriving at a solution.
4) Development of Alternate Solution
• After diagnosis next step is to find alternate solutions.
• Alternates do exist. In the absence of past history of alternate solutions, managers
should find alternatives of his own.
5) Measuring and comparing Sequences
• This comparison involves comparing a quality and acceptability of these alternatives.
6) Decision implementation or take action:
• This requires the communications of the decisions to the concerned employees in clear and
simple terms.
7) Follow up or review:
• In final step, the action should be continuously followed up to ensure whether the
decision is achieving its purpose.

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