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PRINCIPLEs OF MANAGEMENT
DR. S. SRINIVASAN
VGSOM, IIT KHARAGPUR
Module 02:
Lecture 01 : Concept, Types, Importance and Process of Planning
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PRINCIPLEs OF MANAGEMENT

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Main Topics to be discussed are

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Concept, Objectives, Components, Different levels and Types of Planning
Importance and Barriers of Planning
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Concept, Types and Process of Planning

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Concept of Planning

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The term Planning involves deciding the future course of action in advance. A
manager has to plan what is to be done, where, how, and by whom.

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Planning is a formal process whereby managers choose goals, identify actions
to attain those goals, allocate responsibility for implementing actions to

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specific individuals or units, measure the success of actions by comparing
actual results against the goals, and revise plans accordingly (Hill and
McShane).
Planning allows managers the opportunity to adjust to the environment
instead of merely reacting to it.
Planning increases the possibility of survival in business by actively
anticipating and managing the risks that may occur in the future
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Objectives of Planning

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Benowitz, E.A.(2001). Has pointed out six objectives of Planning:

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§ Planning gives an organization a sense of direction: Plan helps avoiding
drift situation and ensuring efforts to harmonize with future goals.
§ Focuses attention on objectives and results: People who carry out plans

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focused on the anticipated results of the organization.
§ Establishes a basis for teamwork: An integrated plan helps to ensure
group activities to attain the goal.

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§ Helps anticipate problems and cope with change: It helps to minimize
mistakes and reduce the “surprises” that inevitably occur
§ Provides guidelines for decision making: It helps management with plans
for the future and have few guidelines for making current decisions.
§ Serves as a prerequisite to employing all other management functions : It
helps an organization wants to accomplish any task which management
can undertake applying other basic managerial function
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Components of Planning

T E
Charles WL Hill and Steven L McShane. (2008) has pointed out that after
having a clear understanding about the meaning and context of planning,
there is importance of learning about various components of planning.

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The components of Planning are usually classified as follows:

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§ Objectives: Objectives are the basics of every organisation and the desire
objectives are planned to achieve.
§ Policies: Policies are made across all levels of management as a guide to
channelize energies towards a particular strategy and help employees
navigate a situation.
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Components of Planning

T E
§ Procedures: These are step wise guides for the routine to carry out the
activities

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§ Programmes: These are the statement of outlines of organisation’s
policies, objectives, procedures, etc.

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§ Budgets: Budgets are quantitative statement that forecasts the
profit/income or the future of the organisation
§ Strategies: It helps to establish long-term objectives, to select specific
action and to allocate necessary resources
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Planning at different levels

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Planning outlines the major goals of the organization and the organization

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wide strategies for attaining those goals. In complex organizations, such as a
large diversified corporation with multiple business units, there may be three
layers of strategic planning.

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§ Corporate level: Planning at the corporate level focuses on corporate-level
strategy;

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§ Business level: Plans made at the business level focus on business-level
strategy;
§ Operating level: Planning done at the operating level focuses on operational
strategy.
§ Functional level: Planning focuses on support functions possessed by
business enterprises.
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Different Types of Planning

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One of the important and foremost function of management is planning. It is
differed as per types and level of organisations. Different types of planning

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in management generally found are as follows:

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§ Operational plan: It is one that a manager uses to accomplish his or her
job responsibilities. It can be single use or continuing plan.

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§ Tactical plan: It is concerned tactics needed to activate a strategy and
make it working in the organisation.
§ Strategic plan: It is an outline of steps designed with the goals of the entire
organization as a whole in a systematic direction.
§ Contingency planning: It is to keep identifying alternative courses of action
that can be implemented when the original plan proves inadequate
because of changing circumstances.
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Different Types of Planning

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Based upon time, the plan is classified as :-

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(i) Long Range Planning: Generally planning to attain long term goal/mission
(ii) Medium Range Planning: Neither long nor short term plan such as five

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years plan.
(iii) Short Range Planning: Planning is made for short term that is to say it-
monthly/quarterly/half yearly plan

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On the basis of managerial levels, the plans may also, be categorised as:-
(i) Strategic plans: Planning for whole of the organisation with a strategic
start up point
(ii) Administrative plans: Planning for the administrative purpose of the
organisation
(iii) Operational plans: Planning for the unit/department level operation
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Different Types of Planning

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In terms of repetitiveness of operations in the firm, planning may be
divided to :-

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(i) Standing plan: Planning is developed once and may be used for
many times that tend to be recurring and modified as per need of

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the organization

(ii) Single use plans: Planning is designed for a specific purpose to solve
a particular need and in non-repetitive manner.
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Importance of Planning

T E
The importance of planning is amply manifested by the increasing interest
evinced in planning in business, government, and other organizations.

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Bhattacharyya D. K. Has identified five importance of planning, such as-
§ Planning clarifies the objectives of the organization: It has important role to

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clarify as well as to attain objectives of the organisation.
§ Planning economizes operations: It helps to have coordination among all
department activities which puts an end to overlapping costs and wasteful
activities.
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Importance of Planning

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§ Planning precedes control: Proper planning help all employees in

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the organisation informed about their work, time and costs. It helps
compare actual work done with standard, in time and order.

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§ Planning provides for the future: Planning helps to generate the
best output of the employees within stipulated timeframe that

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creates the way of better future.

§ Planning increases the efficiency of all managerial functions:

Planning imparts a real power of thinking and the ideas to
encourage real birth of innovative ideas. It helps increasing
efficiency of the employees and of the managers.
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Barriers of Planning

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Planning in some organisations do not give always desired results. There are

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many reasons for that. Here we have summed up some limitations of planning
as follows:

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§ Inability to plan or inadequate planning: Due to lack of efficient
management, plan is not prepared in a scientific way in tune of the
objectives of the organisations.

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§ Lack of commitment to the planning process: Management can not foresee
the changing pattern of time, cost and resources due to lack of commitment.
§ Inferior information: It is assumed that planning in previous years got
success so that same plan is replicated in future which is a part of inferiority
of information.
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Barriers of Planning

T E
§ Focusing on the present at the expense of the future: Planning yields
results for the present do not necessarily will bring the same in long

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turn as other factors are unseen.
§ Too much reliance on the organization’s planning unit: In large
organisations planning unit itself looks after it but they do not

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implement so that the effect is not assessed.
§ Concentrating on controllable variables: Planning sometimes
concentrate on the events and resources within organisations but it
does not consider the outside factors like government policy, external
resource gapping etc.
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Process of Planning

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Step by step process of planning can be defined as follows-

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§ Step-1 Perception of opportunities: Managers should identify first the
opportunities of planning and action.

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§ Step-2 Setting the objectives: Setting objectives in the clearest
possible term keeping in mind the strength and weaknesses of it.

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§ Step-3 Setting planning premises: It is to build a condition through
which planning activities will be taken up.
§ Step-4 Identifying the alternatives: Searching for various alternative
course of action is an important step of planning.
§ Step-5 Evaluation of the alternatives: Alternative course of action can
be evaluated in terms of cost and benefit to the organisations.
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Process of Planning

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§ Step-6 Selection of alternatives: After evaluation, the most

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appropriate alternatives may be more than one selected which are
equally good for the organisation.

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§ Step-7 Formulating supportive plans: There may be various plans to
support the main planning of the organisations.
§ Step-8 Establishing sequence of activities: The sequencing of planned

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activities is necessary to avoid overlapping of time, cost and
resources.
§ Step-9 Ensuring participation: Plans must be communicated for larger
participation of the employees and management of the organisation
§ Step-10 Scope for future evaluation: There should have scope to carry
out future evaluation and modification of planning
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REFERENCES

PT
Ø Bhattacharyya DK. (2012). Principle of Management, Text and Cases, Pearson, New Delhi
Ø Charles WL Hill and Steven L McShane. (2008). Principles of Management, Published by

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McGraw-Hill/Irwin
Ø Stoner AF. Principle of Management, Pearson, New Delhi.
Ø Ellen A. Benowitz. (2001). Clifford Quick Review Principle of Management, Hungry Minds,
New York, NY 10022
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CONCLUSION

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This lecture session has covered basic concepts of planning, types, elements,

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objectives, importance, barriesr and process of planning which will be
helpful to all Learners to have an idea on all these issues of planning after
careful observation and attendance of the session

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PRINCIPLEs OF MANAGEMENT
DR. S. SRINIVASAN
VGSOM, IIT KHARAGPUR
Module 02:
Lecture 02 : Characteristics, Nature & Scope and Principles of Planning
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PRINCIPLES OF MANAGEMENT

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Discussion on the characteristics, nature and scope and

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principles of Planning
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Characteristics of Planning

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Characteristics of Planning may be categorised as follows:

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1. Planning is continuous: Plans are prepared for a specific period of time and
at the end of time another plan is prepared in lights of new requirement and

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given situations.
2. Planning is flexible: Planning is always an exercise for the expected result in

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future which is uncertain and unpredictable. As a result of that, there is always
a scope to modify as per changing situation in future.
3. Planning ensures efficiency: Planning helps to obtain desired result at the
given time with cost effective and proper utilization of resources.
4. Planning is basic of function: All other functions of management are
performed with the foundation laid by planning in management.
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Characteristics of Planning

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5. Planning is key of decision making: Planning involves different possible

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courses of action so that decision making helps as an integral part to choice
among various alternatives.

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6. Planning is future course of action: Planning is always based on forecasting,
analysing and predicting for things to be happened. It is sometimes considered

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as the synthesis of forecasting
7. Planning goal oriented: Planning is made for achieving desired objectives of
the organisations. The diversion from objectives can mislead to planning and
misutilization of resources.
8. Planning is an intellectual exercise: In all kinds of planning, application of
skills, knowledge and intellectuality are preconditions for sound planning.
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Characteristics of Planning

T E
9. Planning is independent exercise: Planning involves a collective action of
different departments of an organisations which is an independent and integral

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exercise.
10. Planning considers limiting factors: Planning is mainly based on
organisational objectives which are attained as per stipulated time and

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resources limited for the same.
11. Planning creates coordination: Planning helps to establish coordination
within and and outside of the organisations to achieve the goals.
12. Planning is precision of actions: What kind of activities planned to be taken
up is made in a precise way to have clear picture on it.
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Nature and Scope of Planning in Management

E
Scope of planning has been lying between boundaries and deliverables of the

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action designed to be taken for future. The scope of planning may be put
down as follows:

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§ Managing Risk And Uncertainty : Managing risk is essential to bring out
success of an organization. Sometimes unforeseen events occur which
required to deal immediately. In doing all these need of planning is gradually
increasing.

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§ Building team work and cooperation : Planning promotes team building and
a spirit of cooperation since when the plan is finalized and all members of
the organization are informed. Everyone knows what their responsibilities
are, and how to do in cooperation of others. This is leading the scope of
planning.
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Nature and Scope of Planning in Management

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§ Creating Quality of work: Planning helps organizations to get a realistic
view of their available resources and the objectives desired to fulfill. The

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division of resources is restricted to a desired common standard. This is
creating additional scope of planning in management.

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§ Better use of time frame: Planning is always designed with a set of tasks to
be taken up in a particular timeframe. Maintaining time and resource
allocation are preconditions to obtain success of planning at desired level.

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In every planning, there is answer of when the plan is to be undertaken?
§ Resources: Planning is drafted to avoid overlapping of resources as well as
to make work done in a cost effective way. As a result of that scope of
planning has been increasing as the constraint of resources is an issue to
every organisation.
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Principles of Planning in Management

E
In the lecture series-I, Principles of Planning were discussed including
Principles of flexibility, acceptance, efficiency, innovation and reflective

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thinking. Now we may have some more principles of Planning, such as-
Ø Principle of commitment: Established organisational objectives are

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achieved through a dedicated team of planning who have commitment
towards it.

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Ø Principle of contribution: It is to ensure the purpose of planning effectively
achieved with contribution from all concerned.
Ø Principle of navigational change: Periodic review is done since the
environmental issues are subject to change which will navigate the plan.
Ø Principle of coordinated planning: All sub plans are coordinated and main
planning of the organisation is prepared as usual practice.
Continued….
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Principles of Planning in Management

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Ø Principle of continuity: Planning is continuous process and subject to

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modifiable as per given time and resources.
Ø Principle of timing: In every organisations plans are arranged in a time

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bound manner.
Ø Principle of promising plan: Planning is related to future course of action so

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that it is based on several assumptions and promise to achieve.
Ø Principle of framework: It deals with policy framework that governs the
functions of the organisation for achieving.
Ø Principle of limiting factor: It helps to identify the factors having limited
achievement for the desired objectives.
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Limitations of Planning in Management

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Following are some limitations of planning-

Ø Planning creates rigidity: Planning is modifiable only in limited and small

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cases but in case of big changes planning is not modifiable. Both the
external and internal factors are responsible for this rigidity.

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Ø Planning does not work in dynamic situation: Planning is done for future
happenings. Since future is uncertain and dynamic, the future anticipation is

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not always done.
Ø Planning reduces creativity: Planning is prepared in connection with all
activities to attain objectives which are predetermined. Everybody works as
per direction to do that for which scope of creativity is limited.
Ø Planning is a time consuming process: Because of its lengthy process, it can
not address the sudden emergencies which can be in the form of
unforeseen. t for the desired objectives.
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Limitations of Planning in Management

T E
Ø Planning does not ensure success: In some organisations management

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thinks planning will bring all objectives fulfilled which neglects their real
work and efficiency and adverse effect is being faced by the organisation.
Ø Planning boosts a false sense of security: The managers mostly becomes

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careless and think the main tasks will be done by subordinates. This attitude
creates problems on the future actions of the organisation.
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REFERENCES

PT
Ø Bhattacharyya DK. (2012). Principle of Management, Text and Cases, Pearson, New Delhi
Ø Charles WL Hill and Steven L McShane. (2008). Principles of Management, Published by

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McGraw-Hill/Irwin
Ø Stoner AF. Principle of Management, Pearson, New Delhi.
Ø Ellen A. Benowitz. Clifford Quick Review Principle of Management, Hungry Minds, New
York, NY 10022
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CONCLUSION

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In this lecture session, the characteristics, nature and scope and

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principles of planning in management have been discussed. After
attending the discussion, learners will be able to have knowledge
about various issues of planning and may be interested enough to
implement in the practicing lives
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PRINCIPLEs OF MANAGEMENT
DR. S. SRINIVASAN
VGSOM, IIT KHARAGPUR
Module 02:
Lecture 03 : Traditional objective setting and methods of Planning
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PRINCIPLES OF MANAGEMENT

T E
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In this lecture session the traditional objective setting and

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methods of planning will be discussed
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Introduction

T E
Traditional objective setting is an approach of planning in management
practice. In this approach, objectives are set at the top level of the

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organisation and then it is devided into sub unit objective for each level
of the organisation.

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In the traditional objectives setting, all objectives are set by the leaders
of the organisation as they are at the top level of the organisation and
have clear understanding of the organisation to outline where they want
to see the organisation.
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Expected benefits of traditional objective setting

T E
Traditional objective setting has three main benefits. Such as –

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Efficient use of resources: It helps to optimum use of manpower, money,
time and other resources to increase productivity and proficiency.

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Prioritization of objectives: Prioritization helps to finalize when and what
to achieve in case setting of objectives are more than one

Measurement of progress: As there are set objectives, management can

track the progress of the organisation towards the set objectives
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Types of traditional objective setting

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There are different types of traditional objectives. They may be classified

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herewith as follows-
i) Organisational objectives: An organisation is built with certain objectives

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to achieve during its course of operation.
ii) Financial objectives: Financial objectives of an organisation is determined
by its future requirement of fund.

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iii) Strategic objectives: Objectives that an organisation strives to achieve
and that will guide day by day decisions in the organisational efforts to meet
up.
iv) Defined/stated objectives: It is the objectives which organisations have
set and wants to make its stakeholders believe.
v) Real objectives: From the real point of view an objectives that an
organisation striving to achieve through ongoing activities/efforts.
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Major areas of traditional objective setting

T E
According to Drucker, P.F. there are eight areas on which objectives have
to be set. The areas include the following-

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i) Physical resources: It includes the resources related to infrastructure, land
and properties and human capital of the organisation.
ii) Financial resources: It includes the recurring and non recurring grant,

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capital accumulated and internal and external sources of funding.
iii) Innovation: Innovation relates to product designing, staff mobilisation,
quality output generation by the employees and management.
iv) Market standing: In case of production, trading and business houses
market stand influences directly on the achievement of objectives set.
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Major areas of traditional objective setting

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v) Productivity: It relate to the performance of the employees and strategic

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action taken by the management for achieving the objective at desired
level.

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vi) Profitability: Objectives set in an organisation to minimize cost, time
bound work and optimum use of resources may help earn profitable
objective.

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vii) Manager’s performance and development: Management plays the top
level directions, decisions in the objectives they set and put it downline to
lower employees.
viii) Workers performance, attitude and public responsibility: Workers are
at the implementation and achievement of objectives set by top level
management. They are encouraged to work with efficiency.
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Characteristics of traditional objective setting

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Well set traditional objectives have four main characteristics:

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1. They are precise and measurable: It gives managers a standard against
which they can judge their performance.

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2. They address important issues: To keep focus, few major objectives to
assess the performance and they should address crucial issues.
3. They are realistic: They motivate employees to improve the performance of

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the organization.
4. They specify a time period: Time constraints tell employees that success
requires a goal to be attained by a given date which can inject a sense of
necessity for achieving the objectives.

Well-constructed objectives also provide a means to assess strategy

effectiveness and evaluate the performance of managers.
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Integrated network of traditional objective setting

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When the organisational hierarchy clearly defines the objectives, it forms
an integrated network that is stated as ‘means-end-chain’.

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In this network, accomplishment of certain objectives at one level serves

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as the means of achieving objectives at the next level. This may be as
follows:
1. Individual employees’ objectives: Works first to achieve irrespective of

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quality.
2. Department’s objective: Strives to increase productivity irrespective of
means
3. Division’s objective: Strives to see a significant improvement in the
productivity of the division as a whole
4. Top level’s objective: Strives to see the highest performance of the
organisation.
These are the different ways of functioning integrated network
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Process of traditional objective setting

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The process of traditional objectives setting may be described as
follows-

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1. Classification of objectives as per nature and function of the
organization which may be short term, medium or long term.

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2. Objectives need to be rational, reasonable and realistic with adequate
consistency.
3. Most of the organizations have multiple objectives covering different
areas and units of operations that need to be integrated.
4. Balancing the objectives should be taken take of with adequate
knowledge, skills and thought of the management.
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Approaches of traditional objective setting

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There are two major approaches of traditional objectives setting. This may

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be as follows:
1. Traditional approach: It is age old practice that people at the top of the

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organisation always set the objectives for those working at the lower
levels. It is basically one way approach and attached authoritarian style
of functioning. It is neither motivational nor promotional to the

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employees’ sense of commitment and responsibility.
2. Management by objective approach: It is based on converting an
organisational objectives into a personal objectives on the presumption
that establishing employees’ objectives makes them committed which
leads to productivity. It is an approach of setting objectives jointly by
superiors and subordinates.
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Barriers of traditional objective setting

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There are certain barriers which lead failure in the approaches of

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traditional objectives setting. This may be as follows:
1. Lack of employees’ understanding: Many organisations expect their

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team to do but they are poorly trained and lack of practices.
2. Big organisational network: Due to structural limitations many of the
team are out of sight and out of mind of management.

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3. Cultural lag: There is cultural diversity among employees and
management for which objective setting becomes hard work.
4. Outdated objectives: In most of the organisations, traditional
objectives setting practices are backdated and management are with
old mindset up.
5. Resource constraints: Traditional objectives focus on only monetary
issues. They hardly think of going beyond that limitation.
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Process of traditional objective setting

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There are certain process of traditional objectives setting. They are as

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follows: -
1. Statement of vision and mission: Review of organisational vision and

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mission is essential first to go for objective setting.
2. Changes need to do: It is important to analyse what changes an
organisation needs to do that can be done through research.

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3. Collection of baseline data: Baseline data may be collected on the
issues need to be addressed in the organisation
4. Decision on realistic function: What the organisation needs to do, can
be stepped into action as there are resources.
5. Setting the objectives: On the basis of available information,
organisation is ready to set its objectives to be achieved.
6. Review of the objectives: It is time to review the objectives decided to
be set and finalise.
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Methods of Planning

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There are four important methods of Planning in management. They are-

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§ Clarification of issues and problems: Enough time and thoughts to be

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given to understand problem and compare options. Several structural
techniques are adopted for this exercise.
For better clarification and understanding on the problems there are

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techniques, like-
ü Brainstorming: Making employees thinking and thinking and discussion
ü SWOT Analysis: strength, weakness, opportunity and threat analysis
ü Problem trees: from complex/big issues to small /simple issues
ü Logical framework analysis: on the cause and effect relationship
ü Force-field analysis: Ranking several options in a systematic way
ü Role play: assigning different team to interprete problems
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Methods of Planning

E
§ Analysing spatial and inter-sectoral relationship: Planning is done keeping in
account for cross cutting functional and spatial relationship together with

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computer simulations and model in regional economic geography.
Analysing spatial and intersectoral relationship include thee following

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techniques:
ü Maps and land use plans: to see a composite picture of selected areas
ü Computerized simulations: how land use will change for population

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growth and other causes.
ü Models in economic geography: I helpful to understand how different kinds
of investments create demand for credits and other supports.
§ Socio-economic and environmental analysis: In the proposed goals and
strategies, planning needs to anticipate the social, environmental and
economic impact on it.
§ Discuss on the future: Discussion is held to forecasting the future and
deciding on how to prepare for it.
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Methods of Planning

E
§ Socio-economic and environmental analysis: In the proposed goals and

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strategies, planning needs to anticipate the social, environmental and
economic impact on it.

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Different techniques used for this kind of analysis are-
ü Social assessment: may be from ethnographic to formal studies.
ü Environmental assessment: biological impact and their distribution in

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space and time can be assessed.
ü Benefit cost analysis: strategic actions to be measured by standard that are
financial and economic.
§ Discuss on the future: Discussion is held to forecasting the future and
deciding on how to prepare for it.
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REFERENCES

PT
Ø Bhattacharyya DK. (2012). Principle of Management, Text and Cases, Pearson, New Delhi
Ø Charles WL Hill and Steven L McShane. (2008). Principles of Management, Published by

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McGraw-Hill/Irwin
Ø Stoner AF. Principle of Management, Pearson, New Delhi.
Ø Ellen A. Benowitz. Clifford Quick Review Principle of Management, Hungry Minds, New
York, NY 10022
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CONCLUSION

PT
This lecture session on different aspects of traditional

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objective settings and the methods of planning in
management will encourage the learners to enhance their
knowledge about different aspects of planning in
management and they will try to keep all these in their minds
while they are in their field practice.
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PRINCIPLEs OF MANAGEMENT
DR. S. SRINIVASAN
VGSOM, IIT KHARAGPUR
Module 02:
Lecture 04 : Strategic Management and Planning
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PRINCIPLES OF MANAGEMENT

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Lecture session on Concept, Importance, process,

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advantages of Strategic management and planning
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Concept of strategic management and planning

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Strategic management consists of two words. Strategy and management.
Strategy relates to policy, a way to lead and management takes lead in a

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topic by decision as a part of strategy.

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Strategic management is the process of decision making and planning
which leads to the development of an effective strategy to help achieving
organisational objective.

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Strategic management is a process initiated to enable the organization's
top managers to make those decisions that effect the long term
profitability and sustainability of the organisation. It is in other words a
process of-
Ø Strategic analysis of an organisation
Ø Strategy focussed objective setting
Ø Strategy formulation and implementation
Ø Strategic evaluation and control
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Three basic considerations of strategic management and planning

T E
i) Strategic management deals with making decisions about the future: As
the future is uncertain and unpredictable for any individual and organisation.

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As a result of that strategic management has a high degree of uncertainty.

ii) Different departmental managers in an organisation have different

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priorities: All managers should come together to ensure an integration for
effective strategic management.

iii) Strategic management involves major multifarious changes in the

organisation: It needs changes in organisational culture, structure,
leadership and functional system.
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Basic objectives of strategic management and planning

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Strategic management is used to denote a branch of management that is

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concerned with the development of strategic vision. There are two main
objectives. Such as -

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i) To obtain competitive advantage with an aim to outperforming the
competitors so as to acquire dominance over the market.

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ii) To act as guide to the organisation to help surviving the changes in the
business environment. Changes mainly in the internal environment within
the organisation.

iii) To gain sustained strategic competitiveness of the organisation by

developing and implementing such strategy that creates value of the
organisation.
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Components of strategic management and planning

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Strategic management has three main components. Such as -

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i) Environmental scanning: A process of quickly reviewing and processing

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factors both inside and outside the organisation that influence the
operation.

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ii) Strategy formulation and implementation: As the environmental
scanning is done, there might have adequate information to management to
capitalise on strength and opportunities and proceed for strategy
formulation and implementation.

iii) Strategy evaluation: Strategy implementation indicates how far the

strategy is able to meet the goals. Strategy evaluation is crucial in strategic
management to achieve the best possible results.
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Evolution of Strategic Management

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The historical development of strategic management began with the case

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studies on industrial economics and industrial organisations in 1950s.
Drucker, Selznick, chandler and Ansof pioneered the concept of strategic

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management.
Drucker developed the concept of management by objectives which is a

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process to define aims with in organisation. The procedure of setting
objectives and monitoring the progress should be mobilized from top to
bottom.
In 1962, Alfred Chandler’s work on strategy and structure showed that
long-term coordinated strategy was necessary to give a organisation
structure, direction and ‘structure follows strategy.’
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Evolution of Strategic Management

T E
In 1970s strategic management largely dealt with size growth and portfolio
theory as it shifted from planning to a strategy to find way to increase

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profitability by increasing productivity.
In 1980 Porter developed competitive forces approach as the dominant

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model in the field of strategy rooted in the structure-conduct and
performance accepted point of view.
From the 1980s to today, the approach like resource based view came into
prominence and in mid 1990s the dynamic capabilities approach came to
prominence. These approaches primarily apply a bundle of valuable
tangible and resources at the firm disposal and strategic management
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Importance of strategic management and planning

E
The importance of strategic management are as follows-

T
i) Moving in a specific direction: It helps organisation to move in
alignment with the organisation’s goals and fixes realistic objectives.

P
ii) Analysing the actions of competitors: As it helps organisation to
become proactive, hence the existence of competitors in the market

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is analysed and necessary steps taken to compete.
iii) Prompt decision making: It acts as a foundation of key decision
making in every aspects of the organisation.
iv) Preparing for future challenge: It plays the role of pioneer to explore
opportunities and face the challenge by reaching those opportunities.
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Importance of strategic management and planning

T E
v) Ensuring long-term survival: It helps organisation to cope up with the

P
competition and dynamic situation so that there is opportunity for long
term survival.

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vi) Helps to develop competencies: In the process of keeping organisation
ready to meet the challenges, it help to develop competencies and
competitive advantages that ensure growth of the organisation and
survival.
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Process of strategic management and planning

E
Strategic management has different process of functioning. They are-

T
i) Defining the level of strategic intent including objective setting, designing
mission and establishing vision of the organisation.

P
ii) Formulation of strategy by performing organisational appraisal,
considering strategy, conducting strategic analysis and preparing strategic

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plan
iii) Implementation of strategy through putting strategies into action,
developing structure and system and managing behaaviour of the
employees and functional implementation.
iv) Strategic evaluation and control through performance evaluation,
controlling and restructuring strategies.
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Advantages of strategic management and planning

T E
The advantage of strategic management has been pointed out herewith as
follows-

P
i) Helps organisation to be proactive: Strategic plan helps organisation to
become proactive rather than mere reactive to situations or
challenges.

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ii) Promotes a sense of direction: Strategic plan offers an organisation
required foundation to grow in a defined direction that are in line of
the vision and mission of the organisation.
iii) Enhance operational efficiency: It provides management to keep align
the organisational activities to achieve goals with the determined
resources and budgets which increase organisational efficiency.
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Advantages of strategic management and planning

T E
iv) Helps organisation increasing profitability: It helps to develop an approach
that is targeted and well strategized to turn all business efforts into the best

P
possible outcomes that helps to increase profitability and marketing stake.
v) Ensure organisational sustainability: It helps to cope up with constantly
changing industries and world markets with that of a strong strategic plan

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and management. It also, helps to track employees’ performance, report to
stakeholders and make organisation more sustainable.
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REFERENCES

PT
Ø Bhattacharyya, D.K. (2012). Principle of Management, Text and Cases, Pearson, New Delhi
Ø Taylor, F.W. (1919). Principle of Scientific Management, Harper & Brothers Publishers, New

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York and London
Ø Charles, W.L. Hill and Steven, L. McShane. (2008). Principles of Management, Published by
McGraw-Hill/Irwin
Ø Stoner AF. Principle of Management, Pearson, New Delhi.
Ø Ellen A. Benowitz. Clifford Quick Review Principle of Management, Hungry Minds, New
York, NY 10022
Ø Ritson, N.(2011). Strategic Management, Neil Ritson & Ventus Publishing ApS
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CONCLUSION

PT
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This lection session has given clear picture on the concept, basic
ideas, advantages, importance, process and evolution of strategic
management planning . It is expected that learners will be
enriched with this knowledge and have confidence on applying in
their practice.
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PRINCIPLEs OF MANAGEMENT
DR. S. SRINIVASAN
VGSOM, IIT KHARAGPUR
Module 02:
Lecture 05 : Premising and Forecasting of Planning
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PRINCIPLES OF MANAGEMENT

T E
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Lecture session on Concepts, Types, Methods, Importance

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of premising and forecasting in Planning
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Concept of Planning Premises

T E
It is widely accepted that identifying the factors or the assumptions that
affect plans of an organization is called premising.

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The planning process is generally based on estimation and predictions of
the future. The forecasting or the assumptions about future provide a
basis for planning in the present which may be called as planning

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premises.

Effective planning depends much upon the knowledge and appropriate

choice of planning premises.
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Types of planning of premises

E
Planning premises can be classified in different ways.

T
In view of the existing assumptions and prediction, premises may be of
two types - Internal and external.

P
- Internal premises are the resources and abilities of organisation in the
form of manpower, money, machines and methods.
- External premises are the assumptions that encompasses the

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products, materials, markets as well as the political, economic,
cultural and demographic factors.

In view of the quantitative measurement, premises can be classified into

two types, as – tangible and intangible planning premises.
- Tangible premises are measured quantitatively in one way or the
other.
- Intangible premises are of qualitative by nature.
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Types of planning of premises

T E
In view of the various forces and factors premises may be of two types –
Constant and variable.

P
- Constant premises are ignored as they behave in a similar manner
- Variable premises have a significant bearing on the sources of
planning.

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In view of the exercising control over the planning premises, it can be
classified into three types, as –
i) Fully controllable,
ii) Partially controllable and
iii) Absolutely non controllable.
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Process of planning premises

E
Planning premises involves various stages or processes which have been

T
developed rationally and scientifically. It includes the following-

P
§ Study the probability of impact factors: It is to ascertain whether the
studied factors affect the planning premises.

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§ Analyse the degree of impact factors: It is to come in a conclusion that
the degree to which these factors affect the planning premises and to
what extent such as high, medium and low.
§ Development of alternatives: Planning under sets of assumptions about
the future events may not be perfect and an alternative plans for planning
premises can be prepared as contingent premise.
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Importance of planning premises

E
Importance of planning premises can be of different dimensional. Some of
them may be as follows-

T
• It is based on a framework for planning and action: Planning premises

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constitute the framework in the midst uncertainties and predictions of
future.
• Application of correct knowledge and choice: Management working out

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on planning premises applies adequate knowledge and choice of planning
premises.
• Anticipated environment of operation: Planning premises are the
anticipated environment in which plans are generally operated.
• Based on systematic forecasting: Plans are based on sound premises and
systematic forecasting that lead to effectiveness.
• Premises are modifiable: In case of any change in future events or
assumptions, there is scope of modifications.
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Limitations of planning premises

T E
In the functioning process, planning premises observed some kinds of
limitations. These are included as follows-

P
i) Future assumption has many a times been changed rapidIy
ii) Time and cost involved with planning premises are restricting to
management decisions in application of scientific tools/statistical

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analysis.
iii) Application of new ideas or innovations witnessed challenges due to lack
of skills and knowledge.
iv) Non-control over external factors sometimes lead planning premises to
hardly attain its desired goal.
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Concept of forecasting

E
Forecasting is a process of predicting or estimating the future depending upon

T
the data of past and present situation. As there is use of statistical data,
forecasting is, therefore, called a statistical analysis.

P
From the explanation given above we may sum up certain features of
forecasting as-

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i) It is concerned with future assumptions
ii) It shows the probability of future events and happening
iii) It is based on past and present data analysis
iv) It is done using statistical tools and techniques
v) It makes use of personal observations
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Functional process of forecasting

E
Forecasting is done observing different stages or processes which are being

T
put down as follows:

P
i) Collecting data and analysing: Considering time consuming constraint,
data are collected on relevant field and preserved. Selected statistical tools
are also used to get necessary result and proceed further.

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ii) Analysing and understanding the problem: It is very important to identify
the problem for which forecasting needs to be done. This may help
manager to take decision properly.
iii) Establishing good foundation: It is important for the future after having
considerable information, experience and growth rate of the organisation.
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Functional process of forecasting

T E
iv) Estimation on the future events: Using some statistical tools like trend

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analysis, future events are estimated to find out suitable provisions for
some errors.
v) Comparison of the results: After estimation of future events, attempt is

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made to compare it with actual results and there is nothing to be
worried for the managers if the comparison results tally. In case of any
major difference between two, then the reasons may be shorted out
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Importance and scope of forecasting

E
In the modern management, forecasting has been evolved as scientific
process and its scope is gradually increasing. Major issues of its importance

T
may be put down as follows:

P
i) Forecasting provides necessary information: Management is backed up
with relevant and reliable information provided in the process of
forecasting.

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ii) Builds up confidence: Forecasting helps managers to get confidence to
decide over future events as there is results of statistical analysis.
iii) Keeps active and alert: Forecasting helps managers to remain alert and
active to face challenges due to unforeseen events and changing
situation.
iv) Sets the basis: Forecasting sets the basis for making the planning
premises.
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Barriers of forecasting

E
In spite of its growing demand in the modern management, forecasting has
certain limitations. These are-

T
i) Balancing the benefit cost for forecasting: There is huge tasks involved with
collection of data and analysis including time and money. Managers have to

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balance the cost and benefit of forecasting.
ii) No guarantee about the future events: As the forecasting is done for future
assumption, hence, there is no guarantee that all those events will be

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happened in future.
iii) Lack of proper judgement and skills: Forecasting may go in a wrong
direction in case proper judgement is not done by the managers. It is the
human who may be biased, having inadequacy of skills and knowledge to
give proper direction for forecasting.
iv) Assumptions may be wrong: Forecasting is based on past events but history
may not repeated and future assumptions may not be happened.
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REFERENCES

PT
Ø Bhattacharyya, D.K. (2012). Principle of Management, Text and Cases, Pearson, New Delhi
Ø Taylor, F.W. (1919). Principle of Scientific Management, Harper & Brothers Publishers, New

N
York and London
Ø Charles, W.L. Hill and Steven, L. McShane. (2008). Principles of Management, Published by
McGraw-Hill/Irwin
Ø Stoner AF. Principle of Management, Pearson, New Delhi.
Ø Ellen A. Benowitz. Clifford Quick Review Principle of Management, Hungry Minds, New
York, NY 10022
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CONCLUSION

PT
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This lecture session is mainly held to make learns understand the
concept, importance, functional process and barriers of planning
premises and forecasting. Learning on all these may be helpful to
learners to gain necessary ideas, knowledge and capabilities about all
the aforesaid issues relating to planning premises and forecasting.
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