Planning

Definition: Planning is the fundamental management function, which

involves deciding beforehand, what is to be done, when is it to be done, how
it is to be done and who is going to do it. It is an intellectual
process which lays down an organisation’s objectives and develops
various courses of action, by which the organisation can achieve those
objectives. It chalks out exactly, how to attain a specific goal.

Planning is nothing but thinking before the action takes place. It helps us to take
a peep into the future and decide in advance the way to deal with the situations,
which we are going to encounter in future. It involves logical thinking and
rational decision making.

Characteristics of Planning
1.
Managerial function: Planning is a first and foremost managerial
function provides the base for other functions of the management, i.e.
organising, staffing, directing and controlling, as they are performed
within the periphery of the plans made.
2. Goal oriented: It focuses on defining the goals of the organisation,
identifying alternative courses of action and deciding the appropriate
action plan, which is to be undertaken for reaching the goals.
3. Pervasive: It is pervasive in the sense that it is present in all the
segments and is required at all the levels of the organisation. Although
the scope of planning varies at different levels and departments.
4. Continuous Process: Plans are made for a specific term, say for a
month, quarter, year and so on. Once that period is over, new plans are
drawn, considering the organisation’s present and future requirements
and conditions. Therefore, it is an ongoing process, as the plans are
framed, executed and followed by another plan.
5. Intellectual Process: It is a mental exercise at it involves the
application of mind, to think, forecast, imagine intelligently and innovate
etc.
 6. Futuristic: In the process of planning we take a sneak peek of the
future. It encompasses looking into the future, to analyse and predict it
so that the organisation can face future challenges effectively.
7. Decision making: Decisions are made regarding the choice of
alternative courses of action that can be undertaken to reach the goal.
The alternative chosen should be best among all, with the least number
of the negative and highest number of positive outcomes.
Planning is concerned with setting objectives, targets, and formulating plan to
accomplish them. The activity helps managers analyse the present
condition to identify the ways of attaining the desired position in future.
It is both, the need of the organisation and the responsibility of managers.

Importance of Planning
 It helps managers to improve future performance, by establishing
objectives and selecting a course of action, for the benefit of the
organisation.
 It minimises risk and uncertainty, by looking ahead into the future.
 It facilitates the coordination of activities. Thus, reduces overlapping
among activities and eliminates unproductive work.
 It states in advance, what should be done in future, so it
provides direction for action.
 It uncovers and identifies future opportunities and threats.
 It sets out standards for controlling. It compares actual performance
with the standard performance and efforts are made to correct the
same.

Planning is present in all types of organisations, households, sectors,

economies, etc. We need to plan because the future is highly uncertain and
no one can predict the future with 100% accuracy, as the conditions can
change anytime. Hence, planning is the basic requirement of any organization
for the survival, growth and success.
Steps involved in Planning

Organizing
Definition: Organizing is the second key management function,
after planning, which coordinates human efforts, arranges resources and
incorporates the two in such a way which helps in the achievement of
objectives. It involves deciding the ways and means with which the plans can
be implemented.
It entails defining jobs and working relationships, assigning different tasks
associated with the plans, arranging and allocating resources, design a
structure which distinguishes duties, responsibilities and authorities,
scheduling activities, in order to maintain smoothness and effectiveness in
operations.

Characteristics of Organizing
Organizing has the following characteristics:

 Division of Labour: Work is assigned to the employee who is

specialised in that work.
 Coordination: Different members of the organization are given different
tasks to perform when all the tasks are put together logically and
sequentially, it results in the objectives, so coordination is required.
 Objectives: Objectives need to be specifically defined.
 Authority-Responsibility Structure: For an effective authority
responsibility structure, the position of each manager and executive is
specified, as per the degree of the authority and responsibility assigned
to them, while performing the duties.
 Communication: The techniques, flow and importance of
communication must be known to all the members.

Process of Organizing
Organizing is the core function which binds all the activities and resources
together in a systematic and logical sequence. It encompasses a number of
steps which are pursued to achieve organizational goals. Now, we will discuss
those steps in detail:

1. Identification and division of work: Organizing process begins with

identifying the work and dividing them as per the plans. Basically, the
work is classified into different manageable activities, to avoid
redundancy, and sharing of work is encouraged.
 2. Departmentalization: After classifying the work into different activities,
the activities having a similar nature are grouped together. This process
is called as departmentalization which facilitates specialization and
forms the basis for creating departments.
3. Assignment of the task: After the formation of departments,
employees are placed in different departments under a manager, called
as a departmental manager. Thereafter, employees are assigned the
jobs as per their skills, qualifications and competencies. For the
effectiveness of the performance, the manager must ensure that there is
a proper match between the job and the incumbent, i.e. the right person
has to be placed at the right job.
4. Establishment of organizational hierarchy: Deployment of work is not
all, the employees must be aware of whom they have to report and who
can give them orders. Hence, work relationships need to be established
clearly, which helps in the creation of a hierarchical structure of the
organization.
5. Provision of resources to the members: Arrangement and
deployment of resources such as money, materials, supplies, and
machine, etc. which are important to carry out day to day operations of
the organization.
6. Coordination of efforts and scheduling of activities: The final step to
this process is the coordination of efforts and scheduling the activities in
a logical and systematic manner so that the common objectives can be
achieved effectively.

Importance of Organizing
Organizing is integral to management as it facilitates the smooth functioning of
the enterprise. The importance of organizing is as under:

 Advantage of Specialization: Organizing helps in the classification of

jobs systematically amongst the workforce, which helps in the reduction
of workload, as well as improved productivity. This is because the
organization will get the benefit of specialization wherein workers will
perform specific work on a regular basis, according to their competency.
 Describes work relationships: The definition of work relationships
describes the flow of communication and determine the superior-
subordinate relationship. This removes confusion and chaos, in getting
orders and instructions.
  Effective utilization of resources: Organizing function ensures the
best possible utilization of resources whether it is human, material,
financial or technical. This is because jobs are assigned to the
employees which avoid overlapping and duplication of work.
 Adaptation to change: Organizing process helps the organization to
survive and adapt the changes, by making substantial changes in the
strategies, hierarchy, relationships, etc.
 Development of personnel: Organising encourages creativity in
executives. Delegation of authority reduce their workload and they get
time to identify new methods to perform the work. It also enables them
to explore new areas for their growth and development.
In a nutshell, with organizing the manager brings order out of disorder,
removes confusion with respect to work and responsibility, and frames an
ideal environment where all the members of the organization can work in
tandem.

Leadership
Definition:”The ability to create a vision and influence, motivate, inspire and
transform others to achieve certain goals towards that vision is known as
leadership.”

Leadership is the specific set of skills and attributes which can be acquired
through learning.

Who is a Leader?
A Leader is a person who guides others and motivates them to achieve
specific goals to accomplish his vision.

Difference between Managers and Leaders

Basis for
Manager Leader
Comparison

Position and Managers are appointed Any person can be a leader no

Status personnel at official matter what his position and status

positions. is.

Way of thinking Controlled mindset Out of the box thinking

Focus Goal-oriented People-oriented

Aim Achieving targets Accomplishing their vision

Objective Getting the work done Bringing some change

Tools Power and control Trust and honesty

Originality Replica of one another, all Original and individual personality

doing the same thing

Attitude Accept the existing Challenge the existing situation

situation and works and work to change the same

accordingly

Perspective Short term Long term

Qualities of a Good Leader

 Proactive
 Ability to Inspire
 Clear Vision
 Good Communication Skills
 Confident
 Self Driven
 Decision Maker
 Responsible
 Learner
 Patient Listener
 Commitment
  Never Give Up Attitude
 Trustworthy

Leadership Process
1. Evaluate and assess the organisation’s position
2. Take initiative
3. Create a vision
4. Set objectives to accomplish the vision
5. Formulate strategies to achieve objectives
6. Develop a change process or tactics
7. Explain the need for change to the employees
8. Motivate and inspire the employees to bring the desired change
9. Implement the strategies
10. Analyze the results

Leadership Styles
1. Supportive Leadership: Leaders are more attentive towards the
welfare and individual needs of the subordinates.
2. Directive Leadership: Leaders establish the standards of performance
for the subordinates and expect them to adhere to the rules and
regulations. They provide complete guidance to the subordinates.
3. Achievement-oriented Leadership: Leaders usually set challenging
goals for the subordinates, expecting their constant improvement in
performance. They have confidence that the subordinates will perform
excellently.
4. Participative or Democratic Leadership: Leaders invite opinions and
suggestions from the subordinates while making decisions.
5. Autocratic or Authoritative Leadership: Leaders have the complete
hold over the subordinates and do not entertain opinions, suggestions,
questions and complains. They take all the decisions solely without the
participation of subordinates.
 6. Strategic Leadership: Strategic leaders frame a set of strategies
towards their vision and motivate subordinates to accomplish that
vision.
7. Charismatic Leadership: Charismatic Leader has an extraordinary and
powerful personality and acts as a role model for his followers who
follow him blindly.
8. Laissez-faire or Delegative Leadership: Leaders are lenient and
assign authority and responsibility to the subordinates. The
subordinates are free to work as they like to and take their own
decisions with the minimal interference of the management. Laissez-
faire is one of the least effective styles of leadership.
9. Transformational Leadership: Transformational Leaders initiates a
revolutionary change in the behaviour, perception and attitude of the
subordinates. They motivate and inspire the subordinates to develop
their own skills to perform better and ultimately accomplish the vision of
the organisation.
10. Transactional Leadership: Transactional Leaders believe in
motivating subordinates through rewards and incentives and
discouraging them through punishments.
11. Coaching Leadership: A Coaching Leader is well experienced in
his role and is focussed on the long-term growth of his subordinates.
12. Cross-cultural Leadership: In today’s global scenario, Cross-
cultural Leaders keep themselves updated and aware of the different
cultures around the world, and uses this knowledge to lead culturally
diverse teams.
13. Visionary Leadership: A Visionary Leader communicates his
vision for the organisation to his followers and intellectually influences
them to become self-driven towards the shared vision.
14. Bureaucratic Leadership: Bureaucratic leaders use their position
to exercise power and strict control over the subordinates. The
subordinates have to be in complete discipline and are promoted on the
basis of their capability to comply with the rules and regulations of the
organisation.

Theories of Leadership
 Great Man Theory
 Trait Theory
  Behavioural Theory
 Contingency Theory
 Charismatic Leadership Theory
 Transactional Leadership Theory
 Transformational Leadership Theory
Leadership is all about the zealous action of a person taking an initiative to
bring a change, solve a problem and accomplish the certain goals.

Theories of Leadership
Definition: Leadership is the process of channelising the energy of an
individual or a group towards the realisation of specific goals, objectives and
vision.

Theories of Leadership
Over the decades, many great scholars, researchers and academicians have
conducted various research and studies to discover the factors that contribute
to effective leadership. In this process, the following theories of leadership
have evolved:

 The Great Man Theory: Thomas Carlyle proposed the Great Man
Theory in the 1840s, and it merely believes that leadership is an
inherent trait of a person who is destined to become a great leader by
birth and they prove themselves when the great need arises. In other
words, some people are born to become leaders and leadership is a
heroic act.:

Criticism: This theory was criticised or questioned due to the following

reasons:
o It was a male-centric approach when women have proved to be
great leaders too.
o This theory explains that leadership cannot be learned or taught
it’s an inherent trait.
o There is no scientific validation to support this theory.
 o It neglected the environmental and situational factors which affect
the leadership process.
 The Trait Theory: Ralph M. Stogdill proposed the trait theory of
leadership in the late 1940s; he explained that an individual must
possess the key personality traits and characteristics to be an effective
leader and these traits are inherent by birth.
Some of the core leadership traits based on this theory can be
categorised as follows:
o Physiological traits: Height, weight, structure, colour,
appearance and so forth.
o Socioeconomic characteristics: Gender, religion, marital status,
age, occupation, literacy and earnings.
o Personality traits: Extraversion, self-confidence, patience,
agreeable, reliable, honesty and leadership motivation.
o Intellectual traits: Decisiveness, intelligence, judgemental ability,
knowledge and emotional attribute.
o Task-related traits: Attainment drive, dedication, initiative,
determination and business expertise.
o Social characteristics: Socially active, cordiality and
cooperation.
o Some of the other traits being charisma, adaptiveness, creativity,
uniqueness.
This theory was criticised since it neglected the environmental factors which
may not always remain the same. The list of traits is quite vast and keeps on
changing from time to time. It was unable to explain failures despite
possessing the certain traits specified in the theory. Moreover, of the identified
traits can be acquired through learning and training.

 Behavioural Theory: The behavioural theory of leadership evolved in

the 1950s. After understanding that the personal traits of a leader are
essential for effective leadership, the researchers were now keen to
know that what leaders do to become effective leaders
Thus, they now focussed on the leader’s behaviour rather than traits. To
study the behaviour of leaders, two major research programs were
started by two different universities namely, the Ohio State Leadership
Studies and the University of Michigan Studies.
 o The Ohio State University Studies: A group of researchers at
Ohio State University prepared a questionnaire to be surveyed in
military and industrial setups, to determine the perception of the
subordinates for the actual behaviour of their leaders. From their
findings, the researchers identified two major categories of leader
behaviour:

o Consideration: The leaders are attentive towards their

subordinates and build up an excellent inter-personnel
relationship with them. They are very supportive and
friendly. This was termed as ‘people-oriented behaviour’.
o Initiating structure: The leaders are majorly concerned
about the achievement of goals and schedule and structure
work accordingly. For such leaders, subordinates are just
resources, and they have to make the optimal utilisation of
them. This was termed as ‘task-oriented behaviour’.
o The University of Michigan Studies: This study is based on how
the leader’s behaviour is related to group performance.
Researchers made a comparison of effective managers with the
ineffective ones and found that the two can be discriminated on
the basis of their behaviour, i.e. job-centric behaviour and
organisational-member centric behaviour.
The study further resulted in the identification of four additional
behaviours essential for effective leadership which are:

o Support
o Goal emphasis
o Work facilitation
o Interaction facilitation
o Blake and Mouton’s Leadership Grid: Robert R. Blake and
Jane S. Mouton gave the Leadership/Managerial Grid Theory and
discovered the five different styles of leadership by categorising
the managers into 81 possible ways arising out of the combination
of rating depending on two variables, concern for people and
concern for results.

Following are the various styles of Leadership according to this model:


 o

o Indifferent: Neither the attention is paid towards the work,

nor towards the employees, it is the most ineffective style of
leadership.
o Controlling or the country club: All that matters is the
well-being of the staff.
o Accommodating or task oriented: All that matters is
production and output.
o Status Quo or balance: Moderate and equal importance
and attention are given to work as well as employee
welfare.
o Sound: A high level of concern is shown towards both, the
output as well as the employees, it is the most effective
style of leadership.
 Contingency Theory: Contingency theories of leadership state that
effective leadership comprises of all the three factors, i.e. traits,
behaviour and situation. A leader’s behaviour varies as per the situation.
To support this theory of leadership various models were developed,
and multiple studies were conducted in this direction.
Following are the models of contingency theory:

o Fred Fiedler’s Contingency Model: Dr Fred E. Fiedler tried to explain

that the performance of a group or team is banked on the pleasant and
unpleasant situations and style of leadership.
Leadership style can be assessed with the help of Least Preferred Co-
worker (LPC) scale. It is a technique in which a leader is asked to think
of a person whom they least like to work with and score them on
different bipolar scales.

For instance: Friendly-unfriendly, Efficient-inefficient, Cooperative-

uncooperative, etc

o Fiedler’s findings:

o Leader’s Traits: On the basis of the LPC Scale, a leader’s

style of leadership can be determined. If a leader scores
high on the LPC scale, that means he is highly relationship-
 oriented and treats even the least preferred co-worker
generously.If he scores low on the LPC scale, he is a task-
oriented leader prioritising the work and performance.
o Situational factor: Leaders manage to perform effectively
in the favourable situations. They feel that they have control
and command over the group of employees in such
situations.
o Situation Matches: Fiedler gave a Contingency Model
named Leader Situation Matches in which he explained that
leadership style could be either task-oriented or people-
oriented, based on the favourableness of the situation.

Hersey Blanchard Situational Theory: The Hersey-Blanchard Situational

Theory states that the style of leadership depends upon the maturity of the
subordinates; accordingly the following four styles were developed:

o
o Telling: When a new person enters the organisation, he has to be
told everything, i.e. he is given training and orientation to make
him understand the task to be performed.
o Selling: The leader leads by providing social and emotional
support to the subordinates and convincing the groups to give
maximum output.
o Delegating: The leaders are least concerned about and hardly
interferes with the execution of the tasks. They are not even
concerned about the subordinates and their issues.
o Participating: It is a democratic style where subordinates are
allowed to participate in the decision-making process. Here, the
leader is less focussed on the achievement of objectives.
o Evans and House Path-Goal Theory: The Path-Goal Theory was
proposed by Robert J. House and Martin Evans in 1970s.
This theory pro-founded that leader’s noticeable behaviour, and the
situation in which he is placed are inter-connected. To increase the
organisation’s effectiveness, the managers should either match the
situation with the leader’s behaviour or change his behaviour according
to the situation in which he is placed. This theory focused on the need
for flexibility while adopting different leadership styles in different
situations.
 The situational factors involved are Subordinate characteristics and
Organisational environment. This model emphasised four different
behaviours of a leader:

o Directive
o Supportive
o Participative
o Achievement-Oriented
o Vroom-Yetton-Jago Decision-Making Model: This model suggested
that leadership style varies on the basis of the decision-making ability of
the leaders in different situations. Leadership style was merely based on
the degree of employee’s contribution and activeness in the decision-
making process.
The various aspects taken into consideration were decision timeliness,
decision acceptance and the decision quality. Following are the
Leadership Styles derived out of this model:


o

o Autocratic (AI): The leader solely decides with the

available information.
o Autocratic (AII): This is stringic autocratic leadership style
where the leader takes the opinion of group members to
gather more information but may or may not share the final
decision with the group members.
o Consultative (CI): The leaders consult with the group
members to explore opinions but solely takes the decision.
o Consultative (CII): The leaders consult with the group
members to explore opinions and also invites suggestions
but solely takes the decision.
o Collaborative (GII): The leader allows the group to take
their own decisions collectively and plays a supportive role
in the process.
o Cognitive Resource Theory: This theory explains that if the
leader is experienced he will be able to perform effectively even
 under the stressful situations whereas an intelligent leader
performs well in less stressful situations.
o Strategic Contingencies Theory: This theory says that the
effectiveness of a leader depends upon his problem-solving skills
and ability to handle critical situations and make decisions wisely.
A person with better problem-solving skills can secure his position
and cannot be easily replaced.
 Charismatic Leadership Theory: This theory believes that a leader
must possess some extraordinary and exceptional qualities to become
an effective leader. Such leaders lead by their key traits i.e.

o Envisioning/Foreseeing: Leaders foresees future possibilities
and create a vision accordingly, usually having high expectations
and dreams.
o Energizing/Empowering: Leaders are highly enthusiastic,
proactive, energetic and confidently aiming towards success.
o Enabling/Guiding: Leaders provide complete support and
guidance and show compassion and trust in followers. Such
leaders are highly focussed and committed towards their goal
accomplishment.
 Transactional Leadership Theory: Transactional Leadership Theory
emphasises the realisation of a desired outcome and result. The leaders
motivate the followers by way of a reward system, i.e. rewarding the
performers and punishing the non-performers.
The theory emphasises maintaining a cordial relationship with the
followers, leaders and followers must work mutually to meet
organisational goals.

 Transformational Leadership Theory: The transformational theory

states that a leader is effective only if he can transform or change the
perceptions, behaviour and expectations of the followers and direct
them towards a common goal which will lead to the accomplishment of
the leader’s vision. Such leaders have a charismatic and influential
personality.
Following are the key factors behind Transformational Leadership:


 o Psychological transformation: Bring about a change in the
perception and mindset of the follower.
o Influential: Creates a strong impact on the followers.
o Motivational: Generates positive energy within followers.
o Inspirational: Encourages them to achieve something.
o Individual impact: Creates a powerful effect on the behaviour
and perception of the followers.
From the above description, we can conclude that a leader needs to follow
different leadership theories based on the situation and circumstances.

Controlling
Definition: Control is a primary goal-oriented function of management in an
organisation. It is a process of comparing the actual performance with the
set standards of the company to ensure that activities are performed
according to the plans and if not then taking corrective action.

Every manager needs to monitor and evaluate the activities of his

subordinates. It helps in taking corrective actions by the manager in the given
timeline to avoid contingency or company’s loss.

Controlling is performed at the lower, middle and upper levels of the

management.

Features of Controlling
 An effective control system has the following features:
 It helps in achieving organizational goals.
 Facilitates optimum utilization of resources.
 It evaluates the accuracy of the standard.
 It also sets discipline and order.
 Motivates the employees and boosts employee morale.
 Ensures future planning by revising standards.
  Improves overall performance of an organization.
 It also minimises errors.
Controlling and planning are interrelated for controlling gives an important
input into the next planning cycle. Controlling is a backwards-looking
function which brings the management cycle back to the planning function.
Planning is a forward-looking process as it deals with the forecasts about the
future conditions.

Process of Controlling
Control process involves the following steps as shown in the figure:

 Establishing standards: This means setting up of the target which needs

to be achieved to meet organisational goals eventually. Standards
indicate the criteria of performance.
Control standards are categorized as quantitative and qualitative
standards. Quantitative standards are expressed in terms of
money. Qualitative standards, on the other hand, includes intangible
items.

 Measurement of actual performance: The actual performance of the

employee is measured against the target. With the increasing levels of
management, the measurement of performance becomes difficult.
 Comparison of actual performance with the standard: This compares the
degree of difference between the actual performance and the standard.
 Taking corrective actions: It is initiated by the manager who corrects any
defects in actual performance.
Controlling process thus regulates companies’ activities so that actual
performance conforms to the standard plan. An effective control system
enables managers to avoid circumstances which cause the company’s loss.

Types of control
There are three types of control viz.,
 1. Feedback Control: This process involves collecting information about a
finished task, assessing that information and improvising the same type
of tasks in the future.
2. Concurrent control: It is also called real-time control. It checks any
problem and examines it to take action before any loss is incurred.
Example: control chart.
3. Predictive/ feedforward control: This type of control helps to foresee
problem ahead of occurrence. Therefore action can be taken before
such a circumstance arises.
In an ever-changing and complex environment, controlling forms an integral
part of the organization.

Advantages of controlling
 Saves time and energy
 Allows managers to concentrate on important tasks. This allows better
utilization of the managerial resource.
 Helps in timely corrective action to be taken by the manager.
 Managers can delegate tasks so routinely chores can be completed by
subordinates.
 On the contrary, controlling suffers from the constraint that the
organization has no control over external factors. It can turn out to be a
costly affair, especially for small companies.

 Staffing
 Definition: Staffing is a managerial function which involves obtaining,
utilising and retaining, qualified and competent personnel to fill all
positions of an organisation, from top to operative echelon. In finer
terms, staffing is placing the right person at the right job.

It aims at employing, deploying and monitoring a competent and contented staff, i.e.
daily wage earners, contract employees, consultants, regular employees, etc.,
to undertake various managerial and non-managerial activities in an
organisation.
Importance of Staffing
 It helps in the finding out efficient and effective workforce, to fill
different posts in the organisation.
 It improves organisation’s performance and productivity by appointing
the right person at the right job.
 It facilitates in identifying the staffing requirements of the organisation
in future.
 It ensures continuous survival and growth of the organisation, by way
of succession planning for executives.
 It develops personnel to take up top managerial positions of the
organisation.
 It ensures training and development of the people working in the
organisation.
 It assists the organisation in making the optimum use of human
resources.
 Therefore, staffing increases employee morale and job satisfaction.
Further, it helps the top management in ascertaining the manpower
requirement resulting from a promotion, transfer, employee turnover,
retirement, etc. of the existing employees.
 Process of Staffing
 Staffing process stresses on equipping the organisation with an
exact number of people, and that too at the right time and place,
which will help the organisation to attain its objectives effectively. The
staffing process involves a series of steps, discussed as under:
 Manpower Planning: Popularly known as human resource planning, it
is the process of forecasting the firm’s demand for and supply of
competent workforce, in the adequate number in future.
 Recruitment: It entails seeking, stimulating and obtaining, as many
applications as possible from the eligible and competent candidates.
 Selection: It is the decisive step of the staffing process, which involves
differentiating between applicants, so as to identify and choose the
candidate who best fulfils the qualifications and requirements of the
vacant position.
 Placement: The allocation of rank and responsibility to selected
candidate, is known as Placement.
 Orientation and Induction: After the placement, the next step is to
provide the new employee with the information they require for
functioning comfortably and efficiently in an organisation. Induction is
the process of introducing the new joinees to the job and the
organisation as well.
 Training and Development: In this step, the new joinees undergo
training to acquire specific skills. Development implies learning
opportunities, designed by the organisation, to ensure the growth of
employees.
 Performance Appraisal: A rational assessment and evaluation of
employee’s performance against clear-cut benchmarks.
 Career Management: Career Management is a process in which the
individual understand and learns new skills and interests and use them
for the betterment of the organisation and self.
 Compensation: Compensation refers to the consideration which an
individual gains, in return for his/her contribution to the organisation.
 Staffing process recognises the significance of each
person employed by the organisation, as the work of every individual,
keeps the organisation going. So, acquiring a good staff is a tough task,
because the success of the organisation depends on it and so, the
process should be performed attentively.
 Further, the top executives of the organisation should be aware of the
national labour laws, which applies to the organisation. Moreover, the
organisation should be clear on how many employees, it is going to
recruit, for carrying out various activities of the organisation.
The SWOT Analysis helps in ascertaining the factors that influences the
efficiency and effectiveness of any product, project, or business entity. These
are explained as under:

1. Strengths: The strengths of a company are the core competencies, in

which the business has an edge over its competitors. It covers aspects
such as:
o Strong financial condition
o A large customer base.
o Strong brand name or a unique product
o Latest technology or patents
o Influential advertising and promotion.
o Cost Advantage
o Quality in product and customer service.
2. Weaknesses: Weaknesses can be described as the areas of limitations
of the business, that hinders the growth of the company and even leads
to a strategic disadvantage. These are the areas which need
improvement to perform competitively. It encompasses:
o Obsolete facilities and outdated technology.
 o The unit cost of a product is higher than the competitors.
o No or less internal control.
o Less quality in products and services offered.
o Weak brand image.
o Financial condition is not very sound.
o Underutilization of plant capacity.
o Lack of major skills or competencies, and intellectual capital.

1. Opportunities: Opportunities can be understood as the condition, which is favourable or

beneficial to the organization in the business environment, that the business could exploit
to gain an advantage. These are:
o Looking for areas of development, by utilizing skills and technology to enter new
markets
o Adding new products to the existing product line to increase customer base.
o Forward and backward integration.
o Acquiring rivals businesses.
o Joint ventures, mergers and alliances to increase market coverage.
2. Threats: Threat implies an adverse condition which can lead the business enterprise to
losses, and can also harm the overall position and reputation of the enterprise. It entails:
o A downtrend in market growth.
o A new entrant to the market.
o Substitute products that can decrease sales.
o Increasing the bargaining power of customers and suppliers.
o New regulatory requirements
o Changes in a demographic environment that will decrease demand for firm’s
product.

Importance of SWOT Analysis

 Logical framework of analysis: SWOT Analysis equips the management with an
insightful framework for eliminating issues in a systematic manner, that can influence the
condition of business, formulation of various strategies and their selection.
 Presents a comparative report: The analysis facilitates in presenting systematic
information about the internal and external environment. This helps in making a
comparison of external opportunities and threats with internal strengths and weaknesses,
 as well as reconciling the internal and external business environment, to help the
managers in choosing the best strategy, by considering various patterns.
 Strategy Identification: Every organization has its strengths weakness, opportunities and
threats. So, the SWOT Analysis acts as a guide to the strategist to reckon the exact
position, i.e. where the business stands, so as to identify the primary objective of the
strategy under consideration.
SWOT Analysis helps the company’s management in designing a business model specific to the
firm. The model perfectly suits or aligns the company’s resources or competencies, as per the
needs of the business environment, wherein the organization operates and helps in gaining a
competitive advantage over the rivals. This will increase the profitability, market share and the
chances to survive in the dynamic competitive business environment.