Prof Ramakrishnan.v M.B.A, Pursuing PH.

D
 INTRODUCTION
PRINCIPILES OF MANAGEMENT
 UNIT 1
DEVEL0PING MANAGEMENT THOUGHT

• PRE SCIENTIFIC MANAGEMENT ERA

I. PRE SCIENTIFIC MANAGEMENT ERA •I. Ever Since
Down Of civilization.
II. •-Administration of Mohenjodaro & Harappa Cities
Of ancient Aryan in 2000 B.C.
III. •-Buddha order and the sangha
IV. •-Organizations of public life in ancient Greece.
•Organization of roman catholic church.
•Organization of military forces.
• SECOND HALF OF NINETEENTH CENTURY
•Use of management Principles in business.
•Robert Owen-1813 :-Development of mgmt
Concepts.
•Factor which influence the productivity of
personnel in plants.
 HUMAN RELATION ERA

• A manager’s success in directing depends on his

ability to create such a healthy human relations
climate.
• Leaders need to understand workers as human
beings with social and emotional needs.
• A manager’s success in directing depends on his
ability to create such a healthy human relations
climate.
• Leaders need to understand workers as human
beings with social and emotional needs.
 Why should Human Relations in
Management?
• To remove conflict between individual and
organization.
• To remove individual differences.
• To achieve the goals of institution.
• To make a good working environment.
• To make a coordination between different
sections.
• To increase quality and quantity of products and
services.
Human Relations Theory
Human Relations Theorists

• Mary Parker Follett

• Elton Mayo
 Mary Parker Follett (1868-1933)
• Known as a visionary genius

 Mutual influence is developed

when people work together.
 Do not try to control people.
Control the situation together.
 George Elton Mayo (1880-1949)
Successful Academic and Clinical Psychologist

 Mayo had discovered a fundamental

concept. Working places should be
like as a social environments and
good relationship should be
maintained between all the workers.
People are motivated by much more
than self-interest.
Thus,
THE HUMAN RELATIONS ERA
HAD BEGUN!
 Guidelines for Effective Human
Relationship
Adaptive leadership
Be optimistic
Be positive
Be genuinely interested in others
Smile and develop sense of humor
Call people by respectfully
Communicating effectively
Conditioning behavior
 Continued….
Listen actively to others
Always help to others
Think before you act
Management should be a positive attitude towards
workers
Too concerned with worker satisfaction
Increase the team-work
Involving individuals and groups in decision
making
The workplace environment should focus on needs
of employees.
Management requires effective social skills.
 SOCIAL SCIENCES ERA

• Social sciencies are closely related to human

behiviour
• Social systems approach(1940-1950)was
founded by V ilfred Pareto
• His ideas were further developed by chester I
Bernad
• It is a study of individual social behavior with
group behavior and its effects in management
• It considers organization as a social system
consisting of various groups of people working
together
• It is a system of cultural relationships in which
cooperation and team spirit are necessary for
achieving organizational objectives
• Organization is represented by cultural
relationships of the social groups working in the
organization
• It shows relationship exists between internal and
external changes
 Advantages
• Organization is a social system and it needs to consider
all groups that functioning
• Among formal and informal groups management has
to identify informal groups and motivate them
• Both types of incentives financial and non financial
have to be used to encourage various groups working
in an organization
• People come together to achieve ends which they
cannot accomplish working alone
• In groups cooperative interaction of ideas , forces ,
desires and thinking takes place
 Contributions of Bernard

• People in groups can communicate

• People are willing to contribute to action
• They work to accomplish a common purpose
• He suggests informal organization should be
developed as a means of communication .
How ever a manager has to deal with both types of
organizations formal and informal
He suggested four key elements of organization
• System of Logical decision making
• System of power to lead people in group
• System of functionalisation to
specialize(departmentation )
• System of effective and efficient incentives to
induce people to contribute to group action.
• He also gave a new theory of “Acceptance Theory
of Authority”
 MANAGEMENT SCIENCES ERA

• 1.F.W Taylor –Industrial Engineers(Father of

Scientific Management).
• Thought About need of scientific approach to
management of business organization
• Courses on law on efficiency of workers were
developed
• Lack of knowledge of management were to be
done by workers
 Book-Principles of scientific
Management (F W TAYLOR)
To enhance Productive efficiency of each worker-
Principles to be followed
•1) Science not rule of thumb
•2) Harmony not discord.
•3) Co-operation not individualism
•4) Maximum output in place of restricted output.
•5)Development of each man to his greatest
efficiency &prosperity.
•6)Equitable division of work and responsibility
between management and lab our.
 Book-Principles of scientific
Management (F W TAYLOR)
• Techniques Developed to implement principles
1.Element of Scientific Management
Method study, routing motion study, time study
,fatigue study& role setting.
2.PLANNING OF INDUSTRIAL OPERATIONS
What How ,Where & When the work shall be done .
3)Proper selection ,placement and training of
workers by a centralized personnel department.
 Book-Principles of scientific
Management (F W TAYLOR)
• IMPROVEMENT IN METHODS OF WORK VIZ
I)Standardization of tools and equipment.
2)Regulation of speeds of machines.
3)Improvement of the work environment.
4)Introduction of functional organization.
 CONTRUBUTIONS OF FW TAYLOR

CONTRIBUTION TO MANAGEMENT
WHAT IS SCIENTIFIC MANAGEMENT ?

MANAGEMENT THEORY BY TAYLOR.

MANAGEMENT VIEW.

PRINCIPLES OF SCIENTIFIC MANAGEMENT.

CRITICISM FOR TAYLOR’S MANAGEMENT.

 SCIENTIFIC MANAGEMENT
• Frederick Winslow Taylor (20 March 1856-21
March 1915), widely known as F. W. Taylor,
was an American mechanical engineer who
sought to improve industrial efficiency.

• He is regarded as the father of scientific

management, and was one of the first
management consultants.
 Scientific Management
• It is the art of knowing what exactly you want
from your men to do & then seeing that it is
done in best possible manner by them.
• In simple words it is just an application of
scientific theories to management.
 MANAGEMENT THEORY BY TAYLOR

• Analyzing the work – One best way to do it.

• He is remembered for developing time and
motion study.
• He would break a job into parts and measure
each of 100th of a minute.
• The efforts of his disciples (most notably
H.L.Gantt) made the industry to implement
these ideas.
 Taylor’s view about Management

• Taylor believed that the industrial

management of his day was amateurish, that
management could be formulated as an
academic discipline.
• Best results would come from the partnership
between trained and qualified management
and a cooperative and innovative workforce.
• Each side needed the other and there is no
need for trade unions.
 Principles of scientific management
• Science not the rule of thumb: scientific
investigation should be used for taking
managerial decisions instead of basing on
opinion, institution or thumb rule.
• Harmony not discard/ cooperation between
employers and employees: Harmonious
relationship between employees and employers.
Cooperation of employees helps managers to
ensure that work is carried in accordance with
standards
 Continued…
• Scientific selection training and development:
selection means to choose the best employee
according to the need. Their skill and
experience must match the requirement of
the job.
• Scientific development refers to criteria for
promotions, transfers etc.. So that work is
done with full efficiency.
 Taylor’s principles
The four principles of management.
1.Development of a true science.
2.Scientific selection of the workman.
3.Scientific education and development of the
workman.
4.Intimate and friendly cooperation between
the management and the men
• Taylor created planning departments, staffed
them with engineers, and gave them the
responsibility to:
1. Develop scientific methods for doing work.
2. Establish goals for productivity.
3. Establish systems of rewards for meeting
the goals.
4. Train the personnel in how to use the
methods and there by meet the goals.
Criticism for scientific management
• The main argument against Taylor is this reductionist approach to
work dehumanizes the worker.

• The allocation of work "specifying not only what is to be done but

how it is to done and the exact time allowed for doing it" is seen as
leaving no scope for the individual worker to excel or think.

• The belief that increased output would lead to less workers.

•
Inefficiencies within the management control system such as
poorly designed incentive schemes and hourly pay rates not linked
to productivity.
 Continued…
• Division of work/ responsibility: The responsibility of
workers and management should be properly divided
& communicated so that they can perform them in an
effective way and should be reward for the same.
• Mental revolution: Acc. To Taylor, the workers and
managers should have a complete new outlook; a
mental revolution in respect to their mutual relations.
• Workers should be considered as part of
Organization.
• Employers shouldn’t treat workers as mere wage
earners.
 CONTRUBUTIONS OF HENRI FAYOL

• Henry Fayol (1841-1925) started his career as

a junior engineer in a coal mine company in
France and became its general manager in
1880.
• He not only saved a large coal and steel
company from bankruptcy, but also led to
crowning success.
• A contemporary of Taylor, Fayol for the first time
attempted a systematic analysis of the overall
management process. In 1916, he published his
famous book in French language ‘Administration
Industrielle Generale.’

It was reprinted several times in French and later

published in English language under the title,
General and Industrial Management in 1929.
 Fayol’s contribution
Fayol’s contribution to management can be discussed under the
following four heads:
1. Division of Industrial Activities:
He found that all activities of the industrial enterprise could be divided
into six groups:
• Technical (relating to production);
• (ii) Commercial (buying, selling and exchange);
• (iii) Financial (search for capital and its optimum use) ;
• (iv) Security (protection of property and persons);
• (v) Accounting (Preparation of various statements, accounts,
returns etc.) and
• (vi) Managerial (planning, organisation, command, co-ordination
and control)
He pointed out that these activities exist in every enterprise.
• 2. Qualities of an Effective Manager:
• Henry Fayol was the first person to recognize the different qualities
for manager.
• According to him these qualities are:
• (i) Physical (health, vigor, and address);
• (ii) Mental (ability to understand and learn, judgment, mental vigor,
and adaptability) ;
• (iii) Moral (energy, firmness, willingness to accept responsibility,
initiative, loyalty, tact and dignity);
• (iv) Educational (acquaintance with matters related to general
functioning) ;
• (v) Technical (peculiar to the functions being performed); and
• (vi) Experience (arising from the work).
 3. Functions of Management:
• Fayol classified the elements of management into five and all such elements were considered
by him as the functions of management.
• According to him following are the functions of management:
• (i) Planning:
• Deciding in advance what to do. It involves thought and decision relating to a future course of
action.
• (ii) Organizing:
• Providing everything that is useful to a business enterprise for its operation i.e., men,
materials, machines and money etc.
• (iii) Commanding:
• Maintaining activity among personnel (lead the personnel in a better way).
• (iv) Co-ordinating:
• The channelization of group efforts in the direction of achieving the desired objective of the
enterprise (binding together-unifying and harmonizing all activity).
• (v) Controlling:
• Seeing that everything is being carried out according to the plan which has been adopted,
the orders which have been given, and the principles which have been laid down. Its object is
to point out mistakes in order that they may be rectified and prevented from occurring again.
Fayol observed that these principles apply not only to business enterprise, but also to
political, religious, philanthropic or other undertakings.
4.PRINCIPLES OF MANAGEMENT

Henri Fayol evolved 14 principles of

management which could used in all
management systems
1.Division of work (Specialization): work should be divided among individuals and
groups to ensure effort and attention focused on task.
2. Authority and Responsibility: Authority and responsibility are two sides of a coin
Authority refers to power to give orders and responsibility refers to being accountable
or responsible for ones acts .
3.Discipline: For an organization to be successful it requires common effort ,penalties
shall be applied for encouraging common effort .
4Unity of Command:
workers should receive orders from one manager
5.Unity of Direction:
Entire organization moves to a single objective
6.Subordination of Individual Interest to General Interest:
Priority should be given to organization’s interest than ones individual interest .
7. Fair Remuneration to workers:
Works should be provided fair rate of payment for their work.
8.Effective Centralization:
Where all important decisions are taken by top level management
9. Scalar Chain:
It shows hierarchy in an organization how authority flows or how communication
flows.
10.Order:
For sake of efficiency and control people should have right resources at their
disposal to function properly.
11.Equity:
According to Henri Fayol all employees should be treated equally
12.Stability in the tenure of personnel: In this management strives to reduce
employee turnover.
13Initiative: Fayol argued that employees should be given freedom to bring new ideas
it increases interest and new ideas.
14. Esprit de Corps (Union is Strength)where in organization strives to bring unity in
organization.
 Contribution by Elton Mayo

Hawthorne experiments
• The term “Hawthorne” is a term used within several
behavioral management theories
• and is originally derived from the western electric
company’s large factory complex named Hawthorne works.
• Starting in 1905 and operating until 1983, Hawthorne
works had 45,000 employees and it produced a wide
variety of consumer products, including telephone
equipment, refrigerators and electric fans.
• As a result, Hawthorne works is well-known for its
enormous output of telephone equipment and most
importantly for its industrial experiments and studies
carried out.
• In 1927, a group of researchers led by Elton Mayo and Fritz
Roethlisberger of the Harvard Business School were invited to join
in the studies at the Hawthorne Works of Western Electric
Company, Chicago.
• Experiment lasted up to1932
• Experiment bought out productivity of employees is not a function
depending on work wages paid to employees but it depends on
satisfaction of employees in work environment.
• He tried to bring out emotional factors which effected productivity
efficiency.
• He pointed out of all factors influencing human behavior the most
important was workers participation in social groups
• Mayo pointed out that work arrangement in addition to production
requirement objectives was key subjective requirement of
employees for social satisfaction.
Hawthorne experiments consisted for four
phases
1.llumination Experiment
2.Relay Assembly Test Room Experiment
3.Interviewing Program
4.Bank Wiring Test Room Experiment
 llumination Experiment

• This experiment was conducted to establish

relationship between output and illumination.
• When the intensity of light was increased, the output
also increased.
• The output showed an upward trend even when the
illumination was gradually brought down to the normal
level.
• Therefore, it was concluded that there is no consistent
relationship between output of workers and
illumination in the factory.
• There must be some other factor which affected
productivity.
 MASS INTERVIEW PROGRAM
• The objective of this program was to make a systematic study of
the employees attitudes which would reveal the meaning which
their “working situation” has for them.
• The researchers interviewed a large number of workers with regard
to their opinions on work, working conditions and supervision.
Initially, a direct approach was used whereby interviews asked
questions considered important by managers and researchers.
• The researchers observed that the replies of the workmen were
guarded.
• Therefore, this approach was replaced by an indirect technique,
where the interviewer simply listened to what the workmen had to
say.
• The findings confirmed the importance of social factors at work in
the total work environment.
 Relay assembly test room Experiment
• This phase aimed at knowing not only the impact of illumination on
production but also other factors like length of the working day, rest
hours, and other physical conditions.
• In this experiment, a small homogeneous work-group of six girls
was constituted. These girls were friendly to each other and were
asked to work in a very informal atmosphere under the supervision
of a researcher. Productivity and morale increased considerably
during the period of the experiment.
• Productivity went on increasing and stabilized at a high level even
when all the improvements were taken away and the pre-test
conditions were reintroduced.
• The researchers concluded that socio-psychological factors such as
feeling of being important, recognition, attention, participation,
cohesive work-group, and non-directive supervision held the key for
higher productivity.
 BANK WIRING TEST ROOM
EXPRIMENT
• This experiment was conducted by Roethlisberger and Dickson with a view
to develop a new method of observation and obtaining more exact
information about social groups within a company and also finding out the
causes which restrict output.
• The experiment was conducted to study a group of workers under
conditions which were as close as possible to normal. This group
comprised of 14 workers. After the experiment, the production records of
this group were compared with their earlier production records.
• It was observed that the group evolved its own production norms for each
individual worker, which was made lower than those set by the
management.
• Because of this, workers would produce only that much, thereby
defeating the incentive system.
• Those workers who tried to produce more than the group norms were
isolated, harassed or punished by the group.
 The findings of the study are:-

• Each individual was restricting output.

• The group had its own “unofficial” standards
of performance.
• Individual output remained fairly constant
over a period of time.
• Informal groups play an important role in the
working of an organization.
 CONTRUBUTION OF HOWTHRON
EXPRIMENT
• A business organization is basically a social system. It is not just a techno-
economic system.
• The employer can be motivated by psychological and social wants because
his behavior is also influenced by feelings, emotions and attitudes. Thus
economic incentives are not the only method to motivate people.
• Management must learn to develop co-operative attitudes and not rely
merely on command
• Participation becomes an important instrument in human relations
movement. In order to achieve participation, effective two-way
communication network is essential.
• Productivity is linked with employee satisfaction in any business
organization. Therefore management must take greater interest in
employee satisfaction.
• Group psychology plays an important role in any business organization. We
must therefore rely more on informal group effort.
 Contribution by Rensis Likert

• Dr. Rensis Likert was a American

• psychologist. Likert graduated
• from University Michigan with
• in economics and sociology in
• 1922. He received his doctorate
• in psychology from Columbia
• University in 1932. During the
next decade his work involved the interpretation of
surveys and the handling of questionnaires. He joined
the staff of U Michigan in 1946, becoming the founding
Director of the Institute for Social Research in 1949.
 Liker's Research
 University of Michigan's Institute for Social
Research and its inception in 1946-1970.
 Rensis Likert devoted particular attention to
research on organizations (1960s-1970s).
Research on major corporations around the
world.
 The Research Center for Group Dynamics in
1948.
 Contribution by Likert
• Dr. Likert has conduct much on human
behavior with organization, particularly in the
industrial situation. He has examined different
type of Organization and leadership styles,
and he asserts that to achieve maximum
profitability, goods labor relation and high
productivity, ever organization must make
optimum use of their human assets.
Likert had identified four management
system:
 Exploitive authoritative system
 Benevolent authoritative system
 Consultative system
 Participative (group) system
 Exploitive authoritative system
• In this type of management system the job of
employees/subordinates is to abide by the
decisions made by managers and others with
a higher status in the organization. The
subordinates do not participate in the decision
making. The organization's sole concern is
completion of work. Fear and threats may be
used to insure completion. No teamwork is
involved
 Benevolent authoritative system
• Just as in an exploitive authoritative system,
decisions are made at the top of the
organization. However, employees are
motivated through rewards rather than fear
and threats. Information may flow from
subordinates to managers, but it is restricted
to “what management want to hear”.
 Consultative system
• In this type of management system,
subordinates are motivated by rewards and a
degree of involvement in the decision-making
process. Management will constructively use
subordinates' ideas and opinions. However,
involvement is incomplete, and major
decisions are still made by senior
management. More information flows from
subordinates to management, although it is
incomplete and euphemistic.
 Participative (group) system
• Management have complete confidence in their
subordinates/employees. Communication is free, and
subordinates are fully involved in decision making.
Subordinates comfortably express opinions and engage
in teamwork. Teams are linked together by common
members. Likert calls people in more than one group
“linking pins”. Employees throughout the organisation
feel responsible for achieving the organisation’s
objectives. This responsibility is motivational,
especially as subordinates are offered economic
rewards for achieving organisational goals, which they
have participated in setting.
 Likert’s suggestion for effective
management
The motivation to work must be fostered by
modern principles and techniques, and not by
the old system of rewards and threats.
 Employees must be seen as people who have
their own needs, desires and values.
Supportive relationships must exist within
each work group. These are characterized not
by actual support, but by mutual respect.
Contribution by Mary Parker Fallot
• Motivation to work must be fostered by
modern principles and not by old system of
rewards and threats. Employees must be seen
as people who have their own needs desires
and values supportive relationship must exist
with in each work group these are put forward
as not by actual support but as mutual
respect.
 Mary parker defined management as “ Art of
getting things done through others”

She is regarded as mother of scientific management

her highly influential development ideas were in
negotiation, power, employee participation of
organizational studies
She was a worker who turned management
theorist.
 Principles of coordination by Mary
• Principle of early stage
States that business can achieve coordination in early stages of
planning and policy making
• Principle of continuity
The principle of continuity states that coordination is a continuous
process
• Principle of direct contact
• States that a business can achieve co-ordination more easily by direct
interpersonal relationships.
• Principle of reciprocal relations
• The decisions and actions of of all managers and employees and
departments of the organization are inter-related. So, the decisions and
actions of A person or departments will affect all other people and
departments in the organization. Therefore, before taking any decision or
action all managers must first find out the effect of that decision or action
on other persons and departments in the organization. This is called the
Principle of Reciprocal Relations.
Additional principles of coordination
• Principle of effective communication
Co-ordination will be successful only in the presence of an effective
communication. Good communication must be present between all departments,
within employees themselves and even between managers and their subordinates.
• Principle of mutual respect
Coordination will be successful only if there exist a mutual respect throughout the
organization. All managers working at different levels (top, middle or lower) must
respect each other.
• Principle of clarity of objectives
Co-ordination will be successful only if the organization has set its clear objectives.
Everyone in the organization must know the objectives very clear.

• Principle of scalar chain

The line of authority which flows with in an organization . It is necessary for good
communication.
• Mary Parker Follet
• McGregor
• Herbert A Simon
• Peter F Drucker
Contributions by McGregor

Douglas Murray McGregor's : Theory Y & Theory X

• Douglas McGregor was a management
professor at MIT Sloan School of Management
and president of Antioch College from 1948 to
1954. He also taught in IIM Calcutta . In his book
The Human Side of Enterprise, he talked about
two theories called Theory X and Theory
Y. McGregor identified an approach of creating an
environment within which employees are
motivated via authoritative, direction and control
or integration and self-control, which he called
Theory X and Theory Y.
• Theory X is an authoritarian style where the
emphasis is on “productivity, on the concept
of a fair day's work. It reflects an underlying
belief that management must counteract an
inherent human tendency to avoid work”.
 THEORY X
• Following are the assumption made by Theory X style of
management :

• An average employee intrinsically does not like work and tries to

escape it whenever possible
• Since the employee does not want to work, he must be persuaded,
compelled, or warned with punishment so as to achieve
organizational goals. A close supervision is required on part of
managers. The managers adopt a more dictatorial style
• Many employees rank job security on top, and they have little or no
aspiration/ ambition
• Employees generally dislike responsibilities
• Employees resist change
• An average employee needs formal direction
 Theory Y
• Theory Y is a participative style of
management which “assumes that people will
exercise self-direction and self-control in the
achievement of organizational objectives to
the degree that they are committed to those
objectives”. It is management's main task in
such a system to maximize that commitment
 THEORY Y
• Following are the assumptions made by Theory Y style of management :-

Employees can perceive their job as relaxing and normal. They exercise
their physical and mental efforts in an inherent manner in their jobs
• Employees may not require only threat, external control and coercion to
work, but they can use self-direction and self-control if they are dedicated
and sincere to achieve the organizational objectives
• If the job is rewarding and satisfying, then it will result in employees’
loyalty and commitment to organization
• An average employee can learn to admit and recognize the responsibility.
In fact, he can even learn to obtain responsibility
• The employees have skills and capabilities. Their logical capabilities should
be fully utilized. In other words, the creativity, resourcefulness and
innovative potentiality of the employees can be utilized to solve
organizational problems
 Contributions by Herbert A Simon

• Some of the major contributions of Herbert Simon

towards management are as follows:
1. Concept of Organization
• 2. Decision-making
• 3. Bounded Rationality
• 4. Administrative Man
• 5. Organizational Communication.
• Herbert Simon, a noble prize winner in Economics, has
made significant contributions in the field of
management particularly administrative behavior and
decision making.
• 1. Concept of Organisation:
• Simon has described an organisation as a complex network
of decisional processes, all pointed towards their influence
upon the behaviour of the operatives. He has viewed the
organisation containing distribution and allocation of
decision-making functions.

• According to him, physiology of the organisation is to be

found in the process whereby organisation influences the
decisions of its members, supplying these decisions with
their devices. Thus, the best way to analyses an
organisation is to find out where and by whom decisions
are made.
• 2. Decision-making:
• Perhaps the greatest contribution of Simon is in the field of
decision-making. Decision-making is the core of management and
management is synonymous with decision-making. This is why he
has been referred to as decision theorist. According to him, the
decision process can be broken into a series of three sequential
steps.
• These are:
• (i) Intelligent activity the initial phase of searching the environment
for conditions calling for decisions;
• (ii) Design activity the phase of inventing, developing, and analysing
possible course of action to take place; and
• (iii) Choice activity the final phase of actual choice selecting a
particular course of action from those available.
• 3. Bounded Rationality:
• Simon is of view that man is not completely rational.
He has criticized the theories which are based on the
assumptions of complete rationality. He has advocated
the principle of bounded rationality. Accordingly,
managers do not go for maximum satisfaction of a
decision but are satisfied with good enough
satisfaction from a decision.
• Managers cannot maximize on account of various
limitations and constraints. A decision is a rational for
achieving the desired ends, appropriate means are
adopted.
• 4. Administrative Man:

• Simon has given the concept of administrative man as the model of

decision-making. The model is based on the following assumptions:
• (i) Administrative man adopts satisfaction approach in decision-making
rather than the maximizing approach of economic man.
• (ii) He perceives the word as a simplified model of real world. Thus, he
remains content with simplification,
• (iii) He can make his choice without first determining all possible
alternatives and without screening that these are in-fact all the
alternatives,
• (iv) He is able to make decisions with relatively simple rule of thumb, or
tricks of trade, or force of habit. The administrative man model describes
the decision-making process of mangers as tempting .
 Contributions of Peter Drucker
• Peter F Drucker (1909-2005)
• Some of the major contributions of Peter Drucker
are as follows:
• 1. Nature of Management
• 2. Management Functions
• 3. Organization Structure
• 4. Federalism
• 5. Management by Objectives
• 6. Organizational Changes
• Nature of Management
The basic objective of management is to read towards
innovation. It may include development of new ideas,
combining of old and new ideas, adaptation of ideas from
other fields or even to act as a catalyst and encouraging
others to carry out innovation.
He has treated management as a discipline as well as
profession. As a discipline, management has its own tools,
skills, techniques and approaches.
As management as profession more emphasis that
managers should not only have skills and techniques but
should have right perspective putting the things into
practice.
Managerial functions
• According to Drucker, management is the organ of its institution.
He sees management through its tasks. Accordingly, there are three
basic functions of a manager which he must perform to enable the
institution to make its contribution for:
• (i) the specific purpose and mission of the institution whether
business, hospital or university;
• (ii) making work productive and the worker achieving; and
• (iii) managing social impacts and social responsibilities.
• He considers manager as administrator thus, a manager has to
perform several functions: setting of objectives, making, organizing
and motivating key areas of objective setting are market standing,
innovation, productivity, physical and financial resources,
profitability, managerial performance and development, worker
performance and attitude, and public responsibility.
• Organization Structure:
Drucker has decried bureaucratic structure because of its too many
dysfunctional effects. Therefore, it should be replaced. He has
emphasized three basic characteristics of an effective organization
structure.
These are:
(i) Enterprise should be organized for performance;
(ii) it should contain the least possible number of managerial levels;
(iii) it must make possible the training and testing of tomorrow’s
top managers—responsibility to a manager while still he is young.
He has identified three basic aspects in organizing activity analysis,
decision analysis, and relation analysis.
Federalism:
• Drucker has advocated the concept of federalism.
Federalism refers to centralized control in decentralized
structure Decentralized structure goes far beyond the
delegation of authority.
Advantages of Federalism
• i)It sets the top management free to devote itself to its
proper functions;
• (ii) It defines the functions and responsibilities of the
operating people;
• (iii) It creates a yardstick to measure their success and
effectiveness in operating jobs.
MBO
Management by objectives (MBO) is regarded as
one of the important contributions of Drucker to
the discipline of management. He introduced this
concept in 1954. MBO has further been modified
by Schleh which has been termed as
management by results’. MBO includes method
of planning, setting standards, performance
appraisal, and motivation.
• Organizational Changes:
• Drucker has visualised rapid changes in the
society because of rapid technological
development. Though he is not resistant to
change, he feels concerned for the rapid
changes and their impact on human life.
Normally, some changes can be absorbed by
the organization but not the rapid changes.
• 5. Organizational Communication:
Simon has emphasized the role of communication
in organization. According to him, there are three
stage in the communication process; initiation,
transmittal, and receipt of information. There
may be blockade of communication and any of
these three stages. In order to overcome the
problem of communication, he has emphasized
the role of informal communication and has
attached less importance to the formal network
of authority.
Trends and Challenges of Management
in Global Scenario
• Organizing, leading, and controlling are just as
relevant to international managers as to
domestic managers. International managers
need to have a clear view of where they want
their firm to be in the future; they have to
organize to implement their plans: they have
to motivate those who work lot them; and
they have to develop appropriate control
mechanisms.
 Planning
Planning and Decision Making in a Global Scenario To
effectively plan and make decisions in a global economy,
managers must have a broad based understanding of both
• Environmental issues
They need to understand local market conditions and
technological factor that will affect their operations. At the
corporate level, executives need a great deal of information
to function effectively. Which markets are growing? Which
markets are shrinking?
• Competitive issues.
Which are our domestic and foreign competitors doing in
each market? They must also make a variety of strategic
decisions about their organizations.
MANAGEMENT SYSTMS
 ORGANIZING
Organizing in a Global Scenario Managers in international busin
esses must also attend to a variety of organizing issues.
• For example, General Electric has operations scattered around the
globe. The firm has made the decision to give local managers a
great deal of responsibility for how they run their business.
• In contrast, many Japanese firms give managers of their foreign
operations relatively little responsibility. As a result, those managers
must frequently travel back to Japan to present problems or get
decisions approved.
• Managers in an international business must address the basic issues
of organization structure and design, managing change, and dealing
with human resources.
 Leading
Leading in a Global Scenario We noted earlier some of the
cultural factors that affect international organizations. Individual
managers must be prepared to deal with these and other factors as
they interact people from different cultural backgrounds .
• Supervising a group of five managers, each of whom is from a
different state in India, is likely to be much simpler than supervising
a group of five managers, each of whom is from a different culture.
• Managers must understand how cultural factors affect individuals.
How motivational processes vary across cultures, how the role of
leadership changes in different cultures, how communication varies
across cultures, and how interpersonal and group processes depend
on cultural background.
 Controlling
• Controlling in a Global Scenario Finally, managers in international
organizations must also be concerned with control.
• Distances
• Time zone differences
• cultural factors also play a role in control.
• For example, in some cultures, close supervision is seen as being
appropriate, whereas in other cultures, it is not like wise, executives in the
United States and Japan may find it difficult to communicate vital
information to one another because of the time zone differences.
Basic control issues for the international manager revolve around
• operations management
• productivity
• Quality
• Technology
• Information systems.
 TEN WAYS WORLD IS CHANGING

Let’s look at 10 major ways in which the world is

changing; we’ll characterize the first five as
challenges and the next five as solution
 CHALLENGES
• TOP Trends
• Top 5 Challenge Trends
• Increasing Concern for the Environment
More and more companies now watch the “triple bottom line”—the
benchmark of how they benefit, not just (1) profits but also (2) employees
and (3) the environment as a whole. Companies realize they have to take
bold steps to minimize their carbon footprint, create environmentally
friendly products, and manage the company for more than just the next
quarter’s profits. Managers can’t simply “greenwash” (pretend to be green
through tiny steps and heavy advertising).
• Greater Personalization and Customization
• One size no longer fits all, and that means tailoring products and services
to meet specific customer preferences. And as companies sell their
products globally, that tailoring has to meet vastly different needs, cultural
sensitivities, and income levels
• Faster Pace of Innovation
We all want the next new thing, and we want it now. New
models, new products, and new variations—companies are
speeding new products to market in response to customer
demands. The Finland-based mobile phone maker Nokia sells 150
different devices, of which 50–60 are newly introduced each year
• Increasing Complexity
Because we want more sustainability, more customization, and more
innovation, companies face growing complexity. Nokia’s 50–60 new
phone models a year all have 300–400 components, some of which
contain millions or hundreds of millions of transistors. Those
components have to arrive at the right manufacturing location
(Nokia has 10 worldwide) from whichever country they originated
and arrive just in time to be manufactured.
• Increasing Competition for Talent
We need people who can solve all these
tough problems, and that’s a challenge all by
itself. Overall, demand will grow for new types
of talent such as in the green energy industry.
At the same time, companies face a shrinking
supply of seasoned managers as baby
boomers retire in droves. Companies will have
to deal with shortages of specific skills.
 SOLUTIONS
• Top 5 Solution Trends
• Becoming More Connected
We can now use the Internet and World Wide Web to connect people with
people as never before. Through over a 100 million Web sites, we can
access information, words, sounds, pictures, and video with an ease
previously unimaginable.

• Becoming More Global

We can now tap into more global suppliers and global talent. Whatever
problem a manager faces, someone in the world probably has the
innovative products, the knowledge, or the talent to address the problem.
And the Internet gives managers to the tools to help problems find
solutions, customers find suppliers, and innovators find markets.
Organizations and social movements alike are using social networking to
help people find others with the skills and talents to solve pressing
problems.
• Becoming More Mobile
• We can now reach employees, suppliers, and
customers wherever they are. The penetration of
mobile phones is changing the way we do
business because people are more connected and
able to share more information. Two-way, real-
time dialogue and collaboration are available to
people anytime, anywhere.
• The low cost of phones compared with
computers puts them in the hands of more
people around the world.
• Rise of the Creative Class
Workers may become free agents, working
temporarily on one project and then moving to
another when that project is done. Mobile
connectivity means these new workers can live
anywhere in the world and can work from
anywhere in their community. For you as a
manager, this means managing workers who
might be in a cubicle in Columbus, Ohio, an
apartment in Amsterdam, or an Internet café in
Bangalore.
• Increasing Collaboration
• These solution trends combine to foster a rise in
collaboration across space and time. We can now
bring more people together to solve more
problems more quickly. To design new products
quickly—and make sure they meet consumer
needs—companies are now looking beyond their
four walls for innovation. People can now not just
communicate but actually collaborate, building
coalitions, projects, and products.
 TOP BUSINESS TRENDS
Top business trends likely to have the greatest effect on business.
• Competition for talent will intensify, become more global.
• Centers of economic activity will shift globally, regionally.
• Technological connectivity will increase.
• Ubiquitous access to information will change economics of
knowledge.
• Demand for natural resources will grow, as will strain on
environment.
• Population in developed economies will age.
• Consumer landscape will change, expand significantly.
• Role, behavior of business will come under increasing scrutiny.
• Organizations will become larger, more complex.
• New global industry structures will emerge (e.g., private equity,
networked).
 Big trends in small business

• Web 2.0
• Rise of e-marketing
• Little is the new big
• The new consumer
• Fragmentation
• The world is getting flatter
• Personalization
• Work anywhere, any place
• Global warming may put you out of business
 Management definitions
• Definitions of management by various author.
Harold koontz “Management is the art of
getting things done through others and with
formally organised groups.”
• Henri Fayol “Management is to forecast, to
plan, to organize, to command, to coordinate
and control activities of others.”
 Management definitions
• F W TAYLOR – Management is art of knowing
what you want to do and then seeing that
they do in best and cheapest manner
• Gorge R Terry –
“Management is a distinct process consisting of
planning ,organizing ,actuating and controlling
;utilizing in each both science and arts and
followed in order to accomplish pre
determined objective “
 Administration definition
• The definition of administration refers to the
group of individuals who are in charge of creating
and enforcing rules and regulations, or those in
leadership positions who complete important
tasks.
• According to Theo Haimann, “Administration
means overall determination of policies, setting
of major objectives, the identification of general
purposes and laying down of broad programmes
and projects”. It refers to the activities of higher
level.
According to Newman, “Administration means
guidance, leadership & control of the efforts
of the groups towards some common goals”.
• On the Basis of Functions: -
• Basis
• Management
• Administration
• Meaning
• Management is an art of getting things done through others by directing their efforts
towards achievement of pre-determined goals.
• It is concerned with formulation of broad objectives, plans & policies.
• Nature
• Management is an executing function.
• Administration is a decision-making function.
• Process
• Management decides who should as it & how should he dot it.
• Administration decides what is to be done & when it is to be done.
• Function
• Management is a doing function because managers get work done under their
supervision.
• Administration is a thinking function because plans & policies are determined under it.
• Skills
• Technical and Human skills
• Conceptual and Human skills
• Level
• Middle & lower level function
• Top level function
• On the Basis of Usage: -
• Basis
• Management
• Administration
• Applicability
• It is applicable to business concerns i.e. profit-making organization.
• It is applicable to non-business concerns i.e. clubs, schools, hospitals etc.
• Influence
• The management decisions are influenced by the values, opinions, beliefs
& decisions of the managers.
• The administration is influenced by public opinion, govt. policies, religious
organizations, customs etc.
• Status
• Management constitutes the employees of the organization who are paid
remuneration (in the form of salaries & wages).
• Administration represents owners of the enterprise who earn return on
their capital invested & profits in the form of dividend.
•
Definitions of administration and management
– Basic Principles and process of management.
Planning – Distinguishing between operational
and strategic planning – types of plans –
grouping of various types of plans – Steps in
planning – Making of Effective Planning.
Unit–II
Policy making: Importance of policies – Types
of policies – Principles–Policy formulation and
Administration – Basic areas of Policy making.
Organisational theory – Formal organisation –
Informal organisation – New Forms of
Organization - Virtual Organisation as
Networks– Identification of informal groups –
Sociogram– Benefits of sound organisation
structure – Organizational Designs for Change
and Innovation.
Departmentation – Organisation Charts and
manuals.
 Chapter 2
BASIC PRINCIPLES AND PROCESS
OF MANAGEMENT
 BASIC PRINCIPLES AND PROCESS OF
MANAGEMENT
• Introduction
Managing is one of the most important human activates. People
have began forming groups to accomplish their aims which they
could not achieve individually it basically means coordination of
individual efforts . Modern societies are often described as
‘societies of organisations’. When we think of any modern society,
institutions like business enterprises, hospitals, religious and social
organisations naturally come to our mind. All these organisations
affect our lives in many ways. Despite the differences in their
functioning and approaches, they all strive to the differences in
their functioning and approaches, they all strive to achieve certain
objectives. It must also be noted that organisations cannot achieve
the objectives effortlessly. Several activities have to be performed
in a cohesive way. As such, it is the function of the management to
facilitate the performance of activities in a systematic fashion such
that the accomplishment of the objectives becomes possible.
 Nature of management

• Management is the process of designing and

maintaining an environment in which individuals
working together in groups ,efficiently accomplish
selected aims.
Managers carry managerial functions of planning
,organizing , staffing, leading and controlling.
• It applies to any organization
• It applies at all levels
• All managers aim to create surplus
• It is concerned with productivity
• It helps to bring effectiveness and efficiency.
 Input out put model

inputs Transformation outputs

External environment
• Management as science
• Management as art
• Management as profession
• Professionalism of management in India
 Stratagic PLANNING

Definition of Strategic Planning

Strategic Planning is a planning process undertaken by the top level management, to
decide Where the organization wants to reach in future? And What should be done to
pursue the organizational vision, mission, and objectives? It is an analytical process
which examines the micro and macro environment of business. The process is used to
define the company’s vision, ambitions, and set priorities to make a route that will
lead the company towards its ultimate goal.
The tools used in this process are:
SWOT Analysis (Strength, Weakness, Opportunities, Threats)
Portfolio Analysis
PEST Analysis (Political, Economic, Social, Technological Environment)
Porter’s 5 forces Analysis (New Entrants, Rival Sellers, Substitute Products, Buyer
Bargaining Power, Supplier Bargaining Power)
BCG Matrix (Boston Consulting Group)
These tools help the management to design a strategy considering various elements,
that will lead the organization towards its vision.
 Operational Planning
Definition of Operational Planning
• The process which predetermines the day to day activities of the business is
known as Operational Planning. The planning is done to support the strategic
planning to accomplish the organizational goals. In this process, short run
objectives of the company are determined as well as a means to achieve those
objectives are also discovered.
• Middle-level management performs the function of the operational planning
process. It includes planning of regular business activities and operations for a
short period.
• The following are the features of Operational Planning:
• Objectives need to be clearly defined.
• Achievement of the desired result.
• The activities are to be performed as decided.
• Maintenance of quality standards.
• Measuring performance.
Strategic Plans v/sOperational Plans
STRATAGIC PLAN
The planning to pursue the
organization’s vision is known as
Strategic Planning
Strategic Planning is long lasting
Strategic plan is independent
Strategic Planning takes into account
the internal as well as the external
environment of business
OPERATIONAL PLAN
The planning to achieve the tactical
objectives of the organization is known
as Operational Planning.
Operational planning lasts for short
period
Operational plan is supportive to
strategic plan
Operational Planning is concerned with
the internal environment of business.
 Operational Planning is a function of
Strategic planning is done by top level
middle-level management.
management

Strategic Planning covers the whole Operational Planning is done in a

organization particular unit or department of the
organization
 FUNCTIONS OF MANAGEMENT

PANNING
• It is the basic function of management. It deals with chalking out a
future course of action & deciding in advance the most appropriate
course of actions for achievement of pre-determined goals.
According to KOONTZ, “Planning is deciding in advance - what to do,
when to do & how to do. It bridges the gap from where we are &
where we want to be”. A plan is a future course of actions. It is an
exercise in problem solving & decision making. Planning is
determination of courses of action to achieve desired goals. Thus,
planning is a systematic thinking about ways & means for
accomplishment of pre-determined goals. Planning is necessary to
ensure proper utilization of human & non-human resources. It is all
pervasive, it is an intellectual activity and it also helps in avoiding
confusion, uncertainties, risks, wastages etc.
Organizing
• It is the process of bringing together physical, financial and human
resources and developing productive relationship amongst them for
achievement of organizational goals. According to Henry Fayol, “To
organize a business is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and personnel’s”. To
organize a business involves determining & providing human and
non-human resources to the organizational structure. Organizing as
a process involves:
• Identification of activities.
• Classification of grouping of activities.
• Assignment of duties.
• Delegation of authority and creation of responsibility.
• Coordinating authority and responsibility relationships.
• LEADING
• Leadership is a process by which an executive can direct, guide and influence the behavior and
work of others towards accomplishment of specific goals in a given situation. Leadership is the
ability of a manager to induce the subordinates to work with confidence and zeal.
• Leadership is the potential to influence behaviour of others. It is also defined as the capacity to
influence a group towards the realization of a goal. Leaders are required to develop future visions,
and to motivate the organizational members to want to achieve the visions.
• According to Keith Davis, “Leadership is the ability to persuade others to seek defined objectives
enthusiastically. It is the human factor which binds a group together and motivates it towards
goals.”
• It is a inter-personal process in which a manager is into influencing and guiding workers towards
attainment of goals.
• It denotes a few qualities to be present in a person which includes intelligence, maturity and
personality.
• It is a group process.
• It involves two or more people interacting with each other.
• A leader is involved in shaping and moulding the behaviour of the group towards accomplishment
of organizational goals.
• Leadership is situation bound.
• CONTROLING
• It implies measurement of accomplishment against the standards and correction
of deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards.
An efficient system of control helps to predict deviations before they actually
occur. According to Theo Haimann, “Controlling is the process of checking whether
or not proper progress is being made towards the objectives and goals and acting
if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling
is the measurement & correction of performance activities of subordinates in
order to make sure that the enterprise objectives and plans desired to obtain them
as being accomplished”. Therefore controlling has following steps:
• Establishment of standard performance.
• Measurement of actual performance.
• Comparison of actual performance with the standards and finding out deviation if
any.
• Corrective action.
Levels of management
• The term “Levels of Management’ refers to a line of
demarcation between various managerial positions in an
organization. The number of levels in management
increases when the size of the business and work force
increases and vice versa. The level of management
determines a chain of command, the amount of authority
& status enjoyed by any managerial position. The levels of
management can be classified in three broad categories:
• Top level / Administrative level
• Middle level / Executory
• Low level / Supervisory / Operative / First-line managers
• Managers at all these levels perform different functions.
 LEVELS OF MANAGEMENT
TOP LEVEL
• It consists of board of directors, chief executive or managing director. The top
management is the ultimate source of authority and it manages goals and policies
for an enterprise. It devotes more time on planning and coordinating functions.

• The role of the top management can be summarized as follows -

• Top management lays down the objectives and broad policies of the enterprise.
• It issues necessary instructions for preparation of department budgets,
procedures, schedules etc.
• It prepares strategic plans & policies for the enterprise.
• It appoints the executive for middle level i.e. departmental managers.
• It controls & coordinates the activities of all the departments.
• It is also responsible for maintaining a contact with the outside world.
• It provides guidance and direction.
• The top management is also responsible towards the shareholders for the
performance of the enterprise
Middle level
• The branch managers and departmental managers constitute middle level. They are responsible to
the top management for the functioning of their department. They devote more time to
organizational and directional functions. In small organization, there is only one layer of middle
level of management but in big enterprises, there may be senior and junior middle level
management. Their role can be emphasized as –

• They execute the plans of the organization in accordance with the policies and directives of the top
management.
• They make plans for the sub-units of the organization.
• They participate in employment & training of lower level management.
• They interpret and explain policies from top level management to lower level.
• They are responsible for coordinating the activities within the division or department.
• It also sends important reports and other important data to top level management.
• They evaluate performance of junior managers.
• They are also responsible for inspiring lower level managers towards better performance.
Lower level
Is also known as supervisory / operative level of management. It consists of supervisors, foreman,
section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers to
those executives whose work has to be largely with personal oversight and direction of operative
employees”. In other words, they are concerned with direction and controlling function of
management. Their activities include -
– Assigning of jobs and tasks to various workers.
– They guide and instruct workers for day to day activities.
– They are responsible for the quality as well as quantity of production.
– They are also entrusted with the responsibility of maintaining good relation in the organization.
– They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and
higher level goals and objectives to the workers.
– They help to solve the grievances of the workers.
– They supervise & guide the sub-ordinates.
– They are responsible for providing training to the workers.
– They arrange necessary materials, machines, tools etc for getting the things done.
– They prepare periodical reports about the performance of the workers.
– They ensure discipline in the enterprise.
– They motivate workers.
– They are the image builders of the enterprise because they are in direct contact with the workers.
• NATURE AND PURPOSE OF PLANNING
•
• Nature of Planning
• 1. Planning is goal-oriented: Every plan must contribute in some positive way towards the
accomplishment of group objectives. Planning has no meaning without being related to goals.
• 2. Primacy of Planning: Planning is the first of the managerial functions. It precedes all other
management functions.
• 3. Pervasiveness of Planning: Planning is found at all levels of management. Top management looks
after strategic planning. Middle management is in charge of administrative planning. Lower
management has to concentrate on operational planning.
• 4. Efficiency, Economy and Accuracy: Efficiency of plan is measured by its contribution to the
objectives as economically as possible. Planning also focuses on accurate forecasts.
• 5. Co-ordination: Planning co-ordinates the what, who, how, where and why of planning. Without
co-ordination of all activities, we cannot have united efforts.
• 6. Limiting Factors: A planner must recognize the limiting factors (money, manpower etc) and
formulate plans in the light of these critical factors.
• 7. Flexibility: The process of planning should be adaptable to changing environmental conditions.
• 8. Planning is an intellectual process: The quality of planning will vary according to the quality of
the mind of the manager.
• Purpose of Planning
• As a managerial function planning is important due to the following reasons:- 1. To manage by
objectives: All the activities of an organization are designed to achieve certain specified objectives.
However, planning makes the objectives more concrete by focusing attention on them.
• 2. To offset uncertainty and change: Future is always full of uncertainties and changes. Planning
foresees the future and makes the necessary provisions for it.
• 3. To secure economy in operation: Planning involves, the selection of most profitable course of
action that would lead to the best result at the minimum costs.
• 4. To help in co-ordination: Co-ordination is, indeed, the essence of management, the planning is
the base of it. Without planning it is not possible to co-ordinate the different activities of an
organization.
• 5. To make control effective: The controlling function of management relates to the comparison of
the planned performance with the actual performance. In the absence of plans, a management will
have no standards for controlling other's performance.
• 6. To increase organizational effectiveness: Mere efficiency in the organization is not important; it
should also lead to productivity and effectiveness. Planning enables the manager to measure the
organizational effectiveness in the context of the stated objectives and take further actions in this
direction.
• Features of Planning
• It is primary function of management.
• • It is an intellectual process
• Focuses on determining the objectives
• Involves choice and decision making
• It is a continuous process
• It is a pervasive function
• Classification of Planning On the basis of content
• Strategic Planning
– It is the process of deciding on Long-term objectives of the organization.
– It encompasses all the functional areas of business

• Tactical Planning

- It involves conversion of detailed and specific plans into detailed and specific action plans.

– It is the blue print for current action and it supports the strategic plans.

On the basis of time period

• Long term planning

– Time frame beyond five years

– It specifies what the organization wants to become in long run.

– It involves great deal of uncertainty.

•
• Intermediate term planning
– Time frame between two and five years.
– It is designed to implement long term plans.
• Short term planning
– Time frame of one year or less.
– It provide basis for day to day operations.
 Types of Plans
• TYPES OF PLANS / COMPONENTS OF PLANNING
In the process of planning, several plans are prepared which are known as
components of planning.
Plan

Strategic plan Tactical plan Operational plan Contingency plan

Mission

Objectives Single use plan Standing plan

Strategies Policy
Programs

Procurers
Budgets
Rules
 Types of plans
• Plans can be broadly classified as a) Strategic plans b) Tactical plans c) Operational plans

• Operational: plans lead to the achievement of tactical plans, which in turn lead to the attainment of
strategic plans. In addition to these three types of plans, managers should also develop a
contingency plan in case their original plans fail.

• Strategic plans: A strategic plan is an outline of steps designed with the goals of the entire
organization as a whole in mind, rather than with the goals of specific divisions or departments. It is
further classified as

i) Mission: . The mission is a statement that reflects the basic purpose and focus of the organization
which normally remain unchanged. The mission of the company is the answer of the question : why
does the organization exists
Properly crafted mission statements serve as filters to separate what is important from what is
not clearly state which markets will be served and how, and communicate a sense of intended
direction to the entire organization. Mission of Ford: “we are a global, diverse family with a proud
inheritance, providing exceptional products and services”.
ii) Objectives or goals: Both goal and objective can be defined as statements that reflect the end towards which
the organization is aiming to achieve. However, there are significant differences between the two. A goal
is an abstract and general umbrella statement, under which specific objectives can be clustered.
Objectives are statements that describe—in precise, measurable, and obtainable terms which reflect the
desired organization’s outcomes.

iii) Strategies: Strategy is the determination of the basic long term objectives of an organization and the
adoption of action and collection of action and allocation of resources necessary to achieve these goals.
Strategic planning begins with an organization's mission. Strategic plans look ahead over the next two,
three, five, or even more years to move the organization from where it currently is to where it wants to be.
Requiring multilevel involvement, these plans demand harmony among all levels of management within
the organization. Top-level management develops the directional objectives for the entire organization,
while lower levels of management develop compatible objectives and plans to achieve them. Top
management's strategic plan for the entire organization becomes the framework and sets dimensions for
the lower level planning.

b) Tactical plans: A tactical plan is concerned with what the lower level units within each division must do, how
they must do it, and who is in charge at each level. Tactics are the means needed to activate a strategy and
make it work. Tactical plans are concerned with shorter time frames and narrower scopes than are
strategic plans. These plans usually span one year or less because they are considered short-term goals.
Long-term goals, on the other hand, can take several years or more to accomplish. Normally, it is the
middle manager's responsibility to take the broad strategic plan and identify specific tactical actions.
• c) Operational plans The specific results expected from departments, work groups, and individuals are the
operational goals. These goals are precise and measurable. “Process 150 sales applications each week” or
“Publish 20 books this quarter” are examples of operational goals. An operational plan is one that a
manager uses to accomplish his or her job responsibilities. Supervisors, team leaders, and facilitators
develop operational plans to support tactical plans (see the next section). Operational plans can be a
single-use plan or a standing plan.
i) Single-use plans apply to activities that do not recur or repeat. A one-time occurrence, such as a special
sales program, is a single-use plan because it deals with the who, what, where, how, and how much of an
activity.
• Programme: Program me consists of an ordered list of events to be followed to execute a project.
• Budget: A budget predicts sources and amounts of income and how much they are used for a specific
project. ii) Standing plans are usually made once and retain their value over a period of years while
undergoing periodic revisions and updates. The following are examples of ongoing plans:
• Policy: A policy provides a broad guideline for managers to follow when dealing with important areas of
decision making. Policies are general statements that explain how a manager should attempt to handle
routine management responsibilities. Typical human resources policies, for example, address such matters
as employee hiring, terminations, performance appraisals, pay increases, and discipline.
• Procedure: A procedure is a set of step-by-step directions that explains how
activities or tasks are to be carried out. Most organizations have procedures for
purchasing supplies and equipment, for example. This procedure usually begins
with a supervisor completing a purchasing requisition. The requisition is then sent
to the next level of management for approval. The approved requisition is
forwarded to the purchasing department. Depending on the amount of the
request, the purchasing department may place an order, or they may need to
secure quotations and/or bids for several vendors before placing the order. By
defining the steps to be taken and the order in which they are to be done,
procedures provide a standardized way of responding to a repetitive problem.
• Rule: A rule is an explicit statement that tells an employee what he or she can
and cannot do. Rules are “do” and “don't” statements put into place to promote
the safety of employees and the uniform treatment and behavior of employees.
For example, rules about tardiness and absenteeism permit supervisors to make
discipline decisions rapidly and with a high degree of fairness.
d) Contingency plans
Intelligent and successful management depends upon a constant
pursuit of adaptation, flexibility, and mastery of changing
conditions. Strong management requires a “keeping all options
open” approach at all times — that's where contingency planning
comes in. Contingency planning involves identifying alternative
courses of action that can be implemented if and when the original
plan proves inadequate because of changing circumstances. Keep
in mind that events beyond a manager's control may cause even
the most carefully prepared alternative future scenarios to go awry.
Unexpected problems and events frequently occur. When they do,
managers may need to change their plans. Anticipating change
during the planning process is best in case things don't go as
expected. Management can then develop alternatives to the
existing plan and ready them for use when and if circumstances
make these alternatives appropriate.
 Objectives
• OBJECTIVES Objectives may be defined as the goals which an
organisation tries to achieve. Objectives are described as the end-
points of planning. According to Koontz and O'Donnell, "an
objective is a term commonly used to indicate the end point of a
management programme." Objectives constitute the purpose of
the enterprise and without them no intelligent planning can take
place. Objectives are, therefore, the ends towards which the
activities of the enterprise are aimed. They are present not only the
end-point of planning but also the end towards which organizing,
directing and controlling are aimed. Objectives provide direction to
various activities. They also serve as the benchmark of measuring
the efficiency and effectiveness of the enterprise. Objectives make
every human activity purposeful. Planning has no meaning if it is
not related to certain objectives.
• Features of Objectives
• The objectives must be predetermined.
• A clearly defined objective provides the clear direction for managerial effort.
• Objectives must be realistic.
• Objectives must be measurable.
• Objectives must have social sanction.
• All objectives are interconnected and mutually supportive.
• Objectives may be short-range, medium-range and long-range.
• Objectives may be constructed into a hierarchy.
Advantages of Objectives
• Clear definition of objectives encourages unified planning.
• Objectives provide motivation to people in the organization. •
When the work is goal-oriented, unproductive tasks can be avoided.
• Objectives provide standards which aid in the control of human
efforts in an organization.
• Objectives serve to identify the organization and to link it to the
groups upon which its existence depends.
• Objectives act as a sound basis for developing administrative
controls.
• Objectives contribute to the management process: they influence
the purpose of the organization, policies, personnel, leadership as
well as managerial control.
STEPS INPLANNING
HOW TO MAKE AN EFFECTIVE PLAN