WAYAMBA UNIVERSITY OF SRI LANKA

Faculty of Business Studies and Finance

MBA Programme

COURSE TITLE: Management & Organizational Theory

COURSE CODE: PG 1112
COURSE LECTURER: T.K. Karandakatiya (PhD)

Master Degree in Business Management ****2020**** 1

 Unit -1

Management , Planning and Decision Making

Lesson Outline

Nature of management – Meaning of Management-

Levels in management-Managerial skills-Planning –
Planning process- Scope and Limitations -
Flexibility in planning - Management by Objectives
(MBO) - Policies and Strategies - Decision making -
Techniques and Processes.

2
 Learning outcomes
 After the completion of this handout, you will
be able to:

◦ Describe the concept of management.

◦ Identify the fundamentals of planning process.

◦ Apply management concepts and techniques in

decision-making process.

3
 Nature of Management
 Management is Science? Art? Profession?........

 Lot of organizations around us…. Facilitate to

perform activities….

 Management…. What it is?.....

 Economists …factors of production; Socio-

logists…. Group of people…. Managers …..
process…

4
 Practice of management is old…. Not new….

 Progress of mankind….effective management of

resources…..

 Irrigation systems….pyramids…monuments…

 Modern management…. industrial revolution

…..scientific invention….. Production of goods
and services….

 ‘Management’ …. Worldwide acceptance….still

nature of management is not clear…..

5
 ‘Science’ has some properties.

 Management has a systematic body of

knowledge.

 But , is it a pure science ?......

 Some conditions do not allow the

management to be a ‘pure science’.

 Management has some qualities of “art”

then ?.....
6
 ‘Art’ …..know – how….skill …. Promote through
practice….

 Just knowledge in theory may not produce

results/success in management.

 Management practitioner requires skills

acquired through practice.

 Needs a blend of theory and

practice….creativity on the part of
practitioner…..correct understanding of the
situations…..

7
 Effective practice….. Underlying science……

 Conceptual understanding of management

principles and techniques…..luck and
intuition…

 Professional managers…. Management is a

profession?.....

 Managers are born or made?......

 Management education….formal
training….acquisition skills…
8
 Meaning of Management
 “The art of getting things done through
people” .
Mary Parker Follet

 “Management is the process of planning,

organizing, leading and controlling the
efforts of organization members and of using
all other organizational resources to achieve
stated organizational goals”.
James A.F. Stoner

9
 Planning, organizing,
leading, controlling.
 “Process of getting activities completed efficiently
and effectively with and through other people”.

 Efficient : input- output..

‘Doing things right’
People
Money
Equipment, Resource
etc. usage
 Effective : Achieve organizational goals.

Goal ‘Doing the right thing’

attainment
10
 Process approach to study management.

 Henri Fayol: Plan, Organize, Command,

Coordinate, Control.

 Planning, organizing, staffing, directing,

controlling.

 Planning, organizing , leading, controlling.

11
 Levels in Management
 Managers at different levels…

 Levels of management.
◦ Top
◦ Middle
◦ Front/ First – line.

 Top management / managers.

◦ Relatively small group / manage overall
organization.

◦ Titles : President, vice-president, chief executive

12
 Organization’s goals, overall strategy,
operating policies…., e.g. decisions- building
new plant, office facilities, entering new
markets, purchase another company.

 --------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------

13
 Middle management / managers.

◦ Middle management represents a relatively a

large group of managers in an organization.

◦ Titles : plant manager, operations manager,

division head….

◦ Responsible for implementing policies and plans.

◦ Meet production quotas, inventory management,

quality control, equipment failures, union
problems…. 14
 ◦ Supervising and coordinating the activities of
front-line managers.

 Front/First-line management / managers.

◦ Supervise and coordinate activities of

operating employees.

◦ Titles: supervisor, coordinator, office manager,

foreman….

◦ Oversee the day-to-day operations, handle

routine administrative duties….
15
 Managerial skills

◦ In 1970s, Robert L.Katz found three essential

skills/competencies for managers.

◦ Management skills

 Technical skills
 Human skills
 Conceptual skills

◦ The manger job universal ?…..functions…

16
◦ In 1970s, Robert L.Katz found three essential
skills/competencies for managers.

◦ Management skills

 Technical skills
 Human skills
 Conceptual skills

◦ The manger job universal ?…..functions…

17
 Managerial Roles
 What do managers do?

◦ Interpersonal roles
 Figurehead
 Leader
 Liaison
◦ Informational roles
 Monitor
 Disseminator
 Spokesperson
◦ Decisional roles
 Entrepreneur
 Disturbance handler
 Resource allocator
 Negotiations 18
 Planning
 Defining ….

◦ What is to be done? How it is to be done?

◦ “Defining the organization’s goals/objectives,

establishing overall strategy for achieving these
goals, and developing a comprehensive
hierarchy of plans to integrate and coordinate
activities”.
◦ ----------------------------------------
----------------------------------------
----------------------------------------
---------------------------------------- 19
◦ “The process of setting goals and choosing the
means to achieve those goals”

◦ All the mangers engage in planning: formal vs.

informal.

◦ Formal planning:
 Specific objectives … period of years…
written…made available… clearly defined path
…..

20
 Purpose of planning

◦ Why should plan?

 Gives direction…coordination efforts

 Look ahead, anticipate change, appropriate

responses, reduce uncertainty

 Reduce overlapping/wasteful activities-

coordination.

 Set standards…used in controlling. Without

planning no way to control.
21
 Planning and performance

◦ Outperform…?

◦ Higher profit…..

◦ Quality of planning and implementation.

22
 Types of plans

◦ Bases to identify types:

 Breadth
 Time frame
 Specificity
 Frequency of use

◦ Breadth: strategic vs operational plans.

◦ Strategic : “Plans that are organization-wide,

establish overall objectives, and position an
23
 ◦ Operational: “ Plans that specify details on how
overall objectives are to be achieved”.

◦ Difference : time , scope , known objectives.

 Short-term vs Long-term plans.

◦ One year, one to five, over five.

 Specific vs Directional plans.

◦ Specific : “Plans that are clearly defined and 24

  Directional: “flexible plans that set out
general guidelines”. Provide focus.

 Frequency of use

◦ Single-use-plans: “A one-time plan that’s

specifically designed to meet the needs of a
unique situation and is created in response to
non-programmed decisions that managers
make”.

25
◦ Standing plans: “ Ongoing plans that provide
guidance for activities repeatedly performed in
the organization and that are created in
response to programmed decisions that
managers make”. ….Policies, rules,
procedures.

26
 Contingency factors affecting planning.

◦ What are the situations that make plans effective

or ineffective?

 Level in the organization. Top – strategy

oriented, lower-level : operational…

 Degree of environmental uncertainty.

 Greater uncertainty: Directional.
 ---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
--------------------------------------- 27
 Length of future commitment.

 Plans should extend far enough to see

through current commitments.
 -------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
28
 Process of Planning
1. Setting goals/objectives

◦ Multiplicity of objectives.

◦ Desired outcomes for individuals , groups, or

entire organization.
◦ ---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
◦ ---------------------------------------
---------------------------------------
--------------------------------------- 29
◦ Traditional objective setting.

 Objectives are set at the top. Then broken

down to each level.

 Top management knows best. ‘Big picture’…..

 Broad terms: ‘sufficient profit’ , ‘market

leadership’. Nonoperational.

30
 E.g.
 Don’t worry about Quality , just work
fast(employee).

 Increase profit regardless of the

means(department).

 I want to see a significant improvement in

this division’s profit(Division).

 We need to improve the companies

performance (Top).
31
  Integrated objectives: higher level objectives
are linked to lower level objectives. Means-
ends chain……..

◦ Management by objectives.

 Peter Drucker introduced the idea.

 Objectives jointly determined: Superior –

Subordinate.

 Progress periodically reviewed.

32
2. Outlining planning premises

3. Decide the planning period.

4. Develop alternatives and select the course of

action.

5. Derivative plans

6. Review periodically

33
 Planning tools and techniques
 Tools/Techniques:

◦ Assessing environment.
 Environmental scanning
 Forecasting
 Benchmarking.

◦ Budgets.

◦ Operational planning tools.

◦ Personal planning: Time Management. 34

 Assessing environment.

 Environmental scanning.

 Anticipate and interpret changes.

 ‘Screening large amount of information to

detect emerging trends and create
scenarios’.

 Scenarios: consistent view of what the

future is likely to be?
35
 Forecasting.
 Prediction of future outcomes.

 E.g.
 Revenue forecasting…., predicting future
revenue,…. Purchasing, production…..

 Technological forecasting…. Predicting

changes in technology… when new
technologies are likely to be economically
feasible.

 Forecasting is crucial element for planning.

36
 Benchmarking.

 ‘The search for the best practices among

competitors or non competitors that lead to
their superior performance’.

 Analyzing and copying….

 Steps:
i. Identify what is to be benchmarked.
ii. Collect information: internal and external.
iii. Identify gaps and causes of differences.
iv. Take actions.
37
 Budgets.

◦ ‘A numerical plan for allocating resources to

specific activities’. – a planning device.

 E.g.

 Revenue budget: project future sales,

estimate sales volume…competitor,
advertising….

 Expense budget: each activity and

cost……………………………………………………
38
 Profit budget: combine revenue and
expense budget …………………………………

 Cash budget: how much on hand and how

much will need to meet expenses.

 Capital expenditure budget: forecast

investment in property, buildings, and
major equipment.

39
 Operational planning tools.

• Scheduling: a listing of necessary activities,

their order of accomplishment, who is to do
each, and time needed to complete them.

• Gantt Chart: A bar graph with time on

horizontal axis and activities to be done on
the vertical axis.

• Load Chart: that schedules capacity by

workstations. Capacity utilization…..

40
• PERT (Program Evaluation Review Technique):
for scheduling complicated projects. It shows
the sequence of activities needed to complete
a project and the time or cost associated with
each.

• Break even analysis: point at which total

revenue is just sufficient to cover total cost.

• ---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
41
• Linear programming: a mathematical
technique that solves resource allocation
problems. Optimization….

• Queuing theory/ waiting-line theory: a

techniques that balances the cost of having a
waiting line against the cost of service to
maintain that line.

• Marginal analysis: incremental cost and

revenue assessed.

42
 Policies and Strategies
 Policy is……

 Types of policies….. Originated Policies,

Appealed Policies, Implied Polices, Externally
Imposed Policies.

 Importance of policies…..

 Policy formulation for major areas of

business.

43
 Strategy formulation…..

 Appropriateness…
◦ Internal Consistency…
◦ Consistency with Environment…
◦ Appropriateness in the light of available
Resources…
◦ Acceptable degree of Risk…
◦ Appropriate Time Horizon…
◦ Workability…
44
 Decision Making
 Types of Decisions…

 Steps in the Decision-making Process….

 Rationality and Barriers in Decision-Making.

 Techniques of decision making.

45