PRINCIPALS OF MANAGEMENT

Unit B: Planning

Sudhanshu Shekhar
WHAT IS PLANNING?
 What
 When

 Who and

 How

 Planning is the process of deciding in advance what

has to be done, who is to do it , how is it to be done and
When it is to be done
WHAT IS PLANNING?
Nature of Planning
 Intellectual Activity
 Selection amongst Alternatives

 Forward Looking

 Related to Objectives

 Basic management Function

 Pervasive function of management

WHAT IS PLANNING?
Significance of Planning
 Attention on objectives
 Economical Operation

 Reduces uncertainty

 Facilitates control

 Encourages Innovation & creativity

 Improves motivation

 Improves competitive strength

 Facilitates co-ordination
TYPES OF PLANNING
 Strategic Planning
 Operational Planning

 Tactical Planning
 Strategic Planning
Time Span  Long period of time
Level  Done by top level managers
Scope
 Covers whole enterprise
Primacy  Based on organizational objectives
 Less detail and less specific
Detail
 Concerned with acquisition and
Resources allocation of new resources
 Depends on external environment
Environment
 Based on long term forecast for
technological, economic and
socio-political changes
Operational Planning
 Short term perspective
 Done by mid level managers
 Covers specific departments
 Based on strategic plans and come
after strategic plan
 Greater detail & more specific
 Utilize given resource
 Depend on internal environment
 Make effective use of firm’s
resources
RANGE (TIME SPAN) OF PLANNING
 Long Term
 Capital Budgeting
 Product Planning
 Project Planning
 Mergers and Acquisition

 Intermediate or Medium term

 ProductDevelopment
 Marketing and Advertisement

 Short Term Planning

THE PLANNING PROCESS
 Establishment of Objectives.
 Collection of Information and Forecasting.

 Development of premises.

 Search Alternatives.

 Evaluation of Alternatives.

 Selection/Development of Plan.

.

.

 .Appraisal of the plan.

LIMITATIONS OF PLANNING
 Lack of reliable data
 Lack of initiative

 Costly process

 Rigidity in organizational working

 Non-acceptability of change

 External limitations

 Psychological barriers
MEASURES TO OVERCOME
LIMITATIONS
 Setting out clear objectives
 Management information system (MIS)

 Careful premising

 Business forecasting

 Dynamic management

 Flexibility

 Availability of resources

 Cost benefit analysis

TECHNIQUES OF FORECASTING
 Time series analysis
 Regression analysis

 Econometric models

 Extrapolation

 Historical perspective

 Panel consensus method

 Delphi method

 Morphological research method

 Relevance tree method

PRINCIPALS OF MANAGEMENT

Unit C: Organisational Structure

Sudhanshu Shekhar
ORGANISATIONAL STRUCTURE
An orgnisational structure is
a set of planned relationships between
groups of related functions and between
physical factors and
personnel required for
the performance of the functions.
PROCESS OF ORGANIZING
 Determination of Objectives
 Division of Activities

 Creating and Grouping of Jobs

 Assignment of groups of jobs

 Creation of managerial hierarchy

 Establishment of integration mechanism

IMPORTANCE OF ORGNISATIONAL
STRUCTURE
 Facilitates Administration
 Promoters growth and diversification

 Co-ordination

 Optimum use of technological innovations

 Optimum use of human resources

 Stimulates creative thinking

 Training and Development

PRINCIPALS OF ORGANIZATION
 Objective
 Division of work

 Unity of command

 Span of control

 Scalar chain

 Delegation
PRINCIPALS OF ORGANIZATION
 Absoluteness of Responsibility
 Parity of Authority and Responsibility

 Co-ordination

 Flexibility

 Efficiency

 Continuity

 Balance

 Exception
SPAN OF CONTROL
 Number of workers reporting directly to a supervisor.
 Direct Relationship
N

 Cross Relationship
 N(N-1)

 Group Relationship
 N(2n – 1)

 N(2n-1 + n-1)
SCALAR CHAIN
 Number of different levels in an organization
FACTOR INFLUENCING SPAN OF
CONTROL
 Communication
 Nature of Work

 Capability of supervisors

 Ability of subordinates’

 Availability of time

 Degree of decentralization

 Availability of staff assistance

SCALAR CHAIN
 No of different levels in an organisation
 Flat or Tall
DETERMINANTS OF ORGANISATIONAL
STRUCTURE
 Objectives and Strategy
 Environment Strategy
Technolo
 Technology
gy
 People

 Size People

Environm
ent

Size
DEPARTMENTALIZATION
 Work Group brought together for performing certain
functions of similar nature.

 For example, a manufacturing company may create a

production department, sales and marketing department, an
accounting department, and a human resources department.
ADVANTAGES OF
DEPARTMENTALIZATION
 Specialization
 Increased efficiency

 Fixation of responsibility

 Appraisal

 Training of executives

 Control
FORMS OF STRUCTURAL DESIGN
 In a functional structure, activities are grouped and
departments are created on the basis of specified
functions to be performed.

Managing Director

Finance Manager

Production Marketing Personnel

ManagerTextiles
Manager
Cement
Manager
DIVISIONAL STRUCTURE
 Divisional Structure is formed by creating a set of
autonomous units or divisions which are coordinated by
central headquarters

Headquarters

Shipping Division

Textiles Cement Retail

Division Division
Finance Advertising Division
Production
ROLE PLAY
 3 volunteers
 A CEO wants a the new product to be ready in 6 months.

 The Project Manager needs 9 months to complete the

project, so it order to complete it in 6 months he needs
additional resources.
 The CFO knows that the cash is limited and he cannot
allocate extra money for additional resources.
AUTHORITY
 Rights entrusted to a position holder to make possible
performance of a work assigned.
 Right/power to command
 Only for achievement of organizational objective
 If the subordinate does not obey, superior has rights to take
disciplinary action.
SOURCES OF AUTHORITY
 Formal authority theory
 Acceptance theory (by others)

 Competence theory
DELEGATION
 Process a manager follows in dividing the work assigned
to him so that he performs that part only he can perform
and so that he can effectively get others to help him with
what remains.
 It means assignment of work to others and granting them
requisite authority to accomplish the job assigned.
TYPES OF DELEGATION
 Written or oral
 Delegation of general or specific authority

 Soft and hard delegation

 Lateral delegation

 Informal delegation
ELEMENTS OF DELEGATION
 Assignment of responsibility
 Granting of authority

 Accounting for performance

 Authority can be delegated but responsibility cannot.

ADVANTAGES OF DELEGATION
 Multiplication of executives capacity
 Speedy decision making

 Means of co-ordination

 Opportunity of professional training and growth

 Increasing the morale of the employees

 Helping the expansion of business

DIFFICULTY IN DELEGATION
 Superior
 Resistance
 Lack of ability to plan and direct
 Lack of willingness to let go
 Lack of willingness to trust subordinate
 Lack of controls
DIFFICULTY IN DELEGATION
 Subordinate
 Lack of self confidence
 Dependent on the boss
 Fear of criticism
 No proper information
 No incentive
 Overworked

 Organisation
 Organisational Structure
 Inadequate planning
 Splintered authority
 Infringement of the principal of unity of command
 Lack of effective control
OVERCOMING CHALLENGE: EFFECTIVE
DELEGATION
 Clear cut objective
 Unity of command

 Explanation of assignment

 Control over delegatee

 Free communication

 No intervention in day to day work

 Training of subordinates

 Co-operative attitude and atmosphere

PRINCIPLES OF DELEGATION
 Proper planning
 Functional definitions

 Parity of authority and responsibility

 Clarification of limits of authority

 Effective communication

 Selection of right persons

 Incentives

 Absoluteness of accountability

 Unity of command
CENTRALISATION OF AUTHORITY
 Decentralisation refers to the systematic effort to
delegate to the lowest levels all authority except that
which can only be exercised at central points.
 It is an extension of delegation

 An organisation can not be de-centralised by changing

the organisational structure.
FACTORS LEADING TO
DECENTRALISATION
 Requirement to take a quick and appropriate decisions at
every level.
 Reduced communication

 Nature of product or market

 Technological changes

 Growth and diversification strategies

 Physical dispersion of activities

Advantage
 Relieves top management
 Job at lower level more
attractive
 Initiative at lower level
 Decision or more realistic
 Development of
management
 Performance judgement
Disadvantage
 High administrative cost
 Lack of proper control
 Narrow outlook
 Hampers uniformity in
decision making
 Consistency of
procedures
 Handling of emergency
situations