Management Concepts

Organisational Behaviour
Unit-1 Fundamentals of Management: Management
practices from past to present, Different levels of
management, Managerial skills and Managerial
Functions , Case Studies Planning- Objective of
planning, Planning process, Types of planning, Types
of plans, Management by Objective, Decision-
making- types, process & techniques,. Case Studies
 What is management?
• According to Harold Koontz, ‘Management is
an art of getting things done through and with
the people in formally organized groups. It is
an art of creating an environment in which
people can perform and individuals and can
co-operate towards attainment of group
goals.’
 Who Are Managers?

• Managers
– Individuals in an organization who direct the
activities of others.
– Hired by the organization.
 Where managers work?

• Organization
– A systematic arrangement of people brought
together to accomplish some specific purpose;
applies to all organizations.
– Where managers work (manage).
• Common Characteristics of Organizations
– Distinct purpose and goals
– People
– Systematic structure
 What do Manager’s do :
Managerial Roles

Interpersonal Informational Decisional

Figurehead Monitor Entrepreneur

Leader Disseminator Disturbance

Handler
Liaison Spokesperson
Resource
Allocator

Negotiator
 Interpersonal Roles
Roles that managers assume to provide
direction and supervision to both employees
and the organization as a whole.
– Figurehead—symbolizing the
organization’s mission and what it is
seeking to achieve.
– Leader—training, counseling, and
mentoring high employee performance.
– Liaison—linking and coordinating the
activities of people and groups both inside
and outside the organization.
 Informational roles
• Informational Roles–obtaining and sharing
information
• Monitor Role: managers scan their environment
for information, actively contact others for
information.
• Disseminator Role: managers share the
information they have collected with their
subordinates and others in the company.
• Spokesperson: Managers shall be responsible for
providing information outside to the concerned
stakeholders.
 Decisional Roles
Roles associated with methods managers use in
planning strategy and utilizing resources.
◦ Entrepreneur—deciding which new projects or
programs to initiate and to invest resources in.
◦ Disturbance handler—managing an unexpected
event or crisis.
◦ Resource allocator—assigning resources between
functions and divisions, setting the budgets of lower
managers.
◦ Negotiator—reaching agreements between other
managers, unions, customers, or shareholders.
 How The Manager’s Job Is
Changing
The Increasing Importance of Customers
◦ Customers: the reason that organizations exist
 Managing customer relationships is the responsibility of
all managers and employees.
 Consistent high quality customer service is essential for
survival.
Innovation
◦ Doing things differently, exploring new territory, and taking
risks
 Managers should encourage employees to be aware of
and act on opportunities for innovation.
 Levels of Management

Top Level Management CEO

COO
CIO

Middle Level Management

General Mgr
Plant Mgr
Regional Mgr

First-Line Office Manager

Management Shift Supervisor
Department Manager
Team Leader
 Top Managers
Responsible for…

Creating a context for change

Developing attitudes of commitment

and ownership in employees

Creating a positive organizational

culture through language and action

Monitoring their business environments

 Middle Managers
Responsible for…

Setting objectives consistent with top

management goals, planning strategies

Coordinating and linking groups,

departments, and divisions

Monitoring and managing the performance

of subunits and managers who report to them

Implementing the changes or strategies

generated by top managers
 First-Line Managers

Responsible for…

Managing the performance of

entry-level employees

Teaching entry-level employees

how to do their jobs

Making schedules and operating plans based on

middle management’s intermediate-range plans
 Managerial Skills

• Conceptual skills
– The ability to analyze and diagnose a situation and
distinguish between cause and effect.
• Human skills
– The ability to understand, alter, lead, and control the
behavior of other individuals and groups.
• Technical skills
– Job-specific skills required to perform a particular type
of work or occupation at a high level.
Fundamental Management Skills

• Management Skill Mixes at Different Organizational Levels

Core skills and their use in the
different levels
Managerial levels
Lower Middle Top

Conceptual skills

Human skills

Technical skills
 Is Management an art or a science?

• A number of debates have taken place

over the nature of management being an
art or a science. Lets take a look on:
• How management is a science?
• How management is an art?
 Management as a Science
• Science is a systematic body of knowledge pertaining to
a specific field of study that contains general facts which
explains a phenomenon. It establishes cause and effect
relationship between two or more variables and
underlines the principles governing their relationship.
• Principles of Science are:
– Universally acceptance principles
– Experimentation & Observation
– Cause & Effect Relationship
– Test of Validity & Predictability
 Management as an art
• Art implies application of knowledge & skill to trying
about desired results. An art may be defined as
personalized application of general theoretical
principles for achieving best possible results.
• Characteristics of an art are:
– Practical Knowledge
– Personal Skill
– Creativity
– Perfection through practice
– Goal-Oriented
Management both as a Science and an art
• Management is both an art and a science. The above mentioned
points clearly reveals that management combines features of both
science as well as art. It is considered as a science because it has an
organized body of knowledge which contains certain universal
truth. It is called an art because managing requires certain skills
which are personal possessions of managers. Science provides the
knowledge & art deals with the application of knowledge and skills.
• A manager to be successful in his profession must acquire the
knowledge of science & the art of applying it. Therefore
management is a judicious blend of science as well as an art
because it proves the principles and the way these principles are
applied is a matter of art.
 Management as a Profession
• A profession may be defined as an occupation that
requires specialized knowledge and intensive academic
preparations to which entry is regulated by a
representative body. The essentials of a profession are:
• Specialized Knowledge
• Formal Education & Training
• Social Obligations
• Code of Conduct
• Representative Association
 But not exactly a Profession…
• Management does not fulfill some conditions that are associated
with being a professional:
• It does not restrict the entry in managerial jobs for account of one
standard or other.
• No minimum qualifications have been prescribed for managers.
• No management association has the authority to grant a certificate
of practice to various managers.
• Competent education and training facilities do not exist.
• Managers are responsible to many groups such as shareholders,
employees and society. A regulatory code may curtail their
freedom.
• Managers are known by their performance and not mere degrees.
Functions of Management
 Planning
• 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”.
 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”.
 Staffing
• It is the function of manning the organization
structure and keeping it manned. Staffing has
assumed greater importance in the recent
years due to advancement of technology,
increase in size of business, complexity of
human behavior etc. The main purpose o
staffing is to put right man on right job.
 Directing
• It is that part of managerial function which
actuates the organizational methods to work
efficiently for achievement of organizational
purposes. It is considered life-spark of the
enterprise which sets it in motion the action
of people because planning, organizing and
staffing are the mere preparations for doing
the work.
 Controlling
• 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”.
Evolution of Management
 Adam Smith (18th century economist)
Wrote the Wealth of Nations (1776)
Advocated the economic advantages that
organizations and society would reap from
the division of labor:
Increased productivity by
increasing each worker’s skill
and dexterity.
Time saved that is commonly
lost in changing tasks.
The creation of labor-saving
inventions and machinery.
– Observed that firms
manufactured pins in one of
two different ways:
• Craft-style—each worker did all
steps.
• Production—each worker
specialized in one step.
– Realized that job specialization
resulted in much higher
efficiency and productivity
• Breaking down the total job
allowed for the division of labor in
which workers became very
skilled at their specific tasks.
 The Industrial Revolution’s Influence
On Management Practices
Industrial Revolution
– Machine power began to
substitute for human power
• Lead to mass production of
economical goods
– Improved and less costly
transportation systems became
available
• Created larger markets for
goods.
– Larger organizations developed
to serve larger markets
• Created the need for formalized
management practices.
Classical Contributions
• Classical Approach
– The term used to describe the
hypotheses of the scientific management
theorists and the general administrative
theorists.
• Scientific management
theorists
– Fredrick W. Taylor, Frank
and Lillian Gilbreth, and
Henry Gantt
• General administrative
theorists
– Henri Fayol and Max Weber
 Scientific Management
• Timeline: 1911
– By: Frederick W. Taylor
• About:  Its main objective was improving economic
efficiency, especially labor productivity. It was one of
the earliest attempts to apply science to the
engineering of processes and to management.
 Scientific Management
• Principles:
• Replace rule-of-thumb work methods with methods based on a
scientific study of the tasks.
• Scientifically select, train, and develop each worker rather than
passively leaving them to train themselves.
• Cooperate with the workers to ensure that the scientifically
develop methods are being followed.
• Divide work nearly equally between managers and workers, so
that the managers apply scientific management principles to
planning the work and the workers actually perform the tasks .
 Scientific Management
• Criticisms:
• While scientific management principles improved productivity
and had a substantial impact on industry, they also increased
the monotony of work. The core job dimensions of skill
variety, task identity, task significance, autonomy, and
feedback all were missing from the picture of scientific
management.
 Administrative Management
• Timeline: 1916
• By: Henri Fayol
• About: Fayol's work was one of the first
comprehensive statements of a general theory of
management. He proposed that there were Six
primary functions of management and 14 principles
of management.
 Administrative Management
• 14 Principles of Management:
• Division of work. Work should be divided among individuals and
groups to ensure that effort and attention are focused on special
portions of the task. Fayol presented work specialization as the best
way to use the human resources of the organization.
• Authority. Managers must be able to give orders. Authority gives them
this right. Note that responsibility arises wherever authority is
exercised.
• Discipline. Employees must obey and respect the rules that govern the
organization. Good discipline is the result of effective leadership, a
clear understanding between management and workers regarding the
organization's rules, and the judicious use of penalties for infractions
of the rules.
 Administrative Management
• Unity of command. Every employee should receive orders
from only one superior.
• Unity of direction. Each group of organizational activities
that have the same objective should be directed by one
manager using one plan.
• Subordination of individual interests to the general
interest. The interests of any one employee or group of
employees should not take precedence over the interests
of the organization as a whole.
• Remuneration. Workers must be paid a fair wage for their
services.
 Administrative Management
• Centralization. Centralization refers to the degree to which
subordinates are involved in decision making. Whether decision
making is centralized (to management) or decentralized (to
subordinates) is a question of proper proportion. The task is to
find the optimum degree of centralization for each situation.
• Scalar chain. The line of authority from top management to the
lowest ranks represents the scalar chain. Communications
should follow this chain. However, if following the chain creates
delays, cross-communications can be allowed if agreed to by all
parties and superiors are kept informed.
• Order. People and materials should be in the right place at the
right time.
 Administrative Management
• Equity. Managers should be kind and fair to their
subordinates.
• Stability of tenure of personnel. High employee
turnover is inefficient. Management should provide
orderly personnel planning and ensure that
replacements are available to fill vacancies.
• Initiative. Employees who are allowed to originate and
carry out plans will exert high levels of effort.
• Esprit de corps. Promoting team spirit will build
harmony and unity within the organization.
 Administrative Management
• Criticisms:
• Management Oriented Theory 
• Lack of Importance to Informal Organization
• Concepts Borrowed From Military Science
• Mechanical Approach 
 Bureaucratic Management
• Timeline:
• By: Max Webber
• About: According to Weber, the need for
bureaucratization in the ancient empire state
arises from the maintenance of armies, public
finances and most importantly power and
politics.
 Bureaucratic Management
• Principles:
• Division of Labor
• Hierarchy
• Rules and Rationality
• Impersonality
• Rules Orientation
• impartiality
 Human Relations Approach
• Timeline: 1920 to 1930
• By: Elton Mayo
• About: This approach recognized worker’s needs, feeling,
attitudes, values and desires are extremely important. Mayo
proved that through the ‘HAWTHORNE EXPERIMENTS’ conducted
between 1924 to 1933 in the Hawthorne Plant of Western
Electric Company, USA.
• The Experiments were Conducted in four phases:
– Phase 1: Illumination Experiments
– Phase 2: Relay Assembly Test Group
– Phase 3: Interviewing Programme
– Phase 4: The Bank Wiring Observation Room Experiments
 Human Relations Approach
• Phase 1: Illumination Experiments
– The experiment was conducted to know the impact of
illumination on productivity.
– There were 2 groups used The Test Group and The Control
Group, both groups made Telephone relays.
– The light of the Test Group varied systematically where as
it remained constant for the Control Group.
– At times, the light was as bright as the sun and at times as
dull as the moon.
– It was found that illumination had little or no impact on
the productivity of the group.
 Human Relations Approach
• Phase 2: Relay Assembly Test Group
– A small group of workers were placed in a separate
room and a number of variables were altered over
time.
– The variables wages, rest periods of varying length,
the workdays and work week were shortened.
– The people of the group took initiative to make
changes.
– The performance though increased initially but the
increase was very erratic to be conclusive.
 Human Relations Approach
• Phase 3: Interviewing Program
– Initiated a 3 year long Interviewing Program from
1928 covering 21,000 employees of the company.
– The reason was to find out the causes of
productivity.
– The emphasis was on human relation instead of
working conditions.
– This phase of the experiment proved to be useless
as no fruitful results could be derived.
 Human Relations Approach
• Phase 4: The Bank Wiring Observation Room Experiment.
– 14 male workers were formed into a work group and observed for
7 months in a bank wiring room.
– The employees were to be paid bonus on the basis of both
individual and group efforts.
– The expectation was that the highly efficient workers would put
pressure on others for increased productivity and increased bonus.
– The results came to be different and the group had formed a
mechanism to save themselves.
– Work Group Norms, Beliefs and Sentiments has a greater impact
in influencing individual behavior that did the monetary
incentives offered by the management .
 Human Relations Approach
• Importance:
– Led to Democratic style of management.
– The researchers recognized the significance of
management style led to its growth.
– Humanized the employees.
– Attention was paid to teaching Management skills instead
of Technical Skills.
– Led to Interest in Groups and Group Dynamics instead of
just studying Individuals.
– Workers can be motivated by Non-Financial Rewards also.
 Systems Approach
• Timeline: Around 1960’s
• By: Multiple Authors
• About: Every business has to follow a
process, and that process is the result of a
system. The systems management theory
focuses on systems and how they work
and function within an organization.
 Systems Approach
•  The systems management
theory believes that a system is a
collection of parts brought together to
accomplish some end goal or objective.
• Systems are of two types:
– Open Systems
– Closed Systems
 Systems Approach
• Open System: A system that continually
interacts with the environment around it.
• Closed System: Is the opposite of an open
system. It is a system (or company)
independent of the environment around it.
• But Sometimes there is a:
– Subsystem: A system that is part of a larger
system.
 Contingency Approach
• Timeline: 1960’s
• By: Developed from the works of Fred Fielder.
• About: A contingency approach to management is
based on the theory that management effectiveness
is contingent - or dependent - upon the interplay
between the application of management behaviors
and specific situations. In other words, the way you
manage should change depending upon the
circumstances. 
Peter Drucker’s Management By Objectives
8 Key Result Areas Where Managers Must Pursue
Clear Objectives -
•Marketing
In order for a business to create a customer, there
needs to be a market.
•Innovation
New ideas are required by a business in order to
create a demand for a product.
•Human organization
•Financial resources
•Physical resources
According to Drucker, 2007 the above three Key Result
Areas are interlinked and all businesses depend on
them. These are known as the factors of production.
Productivity
Resources must be used productively and the
productivity must grow in order for the business
to survive.
Social responsibility
A business exists in a society therefore it has
certain obligations towards the community and is
responsible for its impact on the environment.
Profit requirements
Profit is essential for a business to succeed. It is
one of the main reasons behind the existence of
a business and without it there would be no way
of covering the risk of potential losses, financing
future projects and most importantly none of the
other above areas would exist without profit.
PLANNING
Management Process is:

Planning

Controlling Organizing

Directing Staffing
 Management Process:
• Planning: 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.
• Organizing: It is the process of bringing together
physical, financial and human resources and
developing productive relationship amongst
them for achievement of organizational goals.
 Management Process:
• Staffing: It is the function of manning the
organization structure and keeping it manned.
• Directing: It is that part of managerial function which
actuates the organizational methods to work
efficiently for achievement of organizational
purposes.
• Controlling: It implies measurement of
accomplishment against the standards and
correction of deviation if any to ensure achievement
of organizational goals.
 Planning
• Planning includes all the activities that lead to
the definition of objectives and to the
determination of appropriate courses of
action to achieve those objectives.
 Planning helps us answer:
• What to do?
• Where to do it?
• How will we do it?
• Who will do the task?
And….
• When will we do it?
 The need for planning:
• Increasing Organizational complexity
• Increased External Change
• Planning and other functions.
 Importance of Planning
• Planning Clarifies the objectives of the
organization.
• Planning economizes operations.
• Planning precedes control
• Planning provides for the future
• Planning increases the efficiency of all the
managerial functions.
 Limitations of Planning
• Planning premises may be wrong
• Rapidity of change
• Time and cost constraints
• Planning may limit new ideas
• Capital investment constraint
• Lack of control over external factors
 Types of Planning
• Planning types are decided on basis of:
– Scope: The range of activities that a plan cover.
– Time Frame: The period considered by a plan,
ranging from short term to long term.
– Level of detail: the amount of specificity in the
plan.
 Types of Planning
• Strategic Planning
• Tactical Planning
• Operational Planning
• Long Term Planning
• Short term Planning
 Strategic Planning
• The activities that lead to the definition of
objectives for the entire organization and to
the determination of the appropriate
strategies for achieving those objectives.
 Operational Planning
• Translates the broad concepts of a strategic
plan into clear numbers, specific steps and
measurable objectives for the short term.
 Tactical Planning
• Planning that deals more with the issues of
efficiency than with the long term
effectiveness.
 Long Term Planning
• Strategic in Nature
• Takes place for 3 to 5 years.
• Involves analysis of External
factors/environment.
 Short Term Planning
• Operational in Nature
• Involves 6 months to 1 year
• Aimed at sustaining organization in its
production and distribution of current
products and/or service to the existing
market.
 Types of Plan
Plans

Standing Single Use

Plans Plans

Objectives Programs

Policies and
Schedules
Strategies

Procedures Projects

Methods Budgets

Rules
 Types of Plan
• Standing Plans: Developed for activities that
recur regularly over a period of time.
• Single Use Plans: Developed to carry out a
course of action that is not likely to be
repeated in the future.
 Standing Plans
• Objectives: They are goals established to guide
the efforts of the company and each of its
components.
• They are the end point of the management
programme.
• An objective indicates the end result the
management wishes to achieve in the long
run.
 Standing Plans
• Policy: A policy is a basic statement that
guides decision making. It tells us what we
may or may not do. It directs the way in which
the activities are to be achieved. It is
concerned with ‘how’ of administrative action.
• They allow a more refined and flexible
approach to recurring problems.
• They help in achieving co-ordination.
 Standing Plans
• Procedures: They are well thought out courses
of action. It prescribes the specific way in
which piece of work is to be done.
• They are also called ‘action guidelines.’
• They are generally derived from policies.
• The emphasis is on chronological, step by step
sequence of required action.
 Standing Plans
• Methods: they are sub units of procedures; they
show clearly show a step of the procedure
should be performed.
• They indicate the techniques to be employed to
make the procedure effective.
• The primary focus is on finding the best way on
doing a piece of work.
• Methods cover limited territory, normally one
department.
 Standing Plans
• Rules: They are very specific and detailed
guide to action. It is established in a fairly
narrow manner. There is no scope for
discretion or judgment.
• Rules must be followed precisely and
observed strictly.
 Single Use Plans
• Programme: it is a comprehensive plan that
include a complex set of goals, procedures,
rules, work assignment resource flow and
generally cover a large territory.
Decision Making
 Decision Making-Definition
The process by which individuals select a course of action
among several alternatives to produce a desired result.
• Decision-making is the selection based on some
criteria from two or more possible alternatives. “-—
George R.Terry
• A decision is an act of choice, wherein an executive
forms a conclusion about what must be done in a given
situation. A decision represents a course of behaviour
chosen from a number of possible alternatives. -—D.E.
Mc. Farland
 Types of Decision

Strategic Decisions and Routine

Decisions
– routine decisions are those that the manager makes in the
daily functioning of the organization, i.e. they are routine.
– strategic decisions are the important decisions of the firm.
These are usually taken by upper and middle-level
management. They usually relate to the policies of the firm
or the strategic plan for the future.
 Types of Decision
• Programmed Decisions:
– A decision that is fairly structured or recurs with some frequency or
both.
– These decisions are usually taken by lower management.
– For example, granting leave to employees, purchasing spare parts etc.
are programmed decisions where a specific procedure is followed.
• Non-Programmed Decisions:
– A decisions made in response to a situation that is unique, is poorly
defined and largely unstructured and influences important
consequences of the organization.
– Such decisions are left to upper management. For example, opening a
new branch office will be a non-programmed decision.
 Types of Decision
Policy Decisions and Operating Decisions
– Tactical decisions pertaining to the policy and planning of
the firm are known as policy decisions. Such decisions are
usually reserved for the firm’s top management officials.
– Operating decisions are the decisions necessary to put the
policy decisions into action. These decisions help
implement the plans and policies taken by the high-level
managers. Such decisions are usually taken by middle and
lower management.
– Say the company announces a bonus issue. This is a policy
decision. However, the calculation and implementation of
such bonus issue is an operating decision.
 Types of Decision
Organizational Decisions and Personal
Decisions
– When an executive takes a decision in an official
capacity, on behalf of the organization, this is an
organizational decision. Such decisions can be
delegated to subordinates.
– if the executive takes a decision in a personal
capacity, that does not relate to the organization
in any way this is a personal decision.
 Types of Decision
Individual Decisions and Group Decisions
– Any decision taken by an individual in an official
capacity it is an individual decision. Organizations
that are smaller and have an autocratic style of
management rely on such decisions.
– Group decisions are taken by a group or a
collective of the firm’s employees and
management. For example, decisions taken by the
board of directors are a group decision.
The Decision Making Process
Awareness of the problem
Diagnose and state the problem
Develop the alternatives
Evaluate the alternatives
Select the best alternatives
Implement and Verify the decision
 The Decision Making Process
• Awareness of the Problem
– This is the first step.
– Problems generally arise because of disparity between what is and what should be
• Diagnose and state the problem
– Answer the questions:
– What is the problem?
– Which problems to solve?
– What is the real cause of the problem?
• Developing the alternatives
– help guarantees adequate focus and attention to the problem.
• Evaluate the alternatives
– By deciding on the advantages and disadvantages of all the alternatives.
• Select the best alternative
 Decision Making Techniques
Rationality in decision making
– Rational decision making is a multi-step process for
making choices between alternatives. The process of
rational decision making favors logic, objectivity, and
analysis over subjectivity and insight.
– The approach follows a sequential and formal path of
activities. This path includes:
• 1. Formulating a goal(s)
• 2. Identifying the criteria for making the decision
• 3. Identifying alternatives
• 4. Performing analysis 5. Making a final decision.
 Group decision making Techniques
Brainstorming: Brainstorming technique involves a group of
people, usually between five and ten, sitting around a table in a
classroom setting generating ideas in the form of free association.
(a) No judgements are to be made on these ideas when they are generated. No
idea is to be criticized or evaluated in any way until all ideas have been
considered.
(b) Welcome wild ideas, no matter how absurd they might seem. Some of the
wildest ideas have resulted in unique solutions. There should be no inhibition
in generating any ideas. The ideas that are too wild and unfeasible can always
be discarded later.
(c) Strive for quantity and not quality. Quality can always be judged at the end.
The more ideas there are, the better the chances that the best solution will
not escape.
(d) Each participant is encouraged to improve or modify other participant’s
suggestions.
Group decision making Techniques
Nominal Group Thinking :
• This technique is similar to brainstorming except that this
approach is more structured. It motivates individual creativity.
Members form the group for namesake and operate
independently, originate ideas for solving the problem on their
own, in silence and in writing.
• The group coordinator either collects the written ideas or
writes them on a large blackboard so that each member of the
group can see what the ideas are.
• The idea with the highest cumulative ranking is selected as the
final solution to the problem.
Group decision making Techniques
Didactic Interaction: This technique is applicable only in certain
situations. The type of problem should be such that it generates output in the
form of yes or no.
• E.g. a decision is to be made whether to buy a product or not, to merge or
not, to expand or not etc. These types of decision requires an extensive
and exhaustive discussion and investigation since a wrong decision can
have serious consequences.
• The group that makes the decision is divided into two sub-groups, one in
favor of the “go” decision and the opposing in favor of “no go” decision.
• These groups meet and discuss their discoveries and their reasons. After
tiring discussions, the groups switch sides and try to find weaknesses in
their own original standpoints.
• This interchange of ideas and understanding of various viewpoints results
in mutual acceptance of the facts as they exist so that a solution can be put
together around these facts and ultimately a final decision is reached.
Group decision making Techniques
Delphi Technique: Delphi technique is a modification of
brainstorming technique that it involves obtaining the opinions of
experts physically separated from each other and unknown to each
other. For example, the Delphi technique may be used to understand
the problems that could be created in the event of a war and after.
The following sequential steps characterize the technique
(a) The problem is identified and set of questions is built relating to
the problem so that the answer to these questions generates
solutions to the problem.
(b) Experts in the problem area are identified and contacted. The
questionnaire is sent to each member who anonymously and
independently answers the questions and sends it back to the
central coordinator.
Group decision making Techniques
c) Results of this questionnaire are compiled and analyzed and on
the basis of the responses received, a second questionnaire is
developed which is mailed back to the participating members.
d) The members are asked again to react to these responses and
to comment, suggest, evaluate and answer the new questions,
possibly generating some new ideas and solutions.
e) The responses to this second questionnaire are compiled and
analyzed by the central coordinator and if a consensus has not
been reached, then a third questionnaire is developed, pinpointing
the issue and unresolved areas of concern.
f) The above process is repeated until a consensus is obtained.
Then final report is prepared and a solution is defined and
developed if possible
Group decision making Techniques
Quality circle and teams
Quality circle is a small group of employees in
the same work area or doing similar type of
work who voluntarily meets regularly for about
an hour every week to identify, analyse and
resolve work related problems. The objective is
to improve quality, productivity and the total
performance of the organisation and also to
enrich the quality of work life of employees.
Group decision making Techniques
Self managed teams
A self-managed team is responsible and accountable for
all or most aspects of making a product and/or
delivering a service. They carry out supporting tasks (eg
plan and schedule workflow, manage annual leave and
absence, handle issues among colleagues, train and
hire new workers), as well as technical tasks.
 Individual decision making techniques

Linear programming is a mathematical modeling

technique used to determine a level of operational activity in
order to achieve an objective, subject to restrictions called
constraints.
• Many decisions faced by an operations manager are
centered around the best way to achieve the objectives of
the firm subject to the constraints of the operating
environment. These constraints can be limited resources,
such as time, labor, energy, materials, or money, or they can
be restrictive guidelines, such as a recipe for making cereal,
engineering specifications, or a blend for gasoline.
 Individual decision making techniques
Decision Tree
• A decision tree is a branched flowchart showing multiple pathways for potential
decisions and outcomes.
• The tree starts with what is called a decision node, which signifies that a decision
must be made. From the decision node, a branch is created for each of the
alternative choices under consideration.
• The initial decision might lead to another decision, in which case a new decision
node is created and new branches are added to show each alternative pathway
for the new decision. The result is a series of decision pathways.
• Along the decision pathway, there is usually some point at which a decision leads
to an uncertain outcome. That is, a decision could result in multiple possible
outcomes, so an uncertainty node is added to the tree at that point. Branches
come from that uncertainty node showing the different possible outcomes.
Individual decision making techniques

Simulation
Simulation typically uses statistical and computer
modelling to investigate the performance of a business
process either for a new situation or to improve an
existing set of processes. By modelling different process
scenarios and outcomes, companies can minimise the
traditional risks associated with change management
initiatives without having to make changes in a 'live'
business environment where performance could
adversely be affected .
 Individual decision making techniques
Network techniques: A project has divided into
many small activities and these activities can be
analyzed with the help of network technique to
achieve the objectives of the project.
1. CPM: It is popularly known as Critical Path Method. Critical path method
is a project management tool used to formulate a time frame for a
project in order to determine where potential delays are most likely to
take place.
2. PERT: The Programme Evaluation and Review Technique is basically a
scheduling technique. It helps project manager in planning, scheduling,
monitoring, evaluating, and controlling large and complex projects. It is a
probabilistic model and introduces uncertainties in project network.
 Individual decision making techniques
1. GERT: The Graphical Evaluation and Review Technique is a
new technique and superior over the above mentioned
techniques. In this analysis only simulation can be used. 4
2. LOB: It is known as Line of Balance technique. Line of
balance is a graphical technique to show the progress
achieved during the project with the help of key events.
3. PERT/Cost: It is an extension of the PERT technique to cover
the cost of project. It is not only helpful to plan the
completion of project within a specific time but also within a
specific cost.
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