TOPIC 3

PLANNING

JANGA, TD. 1
Introduction…
Planning is the primary function of management.
Its purpose is to ensure optimum utilization of
human and economic resources in the business
processes. It precedes all other activities of the
business undertaking.
It is the process of charting out the path for
attaining the ultimate purpose of business
operations by outlining the sequence of events
forecast with reasonable degree of certainty. It
involves not only anticipating the consequences of
decisions but also predicting events that may have
effects on a business.
JANGA, TD. 2
Intro …
Thus planning is deciding in the present what
to do in the future. It directs efforts and
resources of an enterprise toward the common
objectives.
Planning requires both creativity and analysis
in defining business opportunities and
constraints. Hence it is called the art of the
possible. It is the process of guiding the
business enterprise toward clearly specified
objectives with the clearest possible view of
the future.
JANGA, TD. 3
Intro …
Hence it is known as the process of
matching the resources with opportunities.
Also, it is a future oriented activity. It
specifies in detail what will be done, by
whom, with what and when to achieve the
objective of the undertaking. It should be
noted that planning is not a “blue print”
of future operations. It is basically a
problem of choosing.

JANGA, TD. 4
Meaning and Definition of Planning
“Planning is deciding in advance what is to
be done. When a manager plans, he
projects a course of action for the future,
attempting to achieve a consistent,
coordinated structure of operations aimed
at the desired results.”
“Planning is the thinking process, the
organized foresight, the vision based on
fact and experience that is required for
intelligent action.”
JANGA, TD. 5
Planning defined…
“It is the selecting and relating of facts and
the making and using of assumption
regarding the future, in the visualization
and formulation of proposed activities
believed necessary to achieve desired
results.”
“Planning is an intellectual process, the
conscious determination of courses of
action, the basing of decisions on purpose,
facts and considered estimates.”
JANGA, TD. 6
Planning defined…
In conclusion we may define planning as
“the thinking process, the organized
foresight, the vision based on fact and
experience that is required for intelligent
action.”
It is careful scheduling of efforts and
investment, and the integrated mix of men,
machines, money and effort to achieve an
established objective by a given time in
future.
JANGA, TD. 7
Why a Management Plan?
A good management plan helps you accomplish your goals
in a number of ways:
 It clarifies the roles and responsibilities of everyone in
the organization so that everyone knows what she
and everyone else is supposed to do. Staff members
know who they need to go to for information,
consultation, supervision, etc. They also know what the
boundaries of their own positions are -- when they can
do something without checking with someone else, and
when they can't.
 It divides the work of the organization in reasonable
and equitable ways, so that everyone's job is not only
defined, but feasible.
JANGA, TD. 8
Management Plan…
 It increases accountability, both internally (when
something doesn't get done, it's obvious whose
responsibility it was) and externally (the better the
management of the organization, the better it will serve
the community).
 It ensures that necessary tasks are assigned to the
appropriate staff members, and creates a time
schedule to get them accomplished. Bills get paid on
time, staff members are where they're supposed to be to
provide the organization's services, funding proposals
get written and submitted, problems are dealt with, and
the organization functions smoothly as a result.

JANGA, TD. 9
Management Plan…
 Ithelps the organization define itself. By
developing a plan that's consistent with its
mission and philosophy, an organization
can be clear on what it believes in and
communicate this with clarity to its staff, its
target population, and the community as a
whole
The general answer here is that your
organization is too important for you to
leave things to chance.
JANGA, TD. 10
Planning Process:
1. The determination of objectives of the
enterprise.
2. The undertaking of research to understand the
problems likely to be encountered in achieving
these objectives.
3. The discovery of alternative solutions to such
problems.
4. Choosing between different alternatives—
making policy.
5. Execution in detail of the alternative programme
of action.
JANGA, TD. 11
Note…
In a way planning seeks to answer multitude of the
questions:
 What should be done?
 Why is action necessary?
 Where shall it be done?
 How shall it be done?
 Who will do it?
 What physical resources will be required?

Thus, planning is deliberate and conscious research used

to formulate the design and orderly sequence of actions
through which it is expected to help reach its objectives.

JANGA, TD. 12
Characteristics of Planning:
For the nature or characteristics of features of
planning the following points should be noted:
i. Primacy of Planning:
Planning precedes all other managerial functions.
It is nothing but logical, because the functions of
organising, staffing, directing and control are
concerned with the accomplishment of the
objectives of the business undertaking. Planning
functions occupy a unique position of primacy
because it is concerned with the establishment of
the objectives necessary for all group efforts.
JANGA, TD. 13
Characteristics…
ii.Pervasiveness of Planning:
Managers at all levels of organization
perform the planning function. No doubt,
the character and breadth of planning varies
with the authority delegated to managers at
different levels and with the nature of
policies and plans outlined by their
superiors. ‘One manager may do more
planning or more important planning’ than
another manager.
JANGA, TD. 14
Characteristics…
iii. Planning is Directed towards Efficiency:
 A good plan is a course of action expected to give
optimum return at the minimum costs. The
efficiency of a plan is measured by the amount of its
contribution to the purpose and objectives as against
the costs and other unwanted effects involved in the
formulation and operation of the plan.
 This concept of efficiency takes into consideration
not only the output and costs in terms of rupees,
man-hours of units of production but also the overall
individual and group satisfaction.

JANGA, TD. 15
Characteristics…
iv. Planning is an Intellectual Process
 Planning is essentially an intelligent synthesis of
present knowledge and previous experience. Planner
has to choose from among alternative courses of
action the most suitable one to achieve an objective.
For this purpose, the manager developing a plan has
to depend on his ‘knowledge’ and ‘know-how’.
 ‘Knowledge’ here, refers to some basic body of
principles, points of view, general methods of
solving a problem, and other background
information related to the solution of certain general
classes of problems.
JANGA, TD. 16
Characteristics…
‘Know-how’ is the body of facts and
skills which are acquired from practical
experience in solving specific difficulties.
Usually, it cannot be acquired from books.
A manager has to integrate his
intelligence, knowledge, know-how and
facts in developing a business plan.

JANGA, TD. 17
Characteristics…
v. Planning is Goal-Oriented:
The purpose of every plan and all derivative
plans is to facilitate the accomplishment of the
purpose and objectives of the business
undertaking. Plans focus attention on
objectives.
They forecast which actions will lead to the
ultimate objective. “Managerial planning seeks
to achieve a consistent, coordinated structure
of operations focused on desired end.”

JANGA, TD. 18
Characteristics…
vi. Planning is Futuristic:
Planning is primarily concerned with looking
into future. It necessitates accurate forecasting
of future situations and requirements in order to
chalk out a rational path to tackle future
situations.
This involves taking into consideration correct
and prospective resources of the business and
make a systematic effort to look into future.
Thus, planning can be termed as ‘forward
looking’ in nature.
JANGA, TD. 19
Characteristics…
vii. Planning Involves Choice:
Planning involves selection of best
alternatives. Good planning must be realistic
and precise as far as the selection of the most
appropriate course of action is concerned.
Planning is a decision making activity which
has evolved due to the existence of various
alternatives available and the need to evaluate
and select the most suitable alternative.

JANGA, TD. 20
Characteristics…
viii. Planning is a Flexible and a Continuous
Process:
Planning is flexible, as it is based on future
conditions which are always dynamic.
Consequently, planning cannot be executed
on the basis of a rigid framework.
In fact, there should be enough scope for
revaluation and review according to changes
in conditions in order to make planning more
effective.
JANGA, TD. 21
Steps Taken for Planning:
i. Establishing Objectives:
The first step in planning is the statement of
objectives to be achieved by the concern. It
should be known to every member of the
concern as to what are its purposes and
objectives. Objectives indicate what basically
is to be done. Where the preliminary stress is
to be placed and what is to be accomplished
by the network of policies, procedures, rules,
strategies, budgets and programmes.
JANGA, TD. 22
Steps…
ii. Establishing Planning Premises:
It is to establish, obtain agreement to use
and disseminate critical planning
premises. There are forecast data of a
factual nature, applicable basic policies
and existing company plans. Premises
then are planning assumptions, the future
setting in which planning takes place in
other words, the environment of plans.

JANGA, TD. 23
Steps…
iii. Determining Alternative Courses:
In planning it is to search for and examine
alternative courses of action especially those not
immediately clear. There is seldom a plan for
which reasonable alternatives do not exist.
iv. Evaluating Alternative Courses:
Having sought out alternative courses and
examined their strong and weak points the other
step is to evaluate them by weighing the various
factors in the light of premises and objectives.

JANGA, TD. 24
Steps…
v. Selection from the Alternatives:
Selecting the course of action, is the point
at which plan is adopted … the real point
of decision making. An analysis and
evaluation of alternative courses will
disclose that two or more courses are
available, and the manager may decide to
follow several courses rather than one
best course.

JANGA, TD. 25
Steps…
vi. Formulation of Derivative Plans:
 As soon as the best programme is decided upon, the
next task is to work out its details, formulate the steps
in full service to break it down for each section or
department, for each product and component of a
product and for each month, quarter, week ultimately,
the manager will get the final plan of action in
concrete terms.
vii. Effective Communication of Plans:
 It is necessary that the plans are properly and
effectively communicated to all the managers
concerned.
JANGA, TD. 26
Components of a Plan
Planning is one of the most important aspects of
management. A perfect plan can increase
profits to their optimum levels. When it comes
to making plans, one must keep several things
in mind. These include the components of
planning. Each component plays a big role in
planning.
The entire process of planning consists of many
aspects. These basically include missions,
objectives, policies, procedures, programmes,
budgets and strategies.
JANGA, TD. 27
(i) Mission
This is one of the first components of
planning. The mission of an organization
basically dictates its fundamental purposes.
It describes what exactly it wants to achieve.
The mission may be either written or
implicit from the organization’s functioning.
A mission statement describes who the
products and customers of a business are. It
shows the direction in which the business
intends to move and what it aims to achieve.
JANGA, TD. 28
Mission…
Even the basic values and beliefs of the
organization are a part of this. One can also
understand its attitude towards its employees
from the mission statement.
Many stakeholders of a business use its mission
statement. Managers use it to evaluate their
success and set goals. On the other hand,
employees use it to foster a sense of unity and
purpose. Even customers and investors use it to
understand how the business intends to work in
the future.
JANGA, TD. 29
(ii) Objectives:
 Efficient management is always managed by
objectives. Objectives are the ends towards which all
management activities are directed. They constitute the
purpose of the enterprise, and without them no
intelligent planning can take place. An organization
can grow and change in an orderly and progressive
manner only if well defined goals have been
established to guide its progress.
 Objectives may be short-term or long-term. In the short
term an enterprise may concentrate more on satisfying
customers with good products at cheap rate, keeping in
view the long-term objective of maximum profit.

JANGA, TD. 30
(iii) Policies:
Policies are guides to action. They give a broad
guide as to how objectives of an enterprise are
to be achieved. While objectives provide the
aim which a manager tries to attain, the
policies provide the guidelines that will help
him in attainment of aims. A policy can be
defined in the following manner.
“A policy is a guiding decision by the
management that guides the organisation to
deal with a particular manner.”

JANGA, TD. 31
Policies…
An industrial policy is a code or general
rule that states the established procedure to
follow in a recurring situation. A particular
policy may be of great importance in one
situation, may be disregarded in another.
A policy should be:
 Flexible in application’
 Subject to change and improvement, and
 Subject to enforcement to be effective.

JANGA, TD. 32
(iv) Procedures:
Procedures prescribe the manner or method
by which work is to be done. Procedures
like the policies are also plans but
procedures are more specific. They provide
us the chronological order of acts to be
performed.
Policies always set an objective or the
limits in area of action, while procedures
fix a path toward the objective or through
the area.
JANGA, TD. 33
Procedures…
Once the procedure is established, it ensures
an uniformly high level of work. If properly
prepared, the procedure constitutes a useful
outline for developing people.
Since the procedure establishes a uniform
method of doing work applicable to all
departments, it can help to eliminate friction
and disagreements between departments.
Procedures make for closer co-ordination.

JANGA, TD. 34
(v) Budget:
Budget is a plan relating to a period of
time, expressed in numerical terms.
Budget may be expressed in terms of
money, time, materials of other units
needed to perform work and accomplish
specified results.
Budgets are necessary for control but they
cannot serve as sensible standards of
control unless they reflect plans.

JANGA, TD. 35
(vi) Strategies:
Strategies may be regarded as interpretative
planning or plans made in the light of the plans of a
competitor. If a manager develops plans without
regard to what his competitors are doing, he may
find that even sound projections will go astray.
Strategies are of two types:
(a) Competitive strategies which take into account the
plans and programmes of the rivals in the market.
(b) Grand strategies which are designed to change the
size and character of business over a period of time.

JANGA, TD. 36
(vii) Programmes:
Programme is a sequence of activities in a
proper orderly way. It is designed to use
policies in practice and accomplish objectives.
It provides an approach, systematically item
wise to guide the action needed to achieve a pre­
determined objectives.
They must be closely integrated with
objectives. They may be combined with
budgets. Schedules are often combined with
programmes to provide a chronological
sequence of activities.
JANGA, TD. 37
Note…
By planning, manager is focused on the formulation
of the policies or objectives. This then compels him
to decide in clear-cut terms to chalk out a course of
action to be pursued for the accomplishment of the
enterprise ‘objectives’. Planning rests on thinking
before acting. So truly planning is looking ahead.
In the context of the control process a manager’s role
is to make plans, make all the preparations for putting
into effect, order actions, and then keep a watch on
the way the things proceed. Deviation found
anywhere should be corrected. In this sense,
therefore, the entire control process is looking back.
JANGA, TD. 38
Plan vs. Control

JANGA, TD. 39
Types of Planning
There are four main types of plans that a
manager will use in his or her pursuit of
company goals, which include
operational, strategic, tactical and
contingency .
If you think about these four types of
plans as stepping stones, you can see how
their relationship to one another aids in
the achievement of organizational goals.

JANGA, TD. 40
Operational Planning
“Operational plans are about “how things need to
happen,” motivational leadership speaker Mack Story
said at LinkedIn. “Guidelines of how to accomplish the
mission are set.”
This type of planning typically describes the day-to-day
running of the company. Operational plans are often
described as single use plans or ongoing plans. Single
use plans are created for events and activities with a
single occurrence (such as a single marketing campaign).
Ongoing plans include policies for approaching
problems, rules for specific regulations and procedures
for a step-by-step process for accomplishing particular
objectives.
JANGA, TD. 41
Strategic Planning
 “Strategic plans are all about why things need to
happen,” Story said. “It’s big picture, long-term
thinking. It starts at the highest level with
defining a mission and casting a vision.”
 Strategic planning includes a high-level overview
of the entire business. It’s the foundational basis
of the organization and will dictate long-term
decisions. The scope of strategic planning can be
anywhere from the next two years to the next 10
years. Important components of a strategic plan
are vision, mission and values.
JANGA, TD. 42
Tactical Planning
“Tactical plans are about what is going to
happen,” Story said. “Basically at the tactical
level, there are many focused, specific, and short-
term plans, where the actual work is being done,
that support the high-level strategic plans.”
Tactical planning supports strategic planning. It
includes tactics that the organization plans to use
to achieve what’s outlined in the strategic plan.
Often, the scope is less than one year and breaks
down the strategic plan into actionable chunks.

JANGA, TD. 43
Tactical planning … cont…
Tacticalplanning is different from
operational planning in that tactical plans
ask specific questions about what needs to
happen to accomplish a strategic goal;
operational plans ask how the
organization will generally do something
to accomplish the company’s mission.

JANGA, TD. 44
Contingency Planning
Contingency plans are made when something
unexpected happens or when something needs to be
changed. Business experts sometimes refer to these
plans as a special type of planning.
Contingency planning can be helpful in
circumstances that call for a change. Although
managers should anticipate changes when engaged in
any of the primary types of planning, contingency
planning is essential in moments when changes can’t
be foreseen. As the business world becomes more
complicated, contingency planning becomes more
important to engage in and understand.
JANGA, TD. 45
Planning and Management tools
Management and planning tools are many,
and collectively used by organizations to
make better decisions and implement new
solutions effectively.
There are independent tools and developed
by different people for diverse purposes.
However they were assembled as a set of
methods in order to achieve efficiencies in
the planning and management of
operations.
JANGA, TD. 46
Planning Tools examples
SWOT analysis – strength, weakness,
opportunities, threats
RACI - responsible, accountable,
consulted, informed
Stakeholder matrix
Cause and effect diagram
Decision tree/ Tree diagram…etc

JANGA, TD. 47
Limitations of Planning:
i. It has been thought as a time-consuming and
expensive device. The framing of plans
involves money, energy and also, risk
without giving any guarantee as to the
realization of assured goals.
ii. Smaller business concerns which are short
of capital and which expect quick results
cannot afford to have a planning programme.
iii. It leads to possible results and not assured
gains.
JANGA, TD. 48
Limitations…
iv. It makes the entire organisational set-up
rigid.
v. Forecasting methods, statistical data
supplied are all inaccurate and the results
of operations research cannot be applied
to all cases that come under planning.

JANGA, TD. 49
Topic 4

ORGANIZATION
STRUCTURE, DIVISION
OF WORK AND
AUTHORITY

JANGA, TD. 50
Introduction
Organizing is the second key management function,
after planning, which coordinates human efforts,
arranges resources and incorporates the two in such a
way which helps in the achievement of objectives. It
involves deciding the ways and means with which the
plans can be implemented.
It entails defining jobs and working relationships,
assigning different tasks associated with the plans,
arranging and allocating resources, design a structure
which distinguishes duties, responsibilities and
authorities, scheduling activities, in order to maintain
smoothness and effectiveness in operations.
JANGA, TD. 51
A manager, with required qualification,
intelligence and capability is given authority
and made in charge of each department, so as
enable him to work his subordinates to reach
the organizational objectives.
The management has to identify the activities
necessary to reach the objectives and group
these activities and assigned to the group of
people, known as departments.

JANGA, TD. 52
Definition…
 “Organization is the process of identifying
and grouping of the works to be performed,
defining and delegating responsibility and
authority and establishing relationships for
the purpose of enabling people to work most
efficiently”.
“Organizing is a function by which the
concern is able to define the role positions,
the jobs related and the co-ordination
between authority and responsibility”.
JANGA, TD. 53
Note…
 In this sense, organization can be considered as a
vehicle through which goals are supposed to be
achieved. Organization structure is considered in
different views. Some consider it as a network of
relationships, a blueprint of how the management will
like the various functions and activities to be assigned
and connected together.
 Some others look upon it as a social system, consisting
of the human relationships existing among people
performing different types of activities. For some
people, organizations are a system with inputs (such as
men, materials, money and machines), and processes
through which product or service is produced.
JANGA, TD. 54
Conceptual Realization
Two concepts are prevalent about
organization.
In other words, there are two meanings
of organization:
(1) Organizing as a process, and
(2) Organizing as a structure of relationship.

JANGA, TD. 55
Concept # 1. Organizing as a Process:
According to the first concept of
organizing, it has been considered as a
process. In other words, organizing is not
a function that can be performed at a
single stroke, but it is a chain of various
functions. It includes getting information
about objectives, deciding various
activities and grouping them, determining
important activities, allowing authority
and responsibility, etc.
JANGA, TD. 56
As a Process….
Organizing is related to human beings and
human conduct is deeply affected by the
conditions of work, their competency and
capability, changes in the internal and
external environment of the organization.
The process of organizing has also to be
changed according these changes. Hence,
organizing as a process can also be
described as dynamic element.

JANGA, TD. 57
Concept # 2. Organizing as a
Structure of Relationship
According to this concept, organizing is treated as a
structure of relationship. Under this various posts are
created or established and the mutual relationship of
employees working on various posts, their authorities
and responsibilities are defined. Relationship lays down
as to who is the superior and who is the subordinate.
Various posts in different departments of the
organization are mostly permanent. Therefore,
organization as a structure of relationship is called static
element.
As a structure of relationship organization can be of two
types – firstly formal organization, and secondly,
informal organization.
JANGA, TD. 58
Comparison between both the
concepts
So far as the similarity between both the
concepts is concerned, business
organization is looked upon as a group of
different parts under both the concepts.
These parts are both tangible (like human,
material, machine and money) and
intangible (like authority, responsibility,
function and objective). Both the concepts
lay stress upon the establishment of
relationship between these two parts.
JANGA, TD. 59
Comparison…
On the contrary, there are certain
differences between both the concepts.
According to the concept of ‘organising
as a process’ organizing is that function
which continues throughout the existence
of the enterprise and changes go on taking
place in it. Herein man is the central
point. In other words, many factors affect
them and changes have to be introduced
accordingly.
JANGA, TD. 60
Comparison…
On the other hand, according to the
concept of ‘organizing as a structure of
relationship’, posts are established in the
organization and authorities and
responsibilities of each post are
determined.
Therefore, here under this concept more
attention is paid to posts which are stable
than to men

JANGA, TD. 61
Organizing Main Features
Division of work – The total work should be
divided into many parts for effective performance of
the work. Each part of work is to be performed by
one person or a group of persons. In this way, the
division of work results in the creation of
specialized persons.
Achieving organizational objective – There is a
need of coordination among the employees in the
organ­ization. The division of work is done keeping
in view the overall objectives of the organization.
The organiz­ing process is framed in such a way so
as to achieve organizational objectives smoothly.
JANGA, TD. 62
Features…
Authority-responsibility structure – The position of
each of the executives is defined with regard to the
extent of authority and responsibility vested in him to
discharge his duties. Organizing arranges for the dele­
gation of authority and responsibility. It tries to bring
harmony, authority, and responsibility.
Grouping of activities – Activities are needed to be
grouped on certain well-defined basis such as
function, product, customer, process, territory, etc.
This grouping process is called departmentation. It
helps in achiev­ing the benefits of specialization and
administrative control.
JANGA, TD. 63
Features…
 Scalar (step-by-step) principle – Authority is delegated
from the upper level to the lower level and the respon­
sibility flows from the lower level to the upper level of
organizational hierarchy. Provision is to be made for the
accountability of the assigned duties. Each employee of
an organization must know where his accountability lies.
 Installing sound communication system – The success
of management depends upon effective system of
communication. It helps the management by providing
information about the duties, responsibilities, authority,
positions, and jobs. Coordination can be maintained
among various related departments by making exchange
of information on a regular basis.
JANGA, TD. 64
Features…
 Flexibility – The organizing process should be flexible so
that any change can be incorporated as and when required.
It ensures the ability to adapt and adjust the activities in
response to the change taking place in the external
environment. The programs, policies, and strategies can be
changed as and when required if the provision for
flexibility is made in the organizing process.
 Coordination – Coordination ensures the unity of action in
the realization of a common objective. It is an arrangement
of group effort to achieve organizational goals.
Coordination of different personnel and depart­ments are
needed for ensuring higher efficiency and effectiveness.

JANGA, TD. 65
The Basic Elements of Organizing
Element # 1. Division of Work:
It means dividing the work into specific tasks
with deadlines to their completion. Once the
work is divided, the tasks are distributed to
different functional areas of the organisation as
production, marketing, finance and personnel.
Element # 2. Grouping of Activities:
The tasks are grouped into different
departments on the basis of similarity of their
features. This is called departmentation.
JANGA, TD. 66
The common forms of
departmentation
i. Functional Departmentation (Grouping
Activities by Functions Performed):
Activities can be grouped according to
functions (work being done) to pursue
economies of scale by placing employees
with shared skills and knowledge into
departments, for example, human resources,
IT, accounting, manufacturing, logistics, and
engineering. Functional departmentalization
can be used in all types of organisations.
JANGA, TD. 67
Departmentation…
ii. Product Departmentation (Grouping Activities
by Product Line):
Tasks are grouped according to a specific product
or service. All activities related to the product or
the service are placed under one manager. Each
major product area in the company is under the
authority of a senior manager who is specialist in,
and is responsible for everything related to the
product line. For a shoe company, the structure
could be based on product lines like women’s
footwear, children’s footwear and men’s footwear.

JANGA, TD. 68
Departmentation…
iii. Customer Departmentation (Grouping
Activities on the Basis of Common Customers
or Types of Customers):
Jobs are grouped according to the type of
customers served by the organisation assuming
that customers in each department have a
common set of problems and needs that can best
be met by specialists. For example, the sales
activities in the organisation can be broken down
into three departments that serve retail,
wholesale and government accounts.
JANGA, TD. 69
Departmentation
iv. Geographic Departmentation (Grouping
Activities on the Basis of Territory):
If the customers are geographically dispersed,
jobs can be grouped on the basis of
geographical locations. For example, the
organisation structure of a company can reflect
its operations in two broad geographic areas –
the national sector and the international sector.
The national sector could further be divided
into north zone, south zone, east zone and west
zone.
JANGA, TD. 70
Departmentation…
v. Process Departmentation (Grouping Activities
on the Basis of Product or Service or Customer
Flow):
 Process departmentalisation allows homogenous
activities to be categorised in one department
because each process requires different skills. For
example, the applicants might need to go through
several departments namely validation, licensing
and treasury, before receiving the driver’s license.
Each department looks after specific sequence of
the process which increases the speed and
efficiency of that process.
JANGA, TD. 71
Element # 3. Distribution of Authority:
Once the departments are created, members are given
authority to perform the tasks assigned. Authority
specifies the discretion of employee over his work. In
a formally designed organization structure,
employees’ behavior is bound by rules, regulations
and policies but in a comparatively less formal
organization structure, they have a great deal of
freedom in deciding how they perform their work.
“Authority is the legitimate power of the supervisor
to direct subordinates to take action within the scope
of the supervisor’s positions.”
JANGA, TD. 72
Element # 4. Coordination:
When people perform tasks assigned to them at
different levels in different departments, it has to be
ensured that the tasks are related to each other and
aim at unified goals. This requires coordination
amongst the tasks of all the organisational
members. Coordination is the act of organising,
making different people or things work together for
a goal or effort to fulfil desired goals in the
organisations. It is a managerial function that aims
to adjust and interlink activities of the business.

JANGA, TD. 73
Process of Organizing
Organizing, like planning, is a process
which is to be carefully worked out and
applied. This process involves
determining what work is needed,
assigning those tasks, and arranging them
in a decision-making framework
(organizational structure). If this process
is not conducted well, the results may be
confusion, frustration, loss of efficiency,
and limited effectiveness.
JANGA, TD. 74
Step 1…
Identification of activities – Each organization
exists for fulfilling a specific purpose. This purpose
identifies the activities which are performed by the
organization. For example, in a manufacturing
organization, production of the goods and their
selling are the major activities in addition to the
routine activities. And these activities are in variance
with the activities of a service organization or an
organization involved in the trading activities.
Hence the identification of the various activities of
the organization is an important step in the
organizing function.
JANGA, TD. 75
Step 2…
 Grouping of activities – Once the activities have
been identified, then there is a necessity that they are
grouped. The activities are grouped in various ways.
The activities which are similar in nature can be
grouped as one and a separate department can be
created. For example, activities related to the
purchasing, production, marketing, and accounting
and finance can be grouped respectively under
purchase, production, marketing, and finance
departments etc.
 Further in each department the activities can be
further subdivided into various specific jobs.
JANGA, TD. 76
Step 3…
Assignment of responsibilities – Having
completed the exercise of identifying,
grouping and classifying of all activities
into specific jobs, the individual
employees comes into picture since the
employees are to be assign with the
responsibilities to take care of activities
related to the specific jobs.

JANGA, TD. 77
Step 4…
Granting authority – On the basis of
specific responsibilities given to
individual employees, they are to be
provided with the necessary authority for
the discharge of the assigned
responsibilities in order to ensure their
effective performance and in turn the
performance of the organization

JANGA, TD. 78
Step 5…
Establishing relationship – This is a very
important part of the organizing function
since each employee in the organization is
to know as to whom to report and which are
the employee who are to work with him.
This establishes a structure of relationships
in the organization which helps to ensure
that the organization has clear relationships.
This structure of relationships also
facilitates the delegation.
JANGA, TD. 79
Process of Organizing…

JANGA, TD. 80
Organizing Principles
Organizing function is effective only if
the management follows some guiding
principles in order to make important
decisions and act upon them. For an
efficient organizing function the following
are the guiding principles:

JANGA, TD. 81
Principle of Specialization
According to the principle, the entire
work of the organization is to be shared
among the subordinates based on their
qualifications, abilities and skills. Hence,
effective organization can be achieved
through specialization of sharing or
dividing work.

JANGA, TD. 82
Principle of Functional Definition
The principle states that all the work in the
organization is to be fully and clearly described
to the managers and subordinates.
For instance, the initial work of production,
marketing and finance, the authority of managers
and the responsibilities of the workers and their
relationships towards each other must be clearly
described to all the employees working in the
department. Hence, clarification in the authority
and responsibility helps in the growth of the
organization.
JANGA, TD. 83
Principles of Supervision or Span of
Control
The principle states that the span of
control shows the number of employees
that a single manager can handle and
control efficiently. Hence, the
management is to decide the number of
employees that a manager can handle and
this decision can be chosen from either a
wide or narrow span of employees.

JANGA, TD. 84
Principles of Supervision…
There are two types of span of control namely
(i) wide span of control in which a manager can
easily supervise and effectively handle a big
group of subordinates independently, and
(ii) narrow span of control in which a manager
does not have to supervise and control a large
group of employees as the work and authority
is shared among many subordinates. Hence,
the manager needs to supervise only a selected
number of employees at one time.
JANGA, TD. 85
Principle of Scalar Chain
It is that chain of command or
authorization in which there is minimum
wastage of resources, communication is
unaffected, overlapping of work is
prevented, and this facilitates effective
organization. The flow of authorization
from the top level to the bottom level
enables the managers to understand their
positions of authority and this helps in an
effective organization.
JANGA, TD. 86
There are two types of span of control:
Wide span of control- It is one in which a manager can
supervise and control effectively a large group of
persons at one time. The features of this span are:-
 Less overhead cost of supervision
 Prompt response from the employees
 Better communication
 Better supervision
 Better co-ordination
 Suitable for repetitive jobs
 According to this span, one manager can effectively and
efficiently handle a large number of subordinates at one
time.
JANGA, TD. 87
Span of Controls…
Narrow span of control- According to this
span, the work and authority is divided
amongst many subordinates and a
manager doesn't supervises and control a
very big group of people under him. The
manager according to a narrow span
supervises a selected number of
employees at one time.

JANGA, TD. 88
Span of Controls…
The features are:-
 Work which requires tight control and
supervision, for example, handicrafts, ivory
work, etc. which requires craftsmanship,
there narrow span is more helpful.
 Co-ordination is difficult to be achieved.
 Communication gaps can come.
 Messages can be distorted.
 Specialization work can be achieved.

JANGA, TD. 89
Factors influencing Span of Control
Managerial abilities- In the concerns where
managers are capable, qualified and
experienced, wide span of control is always
helpful.
Competence of subordinates- Where the
subordinates are capable and competent and
their understanding levels are proper, the
subordinates tend to very frequently visit the
superiors for solving their problems. In such
cases, the manager can handle large number of
employees. Hence wide span is suitable.
JANGA, TD. 90
 Nature of work- If the work is of repetitive nature,
wide span of supervision is more helpful. On the
other hand, if work requires mental skill or
craftsmanship, tight control and supervision is
required in which narrow span is more helpful.
 Delegation of authority- When the work is
delegated to lower levels in an efficient and proper
way, confusions are less and congeniality of the
environment can be maintained. In such cases, wide
span of control is suitable and the supervisors can
manage and control large number of sub- ordinates at
one time.
JANGA, TD. 91
Degree of decentralization- Decentralization is
done in order to achieve specialization in which
authority is shared by many people and
managers at different levels. In such cases, a tall
structure is helpful. There are certain concerns
where decentralization is done in very effective
way which results in direct and personal
communication between superiors and sub-
ordinates and there the superiors can manage
large number of subordinates very easily. In
such cases, wide span again helps.
JANGA, TD. 92
Principle of Unity of Command
As per this principle, one subordinate is
accountable to only one superior at one
time.
This helps in preventing lack of
communication and feedback and also
brings about quick response. Hence, the
principle of unity of command leads to
effectively combine both physical and
financial resources which in turn aids in
effective coordination and organization.
JANGA, TD. 93
Classification of Organizations
Organizations are basically classified on
the basis of relationships. There are two
types of organizations formed on the basis
of relationships in an organization

JANGA, TD. 94
Formal Organization
This is one which refers to a structure of
well defined jobs each bearing a measure of
authority and responsibility. It is a conscious
determination by which people accomplish
goals by adhering to the norms laid down by
the structure. This kind of organization is an
arbitrary set up in which each person is
responsible for his performance. Formal
organization has a formal set up to achieve
pre- determined goals.
JANGA, TD. 95
Informal Organization
Itrefers to a network of personal and social
relationships which spontaneously originates
within the formal set up. Informal organizations
develop relationships which are built on likes,
dislikes, feelings and emotions. Therefore, the
network of social groups based on friendships
can be called as informal organizations. There is
no conscious effort made to have informal
organization. It emerges from the formal
organization and it is not based on any rules and
regulations as in case of formal organization
JANGA, TD. 96
Relationship between Formal and
Informal Organizations
For a concerns working both formal and informal
organization are important. Formal organization
originates from the set organizational structure
and informal organization originates from formal
organization. For an efficient organization, both
formal and informal organizations are required.
They are the two phase of a same concern.
Formal organization can work independently. But
informal organization depends totally upon the
formal organization.

JANGA, TD. 97
Formal and informal organization helps in bringing
efficient working organization and smoothness in a
concern. Within the formal organization, the
members undertake the assigned duties in co-
operation with each other. Therefore, both formal and
informal organizations are important.
When several people work together for achievement
of organizational goals, social tie ups tends to built
and therefore informal organization helps to secure
co-operation by which goals can be achieved smooth.
Therefore, we can say that informal organization
emerges from formal organization.
JANGA, TD. 98
Line Organization
 This is the most oldest and simplest method of
administrative organization. According to this type of
organization, the authority flows from top to bottom
in a concern.
 The line of command is carried out from top to
bottom. This is the reason for calling this
organization as scalar organization which means
scalar chain of command is a part and parcel of this
type of administrative organization.
 In this type of organization, the line of command
flows on an even basis without any gaps in
communication and co-ordination taking place
JANGA, TD. 99
Features of Line Organization
 Itis the most simplest form of organization.
 Line of authority flows from top to bottom.
 Specialized and supportive services do not
take place in these organization.
 Unified control by the line officers can be
maintained since they can independently take
decisions in their areas and spheres.
 This kind of organization always helps in
bringing efficiency in communication and
bringing stability to a concern.
JANGA, TD. 100
Merits of Line Organization
Simplest- It is the most simple and oldest
method of administration.
Unity of Command- In these organizations,
superior-subordinate relationship is
maintained and scalar chain of command
flows from top to bottom.
Better discipline- The control is unified and
concentrates on one person and therefore, he
can independently make decisions of his own.
Unified control ensures better discipline.
JANGA, TD. 101
Merits…
Fixed responsibility- In this type of organization,
every line executive has got fixed authority, power
and fixed responsibility attached to every authority.
Flexibility- There is a co-ordination between the
top most authority and bottom line authority. Since
the authority relationships are clear, line officials
are independent and can flexibly take the decision.
This flexibility gives satisfaction of line executives.
Prompt decision- Due to the factors of fixed
responsibility and unity of command, the officials
can take prompt decision.

JANGA, TD. 102

Demerits of Line Organization
Over reliance- The line executive’s decisions
are implemented to the bottom. This results
in over-relying on the line officials.
Lack of specialization- A line organization
flows in a scalar chain from top to bottom
and there is no scope for specialized
functions. For example, expert advices
whatever decisions are taken by line
managers are implemented in the same way.

JANGA, TD. 103

Demerits…
Inadequate communication- The
policies and strategies which are framed
by the top authority are carried out in the
same way. This leaves no scope for
communication from the other end. The
complaints and suggestions of lower
authority are not communicated back to
the top authority. So there is one way
communication.

JANGA, TD. 104

Demerits…
Lack of Co-ordination- Whatever
decisions are taken by the line officials, in
certain situations wrong decisions, are
carried down and implemented in the same
way. Therefore, the degree of effective co-
ordination is less.
Authority leadership- The line officials
have tendency to misuse their authority
positions. This leads to autocratic
leadership and monopoly in the concern.
JANGA, TD. 105
Line and Staff
Organization/Authority
 Line and staff organization is a modification of
line organization and it is more complex than line
organization. According to this administrative
organization, specialized and supportive activities
are attached to the line of command by appointing
staff supervisors and staff specialists who are
attached to the line authority.
 The power of command always remains with the
line executives and staff supervisors guide, advice
and council the line executives. Personal Secretary
to the Managing Director is a staff official.

JANGA, TD. 106

Line and Stuff…
 Inan organization, the line authority flows from
top to bottom and the staff authority is exercised
by the specialists over the line managers who
advise them on important matters. These
specialists stand ready with their specialty to serve
line mangers as and when their services are called
for, to collect information and to give help which
will enable the line officials to carry out their
activities better. The staff officers do not have any
power of command in the organization as they are
employed to provide expert advice to the line
officers.
JANGA, TD. 107
Line and Stuff…
The 'line' maintains discipline and stability;
the 'staff' provides expert information. The
line gets out the production, the staffs carries
on the research, planning, scheduling,
establishing of standards and recording of
performance. The authority by which the
staff performs these functions is delegated by
the line and the performance must be
acceptable to the line before action is taken.

JANGA, TD. 108

Types of Staff
The staff position established as a measure of
support for the line managers may take the
following forms:
Personal Staff: Here the staff official is
attached as a personal assistant or adviser to
the line manager. For example, Assistant to
managing director.
Specialized Staff: Such staff acts as the
fountainhead of expertise in specialized areas
like R & D, personnel, accounting etc.
JANGA, TD. 109
General Staff: This category of staff
consists of a set of experts in different
areas who are meant to advise and assist
the top management on matters called for
expertise. For example, Financial advisor,
technical advisor etc.

JANGA, TD. 110

Features of Line and Staff
Organization
 Line and Staff Organization is a compromise
of line organization. It is more complex than
line concern.
 Division of work and specialization takes
place in line and staff organization.
 The whole organization is divided into
different functional areas to which staff
specialists are attached.
 Efficiency can be achieved through the
features of specialization.
JANGA, TD. 111
Features…
 There are two lines of authority which
flow at one time in a concern :
Line Authority
Staff Authority
 Power of command remains with the line
executive and staff serves only as
counselors.

JANGA, TD. 112

Merits of Line and Staff
Organization/Authority
Relief to line of executives- In a line and staff
organization, the advice and counseling which is
provided to the line executives divides the work
between the two. The line executive can concentrate
on the execution of plans and they get relieved of
dividing their attention to many areas.
Expert advice- The line and staff organization
facilitates expert advice to the line executive at the
time of need. The planning and investigation which
is related to different matters can be done by the staff
specialist and line officers can concentrate on
execution of plans.
JANGA, TD. 113
Merits…
Benefit of Specialization- Line and staff
through division of whole concern into two types
of authority divides the enterprise into parts and
functional areas. This way every officer or
official can concentrate in its own area.
Better co-ordination- Line and staff
organization through specialization is able to
provide better decision making and
concentration remains in few hands. This feature
helps in bringing co-ordination in work as every
official is concentrating in their own area.
JANGA, TD. 114
Merits…
 Benefits of Research and Development- Through
the advice of specialized staff, the line executives, the
line executives get time to execute plans by taking
productive decisions which are helpful for a concern.
This gives a wide scope to the line executive to bring
innovations and go for research work in those areas.
This is possible due to the presence of staff specialists.
 Training- Due to the presence of staff specialists and
their expert advice serves as ground for training to
line officials. Line executives can give due
concentration to their decision making. This in itself is
a training ground for them.

JANGA, TD. 115

Merits…
Balanced decisions- The factor of specialization
which is achieved by line staff helps in bringing
co-ordination. This relationship automatically ends
up the line official to take better and balanced
decision.
Unity of action- Unity of action is a result of
unified control. Control and its effectivity take
place when co-ordination is present in the concern.
In the line and staff authority all the officials have
got independence to make decisions. This serves
as effective control in the whole enterprise

JANGA, TD. 116

Demerits of Line and Staff
Organization
 Lack of understanding- In a line and staff
organization, there are two authority flowing at one
time. This results in the confusion between the two.
As a result, the workers are not able to understand as
to who is their commanding authority. Hence the
problem of understanding can be a hurdle in effective
running.
 Lack of sound advice- The line official get used to
the expertise advice of the staff. At times the staff
specialist also provide wrong decisions which the
line executive have to consider. This can affect the
efficient running of the enterprise.
JANGA, TD. 117
Demerits…
Line and staff conflicts- Line and staff are two
authorities which are flowing at the same time.
The factors of designations, status influence
sentiments which are related to their relation,
can pose a distress on the minds of the
employees. This leads to minimizing of co-
ordination which hampers a concern’s working.
Costly- In line and staff concern, the concerns
have to maintain the high remuneration of staff
specialist. This proves to be costly for a concern
with limited finance.
JANGA, TD. 118
Demerits…
Assumption of authority- The power of
concern is with the line official but the staff
dislikes it as they are the one more in mental
work.
Staff steals the show- In a line and staff
concern, the higher returns are considered to be
a product of staff advice and counseling. The
line officials feel dissatisfied and a feeling of
distress enters a concern. The satisfaction of
line officials is very important for effective
results.
JANGA, TD. 119
Delegation of Authority
A manager alone cannot perform all the tasks
assigned to him. In order to meet the targets, the
manager should delegate authority.
Delegation of Authority means division of
authority and powers downwards to the
subordinate. Delegation is about entrusting
someone else to do parts of your job.
Delegation of authority can be defined as
subdivision and sub-allocation of powers to the
subordinates in order to achieve effective
results.
JANGA, TD. 120
Elements of Delegation
The main elements of delegation are:

Authority

Responsibility and

Accountability

JANGA, TD. 121

Authority
In context of a business organization, authority
can be defined as the power and right of a
person to use and allocate the resources
efficiently, to take decisions and to give orders
so as to achieve the organizational objectives.
Authority is the right to give commands,
orders and get the things done.
Authority always flows from top to bottom
where the top level management has greatest
authority.
JANGA, TD. 122
Authority…cont.
Itexplains how a superior gets work done
from his subordinate by clearly explaining
what is expected of him and how he should
go about it.
Authority should be accompanied with an
equal amount of responsibility.
Delegating the authority to someone else
doesn’t imply escaping from accountability.
Accountability still rest with the person
having the utmost authority.
JANGA, TD. 123
Responsibility
Is the duty of the person to complete the task
assigned to him.
A person who is given the responsibility should
ensure that he accomplishes the tasks assigned to
him.
If the tasks for which he was held responsible are
not completed, then he should not give
explanations or excuses.
Responsibility without adequate authority leads
to discontent and dissatisfaction among the
person.
JANGA, TD. 124
Responsibility…cont.
Responsibility flows from bottom to top.
The middle level and lower level
management holds more responsibility.
The person held responsible for a job is
answerable for it. If he performs the tasks
assigned as expected, he is bound for
praises. While if he doesn’t accomplish
tasks assigned as expected, then also he is
answerable for that.

JANGA, TD. 125

Accountability
Means giving explanations for any variance in
the actual performance from the expectations
set.
Accountability cannot be delegated
For example, if ’A’ is given a task with
sufficient authority, and ’A’ delegates this task
to B and asks him to ensure that task is done
well, responsibility rest with ’B’, but
accountability still rest with ’A’.
The top level management is most accountable.

JANGA, TD. 126

Accountability…cont.
Being accountable means being
innovative as the person will think beyond
his scope of job. Accountability ,in short,
means being answerable for the end
result. Accountability can’t be escaped. It
arises from responsibility.

JANGA, TD. 127

Differences between Authority and
Responsibility
Authority Responsibility
It is the legal right of a person or a It is the obligation of subordinate to
superior to command his subordinates. perform the work assigned to him.

Authority is attached to the position of Responsibility arises out of superior-

a superior in concern. subordinate relationship in which
subordinate agrees to carry out duty
given to him.

Authority can be delegated by a Responsibility cannot be shifted and is

superior to a subordinate absolute

It flows from top to bottom. It flows from bottom to top.

JANGA, TD. 128

Delegation Process

JANGA, TD. 129

The process…
Allocation of duties – The delegator first tries to define
the task and duties to the subordinate. He also has to
define the result expected from the subordinates. Clarity
of duty as well as result expected has to be the first step
in delegation.
Granting of authority – Subdivision of authority takes
place when a superior divides and shares his authority
with the subordinate. It is for this reason; every
subordinate should be given enough independence to
carry the task given to him by his superiors. The
managers at all levels delegate authority and power
which is attached to their job positions. The subdivision
of powers is very important to get effective results.
JANGA, TD. 130
The process…cont.
Assigning of Responsibility and Accountability
 The delegation process does not end once powers
are granted to the subordinates. They at the same
time have to be obligatory towards the duties
assigned to them.
 Responsibility is said to be the factor or obligation
of an individual to carry out his duties in best of
his ability as per the directions of superior.
 Therefore, it is that which gives effectiveness to
authority. At the same time, responsibility is
absolute and cannot be shifted.
JANGA, TD. 131
The process…cont.
Creation of accountability
Accountability, on the others hand, is the obligation of
the individual to carry out his duties as per the
standards of performance.
Therefore, it is said that authority is delegated,
responsibility is created and accountability is
imposed.
Accountability arises out of responsibility and
responsibility arises out of authority.
Therefore, it becomes important that with every
authority position an equal and opposite responsibility
should be attached.
JANGA, TD. 132
Note…
Therefore every manager, i.e., the
delegator has to follow a system to finish
up the delegation process. Equally
important is the delegatee’s role which
means his responsibility and
accountability is attached with the
authority over to here.

JANGA, TD. 133

Centralization and Decentralization
CENTRALIZATION:
It is the process of transferring and
assigning decision-making authority to
higher levels of an organizational
hierarchy. The span of control of top
managers is relatively broad, and there are
relatively many tiers in the organization.

JANGA, TD. 134

DECENTRALIZATION:
It is the process of transferring and
assigning decision-making authority to
lower levels of an organizational
hierarchy. The span of control of top
managers is relatively small, and there are
relatively few tears in the organization,
because there is more autonomy in the
lower ranks.

JANGA, TD. 135

Characteristics of Centralization
Philosophy / emphasis on: top-down control,
leadership, vision, strategy.
Decision-making: strong, authoritarian,
visionary, charismatic.
Organizational change: shaped by top, vision
of leader.
Execution: decisive, fast, coordinated. Able to
respond quickly to major issues and changes.
Uniformity. Low risk of dissent or conflicts
between parts of the organization.
JANGA, TD. 136
Advantages of Centralization
Provide Power and prestige for manager
Promote uniformity of policies, practices
and decisions
Minimal extensive controlling procedures
and practices
Minimize duplication of function

JANGA, TD. 137

Disadvantages of Centralization
Neglected functions for mid. Level, and
less motivated beside personnel.
Nursing supervisor functions as a link
officer between nursing director and first-
line management.

JANGA, TD. 138

Characteristics of Decentralization
Philosophy / emphasis on: bottom-up,
political, cultural and learning dynamics.
Decision-making: democratic, participative,
detailed.
Organizational change: emerging from
interactions, organizational dynamics.
Execution: evolutionary, emergent. Flexible to
adapt to minor issues and changes.
Participation, accountability. Low risk of not-
invented-here behavior.
JANGA, TD. 139
Three Forms of decentralization
 De-concentration. The weakest form of
decentralization. Decision making authority is
redistributed to lower or regional levels of the same
central organization.
 Delegation. A more extensive form of decentralization.
Through delegation the responsibility for decision-
making are transferred to semi-autonomous
organizations not wholly controlled by the central
organization, but ultimately accountable to it.
 Devolution. A third type of decentralization is
devolution. The authority for decision-making is
transferred completely to autonomous organizational
units.
JANGA, TD. 140
Advantages of Decentralization
Raise morale and promote interpersonal
relationships
Relieve from the daily administration
Bring decision-making close to action
Develop Second-line managers
Promote employee’s enthusiasm and
coordination
Facilitate actions by lower-level managers

JANGA, TD. 141

Disadvantages of Decentralization
Top-level administration may feel it
would decrease their status
Managers may not permit full and
maximum utilization of highly qualified
personnel
Increased costs. It requires more
managers and large staff
It may lead to overlapping and
duplication of effort
JANGA, TD. 142
Note…
Centralization and Decentralization are two
opposite ways to transfer decision-making
power and to change the organizational
structure of organizations accordingly.
There must be a good balance between
centralization and decentralization of
authority and power. Extreme centralization
and decentralization must be avoided.

JANGA, TD. 143