UNIT: 1

MANAGEMENT THEORY AND PRACTICE

Introduction:

During the last six-seven decades, management as a discipline has attracted the attention of academicians and practitioners to a very great extent. The basis reason behind this phenomenon is the growing importance of management in day-to-day life of people. Today, the society has large and complex institutions with many people working together. The relationship between managers and managed has changed as compared to the older master-servant relationship making it more complex. People have greater expectations from their jobs. In order to make all these things and function properly, people have been trying to evolve some methods and techniques. Such attempts have given the birth of management as a separate discipline. It has been grown over the period of time making itself one of the most respected disciplines. Today, the study of management has become an important facet of human life.

In order to satisfy his/her wants a person has to perform numerous activities. An individual alone cannot perform all the necessary activities. Therefore, human beings join or cooperate together in the form of groups and organizations. Every organization (a church, a government, an army, a family, a college, a business enterprise) is basically a group of people seeking to attain some common objectives. A central organ or agency is required to coordinate the activities and efforts of various individuals working together in an organization so that they can work collectively as a team. Such an organ is called management.

Concept (Meaning) of Management:-The term management conveys different meanings depending upon the context in which it is used. Being a new discipline, it has drawn concepts and principles form economics, sociology, psychology, anthropology, history, statistics, and so on. The result is that each group of contributors has treated management differently. For example, economists see management as a factor of production; sociologists see it as a class or group of persons; practitioners of management treat it as a process. Naturally, all these divergent groups view the nature and scope of management from their own point of view. Thus taking all these points of view together, it becomes difficult to define management in a comprehensive way.

Definitions:Harold Koontz: Management is the art of getting things done through and with people in formally organized groups.Peter F. Drucker: Management is multipurpose organ that manages a business and manages managers and manages worker and work.Koontz and ODonnell: Management is the creation and maintenance of an internal environment in an enterprise where individuals, working in groups, can perform efficiently and effectively toward the attainment of group goals.

Salient Features (Nature of Management):-1. Management is universal: Management is required in every form of group activity whether it is a family, a club, a government, an army or a business house. The approach and style of management may differ from one organization to another. But in each case it involves marshalling of human and physical resources towards the attainment of common objectives. The fundamental principles of management are applicable in all areas of organized effort. Managers at all levels perform the same basic functions.2. Management is purposeful: Management exists for the achievement of specific objectives. It is a means towards the accomplishment of predetermined goals. All activities of management are goal-oriented. The success of management is measured by the extent to which the desired objectives are attained. Management has no justification to exist in the absence of objectives. Management is creative-a process of achieving results. It makes things happen.3. Management is unifying force: The essence of management lies in the coordination of individual efforts into a team. Management reconciles the individual goals with organizational goals. As a unifying force, management creates a whole that is more than the sum of individual parts. It integrates human and other resources.4. Management is a social process: management is done by people through people and for people. It is a social process because it is concerned with interpersonal relations. Human factor is the most important element in management. According to Appley, Management is the development of people not the direction of things. A good manager is a leader not a boss. It is the pervasiveness of the human element which gives management its special character as a social process.5. Management is multidisciplinary: Management has to deal with human behavior under dynamic conditions. Therefore, it depends upon wide knowledge derived from the several disciplines like engineering, sociology, psychology, economics, mathematics, anthropology, etc. The vast body of knowledge in management draws heavily upon other fields of study.6. Management is a continuous process: Management is a dynamic and on-going process. The cycle of management continues to operate so long as there is organized action for the achievement of group goals. 7. Management is intangible: Management is an unseen or invisible force. It cannot be seen but its presence can be felt everywhere in the form of results. However, the managers who perform the functions of management are very much tangible and visible.8. Management is situational: Efficient management is always situational or contingency management because there is not one best way of doing things. A successful manager must take into account situational differences. This is what management is all aboutthe application of knowledge realities in order to attain desired results.9. Management is essentially an executive function: It deals with the active direction and control of the activities of people to attain predetermined objectives. Management is a technique by means of which the objectives human groups are determined, clarified and accomplished.10. Management is an art as well as a science: Management contains a systematic body of theoretical knowledge as well as the practical application of such knowledge.

Scope of Management (Operative Functions of Management): The scope of management is very wide. The various functional areas of management may be classified into the following categories:1. Production Management: Production or operations management is the management of production and various operations in the organization so as to produce the right goods, in right quality and quantity, at the right time and at the right cost. It consists of the following activities: a) designing the product, b) location and layout of plant and buildings, c) operation of purchase and storage of materials, d) planning and control of factory operations, e) repairs and maintenance, f) inventory control and quality control, and g) research and development, etc.2. Marketing Management: Marketing management refers to the identification of consumers needs and supplying them the goods and services which can satisfy those wants. It involves the following activities: a) marketing research to determine the needs and expectations of consumers, b)setting appropriate prices, c) selecting the right channels of distribution, d) promotional activities like advertising and salesmanship to communicate with the customers.3. Financial Management: Financial management seeks to ensure the right amount and type of funds to business at the right time and at reasonable cost. It comprises the following activities: a) estimating the volume of funds required for both long-term and short-term needs of business, b) selecting the appropriate sources of funds, c) raising the required funds at the right time, d) ensuring proper utilization and allocation of raised funds so as to maintain safety and liquidity of funds and the creditworthiness and profitability of business, and e) administration of earnings. Thus financial management involves the planning, organizing and controlling of the financial resources.4. Personnel Management: Personnel management involves planning, organizing, directing and controlling the procurement, development, compensation, maintenance, etc. of the human resources in an enterprise. It consists of the following activities: a) manpower planning, b) recruitment, and selection, c) training and development, d) performance appraisal, e) compensation and promotion, f) employee services and benefits, and g) personnel records and research etc.

Management: Science or Art

The controversy with regard to the nature of management, as to whether it is a science or art, is very old. This controversy, however, is not very much in the air though the controversy is yet to be settled. Specification of exact nature of management as science or art or both is necessary to specify the process of learning of management. It is to be noted that learning process in science differs from that of art. Learning of science basically involves the assimilation of principles while learning of art involves its continuous practice. Much of the controversy of management as science or art is on account of the fact that the earlier captains of the industry and managers have used intuition, hunches, commonsense, and experience in managing organizations. They were not trained professional managers, although they were very brilliant and had developed commonsense through which they managed well.

Management as an Art:Art involves the practical application of personal skills and knowledge to achieve concrete results. It is the practical way of doing specific things. The function of the art is to effect change and to achieve desired results. Art represents how of human behavior or the know-how to do work. Art is a personalized process and every artist has his own style. Art is essentially creative and the success of an artist is measured by the results he achieves. Thus the main elements of an art are: a) personal skills, b) practical know-how, c) result-orientation, d) creativity, and e) constant practice aimed at perfection.

Management is basically an art because of the following reasons:a) Like any other artist, a manager applies his knowledge and skills to coordinate the efforts of his people.b) Management seeks to achieve concrete practical results, e.g., profits, growth, social service, etc., in a given situation.c) Like any other art, management is creative. It brings out new situations and converts resources into output.d) Management is personalized process. Every manager adopts his own approach towards problems depending upon his perception and the environmental condition.e) Effective management leads to realization of organizational and other goals. The success of a manager is measured by the results he achieves. Mastery in management requires a sufficiently long period of experience in managing. The managerial art can be refined through continuous practice.

Management as a Science:The essential elements of science are as follows:a) Science is a systematized body of knowledge pertaining to a particular field of inquiry. It is systematized in the sense that it establishes cause and effect relationship between different variables.b) It contains underlying principles and theories developed through continuous observation, experimentation and research.c) The principles have universal applicability. They can be applied under different situations barring a few exceptions which can be logically explained. The principles are verifiable and lead to predictable results.d) The organized body of knowledge can be taught and learnt in the classroom and outside. Physics, Chemistry, Mathematics and Economics are some examples of science.Management is a science because it contains all the essentials of science:a) There is now a systematized body of knowledge. Principles and theories are now available in every area of management. b) Principles of management have been evolved through practical experience and theoretical research over several decades. c) Managerial principles have a wide and repetitive range of application. d) Management theory and principles can be taught in classrooms and in industry.

Thus, management is neither exclusively an art nor exclusively a science but a combination of both. According to Koontz and ODonnell, Essentially, managing is the art of doing and management is the body of knowledge which underlies the art. Science without art is sterile and art without science is blind. Every art is based on an underlying body of knowledge and with every advancement in science; art is freed from dependence on intuition and judgment. A manager without any knowledge of underlying theory has to depend on luck, precedents and intuition which are highly unreliable. Management theory helps him to understand the problems correctly. It provides insight to diagnose problems and opportunities. It encourages systematic thinking and right perspective. Therefore, management theory is a foundation to management practice. Management theory cannot by itself lead to success in management. Acquiring knowledge and skills in management is not an end in itself. A person with an advanced degree or diploma in management cannot be an effective manager unless he knows how to apply management theory in real business situations. The science of management may be learnt in the classroom but practice is required to make its successful use. The practicing manager is like goldsmith who has to cut, refashion and give a finish to the gold of principles to meet specific situations faced by him. If the existing body of knowledge does not provide the solution to his problem, he will seek new solutions thereby adding to the science of management.Thus, the theory (science) and practice (art) of management go side by side for the efficient functioning of an organization.

Management Vs. Administration:

There has been a controversy on the use of the two termsmanagement and administration. Various authorities have expressed divergent views. Many experts make no distinction between administration and management and use them as synonyms. Several American writers consider them as two distinct functions. A few experts treat administration as a part of management. Then, three points of view are explained here:1. Administration is above management: According to this viewpoint administration is a top-level function while management is a lower-level function. Administration is a determinative (thinking) function concerned with laying down basic objective and broad policies of an organization. On the other hand, management is an executive (doing) function involving the direction of human effort towards the realization of such objectives. Therefore, managers are often called executives. This view is held by eminent American experts on management. Oliver Sheldon was the first person to make a distinction between management and administration. According to him, Administration is the function in industry concerned with the determination of corporate policy, the coordination of finance, production and distribution, the settlement of the compass (structure of the organization), and ultimate control of the executive. Management, on the other hand, is the function in industry concerned with the execution of policy within the limits setup by administration, and the employment of the organization for the particular objective set before it. Administration defines the goal, management strives toward it. Thus, this view considers administration as superior to management.2. Administration is a part of management: European School of thought holds that management is a comprehensive term and administration is a part of it According to E.F.L. Brech, Management is the generic term for the total process of executive control involving responsibility for effective planning and guidance of the operations of an enterprise. Administration is that part of management which is concerned with the installation and carrying out of the procedures by which the program is laid down and communicated and the progress of activities is regulated and checked against plans. Thus, the European viewpoint is exactly opposite to the American viewpoint.3. Administration and management are one: Henry Fayol, Georgy R. Terry, Harold Koontz, William Newman and many other writers make no distinction between administration and management. Fayol said, all undertakings require the same functions and all must observe the same principles. There is one common science which can be applied equally well to public and private affairs. According to W. H. NewMan, management or administration is the guidance, leadership and control of the efforts of a group of individuals towards some common goals.The distinction between administration and management is superfluous and meaningless. In practice, the two terms are used interchangeably because both involve the same principles and functions. Somehow, the world management has become popular in business enterprises where economic performance is of primary importance. On the other hand, the term administration is preferred in government departments, hospitals, religious trusts, educational institutions, and other non-business organizations.

Levels of Management: In every company, there is a managerial hierarchy or chain of command which consists of several levels of authority. The number of management levels may differ from company to company. In a big company, the management levels may be classified as follows:1. Top management2. Middle management and 3. Supervisory or Operating or First Line management1. Top management: Top management consists of a Board of Directors and the Chief Executive. Chief executive may be an individual, e.g., managing director, general manager, chief operating officer etc. or a group consisting of chairman and functional/executive directors. Board of directors is accountable to the shareholders in the Annual General Meeting of the company. It is basically an organ of overall review and control. Chief executive is concerned with the overall management of the companys operations. He maintains coordination among different departments/subsidiaries/units of the company. He also keeps the organization in harmony with its external environment.Thus, the main functions of top management are:a) To analyze and interpret changes in the external environment of the company;b) To establish long-term corporate plans (goals, policies and strategies) of the company.c) To formulate and approve the master budget and departmental budgets.d) To design broad organization structure.e) To appoint departmental heads and key executives.f) To coordinate and integrate the activities of different departments and divisions of the company.g) To provide overall direction and leadership to the company.h) To exercise overall review and control of the financial and operating results of the company.i) To represent the company to the outside world (public relations), and j) To decide the distribution of profits, etc.

Intermediate Management: Intermediate or upper middle management comprises departmental or divisional heads, e.g. works manager, marketing manager, finance and HR managers etc. It is also known as departmental or functional management. Every divisional or departmental head is the overall in-charge of one particular division or department. He is accountable for the performance of his division or department to the chief executive. He performs the usual managerial functions of planning, organizing, staffing, directing and controlling in relation to one department. He coordinates and controls the activities of all personnel working in different branches or sections of his particular department.

2. Middle Management: Middle management or lower middle management level consists of sectional heads, e.g., plant manager, area sales manager, branch manager, office manager, etc. These executives serve as a link between intermediate or top management and the operating management. The main functions of middle level managers are:a) To interpret and explain the plans and policies formulated by top management;b) To monitor and control the operating performance;c) To cooperate among themselves so as to integrate the various activities of a departmentd) To train, motivate and develop supervisory personnel, ande) To lay down rules and regulations to be followed by supervisory personnel.

3. Supervisory or Operating Management: This is the lowest or first level of management in an organization. It consists of supervisors, foremen, sales officers, accounts officers, purchasing officers etc. The distinguishing feature of supervisory management is that it deals with non-managers, i.e., workers, whereas all other levels deal with executives. Supervisors and operating managers maintain close contacts with the rank and file workers and supervise day-to-day operations. They serve as the channel of communication between management and the workforce. They are concerned with the mechanics of jobs. The functions of supervisory management are as follows:a) To plan day-to-day production within the goals laid down by higher authorities.b) To assign jobs to workers and to make arrangements for their training and development.c) To issue orders and instructions.d) To supervise and control workers operations and to maintain personal contacts with them.e) To arrange materials and tools and to maintain machinery.f) To advise and assist workers by explaining work procedures, solving their problems etcg) To maintain discipline and good human relations among workers.h) To report feedback information and workers problems to the higher authorities.

Skills of a Manager: The job of a manager has become very challenging. Several skills are required in order to be a successful manager. The skills of an effective manager may be classified into four categories as given below:1. Technical Skills: Technical skills refer to the ability and knowledge in using the equipment, techniques and procedures involved in performing specific tasks. These skills require specialized knowledge and proficiency in the mechanics of a particular job. Ability in programming and operating computer is a technical skill. There are two things a manager should understand about technical skills. In the first place, he must know which skills should be employed in his particular enterprise and be familiar enough with their potentiality to ask discerning questions of his technical advisers. Secondly, a manager must understand both the role of each skill employed and the interrelationships between the skills.2. Human Skills: Human skills consist of the ability to work effectively with other people both as individuals and as members of a group. These are required to win co-operation of others and to build effective work teams. Such skills require a sense of feeling for others and capacity to look at things from others point of view. Human skills are reflected in the way a manager perceives his superiors, subordinates and peers. An awareness of the importance of human skills should be part of a managers orientation and such skills should be developed throughout the career. While technical skills involve mastery of things, human skills are concerned with understanding of people.

Conceptual Skills Human Skills Technical SkillsTop Management

Middle Management

Operating Management

3. Conceptual Skills: Conceptual skills comprise the ability to see the whole organization and the inter-relationships between its parts. These skills refer to the ability to visualize the entire picture or to consider a situation in its totality. Such skills help the manager to conceptualize the environment, to analyze the forces working in a situation and to take a broad and farsighted view of the organization. Conceptual skills also include the competence to understand a problem in all its aspects and to use original thinking in solving the problem. Such competence is necessary for rational decision making. Thus, technical skills deal with jobs, human skills with persons and conceptual skills with ideas.4. Diagnostic Skills: Diagnostic skills include the ability to determine, by analysis and examination, the nature and circumstances of a particular condition. It is not only the ability to specify why something happened but also the ability to develop certain possible outcomes. It is the ability to cut through unimportant aspects and quickly get to the heart of the problem, i.e., logical thinking, analytical reasoning and creativity. Diagnostic skills are probably the most difficult ones to develop because they require the proper blend of analytic ability with commonsense and intelligence to be effective.

Technical skills are most important at the supervisory or operating level where a close understanding of job techniques is necessary to guide workers. Higher level managers deal with subordinate managers and specialized technical knowledge is comparatively less important and human and conceptual skills are more important. Conceptual skills are very important for top management in formulating long range plans, making broad policy decisions, and relating the business enterprise to its industry and the economy. Thus, the relative importance of conceptual skills increases as we move to higher levels of management. Human skills are equally important at all levels of management. This should be self-evident as management is the process of getting things done through people.

Roles of a Manager: The job of a modern manager is very complex and multi-dimensional. Henry Mintzberg has identified ten roles of a manager which are grouped into three categories. There is some arbitrariness in this classification but it is a useful framework for analyzing and understanding the managerial job. These roles are inseparable and should, therefore, be viewed as an integrated whole. For example, status, as manifested in the interpersonal roles, brings information to the manager, and it is this information (together with the status) that enables him to perform the decision-making role effectively.A brief description of the ten roles is given below:1. Figurehead: In this role a manager performs symbolic duties required by the status of his office. Making speeches, bestowing honors, welcoming official visitors, distributing gifts to retiring employees are examples of such ceremonial and social duties.2. Leader: This role defines the managers relationship with his own subordinates. The manager sets an example, legitimizes the power of subordinates and brings their needs in accord with those of his organization.3. Liaison: It describes a managers relationships with the outsiders. A manager maintains mutually beneficial relations with other organizations, governments, industry groups etc.4. Monitor: It implies seeking and receiving information about his organization and external events. An example is picking up a rumor about organization. 5. Disseminator: It involves transmitting information and judgments to the members of the organization. The information relates to internal operations and the external environment. A manager calling a staff meeting after business trip is an example of such a role.6. Spokesman: In this role, a manager speaks for his organization lobbies and defends his enterprise. A manager addressing the trade union is an example.7. Entrepreneur: It involves initiating change or acting as a change agent. For example, a manager decides to launch a feasibility study for setting up a new plant.8. Disturbance Handler: This refers to taking charge when the organization faces a problem or crisis, e.g., a strike, feud between subordinates, loss of an important customer. A manager handles conflicts, complaints and competitive actions.9. Resource Allocator: In this role a manager approves budgets and schedules, sets priorities and distributes resources.10. Negotiator: As a negotiator, a manager bargains with suppliers, dealers, trade unions, agents, etc.

Importance of Management: The survival and growth of an organization depends largely on the competence and character of its management. Every organization needs repeated stimulus which only managers can provide. Management is the dynamic life-giving element in every organization. Without management the resources of production remain resources and can never become output. Organizations stand or fall on the quality of their managements because sound management provides the following benefits: 1. Achievement of group goals: Management enables an enterprise to achieve its desired objectives through proper planning and control. It decides what should be done and how. It lays down the long-term and short-term goals keeping in mind the resources of the enterprise. Management maintains order and coordination and without it there will be utter chaos. Management also creates a sound organization structure that prov8des specialization. Through a well-organized system of direction and control, management keeps a close watch on the activities of the organization. Thus, management makes an organization successful through sound resource planning and effective control. 2. Optimum utilization of resources: Materials, machinery, and money are the physical factors of production. The efficient use of these resources depends upon the efficiency and motivation of workers. Management makes the workers efficient and motivated through training, supervision and inspiring leadership. Managers guide and motivate workers towards best performance. They tell workers what to do and how to do their jobs. Managers develop a spirit of mutual cooperation and a sense of responsibility among workers.3. Fulfillment of social obligations: Sound management monitors the environment of business and makes necessary changes in business policies and practices so as to keep the consumers and workers satisfied. In this way, managers help an enterprise to fulfill its obligations towards different sections of society. Management balances and integrates various interests in group efforts.4. Economic growth: Management is the catalyst of economic growth. We no longer talk of capital and labor but of management and labor. Peter F. Drucker said, Development is a matter of human energies rather than of economic growth, and the generation of human energies is the task of management. Management is the mover and development is the consequence.5. Stability: Management ensures the survival of an organization in a fast changing environment. It coordinates the activities of different departments in an organization and maintains team spirit amongst the personnel. Just as mind controls the body, similarly management directs and controls the organization to keep it on the right track.6. Human development: Management is not simply the direction of things but the development of men. It improves the personality and caliber of people to raise their efficiency and productivity. A good manager serves as a friend and guide to his subordinates. 7. Meets the challenge of change: Management is the catalytic force that enables an organization to face the challenge of change. The environment of business has become very turbulent. Managers maintain a dynamic equilibrium between an enterprise and its environment through innovation and creativity.

Thus, good management achieves both economic and social objectives by making best use of human and material resources and by providing satisfaction of people. In the words of John F. Mee, Management is an art of securing maximum results with a minimum of effort so as to ensure maximum prosperity for the employer and employee and give the public the best possible service.In recent years the role of management has increased due to the following challenges:a) Growing size and complexity of businessb) Changing technologyc) Need for optimum utilization of resources,d) Cut-throat competition in the markete) Uncertain business environmentf) Increasing expectations of social groups andg) Growth of trade union movement.

Management as a Process:Process means a series of operations or actions necessary to achieve certain results. A process has a beginning and termination. It consists of some distinct stages or steps which take place in a sequential manner. As a process management refers to a series of interrelated elements or functions. These are:a) Defining the aims or objectives of the organization;b) Formulating policies, procedures, programs, etc. to attain these objectives efficiently and economically;c) Bringing together men, money, materials, machinery and other factors of production;d) Assigning work or duties to people and defining their authority and responsibility;e) Guiding and inspiring people to perform the assigned tasks planned andf) Exercising control over the performance of people.

Management ProcessPlanningOrganizingStaffingDirectingControlling

Elements of the Management Process.

Nature or Features of the Process of Management: The process of management is characterized by the following features: 1. Continuity: Management is a continuous process. This process is analyzed into several elements like planning, organizing, staffing, directing and controlling. But this does not mean that the process always begins with planning and comes to an end with controlling. The elements or function are interrelated and interdependent. The functions may be fused and the sequence may begin with any function and the entire process cycle may be completed. It is therefore, undesirable to insist that a manager must perform the functions always in a definite chronological sequence. The management cycle is never ending and is repeated over and over again. 2. Circular: The managerial functions are interactive in nature. This means they are contained within each other. For example, planning, organizing, directing and controlling all may occur within the planning process. In a way, all functions may be considered as sub-functions of each other. A preceding element of the management process influences all the success elements and is in turn influenced by them. Therefore, management is circular and not a linear process.3. Social: Management is a human and social process and not a mechanical one. It influences significantly the people inside and outside an organization and the society as a whole. Management has far-reaching social consequences. Therefore, a manager while taking decision must remember the likely impact of his decision on society. Moreover, the management process is carried out by people, through people and for people.4. Composite: All the managerial functions must be considered in the totality because management process is an organic and integrated whole. Each function makes a distinct contribution to this process but cannot be considered in isolation. All the functions contribute to the whole and derive strength from each other. The final outcome is greater than the aggregate of their individual contributions. A manager performs the various functions simultaneously in a continuum.

Classification of Management Functions:The elements of management process are known as functions of management. There is, no single list of functions acceptable to all. Various authors have classified these functions differently. Henry Fayol has classified them into planning, organizing, commanding, coordinating and controlling. R.C. Davis identified planning, organizing, and coordination as parts of control. Luther Gullick has given keyword POSDCORB which stands for Planning, Organizing, Staffing, Directing, Controlling (Co), Reporting and Budgeting. Koontz and ODonnell have suggested planning, organizing, staffing, directing and controlling. Ernest Dale has in addition mentioned innovation and representation.Broadly, management functions are two types: 1. Managerial Functions2. Operative Functions

1. Managerial Functions: Managements managerial functions are planning, organizing, staffing, directing, controlling. Though the managerial functions are necessary at all levels of organization, the relative significance of different functions may not be the same at all levels of management. The time spent on planning and control is more significant at higher levels of management. A brief description of different managerial functions of management is given below: a) Planning: Planning is the most basic or primary function of management. It precedes other functions because a manager plans before he acts. Planning involves determining the objectives and selecting a course of action to achieve them. It implies looking ahead and deciding in advance what is to be done, when and where it is to be done, how and by whom it is to be done. Planning is a mental process requiring the use of intellectual faculties, foresight, imagination and sound judgment. It consists of forecasting, decision-making and problem solving. A plan is a predetermined future course of action. b) Organizing: Once plans are formulated, the next step is that of organizing. Organizing is the process of establishing harmonious authority-responsibility relationships among the members of the enterprise. It is the function of creating a structure of duties and responsibilities. The network of authority-responsibility relationships is known as organization structure. According to Henry Fayol, to organize a business is to provide it with everything useful to its functioning raw materials, tools, capital and personnel. The process of organizing consists of the following steps:i) Determining and defining the activities required for the achievement of planned goals;ii) Grouping the activities into logical and convenient units;iii) Assigning the duties and activities to specific positions and people;iv) Delegating authority to these positions and people;v) Defining and fixing responsibility for performance; andvi) Establishing horizontal and vertical authority-responsibility relationships throughout the organization. c) Staffing: Staffing is the process of filling all positions in the organization with adequate and qualified personnel. According to Koontz and ODonnell, The managerial function of staffing involves manning the organizational structure through proper and effective selection, appraisal and development of personnel to fill the roles designed into the structure. Staffing consists of manpower planning, recruitment, selection, training, compensation, integration and maintenance of employees. Staffing function has become important with growing size of organization, technological advancement and recognition of the human factor in industry.d) Directing: Directing is the managerial function of guiding, supervising, motivating and leading people towards the attainment of planned targets of performance. In the process of directing his subordinates, a manager takes active steps to ensure that the employees accomplish their tasks according to the established plans. Directing is the executive function of management because it is concerned with the execution of plans and policies. Direction initiates organized action and sets the whole organizational machinery into action. It is the life spark of an organization. Directing function of management embraces the following activities:i) Issuing orders and instructions,ii) Supervising people at work,iii) Motivation i.e. creating the willingness to work for certain objectives,iv) Communication, i.e. establishing understanding with employees regarding plans and their implementation, and v) Leadership or influencing the behavior of employees.e) Controlling: Controlling is the process of ensuring that the organization is moving in the desired direction and that progress is being made towards the achievement of goals. The process of controlling involves the following steps: a) establishing standards for measuring work performance; b) measurement of actual performance and comparing it with the standards; c) finding variances between the two and the reasons therefore; and d) taking corrective action for correcting deviations so as to ensure attainment of objectives.

2. Operative Functions of Management: These are: Production and Operations Management Marketing Management Financial Management Personnel or Human Resource ManagementSee for explanation: Scope of Management heading in the previous chapter.

Principles of Management:A principle is a fundamental statement of truth. It establishes a cause and effect relationship between two or more variables. The principles of management are the result of managers experience over a long period of time. Management theory is a systematic grouping of interrelated principles of management. Management principles are fundamental truths of general validity which have value in predicting the results of managerial action. These principles are helpful in providing the groundwork for a science of management. A management principle refines and organizes knowledge that has been built through experience and research. Henry Fayol gave the following general principles of management:1. Division of Work: The work of every person in the organization should be limited as far as possible to the performance of a single leading function. This helps to do more and better work with the same effort.2. Authority and Responsibility: Responsibility is a natural consequence of and a corollary to authority. The two are coextensive and, therefore, parity should be maintained between them. Authority is not being conceived of apart from responsibility. Wherever authority is exercised responsibility arises.3. Discipline: It implies respect for agreements designed to secure obedience. It must prevail throughout an organization to ensure its smooth functioning. Discipline requires clear and fair agreements, good supervision and judicious application of penalties. 4. Unity of Command: Every employee must receive orders and be accountable to only one boss. It is necessary to avoid conflicting orders and to ensure order and stability in the organization. As soon as two supervisors wield their authority over the same person uneasiness makes itself felt. 5. Unity of Direction: There should be one head and one plan for a group of activities having the same objective. This is essential to ensure unity and coordination in the enterprise. Unity of command cannot exist without unity of direction but does not necessarily flow from it.6. Subordination of Individual to General Interest: Efforts should be made to reconcile individual interests with common interests. When there is conflict between the two, the interests of the organization should prevail over individual interests. This requires continuous and exemplary supervision and fair agreements.7. Remuneration of Personnel: The amount of remuneration and the methods of payment should be just and fair and should provide maximum possible satisfaction to both employees and employers.8. Centralization: According to Fayol, the question of centralization and decentralization is a matter of finding the optimum degree for the particular concern. The degree of concentration of authority should be based upon optimum utilization of all faculties of the personnel. It should be determined on the basis of individual circumstances in each case.9. Scalar Chain: Scalar chain refers to the chain of superiors ranging from the ultimate authority to the lowest level in the organization. It should be short-circuited and not carried to the extent it proves detrimental to the organization. To prevent the scalar chain bogging (unable to move) down action, Fayol gave the concept of gang-plank as shown in the below figure: O P -- -- UO--- --- V R -- -- W S -- - - X T ----------Gang-Plank -----------Y

In the above figure, it is shown that if T wants to communicate with Y, usually the message will flow from T to O via S, R, Q and P and from O it will come down to Y through U, V, W and X. But if it is essential to communicate immediately, a gang-plank (dotted line) may be created between T and Y without weakening the chain of command. This gang-plank allows the two employees to deal directly with each other. But each must inform his superior of any action taken by him.10. Order: This principle is concerned with the arrangement of things and the placement of people. In material order, there should be a place for everything and everything should be in its proper place. Similarly in social order, there should be an appointed place for everyone and everyone should be in his or her appointed place. This kind of order requires precise knowledge of human requirements and resources of the concern so that a proper balance may be created between them.11. Equity: Equity implies that employees should be treated with justice and kindness. Managers should be fair and impartial in their dealings with subordinates. They should adopt a sympathetic and unbiased attitude towards workers. Equity helps to create cordial relations between management and workers which are essential for the successful functioning of every enterprise.12. Stability of Tenure of Personnel: Employees cannot work efficiently unless job security is assured to them. Time is required for an employee to get used to new work and succeed in doing it well. An employee cannot render worthwhile service if he is removed from the job before he gets accustomed to it. Therefore, management must strive to minimize employee turnover.13. Initiative: Employees at all levels should be given the opportunity to take initiative and exercise judgment in the formulation and execution of plans. Initiative refers to the freedom to think for one self and use discretion in doing work. It develops the interest of employees in their jobs and provides job satisfaction to them.14. Esprit de Corps: This refers to harmony and mutual understanding among the members of an organization. Union is strength and unity in the staff is the foundation of success in any organization. Management shuld not follow the policy of divide and rule. Rather it should strive to maintain team-spirit and cooperation among employees so that they can work together as a team for the accomplishment of common objectives. Unity among the personnel can be developed through proper communication and coordination.

General EnvironmentTechnological International Socio-culturalLegal/PoliticalEconomicEmployeesCultureManagementInternal EnvironmentCustomersLabor MarketCompetitorsSuppliers

Managing for Competitive Advantage:

CORPORATE SOCIAL RESPONSIBILITY:

In the words of Bowen (1953), Social responsibility refers to the obligations (of businessmen) to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society.

According to Koontz and ODonnell (1977), the definition of social responsibility is: The personal obligation of the people as they act in their own interests to assure that the rights and legitimate interests of others are not infringed.Corporate social responsibility is a commitment to improve community well-being through discretionary business practices and contributions of corporate resources (Kotler and Lee, 2005).

Causes of Growing Concern for CSR:

* Growing awareness due to education * Trade Union Movement* Media & Consumer Organizations * Fear of Govt. Interference* Public Image * Competitive Market Forces* Public Relations * Managerial Skills

Managerial Ethics:

In a general sense, ethics is the code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong. Ethics set standards as to what is good or bad in conduct and decision making. Ethics deals with internal values that are a part of corporate culture and shapes decisions concerning social responsibility with respect to the external environment. An ethical issue is present in a situation when the actions of a person or organization may harm or benefit others. Ethics can be more clearly understood when compared with behaviors governed by laws and by free choice.

Managing Company Ethics and Social Responsibility:

Many managers are concerned with improving the ethical climate and social responsiveness of their companies. As one expert on the topic of ethics said, Management is responsible for creating and sustaining conditions in which people are likely to behave themselves. Managers can take active steps to ensure that the company stays on an ethical footing.

The Three Pillars of an Ethical Organization:

1. Ethical Individuals: Managers who are essentially ethical individuals make up the first pillar. These individuals possess honesty and integrity, which is reflected in their behavior and decisions. People inside and outside the organization trust them because they can be relied upon to follow the standards of fairness, treat people right, and be ethical in their dealings with others. Ethical individuals strive for a high level of moral development.

Being a moral person and making ethical decisions is not enough, though. Ethical managers also encourage the moral development of others. They find ways to focus the entire organizations attention on ethical values and create an organizational environment that encourages, guides, and supports and ethical behavior of all employees. Two additional pillars are needed to provide a strong foundation for an ethical organization:

2. Ethical Leadership: In a study of ethics policy and practice in successful ethical companies, no point emerged more clearly than the crucial role of leadership. A manager must be a role model, uphold ethical values in the organization, communicate about ethics and values, and reward ethical behavior, swiftly discipline unethical behavior.

3. Organizational Structures and Systems: The third pillar of ethical organizations is the set of tools that managers use to shape values and promote ethical behavior throughout the organization. Three of these tools are codes of ethics, ethical structures, and mechanisms for supporting whistle-blowers.

a) Code of Ethics:A code of ethics is a formal statement of the companys values concerning ethics and social issues. It communicates to employees what the company stands for. Codes of ethics tend to exist as two types: Principle based ethics and Policy based statements.Principle-based statements are designed to affect corporate culture; they define fundamental values and contain general language about the company responsibilities, quality of products, and treatment of employees. General statements of principle are often called corporate credos.Policy-based statements generally outline the procedures to be used in specific ethical situations. These situations include marketing practices, conflicts of interest, observance of laws, proprietary information, political gifts, and equal opportunities. Examples of policy-based statements are Boeings Business Conduct Guidelines, Chemical Banks Code of Ethics, and Anti-Trust and Conflict of Interest Guidelines, and Nortons Norton Policy on Business Ethics.b) Ethical Structures: represent the various systems, positions, and programs a company can undertake to implement ethical behavior. An ethics committee is a group of executives appointed to oversee company ethics. The committee provides rulings on questionable ethical issues. The ethics committee assumes responsibility for disciplining wrongdoers, which is essential if the organization is to directly influence employee behavior. Ethics training programs also help employees deal with ethical questions and translate the values stated in a code of ethics into everyday behavior.c) Whistle-Blowing: Employee disclosure of illegal, immoral, or illegitimate practices on the employers part is called whistle-blowing. No organization can rely exclusively on codes of conduct and ethical structures to prevent all unethical behavior.

****

UNIT: 2

PERSPECTIVES ON MANAGEMENT

Approaches to Management:

A heterogeneous group of management practitioners, thinkers and social scientists have contributed to the accumulation of knowledge in management. Therefore, several approaches to the study of management have emerged over the years. Some of these approaches are described below:

1. Classical Approach: This is also known as traditional approach, management process approach or empirical approach. The main features of this approach are as fallows:a) Management is viewed as a systematic network (process) of interrelated functions.b) On the basis of experiences of practicing managers, principles are developed. These principles are used as guidelines for the practicing executive.c) Functions, principles and skills of management are considered universal. They can be applied in different situations. d) Formal education and training is emphasized for developing managerial skills in would-be managers. Case study method is often used for this purpose.e) Emphasis is placed on economic efficiency and the formal organization structure. f) People are motivated by economic gains. Therefore, organizations control economic incentives. Uses: a) The observational method of case study is helpful in drawing common principles out of past experiences with some relevance for future application. b) This approach focuses attention on what managers actually do.c) This approach highlights the universal nature of management.d) It provides scientific basis for management practice.

Limitations: a) It offers a mechanistic framework that undermines the role of human factor. b) The environmental dynamics and their effect on management have been discontinued.c) There is a positive danger in relying too much on past experiences because a principle or technique found effective in the past may not fit a situation of the future.d) The totality of the real situation can seldom be incorporated in a case study.

2) Behavioral Approach: While the classical approach focused on the jobs, the behavioral approach stresses the individuals performing these jobs. Here attention is directed towards the human aspects of management. The neglect of human factor and over-emphasis on machines and materials led to the development of this approach. Prof. Elton Mayo is considered to be the founder of the behavioral school of thought. The behavioral science approach is thus an improved and more modern version of the human relations approach. It focuses on human behavior in organization and seeks to promote verifiable propositions for scientific understanding of human behavior in organizations. This approach draws heavily its concepts from psychology and sociology. Motivation, leadership, communication, group dynamics and participate management are the core of this approach. The basic propositions of the behavioral science approach are as follows:a) An organization is a socio-technical system.b) A wide range of factors influence interpersonal and group behavior of people in the organization.c) There should be a fusion between organizational goals and human needs.d) Several differences in the attitudes, perceptions and values of employees exist and influence their behaviors and performance.e) Some degree of conflict maybe inevitable and even desirable in organization.

3. Quantitative Approach: Also known as management science approach, mathematical approach, decision theory approach, operations research approach, etc. This approach gained momentum during and after World War II. During the war, interdisciplinary groups of scientists were engaged to undertake applied scientific research into strategic and tactical military operations. These groups were expected to develop optimal decisions about deployment of military resources. Mathematical model building was sought to be applied to find optimal solutions to military and logistical problems.

The main postulates of the quantitative approach are as follows:a) Management is a series of decision-making. The job of a manager is to secure the best solution out of a series of interrelated variables.b) These variables can be presented in the form of a mathematical model. The model is a prototype of the decision situation. It consists of a set of functional equations which set out the quantitative interrelationship of the variables.c) If the model is properly formulated and the equations are corrections solved, one can secure the best solution to the model.d) Organizations exist for the achievement of specific and measurable economic goals.e) In order to achieve these goals, optimal decisions must be made through scientific formal reasoning backed by quantification.f) Decision-making models should be evaluated in the light of set criteria like cost reduction, return on investment, meeting time schedules etc.g) The quality of management is judged by the quality of decisions made in diverse situations.

4. Systems Approach: The General Systems Theory was applied to organization and management during the fifties. A system is a set of distinguishable and interdependent and interrelated parts operating in a logical manner or sequence in order to achieve a goal. Each part affects the others and the system as a whole. Every system operates within a wider system. A system is goal-oriented and operates in a logical manner in accordance with some plans. Each system is comprised of interrelated parts. Thus system denotes order and arrangements.The basic postulates of the systems approach are as follows:a) An organization is a system consisting of several sub-systems. For example, in a business enterprise production, sales and other departments are the sub-systems. All these sub-systems are functionally interacting and interdependent. They are tied together into an organic whole through goals, authority flows, resource flows, and so on.b) The position and function of each sub-system can be analyzed only in relation to other sub-system and to the organization as a whole rather than in isolation.c) An organizational system has a boundary which separates it from other systems. The boundary determines which parts are internal and which are external.d) An organization is a dynamic system because it is responsive or sensitive to its environment.

USES: a) The systems approach represents a refreshingly new thinking on organization and management. b) It stresses that managers avoid analyzing problems in isolation and should develop the ability for integrated thinking. c) It provides a unified focus to organizational efforts. It stresses the dynamic, multi-dimensional and adaptive nature of organizations.d) It provides a strong conceptual framework for meaningful analyses and understanding of organizations. e) It recognized the interaction and interdependence among the different variables of the environment. It provides clues to the complex behavior of an organization. f) It warns against narrow fragmented and piecemeal approach to problems by stressing interrelations.g) It forces the practicing manger to analyze and understand a particular element by taking into account its interacting consequences with other elements. h) A wide range of systems concepts and perspectives have been developed for managers.

Limitations: a) The systems approach is often criticized as being too abstract and vague.b) It cannot directly and easily be applied to practical problems. c) It does not offer specific tools and techniques for the practicing executive. d) Moreover, this approach does not recognize differences in systems. e) It fails to specify the nature of interactions and interdependencies particularly between an organization and its external environment. It fails to offer a unified body of knowledge. 5. Contingency and Situational Approach: This approach is relatively new approach to management. It is an extension of systems approach. The basic theme of the contingency approach is that organizations have to cope with different situations in different ways. There is no single best way to managing applicable to all situations. In order to be effective, the internal functioning of an organization must be consistent with the demands of the external environment. The managers must keep the functioning of an organization in harmony with the needs of its members and the external forces. The main features of the contingency approach are as follows:a) Management is entirely situational. The application and effectiveness of any technique is contingent on the situation.b) Management should, therefore, match or fit its approach to the requirements of the particular situation.c) Since managements success depends on its ability to cope with its environment. It should sharpen its diagnostic skills so as to anticipate and understand the environmental changes. d) Managers should understand that there is no one best way to manage. They must not consider management principles and techniques universal.

6. Operational Approach: The operational or universalistic approach to management attempts to draw together the relevant knowledge of management by relating it to the managerial job. Management is looked upon as an operational and dynamic process consisting of certain elements which are common to all organizations.This approach is an eclectic approach, i.e., it takes the best from what is available in management thought and integrates it with the central core of process framework to build up a unified theory of management. It is simple and realistic and deals with the whole subject of management from the viewpoint of the practicing manager. Relevant contributions from other thoughts and disciplines are integrated into the management process. Thus, despite the multiplicity of approaches to management analysis, there is some convergence among the various approaches. Such an integrated approach more adequately clears the nature of modern management.

Role of Communication in Management:

Communication is an indispensable element in human relationships. Human beings interact with one another through communication. It is the ability to communicate effectively that has enabled people to build organizations and societies for survival and better living. We communicate when we speak, write or act. There is communication when we read a book or watch a film or listen to a piece of music. A large part of the day is spent on communication of one type or the other. Communication is all the more important in management because the success of an enterprise depends upon how effectively its employees understand one another. Most of the problems of business can be attributed to poor communication between management and labor. Communication is perhaps the number one problem of management today.The term communication is derived from the Latin word communis which means common. Thus communication means sharing of ideas in common. Therefore, communication may be defined as an exchange of facts, ideas, opinions or emotions to create mutual understanding. Communication is generally understood as spoken or written words. According to Keith Davis, Communication is the process of passing information and understanding from one person to another.According to Koontz and ODonnell, Communication is a way that one organization member shares meaning and understanding with another.

Nature of Communication:1. Communication is a pervasive function: It is required not only in direction function but in all functions of management. Planning requires communication of information. Organization involves transfer of information about tasks, authority and responsibility. Selection, training, appraisal etc. (staffing) require interchange of facts and ideas with employees. Controlling involves feedback about performance. Thus, communication is vital to all managerial functions. It is a universal element in the management process.2. Communication is a continuous process: Stop of communication means an end to human activity. Just as regular circulation of blood is essential for human life, on-going circulation of information and ideas is essential for organizational activity. Organizations cannot exist without communication.3. Communication is a two-way process: It is not complete unless the message has been correctly understood by the receiver and his response (feed-back) becomes known to the sender. Communication is not merely the transmission of message but also the correct interpretation and understanding of the message.4. The basic purpose of communication is to create mutual understanding and co-operative human relationships.

Role of Communication in Management:Communication is the foundation of all group activity. It is the element which sets the enterprise in motion and provides life to the dead structure. Communication is essential not only in business but in all types of organizations. In fact, it is difficult to imagine any kind of inter-personal activity without communication. Koontz and ODonnell said, It is no exaggeration to say that communication is the means by which organization activity is unified. It is the means by which behavior is modified, change is effected and goals are achieved. To be specific, sound communication offers the following benefits:

1. Planning and Decision-Making: Communication provides to managers the information and ideas necessary for sound planning. The widest possible participation in planning is a precondition for getting the task done. This can be effectively secured only through the media of communication. Communication enables a manager to diagnose the problem and to gather information for making sound decisions.2. Implementation of Plans: Plans and decisions must be effectively conveyed to those who can translate them into action. Effective communication is the sine qua non (reason) for quick and successful implementation of the management decisions. Managers issue specific orders and instructions management decisions. Managers issue specific orders and instructions through communication. They inform employees about the goals, policies, and procedures of the organization as well as about rationale of the job. Communication is the artery through which decisions and instructions flow downward. In order to get maximum results from people, correct and detailed instructions must be given at the right time. Similarly, the difficulties experienced by workers should be conveyed to the managers so that they can amend or issue new instructions. Without a rich flow of communication from his boss, the subordinate cannot judge which direction he should be going and how well he is doing. The subordinate knows his responsibility and regulates his work from the communications sent by his boss.3. Motivation and Morale: Managers use communication to secure acceptance of their ideas and orders. They can improve the job satisfaction of employees by providing feedback information on their performance. Sound communication facilitates delegation and decentralization. Communication plays a vital role in building up high morale in the organization. As an influence process, communication is an essential part of guidance, motivation and leadership functions of management.4. Human Relations: In order to secure maximum productivity with the minimum cost, there must be perfect cooperation and trust among management and labor. Sound communication enables workers to express their grievances which reduce tension and industrial unrest. Most of the conflicts in industry arise due to misunderstood motives and ignorance of facts. Proper communications help to minimize friction and to maximize mutual understanding and cooperation. Management can sell its ideas and reduce resistance to change through effective communication. Communication inspires change which is the moving symbol of living organizations.5. Training and Development: Communication is vital for the orientation and training of both workers and executives. In modern industry training and development of personnel is an ongoing process. The degree of learning depends not only on the contents of the training program but on how effectively the knowledge and skills are transmitted. Communication is knowledge and without knowledge employees remain ignorant.6. Coordination: Communication is a bridge of meaning between people. It ties people and structure together. It links different departments and divisions of the enterprise together. Need for integrating and unifying human efforts has increased due to growing specialization. Communication helps to create team work and integration and it serves as a cementing force. According to Mary Cushing Niles, good communications are essential to coordination. They are necessary upward, downward and sideways, through all the levels of authority and a device for the transmission, interpretation, and adoption of policies, for the sharing of knowledge land information, and for the more subtle needs of good morale and mutual understanding.7. Public Relations: A business enterprise comes into contact with several social groups, e.g., customers, investors, trade unions, government and the local community. It must maintain cordial relations with these groups in order to develop a favorable image. It must continuously strive to convince the public that its actions are in the interest of society. Otherwise the reality becomes whatever customers, employees and government officials want to believe.

****

UNIT: 3PLANNINGMeaning and Nature of Planning:Planning is the most fundamental function of management. It is basic to all other management functions. It provides the foundation upon which organizing, staffing, directing and controlling functions can be carried out. Action follows planning and there is nothing to do unless the goals and ways of achieving them are decided. Whenever a number of individuals join together and decide to achieve a common goal, planning becomes necessary. Planning has always been a prerequisite to effective management. But need for planning has increase due to frequent changes in technology, tastes and fashions, government policies and competition.

Meaning of Planning: In simple words, planning is deciding in advance what to do, how to do it, when to do it and who is to do it. It involves anticipating the future and consciously choosing the future course of action. A plan is a blueprint for the future course of action. According to Haimann, Planning is the function that determines in advance what should be done. It consists of selecting the enterprise objectives, policies, programs, procedures, and other means of achieving these objectives. In the words of Koontz and ODonnell, Planning involves selecting enterprise objectives, departmental goals, and programs and determining the ways of reaching them. Planning thus provides a rational approach. Planning is a process and a plan is the outcome of this process.

Nature of Planning: 1. Planning is goal-oriented: Planning is not an end in itself. Rather it is a means towards the accomplishment of objectives. Planning has no meaning unless it contributes in some way to the achievement of desired goals. All plans derive from objectives. The goals may be implicit or explicit but well-defined goals are essential for efficient planning. Thus, planning is goal oriented.2. Planning is a primary function: Planning is the basis or foundation of the management process. All other functions of management are designed to attain the goals set under planning. Planning provides the basis for efficient organizing, staffing, directing and controlling. It precedes the execution of all other functions. Without planning there is nothing to organize, no one to actuate and no need to control.3. Planning is all-pervasive: Planning is the function of each and every manager irrespective of the level and area of his/her operation. It is the job of all managers in all types of organizations. Planning is an essential ingredient in management at all executive levels. However, the scope, extent and the nature of a planning tend to decrease as we descend towards the lower levels of management. Managers at the top level prepare long-term plans for the company as a whole; middle-level managers formulate departmental and functional plans for medium term. At the lowest level, managers prepare operating and short-term plans.4. Planning is an intellectual or rational process: Planning is a mental exercise involving imagination, foresight and sound judgment. It is not guesswork or wishful thinking. It requires a mental disposition of thinking before doing and acting in the light of facts, rather than guess. Planning is the thinking process, the organized foresight and vision based on facts and experience that is required for intelligent action.5. Planning is a continuous process: Planning is an on-going and dynamic exercise. As the assumptions and events on which plans are based change, old plans have to be revised or new ones have to be prepared. As a manager carries out his functions, he continues to plan, revising his old plans and choosing alternative plans as the need arises.6. Planning is forward-looking: All planning is done with an eye on the future. Planning involves anticipating the future course of events. Therefore, forecasting is the essence of planning. Forecasting involves assessing the uncertain future and making provisions for it. A plan is really a synthesis of various forecasts. No plan can be prepared without knowledge of future events. Planning is an attempt to see through the uncertain future. Its essence is futurity and it is anticipatory as it involves forecasting.7. Planning involves choice: Planning is essentially decision-making of choosing among alternative courses of action. Planning presupposes the existence of alternatives. There is no need for planning if there is only one way of doing something. Plans are decisions made after evaluation of alternative courses of action. A planning problem arises only when an alternative course of action is discovered.8. Planning is an integrated process: Planning does not just happen, it has to be initiated. Planning is a structured process and different plans constitute a hierarchy. Different plans are interdependent and interrelated. Every lower-level plan serves as a means towards the need of higher plans. This is known as the ends-means chain. Planning is a time-bound concept and every plan has a definite time horizon.9. Planning is directed towards efficiency: Planning has no relevance if it does not facilitate the achievement of objectives economically and efficiently. It is a deliberate and conscious process. The efficiency of plans is measured by how much they contribute to the objectives.

Principles of Planning:1. Principle of contribution to objectives: Every major and derivative plan should contribute positively towards the accomplishment of enterprise objectives. 2. Principle of efficiency of plans: The efficiency of a plan is measured by the amount it contributes to objectives minus the costs and other undesirable consequences involved in the formulation and operation of the plans. This principle stresses upon economical use of individual effort to achieve group goals.3. Principle of primacy of planning: This principle emphasizes that the manager can hardly perform other managerial functions without a road map of plans to guide him. Planning is the primary requisite of other management functions because these functions are designed to support the accomplishment of enterprise objectives.4. Principle of planning premises: Perhaps the main deficiency of planning arises from poorly structured plans. A coordinated structure of plans can be developed only when managers throughout the organization understand and agree to utilize consistent planning premises.5. Principle of policy framework: A consistent and effective framework of enterprise plans can be developed if the basic policies that guide thinking in decisions are expressed clearly and are understood by managers who prepare the plans. The decisions which lead to plans cannot be accurately focused on enterprise objective without a framework of policies. 6. Principle of timing: When the plans are structured to provide an appropriately timed, intermeshed network of derivative and supporting programs, the plans can contribute effectively and efficiently towards the attainment of enterprise objectives. Both premises and policies are useless without proper timing.7. Principle of alternatives: In choosing from among alternatives, the best alternative will be that which contributes most efficiently and effectively to the accomplishment of a desired goal.8. Principle of limiting factor: While choosing from among alternatives, the planner should focus on those factors which are critical to the attainment of the desired goal. This will help in selecting the most favorable alternative.9. Principle of commitment: Logical planning should cover a time period necessary to forecast the fulfillment of commitment involved in a decision. This is necessary to make reasonably sure of meeting commitments.10. Principle of flexibility: This principle deals with the ability to change which is build into plans. The risk of loss due to unexpected events can be reduced by building flexibility into the plans. However, the cost of flexibility should be weighted against the dangers of future commitments made.11. Principle of navigational change: The manager should periodically check on events and expectations and re-draw plans to maintain a course toward the desired goal. Unless plans have in-built flexibility, navigational change is difficult or costly. But in-built flexibility should not be an excuse for periodic revision of plans, if circumstances so warrant.12. Principle of competitive strategies: While formulating plans, a manager should take into account the plans of rivals or competitors. The plans should be chosen in the light of what a competitor will do in the same situation.Steps in Corporate Planning Process:Organizations differ in term of their size and complexity. Therefore, there is no single planning procedure applicable to all organizations. However, the main steps in planning process are as follows:1. Identify Goals: Plans are formulated to achieve certain objectives. Therefore, the first step in the planning process is to identify the goals of the organization. The objectives fixed must clearly indicate what is to be achieved, where action should take place and who is to perform it and when it is to be accomplished. Objectives set must be stated clearly and in measurable terms. For example, quantity standards, cost targets and quality specifications are measurable objectives. Objectives should be established in all key areas where performance affects the health of the organization. Objectives should be laid down after an analysis of the external and internal environment of the organization. 2. Develop Planning Premises: Planning is done for future which is uncertain. Therefore, certain assumptions are made about the future environment. These assumptions are known as planning premises. Planning premises lay down the boundary or limitations within which plans are to be implemented. In order to develop good planning premises, it is necessary to collect data on the current status of the organization and to forecast future changes.Planning premises are of several types. Internal premises refer to the resources of the enterprise, e.g., sales forecast, capital investment, labor skills, technology etc. On the other hand, external premises imply the external environment of the organization, e.g., product market and factor market conditions, government policy, population trends, etc. Controllable premises are the policies and programs under the control of management. Conditions beyond the control of management are known as uncontrollable premises. Premises which can be quantified in terms of money, time and units of output are called tangible premises. Public relations, goodwill, employee morale and other qualitative factors are known as intangible premises. These factors are very important in planning process and management should not overlook them just because they cannot be quantified. Premising involves assessment of the future which is uncertain. Therefore, premises should be limited to those aspects which are critical or strategic to plan.

DetermineObjectivesDevelop Planning PremisesDetermine Alternative Courses of ActionEvaluate the AlternativesSelect a Course of ActionFormulate Derivative Plans3. Determine Alternative Course of Action: Generally, there are alternative ways of achieving the same goal. For example, in order to increase sales of an enterprise may launch advertising campaign or reduce prices or improve the quality of products. Therefore, alternative courses of action should be determined. This requires imagination, foresight and ingenuity. In determining alternatives the critical or limiting factors must be kept in view. 4. Evaluate the Alternatives: Once alternative courses of action have been determined, they must be evaluated. Alternative courses of action can be evaluated against the criteria of cost, risks, benefit and organizational facilities. The strong and weak points of every alternative should be analyzed carefully. Computer-oriented mathematical techniques may be used wherever necessary.5. Select a Course of Action: The most appropriate alternative is selected as the plan. This is the point of decision where a plan is adopted for accomplishing identified goals.6. Formulate Derivative Plans: The final step in planning process is to develop sub-plans. In order to given effect to and support and basic plan, several sub-plans are required. Once a choice is made and the master plan is adopted, functional and tactical plans and action programs are decided. The breakdown of the master plan into departmental and sectional plans provides a realistic picture of the actions to be taken in future. A time sequence of activities should also be decided.

TYPES OF PLANS:The planning process cannot be effective unless the types of plans are properly understood. It is easy to see that a major program, such as one to build and equip a new factory, is a plan. But a number of other courses of future action are also plans. In fact plan can encompass any course of future action, which clearly shows that plans are varied. Managers use strategic, tactical, and operational goals to direct employees and resources toward achieving specific outcomes that enable the organization to perform efficiently and effectively. They take a number of planning approaches, among the most popular of which are 1) Management by Objectives (MBO)2) Single-use plans: a) Programb) Project3) Standing plans: a) Policy b) Rules c) Procedure 4) Contingency plans.

1. Management by Objectives (MBO):

2. Single-Use Plans: are developed to achieve a set of goals that are not likely to repeat in the future. Most widely used single-use plans are a) Program b) Projecta) Program: Plans for attaining a one-time organizational goal Major undertaking that may take several years to complete Large in scope; may be associated with several projectsExamples: Building a new headquarters; converting all paper files to digital b) Project: Also a set of plans for attaining a onetime goal Smaller in scope and complexity than a program; shorter in horizon Often one part of a larger programExamples: Renovating the office; Setting up a company intranet.

3. Standing Plans: are ongoing plans that provide guidance for tasks performed repeatedly within the organization. These plans generally pertain to matters such as employee illness, absences, smoking, discipline, hiring, and dismissal. The primary standing plans are organizational a) policies, b) rules, and c) procedures. a) Policies: Broad in scope-general guide to action Based on organizations overall goals/strategic plan Defines boundaries within which to make decisionsExamples: Sexual harassment policies; Internet and e-mail usage policies etc.b) Rules: Narrow in scope Describes how a specific action is to be performed May apply to specific settingExamples: No eating rule in areas of company where employees are visible to the public.c) Procedures: Sometimes called a standard operating procedure Defines a precise series of steps to attain certain goalsExamples: Procedures for issuing refunds; Procedures for handling employee grievances

4. Contingency Plans: define company responses to be taken in the case of emergencies, setbacks, or unexpected conditions. To develop contingency plans, managers identify important factors in the environment, such as possible economic downturns, declining markets, increases in cost of supplies, new technological developments, or safety accidents. Managers then forecast a range of alternative responses to the most likely high-impact contingences, focusing on the worst case.

According to Harold Koontz, Heinz Weihrich and Ramachandra Aryasri, planning types are:

1. Purpose or Mission: The mission or purpose identifies the basic function or task of an enterprise or agency, or of any part of it. Every kind of organized operation has, or at least should have if it is to be meaningful, purposes or mission. In every social system, enterprises have a basic function or task, which is assigned to them by society. The purpose of a business is generally the production and distribution of goods and services. The purpose of a state highway department is the design, building and operation of a system of state highways. The purpose of the courts is the interpretation of laws and their application. The purpose of a university is teaching, research, consultancy and training.

Some writers distinguish between purposes and missions. While a business, for example, may have a social purpose of producing and distributing goods and services, it can accomplish this by fulfilling a mission of producing certain lines of products. The mission of Indian Institute of Management, Ahmedabad is to professionalize Indian management through teaching, research, training, institution building and consulting. It also aims to professionalize some of the vital sectors of Indias economy, such as agriculture, education, health, transportation, population control, energy and public administration. The mission of Reliance Industries is to search for oil and to produce, refine and market petroleum and a wide variety of petroleum products, ranging from diesel fuel to chemicals. Hallmark, which has expanded its business beyond greeting cards, defines its mission as the social expression business.

2. Objectives: Objectives or goals are the ends toward which activity is aimed, and every organization strives hard to achieve them. They represent not only the end point of planning but the end toward which other functions of management, i.e., organizing, staffing, leading and controlling are aimed. While enterprise objectives are the basic plan of the firm, a department may also have its own objectives. Its goals naturally contribute to the attainment of enterprise objectives. According to Allen, Objectives are goals established to guide the efforts of the company and each of its components. Objectives indicate the destination of an organization. The planning process begins with the setting up of objectives. Objectives may be defined as the ends, purposes or aims which an organization wants to achiever over varying periods of time.

3. Strategy: The concept of strategy in business has been borrowed from military science where it implies the art of the military general to fight the enemy. The term strategy began to be used in business with increase in competition and complexity of operations. A strategy may be defined as a special type of plan prepared for meeting the challenge posed by the activities of competitors and other environmental forces. Strategy is the complex plan for bringing the organization from a given posture to a desired position in a future period of time. It is essentially a response to external environmental forces. In order to formulate an effective strategy, management must anticipate accurately the plans of competitors and look at them from the viewpoint of