principles of management unit ii reference notes

8/13/2019 Principles of Management Unit II Reference Notes

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MAM COLLEGE OF ENGINEERING AND TECHNOLOGYSiruganur, Tiruchirappalli-621105Department of Civil Engineering

MG-251!"rinciple# of Management$nit %%

"art-&

1' Define ()*ective#

Objectives are the goals, aims or purpose that organizations wish to achieve

over varying periods of time.

2' Mention the characteri#tic of #oun+ polic`

Characteristics of Sound policy

Relationship to Organizational objective

air amount of Clarity

!ritten

Consistency

' Eplain T(.S Matri

T(.S Matri "alternatively S.(T anal#i# # is a structured planning method used toevaluate the Strengths, .ea$nesses, (pportunities, and Threats involved in a project orin a business venture. % S!O& analysis can be carried out for a product, place or person.

/' Mention the )enefit# of M(

1' Clarit in organiation''(O tends to force clarification in organization roles and structures.

2' Commitment'(O elicits commitment performance. )f the objectives are set by people who areresponsible for achieving them, they have a sense of feeling that they are achieving

their own objectives.

5' Define "lanning

%ccording to *oontz and O+ onnell, -lanning is an intellectual process, consciousdetermination of course of action, the basing of decision on purpose, facts and

considered estimates.-

6' Mention +ifferent tpe# of "lan


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/%0S

S&%0)01 /%0 S)01/2 3S2 /%0S

'ission rogrammes

Objectives roject

olicies Schedules

Strategies (udgets

'ethods

rocedure Rules Standards

' Define M(

4'(O is a comprehensive managerial system that integrates many $ey managerial

activities in a systematic manner and that is consciously directed towards the effective

and efficient achievement of Organization and individual Objectives.5

6 eter ruc$er

3' Define "olic

% policy is a general guide to thin$ing and action rather than a specific course of action. )tdefines the area or limits within which decisions can be made to achieve organizationalobjectives.

2g7 8uality control policy,ividend policy, 9R policy

4' Define )u+get#

(udget is a type of plan which is e:pressed in numerical data

10' Define oreca#ting

4orecasting is the formal process of predicting future events that will significantly affect

the functioning of the enterprises.5


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11' Define Strategie#

;Strategy is the comple: plan for bringing the organization from a given posture to a

desired position in a future period of time


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PART B

1. Discuss the nature and importance of Planning in detail.

Planning Meaning, Definition, Nature & Purpose

Meaning and Concept of Planning

In simple words,

A plan is a predetermined course of action to achieve a specified goal.

Planning is deciding in advance what is to be done, when where, how and by whom it is to be done.

Planning bridges the gap from where we are to where we want to go.

It includes the selection of objectives, policies, procedures and programmes from among

alternatives.

It is an intellectual process characterized by thinking before doing.

In short, it is a blueprint for action

Planning -Definitions

Definitions of Planning

According to Koontz and ! "onnell, #Planning is an intellectual process, conscious determinationof course of action, the basing of decision on purpose, facts and considered estimates.#

According to Alford and $eatt, #Planning is the thinking process, the organized foresight, thevision based on fact and e%perience that is re&uired for intelligent action.#

According to 'heo (aimann ) #Planning is deciding in advance what is to be done.

*hen a manager plans, he projects a course of action, for the future, attempting to

achieve a consistent, co)ordinated structure of operations aimed at the desired results#.

Nature / Characteristics of Planning

Nature of Planning

The nature of planning can be highlighted by studying its characteristics.

They are as follows:

(a) Planning is a intellectual activit .

Planning is not a simple process. It is an intellectual exercise and involves thinking and


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forethought on the part of the manager.

(b)Planning is goal!oriente" .

very plan specifies the goals to be attained in the future and the steps necessary toreach

them. ! manager cannot do any planning" unless the goals are known.

(c)Planning is for#ar" loo$ing .

Planning is in keeping with the adage" #look before you leap$. Thus planning meanslooking ahead. It is futuristic in nature since it is performed to accomplish someob%ectives in future.

(d)Planning %erva"es all &anagerial activit .

Planning is the basic function of managers at all levels" although the natureand scope of planning will vary at each level.

(e) Planning is t'e %ri&ar function .

Planning logically precedes the execution of all other managerial functions" sincemanagerial activities in organi&ing' staffing" directing and controlling are designed tosupport the attainment of organi&ational goals. Thus" management is a circular processbeginning with planning and returning to planning for revision and ad%ustment.

(f) Planning is (ase" on facts .

Planning is a conscious determination and pro%ection of a course of action for the future.It is based on ob%ectives" facts and considered forecasts. Thus planning is not a guesswork.

(g)Planning is fle)i(le .

Planning is a dynamic process capable of ad%ustments in accordance with the needs and

reuirements of the situations. Thus planning has to be flexible and cannot be rigid.

(h) Planning is essentiall "ecision &a$ing .

Planning is a choice activity as the planning process involves finding the alternatives andthe selection of the best. Thus decision making is the cardinal part of planning.

(i)Planning is a continuous %rocess

Planning is a continuous process and a never ending activity of a manager in anenterprise based upon some assumptions which may or may not come true in the future.Therefore" the manager has to go on modifying revising and ad%usting plans in the light ofchanging circumstances


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Importance /Significance/Adantages of Planning

*ignificance of Planning

According to Koontz and !"onnell, #*ithout planning, business becomes random in nature and decisions

become meaningless and adhoc choices. According to +.. 'erry, -Planning is the foundation of most

successful actions of all enterprises. An enterprise can achieve its objectives only through systematic

planning on account of the increasing comple%ities of modern business.

'he importance and usefulness of planning can be understood with reference to the following benefits.

1. !eduction of "ncertaint#

/uture is always full of uncertainties. A business organisation has to function in these uncertainties. It can

operate successfully if it is able to predict the uncertainties. 0ome of the uncertainties can be predicted by

undertaking systematic. 0ome of the uncertainties can be predicted by undertaking systematic forecasting.

'hus, planning helps in foreseeing uncertainties which may be caused by changes in technology, fashion

and taste of people, government rules and regulations, etc.

2. $etter "tili%ation of !esources

An important advantage of planning is that it makes effective and proper utilization of enterprise resources.

It identifies all such available resources and makes optimum use of these resources.

3. Increases rgani%ational 'ffectieness

Planning ensures organizational effectiveness. 1ffectiveness ensures that the organisation is in a position to

achieve its objective due to increased efficiency of the organisation.

4. !educes the Cost of Performance

Planning assists in reducing the cost of performance. It includes the selection of only one course of action

amongst the different courses of action that would yield the best results at minimum cost. It removes

hesitancy, avoids crises and chaos, eliminates false steps and protects against improper deviations.

5. Concentration on ()ecties

It is a basic characteristic of planning that it is related to the organizational objectives. All the operations

are planned to achieve the organizational objectives. Planning facilitates the achievement of objectives by

focusing attention on them. It re&uires the clear definition of objectives so that most appropriate alternative

courses of action are chosen.

. *elps in Co-ordination

+ood plans unify the interdepartmental activity and clearly lay down the area of freedom in the

development of various sub)plans. 2arious departments work in accordance with the overall plans of the

organisation. 'hus, there is harmony in the organisation, and duplication of efforts and conflict of

jurisdiction are avoided.


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!. Ma+es Control 'ffectie

Planning and control are inseparable in the sense that unplanned action cannot be controlled because

control involves keeping activities on the predetermined course by rectifying deviations from plans.

Planning helps control by furnishing standards of performance.

". 'ncouragement to Innoation

Planning helps innovative and creative thinking among the managers because many new ideas come to the

mind of a manager when he is planning. It creates a forward)looking attitude among the managers.

#. Increase in Competitie Strength

1ffective planning gives a competitive edge to the enterprise over other enterprises that do not have

planning or have ineffective planning. 'his is because planning may involve e%pansion of capacity, changes

in work methods, changes in &uality, anticipation of tastes and fashions of people and technological

changes etc.

1$. Delegation is acilitated

A good plan always facilitates delegation of authority in a better way to subordinates.

2. %hat are the steps in&ol&ed in Planning' ()plain

Steps inoled in Planning

Planning is a process which embraces a number of steps to be taken. Planning is an intellectual e%ercise and

a conscious determination of courses of action. 'herefore, it re&uires courses of action. 'he planning

process is valid for one organisation and for one plan, may not be valid for other organizations or for all

types of plans, because various factors that go into planning process may differ from organisation to

organisation or from plan to plan. /or e%ample, planning process for a large organisation may not be the

same for a small organisation. (owever, the major steps involved in the planning process of a major

organisation or enterprise are as follows3


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. $eing Aare of pportunities

Although it precedes actual planning and is therefore not strictly a part of the planning process, an

awareness of opportunities in the e%ternal environment as well as within the organization is the real

starting point for planning. All managers should take a preliminary look at possible future opportunities

and see them clearly and completely, know where their company stands in light of its strengths and

weaknesses, understand what problems it has to solve and why, and know what it can e%pect to gain.

0etting realistic objectives depends on this awareness. Planning re&uires a realistic diagnosis of the

opportunity situation.


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0.'sta(lishing o()ecties

'he first and primary step in planning process is the establishment of planning objectives or goals. "efinite

objectives, in fact, speak categorically about what is to be done, where to place the initial emphasis and the

things to be accomplished by the network of policies, procedures, budgets and programmes, the lack of

which would invariably result in either faulty or ineffective planning.

It needs mentioning in this connection that objectives must be understandable and rational to makeplanning effective. $ecause the major objective, in all enterprise, needs be translated into derivative

objective, accomplishment of enterprise objective needs a concrete endeavor of all the departments.

1. Consideration of Planning Premises

Planning premises are assumptions about the future understanding of the e%pected situations. 'hese are

the conditions under which planning activities are to be undertaken. 'hese premises may be internal or

e%ternal. Internal premises are internal variables that affect the planning. 'hese include organizational

polices, various resources and the ability of the organisation to withstand the environmental pressure.

1%ternal premises include all factors in task environment like political, social technological, competitors!

plans and actions, government policies, market conditions. $oth internal factors should be considered in

formulating plans. At the top level mainly e%ternal premises are considered. As one moves downward,

internal premises gain importance.

2. Determining Alternatie Courses

'he ne%t logical step in planning is to determine and evaluate alternative courses of action. It may be

mentioned that there can hardly be any occasion when there are no alternatives. And it is most likely that

alternatives properly assessed may prove worthy and meaningful. As a matter of fact, it is imperative that

alternative courses of action must be developed before deciding upon the e%act plan.

3. 'aluation of Alternaties

(aving sought out the available alternatives along with their strong and weak points, planners are re&uired

to evaluate the alternatives giving due weight)age to various factors involved, for one alternative may

appear to be most profitable involving heavy cash outlay whereas the other less profitable but involve least

risk. 4ikewise, another course of action may be found contributing significantly to the company!s long)

range objectives although immediate e%pectations are likely to go unfulfilled.

1vidently, evaluation of alternative is a must to arrive at a decision. therwise, it would be difficult to

choose the best course of action in the perspective of company needs and resources as well as objectives laid

down.

4. Selecting a Course of Action

'he fifth step in planning is selecting a course of action from among alternatives. In fact, it is the point of

decision)making)deciding upon the plan to be adopted for accomplishing the enterprise objectives.

5. ormulating Deriatie Plans

'o make any planning process complete the final step is to formulate derivative plans to give effect to and

support the basic plan. /or e%ample, if Indian Airlines decide to run 5umbo 5ets between "elhi an Patna,

obliviously, a number of derivative plans have to be framed to support the decision, e.g., a staffing plan,

operating plans for fuelling, maintenance, stores purchase, etc. In other words, plans do not accomplish

themselves. 'hey re&uire to be broken down into supporting plans. 1ach manager and department of the

organisation is to contribute to the accomplishment of the master plan on the basis of the derivative plans.


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6. 7uantif#ing Plans (# $udgeting

After decisions are made and plans are set, the final step in giving them meaning, as was indicated in the

discussion on types of plans, is to &uantify them by converting them into budgets. 'he overall budget of an

enterprise represents the sum total of income and e%penses, with resultant profit or surplus,

and the budgets of major balance sheet items such as cash and capital e%penditures. 1ach department orprogram of a

business or some other enterprise can have its own budgets, usually of e%penses and capital e%penditures,

which tie into the overall budget. If done well, budgets become a means of adding the various plans and set

important standards against which planning progress can be measured.

8. eed(ac+ or ollo-up Action

/ormulating plans and chalking out of programmes are not sufficient, unless follow)up action is provided to

see that plans so prepared and programmes chalked out are being carried out in accordance with the plan

and to see whether these are not kept in cold storage. It is also re&uired to see whether the plan is workingwell in the present situation. If conditions have changed, the plan current plan has become outdated or

inoperative it should be replaced by another plan. A regular follow)up is necessary and desirable from

effective implementation and accomplishment of tasks assigned.

'he plan should be communicated to all persons concerned in the organisation. Its objectives and course of

action must be clearly defined leaving no ambiguity in the minds of those who are responsible for its

e%ecution. Planning is effective only when the persons involved work in a team spirit and all are committed

to the objectives, policies, programmes, strategies envisaged in the plan.


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3. Discuss the different t*pes of Plans

9#pes of Planning/9echni:ues of Planning/'lements of Planning

)n the process of planning several specific plans are prepared which may broadly be classified into

two categories7 Standing and Single =3se plans.

P!*+

+T!*,I*- P!* +I*- + P!*+

/ission Programmes

0b%ectives Pro%ect

Policies +chedules

+trategies 1udgets

/ethods

Procedure +tandards

2ules

ST&:D%:G ";&:

principles of management unit ii reference notes

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