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Principles of Management

Planning and Decision making Planning- Definition and Importance

Features of a good plan

Steps in planning

Advantages and Limitations of planning

Types of plans, Strategic and Tactical planning

Components of planning

MBO

Process of MBO

Decision making Concept and Importance

Characteristics of Decision making

Process of Decision Making

Modern Techniques of Decision Making

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Principles of Management

Planning- the concept

Plan is a commitment to a particular course of action necessary toachieve specific results

Planning is determination of future course of action

It occupies the first position in the management process

Without a plan-

there can be nothing to organise,

managers cant lead with confidence

no way to see if they stray from the path of achieving objectives

Planning is deciding in the present, what to do in the future. It is aprocess by where companies reconcile their resources with theirobjectives and opportunities

- Philip Kotler

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Principles of Management

Features of Planning

Process rather than just a behaviour- decides future courseof action

Needs forecasting

Involves selection of suitable course of action

Undertaken at all levels of management- role increases athigher levels

Flexible principle- since it is based on future, which isdynamic

A continuous management function- involves perception,analysis, communication, decision and action

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Principles of Management

Features of a good plan

Linked to long term objectives

Provide clear and specific direction (for future course ofaction)

Consistency- Alignment with the behaviour of external andinternal factors

Feasible- Not too ambitious, not set too low

Simplicity- to understand by all, encourages leastcommunication between 2 groups of personnel

Flexible

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Principles of Management

Steps in Planning Process

Perception ofopportunities

Establishingobjectives

PlanningPremises

Identificationof alternatives

Evaluation

of alternatives

Choice ofalternative plans

Formulation ofsupporting plans

Establishingsequence

of activities

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Principles of Management

Advantages of Planning

Quick achievement of objectives

Unity in purpose and direction

Optimum utilisation of resources

Increases efficiency of managers

Assists in controlling organisational activities/functions

Reduces chances of inconsistency

Reduces wrong decision making

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Principles of Management

Limitations of planning

Time consuming and costly

Change in situation makes planning ineffective

Internal inflexibility-Psychological, Policy, capital

External inflexibilities- Political Climate, Trade Unions,Technological changes

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Principles of Management

Types of plans

Short term plans

Medium term plans

Long term plans

Formal and Informal plans

Specific and Routine plans

Strategic planning

Functional plans

Operational plans

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Principles of Management

Strategic Planning

It sets the long term direction of the organisation in whichit wants to proceed in future

Generally, the period for strategic plan is 3 to 5 years

It affects a part or whole of the organisation

It is based on long term forecasts

E.g.: Planned growth in sales, diversification of business,new product development

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Principles of Management

Tactical Planning

It decides the detailed use of resources to achieve businessgoals

The lower level management is responsible for the same

It is a short term plan, based on past performances

Involves day to day operations of business

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Principles of Management

Components of Planning

For Repetitive/Standing Plans:

Mission

Objectives

Policies

ProceduresRules

Strategies

Forecasting

For Single Use Plans:

Programmes

Projects

Schedules

Budgets

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Principles of Management

MBO

It is a way of managing where

1) the objectives of individuals, groups, departments,divisions and the organisation identified

2) managerial strategies to achieve the goals are

formulated

Features of MBO

Superior and the subordinate, both need to participate

Joint goal setting Joint decision on method to achieve the objectives

Focus on goals to achieve maximum results

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Principles of Management

Process of MBO

The sub ordinate defines the job and the tasks to be done. He

ranks them according to priority

The objectives are set: The important areas in terms oforganisations success are identified (Production increase);performance measures in every area will be set (Cost effectiveproduction); then standards for each performance are determined(Produce 100 units in Rs. ??)

Develop POA: It gives an idea about steps taken or activities to bedone, to reach the goal

Conducting periodic review: A feedback is given to themanagement regularly, on the progress of POA and achievement ofobjectives

Performance appraisal: Done by superiors with their sub ordinates.They measure actual result against decided standards. Also giveguidance.

Achievement of objectives

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Principles of Management

Improving effectiveness of MBO

Support from all

Acceptance by managers

Training of managers (on MBO philosophy)

Organisational commitment

Allocation of time and resources

Uninterrupted feedback