MODULE - 1

MANAGEMENT: INTRODUCTION
• Art of getting things done through people for the benefit of the customer

• Management’s primary function is to get people to work together for attainment of an

organization’s goals and objectives

• It is process consisting of planning, organizing, actuating and controlling, performed to

determine and accomplish the objectives by the use of people and resources

• Concerned with Efficiency and Effectiveness

MEANING

• Management is the art of getting things done through others – Mary Parker Follet

• To manage is to forecast , to plan, to organize, to command, to co-ordinate and to control

– Henry Fayol

• Management is an art of knowing what is to be done and seeing that it is done in the best
possible manner." ( planning and controlling) - F.W. Taylor

• Management as “a process consisting of planning, organizing, actuating and controlling

performed to determine and accomplish the objectives by the use of people and
resources”. - George R Terry

• Management is the process of working with and through others to achieve organizational
objectives by efficiently using limited resources in the changing environment.- Kreitner

• Management is a multi-purpose organ that manages business and manages managers and
manages workers and work- Peter Drucker

NATURE AND CHARACTERISTICS OF MANAGEMENT

• Involves decision-making: Management in the decision making process & the decisions
are involved in all the functions of management.

• It Co-ordinates all activities & resource: It is concerned with the Co-ordination of all
activities & resources it’s various functions to attain the stated objectives.

• It is a universal activity: It manages irrespective of the enterprise in which they are

working & their place in the organizations makes use of the management principles.

• It is an integrating process: It integrates men, machines & materials for carrying out the
operations of the enterprise & for achieving the stated objectives.
 • It is concerned with direction & control: It in concerned with the direction & control of
various activating the enterprise to attain the business objectives.

• It is intangible: It is abstract & cannot be seen with the eyes. It is evidenced by the
quality of organization & results such as increased productivity.

• It is a profession: Because there are established principles of management which are

being applied in practice.

• It is goal oriented

• It is social process

• It should be stable

• It is group activity

• It is a factor of production

• It is needed at all the levels of organization.

• It is a dynamic function

• It is a system of authority

• It is multi disciplinary

SCOPE OF MANAGEMENT

• Developing Management

• Distribution Management

• Financial Management

• Marketing Management

• Personnel Management

• Production Management

• Office Management

• Transport Management

• Purchase Management

• Sales Management

• Business Management
FUNCTIONAL AREAS OF MANAGEMENT

There are four functional areas of management namely production, finance, marketing
and finance and personnel. Each functional area may have a number of sub-activities.

Production: This is generally put under production manager and he is responsible for all
production related activities.

This area has a number of activities; few of them are given below:

(1) Purchasing: Which is related with the purchase of various materials required by the
organization. Purchasing involves procuring right quantity of materials at the right
quality, at the right time and at the right price from the right supplier.

(2) Materials management: This involves storing of materials, issue of materials to

various departments.

(3) Research and Development: It deals with improving the existing products and
process and developing new products and process.

Marketing: This area involves the distribution of organizations’ products to the buyers.
The sub-activities are:

(1) Advertising: Involves giving information about products to buyers.

(2) Marketing research: It is related with the systematic collection, analysis of data
relating to the marketing of goods and services.

(3) Sales management: It involves management efforts directed towards movement of

products and services from producers to consumers.

Finance and accounting: It deals with intelligent investment of financial resources and
record-keeping of various transactions. The various sub-functions are

(1) Financial Accounting: Deals with record keeping of various transactions.

(2) Management Accounting: Deals with analysis and interpretation of financial records
so that management can take certain decision.

(3) Costing: It deals with recording of costs, their classification and analysis for cost
control.

(4) Investment Management: Takes care of how financial resources can be invested in
various alternatives to maximize returns.

(5) Taxation: Deals with various direct and indirect taxes to be paid by the organization.
 Personnel: It deals with the management of human resources with the following sub-
activities:

(1) Recruitment and Selection: It deals with recruitment and selection of employees.

(2) Training and Development: It deals with training of employees and making them
more efficient.

(3) Wage and Salary Administration: Deals with fixing of salaries, job evaluation,
promotion, incentives etc.

(4) Industrial Relations: Deals with maintenance of good employee relations.

FUNCTIONS OF MANAGEMENT

The functions of management are planning, organizing, staffing, Directing, and

controlling.

1. Planning: This step involves mapping out exactly how to achieve a particular goal.
Say, for example, that the organization’s goal is to improve company sales. The manager
first needs to decide which steps are necessary to accomplish that goal. These steps may
include increasing advertising, inventory, and sales staff. These necessary steps are
developed into a plan. When the plan is in place, the manager can follow it to accomplish
the goal of improving company sales.

2. Organizing: After a plan is in place, a manager needs to organize her team and
materials according to her plan. Assigning work and granting authority are two important
elements of organizing.

3. Staffing: After a manager discerns his area’s needs, he may decide to beef up his
staffing by recruiting, selecting, training, and developing employees. A manager in a
large organization often works with the company’s human resources department to
accomplish this goal.
 4. Directing: A manager needs to do more than just plan, organize, and staff her team to
achieve a goal. She must also lead. Leading involves motivating, communicating,
guiding, and encouraging. It requires the manager to coach, assist, and problem solve
with employees.

5. Controlling: After the other elements are in place, a manager’s job is not finished. He
needs to continuously check results against goals and take any corrective actions
necessary to make sure that his area’s plans remain on track. All managers at all levels of
every organization perform these functions, but the amount of time a manager spends on
each one depends on both the level of management and the specific organization.

GOALS OF MANAGEMENT / OBJECTIVES OF MANAGEMENT

1. Proper utilization of resources: the main objective of management is to use various

resources of the enterprise in most economic way. The proper use of men, machines,
money will help a business to earn sufficient profits to satisfy various in assets.

2. Improving performance: Management should aim at improving the performance of

each & every factor of production. The fixing of objectives of various factors of
production will help them in improving their performance.

3. Mobilizing best talent: The management should try to employ person in various fields
so that better results are possible. The employment of specialists in various fields will be
increasing the efficiency of various factors of production. There should be a people
environment which should encourage good persons to jay the enterprise.

4. Planning for future: No management should feel satisfied with today’s work if it has
not thought of tomorrow future plans should take in to consideration what should we do
next. Future performance will depend upon present planning. Planning for future is
essential to help the concern.

MANAGEMENT AS A SCIENCE, ART OR PROFESSION

Management as a science: Science can be defined as a systematic and organized body of

knowledge based on logically observed findings, facts and events.

Science comprises of exact principles which can be verified and it can establish cause and
effect relations.

The main characteristics/features of science are:

1. Systematic body of knowledge

2. Scientific principles are derived on the basis of logical and scientific observations

3. Principles are based on repeated experiments

4. Universal Validity

5. Replication is possible

Management as a art: Art can be defined as systematic body of knowledge which

requires skill, creativity and practice to get perfection.

The main features of art are:

1. Systematic body of knowledge/Existence of theoretical knowledge

2. Personalized application

3. Based on Practice and creativity

Management: Both Science and Art:

Management is both science as well as art. Like science it has systematic and well-
organized body of knowledge and like art it requires personal skill, creativity and practice
to apply such knowledge in the best possible way. Science and art are not in contrast to
each other; both exist together in every function of management.

Management as a Profession:

Profession can be defined as an occupation backed by specialized knowledge and

training, in which entry is restricted.

The main features of profession are:

1. Well defined Body of knowledge

2. Restricted Entry

3. Presence of professional associations

4. Existence of ethical codes

5. Service Motive
 MANAGEMENT & ADMINISTRATION

BASIS FOR
MANAGEMENT ADMINISTRATION
COMPARISON

Meaning An organized way of managing The process of administering an

people and things of a business organization by a group of people is
organization is called the known as the Administration.
Management.

Authority Middle and Lower Level Top level

Role Executive Decisive

Concerned with Policy Implementation Policy Formulation

Area of operation It works under administration. It has full control over the activities
of the organization.

Applicable to Profit making organizations, i.e. Government offices, military, clubs,

business organizations. business enterprises, hospitals,
religious and educational
organizations.

Decides Who will do the work? And How What should be done? And When is
will it be done? should be done?

Work Putting plans and policies into Formulation of plans, framing

actions. policies and setting objectives

Focus on Managing work Making best possible

allocation of limited resources.

Key person Manager Administrator

Represents Employees, who work for Owners, who get a return on the
remuneration capital invested by them.

Function Executive and Governing Legislative and Determinative

ROLES OF MANAGEMENT

A manager wears many hats. Not only is a manager a team leader, but he or he is also a
planner, organizer, cheerleader, coach, problem solver, and decision maker — all rolled
into one. And these are just a few of a manger’s roles. In addition, managers’ schedules
are usually jam-packed. Whether they’re busy with employee meetings, unexpected
problems, or strategy sessions, managers often find little spare time on their calendars.
These roles fall into three categories by Mintzberg:

• Interpersonal : This role involves the sharing and analyzing of information.

1.Figurehead: Perform ceremonial and symbolic duties, such as greeting visitors and
signing legal documents.

2.Leader: Direct and motivate subordinates; counsel and communicate with

subordinates.

3.Liaison: Maintain information links both inside and outside organization via mail,
phone calls, and meetings.

• Informational : This role involves human interaction.

1.Monitor: Seek and receive information; scan periodicals and reports; maintain personal
contact with stakeholders.

2.Disseminator: Forward information to organization members via memos, reports, and

phone calls.

3.Spokes person: Transmit information to outsiders via reports, memos, and speeches.
 Decisional: This role involves decision making. Decisional Entrepreneur Initiate
improvement projects; identify new ideas & delegate idea responsibility to others.

1.Disturbance: Take corrective action during disputes or handler crises; resolve conflicts
among subordinates; adapt to environments.

2.Resource allocator: Decide who gets resources; prepare allocator budgets; set
schedules and determine priorities

3.Negotiator: Represent department during negotiations of union contracts, sales,

purchases, and budgets.

LEVELS OF MANAGEMENT

• Managers perform almost the same functions of management- Planning, Organizing,

directing and controlling.

• Two leaders may serve as managers within the same company but have very different
titles and purposes.

• Large organizations, in particular, may break down management into different levels
because so many more people need to be managed.

• Edward Francis Leopold Brech has classified management levels into three categories –
Top Management, Middle Management and Supervisory/Lower Level as shown in fig :

Top management of an organization consists board of directors, chairman and chief

executive officer. Top level management determines goals and objectives. It performs
overall planning, organizing, staffing, directing and controlling. It integrates organization
with environment, balances the interest groups and is responsible for overall results.

Middle management stands between top management and supervisory management

level. Middle level management establishes programs for department and carries out
functions for achieving specific goals. The other functions of middle level management
are training and development of employees, integrating various parts of the department.
 Supervisory/ Lower management is concerned with efficiency in using resources of the
organization. A supervisor is an executor of policies and procedures making a series of
decisions with well-defined and specified premises.

DEVELOPMENT OF MANAGEMENT THOUGHT

• Management in antiquity

• Early Management Approaches

 Psychological development

 Scientific Management (F. W. Taylor)

 Administrative Management (Henri Fayol)

 Human relations movement

• Modern Management Approaches

MANAGEMENT IN ANTIQUITY

• Management skills or strengths have been recorded in history.

• Egyptians built pyramids.

• Chinese built Great Wall of China.

• Indian Kautilya wrote Artha shastra.

• Greece provides documentation on management principles, employee selection, and

delegation of authority.

• Rome evolves the first managers.

EARLY MANAGEMENT APPROACHES (1750-1950)

• Psychological development

• Scientific management

• Administrative management

• Human relations movement

Psychological development (Before 17th century): Olden days there was no experience
& knowledge of business, they had to depend upon their inborn abilities. This gave rise to
management that was totally based on psychological process.

Scientific Management (18th -19th century): Art of knowing exactly what is to be done
and the best way of doing it.

During this time the development was brought about by following two important factors.

1) The effort of scientists to demonstrate the application of science & scientific methods.

2) The effort of establishing standard practices.

The work made use of scientific methods for achieving standard practice & higher
efficiency. Thus scientific management came into existence.

Taylor’s Scientific Management (1856-1915):F.W. Taylor started his career as an

apprentice in a steel company in USA and finally became Chief Engineer. Taylor along
with his associates made the first systematic study in management. He launched a new
movement in 1910 which is known as scientific management. Taylor is known as father
of scientific management and has laid down the following principles of scientific
management.

1. Work study

Work study includes time and motion study. Taylor observed that the workers were not
producing their full capacity for the fear that their piece rate would be cut with rise in
production. The best way of doing a particular job was arrived at with this the time
required to complete one job was calculated called stand and time

2. Differential payment

Motion and time study and establishment of standard time further helped in arriving at
the production rate of a particular piece or job. It was linked that incentives are
introduced with increase in production. It was thought that this would motivate workers
to produce more.
 3. Reorganization of supervision

The supervisions work was just to allocate the work to be done. The planning of work
and selection of tools & sequence of doing work are to be done by foreman and the
worker had to simply carry out the work without wasting his time as to how to do that.

4. Scientific requirement and training

Taylor suggested that need for scientific training and development of a worker to carry
out a specific task in a more productive way. He also believes that good cooperation
between the management and workers would have to the increased production and profits
to both.

Objectives of scientific management

a) To assures industrial and market tendencies and to regularize continuous

operation.

b) To earn larger profit from a given expenditure on man and materials by

minimizing waste work and waste movements.

c) To provide healthy and safe working environment

d) To build character this proper work

e) To develop self realization and self satisfaction among workers there by

improving their morale.

f) To give better opportunity for individual their scientific methods of working.

g) To ensure happier and social life to workers,

h) To promote justice among workers by treating them equal.

i) To perform planned and balanced operations.

Administrative Management (1841-1924): Henry Fayol divided general and industrial

management into following six groups:

1. Technical activities (production, manufacture, adaptation).

2. Commercial activities (buying, selling and exchange).

3. Financial activities (search for and optimum use of capital).

4. Security activities (protection of property and persons).

5. Accounting activities (stock taking, balance sheet, cost, and statistics).

6. Managerial activities (planning, organizing, command, coordination and control).

Henry Fayol also suggested 14 principles of management. These principles are:

1. Division of work, 2. Authority and responsibility, 3. Discipline, 4. Unity of command,

5. Unity of direction, 6. Subordination of personal interest to organizational interests,
7. Remuneration, 8. Centralization, 9. Scalar chain,10. Order, 11. Equity, 12. Stability of tenure,
13. Span of co-operation and 14. Initiative

Human relation movement: Taylor and Fayol management techniques not completely achieve
efficient production because of worker unpredicted behavior. Such cases Elton Mayo conducted
experiments, classifies as

1. Illumination experiment

2. Relay assembly list room

3. Interviewing programme

4. Bank writing test room.

MODERN MANAGEMENT APPROACHES

• Behavioral Approach

• Quantitative Approach

• Systems Approach

• Contingency Approach

Quantitative approach: Gained momentum during the second world war when UK and USA
were desperately trying to seek the solutions to a number of few, complex problems in
warfare. Interdisciplinary group of scientists were engaged for this purpose were known as
operations research(OR) teams because their work consisted of analyzing operations and
carrying out applied scientific research which were the same which were used for solving
problems in the industry. Solving problems in the industry using OR techniques.

 A mixed team of specialists from relevant disciplines is called to analyze the

problem and to propose a course of action to the management.
 The team constructs the mathematical model t simulate the problem which in
symbolic terms all relevant factors that bear the problem, and the interrelationship
amongst them.
 By the changing the values of the variables in the model generally with a computer
and they team can determine the effect of each change.
 Thus we can conclude that the focus is on quantitative approach is based on decision
 making with quantitative tools and techniques for making objectively rational
decisions.
 Approach facilitates disciplined thinking, precision and perfection by expressing
relationships in quantitative terms which has been widely used in planning and
control activities where problems can be precisely indentified and defined in
quantitative terms.

Systems approach: Provides integrated approach to management problems and the key
concepts of systems approach are
 System is a set of independent parts: Which together works as a single unit and
performs some function. Similarly an organization can also be considered to be
composed of four independent parts namely task, structure, people and technology.
 Structure subsystem: refers to the formal division of authority and responsibility,
communication channels and workflow.
 People subsystem: refers to the employees with their motives, attitudes and values
and the informal organization.
 Technology subsystem: refers to the tools and equipment as well as techniques
which are used by the organization to perform the task.
 Concept of considering the system as a whole: Means that no part of the system can
be analyzed and understood apart from the whole system and conversely, the whole
system cannot be accurately perceived without understanding all its parts. Each part
bears a relation of interdependence to every other part which rather than dealing
separately with the various parts of the organization as a whole. The above concept
facilitates more effective diagnosis of complex situations and increases the
likelihood of appropriate managerial functions.

 System can be either open or closed: Open system is one which interacts with its
environment and closed system is one which is independent of the environment. All
living systems are actually dependent on the external environment for information,
material and energy. They enter the system from the environment as inputs and
leave the system as outputs and therefore they are rightly conceived as open
systems. Inputs of a business organization: raw materials, power, finance,
equipment, human effort, technology, information about market, new products,
government policies and the changes these inputs into output of goods, services and
satisfaction and the transformation process is known as throughput.
Contingency approach: Is the second approach which tries to integrate the various schools
of management thought. There is no best way of doing things under all conditions Methods
and techniques are highly effective in one situation may not work in other situations and
results differ because the situations differ. The task of a manger is to try to identify which
technique will in a particular best contribute to the attainment of the management goals and
managers have therefore to select the situational sensitivity and practical selectivity.
Contingency views are applicable in designing organizational structure, in deciding the degree
of decentralization, in planning information decision systems, in motivational and leadership
approaches in establishing communication and control systems, in solving conflicts and
managing change, in establishing and control systems and in several areas of organization and
management.

PLANNING
MEANING: “Thinking before doing”.

Planning deals with what has to be done today to be ready for tomorrow.

Planning is deciding in advance what to do, how to do it, when to do it,

Who has to do it, why it has to be done?

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

“Planning bridges the gap from what we are today and what we want to be in future”.

Planning involves the development of forecast, objectives, policies, programmes, procedures,

schedules and budgets.

Planning is decision making

Planning is deciding in advance.

NATURE OR FEATURES OR CHARACTERISTICS OF PLANNING

 Planning is goal oriented.

 Planning is primary function.

 Planning is a thinking process .

 Planning is a continuous process.

  Planning is all- pervasive.

 Planning is flexible.

 Planning involves choices.

 Planning is rational.

 Planning is an integrated process.

 Planning is futuristic.

 Focus in objectives.

 It is an intellectual process.

 Planning is a selective process.

 Planning is directed towards efficiency.

IMPORTANCE AND PURPOSE OF PLANNING PROCESS

 To minimize risk and uncertainty: Organizations have to function and survive in an

environment that is changing too fast.

 To focus attention on objectives: Planning focuses on organizational objectives and

direction of action for achieving these objectives. It helps managers to apply and
coordinate all resources of the organization effectively in achieving the objectives.

 To facilitate control: Planning sets the goals and develops plans to achieve them. These
goals and plans become the standards or benchmarks against which the actual
performance can be measured. Control involves the measurement of actual performance,
comparing it with the standards and initiating corrective action if there is deviation.

 To increase organizational effectiveness: Effectiveness implies that the organization is

able to achieve its objectives within the given resources. The resources are put in a way
which ensures maximum contribution to the organizational objectives.

 It provides direction: Planning provides sense of direction and purpose to the activities
of an organization. It also defines the job behavior of managers and paves the way
towards achieving organizational goals.
  It leads to Economy: Optimal utilization of physical and human resources.

 It reduces overlapping and wastage of efforts: It helps in avoiding duplication of

efforts, overlapping of tasks and to reduce wastage.

 It Encourages innovation and creativity: It makes managers to analyze weakness and

threats to their business.

 It Ensures Co-ordination: It helps to establish co- ordinate efforts from different

divisions, departments and people.

 It facilitates decision making: Planned target serves as criteria for the evaluation of
different alternatives so that best one may be chosen.

 It Trains executives and Leads to success

OBJECTIVES (GOALS / TARGET / MISSION)

Planned by management and administration and expected to achieve by the organization. These
are end points towards which all business activities are directed. These are the products of
specific, concrete thinking.

There are 8 important areas in which objectives of performance are set:

1. Market standing

2. Innovation

3. Productivity

4. Physical and financial resources

5. Profitability

6. Manager performance and development

7. Worker performance and attitude

8. Public responsibility

Characteristics of Objectives

1. Objectives are multiple in natures

According to Peter F Drucker there are 8 important areas in which objectives of performance are
set in an organization:
 1. Market standing, 2.Innovation, 3.Productivity, 4.Physical and financial resources,
5.Profitability , 6.Manager performance and development, 7.Worker performance and
attitude, 8.Fulfillment of Public responsibility

2. Objectives have hierarchy

3. Objectives form a network: The various objectives of an organization across each

department and along the hierarchy are all inter-related and interdependent. Therefore these has
to be co-ordination among the various divisions and departments in order to realize all the
objectives simultaneously.

4. Objectives may be a long range or short range.

5. Objectives are either tangible or intangible.

Requirements of good Objectives

• Objectives must be clear and acceptable.

• Objectives must be precise.

• Objectives must support one another.

• Objectives must be measurable.

• Objectives must be realistic and valid ones.

TYPES OF PLANS

Based on the nature of planning:

Based on their use:

Standing plans provide guidelines for further course of action and are used over a period of
time. Standing plans are designed for situations that recur often enough to justify a standardize
approach.

Examples of such plans are organizational mission, long term objective, strategies, policies,
procedures and rules.

Objectives: Goals or target of the organization

Policies: General guidelines for decision making (how to do the work)

Ex: promotion, marketing, purchase, pricing, training, recruitment, distribution, Personal policy,
payment, wages and incentive.etc

Strategies: route taken to achieve company objectives and policies.

Ex: Strategy for winning an approval in board meeting, strategy to make the best use of media
coverage.
Procedures: detailed guidelines that are used to carry out the policies.

Ex: procedures for recruitment of employees, procedures for customer complaint,CET procedure
for engineering admission.

Methods: prescribed way in which one step of a procedure is to be carried out (sub-units).

Ex: method of conducting written test for recruitment, method of verifying facts and figures.

Rules: are nothing but standard guidelines which specify what is good and what is bad for an
employee’s/organization.

Ex: Rule of “No Smoking", Reporting time to office, lunch time etc.

Single use plans are designed for specific end; when that end is reached, the plan is dissolved or
formulated again for next end.

Examples of such plans are project, budgets, programme, schedules etc.

Programme: Plan that includes set of goals, procedures, methods,strategies etc.

Ex: Program of organizing cultural fest in college, international seminar etc.

Schedules: which are like time-table which clearly specifies when, what and where each element
of work is carried out?

Ex: What is the sequence of operation?, which department/work centre will do which job?

Project: Nothing but a small programme. Several projects make up a programme.

Ex: Project work carried out by students of engineering.

Budgets: are the managerial tools for planning, programming and controlling business
activities.(Expenditure of an respective department).

Ex: Sales budget, production budget, advertising budget etc.

DECISION MAKING: It is the most important part of business process, manager to think
before acting, through planning managers of any organization decide what to do, when to do,
how to do, who has to do and where to do. Hence decision making is integral part of planning.“
The process of choosing among alternatives”.

Decision making is the part of all the functions of management.

Characteristics of Decision Making

• Decision Making is goal oriented.

• Decision Making involves choices (alternatives).

 • Decision Making is an analytical intellectual process.

• Decision Making is a continuous process.

• Decision Making is an all pervasive function.

• Decision Making is situational and dynamic.

Types of Decisions: 1.Pragmatic (Programmed or routine or structured) and Non Pragmatic

(Non programmed or Strategic or policy) decisions.

2. Individual and Collective decisions.

3. Minor and Major decisions.

4. Strategic and Routine decisions.

5.Simple and Complex decisions.

6. Temporary ( Adhoc) and Permanent decisions.

Examples of Decisions

• Pragmatic decisions: Sanctioning hour’s permission, placing purchase order etc.

• Non Pragmatic decisions : Involves heavy expenditure(top level management will take
care of such type of decisions)

• Individual decisions : Single person

• Collective decisions : Committee or group of people)

• Minor decisions: Purchase of stationary, granting leave and permission.

• Major decisions: Purchasing new machinery, employing new technology, hiring new
people etc.

• Strategic decisions : Major decisions only(price increase/ discount, change in product

range)

• Routine decisions : Repetitive decisions

• Simple decisions: Use of problem with few variables to solve.

• Complex decisions: Use of problem with many variables to solve.

• Temporary ( Adhoc) decisions .

• Permanent decisions.
Steps in Decision Making

STEPS IN PLANNING & PLANNING PREMISES

1. Establishing goals / objectives.

2. Establishing planning premises.

3. Deciding the planning period.

4. Identification of alternatives.

5. Evaluation and selection of alternative.

6. Developing derivative/supportive plans.

7. Measuring and controlling the process.

(1) Establishing goals/objectives: The first step in planning process is to determine the
enterprise objectives. These are set by upper level managers after number of objectives has been
carefully considered. The objective set depends on the number of factors like mission of the
organization, abilities of the organization etc., once the organizations objectives are determined,
the section wise or department wise objectives are planned at the lower level. Control process is
very easy if the objectives are clearly defined.

(2) Establishing planning premises: This is the second step in planning which involves
establishing planning premises that is the conditions under which planning activities will be
undertaken.

The planning premises can be classified as below:

(1) Internal and External premises.

(2) Tangible and Intangible premises.

(3) Controllable and non-controllable premises.

Internal and External premises: Premises may exist within or outside the enterprise. Internal
premises include sales forecasts, ability of the organization in the form of machines, methods of
design, behavior of the owners and employees etc., The external premises exists outside the
enterprise and include general business and economic environment, technological changes,
government policies and regulations, population growth etc.,

Tangible and Intangible premises: Tangible premises are those which can be quantified. They
include population growth, industry demand, capital and resources invested etc., On the other
hand political stabilities, sociological factors, attitudes and behavior of the owners etc., are
intangible premises.

Controllable and non-controllable premises: Some of the planning premises are controllable
and others are non-controllable. Some examples of non-controllable factors are strikes, wars,
natural calamity, legislation etc., The controllable factors are availability of resources, skill of
managers and labor etc.,

(3) Deciding the planning period: Once the term objectives and planning premises are decided,
the next task is to decide the period of the plan. Some plans are made for a year and in others it
will be decades.

(4) Identification of alternatives: The fourth step in planning is identifying alternatives. A

particular objective can be achieved through various actions. For example an organization’s
objective is to grow further which can be achieved in several ways like expanding in the same
field of business or product line, diversifying in other areas, joining hands with other
organization and so on.

(5) Evaluation and selection of alternative: Once the alternatives are identified the next step is
to evaluate the alternatives in the light of the premises and goals and to select the best course or
courses of action.
(6) Developing derivative/supportive plans: Once the plan is selected, various plans are
derived so as it support the main plan. The derivative may be planning for buying equipments,
buying raw material etc. These derivative plans are formulated out of the main plan.

(7) Measuring and controlling the process: One should not allow plan to run on its own
without monitoring its progress. Managers need to check the progress of their plans so that
remedial action can be taken to make plan work or change the plan if it is unrealistic.