Professional Documents
Culture Documents
UNIT - 1
UNIT 2: PLANNING: Nature, importance and purpose of planning process - Objectives - Types of plans
(Meaning only) - Decision making - Importance of planning - steps in planning & planning premises -
Hierarchy of plans.
6 Hours
TEXT BOOKS:
1. Principles of Management - P. C. Tripathi, P. N. Reddy; Tata McGraw Hill, 4th Edition,
2010.
2. Dynamics of Entrepreneurial Development & Management - Vasant Desai Himalaya
Publishing House.
3. Entrepreneurship Development - Small Business Enterprises - Poornima M Charantimath -
Pearson Education 2006.
BY:
RAGHUDATHESH G P, LATA S H
Asst Professor
ECE Dept, GMIT
Davangere 577004
Cell: +917411459249
Mail: datheshraghubooks@gmail.com, lathah@gmit.ac.in
Website: raghudathesh.weebly.com
Quotes:
Dont Count the days, make days count.
If you afraid of failure, you dont deserve to be successful.
Every saint has a past. Every sinner has a future.
When a goal matters enough to a person, that person will find a way to accomplish what
at first seemed impossible.
In a crisis, dont hide behind anything or anybody. They are going to find you anyway.
Nature of Planning:
Planning is the most basic function of management. It is referred to as "deciding in advance"
as to what to do, how to do, when to do and who has to do it etc.
Planning is the beginning of the process of management. A manager must plan before he
can possibly organize, staff, direct or control. Because planning sets all other functions into
action, it can be seen as the most basic function of management.
Planning is an intellectual process which requires a manager to think before acting. It is
thinking in advance. Planning involves selection of objectives and goals and determines the
ways and means of achieving them.
Planning is a continuous process, a manager must constantly watch the progress of his
plans, and he must monitor the conditions both within & outside the organization.
Planning is an all pervasive function i.e, planning is important to all managers regardless of
their levels in the organization.
Thus planning bridges the gap from where we are to where we want to be.
Top level managers are concerned with long range planning involving 2 to 5 years, middle
level managers are concerned with medium range planning involving few months to one
year and lower level managers are concerned with planning the activities of daily or week or
upto a month, where as a worker plans his day's work.
A plan must be flexible to change to adapt to the changing structure without undue cost.
Importance of Planning:
Minimizes risk and uncertainty:
In today's complex organizations, decision making cannot be relied only upon
intuition, planning plays a vital role in decision making in such complex situations.
By providing more rational and fact based procedure for making decisions, planning
allows managers and organizations to minimize risk & uncertainty.
Planning deals with the futurity of present decision.
Facilitates effective control:
In planning, the manager sets goals & plans to accomplish these goals. These goals
& plans become standards against which performance can be measured.
The function of control is to ensure that the activities conform to the plans.
Purpose of Planning:
Planning is the beginning of all other functions of management. The purposes of planning
are listed below:
1. To select from many available alternatives so as to achieve the objectives of the
enterprise, economically, effectively and efficiently.
2. To direct all other functions of management.
3. To set up the goals of an enterprise in perspective, within the environment.
4. To form the basis of budget.
5. To forecast the future to avoid uncertainty and change.
6. To provide effective control.
7. To search for alternatives and adopt the best way of accomplishing the work and
8. To focus the vision on the objectives and goals.
Objectives:
Objectives are goals or aims which the management wishes the organization to achieve.
Objectives are the end points or pole-star towards which all business activities like
organizing, staffing, directing and controlling are directed.
Characteristics of Objectives:
1. Objectives Are Multiple In Number:
This implies that every business enterprise has a package of objectives set out in
various key areas.
In business enterprise, there are eight key areas in which objectives of performance
and results have to be set.
These are market standing, innovation, productivity, physical and financial
resources, profitability, manager performance and development, worker
performance and attitude and public responsibility.
2. Objectives Are Either Tangible Or Intangible:
For some of the objectives such as in the areas of market standing, productivity,
physical and financial resources there are quantifiable values available.
Other areas of objectives are not readily quantifiable and are intangible, such as
manager's performance, worker's morale, public responsibility, etc.
3. Objectives Have A Priority:
This implies that at a given point in time, the accomplishment of one objective is
relatively more important than of others.
Ex.: the goal of maintaining minimum funds may be critically important to a firm
having difficulty in meeting payrolls& due dates on accounts.
4. Objectives Are Generally Arranged In A Hierarchy:
This means that we have a corporate objective of the total enterprise at the top,
followed by divisional or departmental objectives.
Next comes the objectives of each section and finally individual objectives.
5. Objectives sometimes clash with each other:
The process of breaking down the enterprise into units like production, sales &
finance, requires objectives to be assigned to each unit.
The process of assigning objectives to each unit creates problem, achieving the goal
of one unit may pose a threat for achieving the goals of another.
Ex.: the production goal of mass production of low quality products may conflict
with the sales goal of selling high quality products.
Requirements of Objectives: While laying down objectives there are certain requirements
that the manager should always keep in mind:
1. Objectives must be both clear and acceptable:
The ultimate test of clarity is the people's understanding of the objectives.
Unambiguous communication is helpful in ensuring clarity of understanding.
The objectives must also be acceptable to the people, that is, they should be
compatible with their individual goals.
2. Objectives Must Support One Another:
Objectives could interlock or interfere with one another.
In view of this, there is need for coordination and balancing the activities of the
entire organization. Otherwise it becomes difficult for the manager to achieve the
company's overall objectives.
3. Objectives must be precise and measurable:
An objective must always be spelled out in precise, measurable terms. There are
several reasons for this:
a. The more precise and measurable the goal, the easier is to decide how to
achieve it.
b. Precise and measurable goals make it easier for lower level managers to
develop their own plans for actually achieving those goals.
c. It is easier for managers to ascertain whether they are succeeding or failing if
their goals are precise and measurable.
4. Objectives should always remain valid:
This means that the manager should constantly review, reassess and adjust them
according to changed conditions.
Advantages of Objectives:
1. They provide a basis for planning.
2. They eliminate accidental action which may result in undesirable consequences.
3. They facilitate coordinated behavior of various groups which otherwise may pull in
different directions.
4. They facilitate better management of the enterprise by providing a basis for leading,
guiding, directing and controlling the activities of people of various departments.
5. Performance can be measured accurately.
Forms of Planning:
Based on the nature of planning, the planning is classified as strategic planning (long range
planning) and tactical planning (short range planning).
The strategic plans are done at top level of management and are generally long term plans,
whereas tactical plans are done at lower levels and are of short term in nature.
Sl No Strategic Planning Tactical Planning
1 It is long Term It is short Term
2 Done at top management Done at lower levels of Management
It decides the major goals, policies and It decides the detailed use of resources
3
allocate of resource to achieve these goals. for achieving each goal.
It is less detailed because it is not involved It is more detailed because it is
4 with the day-to-day operations of the involved with the day-to-day operations
organization. of the organization.
Types of Plans:
There are 2 types of plans
1. Single use Plans:
As the name suggests, they are developed to achieve a specific end; when
that end is reached, the plan is dissolved. Single use plan includes:
a. Policies:
A policy is general guideline for decision-making.
It sets up boundaries around decisions.
Although policies deal with "how to do" the work, they do not dictate
terms to subordinates. They only provide a framework within which
decisions must be made by the management. Thus we may hear that
the recruitment policy of a company is to recruit meritorious people
through employment exchange etc.
DECISION MAKING:
1 Planning is an intellectual process, which requires a manager to think before acting.
2 Through planning, managers of any organization decide what to do, when to do, how to do
and who has to do.
3 Hence decision-making is an integral part of planning. It is defined as "the process of
choosing among alternatives".
4 Decision-making occurs at many stages of planning process.
5 Decision-making and choosing the best alternative is probably the most important activity of
the planning process.
Types of Decisions:
1 Programmed and Non programmed Decisions:
Programmed decisions are those that are made in accordance with some policy, rule
or procedure so that they do not have to be handled each time they occur.
These decisions are generally repetitive, routine and are obviously the easiest for
managers to make.
Ex.: such decisions are sanctioning an hour's permission, determining salary
payments to employees, recording office supplies and so on.
Non-programmed decisions are non-repetitive. If a problem has not arisen before or
if there is no cut and dry method for handling it or if it deserves custom-tailored
treatment, it must be handled by a non-programmed decisions.
A problem may exist either due to a deviation from the past experience, a deviation
from the plan, people bringing problems to the manager or problems arising from
competition.
2. Deciding Priorities among problems:
The manager should identify the problems which he can solve, the problems which
he feels that his subordinates can solve and the problems which are to be referred to
the higher officers.
With this decision, the manager is left with very few problems to solve.
3. Diagnosing the Problem:
Correct diagnosis of the problem is very important for any manager.
Managers should follow systems approach in diagnosing a problem.
He should make a thorough study of all the sides of a problem coupled with
organization before arriving at solution.
If the diagnosis is made correctly, then finding solution becomes easy.
4. Developing alternative solutions or courses of action:
After having diagnosed the problem, the next step is to find alternate solutions.
It is very rare that there is a problem with only unique solution. Alternatives do exist.
Sometimes, in the absence of past history of alternate solutions, the manager has to
depend only on his own ability in finding alternatives.
5. Measuring and comparing the consequences of alternative solutions:
The alternative solutions are measured and compared for their consequences.
This involves a comparison of the quality and acceptability of these alternatives.
6. Converting the decision into effective action and follow -up of action:
The next step is to convert the decision into action.
This requires the communications of the decisions to the concerned employees in
clear and simple terms.
If there is any opposition or non-acceptance from the employees, steps should be
taken to convince them to accept the same.
During the process of decision-making, the managers face many difficulties. Some of them
are:
1. Incomplete Information:
This is a major problem for every manager.
Lack of information leaves manager in a uncertainty situation & also most decisions
involve too many complex variables for one person to be able to examine all of them
fully.
2. Un-supporting Environment:
The environment-physical and organizational-that prevails in an enterprise affects
both the nature of decision and their implementation.
If there is all round goodwill & trust and if the employees are properly motivated,
the manager is encouraged to take decisions with confidence.
Under opposite circumstances, he avoids decision making.
3. Non Acceptance by Subordinates:
If subordinates have a stake in the decision or are likely to be strongly affected by it,
acceptance will probably be necessary for effective implementation.
Democratic leadership style which encourages subordinates to suggest, criticize,
make recommendations or decide upon policies or projects is an effective device for
gaining their acceptance.
4. Ineffective communication:
Ineffective communication makes implementation difficult.
The manager should therefore take care to communicate all decisions to the
employees in clear, precise & simple language.
5. Incorrect Timing:
In decision making, the problem is not merely of taking a correct decision; it is also
of selecting an appropriate time for taking the decision.
Ex: if the manager wants to decide about introducing a new product in the market he
should take the decision at the correct time else he may lose the market to his
competitor.
Hierarchy of Plans:
The plans are generally arranged in a hierarchy within any organization.
It starts at the top with objectives & goals of an organization.
The second level is strategies.
There are 2 types of strategies namely Single-use plans & Standing plans.
The third level is action plans.
The Top Management sets the goals & objectives. These include long-term plans &
strategies of organization.
For ex: a company aims to improve their production by 20% during next 2 years. Such
objectives can be achieved by strategies.
Strategies are carried out by 2 types of plans namely Single-use plans & Standing plans.
Single-use plans are developed to achieve a specific goal, after reaching the goal the plan is
dissolved.
Ex.: budgets, construction of a bridge, dam or shopping complex etc.
Standing plans are developed for projects that happen again and again.
Ex.: admission procedure in a collage, recruitment procedure of an organization etc action
plans are the plans executed by lower level organization, these are routine plans executed by
foreman and supervisors.