ME - RNSIT NOTES.doc

7/21/2019 ME - RNSIT NOTES.doc

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ManagementDefnition o management:Simplest defnition is that it is defned as the art o getting things Donethrough people.Management can also be defned as

The process consisting o planning, organizing, actuating, and controllingperormed to determine and accomplish the use o people and resources.Is systematic way o doing things.

Dierence between a manager and other personnel in the organization

A manager is one who contributes to the organizational goals indirectly by directingthe eforts others by not perorming the task by himsel

A person who is not a manager makes his contribution to the organizations goalsdirecting by perorming the task himsel.

Four management activities included in this process are: Planning, organizing,actuating and controlling.!lanning means thinking o their actions in advance.

"rganizing means that managers coordinate human and material resourceso the organization.#ctuating means that managers motivate and directsubordinates.

$ontrolling means that mangers attempt to ensure that there is no deviationrom the norm or plan.he de!nition involves the act o achieving theorganizations ob"ectives.

A manager also uses people and other resources such as !nance e#uipment toachieve their goals. $anagement involves the act o achieving organizationsob"ectives.

!lanning is a unction that determines in advance what should be done which islooking ahead andpreparing or the uture.

%s a process o determining the ob"ectives and charting out the methods o attainingthose ob"ectives. %s determination o what, where and how it is to be done and howthe results are to be evaluated.%s done or the organization as a whole but every division, department or subunit othe orgainsation.

%s a unction which is perormed by the managers at all levels&top'which may be aslong as !ve years(,middle'shorter may be week( and supervisory.

"rganizing and sta%ng

%s a unction which may be divided into two main sections namely the humanorganization and material organization.

)nce the plans have been developed and the ob"ectives established they mustdesign and develop a human organization to carry out plans successully.

$ay de!ned as a structure which results rom identiying and grouping work,de!ning and delegating responsibility and authority and establishing therelationships.

*ta+ng is also considered an important unction in building thehuman organization %nvolves building the right person or the right

"ob.

Fies responsibility or a manager to !nd the right person or the right "ob andensures enough manpower or the various positions needed or the organization


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%s the net step ater planning, organizing and sta+ng

%nvolves three sub&unctions namely communication leadershipand motivation ommunication is the process o passinginormation rom one person to another

/eadership is the process o guiding and in0uencing the work o his subordinatesby the manager. $otivation is the arousing the desire in the minds o the workers

to give their best to their enterprise. o pull out the weight efectively, to be loyalto their enterprise and carry out the task efectively. 1as two types o motivation!nancial and non!nancialFinancial: takes the orm o salary, bonus, pro!t&sharing etc.2on!nancial: takes the orm o "ob security, opportunity o advancement recognitionpraise etc.

$ontrolling is a unction which ensures everything occurs in conormity with plansadopted and involvesthree elements:3(establishing the standards o perormance

4( $easuring current perormance and comparing it gainst theestablished standards. 5(taking action to correct any perormancethat does not meet the standards, management process:

controlling planning

directing orgainsing

Meaning o management

annot be de!ned or understood let alone be practiced ecept in terms operormance dimensions

And o the demands o perormance on it as said by -rucker in 3675.he results o amanger8s action should be en"oyed by the customer or the client as the ultimatebene!ciary. the customers may be internal or eternal to the organization&ature o management

3(All the managers carry out the managerial unctions o planning, organizing,sta+ng leading and controlling

4(management applies to any kind oorganization 5(applies to managers at allorganizational levels 9(the aim o themanagers is same create the surplus(managing is concerned with productivity, which implies efectiveness ande+ciency$haracteristics o managementManagement is

3( %ntangible 'not measurable and cannot be seen( but its presence can be elt byeforts in the production sales and revenues.4(universal and it is applicable to all sizes and orms o organizations5(a group activity and it involves getting things done with and through others


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9(%s goal oriented and all actions o management are directed atachieving speci!c goals. (is science as well art and emerging now as aproession;(is multidisciplinary and it has contributions rom psychology, sociology,anthropology


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Scope o the management

he management is a must or every organization which encompasses or pro!t aswell as nonpro!t organizations, government as well as non governmentorganizations, and service as well as manuacturing organizations.%t is in act di+cult to !nd an area o activity where management is not applicable.

$anagement is not only limited to business enterprises or pro!ts but also to the ornon&pro!t organizations like educational institutions, health care organizations,!nancial organizations, stores management or keeping their cost o the operationat the optimal levels


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+eels o management %n any organization, there are three levels omanagement the !rst&line, middleand top level managers.*irst0line management is made up o oreman and white collared supervisors.

Middle management consists o vast and diversi!ed group consisting plantmanagers, personnelmanagers and department heads.

Top management consists o board chairman, the company presidents, and the

eecutive vice&presidents.

Managerial sills

The manager is re1uired to posses three ma2or sills $onceptual sillwhich deals with ideas, human relations sill which deals with people andtechnical sill which deals with things.

'i( $onceptual silldeals with the ability o manager to take a broad andarsighted view o organization and its uture, ability to think in abstract ability toanalyze the orces working in a particular situation.

)ii( Technical sill are managers understanding o the nature o the "ob thatpeople under him have to perorm. =eers to the person8s knowledge andpro!ciency in any type o process or techni#ue.

)iii( 3uman relations sill: is the ability to interact efectively with people at alllevels and the managersu+cient ability to'a( to recognize the eelings and sentiments o others.'b(to "udge the possible reactions to and the outcomes o various courses o actionhe amy undertake

'c( to eamine his own concepts and values which may enable to more useulattitudes and about himsel.*kill mi o a manager with the change in his level:)a( Top leel technical skill becomes less important

'b(Middle managementhuman relations skill becomemore important 'c(Superisory sill technical skillbecomes more important.

Management and administration

Management #dministration

3( $anagement involves doing which is alower

3(Administration involves thinking whichis a top

level unction concerned with theeecution and

level unction which centers aroundthe

direction o policies and operations. 2otwo

determination o plans, policies andob"ectives o a

separate personnel are re#uired. >achmanager business enterprise.perorms both activities and spends part

o histime in administering and part o histime

managing.4( $anagement is a generic term whichincludes

4( Administration is a term used in thegovernance

administration $anager is the term usedin the

o non&business institutions 'such asgovernment,


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business enterprises.army etc(. %n administration, on&business

%n management, economic perormancebecomes

institutions economic conse#uences odecisions

the chie dimension o management. are secondary

Management as a science or art or a proessionManagement as a science


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# discipline is called science i

3(the methods o the in#uiry are systematicand empirical 4(i the inormation can beordered and analyzed and 5(results arecumulative and communicable

3(*ystematic means orderly and unbiased attempt to gain knowledge must be with

the personal or other pre"udgment%n#uiry being empirical means that it is not an armchair speculation or prioryapproach.

4(the scienti!c inormation so collected as raw data must be !nally ordered andanalyzed with the statistical tools which makes the results

5( ommunicable and intelligible which also permits repletion o the study and theresults in the sense that what is discovered is added to which has been ound beorewhich helps us to learn rom past mistakes and obtain guides or the uture

To analyze whether management is a science

$anagement is not like the eact or natural science such as physics, chemistry etcwhich are called eact sciences which makes it possible to study any one o many o

the actors afecting a phenomenon individually by making the other actorsinoperative or that moment o time by eamining the efects o heat on the densityo air by holding other actors constant in the laboratory or eample but where asin management it is not possible to study in management as it involves the study oamn and multiplicity o actors afecting him in which involves the study o monitoryincentives on workers8 productivity .

?hich means that !ndings are not accurate and dependable as those o physicalsciences and thereore, a management can be put in the category o a behavioralscience.

$anagement are not culture bound because even though the diferent cultures maygive rise to diferent management practices, techo#ues or theory concepts andprinciples reamin the same which laed to the conclusion that manaement did notdifer rom country to country which is true even in the !eld o natural sciences.

Management as art

As the science considers the why phenomena management as an art is concernedwith the understanding how a particular task can be accomplished which involvesart o getting things done through others in a dynamic and non repetitive ashionand has to constantly analyze the eisting situation, determine the ob"ectives, seekthe alternatives, implement, coordinate, control and evaluate inormation and makedecisions.

As the knowledge o management theory and principles is a valuable kit o themanager but it cannot replace his managerial skills and #ualities which has to beapplied and practiced which makes us to consider manager as an art. /ike the art oa musician or the art o a painter who uses his own skill and does not copy the skillso others

hus we may conclude that management involves both the elements those o an artand those o science

where in certain aspects o management make it as a science, certain others whichinvolves the application oskill makes it an art.


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To analyze whether Management is a proession


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$haracteristics o a proession:3(eistence o organized and systematic knowledge

4( ormalized methods o ac#uiring training andeperience. 5(eistence o an association with theproessionalization as a goal

9(eistence o an ethical code to regulate the behavior o the members

o the proession ( harging o ees based on service.Management

3(-oes not have !ed norms o managerialbehavior 4(no uniorm o code o conduct orlicensing o managers

5(entry o managerial "obs are not restricted to to individuals with a specialacademic degree only and hence management cannot be called a proession

.Deelopment o management thought>volution o the management can be studies as

4(-arly classical approaches represented bya(scienti!c management b(administrative management and c(bureaucracy5( &eoclassical approaches represented bya(human relations movement and behavioral approach6(Modern approaches represented bya(#uantitative approach b(systems approach and c(contingency approach

4 a( Scientifc managementFredric ?inslow'3@;&363( is considered as the ather o *cienti!c management

>erted a great in0uence on the development o the management through hiseperiment and writings. onducted as a series o eperiments in three companies

$idvale steel, *imonds =olling machine and ethlehem *teel while serving as achie engineer o $idvale steel company or a period o 4; years.

Taylors contributions under scientifc management

4( Time and motion study started time and motion study under which eachmotion o "ob was timedout with the help o stop watch o doing "ob was ound andshorter and ewer motions were developed and amongst these the best "ob wasound which replaced the old rule o thumb knowledge o the workman.

5( Dierential payment new payment plan called the diferential piece workwas introduced which was linked incentives with production. under this plan a

worker received low piece rate i he produced the standard number o pieces andhigh rate i he surpassed the standard which would motivate the workers toincrease production

6(Drastic reorganization and superision introduced two new conceptsseparation o planning anddoing and unctional oremanship.

aylor suggested that the work should be planned by the oreman and not by theworker and there should be as oreman as there are special unctions involved indoing a "ob and each o these oreman should give orders to the worker on hisspecialty.


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development o the worker. 1e says that management should develop and trainevery worker to bring out his best acilities and enable him to do a higher, moreinteresting and more pro!table class o work than he has done in past.

8( Intimate and riendly cooperation between the management and theworers: aylor argued thatboth the management and the workers both should tryto increase production rather than #uarrel over pro!ts which would increase the

pro!ts to such an etent that labour and management would no longer have tocompete or them and should sow common interest in increasing productivity.

$ontributions and limitations o scientifc management$ontributions

3( ime and motion studies have made us aware that the tools and physicalmovements involved in a task can be made more e+cient and rationale.

'4(*cienti!c selection o workers has made us recognize that without ability andtraining a person cannot be epected to do "ob properly.

'5(he scienti!c management have to work design encouraged the mangers to doone best way o doing the "ob.

+imitations

'3(aylors belie that economic incentives are strong enough to motivate workers orincreased production proved wrong as there are other needs such as security, socialneeds, or egoistic needs rather than !nancial needs

'4( aylors time and motion study is not accepted as entirely scienti!c as there isno best way o doing the same "ob by two individuals as they may not have samerhythm, attention and learning speed

'5(*eparation o planning and doing the greater specialization inherent in thesystem tends to reduce the need or skill and greater monotony o work.

'9(Advances in methods and better tools and machines eliminated some workerswho ound it di+cult to get other "obs and caused resentment among them.

*ayol9s #dministratie management

1enry Fayol is considered as the ather o administrativemanagement'3@93&364( ?here the ocus is on development obroad administrative principles.

?as a French mining engineer turned a leading industrialist and asuccessul manager. Provided a broad analytical ramework o theprocess o administration.

*ayol9s 47 principles o management as general guides to themanagement process and management practice.4(Diision o wor %n the management process produces more and better workwith the same efort as the various unctions o management like planning,organizing, directing and controlling cannot be perormed e+ciently by a singleproprietor or by a group o directors which must be entrusted to specialists inrelated !elds.


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5( #uthority and responsibility %mplies that the manager should have the rightto give orders andpower to eact obedience and the manager also may eerciseormal authority and also personal power.


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Formal authority is derived rom the o+cial position and personal power is the resulto

%ntelligence, eperience, moral worth, ability to lead, past service etc. =esponsibilityis closely related to authority and an individual who is willing to eercise authoritymust also be prepared to bear responsibility to perorators etc. the work in themanner desired.

6(Discipline Absolutely essential or smooth running o the business anddiscipline means theobedience o authority, observance o rules o rules o serviceand norms o perormance, respect or agreements, sincere eforts o completingthe given "ob, respect or superiors.est means o maintaining discipline are

'a(good supervisors at levels 'b(clear and air agreements between theemployees and the >mployer.

7(:nity o commandhis principle re#uires that each employee should receiveinstructions about aparticular work rom one superior only i reported to more thanone superior would result in conusion and con0ict o instructions.

8( :nity o direction $eans that there should be complete identity betweenindividual andorganizational goals on the one hand and between the departmentalgoals on the other hand and both should not pull in diferent directions.

;( Subordination o indiidual interest to general interest %n a businessconcern, an individual is always interested in maimizing his own satisactionthrough more money, recognition, status etc. which is against the general interestwhich lies in maimizing production and hence there is a need to subordinate theindividual interest to the general interest.


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44( -1uity $eans e#uality o air treatment which results rom a combination okindness and "ustice and employees epect management to be e#ually "ust toeverybody which re#uires managers to be ree rom all pre"udices, personal likes ordislikes.


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45(stability o tenure o personnel %s necessary to motivate workers to domore and better work andthey should be assured security o "ob by managementwhich i not provided they have ear o insecurity o "ob, their morale will be low andthey cannot give more and better work.

46( Initiatie $eans reedom to think out and eecute a plan which when

provided to the employees leads to innovation which is the landmark otechnological progress.

%nitiative is one o the keenest satisactions or an intelligent man to eperience andhence mangers are re#uired to give su+cient scope to show their initiative.

47( -sprit de corps $eans team spirit which should be created b y themanagement among theemployees and is possible only when all the employeespull together as a team and there is scope or realizing the ob"ectives o the concernand there should be harmony and unity among the staf which is a great source ostrength to the undertaking which could be achieved through avoiding divide andrule motto and use o verbal communication and written communication to removemisunderstandings.

$ontributions and limitations o administratie management

$ontributions

3( Fayols principles met with wide spread acceptance among writers onmanagement and among managers and managers themselves.

4(-rawing inspiration rom Fayol a new school o thought known as the$anagement Process *chool came into eistence.+imitations4(*ayols principle o specialization lead to the ollowing dysunctionalconse1uences

'a( /eads to the ormation o small work groups with norms and goals with eachindividual carrying out his own assigned part without bothering about the overallpurpose o the organization as a whole.

'b( =esults in the dissatisaction amongst workers as it does not provide themthe opportunity to use all their abilities.

'c( =esults in the dissatisaction amongst workers as it does not provide themthe opportunity to use all their abilities.

4( one o the !ndings un Fayols principles is that there is nothing in Fayols writingsto indicate which is the proper one to apply like or eample the principle o unity ocommand and the principle o unity o specialization or division o labour cannot beollowed simultaneously. %n this way many o these principles are ull ocontradictions and dilemmas.

5( Fayols principles are based on a ew case studies only and have not been tested

empirically and whenever tested have allen like autumn leaves.9( hese principles are oten stated as unconditional statements o what should bedone in all circumstances when what is needed are conditional principles omanagement.

.the principles o Fayol such as the principles specialization, chain o command,unity o direction and span o control result in the mechanistic organizationalstructures which are insensitive to employees *ocial and psychological needs.


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;.these principles are based on the assumption that the organization are closedsystems but in reality organizations are open systems and hence the rigidstructures so created do not work well under stable conditions.


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@ureaucracy


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4( "er conormity o rules >mployees observe stick to rule policy because theyollow stick to the rulepolicy because they ear o being penalized o the violation othese rules and thereore ollow the letter o law without going into its spirit.


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>ample: a doctor in the emergency spends precious time in !lling various ormsbeore helping the accident victim.

5(buc passing %n situations where there are no rules, employees are araid otaking decisions independently and may be punished or wrong decisions andthereore either shit decisions to there or postpone them which results in the

increase o o+ce work and leads to Parkinson8s disease.

6( $ategorization o 1ueries Probable #ueries coming rom outside aregenerally classi!ed in advance into a ew broad categories and answer or eachcategory are prepared in advance.

)n receiving the #uery the employees "ob is to simply determine its category andtick the reply applicable to that category

7( Displacement o goals Bery common phenomena in bureaucraticorganization and takes place when an organization substitutes or its legitimategoals some other goal which it was not created ,or which resources were notallocated to it and which it is not known to serve.$an occur in seeral ways

'a( occurs when the leaders try to devote to preserve the organization itsel ratherthan its intial purpose and when several interest groups try to use theorganizational goals to serve their own golas.

'b( occurs when the employees try to internalize the rules and the goals are totallyorgotten which is called proessional automation.

-/ample praising the librarian or neat and orderly look o the library and not orincrease in thenumber o book borrowers.Praising the actory worker or his regular attendance and not or the #uality o hisperormance.

'c( *econdary goals o an organization subordinating its primary goals so that latterare not served efectively.

>ample: university initiating certain social or etra&curricular activities to attract

students to classes and universities consuming greater time and resources inconducting the same rather than teaching a course.

'd(sectional interests developing among the heads o sub&units o the organizationwhich may lead to orget the organizational goals.

8(&o right o appeal he clients the bureaucratic organization eel dissatis!edbecause they have noright o appeal

;( &eglect o inormal groups Forms inormal groups which play an importantrole in the organizationwhich has lead to the development o group dynamics whichare ignored by the bureaucratic organization.


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skills and inormation to plan his uture which is not provided as the hierarchy andcontrol eatures work against this organization.


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&eo0classical approachAre called neoclassical because they do not re"ect the classical concepts but only tryto re!ne them.The human relations moement>merged to achieve complete production e+ciency and workplace harmony

?as developed in helping managers to deal more efectively with the people side othe their organizations.

ame into eistence due hawthorns eperiments conducted by >lton $ayo and hiscolleagues at the western electric company8s plant in icero, %llinois rom 3647 to3654 which employed 46,CCC workers to manuacture telephone parts ande#uipment.>lton $ayo8s eperiments can be divided into ollowing our parts:

3(%lluminationeperiments 4(relayassembly test room5(interviewingprogram 9(bank wiring

test room4( Illumination -/periments Aas considered to be the frst phase o study

Productivity was correlated with illumination, tested, eperiments were done on agroup o workers and the productivity was measured at various levels o illuminationor the !rst time and two groups were ormed and set up in diferent buildings orthe second time this time one group called the control group worked under theconstant level o illumination and the other group called the test group calledworked changing levels o illumination.

'esults ?hen post&productivity o two groups were compared, it was ound thatillumination afectedproduction only marginally.5( 'elay assembly test room Aas considered to be the second phase ostudy

%n this phase, the ob"ect o study being broadened, along with the impact oillumination on production, other actors such as the length o the working day,re#uency and duration o rest pauses and other physical conditions were taken intoconsideration.

A group o si women workers, who were riendly with each other, were selected orthe eperiment, were told about the eperiment, were made to work in a inormalatmosphere with the supervisor researcher in a separate room who acted as ariend, philosopher and guide.

*everal variations were made in the working conditions during the study, to !nd themost ideal combination or production.

'esults the researchers ound that the production group had no realtion with theworking conditinswhich went on increasing and stabilized at a high level even whenall the improvements were taken away and the poor pre&test conditions were

reintroduced and something else was responsible or this.'a(eeling o importance among girls as result o participation in the research andthe attention they got 'b(warm inormality ,tension&ree interpersonal and socialrelations amongst small groups and relative reedom rom strict supervision andrules lead to these results'c(high group cohesion among girls6( Interiewing programme

he knowledge about the inormal group processes which were accidentallyac#uired in the second phase made researchers design the third phase.


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hey wanted to know about the basic actors responsible or humanbehavior at work $ethod used to know the basic actors:$ore than 4CCCC workers were interviewed.

Duestions were asked relating to the type o supervision, working conditions, livingconditions and so on.


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%ndirect #uestions were asked to the workers and the workers were ree to talkabout their avorite topics related to their work environment.

'esults: the study revealed that the workers social relations inside the organizationhad an unmistakable in0uence on their attitudes and behavior and about the all&pervasive nature o inormal groups on their culture and the production norms whichthe members were orced to obey.

7( @an wiring obseration room $an be considered as the ourth phaseso e/perimentation.

%nvolved in&depth observation o 39 men making terminal banks o telephone wiringassemblies, to determine banks o telephone wiring assemblies, to determine theefect o inormal group norms and ormal economic incentives on productivity.

'esults

*tudy revealed that group evolved its own production norms or each individualworker which were much lower than the those set by the management and theworkers would produce that much and no more thereby deeating the incentivesystem

his arti!cial restriction o production saved workers rom a possible cut in theirpiece rates and protected weaker and slower workers rom being reprimanded orthrown out o "obs.lass o workers&production rate

alled oolish&was more than the group norm were isolated, harasses or punishedby the group in the several ways and were called rate busters.

hose who were too slow were nicknamed as chisellers.hose who complained to the supervisor against their coworkers were calleds#uealers.$onclusion

he eperience o the 1awthorne eperiments had a proound impact on theluminaries o the human relations movement.ame to realize the important role played by inormal groups in the working o an

organization.

$ontributions and limitations o the human relations moement$ontributionsThe contributions can be summarized as ollows

3(a business organization is not merely a techno&economic system but is also asocial system and hence it is important to provide social satisaction to the workersto produce goods.4(here is no correlation between improved working conditions and high production.

5(A workers production norm is set and enorced by his group and not by the timeand motion study done by the industrial engineer and those deviating rom thegroup were penalized by the coworkers.

9(?orker does not work or money only and also non!nancial awards afect hisbehavior and limit the economic incentive plan.

( >mployee centered, democratic and participative style o supervisory leadershipis more efective than task centered leadership.;(he inormal group and not the individual is the dominant unit o analysis in

organizations.


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+imitations

3( is swing in the opposite direction and is as much s incomplete as the scienti!cmanagement and administrative management. he human relations writers sawonly the human variable as critical actor


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and ignored other variables.

4(he implicit belie that every organization can be turned down into one big happyamily which could satisy everybody was not correct as every organization is madeup o a number o diverse social groups with incompatible values and interests.

5(his approach emphasizes the importance o symbolic rewards and underplaysthe role o material rewards.

9(Approach provides an unrealistic picture about inormal groups by describingthem as ma"or source o satisaction or industrial workers and it is assumed thatmany workers do not come to the actory to seek a+liation and afection.

(Approach is in act production oriented and not employee oriented as it claims tobe. $any o its techni#ues 'running canteens, social groups( trick workers into alsesense o happiness.;(the leisurely process o decision making o this approach cannot work duringemergency,7( $akes un unrealistic demand on the superior and wants him to give up is

desire.

@(Approach is based on wrong assumption that satis!ed workers are moreproductive workers because attempts to increase output by improving workingconditions and the human relations skills o a manager generally in the dramaticproductivity increases that are epected.

@ehaioural approach

his version is an improved and a more mature version o the human relationapproach management. -ouglas $c


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onsider organizations as group o individuals with certain goals or both big andsmall groups about the individuals orming groups, "oining groups, group size,structure and process and group cohesiveness. 1ave made etensive studies onleadership which they believed democratic style desirable and the autocratic styleappropriate in some situations.


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elieved that the realistic model o human motivation as comple because peoplereact diferently or the same situation or react the same way to diferent situationsand no two people are eactly alike.

Modern approaches)Three o them(

4( Buantitatie 5( Systems approach 6( $ontingency approach

4(Buantitatie approach $alled the management science approach


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4(a system is a set o independent parts

?hich together works as a single unit and perorms some unction. *imilarly anorganization can also be considered to be composed o our independent partsnamely task, structure, people and technology. Structure subsystem: reers to theormal division o authority and responsibility, communicationchannels andwork0ow.

!eople subsystem reers to the employees with their motives, attitudes andvalues and the inormalorganization.

Technology subsystem: reers to the tools and e#uipment as well as techni#ueswhich are used by theorganization to perorm the task.5(concept o considering the system as a whole

$eans that no part o the system can be analyzed and understood apart rom thewhole system and conversely, the whole system cannot be accurately perceivedwithout understanding all its parts.

>ach part bears a relation o interdependence to every other part which rather thandealing separately with the various parts o the organization as a whole.

he above concept acilitates more efective diagnosis o comple situations andincreases the likelihood o appropriate managerial unctions6(a system can be either open or closed

)pen system is one which interacts with its environment and closed system is onewhich is independent o the environment.

All living systems are actually dependent on the eternal environment orinormation, material and energy. hey enter the system rom the environment asinputs and leave the system as outputs and thereore they are rightly conceived asopen systems.

%nputs o a business organization: raw materials, power, !nance, e#uipment, humanefort, technology, inormation about market, new products, government policiesand the changes these inputs into output o goods, services and satisaction and thetransormation process is known as throughput.The transormation process can be categorized as ollows

Physical'as in

manuacturing(/ocation'as intransportation>change'as inretailing(

*torage'as in warehousing(Physiological'as intelecommunications(

he output o a system is always more than the combined output o its parts whichis called synergy. ?hich in organizational terms means that as separatedepartments within organization cooperate and interact they become moreproductive i they acted in isolation.

)ne important mechanism o a system which enables to eercise control over its

operations is eedback as shown in the !gure.


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.environment

%nput o inormation,


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>nergy, materials)utput

oproducts ideas and

*ervices

7(-ery system has a boundary boundaries can be clearly observed andthereore more precisely de!ned in the case o physical and bilological systemsthan in case o social systems.

For eample: we can de!ne the physical boundaries o the human body or a plot oland very precisely but it is di+cult to de!ne the boundary o an orgainisation and

they do not have clearly observable boundaries.

$oncept o a boundary3(1elps a system in determining whether it ends and the other system begins.4( -ivides those elements that are a part o a system rom those that are a part

o its environment5(>nables a system to protect its transormation process rom the vagaries o its

environment.$ontributions o systems approach

A problem here is studied both at the level o the subsystem 'micro level( and thetotal system 'macro level(.

Application o this approach results in the re#uirement that eecutives in addition to

having the skills in their own unctional areas should have enough knowledge oother areas also who should be generalists also.$ontingency approach

%s the second approach which tries to integrate the various schools omanagement thought. here is no best way o doing things under allconditions

$ethods and techni#ues are highly efective in one situation may not work in othersituations and results difer because the situations difer.

he task o a manger is to try to identiy which techni#ue will in a particular bestcontribute to the attainment o the management goals and managers havethereore to select the situational sensitivity and practical selectivity.

ontingency views are applicable in designing organizational structure, in decidingthe degree o decentralization,in planning inormation decision systems,inmotivational and leadership approaches in establishing communication nad controlsystems ,in re shoisolving con0icts and managing change ,in establishing andcontrol systems and in several areas o organization and management.

:&IT II!lanning


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!lanning is the beginning o the process managementA manager must plan beore he can possibly organize, staf, direct or control.

ecause planning sets all other unctions into action, it can be seen as the mostbasic unction o management. ?ithout planning other unctions become mereactivity.


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!lanning is an intellectual process which re1uires manager to thin beoreacting. It is thining in adance. it is planning that managers oorganization decide what is to be done, when it is to be done, how it is tobe done, and how has to do it.

Decision maing is an integral part o planning. It is the process ochoosing among alternaties. )bviously, decision making will occur at many

points in the planning process.Planning is a continuous process like a navigator constantly checks where his ship ingoing in the vast ocean, a manger must constantly watch his plans must constantlymonitor the conditions, both within and outside the organization to determine ichanges are re#uired in his plans.

.orollary:

A plan must be 0eible. y 0eibility o a plan is mean its ability to change directionto adapt to changing situations without undue cost. %t needs to possess a built in

0eibility in at least ma"or areas technology, market, !nance, personal andorganization.

Fleibility in technology means the mechanical ability o a company to change andvary its product&mi according to changing needs o its customers. Fleibility inmarket means the company8s ability to obtain additional unds on avorable termswhenever there is need or them. Fleibility in personnel means the company8sability o shit individuals rom one "ob to another. Fleibility in organization meansthe company8s ability t shit individuals rom one "ob to another. Fleibility inorganization means the company8s ability to change the organization structure.

Fleibility is possible only within the limits. it is almost invariably true that itinvolves etra cost. *ometimes it may e so epensive that it bene!ts may not beworth the cost. People may develop patterns o the thought that are resistant tochange. *ometimes people may develop patterns thoughts that are resistant to

change. *ometimes already established and procedures may become so deeplyingrained in the organization that changing them may become di+cult. %n mostcases irretrievable costs already incurred in !ed assets, training, advertising mayblock 0eibility.

Planning is all pervasive unction. %n other words, planning is important to allmanagers regardless o their level in the organization. here are however somediferences in involvement by managers at diferent levels. )ne ma"or diferenceconcerns the time period covered. op level managers are generally months to !veyears later, or even ater that. /ower level managers are more concerned withplanning activities or the day, week or month .!rst line supervisors, or eampleplan the work activities or their people or the day. hey are not responsible orpredicting sales levels and ordering materials to produce

Products si months in the uture. A second ma"or diference concerns the timespent on planning. op managers generally spend more time on planning. hey areconcerned with establishing ob"ectives And developing plans to meet those ob"ectives. /ower level managers are more involved in eecuting these plans.

Importance o planning!lanning4(Minimizes ris and uncertainty


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y providing a more rational, act&based procedure or making decisions, planningallows managers and organizations to minimize risk and uncertainty.Planning does not deal with uture decisions, but in uturity o present decisions.


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% a manager does not make any provision or the replacement o plant andmachinery, the problems he will have to ace ater ten years can well be imagined.

he manager has a eeling o being in control i he has anticipated some o thepossible conse#uences and has planned or them. %t is like going out with anumbrella in cloudy weather.

%t is through planning that the manger relates the uncertainties and possibilities o

tomorrow to the acts o today and yesterday.

5(+eads t success

Planning does not guarantee success but studies have shown that, oten thingsbeing e#ual, companies which plan not only outperorm the non&planners but alsotheir past results.

his may be because when a businessman8s actions are not random arising as merereaction to the market place

Planning leads to success by doing beyond mere adaption to market 0uctuations.?ith the help o a sound plan, management can act proactively and not simplyreact. %t involves to attempt to shape the environment on the belie that business isnot "ust the creation o environment but its creator as well.

6(*ocus attention on the organizations goals

Planning helps the manger to ocus attention on the organizations goals andactivities. his makes it easier to apply and coordinate the resources o theorganization more economically. he whole organization is orced to embraceidentical goals and collaborate in achieving them. %t enables the manager to chalkout in advance an orderly se#uence o steps or the realization o organizationsgoals and to avoid needless overlapping o activities.

7(*acilitates control

%n planning, the manager sets goals and develops plans and to accomplish thesegoals. hese goals and plans then become standards against which perormancecan be measured. he unction o control is to ensure that activities conorm to the

plans. hus control can be eercised only i there are plans.

8(Trains e/ecuties

Planning is also an ecellent means or training eecutives. hey become involvedin the activities o the organization and the plans arouse their interest in themultiarious aspects o planning.

*orms o planning

Planning can take many orms and styles in practice. Planning can becomprehensive or limited in scope. here are organizations that plan to the lastdetail. )thers rest content, simply broad targets or the net !nancial period.

Planning may be done by an army o eperts using sophisticated orecastingtechni#ues. )r it may be done in a seat o the pants manner, by a number oeecutives, sharing their "udgments over a cup o cofee. Planning may begin at thetop with top eecutives deciding on targets and passing them down orimplementation or it may begin at the bottom with the lowest sections ormulatingtheir targets and sending them up or evaluation and coordination. Planning may bedone participitavely with many members o the organization chipping in with theirideas and "udgments or it may done in the elitist manner by a ew eecutives ortechnocrats.


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hus there are many orms and styles o planning, and planning practicesare liely to ary rom organization to organization. )ne useul way oclassiying them is to distinguish between strategic planning and tacticalplanning.

#bout Strategic planning involves deciding what the ma"or goals o the entire

organization will be andwhat policies will guide the organization in its pursuit othese goals and depends on the data collectei the d outside the organization suchas market analysis, estimates o costs, technological developments and so on and ithe data being mostly imprecise make strategic planning less certain.

#bout Tactical planning involves deciding speci!cally how the resources o theorganization will be usedto help the organization achieve these strategic goals. oreample i the organization has prepared a ten&year strategic plan which envisagesa pro!t rate o 4G on capital employed in the tenth year, it also necessary toprepare a more detailed tactical plan or the net year, with a speci!c target o 3CGon the capital employed.

Distinction between strategic planning and tactical planning.

Strategic planning Tactical planning3(decides the ma"or goals and policies oallocation

3(decides the detail use o resources orachieving

o resources to achieve these goals these goals4( -one at higher levels o management.$iddle 4(is done at lower levels o managementmanagers sometimes not even awarethat

strategic planning being considered.

5(it is long term 5(it is short term9( %s generally based on long termorecasts about

9(is generally based on the pastperormance o

technology, political environment and ismore the organization and is less uncertainly

uncertain.(is less detailed because it is notinvolved with

(is more detailed because it is involvedwith the

the day to day operations o theorganization day&to&day operations o the organization

Types o plansPlans are arranged in a hierarchy within the organization as shown in the !gurebelow

At the top o this hierarchy stand ob"ectives. )b"ectives are the broad ends o theorganization which are achieved by means o strategies. *trategies in their turn arecarried out by means o the two ma"or groups o plans.

Single use plans and standing plans.

Single use plans are developed to achieve a speci!c end and when the end isreached the plan isdissolved. he two ma"or types o plans are single use plans areprogrammers and budgets.


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Standing plans on the other hand are designed or situations that recur oten to"ustiy the standardizedapproach. For eample, it would be ine+cient or a bnak todevelop a single use plan or processing a loan application or each new client.instead it uses one standing plan that anticipates in advance whether to approve orturn down the re#uest based on the inormation urnished, credit rating, etc. thema"or types o plans are policies, procedures methods and rules.

>ach type o plan is described in detail as ollows.

"b2ectiesAre the goals o the organization which the management wishes the organization toachieve.

hese are the end points or pole&star towards which all business activities likeorganizing, sta+ng, directing and controlling are directed.

)nly ater having de!ned these end points the can determine the kind oorganization the kind o personnel and their #uali!cations, the kind o motivation,supervision and direction and the control techni#ues which he must employ to reachthese points. )b"ectives are the speci!c targets to be reached by an organization.

hey are the translation o the organization8s mission into concrete terms againstwhich the results can be measured.

-/ample 4(uniersity decision to admit a certain number o students orthe hospitals decision to admit a certain number o indoor patients.

$haracteristics o the ob2ectiesSome o the important characteristics o the ob2ecties are

4("b2ecties are multiple in number

%mplies that every business enterprise has a package o ob"ectives set out invarious key areas. here are eight key areas in which ob"ectives o perormanceand results are set which are 'i(market standing 'ii(innovation'iii(productivity'iv(physical and !nancial resources'v(pro!tability

'vi($anager perormance and development 'vii(worker perormance'viii(attitudeand public responsibility.

5(ob2ecties are either tangible or intangible


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or some ob"ectives such as in the areas o market standing, productivity, andphysical and !nancial resources( there are #uanti!able values available.

)ther areas o ob"ectives are not readily #uanti!able and are intangible, such asmanager8s perormance, workers morale, public responsibility etc.

6(ob2ecties hae priority

%mplies that at one particular given point o time, the accomplishment o oneob"ective is relatively more important than others.Priority o goals also says something about the relative importance o certain goalsregardless o time. For eample, the survival o organization is necessary conditionor the realization o other goals.

he establishment o priorities is etremely important in that resources o anyorganization must be


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allocated by rational means.

7(ob2ecties are generally arranged in a hierarchy

his means that we have corporate ob"ectives o the total enterprise at the top,ollowed by divisional or departmental ob"ectives, then each section and !nally

individual ob"ectives. )b"ectives at all levels serve as an end and as a means.

8(ob2ecties sometimes clash with each other

he process o breaking down the enterprise into units re#uires that ob"ectives beassigned to each unit. >ach unit is given the responsibility o attaining an assignedob"ective. he process o allocating ob"ectives among various units creates theproblem o potential goal con0ict and sub optimization on, where in achieving thegoals o one unit may put in risk o achieving the goals o the other.

'e1uirements o sound ob2ecties

)i("b2ecties must be clear and acceptable

he ob"ectives must be clear and understandable amongst people which could beachieved by unambiguous communication, should be compatible with theirindividual goals.

)ii(ob2ecties must support one another

)b"ectives could interlock or interere with one another which re#uire the need orcoordination and balancing the activities o the entire organization, otherwise itsmembers may pursue diferent paths making it di+cult or the manager to achieve

the company8s overall ob"ectives.

)iii(ob2ecties must be precise and measurableAn ob"ective must be spelled out in precise, measurable terms the reasons or whichbeing'3( he more precise and measurable the goal, the easier it is to decide the way

o achieving it.'4( Precise and measurable goals are better motivators o people than general

goals.

'5(Precise and general goals make it easier or lower level managers to developtheir own plans or actually achieving these goals.

'9( %t is easier or managers to ascertain whether they are succeeding or ailing i

their goals are precise and measurable.

)i( ob2ecties should always remain alid

$eans that the manager should constantly review, reassess and ad"ust themaccording to the changed conditions.

#dantages o ob2ecties The ollowing are the benefts o ob2ecties


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'i(hey provide a basis or planning and or developing other type o palns such aspolicies,budgets and procedures.

'ii(hey act as motivators or individuals and departments o an enterprise imbuingtheir activities with a sense o purpose.ult in undesirable com


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'iii( hey eliminate haphazard action which may result in undesirableconse#uences.

'iv( Facilitate coordinated behavior o various groups which otherwise may pull indiferent directions.

'v( Function as a basis or managerial control by serving as standards againstwhich actual perormance can be measured.

'vi(hey acilitate better management o the enterprise by providing a basis orleading, guiding, directing and controlling the activities o people o variousdepartments.

'vii(/essen misunderstanding and other con0ict and acilitate communicationamong people by minimizing "urisdictional disputes.'viii( Provide legitimacy to organizations activities.

Strategies A corporate strategy is a plan which takes these actors into accountand provides optimalmatch between the !rm and the environment.

wo important activities are involved in strategy

ormulation 'i(environmental appraisal'ii(corporate appraisal)i(enironmental appraisal)4(!olitical and legal actors

An analysis o the relevant environment results in the identi!cation o threatsand opportunities. Eey environment actors which need to b e studied are

'a(stability o the government and its politicalphilosophy. 'b(taation and industrial licensinglaws'c(monitory and !scal policies

'd( =estrictions on capital movement, repatriation o capital,state trading etc. '5(economic actors'a(level o economic development and distribution o income

'b( rend in prices, echange rates, balance o payments.'c( *upply o labour, raw, material, capital etc.)6(competitie actors'a(identi!cation o principle competitors

'b(analysis o their perormance and programmersin ma"or areas 'c(antimonopoly laws and rules ocompetition'd(protection o patents, trademarks, brand names and other industrial propertyrights)7(social and cultural actors

'a(literacy levels opopulation 'b(religious and

social characteristics'c(etent and rateurbanization 'd(rate o socialchange)ii($orporate appraisal%nvolves the analysis o company8s strengths and weaknesses.

A company8s strength may lie in outstanding leadership, ecellent product design,low&cost manuacturing skill, e+cient distribution, e+cient customer service,


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personal relationship with customers, e+cient transportation and logistics, efectivesales promotion, high turnover o inventories and capital etc.

he company must plan to eploit these strengths to the maimum. *imilarly it maysufer rom a number o weaknesses.


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Standing plans

!olicies A policy is a general guideline or decision making which sets upboundaries around decisionsincluding those that cannot be made and shutting outthose that cannot. A policy can be considered as a verbal, written or implied overall

guide setting up boundaries that supply the general limits and the direction in which,managerial action takes place

Policies suggest how to do the work. hey do not dictate terms to subordinates andprovide only a ramework within which the decisions must be made by themanagement in diferent spheres.-/ample

3(=ecruitment policy o a company is to recruit meritorious people through theemployment echange 4( -istribution policy o a ertilizer company is armeroriented.Policies and ob"ectives guide thinking and action, but with a diference.)b"ectives are end points o planning while policies channelize decisions to theseends.#dantages o policies

3(Policies ensure uniormity o action in respect o matters at various organizationalpoints which make actions more predictable.

4(Policies speed up decisions at lower levels because subordinates need not consulttheir superiors re#uently.

5(makes it easier or the superior to delegate more and more authority to the hissubordinates without being unduly concerned because he knows that whateverdecision the subordinates make will be within the boundaries o the policies.

9(Policies give a practical shape to the ob"ectives by elaborating and directing theway in which the predetermined ob"ectives are to be attained.

Types o policies an be classi!ed on the basis o sources, unctions ororganizational levels4($lassifcation on the basis o sources three types originated, appealed,implied and imposed policies

)a("riginated policies Are usually established ormally and deliberately by topmanagers or thepurpose o guiding o actions o their subordinates and also theirown. hese policies are set out in print and embodied in manual.

)b( #ppealed policies Are those which arise rom the appeal made by asubordinate to his superiorregarding the manner o handling a given situation andcomes into eistence because o the appeal made by the subordinate to thesupervisor.

)c( Implied policies are also policies which are stated neither in writing norverbally. *uch policies are called implied policies. )nly by watching the actualbehavior o the various superiors in speci!c situations can the presence o impliedpolicy is ascertained.

)d( -/ternally imposed policies are the policies which are imposed on thebusiness by eternal agencies such as government trade associations, and tradeunions.-/ample policy dictated by the goernment law.


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5( $lassifcation on the basis o unctions on the basis o business unctions,policies may be classi!edinto production, sales, !nance, and personnel policies.>very one o these unctions have number o policies.


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*or e/ample Sales unction may hae policies relating to maret.

!roduction unction may policies relating to the method o production, output,inventory, research.*inance unction may have policies relating to capitalstructure, working capital, internal !nancing etc.!ersonal unction: may havepolicies relating to recruitment, training, working activities, welare activities etc.

6.classifcation on the basis o organizational leel on this basis range rom

ma"or company policiesthrough ma"or departmental policies to minor or derivativepolices applicable to the smallest element o organization.

Cuidelines or eectie policy maing!olicies should be

'3(as ar as possible should be stated in writing and should be clearly understood bythose who are supposed to implement them.'4( *hould re0ect the ob"ectives o the organization, de!ne appropriate methods

and action.

'5( he top managers and the subordinates should participate in the ormulation opolicies or successul implementation o the policies.

'9(*hould strike a reasonable balance between the stability and 0eibility.

onditions change and policies must change accordingly. he degree o stabilityshould also prevail to achieve the sense o direction

'(-iferent policies should not pull in diferent directions and s one should supportone another and they must be internally consistent.

';(*hould not detrimental to the interest o the society and must con!rm to thecanons o ethical behavior which prevail in society.'7(must be comprehensive to cover as many contingencies as possible

'@(*hould be periodically reviewed in order to see whether they are to be modi!ed,changed or completely abandoned and new ones put in their place.

!rocedures

Policies are carried out by means o more detailed guidelines called procedures.A procedure provides a detailed set o instructions or perorming a se#uence oactions involved in doing a certain piece o work. he same steps are ollowed eachtime that activity is perormed.

*or e/ample the procedure or purchasing rawmaterial may be'i(the re#uisition rom the storekeeperto the purchasing department. 'ii( alling tenders orpurchase o materials.'iii(placing orders with the suppliers who are selected'iv(inspecting the materials purchased by the inspecting department nad

'v( $aking payment to the supplier o materials by the accountsdepartment. *imilarly, the procedure or the recruitment opersonnel may be

'i(inviting applications throughadvertisement 'ii(screening theapplications'iii(conducting written test'iv(conducting interview or those who have passed the written test and'v( $edical eamination o those who are selected or the posts.

Procedures may also eist or conducting the meetings o directors andshareholders, granting loans to employees, issuing raw materials rom the stores


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department, granting sick leaves to the employees, passing bills by the accountsdepartment.


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Dierence between the policy and the procedure.

!olicies procedures

3. Are the general guidelines to boththinking and

3 .are the guidelines to action only usuallyor the

action o people at higher levels people at the lower levels4.help in ul!lling the ob"ectives o the

enterprise 4.show us the way to implement policies5.are generally broad and allow some

latitude in 5. Are speci!c and do not show latitude.

decision making

9.are always established ater thorough

study and9.are oten established without any

study or analysis o work

analysis

#dantages and limitations o

procedures#dantages

3( hey indicate a standard way o perorming a task which ensures a high level ouniormity in perormance in the enterprise.4(they result in work simpli!cation and elimination o unnecessary steps andoverlapping

5(they acilitate the eecutive control over perormance b y laying down these#uence and timing o each task, eecutives dependence on the personalattributeso his subordinates is reduced

9(they enable employees to improve their e+ciency by providing them withknowledge about their entire range o work

+imitations'3(y prescribing one standard way o perorming a task, they limit the scope orinnovation or improvement o work perormance.

'4(y cutting across department lines and etending into various otherdepartments, they sometimes result in duplication, overlapping and con0ict.

hese limitations can be overcome i the management reviews and appraises theprocedures periodically with an intention to improve them.

Methods# method is a prescribed way o in which one step o a procedure isperormed.

For eample the speci!ed techni#ue to be used in screening the applications or

conducting a written test is a method where as the se#uence o steps involved inthe recruitment o personnel consists o a procedure.$ethods help in increasing the efectiveness and useulness o the procedure.

y improving the methods reduced atigue better productivity and lowercosts can be achieved. $ethods can be improved in a number o ways.

$anual methods o perorming a task can be replaced by the mechanical means, ortheeisting mechanized process may be improved and unproductive methodsimproved by conducting motion study.'ules


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#re detailed and recorded instructions that a specifc action must or mustnot be perormed a gien situation.

%n sanctioning overtime to workmen, in regulating travelling allowances, insanctioning entertainment bills and in other similar matters a uniorm way ohandling them or dealing with case has to be ollowed which are all covered by therules o the enterprise.

hey make sure that the "ob is done in the same manner every time bringinguniormity in eforts and


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results.

Single use plans !rogrammes and budgets

!rogrammes

!rogrammes are precise plans or defnite steps in proper se1uence whichneed to be taen to discharge a gien tas.

Programmes are drawn in conormity with the ob"ectives and are made up opolicies, procedures, budgets etc.

he essential ingredients o every programme are time phasing and budgeting.

his means that the speci!c dates should be laid down or the completion o theeach successive stage o a programme.

A provision should also be made in the budget or !nancingthe programme. )ten a single step in a programme is set upas a pro"ect.

@udgets

# budget is a fnancial andor 1uantitatie statement prepared prior to adefnite period o time, o the policy perceied during that period, or thepurpose o obtaining a given ob"ective.

udgets are plans or a uture period o time containing the statements o theepected results in numerical terms that is rupees, man hoursProduct units and so orth.

he important budgets are sales budget, revenue budgets, cash budget andepense budget.

#dantages

3(udgets are useul or the enterprise and are epressed in numerical terms,acilitate comparison o the actual results with the planned ones and thus serve as

control device or measuring perormance.4(hey help in identiying and removing the dead heads o ependiture.

Steps in planningThe arious steps inoled in planning are as ollows

4(-stablishing erifable goals or set o goals to be achieed

he !rst step in planning is to determine the enterprise ob"ectives which are otenset up by the upper level or top managers, usually ater number o possibleob"ectives have been careully considered. here are many types o ob"ectivesmanagers may select: desired sales volume or growth rate, the development o a

new product or service or even a more abstract goal such as becoming more activein the community. he type o goal selected will depend on a number o actors: thebasic mission o the organization, the value its mangers hold and the actual and thepotential abilities o the organization.

5(-stablishing planning premises

it is the second step in planning to establish planning premises which is vital to thesuccess o planning as they supply pertinent acts and inormation relating to theuture such as population trends, general economic conditions, production costs and


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prices, probable competitive behavior, capital and material availability andgovernment control and so on.!lanning can be ariously classifed as under


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'a(internal and eternalpremises 'b(tangible andintangible premises

'c(controllable and non controllablepremises 'a(internal and eternalpremises:

!remises may e/ist within and outside company.

Internal premises include sales orecasts, policies and programmes o theorganization, capitalinvestment in plant and e#uipment, competence omanagement, skill o labour, etc. -/ternal premises can be classi!ed intothree diferent groups

usiness environment, actors which in0uence the demand or the product, and theactors which afect the resources available to the enterprise.

)b(Tangible and non0tangible premisesTangible premises: those which can be #uantitatively measured whileIntangible premises are those which being #ualitative in character and cannot bemeasured.

Tangible e/amples: population growth, industry demand, capital and resourcesinvested in theorganization are all tangible.Intangible political stability, sociological actors, business and economicenvironment are all tangible.

)c(controllable and non controllable premises

*ome o the planning premises are controllable and some are non&controllable andbecause o the non&controllable actors there is need or the organization to revisethe plans periodically in accordance with the current development.-/amples o uncontrollable actors strikes, wars, natural calamities,emergency, legislation etc.

-/amples o controllable actors company8s advertising agency, competence omanagementmember8s skill o the labour orce, availability o resources in terms ocapital and labour, attitude and behavior o the owner8s o the organization.

6(deciding the planning period

%t is the net task once the upper level managers have selected the basic long termgoals and the planning premises.

usiness plans are made in some instances once or a year and plans are made ordecades based on some logic and uture thinking.

he actors which afect the choice o period are:'a( /ead time in development and commercialization o new product.'b(he time re#uired to recover capital investments or the pay&back period and'c( /ength o the commitments which are already made.

)a(lead time in deelopment and commercialization o new product

-/ample 1eavy engineering manuacturing company wanting to start a newpro"ect should have aplanning period o !ve years.)b(time re1uired to recoer capital inestments or the pay0bac period%t is the number o years over which the investment outlay will be recovered or paidback.


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-/ample machine investment =s.3C lakhs cash in0ow =s.4 lakhsHyear then thepayback period is years

)c(length o commitments already madeplan period should be as long as possible to enable the ul!llment o commitmentsalready made


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7( *inding alternate courses o actionhe ourth step o planning is to !nd thealternate courses oaction.-/ample securing the technical knowhow by engaging a oreign technician or bytraining staf abroad.

8(ealuating and selecting the alternate courses o action

Ater selecting the alternate courses selection the best course or course o actionwith the help o #uantitative techni#ues and operations research.

;(deeloping the deriatie plans

)nce plan ormulated, its broad goals must be translated on day to day operationso organization $iddle level managers must draw up the appropriate plans,programmes and budgets or their sub&units which are described as derivativeplans.

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