Dr. PRAMOD KUMAR RAWAT MUKESH KUMAR GUPTA ASTT. PROFE.KRCHE NARELA DELHI-40 (GGSIPU)

unit- 2

meaning of planning- planning is a pre-decided/pre-determined course of action to be taken in future. In planning defined about the goal/objective, how it would be get in certain time period? Entire things will be described.

According to koontz and O’Donald- planning is deciding in advance what to do? How to do it? When to do it? Who is to do it?

Nature/feature of planning

1- planning is goal oriented.

2- planning is a primary function.

3- planning is a continuous process.

4- planning is a forward looking.

5- Planning is an integrated process.

6- planning is directed towards efficiency.

7- planning involves choice.

8- planning is an intellectual process.

Planning is goal oriented- planning is a pre-decided course of action to taken in future. Organisation can achieve the target in very specific time. If they made/prepared proper planning that how to do it. That is called planning is goal oriented.

2- planning is primary function- planning is the first function of any management. Planning is based up on the management objective. And also other managerial operations like- organising, staffing, directing, controlling etc. planning is must in every activities of management.

3- planning is a continuous process- in an organisation planning is an on-going and dynamic exercise. It could not be stopped, they change the old plan and apply new plan. As a manager carries out his function, he continuous in plan, revising his old plan selecting alternative plans.

4- planning is forward looking- planning is always concerned with looking in to future. It involves forecasting of future environment in which the organisation is expected to actions.

5- planning is an integrated process- it is not just happen, pre-decided work for all level mgt. plans are inter-related and inter-dependent . Planning is a time bound concept.

6- planning is directed towards efficiency- planning is important of an organisation because of work would be carry with the proper planning. Organisation achieve goal/objective economically and efficiently. The efficiency of plan is measured by how much they contribute to the objectives.

7- planning involves choice- planning is concerned with selecting the best course of action from among the alternatives. Decision making is an integral part of the planning. There is no need to planning if one way of doing some thing.

“ selecting the best alternatives”

8- planning is an intellectual process- planning is not a easy task and done by any one. It is not guess work/wishful thinking. It requires mental capabilities to do something.

scope/importance of planning- planning is most important both for an organisation

and an economy. Sound plan make effective work and help to management. Planning full-fill the management objective. Planning is useful to an organisation.

1- focuses/attention on objectives and results- every organisation want to achieve certain objective. Planning force to members of the organisation do hard work, make proper coordination, in different department, make single objective and think about the organisational goals.

2- reduces uncertainty and risk- future is uncertain planning can not catch it. But proper planning, organisation can reduces risk and uncertainty. An organisation can predict future event and make provision for them. Planning helps to identify potential threats and opportunities.

3- guides decision making- planning is selecting the best alternative for an organisation. Planning guide what will be the best option. Because planning predicting the future. Planning helps in taking future oriented decisions.

4- provide sense of direction- planning saves an organisation from drafting and avoids aimless activities. planning is blue print, give guide to the different department what to do? How to do? Without proper direction no-one can do any things efficiently/economically.

5- helps in coordination- planning would be helpful in making coordination between different levels of management.

Planning integrate all workforce at work place for common goal/objective. it would be possible from proper planning and coordination. It provides unifying framework.

6- Encourages innovation and creativity- planning is prediction of future. So in an organisation what would be the possible changes(technology, Ideas, concept) comes from planning. Planning requires continuous monitoring of environment for new Ideas and developments.

objective of planning-

Every organisation have aim/purpose to do business that is called objective.

1- mission- it represent the overall philosophy of an organisation. Mission is used generally in non-business organisation like- college, religious trust, club, govt. etc.

Exp- elimination of poverty is the mission of the govt. of India. It indicates the line of business of an enterprises and its long-term commitments.

2- goal- goal is that things which is done by an organisation. Goal is the role of an organisation in society and provide a motive for its activities.

Exp- the goal of Suzuki is to provide low cost, economical and quality automobiles to the public.

Tata Nano- low cost, economical and quality automobiles to the public.

3- target- it is a specific and quantitative objective.

Exp- the total out-put in one year.

The total sales by a salesman in a day.

4- standards- standard is a norm/criteria against which performance can be compared and evaluated. Standard may be two types.

standards

Quantitative standardsQualitative standards

Unit of out- put, unit of sales, Quality standard etc.

5- quota- quota defined by in their territory. It is the prescribed guidelines to whole seller/agent. Quota is fixed for marketing activities like- no. of retail points, sales figure of each retail points, etc.

6- deadline- time limit of competition of task. Planning make deadline for every task in an organisation. So the each department make best utilisation of time.

Exp- supplying an order by Dec-2-2013 is a deadline. a deadline show that the time limit for the completion of a task.

Types of planning

Long-range planning

Medium-term or intermediate planning

Short-range planning

1- Long-range planning- long-range planning is the process of planning for long-term goals. In long-range planning time horizon would be 5 years and more. High uncertainty, organisation linkage with the external environment. Different implications comes in long range planning like- changes in the structure and resources.

2- Medium-term or intermediate planning- such planning covered time horizon between 2 and 5 years. It would be more suitable than long-range planning. Such plans are coordinative in nature and designed to implement in long term plans by coordinated efforts of different departments.

3- Short-range planning- such types plans for 1 years. In this plans low uncertainty. Forecasting depend upon the past experience, and linkage between the different part of the organisation. It is provides the basis for day to day operations, program me, schedule etc.

According to the level of formulation, planning may be classified in to 3 categories-

1- corporate planning

2- divisional or business planning

3- functional or unit planning

1- corporate planning- corporate planning is the planning of whole enterprises. It is define the basic goals, strategies, and policies for the enterprises as whole. (top mgt.)

2- divisional or business planning- such plans specifies the goals, policies, and program me, of a particular department in an organisation. Departmental plans- sales budget is the departmental plans for the sales department. It is formulated by middle level mgt. corporate planning concern with the organisational goal. Divisional planning relates to the particular departments.(middle mgt.)

3- functional planning- this is the lowest level of planning. Exp- advertising plan may be prepared to achieve the sales targets. Focus on day to day operations. (operating executives)

According to the focus, the following types of planning can be identified-

1- strategic planning- strategic planning for whole planning for an organisation. Direction of allocation of resources, based on long-term forecast. Usually done by the top level mgt., it is the formulation of detailed operational plans.

2- operational planning- operational plans for the particular department/function areas. Short-range planning, operational planning for middle/ operating level.

Planning process/steps in planning

Establishment of objective

Forecasting of demand,competition,

govt,policy.etc.Planning premises

Appraisal of plans

Developing alternatives

Formulation of derivative plans

Selection of best alternatives

Evaluation of best alternatives

1- establishing objective- planning is an intellectual process. When making planning the question is arise in mind “what is the objective of the doing job”? So the first steps the planning determine the objective. Objective provide direction to various activities in the enterprise, planning has no utility if it is not related to objective.

2- collection of information and forecasting- sufficient information must be collected in order to make the plans and sub-plans.all the information makes the critical assessment of the current status of the organisation. The assessment of the external environment may consider the strong and -

Weak points of the organisation.collection of information and making forecast serve as important basis of planning.

3- development of planning- planning is done for future which is uncertain. In planning explain limitation which plans are to be implemented. Collected data on the current status of the organisation and to forecast future changes.

4- determine alternative- there are several alternatives for any plan. They find out the all the possible alternatives.

Exp- increase sales of an organisation may launch-advertising campaign or reducing prices.

Or improve quality of products.

5- evaluate the alternatives- they must evaluated the alternative with reference to consideration like- cost, long-range objective, limited resources, expected payback, risk, etc.different technique are available to evaluate alternatives. The best possible alternative may be chosen by the manager.

6- selection of plan- this is the final steps in the planning process is to select most feasible plan and develop derivative plans. The hierarchy of plans must be both integrated and flexible to meet the changing internal and external environment.

Limitations of planning-

1- lack of accurate information- planning is done for the future and the quality of planning depend up on the accuracy of information. No manager can predict completely and accurately the event of future. If reliable forecasts and data are not available, planning can not be realistic.

2- time and cost- planning is a time consuming and expensive process. collection of data and revision of plans involve maximum time, effort and money. Increase the accuracy of planning, manager may spend excessive time and money in securing information. planning may delay action.

3- Inflexibility- planning may result rigidity in managerial work. Manager/top management could not explain the planning when they are preparing it.

4- Lack of ability to plans- some manager do not believe in the worth of planning. Lack of commitment to planning, lack of clear and meaningful objectives, lack of top management support. Lack of positive attitude are common human weakness that create problems in planning.

5- Environmental constraints- manager can not control the macro environment. As the condition change more frequently.

Errors of judgment may increase. Changing environment, planning may fit for one condition may not be for next/another condition.

6- False sense of security- planning may create a false sense of security in the enterprise. A manager feel that the plans are formulated, action will automatically be efficient. Once the policies and the procedures are established, they are considered sacred. Instead of facilitating action, these may hinder action unless they are reviewed and revised periodically.

Business forecasting

Meaning of business forecasting- forecasting is the formal process of predicting future events that will significantly affect the functioning of enterprises.

Nature-

a)Forecasting is concerned with future events.

b)Forecasting is done by analysing the past and present events.

c)Forecasting may be made for long-term or short- term.

d)The quality of forecasting depend up on the reliability of information.

Key to planning

Basis for control

Facing environmental

challenges

Executive development

Means of coordination

Importance of business forecasting

1- key to planning- forecasting is helpful in making plans. It improve the quality of managerial planning. With the help of forecasting, mgt. can anticipate future trends and decide the appropriate course of action to take the advantages of these trends.

Exp- sales forecasting helps in identifying the future demand.

Good forecasting for good plan.

2- means of coordination- people at different level participate in the process of forecasting. Regular interactions between the members of the organisation make coordination and unity among them.

Forecasting helps in integrating various departmental plans in to the corporate plan.

3- basis for control- forecasting provides relevant information for exercising control. The manager can know their weaknesses in forecasting process and take suitable action to over come these. Forecasting can disclose the areas where control is lacking. Once such areas are indentified then steps can be taken to make control effective.

4- executive development- forecasting requires executives to look ahead. Think through the future and improve their mental capability. Manager development the habit of collecting,

analysing, interpreting data, no guess work.

5- facing environmental challenges- forecasting provides clues about the future happening. Manager can serve the organisation from the impact of trade cycle and other threats. Forecasting is helpful in not only in planning but in the entire management process.

Limitation of business forecasting

Based on assumption

Not absolute truth Time consuming and expensive

1- Based on assumption- all forecast are based on certain assumption which may not always be true. The basic assumption behind forecast is that event would not be change. This assumption may not hold good in all cases. As a result forecasts may become unreliable.

2- not absolute truth- forecast indicate the trend of the future events and may not be fully true. The techniques of forecasting simply project the future trends and can not guarantee that particular trend will occur in future. There is always a possibility of mistake.

3- Time- consuming and expensive- lot of time and money are involved in the collection, analysis and interpretation of data for forecasting.

Elements/process of business forecasting

Developing the ground

work

Estimating future trends

Comparing actual with

estimated results

Refining the forecast

1- Developing the ground work- first of all the real problem about which the forecasting is to be done and the purpose of forecasting should be made clear. Investigation and analysis of various factors influencing the organisation is necessary. The past events should be analysed and compared with the present events. This will reveal the cause of various changes in the relevant factors.

2- Estimating future trends- in second stage estimating future trends, past trends are projected and the necessary data are analysed this probable trends are intelligent guesses rather than absolute guide to be executive action.

3- Comparing actual with estimated results- the actual results are periodically compared with the estimates. Such comparisons reveals deviations. All significant deviations are analysed to identified their causes and suitable corrective action is taken.

4- Refining the forecast- forecasting is an ongoing process. Proficiency (expert) in forecasting can be achieved slowly through constant improvements in data and techniques over a period of time.

Techniques of business forecasting

Quantitative QualitativeTime series analysis

Extrapolation

Regression analysis

Econometric models

Business barometers

Panel consensus method

Delphi technique

Morphological analysis

Depend up on statistical data predict future

Depend up on human judgment predict future

Quantitative technique

1- time series analysis- in time series analysis data is in various components trends, seasonal variation climates, weather condition customers, tradition and habits. Cyclical variation- prosperity, declining, depression and improvement.

2- extrapolation- it is based on the time series analysis but it does not isolate the effect of various types of changes. It is assumed that there is a constant and stable pattern of movement.

3- regression analysis- it is depend up on two or more interrelated series. Changes in one variable also changes in another variables.

4- econometric model- it is more expensive model small firm can not afford it. It is the mathematical models in this models interrelationship among different variables. It takes a set of simultaneous equiations.these equitation are not easily to formulate, this models developed by specialized institute or agencies.

Qualitative technique

1- panel consensus method- a panel of expert in the area is prepared and they interact to each others.

Exp- the opinion polls are used to predict the out come of election.

2- Delphi technique- expert opinion of any topic but they have no face to face contact. Selecting the best alternative from different opinions. This method applies a scientific approach but may not be give the same answer in all cases.

3- morphological analysis- this method is used mainly to forecast technological changes.

It is depend up on several factors like-

a)Time period to be covered

b)Cost of the forecast

c)Time available for forecasting

4- business barometers- business barometers are the index numbers used to predict the direction in which the economy is moving. The assumption here that the past pattern tend to repeat themselves in future.

Gross national product, wholesale price index, consumers price index, index of industrial production, stock exchange index.

Used in forecasting continuous rise in gross national product.

Management by objective (MBO)

In 1954 Peter Drucker suggested “ management by objective and self control” as the basis of measuring the performance of manager in an organisation.

In 1961 Edward Shelh MBO is integrating individual with the organisation.

In 1965 John Humble a British management consultant published his book “ MBO” MBO is known by the different names like “ management by results” “goal mgt.” “work planning and review” in recent year MBO has become a philosophy of managing many enterprises.

Concept of MBO- according to George Odiorne “ MBO is a process where by the superior and the subordinate managers of an enterprise jointly identify its common goals.

According to John W. Humble- “ MBO is a dynamic system which seeks to integrate the companies need to clarify and achieve its profit and growth goals with the managers need to contribute and develop himself. It is a demanding and rewarding style of managing a business”

Feature of MBO

1- mutual goal setting- mutual setting of objective between different department (every employee) use of these objective as standard evaluating the employees performance. Every manager set target and done with his superior. There is a active participation of all level of people.

2- compatibility- it is helpful in setting objective at all level of organisations. The setting of organisational objective at the top. It is helpful in middle and lower level employee, determine their objective towards organisational objective and with each other.

3- systematic- it is a formal process that being with goal setting and continues through performance review, manager and subordinate act together not only to set common goals but to review performance in the light of these goals.

4- continuity- under MBO performance appraisal with provision for regular periodic reviews. It is a dynamic a approach that integrate the individual with the organisation. Try to predict and influence future rather than on responding and reacting to past. Focus is generally on change to improve both individual and organisational effectiveness.

5- key result areas- MBO ensure that due attention is given to the priority areas which have significant impact on performance and growth of the organisation. Goals of all key personnel are properly explain and they are required to make maximum contribution to the overall objectives.

Finance (key area)

Cash flow, dividend policy, debt-equity ratio, source of funds.

6- measurable objectives- MBO involves the setting of specific measurable objectives for a future time period. The idea is to assign each employee a specific target which is time bound.

Setting measurable objectives may be simple in sales and production. But in other areas it is difficult to set objective in specific terms.

Exp- “ design and run ten community service advertisements” may be an objective in public relations.

Steps in MBO process

DiagnosisUnderstanding the organisation

Obtaining commitmentDefining jobs

Training people

Goal setting Organisational goals and

strategiesUnit and individual goals

Review by superiorJoint agreement

Action planning

Activities requiredSequence of activitiesRules and regulationTime and resources

Interim reviews

Environmental changesRevise goals and

action plans

Final review

DiscussionAnalysis

MotivationRewardscontrol

Advantages of MBO

1- improved planning- MBO produces clear and measurable performance goals. People know what they have to do? There is effective matching of goals and resources. MBO forces manager to plan for result rather than plan for work. Organisation objective would be for each department objective.

2- team work- MBO results is better communication/ coordination between different department and reduces conflict. The whole management team do for one goal/ objective.

there is a interaction of all level of employees. MBO clarifies the job assignment and responsibility of each individual.

3- effective self- control- leadership is free from the routine task, concentrates its efforts and time. Identifying problem and plan can be developed to solve such problems. MBO provide a mechanism by which manager can ensure that enterprise is moving in right direction.

4- objective appraisal- the performance of every individual is evaluated in terms of the mutually agreed targets. MBO also allows employees to monitor and control their own performance.

MBO helps to develop manager, who have potential for growth. Appropriate training programs can be formulated on the basis of performance reviews.

4- motivation- MBO leads to better interpersonal relation in at all levels. It provides greater opportunities to make personal contribution and to accept more responsibility. Superior manager assume a supportive role and subordinates are allowed to exercise self direction and self control.

Different organisation private/public have benefited a lot through the application of MBO.

Limitation of MBO

1- goal setting problems- it is very difficult to set measurable goals. Highly expensive short-term goals may beat the cost of long-term goals. Focus on only end result and goals once set followed rigidity to inflexibility in the organisation.

2- time consuming- MBO requires maximum time in setting of measurable goals. Maximise meeting in initial stage for confidence in subordinates. The formal periodic reviews and final report also consume a lot of time.

3- increased paper work- MBO maximise paper work like newsletters, instruction book, training manual, performance report, etc. employees have to fill and submit detailed reports of their performance.

4- pressure-oriented- under MBO manager are forced to subordinates, not easy to change acting style. An MBO program me based on reward, punishment, psychology may prove self-defecating in the long run.

5- participation problem- MBO requires mutual goal- setting by the superior and the subordinates. But in many cases superior has no time to discuss with the subordinates. He is not willing to share power with subordinate. Subordinate may not willing to set goals for himself because he is in competent or he fears criticism from the superior.

6- inflexibility- MBO introduce inflexibility in the organisation. Once the goals are set down, then the superior may not like to modify it.

organising

Concept of organisation- organisation is also widely means a group of people, a structure of relationship and a function of management.

or

Organisation is used in management in 2 different ways- 1) as a structure 2) as a process

As a structure- organisation is the network of relationship among the member of group of a common objective.

As a process- identifying and grouping the work to be performed, defining responsibility and authority and establishing relationship for the -

Purpose of common objective.

Nature of organising-

1- common purpose- every organisation is goal oriented/purposeful. Every organisation have common goals. It is bound by common purpose and they do for it.

2- division of labour- each and every organisation have division of lab our according to people experience and knowledge divide in to functions. It is necessary to avoid time, energy and resources. It also provide benefits of specialisations.

3- authority structure- define authority of every position. Who is superior or who is subordinates, superior-subordinates relationship is known as chain of command.

4- people- an organisation is basically a group of persons. People constitute the dynamic human elements of an organisation. They have their own need, feeling, goals, sentiments and values.

5- communication- every organisation playing vital role in communication. Proper communication between different department and mutual understanding and cooperation among the member of an organisation.

6- coordination- in an organisation we can find-out proper coordination between different department.

7- resources- an organisation makes various resources like- technology, and skills.

8- environment- an organisation function in an environment comprising- economic, social, political, and legal factor.

9- rules and regulation- every organisatin has rules and regulation for regular functioning. There rules and regulation may be in writing.

Significance of organisation-

1- efficient management

2- coordination and communication

3- growth and diversification

4- optimum use of technological innovation

5- Optimum use of human resources

6- balanced to various activities

1- efficient management- for the successful management it is most important that all the management activities should be done like- planning, staffing, directing, and controlling lack of these things increase duplicacy in an organisation. And some important operation may be left out.

2- coordination and communication- it is clear that proper coordination between different department in an organisation. Improve relationship and mutual communication in different department.

3- growth and diversification- sound organisation helps in the growth and expansion of the enterprise by efficient mgt. sound organisation helps in keeping activities in various areas and increase the capacity of enterprise.

Exp- Air Tel- telecom

Air Tel- air tel digital

4- optimum use of technological innovation- sound organisation change technology with the change of environment for catching the market condition modifying the authority and responsibility and relationship of new development.

5- optimum use of human resources- sound organisation select right person for right job. Favorable condition, satisfy customers and take 100% effort them. The better use of individuals working in the enterprise.

6- balanced to various activities- organisation divides the entire operations of the enterprises in to different development. Define role of various department. This will help in giving attention to various departments according to their contribution to the goals.

process of organising

1- identification of activities

2- grouping of activities

3- assignment of duties

4- delegation of authority

1- identification of activities- the organisation structure is developed to achieve objective. The total work is classified or divide systematically. Identification/classification of important activities while identifying/classifying activities and management must ensure that-

a) All the necessary activities are performed.

b) There is no unnecessary duplication in performing activities.

c) The different activities performed in a coordinated manner and identification of each and every department.

2- grouping of activities- similar activities is group together from department, division, section. Grouping is based on the requirement of the situations. Such grouping of activities is called departmentations.

3- assignment of duties- every group related activities is assigned a position. Every position occupied by an individual. The requirement of the job and the competence of the individual should be properly matched. It creates responsibility and ensure certainty of work performance.

4- delegation of authority- assign duty for right people. Authority and responsibility are properly balanced. Delegation of authority creates superior and subordinates relationship between various position in the organisation.

Principles of organisation

1- principle of objective

2- principle of division of work

3- principle of unity of command

4-Principle of equality of authority and responsibility

5- principle of coordination

6- principle of flexibility

7- principle of efficiency

8- principle of exception

9- principle of continuity

1- principle of objective- in a sound organisation every part should be directed towards the accomplishment of basic objective. Every member of organisation should be familiar with its goals/objective.

2- principle of division of work- in sound organisation the total task should be divided in individual. The allocation of task should be on the basis of qualification and aptitude. It should not make work mechanical and boring.

3- principle of unity of command- every person should received orders from only one superior and be accountable to him. This is necessary to avoid the problems of conflict in instruction, frustration, uncertainty, and divided loyalty and to ensure the feeling of personal responsibility for results.

4- principle of equality of authority and responsibility- authority and responsibility must exist side by side. Authority and responsibility should be clearly defined for all positions.

5- principle of coordination- in sound organisation coordination between department and groups efforts. It is motivate for common objective.

6- principle of flexibility- organisation structure should flexible not static changes. Changes in technology/policy/strategy/etc. according to environmental changes.

7- principle of efficiency- in sound organisation the whole things going well and organisation achieve objective at a minimum possible cost. It should permit optimum use of resources.

8- principle of exception- every manager should take all decision with in the scope of his authority. Only exceptional matters whish are beyond the authority of lower level persons should be referred to higher levels. Routine matters should be deal by executive levels.

9- principle of continuity- the organisation should continuity in business/operation. Proper arrangement should be made for the training and development of executive.

Types of an organisation

Line 0r military type

of organisation

Line and staff type of

organisation

Functional type of organisation

Committee type of organisation

Project org. Matrix org. Free from org.

1-Line or military type organisation It is the oldest and simplest form of organisation.

It is also known as a military type organisation.

All responsibility will be centralized by one man only.

He distribute the responsibility to his subordinate.

Line organisation consist of direct vertical relationship.

A superior exercise direct command over his subordinates.

Sales manager

Assistant sales manager

Assistant sales manager

Assistant sales manager

Assistant sales manager

Region-a Region-b Region-c Region-d

F.S.Supervisior

F.S.Sup

F.S.Sup. F.S.Sup. F.S.sup. F.S.sup. F.S.sup

F.S.Sup

S.M S.MS.M S.M S.M S.M S.M S.M

S-sales, M-man, F-field, Sup-supervisior

Line and staff organisation

• Staff who are experts in specific areas assist the line personnel

• Experts do not have power to command

• They can only advise

• The line manager can accept the suggestion or may reject it

president

Vice president in- charge of marketing

Advertising manager General sales manager Manager of marketing research

Director to sales training

Assistant general manager

Sales promotion manager

Director of dealer and distributor

relations

District sales manager

Branch sales managerSales personal

Functional type organisation• Only for large scale organisation

• Separate departments to look after different activities

• Ex: purchase

• Production

• Sales

• Etc

• Each department has a head and will work under the head.

Director of sales administration

Installation and service

manager

Manager of sales

promotion

Manager of sales training

Manager of sales

supervision

Manager of dealer and distributors

relation

Sales person Sales person Sales person Sales person Sales person

Committee organisation

1- taking important policy decision and planning.

2- general manager, general sales manager, advertising manager, sales research manager, comes in committee type sales organisation.

3- sales man training committee, customers relation committee.

4- they do the meeting time to time and discuss the market conditions.

5- Project organisation

When an organisation has to execute large projects of long duration, it may adopt a project organisation.

A project team is created consisting of specialists from different departments.

The activities of project team are coordinated by the project manager.

Once a project is complete the regular project division undertakes a new project.

M.D

Manager project division -1

Manager project division -2

engineer R/D financ

eH.R

engineer

finance

H.RR/D

CLERKS

CLERKS

Advantages

1- in project management specialist employees in various fields.

2- it provides flexibility in handling specialised projects.

3- it allows maximum use of specialised knowledge and skills.

4- it makes for meaningful control.

Disadvantages

1- there is a great uncertainty because the project manager has to deal with specialists from a no. of diverse fields.

2- lack of clear communication.

3- lack of awareness of project problems.

6- Matrix organisation

It is created by merging the two complementary organisation. (the project & the functional) . It represent a combination of vertical functional departmental organisation with project organisation. Matrix organisation is used in industries with highly complex products as in aerospace industry where project team are created for specific space and system.

Construction divisionResearch and development

Production department

Engineering department

Finance department

Personnel department

Production group

Engineering group

Finance group

Personnel group

Project mgr-1

Project mgr-2

Production group

Finance group

Personnel group

Engineering group

Advantages of matrix organisation

1- this leads to better planning and control and helpful in competition of project in time.

2- it is more flexible than the traditional functional organisation.it can be more easily adapted to changes in technology.

3- matrix structure provides motivation to personnel engaged in a project.

Disadvantage-

1- the organisational relationship become more complex and it also create confusion among personnel.

It contribute to indiscipline and role conflict.

7-Free from organisation-

A free from org. Is a rapidly changing, adaptive, temporary system organised around problems to be solved by group of diverse professional skills.

Free from organisation is similar to the project & matrix organisation.

Nature-

1- objective- a free from org. is follows long-range and development oriented goals but roles and relationship are not well defined.

2- environment- it is highly flexible and dynamics structure, every org. adopts its own organisation design to meet fast changing environment.

3- time- there is no time limit. The structure may last week, a month, or a year depending on changing environment.

4- communication- there are no fixed channel of communication. Focus is on team approach. Communication is in the form of advice and information rather than orders and instruction.

5- roles- roles would not be fixed. Roles performed are interchangeable depending on the nature and complexity of the mission.

6- profit centers- it is the place for all contribution to an integrated single unit with unified goals. so that all gain or lose by the result. major function are treated as profit centers.

Formal organisation informal organisation1-it refers to the personal relationship

which develop automatically when people work together

1- it refers to the well defined authority and responsibility

2- it is related to well defined organisational goals

2- it is created to satisfy social needs of members

3-it is focus the official chain of command which can not be

changed.

3-it does not have a fixed chain of command .it is based on the sentiments of

the members.

4-formal authority attaches to a position

4- informal authority attaches to a person

5-formal organisation is created to meet organisational goals.

5- informal organisation is created for social satisfaction of members

6- it is permanent and stable 6- it is relatively unstable

Function/advantages of informal group-

1- desire to socialise- being a member of an informal group allows an individual to satisfy his social needs. Informal organisation arises from man’s quest (search) for social relationship. Man is a social being he wants to belong, to associate with other rather to work in isolated, loneliness.

2- sense of identification- people want something more than just to have friendship. Everybody should sense that he is a part of an organisation. Worker get more identified in smaller groups.

3- common interest- having common interest helps in bringing informal relationship among the individual working in the organisation. Performing the same type of work, is common determinant of informal groups.

4- source of information- informal group is a source of information to its members. Informal communication is very fast. The group may develop a special language for speedy communication.

Disadvantages of informal group-

1- negative leadership- in order to increase his influence, he may work against the policies of management and manipulate the behavior of his followers. He can be a source of conflict between management and workers.

2- role conflict- conflict between his role as a member of an informal organisation and the formal organisation, in the informal organisation may require him to go slow in his work while the formal organisation may require him to work to his normal capacity.

3- rum our- an informal org. provide a false information which is make problem to smooth functioning of the organisation.

4- conformity- an informal org. forces its members to conform to its norms or code of behavior even of it is detrimental to the objective of the formal org.

5- restriction of out-put- the informal group may set its out works standard and agree on a level of out-put. Which does not permit one member to out perform another.

Span of control

Meaning of span of control- it is refer to the member of subordinates that report directly to a single manager or superior.

Factors determining span of control-

1- nature of work

2- types of technology

3- ability of manager

4- capacity of subordinates

5- planning

6-Staff assistance

7- time available for supervision

1- nature of work- when the work perform by worker /subordinates is not complicated. Then no need to supervision and manager can subordinate maximum workers. When the work is different then the need of manager.

2- type of technology- mass production and assembly line technology can have wider spans than those employing batch or process production system.

Mass production &assembly line-

Unit or small batch production-

Process/continuous production-

3- ability of the manager- span control is the depend up on the ability of the manager.(qualities, leadership, communication, decision making and control) can manage more subordinates. The attitude and personality of a manager also determine the span.

4- capacity of subordinates- well educated and trained subordinates may need less supervision they work without much help from the manager.

5- planning- if policies, and rules are clearly defined Subordinates can direct their own work on the basis of these guidelines.

6- staff assistance- use of staff assistance can reduce the work load of the manager.

7- time available for supervision- at higher levels top management/ managers have less time for supervision. They involve in planning and organising.

Impact of span of control on organisation-

If the span of control is too wide then it becomes difficult to supervise subordinates effectively and places more stress on the manager. there may be lack of time to carry out all activities properly. Planning training, inspection and control may suffer in particular leading to poor job performance. a wide span of control may also result in a slowness to adapt to change or to the introduce new methods/machine.

If the span of control is too narrow. Narrow span of control increase administrative cost and can prevent the best use being made of the limited resources of managerial talent.

They can lead to additional levels of authority in the organisation creating an unnecessarily long scalar chain.

1 2 3 4 5

Span of control

Maximum span=5 levels= 2

Wide span of control

1

Span of control

Narrow span of control

Maximum span=1Levels=4

Basis

meaning

Scope

Nature

Dependence

Compulsion

Delegation

It involves the authority by a manager to his immediate subordinates in a work unit.

Delegation involves a limited transfer of authority.

Delegation is adopted by the manager for getting done the workers of daily routine.

Decentralisation is not essential for delegation.

Delegation is essential for all enterprise.

Decentralisation

It involves systematic delegation of authority at all levels and in all function of the organisation.

It involves a wide distribution of authority.

It requires the formulation of policy at the top levels of authority.

Delegation is essential for decentralisation.

It is not essential for all enterprise.

Departmentation-

Departmentation is used to group various business function and also personnel who will perform these function.

or

Departmentation are the various part or divisions of an enterprise.

Concept of departmentation- concept of departmentation involves grouping all operating task in to jobs, combining of jobs in to effective work group and combining all groups in to divisions often terms as department at.

1- specialisation- when every department looks after one major function, expertise is developed and efficiency of operation increase.

Marketing manager look after only marketing department.

2- expansion – one manager can supervise and direct only a few subordinates. Grouping of activities in to departments make it possible for the enterprise to expand and grow.

3- autonomy- departmentation results division of the enterprise. In these unit every manager is given adequate freedom. The feeling of autonomy provide job satisfaction and motivation.

4- fixation of responsibility- it provide a basis for building up loyalty and commitment, the responsibility for result can be define more precisely and an individual can be accountable for performance.

bases/types of departmentation

1- departmentation by function

2- departmentation by product

3- departmentation by process

4- departmentation by customers

5- departmentation by geographical area

Deparmentation by function

Chief executive

Production department

Marketing department

Finance department

H.R department

Production planning manufacturing Quality control

foundry assembly stores

2- departmentation by product

Board of directors

Managing Director

Plastic divisionChemical division Metals

division

finance production sales personnel

Departmentation by process

Chief executive

General manager textiles

Spinning (round)

Weaving (loom)

Dyeing (die) packing

Departmentation by customers-

Chief executive

General manager (automobiles)

Heavy vehicles division

Light vehicles division

Scooter division

Departmentation by geographical-

LIC head office Mumbai

Eastern (Kolkata)

Central (Kanpur)

Northern (New Delhi)

Southern (Chennai)

Western (Mumbai)

New Delhi (division)

jalandhar Chandigarh Ajmer

Branch unit-1 Branch unit-2 Branch unit-3 Branch unit-4

Authority and responsibility

Concept of authority- according to G.R. Terry authority denotes certain rights granted to a position in institution. It includes right to takes decisions and get them executed from the subordinates.

Concept of responsibility- responsibility denotes the duties assigned to a person of his position in the organisation.

Source of authority-

1- formal authority theory

2- acceptance authority theory

1- formal authority theory- all authority originates in the formal structure of an organisation. Shares holders entrust the mgt. of the company to the board of directors and delegates to it most of their authority. every manager or executive possesses authority because of his organisational position and this authority is known as formal authority.

2- acceptance authority- according to this theory the authority is the power which is accepted by the others. The acceptability of an order will depend up on relative consequences, both positive and negative. Subordinate will accept an order.

If( he understand it well)(he is able mentally and -

Physically to comply with it.

3- competence authority- an individual derives authority because of his personal competence. (seniority, popularity). A person may get his order or advice accepted not only because, he is having an formal authority but also because of his personal qualities.

Authority

1- right to command

2- arises from position

3-long life continuing

4- flow downward

Responsibility

1- obligation to perform the assigned duties.

2- arise from superior-subordinate relationship.

3- short life –over with performance of the given duty.

4- flow upward

Decision making

It is not that people can’t see the solution. It is that they can’t see the problem.

charles f. kettering, writer

Concept of decision making-

“a decision represent is a judgment, a final resolution of a conflict of needs, and a commitment to action made in face of uncertainty, complexity, and even irrationally.”

“Decision making is a process of selection and the aim is to select the best alternative”

Types of decisions-

1- programmed decisions

2- non-programmed decisions

3- strategic decision

4- tactical decision

1- programmed decisions- programmed decision are routine and repetitive and are made within the framework of organisational policies and rules. These policies and rules are well in advance to solve recurring problems in the organisation. Programmed decision are relatively simple-

And have a short-term impact. It happen in lower levels of management.

Exp- the problem relating to promotion of employees is solved by promoting those employees who meet promotion criteria. these criteria established by promotion policy and manager have just to decide which employees meet criteria for promotion and the decision is made accordingly.

2- non-programmed decisions- non-programmed decisions are relevant for solving unique/unusual problems in which various alternatives can not be decided in advance. For such decisions, the situation is not well structure and the outcomes of various alternatives can not be arranged in advance.

Exp- if an organisation wants to take actions for growth, it may have several alternative routes like- going for a gross route project or taking over an existing company. The manager have to evaluate the likely these alternatives. in case of non-programmed decisions readymade solution -

Are not available. Since these decision are of high importance because of their long- term consequences, these are made by manager at higher levels in the organisation.

3- strategic decision- strategic decision concept is based on strategy which is a major action plan in an organisation. It is a major choice of actions concerning allocation of resources and contribution to the achievement of organisational goals.

a) The decision is a major one which affects the whole or major part of the organisation.

b) it contribute the directly to the achievement of the organisational objectives.

c) The strategic decision is normally a non- programmed decision which is made under the condition of partial ignorance. The alternative involved and the outcomes of these alternatives cannot be known in advance.

d) It create relationship between the organisation and its environment.

e) Its comes from top management like- new plant, launching a new product, taking over running firm, are exp. Of strategic decision.

4- tactical decision- tactical/operational decision is derived out of strategic decision. It relates to day to day working of the organisation and is made in the context of well-set policies and procedures.

a) It relates to decision about purchase of raw materials, assigning duties to employees, etc.

b)It short-term nature and affects a narrow part of the organisations. Exp- purchase of raw material affect the production dept.

c) It inter-relates to lower levels of managers.

Decisions making process-Specific

objectiveIdentification of

problemsSearch for

alternatives Evaluation of alternatives

Choice of alternativeAction Results

feedback

1- specific objective- first define the objective because every action of human being is goal directed. Objective setting is an outcome of earlier decision, this may not be considered truly as the first step of decision process but provides framework for further decisions.

2- problem identification- identification of problem is the real beginning of decision making process. it is the gap between present and desired state of affairs on the subject matter of decision. It is just like diagnosis of patient by the doctor. A problem can be identified much clearly, if manager go through diagnosis and analysis of the problem.

3- search for alternatives- at through diagnosis defines both a specific problem and the situation in which the problem exist. With this definition in mind , a decision maker seeks possible solutions. A problems can be solved in several ways, however all the ways can not be equally satisfying if there is only one way of solving a problem, no question of decision arises. The decision maker must try to find out the various alternatives available in order to get the most satisfactory result of a decision.

4- evaluation of alternative- after searching the alternatives it is the next stage to evaluate the alternatives. It is the process of measuring the positive and negative consequence of each alternative. Both qualitative and quantitative evaluation is needed to ensure that all tangible and intangible factors are taken in to account.

Mgt. must set some criteria against which the alternatives can be evaluated-

a)Risk

b)Economy effort

c)Timing

5- choice of alternative- after evaluation of optimum alternative is selected. It is the process that maximise the result under given condition. Choice of the best alternative is the most critical point in decision making. The selection of best alternative depend upon managers past experience, experimentation, research and analysis.

6- action- once the alternative is selected, it is put in to action. The actual process of decision making ends with the choice of alternatives through which the objectives can be achieved. Decision making is the ongoing process. It is ensure that the objective have been achieved by the selected-

It is ensure that the objective have been achieved by the selected alternative. The effectiveness of action is important because It is only effective action through which organisational objective can be achieved, and right decision help in the effective action.

7- results- when decision is put into action, it brings certain result. this result must correspond with objective. If the good decision has been made and implemented properly then the result will be positive. A successful mgr. is one who keeps a close look at the objectives and results of the-

Decision and modifies his decision according to the changes in the circumstances.

Techniques of decision making –

1- marginal cost analysis

2- cost benefits analysis

3-operation research

4- brainstorming

5- Delphi technique

1- marginal costing- “basic concept of marginal costing is the amount at any given volume of out-put by one unit”. It requires complete information regarding the various components of cost and clear difference between fixed cost and variable cost. This would be the point of the maximum efficiency of the machine. Break-even analysis is the modification of this technique which tells the management the point of production where there is no profit and no loss.

2- cost- benefits analysis- it is the technique of the selecting alternative to identify a preferred choice when objective are less specific. Than those expressed by such clear quantities as sales,-

Costs or profits. Cost models may be developed to show cost estimates for each alternative and benefits models show the relationship between each alternatives and its effectiveness.

3- operation research- operation research has been defined as the scientific method of analysis of organisational problems to provide the executive the needed quantitative information in making suitable decisions. The object of operation research is to provide the manager with a scientific basis for solving organisation problems involving the interaction components of the organisation.

operation research is widely used in modern business organisation. Exp- inventory models are used to control the level of inventory.

4- brainstorming- under this technique a small group of person are stimulated to creative thinking. Maximum group participation and minimum criticism are employed. a problem is posed and ideas are invited. And these ideas are identify and the best ideas are selected. no evaluation of ideas during discussion. Such free association and unrestricted thinking generates some novel ideas from which unique solution can be found.

5- Delphi technique- in this technique a panel of experts who are physically separated and unknown to each others. And suggestion are provided to panel members for inviting further suggestion. And finally select the best suggestion.

Bounded rationality

1- economic man model

2- administrative man model

1- economic man model- Adam smith and other classical economists suggested that managers are fully rational and choose the alternative which provides maximum gain. the classical theory of economics is based on the goal of profits maximisation. A rational decision maker has clear idea of the problem to be solved and he is fully objective and logical in his approach.

A rational business decision is that which effectively and efficiently assures the attainment of aims for which the means are selected. It means that the decision-maker as an economic being tries to maximise the advantage by selecting the best or optimum solution to a problem.

It is based on following assumption-

a)A single and well defined goal is to be achieved.

b)The problem is clear and well defined.

c)All alternative and their consequences are known.

d)There are no constraints of time and cost.

According to Herert simon, it is only describes how a person should make decision . In real life, human being can not be fully rational decision makers in practices.

Perfect rational is only a norm which can rarely be attained in practices. Several practical problems come in the way of totally rational decision making behavior.

Rational is bounded by several limitations. Herbert proposed the term “bounded rationality” to define the behavior of decision makers.

2- administrative model- Prof. Herbert define the principle of bounded rationality to explain the decision making behavior in real life. This model is define the fact that due to several constraints manager are unable to make perfectly rational decisions, there are several boundaries to rationality in decision making. the principle of bounded rationality implications-

a) He makes his choice without first determining all possible alternatives.

b)A decision maker does not search for the best solution.

c) An individual does not have enough knowledge -

Of alternative courses of action and their consequence.

d) It is realistic while the economic man model is hypothetical.

A decision is called objectively rational if it is really the correct behavior for maximising given values in a given situations. it subjectively rational if it maximise attainment relative to the actual knowledge of the subject.

A decision is organisationally rational if it is oriented to the goals of the organisation. It is personally rational if it is oriented to the individual’s goals.