Functional Areas of management:

(IMP)
Well accepted and essential
functions of management are
1. Planning
2. Organizing
3. Staffing
4. Directing(Leading/Actuatin
g)
5. Controlling.
Positive DC and
Management Entrepreneurship [POSDC]
Supply 1
KLE College of Engineering & Tech.-Chikodi
Dept. of Electronics and communication.
Management and Entrepreneurship.

Unit 2.
Planning

Management and Entrepreneurship 2

 Goals and Plans
Goal - A desired future state that the organization
attempts to realize.
Plan - A blueprint specifying the resource allocations,
schedules, and other actions necessary for attaining
goals
Planning determining the organizations goals and
the means for achieving them
the most fundamental management function
the most controversial management function.

Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.

3
1. Planning :
Planning is an executive function that is
referred as decision making.
Planning bridges the gap from where we
are now to where we want to be?
It involves ;
1. Setting short term and Long term goals
for an organization.
2. Selecting objectives, strategies,
missions and policies for accomplishing
the planned goals.
3. Deciding in advance what, when, who,
where and how to do???????
Management and Entrepreneurship 4
 Planning Defined
Defining the organizations objectives or goals
Establishing an overall strategy for achieving
those goals
Developing a comprehensive hierarchy of plans
to integrate and coordinate activities

Planning is concerned with ends (what is to be done)

as well as with means (how it is to be done).

Copyright 2004 Prentice Hall, Inc. All rights reserved. 35

Requires decisions on ..
What should be done
How it should be done
Who will be responsible
Where the action is to be taken
Why is it done
 Hierarchy of Goals
Traditional Responsibility Today
Mission
Black Pearl In
Top Long range plans
ocean..
2 to 5 years
Management Shrinking middle
management
Middle Medium range plan Employee
Management Few months empowerment
1st-line
Management Low level
& Workers Daily or week Employees

Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.

7
 The Importance of Goals and Plans

Goals and Plans

Rationale
Rationalefor
fordecisions
decisions Standard
Standardof
ofperformance
performanc

Guides
Guidesto
toaction
action

Copyright 2005 by South-Western, a division of Thomson Learning. All rights reserved.

8
Criticisms Of Formal Planning

Planning may create rigidity.

Plans cant be developed for a dynamic
environment.
Formal plans cant replace intuition and
creativity.
Planning focuses managers attention on todays
competition, not on tomorrows survival.
Formal planning reinforces success, which may
lead to failure.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 39

Importance of planning
1.It overcomes uncertainty and minimizes risk.
Decision should not be made on intuition.
Because of Complex environment.
Provides logical facts and procedures to decide.
Developing country INDIA, complex, uncertainty,
economic conditions, etc
2. Effective control.
Planning sets goals, targets and means.
Becomes standards or bench marks against which
performance can be measured.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 310

Importance of planning
3.Focus on Objectives
Planning helps in focus and concentration of
objectives, moves towards goals to achieve.
4. Economic operation and leads to success
Planning does not ensures success but leads to
success.
Planned in advance hence no confusion in
achieving goals, which results in economical
operation
5. Bridges between present and future.
Vast gap in today and future, systematic planning
forms the bridge.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 311

Purpose/Reasons for
Planning

EXHIBIT 3.1

Copyright 2004 Prentice Hall, Inc. All rights reserved. 312

Purpose of planning
To select from many available alternatives, economic,
effective, efficient.
To direct all other functional areas of management
To form the basis for budget
To break up into more easily achievable
To forecast the future ,avoid uncertainty & change
To provide effective control
To focus the Vision on the objectives / goals.

313
Objectives
Objectives are the goals or the targets
which one wishes to achieve.

First define the objectives,

Then manager will define, type of
organization, kind and nature of
personnel, skills required, technology,
super vision and control.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 314

Objectives
According to Peter Druker- 8 important areas
where in objectives of performance are set.
1. Market-standing
2. Innovation
3. Productivity
4. Physical and financial resources
5. Profitability
6. Manager performance and Development
7. Worker performance and attitude
8. Public responsibility
Copyright 2004 Prentice Hall, Inc. All rights reserved. 315
Copyright 2004 Prentice Hall, Inc. All rights reserved. 316
Copyright 2004 Prentice Hall, Inc. All rights reserved. 317
 Setting Objectives

G.Dessler, 2003
April 6, 2006 LIS580- Spring 2006
18
 Types of Plans

BREADTH TIME SPECIFICITY FREQUENCY

OF USE FRAME OF USE

Strategic Long term Directional Single use

Tactical Short term Specific Standing

EXHIBIT 3 .2
Copyright 2004 Prentice Hall, Inc. All rights reserved. 319
 Strategic Planning
Strategic plans
Apply broadly to the entire organization
Establish the organizations overall objectives
Seek to position the organization in terms of its
environment
Provide direction to drive an organizations efforts to
achieve its goals.
Serve as the basis for the tactical plans.
Cover extended periods of time
Are less specific in their details

Copyright 2004 Prentice Hall, Inc. All rights reserved. 320

 Tactical Planning
Tactical plans (operational plans)
Apply to specific parts of the organization.
Are derived from strategic objectives
Specify the details of how the overall objectives are to
be achieved.
Cover shorter periods of time
Must be updated continuously to meet current
challenges

Copyright 2004 Prentice Hall, Inc. All rights reserved. 321

Sl.
Strategic planning Tactical planning
No.

1. It is long term It is short term

2. Done at top level management Done at lower level

It consists of major goals and It consists of use of facilities and

3.
policies of organization resources.

More derailed(day to day operation

4. Les detailed(long term goal)
of the goal)

More uncertain bcz based on long Less uncertain bcz based on

5.
term goal performance

Tata Nano , marketing car for How to make?, manufacturing?

Ex:
1Lakh rupees. assemble? Etc.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 322

 Directional versus Specific Plans

EXHIBIT 3 .3
Copyright 2004 Prentice Hall, Inc. All rights reserved. 323
Single use and Standing plans.
Single use :
Developed to achieve specific end. .
Once reaching target plan becomes useless.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 324

Copyright 2004 Prentice Hall, Inc. All rights reserved. 325
 Standing plans:
Designed to repeat
Used again and again
1. Policies
2. Procedures
3. Rules
4. Methods

Copyright 2004 Prentice Hall, Inc. All rights reserved. 326

Standing plans.
Standing plans:
1. Policies
Policy is a verbal, written or implied overall guide
setting up boundaries that supply the general limits and
direction in which managerial action will take place
[By- Terry]
They provide how to do the work
They provide frame work to take decision

Copyright 2004 Prentice Hall, Inc. All rights reserved. 328

 Personal policy
Promotion policy
Marketing policy
Purchase policy
Training policy
Recruitment policy
Distribution policy
Payment policy
Wages policy
Incentives policy
Original policy
Appealed policy
Personnel policy

Copyright 2004 Prentice Hall, Inc. All rights reserved. 329

 Personal policy
Promotion policy
Marketing policy
Purchase policy
Training policy
Recruitment policy
Distribution policy
Payment policy
Wages policy
Incentives policy
Original policy
Appealed policy
Personnel policy

Copyright 2004 Prentice Hall, Inc. All rights reserved. 330

Standing plans.
Standing plans:
2. Procedures
Procedures are the detailed guidelines that are used to carry
out the policies.
Provides detailed set of instructions for preparing a
sequence of actions to do a piece of work.

Ex: Issuing raw materials from stores.

Packaging and delivering of goods.
Inspections
Procedure to conduct board of directors meeting.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 331

Sl.
No. Policies Procedures

General guidelines of the

1. General guidelines of the action
organization

2. Top level activity Departmental activity

Fulfill the objectives of the

3. Guide the way to fulfill the policy
organization

Made with more analysis

4. Made with less analysis
(after working with it)

Copyright 2004 Prentice Hall, Inc. All rights reserved. 332

Standing plans.
Standing plans:
3. Rules:
Rules are detailed and recorded instructions that a specific
action must or must not to be done.

Ex: Reporting time in MNC company

Lunch time, Tea break,
college rule and regulations

Copyright 2004 Prentice Hall, Inc. All rights reserved. 333

Standing plans.
Standing plans:
4. Methods
Method is a prescribed way in which one step of a
procedure is to be carried out. (Part of a procedure).

More detailed than a procedure

Methods=Practice
Are concerned only with a single operation with one
particular step
Managers role to determine best method

Copyright 2004 Prentice Hall, Inc. All rights reserved. 334

***Decision making
The process of choosing among alternatives
Planning is an intellectual process. ( Cognitive)
Decision making is an integral part of planning.
(Setting, Selecting, Deciding)

P - Objectives and goals are decided.

O - choice of structure, type of organization, work
allocation, delegation of authority and
responsibility.
S -Recruiting.
D - course of action, instructions.
C - Set the standards, control.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 335

Types of decisions

1.Pragmatic and non pragmatic decisions

2.Individual and collective decisions
3.Minor and major decisions
4.Simple and complex decisions
5.Temporary and permanent decisions
6.Strategic and routine decisions

Copyright 2004 Prentice Hall, Inc. All rights reserved. 336

1. Pragmatic and Non Pragmatic decisions
The decisions taken within the limits of Policies,
Procedures or Rules.
Also known as Programmed decisions.
These are routine decisions.
Repetitive in nature.
Ex: Placing order.
Sanctioning leave/permission.

Also known as non programmed decisions.

Non routine.
Decisions involve heavy expenditure.
Taken at top management.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 337

2. Individual and collective decisions
Individual decisions are taken where the problem is of
routine nature, definite rule and procedure exists.

Interdepartmental decisions and strategical decisions are

taken in group.
Advantages: Increased acceptance
better communication
better coordination
Disadvantages: Delay in decision
Groups may compromise or dominate.
Indecisive.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 338

To avoid these
1.Nominal Group technique.
2.Delphi technique.
Independently generate their ideas and give in writing.
Discussed, Summarized
Opinion about each ideas and rate the ideas by voting.
Maximum votes is selected as groups decision

For the persons who are physically dispersed and

anonymous to one another.
Asked their opinion over a mail
A carefully designed Questionnaire is circulated.
Response are summarized into a feedback report and
sent back with a second questionnaire.
Final summary is developed based on second response.
Copyright 2004 Prentice Hall, Inc. All rights reserved. 339
3. Minor and major decisions
Minor decisions:
Related to day to day and periodical occurances.
Ex: Purchase of stationary

Major decisions:
Top management activity
Ex: Purchasing new machinery
Employing new technology
Recruitment

Copyright 2004 Prentice Hall, Inc. All rights reserved. 340

4. Simple and complex decisions
Simple decisions:
Related to few number of variables.

Complex decisions:
Related to many number of variables.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 341

5.Temporary and permanent decisions
Temporary decisions:
Depending upon the situation
Unexpected situations are temporary in nature.

Permanent decisions:
Based on permanent decision/heavy expenditure
purchasing/incentives depends on manager.

Copyright 2004 Prentice Hall, Inc. All rights reserved. 342

 *** Steps in decision making ***

Copyright 2004 Prentice Hall, Inc. All rights reserved. 343

 Recognition of problem

Deciding priorities among problems

Problem analysis

Development of alternative solutions

Studying and comparing the

affect of alternatives

Implement the decision into action

Study the result

 Your Topics are . . .

Copyright 2004 Prentice Hall, Inc. All rights reserved. 345