“IF THERE IS ANY UNIVERSAL MARKS OF A MANAGER, IT IS DECISION-MAKING.”

1. “IF THERE IS ANY UNIVERSAL MARKS OF A MANAGER, IT IS DECISION-MAKING.”

2. Decision-Making and Decision? Decision making is a process and decision is the outcome of such a process.

3. Definitions of Decision-Making According to George R. Terry, “Decision making us the selection based on some criteria from two or more possible alternatives.

4. Characteristics of Nature of Decision-Making • It is a Process of selecting the best from the alternatives. • Decision-making is based on Rational Thinking. • Decision-making is always related to some problem or conflict. • It involves the Evaluation of Various Available Alternatives.

5. Characteristics of Nature of Decision-Making • Decision-making is aimed at achieving organizational Goals. • Decision-making involves Commitment. • It is basically a Human Activity. • Decision-making is both a Managerial Function and an Organizational Process. • Decision-making is the core of Planning.

6. Characteristics of Nature of Decision-Making • Decision Starts Action. • Uncertainty of Results. • It is Universal Mark of a Manager. • It may be Negative.

7. MECHANISM PROCESS (1) Defining the Problem (3) Development of Alternatives (2) Analysing the Problem (4) Evaluation of Alternatives Decision-Makijng Process (7) Follow-up (6) Execution of the Decision (5) Selection of the best Alternative

8. PROCESS IN DECISION MAKING • Defining the Problem. • Analysing the Problem. • Development of Alternatives. • Evaluation of Alternatives. • Selection of the Best Alternative.

9. PROCESS IN DECISION MAKING • Execution of the Decision : (i) Effective Communication. (ii) Securing Employees. (iii) Correct Timing of Decision Execution. • Follow-up.

10. ECONOMIC MAN MODEL Developed by the traditional economists. According to them, the managers make full use of their reason while taking decision. Before taking the decision they find out different alternatives, evaluate them and select only the most profitable alternative.

11. FEATURES

12. CRITICISMS • Certain conditions do not exist. • Limited Information Collecting Skill. • Based on Theory. • A Man’s Loyalty is not always High.

13. ADMINISTRATIVE MAN MODEL Herbert A. Simon is of the view that it is difficult to take decision with absolute reason because decisions are taken in respect of future and future is uncertain. It is also not necessary that the person taking decision may have the knowledge of all the alternatives and their possible consequences. Simon has talked about the Bounded Rationality instead of absolute reason.

14. MEANING OF BOUNDED RATIONALITY Rationality means using limited reason while taking decisions. FEATURES : • Provides Reasonable Satisfaction. • Sequential Search for Alternatives • Alternatives are guided by Experience.

15. Decision Making Process as per Administrative Man Model. • Defining the problem. • Determining appropriate standard for accepting the solution. • Using one’s experience for the search of alternatives to limit the range of search, and identifying the solution to be applied to the problem.

16. Decision Making Process as per Administrative Man Model • Lowering the standard of the solution to accept it, in case the solution to be applied is not recognised. • Evaluate the solution, if the solution to be applied has been recognised. • To implement the solution if it is acceptable. • To search for the new solution, if it is not acceptable. • To implement the solution.

17. CAUSES OF BONDED RATIONALITY • Limited knowledge. • Incomplete Information. • Uncertain Conditions. • Organisational Factors. • Personal Preferences.

18. DECISION MAKING TECHNIQUES • Judgement Technique. • Statistical Technique. a. Theory of Probability. b. Sampling Analysis. c. Correlation / Regression. d. Time Series Analysis. e. Ratio Analysis. f. Variance Analysis. g. Statistical Quality Control etc.

19. DECISION MAKING TECHNIQUES • Operations Research Techniques. a. Linear Progamming. b. Game Theory. c. Network Analysis. d. Break-even Analysis. e. Waiting Line or Queuing Theory. f. Cost-Benefit Analysis etc.

20. DECISION MAKING TECHNIQUES • Model Building Technique • Behavioural Technique. • Principles of Management Technique. • Intuition Technique.

21. IMPORTANCE OF DECISION-MAKING • Execution of all Managerial Functions. a. Importance in Planning. b. Importance in Organising. c. Importance in Staffing. d. Importing in Leading. e. Importance in Controlling. • Basis of the Evaluation of Performance of Manager.

22. IMPORTANCE OF DECISION-MAKING • Continuous Change and Complexities. • Successful Running of the Enterprise. • Basis of Action. • Double Advantage to Manager.

23. PRINCIPLES OF DECISION-MAKING • Principle of Adequate Information. • Principle of Limiting Factor. • Principle of Considering Other’s Views. • Principle of Maximisation of Profits. • Principle of Human Reaction. • Principle of Self Interest. • Principle of Proper Timing. • Principle of Employees’ Participation. • Principle of Proportionality of Resources. • Principle of Changing Environment.

24. OCCASIONS FOR DECISION-MAKING • At the Time of Getting Routine Information. • At the Time of Getting Special Information. • At the Time of Initiative of the Executive Concerned.

25. CHAPTER NO.8 • MANAGEMENT BY OBJECTIVES

26. MEANING OF MBO Druker told the manager through the medium of MBO that business performance requires that each job be directed towards the objective of the whole business. At the same time he stressed the fact that the determination of objectives should be collectively done by all the officials concerned including the subordinates.

27. MBO MBO is such an attitude under which the objectives are laid down with the help of the subordinates and an efforts is made that every activity/ job performed in the organisation should contribute to the attainment of the objectives.

28. DEFINITIONS OF MBO • According to Peter.F.Drucker, Management by objective is regarded as a system for improving performance, both of the individual manager’s and the enterprise as a whole, by setting of objectives at the corporate department and individual manager’s level.

29. FEATURES OF MBO • All Activities are goal-oriented. • Integration among Organisational, Departmental and Personal Objectives. Organisational Objectives Departmental Objectives Personall Objectives

30. FEATURES OF MBO • MBO views organisation as Dynamic Entity. • MBO is a Participative Attempt. • MBO Matches the Objectives and Resources • MBO is a Philosophy and not a Technique. • MBO gives more weightage to Review and Performance Appraisal. • MBO provides more Freedom to Subordinates. • MBO gives more weightage to results and not to work.

31. PROCESS OF MBO Organisational Objective Setting Determination of Key Result Areas-KRAs Subordinates’s Objective Setting Matching Objective and Resources Periodic Meetings Final Performance Appraisal

32. ADVANTAGES AND IMPORTANCE OF MBO • Incentive for subordinates. • Improvement in Communication Network. • Better Management of Resources and Activities. • Encourages Innovations. • Minimises Ambiguity • Self-control • Clarity of Key Result Areas-KRAs. • Easier to Implement Change.

33. Limitations/ Problems/ Weaknesses of MBO. • More Pressure on Employees. • Wastage of Time. • Wastage of Valuable Resources. • Incomplete Support of Top Management. • Difficulty in Objective Setting. • More Importance to Short-Term Objectives. • Lack of Skilled Staff. • Lack of Subordinates’ Participation.

34. Suggestions for Improving the Effectiveness of MBO • To Release Pressure of Employees. • To understate Value of Time. • To save Valuable Resources. • To Provide Complete Support by Top Management. • To Understand Subordinates Importance. • To give due Importance to Long-term Objectives. • To Arrange Training Programme for Staff. • To Develop Participative Nature.

35. CHAPTER NO.9 • BUSINESS ENVIRONMENT

36. MEANING OF BUSINESS ENVIRONMENT Business environment means the sum total of those factors which influence the business and over which the business has no control.

37. Characteristics of Business Environment • Totalality of External Forces. • Specific and General Forces. • Inter-relatedness. • Dynamic Nature. • Uncertainty. • Complexity. • Relativity.

38. IMPORTANCE OF BUSINESS ENVIRONMENT. • First Mover Advantage. • Warning Signal. • Taping Useful Resources. • Coping with Rapid Changes. • Assisting in Planning and Policy. • Improvement in Performance.

39. COMPONENTS OF BUSINESS ENVIRONMENT. Components of Business Environment Internal Environment Internal Environment Micro Environment Or Operating Environment Macro Environment or General Environment 1.Objectives 2.Policies 3.Organisation Structure. 4.Management Information System. 5.Production Method. 6.Production Capacity. 1.Economic Environment. 2.Political Environment. 3.Social Environment. 4.Legal Regulatory Environment 5.Technological Environment. 1.Objectives 2.Policies 3.Organisation Structure. 4.Management Information System. 5.Production Method. 6.Production Capacity.

40. DIMENSIONS OF BUSINESS ENVIRONMENT • Economic Environment. • Political Environment. • Social Environment. • Legal Regulatory Environment. • Technological Environment.

41. ECONOMIC ENVIRONMENT • Economic System. • Economic Policies. • Economic Conditions.

42. ECONOMIC SYSTEM • Socialistic Economic System. • Capitalistic Economic System. • Mixed Economic System.

43. ECONOMIC POLICIES • Export Import Policy. • Employment Policy. • Taxation Policy. • Industrial Policy. • Public Expenditure Policy. • Public Debt Policy. • Agriculture Policy. • Foreign Investment Policy.

44. ECONOMIC CONDITIONS • Foreign Capital. • Supply of Natural Resources. • Level of Economic Development. • Rate of Interest. • National Income. • Industrial Development. • Foreign Trade. • General Price Level.

45. IMPACT OF ECONOMIC ENVIRONMENT ON BUSINESS. • After reforms were introduced in the banking sector, the bank loans were allowed on easy terms. It also led to better services. It helped really fast development of business. • The change in the economic environment resulted in the establishment of Leasing, Companies, Mutual Funds and Venture Capital Business.

46. POLITICAL ENVIRONMENT • IMPACT OF POLITICAL ENVIRONMENT ON BUSINESS. a. In the year 1977, the Janata Government adopted a stringent attitude towards the multinational companies. b. Government encouraged the multinational companies for investment in India. c. Because of the political interest that Hyderabad came to be known as Cyberabad.

47. SOCIAL ENVIRONMENT • IMPACT OF SOCIAL ENVIRONMENT ON BUSINESS. The production of things should be according to the fashion.

48. LEGAL REGULATORY ENVIRONMENT. • The following Acts have been passed in connection with the above business activities : a. Sale of Goods Act. b. Industrial Disputes Act. c. Minimum Wages Act. d. Indian Partnership Act. e. Companies Act. f. Foreign Exchange Management Act. g. Trade Mark Act. h. Essential Commodities Act. i. Consumer Protection Act. j. Standards of Weights and Measures Act.

49. IMPACT OF LEGAL REGULATORY ENVIRONMENT ON BUSINESS. • By removing control on the capital market, a huge amount of capital was collected by issuing various new issues in the primary market. • Relaxation in Foreign Direct Investment (FDI) and foreign Exchange, may multinational companies entered the Indian Market.

50. TECHNOLOGICAL ENVIRONMENT New Method of production of goods, services and discovery of new implements.