PRIN C IPLES OF MANAG E MENT STU D Y MATERIAL FOR FI V E UNITS

1. PRINCIPLESOFMANAGEMENT STUDYMATERIALFOR FIVEUNITS

2. PRINCIPLESOFMANAGEMENT MG2351-PRINCIPLESOFMANAGEMENT LTPC 3003 UNITI-OVERVIEWOFMANAGEMENT9 Definition-Management-Roleofmanagers-EvolutionofManagementthought-Organizationandthe environmentalfactors–TrendsandChallengesofManagementinGlobalScenario. UNITII-PLANNING9 Natureandpurposeofplanning-Planningprocess-Typesofplans–Objectives-Managingbyobjective (MBO)Strategies-Typesofstrategies-Policies–DecisionMaking-Typesofdecision-Decision MakingProcess-RationalDecisionMakingProcess–DecisionMakingunderdifferentconditions. UNITIII-ORGANIZING9 Natureandpurposeoforganizing-Organizationstructure-FormalandinformalgroupsIorganization- LineandStaffauthority-Departmentation-Spanofcontrol–CentralizationandDecentralization-Delegationofauthority-Staffing-SelectionandRecruitment-Orientation-CareerDevelopment-Careerstages–Training--PerformanceAppraisal. UNITIV-DIRECTING9 CreativityandInnovation-MotivationandSatisfaction-MotivationTheories–LeadershipStyles- Leadershiptheories-Communication-Barrierstoeffectivecommunication-OrganizationCulture-Elementsandtypesofculture–Managingculturaldiversity. UNITV-CONTROLLING9 Processofcontrolling-Typesofcontrol-Budgetaryandnon-budgetarycontroltechniques-Managing Productivity-CostControl-PurchaseControl–MaintenanceControl–QualityControl-Planningoperations. TOTAL:45PERIODS TEXTBOOKS 1.StephenP.RobbinsandMaryCoulter,―Management‖,PrenticeHallofIndia,8thedition. 2.CharlesWLHill,StevenLMcShane,―PrinciplesofManagement‖,McgrawHillEducation,Special IndianEdition,2007. REFERENCEBOOKS 1.Hellriegel,Slocum&Jackson,―Management-ACompetencyBasedApproach‖,ThomsonSouth Western,10thedition,2007. 2.HaroldKoontz,HeinzWeihrichandMarkVCannice,―Management-Aglobal&Entrepreneurial Perspective‖,TataMcgrawHill,12thedition,2007. 3.AndrewJ.Dubrin,―EssentialsofManagement‖,ThomsonSouthwestern,7thedition,2007.

3. PRINCIPLESOFMANAGEMENT OVERVIEWOFMANAGEMENT DEFINITION AccordingtoHaroldKoontz,―Managementisanartofgettingthingsdonethroughandwiththepeoplein formallyorganizedgroups.Itisanartofcreatinganenvironmentinwhichpeoplecanperformand individualsandcanco-operatetowardsattainmentofgroupgoals‖. PerceptiveofManagers: Therearemanydefinitionsofmanagementbutmostperceptivemanagersareconvincedthatitisanorganizedeffort ofpeoplewhosepurposeistoachievetheobjectivesandgoalsofanorganization.Ofcourse,itisnotthatsimple.To gainabetterunderstandingofmanagement,let‘sreviewtheideasandviewsexpressedbyacademiciansand practitioners. Managementasa“Process”: McFarlanddefinesmanagementas―Aprocessbywhichmanagerscreate,direct,maintainandoperatepurposive organizationthroughsystematic,coordinated,cooperativehumanefforts‖.Animportantterninthisdefinitionis ―Process‖.Thistermemphasisthedynamicorongoingnatureofmanagement,anactivityovervaryingspanoftime. Thedynamicnatureimpliesthatchangeisrealityoforganizationallife.Inmanagingorganizations,managerscreate changesadoptorganizationstochangesandimplementchangessuccessfullyintheirorganizations.Businessesfail andbecomebankruptbecausemanagersfailintheirattempttocopewiththechange. Managementas“coordination”: Donally,GibsonandIvancevichalsosupporttheviewofmanagementasaprocessbuttheirstressinmoreonco- ordination.Accordingtothem,―Managementisaprocessbywhichindividualandgroupeffortiscoordinated towardsgroupgoals‖.Inordertoachievegoals,coordinationisessentialandmanagementinvolvessecuringand maintainingthiscoordination.ThiscoordinationeffortisalsostressedinthedefinitionofKoontzandO‘Donnell. Accordingtothem,―Managementisaprocessofdesigningandmaintaininganenvironmentinwhich,individuals, workingtogetheringroupsefficientlyandeffectivelyaccomplishgroupgoals‖. Managementasa“Function”: Therearethosewhoviewmanagementasafunctionratherthanaprocess.Dunn,StephensandKellycontendthat ―Managementisarolewhichincludesasetofduties,responsibilities,andrelationships-involvedinwork organizations‖.Thesedutiesandresponsibilitiesconstitutethefunctionamanagerperforms.Thedutiesand responsibilitiesamanagerperformsarequitedifferentfromthoseperformedbymanagerialemployees. Managementisgettingthingsdonethroughotherpeople: Asimpledefinitionofmanagementthatisoftenquotedanditsoundsverysimple.Accordingtothisdefinition, managersdonotdothingstheygetotherpeopletodothings.Ifmanagingisanindividualabilitytogetthingsdone, thenitisnotaproblem.Wecanplanandperformthingsaccordingtoourownconvinceandinterests.When somebodyelseisinvolvedandwantstogetthingsdonethroughthem,thereisadifficulty.Allsortsofproblems

4. PRINCIPLESOFMANAGEMENT arise;personalitiescomeintocontactandconflict.Interpersonalproblemscropup.Wehavetounderstandthe behaviorofotherpeopleandmusthaveknowledgeastohowtomotivatetheminordertogetthingsdonethrough them.Wehavetoconsidertheconveniencesandinterestofothersalsoinplanningandimplementingthings.In gettingthingsdonethroughothers,peoplehavetobecoaxed,theyhavetobeshown,theyhavetoinspired,theyhave tobemotivatedandthisiswhatmanagementmeans.Theseactivitiesareperformednotonlybythepeopleatthetop butfromthechairmanoftheboardtothefrontlinesupervisorsandforemen.Theyusetheabovementionedmethods togetthingsdonethroughotherpeople. AcomprehensivedefinitionofManagement: Inmid1940s,academicpeoplefromvariousbusinessschoolsintheUnitedStatesgatheredtogetherwiththesole purposeofdecidingwhetheradefinitionofmanagementcouldbewrittenthatbusinessmenwouldacceptand practiceandacademicianswouldteach.Ultimatelytheycameupwiththefallowingdefinition.Noindividualis identifiedwiththisdefinition.Thedefinitionreads;―Managementisguidinghumanandphysicalresourcesintoa dynamicorganizationunitsthatattaintheirobjectivestothesatisfactionofthoseservedandwiththehighdegreeof moralandsenseofattainmentonthepartofthoserenderingtheservices‖ . WhatisManagement? Introduction: Managementisavitalaspectoftheeconomiclifeofman,whichisanorganizedgroupactivity.Acentraldirecting andcontrollingagencyisindispensableforabusinessconcern.Theproductiveresources–material,labor,capital etc.areentrustedtotheorganizingskill,administrativeabilityandenterprisinginitiativeofthemanagement.Thus, managementprovidesleadershiptoabusinessenterprise.Withoutablemanagersandeffectivemanagerialleadership theresourcesofproductionremainmerelyresourcesandneverbecomeproduction.Undercompetitiveeconomyand everchangingenvironmentthequalityandperformanceofmanagersdetermineboththesurvivalaswellassuccess ofanybusinessenterprise.Managementoccupiessuchanimportantplaceinthemodernworldthatthewelfareofthe peopleandthedestinyofthecountryareverymuchinfluencedbyit. Definition: ―Managementistheprocessofgettingthingsdonethroughtheeffortsofotherpeopleinordertoachievethe predeterminedobjectivesoforganization‖. Managementmayalsobedefineas: ―Theprocessbywhichexecutionofgivenpurposeputintooperationandsupervise‖. Aconcisestatement: ―Thefunctionofexecutiveleadershipanywhere‖. Anotherstatement: Managementmaybedefinedas―Atechniquebywhichthepurposeandobjectivesofparticularhumangroupare determined,defined,clarifiedandcompleted‖

5. PRINCIPLESOFMANAGEMENT FrombusinessPontofview: ―Managementistheartofsecuringmaximumresultswiththeminimumofeffortssoastogetmaximumprosperity andhappinessforbothemployerandemployeeandgivepublicthebestpossibleservice‖. Completedefinitionofmanagement: ―Managementisadistinctprocessconsistingofplanning,organizing,staffing,leadingandcontrollingutilizingboth ineachscienceandartandfollowedinordertoaccomplishpredeterminedobjectivesoftheorganization‖. NecessityofManagement: (1)Managementisanessentialactivityofallorganizationallevel(Low,middle,andupperlevel) (2)Managementappliesto: (i)SmallandlargeOrganizations. (ii)ProfitandnonprofitOrganization. (iii)ManufacturingOrganization. (iv)ServicerenderingOrganization. MANAGER Managerisalsoknownasleaderandadministrative,Managerisapersonwhoundertakethetasksandfunctionof managingatanylevel,inanykindofenterprise. ManagerialSkills: Therearefourskillsofmanagersareexpectedtohaveabilityof: (1)Technicalskills: Technicalskillsthatreflectbothanunderstandingofandaproficiencyinaspecializedfield.Forexample,a managermayhavetechnicalskillsinaccounting,finance,engineering,manufacturing,orcomputerscience. HumanSkills: Humanskillsareskillsassociatedwithmanager‘sabilitytoworkwellwithothers,bothasamemberofagroupand asaleaderwhogetsthingsdonethroughother. ConceptSkills: Conceptualskillsrelatedtotheabilitytovisualizetheorganizationasawhole,discerninterrelationshipsamong organizationalparts,andunderstandhowtheorganizationfitsintothewidercontextoftheindustry,community,and world.Conceptualskills,coupledwithtechnicalskills,humanskillsandknowledgebase,areimportantingredients inorganizationalperformance. DesignSkills: Itistheabilitytosolvetheproblemsinwaysthatwillbenefittheenterprise.Managersmustbeabletosolvethe problems.

6. PRINCIPLESOFMANAGEMENT TheSkillsvaryatdifferentlevels: TopmanagementConceptanddesignSkills.MiddleHumanSkills,Supervisor‘sTechnicalskills,Skillsof managementatdifferentlevels. TheFunctionofManagers Therearefivefunctionsofmanagers:Planning,Organizing,Staffing,Leading,andControlling.Thefunctionsof managersprovideausefulstructurefororganizingmanagementknowledge. (1)Planning: Planninginvolvesselectingmissionsandobjectivesandtheactiontoachievethemitrequiresdecisionmaking,that choosingfuturecoursesofactionfromamongalternatives.Therearefivetypesofplanning: 1.Missionsandobjectives. 2.Strategiesandpolices. 3.Proceduresandrules. 4.Programs. 5.Budgets. (2)Organizing: Organizingisthepartofmanagingthatinvolvesestablishinganintentionalstructureofrolesforpeopletofillinan organization.Thepurposeofanorganizationstructureistocreatinganenvironmenthelpfulforhumanperformance. Itisthenmanagementtoolsandnotanend.Althoughthestructuremustdefinethetasktobedone,therulesso establishedmustalsobedesignedinthelightoftheabilitiesandmotivationsofthepeopleavailabledesigningan effectiveorganizationstructureisnotaneasymanagerialtask.Manyproblemsarisesinmakingstructuresfit situations. (3)Staffing: Staffinginvolvesfillingandkeepingfilled,thepositionsintheorganization.Thisisdonebyidentifyingthework forcerequirementinventoryingthepeopleavailableandrecruiting,selecting,placing,promoting,appraising, planningthecareers,compensatingandtraining. (4)Leading: Leadingisinfluencepeoplesothattheywillcontributetoorganizationandgroupgoals.Allmanagerswouldagree thatmostproblemsarisesfrompeoplesdesiresandproblems,theirbehaviorasindividualsandingroupsandthat effectivemanagersalsoneedtobeeffectiveleaders.Leadinginvolvesmotivation,leadershipstylesandapproaches andcommunications. (5)Controlling: Controllingismeasuringandcorrectingindividualsandorganizationalperformance.Itinvolvesmeasuring performanceagainstgoalsandplans,showingwherethedeviationsfromstandardsexitandhelpingtocorrectthem. Inshortcontrollingfacilitatestheaccomplishmentofplans.Controllactivitygenerallyrelatetothemeasurementof

7. PRINCIPLESOFMANAGEMENT achievement.Somemeansofcontrollinglikethebudgetforexpenses,inspection,recordoflabors-hourslost,are generallyfamiliar.Eachshowswhetherplans areworkingout. MANAGEMENTANDADMINISTRATION Thetwoterms„Management‟and„Administration‟areusedinterchangeably.Thereisalotofcontroversy ontheuseofthesetwoterms. 1.Administrationisabovemanagement: ManymanagementexpertslikeOliverShelton,Milward,Lansberg,etcareviewthatadministrationishigher-level activity.Administrationisconcernedwithdecision-makingandpolicyformulation,whilemanagementisconcerned withtheexecutionofwhathasbeenlaiddownbytheadministrators. 2.Administrationisapartofmanagement: AccordingtoE.F.L.Breech―managementisthegenerictermfortotalprocessofexecutivecontrolinvolving responsibilityforeffectiveplanningandguidanceoftheoperationsofanenterprise.Administrationisthepartof managementwhichisconcernedwiththeinstallationandcarryingoutoftheprocedurebywhichtheprogrammeis laiddownandcommunicatedandtheprogressofactivitiesisresultedandcheckedagainstplans.Thisbreech concernsadministrationaspartofmanagement. 3.Administrationandmanagemntarethesame: Thethirdviewisamorepracticalone,wherethereisnodistinctionbetweenthetwoterms„management‟and „administration‟.Managementisusedforhigherlevelfunctionslikeplans,organizing,directionsandcontrollingin abusinessorganizationwhereasadministrationisusedforthesamesetoffunctionsingovernmentorganizations. AdministrationManagement 1.ItisthehigherlevelfunctionsItisthelowerlevelfunctions 2.ItreferstotheownersoftheorganizationItreferstheemployees 3.Administrationisconcernedwithdecisionmaking.Managementisconcernedwithexecutionofdecision 4.ItactsthroughthemanagementItactsthroughtheorganization 5.AdministrationlaysdownbroadpoliciesandprinciplesforguidanceManagementexecutesthesepoliciesinto practice. MANAGERIALROLES Mintzbersamanagementthinkeridentifiedtenrolesandclassifiedthemwithinthreebroadcategories. 1.InterpersonalRoles 2.InformationalRoles 3.DecisionalRoles

8. PRINCIPLESOFMANAGEMENT 1.InterpersonalRoles: a)Figureheadrole: Inthisroleamanagerperformssymbolicdutiesrequiredbythestatusofhisoffice.Hisactivitiesincludetogreetthe visitorsattendstheemployeefamilyfunctions. b)Leader: Responsibleforthemotivationandactivationofsubordinates.Responsibleforstaffing,trainingandassociated duties. c)Liaison: Itdescribesamanager‟srelationshipwiththeoutsiders.Amanagermaintainssmoothrelationwithother organizationgovernment‟sindustrygroupsetc. 2.InformationalRoles: a)Monitor: Amanagerscanstheenvironmentandcollectsinternalandexternalinformation‟s. b)Disseminator: Managerdistributestheinformationtohissubordinatesinordertoachieveorganizationalobjectives. c)Spokesperson: Transmitstheinformation‟stotheoutsideoftheorganization. 3.DecisionRole: a)Entrepreneur: Initiatesandsupervisesdesignoforganizationalimprovementprojects. b)Disturbancehandler: Responsibleforcorrectiveactionwhenorganizationfacesonexpectedproblems. c)Resourceallocated: Managerisresponsibleforallocationofhuman,monetaryandmaterialresources. d)Negotiator: Asamanagerhebargainswithsuppliers,dealers,tradeunion,agentsetc. THEEVOLVATIONOFMANAGEMENT Theoriginofmanagementcanbetracedbacktothedayswhenmanstartedlivingingroups.Historyrevealsthat strongmenorganizedthemassesintogroupsaccordingtotheirintelligence,physicalandmentalcapabilities. Evidenceoftheuseofthewellrecognizedprinciplesofmanagementistobefoundintheorganizationofpubliclife inancientGreece,theorganizationoftheRomanCatholicChurchandthe organizationofmilitaryforces.Thusmanagementinsomeformortheotherhasbeenpracticedinthevariousparts oftheworldsincethedawnofcivilization.WiththeonsetofIndustrialRevolution,however,thepositionunderwent aradicalchange.Thestructureofindustrybecameextremelycomplex.Atthisstage,thedevelopmentofaformal

9. PRINCIPLESOFMANAGEMENT theoryofmanagementbecameabsolutelynecessary.Itwasagainstthisbackgroundthatthepioneersofmodern managementthoughtlaidthefoundationsofmodernmanagementtheoryandpractice. DifferentAuthorsaysthathistoryofmanagementisdifferentAuthorcontributeinmanagement.Therearesomany theoriesofmanagementthatwhyalsocalledJungleofmanagement. Differentperiodofmanagement: 1.ScientificManagement: (i)FredrickTaylor. (ii)HenryL.Gantt. (iii)FrankandLillianGilberth. 2.OperationalManagement (i)HenriFayol. 3.BehavioralScience: (i)Munsterberg. 4.SystemTheory. (i)ChesterBarnard 5.ModernManagement/Recentcontributiontomanagementthoughts. (i)PeterF.Drucker1974. (ii)Edwards. (iii)ThomasPeter&RobertWaterman.19821.ScientificManagement: F.W.TaylorandHenryFayolaregenerallyregardedasthefoundersofscientificmanagementandadministrative managementandbothprovidedthebasesforscienceandartofmanagement. FeaturesofScientificManagement: 1.Itwascloselyassociatedwiththeindustrialrevolutionandtheriseoflarge-scaleenterprise. 2.Classicalorganizationandmanagementtheoryisbasedoncontributionsfromanumberofsources.Theyare scientificmanagement,Administrativemanagementtheory,bureaucraticmodel,andmicro-economicsandpublic administration. 3.Managementthoughtfocusedonjobcontentdivisionoflabour,standardization,simplificationandspecialization andscientificapproachtowardsorganization.Taylor'sScientificManagement(USA1856-1915):Startedasan apprenticemachinistinPhiladelphia,USA.HerosetobethechiefengineerattheMidvaleEngineeringWorksand lateronservedwiththeBethlehemWorkswhereheexperimentedwithhisideasandmadethecontributiontothe managementtheoryforwhichheissowellknown.FrederickWinslowTaylorwellknownasthefounderofscientific managementwasthefirsttorecognizeandemphasistheneedforadoptingascientificapproachtothetaskof managinganenterprise.Hetriedtodiagnosethecausesoflowefficiencyinindustryandcametotheconclusionthat

10. PRINCIPLESOFMANAGEMENT muchofwasteandinefficiencyisduetothelackoforderandsysteminthemethodsofmanagement.Hefoundthat themanagementwasusuallyignorantoftheamountofworkthatcouldbedonebyaworkerinadayasalsothebest methodofdoingthejob.Asaresult,itremainedlargelyatthemercyoftheworkerswhodeliberatelyshirkedwork. Hetherefore,suggestedthatthoseresponsibleformanagementshouldadoptascientificapproachintheirwork,and makeuseof"scientificmethod"forachievinghigherefficiency. Thescientificmethodconsistsessentiallyof (a)Observation (b)Measurement (c)Experimentationand (d)Inference. Headvocatedathoroughplanningofthejobbythemanagementandemphasizedthenecessityofperfect understandingandco-operationbetweenthemanagementandtheworkersbothfortheenlargementofprofitsandthe useofscientificinvestigationandknowledgeinindustrialwork. Hesummeduphisapproachinthesewords: Science,notruleofthumb Harmony,notdiscord Co-operation,notindividualism Maximumoutput,inplaceofrestrictedoutput Thedevelopmentofeachmantohisgreatestefficiencyandprosperity. ElementsofScientificManagement: ThetechniqueswhichTaylorregardedasitsessentialelementsorfeaturesmaybeclassifiedasunder: 1.ScientificTaskandRate-setting,workimprovement,etc. 2.PlanningtheTask. 3.VocationalSelectionandTraining 4.Standardization(ofworkingconditions,materialequipmentetc.) 5.Specialization 6.MentalRevolution. 1.ScientificTaskandRate-Setting(workstudy):Workstudymaybedefinedasthesystematic,objectiveand criticalexaminationofallthefactorsgoverningtheoperationalefficiencyofanyspecifiedactivityinordertoeffect improvement.Workstudyincludes. (a)MethodsStudy:Themanagementshouldtrytoensurethattheplantislaidoutinthebestmannerandis equippedwiththebesttoolsandmachinery.Thepossibilitiesofeliminatingorcombiningcertainoperationsmaybe studied.

11. PRINCIPLESOFMANAGEMENT (b)MotionStudy:Itisastudyofthemovement,ofanoperator(orevenofamachine) inperforminganoperationwiththepurposeofeliminatinguselessmotions. (c)TimeStudy(workmeasurement):Thebasicpurposeoftimestudyistodeterminethepropertimefor performingtheoperation.Suchstudymaybeconductedafterthemotionstudy.Bothtimestudyandmotionstudy helpindeterminingthebestmethodofdoingajobandthestandardtimeallowedforit. (d)FatigueStudy:If,astandardtaskissetwithoutprovidingformeasurestoeliminatefatigue,itmay eitherbebeyondtheworkersortheworkersmayoverstrainthemselvestoattainit.Itisnecessary,therefore,to regulatetheworkinghoursandprovideforrestpausesatscientificallydeterminedintervals. (e)Rate-setting:Taylorrecommendedthedifferentialpiecewagesystem,underwhichworkersperforming thestandardtaskwithinprescribedtimearepaidamuchhigherrateperunitthaninefficientworkerswhoarenot abletocomeuptothestandardset. 2.PlanningtheTask:Havingsetthetaskwhichanaverageworkermuststrivetoperformtogetwagesatthehigher piece-rate,necessarystepshavetobetakentoplantheproductionthoroughlysothatthereisnobottleneckandthe workgoesonsystematically. 3.SelectionandTraining:ScientificManagementrequiresaradicalchangeinthemethodsandproceduresof selectingworkers.Itisthereforenecessarytoentrustthetaskofselectiontoacentralpersonneldepartment.The procedureofselectionwillalsohavetobesystematized.Properattentionhasalsotobedevotedtothetrainingofthe workersinthecorrectmethodsofwork. 4.Standardization:Standardizationmaybeintroducedinrespectofthefollowing. (a)Toolsandequipment:Bystandardizationismeanttheprocessofbringingaboutuniformity.The managementmustselectandstorestandardtoolsandimplementswhichwillbenearlythebestorthebestoftheir kind. (b)Speed:Thereisusuallyanoptimumspeedforeverymachine.Ifitisexceeded,itislikelytoresultin damagetomachinery. (c)ConditionsofWork:Toattainstandardperformance,themaintenanceofstandardconditionsof ventilation,heating,cooling,humidity,floorspace,safetyetc.,isveryessential. (d)Materials:Theefficiencyofaworkerdependsonthequalityofmaterialsandthemethodofhandling materials. 5.Specialization:Scientificmanagementwillnotbecompletewithouttheintroductionofspecialization.Underthis plan,thetwofunctionsof'planning'and'doing'areseparatedintheorganizationoftheplant.The`functional

12. PRINCIPLESOFMANAGEMENT foremen'arespecialistswhojointheirheadstogivethoughttotheplanningoftheperformanceofoperationsinthe workshop.Taylorsuggestedeightfunctionalforemenunderhisschemeoffunctionalforemanship. (a)TheRouteClerk:Tolaydownthesequenceofoperationsandinstructtheworkersconcernedaboutit. (b)TheInstructionCardClerk:Topreparedetailedinstructionsregardingdifferentaspectsofwork. (c)TheTimeandCostClerk:Tosendallinformationrelatingtotheirpaytotheworkersandtosecure properreturnsofworkfromthem. (d)TheShopDisciplinarian:Todealwithcasesofbreachofdisciplineandabsenteeism. (e)TheGangBoss:Toassembleandsetuptoolsandmachinesandtoteachtheworkerstomakealltheir personalmotionsinthequickestandbestway. (f)TheSpeedBoss:Toensurethatmachinesarerunattheirbestspeedsandpropertoolsareusedbythe workers. (g)TheRepairBoss:Toensurethateachworkerkeepshismachineingoodorderandmaintainscleanliness aroundhimandhismachines. (h)TheInspector:Toshowtotheworkerhowtodothework. 6.MentalRevolution:Atpresent,industryisdividedintotwogroups–managementandlabour.Themajorproblem betweenthesetwogroupsisthedivisionofsurplus.Themanagementwantsthemaximumpossibleshareofthe surplusasprofit;theworkerswant,aslargeshareintheformofwages.Taylorhasinmindtheenormousgainthat arisesfromhigherproductivity.Suchgainscanbesharedbothbythemanagementandworkersintheformof increasedprofitsandincreasedwages. BenefitsofScientificManagement: Taylor'sideas,researchandrecommendationsbroughtintofocustechnological,humanandorganizationalissuesin industrialmanagement.BenefitsofTaylor'sscientificmanagementincludedwiderscopeforspecialization,accurate planning,timelydelivery,standardizedmethods,betterquality,lessercosts,minimumwastageofmaterials,timeand energyandcordialrelationsbetweenmanagementandworkers.AccordingtoGilbreths,themainbenefitsof scientificmanagementare"conservationandsavings,makinganadequateuseofeveryone‘senergyofanytypethat isexpended". Thebenefitsofscientificmanagementare:- 1.Replacementoftraditionalruleofthumbmethodbyscientifictechniques. 2.Properselectionandtrainingofworkers. 3.Incentivewagestotheworkersforhigherproduction. 4.Eliminationofwastesandrationalizationofsystemofcontrol. 5.Standardizationoftools,equipment,materialsandworkmethods. 6.Detailedinstructionsandconstantguidanceoftheworkers.

13. PRINCIPLESOFMANAGEMENT ORGANIZATIONANDENVIRONMENTALFACTORS Anorganizationisagroupofpeopleintentionallyorganizedtoaccomplishacommonorsetofgoals. TypesofBusinessOrganizationsWhenorganizinganewbusiness,oneofthemostimportantdecisionsto bemadeischoosingthestructureofabusiness. a)SoleProprietorships Thevastmajorityofsmallbusinessstartsoutassoleproprietorships...verydangerous.Thesefirmsare ownedbyoneperson,usuallytheindividualwhohasday-to-dayresponsibilityforrunningthebusiness. Soleproprietorsownalltheassetsofthebusinessandtheprofitsgeneratedbyit.Theyalsoassume "completepersonal"responsibilityforallofitsliabilitiesordebts.Intheeyesofthelaw,youareoneinthe samewiththebusiness. Merits: •Easiestandleastexpensiveformofownershiptoorganize. •Soleproprietorsareincompletecontrol,withinthelaw,tomakealldecisions. •Soleproprietorsreceiveallincomegeneratedbythebusinesstokeeporreinvest. •Profitsfromthebusinessflow-throughdirectlytotheowner'spersonaltaxreturn. •Thebusinessiseasytodissolve,ifdesired. Demerits: •Unlimitedliabilityandarelegallyresponsibleforalldebtsagainstthebusiness. •Theirbusinessandpersonalassetsare100%atrisk. •Hasalmostbeenabilitytoraiseinvestmentfunds. •Arelimitedtousingfundsfrompersonalsavingsorconsumerloans. •Haveahardtimeattractinghigh-caliberemployees,orthosethataremotivatedbythe opportunitytoownapartofthebusiness. •Employeebenefitssuchasowner'smedicalinsurancepremiumsarenotdirectlydeductiblefrombusiness income(partiallydeductibleasanadjustmenttoincome). b)Partnerships InaPartnership,twoormorepeopleshareownershipofasinglebusiness.Likeproprietorships,thelaw doesnotdistinguishbetweenthebusinessanditsowners.ThePartnersshouldhavea www.eeeexclusive.blogspot.comlegalagreementthatsetsforthhowdecisionswillbemade,profitswillbe shared,disputeswillberesolved,howfuturepartnerswillbeadmittedtothepartnership,howpartnerscan beboughtout,orwhatstepswillbetakentodissolvethepartnershipwhenneeded.Yes,itshardtothink

14. PRINCIPLESOFMANAGEMENT abouta"break-up"whenthebusinessisjustgettingstarted,butmanypartnershipssplitupatcrisistimes andunlessthereisadefinedprocess,therewillbeevengreaterproblems.Theyalsomustdecideupfront howmuchtimeandcapitaleachwillcontribute,etc. Merits: •Partnershipsarerelativelyeasytoestablish;howevertimeshouldbeinvestedindevelopingthe partnershipagreement. •Withmorethanoneowner,theabilitytoraisefundsmaybeincreased. •Theprofitsfromthebusinessflowdirectlythroughtothepartners'personaltaxes. •Prospectiveemployeesmaybeattractedtothebusinessifgiventheincentivetobecomeapartner. Demerits: •Partnersarejointlyandindividuallyliablefortheactionsoftheotherpartners. •Profitsmustbesharedwithothers. •Sincedecisionsareshared,disagreementscanoccur. •Someemployeebenefitsarenotdeductiblefrombusinessincomeontaxreturns. •Thepartnershipshavealimitedlife;itmayenduponapartnerwithdrawalordeath. c)Corporations Acorporation,charteredbythestateinwhichitisheadquartered,isconsideredbylawtobeaunique "entity",separateandapartfromthosewhoownit.Acorporationcanbetaxed;itcanbesued;itcanenter intocontractualagreements.Theownersofacorporationareitsshareholders.Theshareholderselecta boardofdirectorstooverseethemajorpoliciesanddecisions.Thecorporationhasalifeofitsownand doesnotdissolvewhenownershipchanges. Merits: •Shareholdershavelimitedliabilityforthecorporation'sdebtsorjudgmentsagainstthecorporations. •Generally,shareholderscanonlybeheldaccountablefortheirinvestmentinstockofthecompany.(Note however,thatofficerscanbeheldpersonallyliablefortheiractions,suchasthefailuretowithholdandpay employmenttaxes.) •Corporationscanraiseadditionalfundsthroughthesaleofstock. •Acorporationmaydeductthecostofbenefitsitprovidestoofficersandemployees. •CanelectScorporationstatusifcertainrequirementsaremet.Thiselectionenablescompanytobetaxed similartoapartnership. Demerits: •Theprocessofincorporationrequiresmoretimeandmoneythanotherformsoforganization.

15. PRINCIPLESOFMANAGEMENT •Corporationsaremonitoredbyfederal,stateandsomelocalagencies,andasaresultmayhavemore paperworktocomplywithregulations. •Incorporatingmayresultinhigheroveralltaxes.Dividendspaidtoshareholdersarenotdeductibleform businessincome,thusthisincomecanbetaxedtwice. d)JointStockCompany: Limitedfinancialresources&heavyburdenofriskinvolvedinbothofthepreviousformsoforganization hasledtotheformationofjointstockcompaniesthesehavelimiteddilutives.Thecapitalisraisedby sellingsharesofdifferentvalues.Personswhopurchasethesharesarecalledshareholder.Themanaging bodyknownas;BoardofDirectors;isresponsibleforpolicymakingimportantfinancial&technical decisions. TherearetwomaintypesofjointstockCompanies. (i)Privatelimitedcompany. (ii)Publiclimitedcompany (i)Privatelimitedcompany:Thistypecompanycanbeformedbytwoormorepersons.Themaximum numberofmembershipislimitedto50.Inthistransferofsharesislimitedtomembersonly.The governmentalsodoesnotinterfereintheworkingofthecompany. (ii)PublicLimitedCompany:Itsisonewhosemembershipisopentogeneralpublic.Theminimum numberrequiredtoformsuchcompanyisseven,butthereisnoupperlimit.Suchcompany‘scanadvertise toofferitssharetogenerapublicthroughaprospectus.Thesepubliclimitedcompaniesaresubjectedto greatercontrol&supervisionofcontrol. Merits: •TheliabilitybeinglimitedtheshareholderbearnoRick&thereforemoreasmakepersonsareencouraged toinvestcapital. •Becauseoflargenumbersofinvestors,theriskoflossisdivided. •Jointstockcompaniesarenotaffectedbythedeathortheretirementoftheshareholders. Disadvantages: •Itisdifficulttopreservesecrecyinthesecompanies. •Itrequiresalargenumberoflegalformalitiestobeobserved. •Lackofpersonalinterest. e)PublicCorporations:

16. PRINCIPLESOFMANAGEMENT ApubliccorporationiswhollyownedbytheGovernmentcentretostate.Itisestablishedusuallybya SpecialActoftheparliament.Specialstatutealsoprescribesitsmanagementpatternpowerduties& jurisdictions.ThoughthetotalcapitalisprovidedbytheGovernment,theyhaveseparateentity&enjoy independenceinmattersrelatedtoappointments,promotionsetc. Merits: •Theseareexpectedtoprovidebetterworkingconditionstotheemployees&supportedtobebetter managed. •Quickdecisionscanbepossible,becauseofabsenceofbureaucraticcontrol. •MoreHexibilityascomparedtodepartmentalorganization. •Sincethemanagementisinthehandsofexperienced&capabledirectors&managers,theseatemanaged moreefficientlythanthatofgovernmentdepartments. Demerits: •Anyalterationinthepower&ConstitutionofCorporationrequiresanamendmentintheparticularAct, whichisdifficult&timeconsuming. •PublicCorporationspossessmonopoly&intheabsenceofcompetition,thesearenotinterestedin adoptingnewtechniques&inmakingimprovementintheirworking. f)GovernmentCompanies: AstateenterprisecanalsobeorganizedintheformofaJointstockcompany;Agovernmentcompanyis anycompanyinwhichofthesharecapitalisheldbythecentralgovernmentorpartlybycentral government&partybyonetomorestategovernments.Itismanagedbtheelectedboardofdirectors whichmayincludeprivateindividuals.Theseareaccountableforitsworkingtotheconcernedministryor department&itsannualreportisrequiredtobeplacedeveryearonthetableoftheparliamentorstate legislaturesalongwiththecommentsofthegovernmenttoconcerneddepartment. Merits: •Itiseasytoform. •Thedirectorsofagovernmentcompanyarefreetotakedecisions&arenotboundby certainrigidrules&regulations. Demerits: •Misuseofexcessivefreedomcannotberuledout. •Thedirectorsareappointedbythegovernmentsotheyspendmoretimeinpleasingtheir politicalmasters&topgovernmentofficials,whichresultsininefficientmanagement.

17. PRINCIPLESOFMANAGEMENT CLASSIFICATIONOFENVIRONMENTALFACTORS INTERNALENVIRONMENTALFACTORS Theinternalenvironmentistheenvironmentthathasadirectimpactonthebusiness.Theinternalfactors aregenerallycontrollablebecausethecompanyhascontroloverthesefactors.Itcanalterormodifythese factors.Theinternalenvironmentalfactorsareresources,capabilitiesandculture. i)Resources: Agoodstartingpointtoidentifycompanyresourcesistolookattangible,intangibleandhumanresources. Tangibleresourcesaretheeasiesttoidentifyandevaluate:financialresourcesandphysicalassetsare identifiesandvaluedinthefirm‘sfinancialstatements.Intangibleresourcesarelargelyinvisible,butover timebecomemoreimportanttothefirmthantangibleassetsbecausetheycanbeamainsourcefora competitiveadvantage.Suchintangiblerecoursesincludereputationalassets(brands,image,etc.)and technologicalassets(proprietarytechnologyandknow-how).Humanresourcesorhumancapitalarethe productiveserviceshumanbeingsofferthefirmintermsoftheirskills,knowledge,reasoning,and decision-makingabilities. ii)Capabilities: Resourcesarenotproductiveontheirown.Themostproductivetasksrequirethatresourcescollaborate closelytogetherwithinteams.Thetermorganizationalcapabilitiesareusedtorefertoafirm‘scapacityfor undertakingaparticularproductiveactivity.Ourinterestisnotincapabilitiesperse,butincapabilities relativetootherfirms.Toidentifythefirm‘scapabilitieswewillusethefunctionalclassificationapproach. Afunctionalclassificationidentifiesorganizationalcapabilitiesinrelationtoeachoftheprincipal functionalareas. iii)Culture: Itisthespecificcollectionofvaluesandnormsthataresharedbypeopleandgroupsinanorganizationand thathelpsinachievingtheorganizationalgoals. 2)EXTERNALENVIRONMENTFACTORS Itreferstotheenvironmentthathasanindirectinfluenceonthebusiness.Thefactorsareuncontrollableby thebusiness.Thetwotypesofexternalenvironmentaremicroenvironmentandmacroenvironment. a)MICROENVIRONMENTALFACTORS Theseareexternalfactorsclosetothecompanythathaveadirectimpactontheorganizationsprocess. Thesefactorsinclude:

18. PRINCIPLESOFMANAGEMENT i)Shareholders: Anypersonorcompanythatownsatleastoneshare(apercentageofownership)inacompanyisknownas shareholder.Ashareholdermayalsobereferredtoasa"stockholder".Asorganizationrequiresgreater inwardinvestmentforgrowththeyfaceincreasingpressuretomovefromprivateownershiptopublic. Howeverthismovementunleashestheforcesofshareholderpressureonthestrategyoforganizations. ii)Suppliers: Anindividualoranorganizationinvolvedintheprocessofmakingaproductorserviceavailableforuseor consumptionbyaconsumerorbusinessuserisknownassupplier.Increaseinrawmaterialpriceswillhave aknockonaffectonthemarketingmixstrategyofanorganization.Pricesmaybeforcedupasaresult.A closersupplierrelationshipisonewayofensuringcompetitiveandqualityproductsforanorganization. iii)Distributors: Entitythatbuysnon-competingproductsorproduct-lines,warehousesthem,andresellsthemtoretailersor directtotheendusersorcustomersisknownasdistributor.Mostdistributorsprovidestrongmanpower andcashsupporttothesupplierormanufacturer'spromotionalefforts.Theyusuallyalsoprovidearangeof services(suchasproductinformation,estimates,technicalsupport,after-salesservices,credit)totheir customers.Oftengettingproductstotheendcustomerscanbeamajorissueforfirms.Thedistributors usedwilldeterminethefinalpriceoftheproductandhowitispresentedtotheendcustomer.Whenselling viaretailers,forexample,theretailerhascontroloverwheretheproductsaredisplayed,howtheyare pricedandhowmuchtheyarepromotedin-store.Youcanalsogainacompetitiveadvantagebyusing changingdistributionchannels. iv)Customers: Aperson,company,orotherentitywhichbuysgoodsandservicesproducedbyanotherperson,company, orotherentityisknownascustomer.Organizationssurviveonthebasisofmeetingtheneeds,wantsand providingbenefitsfortheircustomers.Failuretodosowillresultinafailedbusinessstrategy. v)Competitors: Acompanyinthesameindustryorasimilarindustrywhichoffersasimilarproductorserviceisknownas competitor.Thepresenceofoneormorecompetitorscanreducethepricesofgoodsandservicesasthe companiesattempttogainalargermarketshare.Competitionalsorequirescompaniestobecomemore efficientinordertoreducecosts.Fast-foodrestaurantsMcDonald'sandBurgerKingarecompetitors,as areCoca-ColaandPepsi,andWal-MartandTarget. vi)Media:

19. PRINCIPLESOFMANAGEMENT Positiveoradversemediaattentiononanorganisationsproductorservicecaninsomecasesmakeorbreak anorganisation..Consumerprogrammeswithawiderandmoredirectaudiencecanalsohaveavery powerfulandpositiveimpact,hforcingorganisationstochangetheirtactics. MACROENVIRONMENTALFACTORS Anorganization'smacroenvironmentconsistsofnonspecificaspectsintheorganization'ssurroundings thathavethepotentialtoaffecttheorganization'sstrategies.Whencomparedtoafirm'staskenvironment, theimpactofmacroenvironmentalvariablesislessdirectandtheorganizationhasamorelimitedimpact ontheseelementsoftheenvironment.Themacroenvironmentconsistsofforcesthatoriginateoutsideof anorganizationandgenerallycannotbealteredbyactionsoftheorganization.Inotherwords,afirmmay beinfluencedbychangeswithinthiselementofitsenvironment,butcannotitselfinfluencethe environment.ThecurvedlinesinFigure1indicatetheindirectinfluenceoftheenvironmentonthe organization. Macroenvironmentincludespolitical,economic,socialandtechnologicalfactors.Afirmconsidersthese aspartofitsenvironmentalscanningtobetterunderstandthethreatsandopportunitiescreatedbythe variablesandhowstrategicplansneedtobeadjustedsothefirmcanobtainandretaincompetitive advantage. i)PoliticalFactors Politicalfactorsincludegovernmentregulationsandlegalissuesanddefinebothformalandinformalrules underwhichthefirmmustoperate.Someexamplesinclude: •taxpolicy •employmentlaws •environmentalregulations •traderestrictionsandtariffs •politicalstability ii)EconomicFactors Economicfactorsaffectthepurchasingpowerofpotentialcustomersandthefirm'scostofcapital.The followingareexamplesoffactorsinthemacroeconomy: •economicgrowth •interestrates •exchangerates •inflationrate

20. PRINCIPLESOFMANAGEMENT iii)SocialFactors www.eeeexclusive.blogspot.comSocialfactorsincludethedemographicandculturalaspectsoftheexternal macroenvironment.Thesefactorsaffectcustomerneedsandthesizeofpotentialmarkets.Somesocial factorsinclude: •healthconsciousness •populationgrowthrate •agedistribution •careerattitudes •emphasisonsafety iv)TechnologicalFactors Technologicalfactorscanlowerbarrierstoentry,reduceminimumefficientproductionlevels, andinfluenceoutsourcingdecisions.Sometechnologicalfactorsinclude: •R&Dactivity •automation •technologyincentives •rateoftechnologicalchange TRENDSANDCHALLENGESOFMANAGEMENTINGLOBALSCENARIO Themanagementfunctionsareplanninganddecisionmaking,organizing.leading,andcontrolling—are justasrelevanttointernationalmanagersastodomesticmanagers.Internationalmanagersneedtohavea clearviewofwheretheywanttheirfirmtobeinthefuture;theyhavetoorganizetoimplementtheirplans: theyhavetomotivatethosewhoworklotthem;andtheyhavetodevelopappropriatecontrolmechanisms. a)PlanningandDecisionMakinginaGlobalScenario Toeffectivelyplanandmakedecisionsinaglobaleconomy,managersmusthaveabroadbased understandingofbothenvironmentalissuesandcompetitiveissues.Theyneedtounderstandlocalmarket conditionsandtechnologicalfactorthatwillaffecttheiroperations.Atthecorporatelevel,executivesneed agreatdealofinformationtofunctioneffectively.Whichmarketsaregrowing?Whichmarketsare shrinking?Whichareourdomesticandforeigncompetitorsdoingineachmarket?Theymustalsomakea varietyofstrategicdecisionsabouttheirorganizations.Forexample,ifafirmwishestoentermarketin France,shoulditbuyalocalfirmthere,buildaplant,orseekastrategicalliance?Criticalissuesinclude

21. PRINCIPLESOFMANAGEMENT understandingenvironmentalcircumstances,theroleofgoalsandplanninginaglobalorganization,and howdecisionmakingaffectstheglobalorganization. b)OrganizinginaGlobalScenario Managersininternationalbusinessesmustalsoattendtoavarietyoforganizingissues.Forexample, GeneralElectrichasoperationsscatteredaroundtheglobe.Thefirmhasmadethedecisiontogivelocal managersagreatdealofresponsibilityforhowtheyruntheirbusiness.Incontrast,manyJapanesefirms givemanagersoftheirforeignoperationsrelativelylittleresponsibility.Asaresult,thosemanagersmust frequentlytravelbacktoJapantopresentproblemsorgetdecisionsapproved.Managersinaninternational businessmustaddressthebasicissuesoforganizationstructureanddesign,managingchange,anddealing withhumanresources. c)LeadinginaGlobalScenario Wenotedearliersomeoftheculturalfactorsthataffectinternationalorganizations.Individualmanagers mustbepreparedtodealwiththeseandotherfactorsastheyinteractpeoplefromdifferentcultural backgrounds.Supervisingagroupoffivemanagers,eachofwhomisfromadifferentstateintheUnited States,islikelytobemuchsimplerthansupervisingagroupoffivemanagers,eachofwhomisfroma differentculture.Managersmustunderstandhowculturalfactorsaffectindividuals.Howmotivational processesvaryacrosscultures,howtheroleofleadershipchangesindifferentcultures,how communicationvariesacrosscultures,andhowinterpersonalandgroupprocessesdependoncultural background. d)ControllinginaGlobalScenario Finally,managersininternationalorganizationsmustalsobeconcernedwithcontrol.Distances,timezone differences,andculturalfactorsalsoplayaroleincontrol.Forexample,insomecultures,closesupervision isseenasbeingappropriate,whereasinothercultures,itisnotLikewise,executivesintheUnitedStates andJapanmayfinditdifficulttocommunicatevitalinformationtooneanotherbecauseofthetimezone differences.Basiccontrolissuesfortheinternationalmanagerrevolvearoundoperationsmanagement productivity,quality,technologyandinformationsystems.

22. PRINCIPLESOFMANAGEMENT UNITII PLANNING DEFINITION AccordingtoKoontzO'Donnel-"Planningisanintellectualprocess,theconsciousdeterminationof coursesofaction,thebasingofdecisionsonpurpose,actsandconsideredestimates". NATUREANDPURPOSEOFPLANNING NatureofPlanning 1.Planningisgoal-oriented:Everyplanmustcontributeinsomepositivewaytowardsthe accomplishmentofgroupobjectives.Planninghasnomeaningwithoutbeingrelatedtogoals. 2.PrimacyofPlanning:Planningisthefirstofthemanagerialfunctions.Itprecedesallother managementfunctions. 3.PervasivenessofPlanning:Planningisfoundatalllevelsofmanagement.Topmanagementlooksafter strategicplanning.Middlemanagementisinchargeofadministrativeplanning.Lowermanagementhasto concentrateonoperationalplanning. 4.Efficiency,EconomyandAccuracy:Efficiencyofplanismeasuredbyitscontributiontothe objectivesaseconomicallyaspossible.Planningalsofocusesonaccurateforecasts. 5.Co-ordination:Planningco-ordinatesthewhat,who,how,whereandwhyofplanning.Withoutco- ordinationofallactivities,wecannothaveunitedefforts. 6.LimitingFactors:Aplannermustrecognizethelimitingfactors(money,manpoweretc)andformulate plansinthelightofthesecriticalfactors. 7.Flexibility:Theprocessofplanningshouldbeadaptabletochangingenvironmentalconditions.

23. PRINCIPLESOFMANAGEMENT 8.Planningisanintellectualprocess:Thequalityofplanningwillvaryaccordingtothequalityofthe mindofthemanager. PurposeofPlanning 1.Tomanagebyobjectives:Alltheactivitiesofanorganizationaredesignedtoachievecertainspecified objectives.However,planningmakestheobjectivesmoreconcretebyfocusingattentiononthem. 2.Tooffsetuncertaintyandchange:Futureisalwaysfullofuncertaintiesandchanges.Planningforesees thefutureandmakesthenecessaryprovisionsforit. 3.Tosecureeconomyinoperation:Planninginvolves,theselectionofmostprofitablecourseofaction thatwouldleadtothebestresultattheminimumcosts. 4.Tohelpinco-ordination:Co-ordinationis,indeed,theessenceofmanagement,theplanningisthebase ofit.Withoutplanningitisnotpossibletoco-ordinatethedifferentactivitiesofanorganization. 5.Tomakecontroleffective:Thecontrollingfunctionofmanagementrelatestothecomparisonofthe plannedperformancewiththeactualperformance.Intheabsenceofplans,amanagementwillhaveno standardsforcontrollingother'sperformance. 6.Toincreaseorganizationaleffectiveness:Mereefficiencyintheorganizationisnotimportant;it shouldalsoleadtoproductivityandeffectiveness.Planningenablesthemanagerto measuretheorganizationaleffectivenessinthecontextofthestatedobjectivesandtakefurther actionsinthisdirection. FeaturesofPlanning •Itisprimaryfunctionofmanagement. •Itisanintellectualprocess •Focusesondeterminingtheobjectives •Involveschoiceanddecisionmaking •Itisacontinuousprocess •Itisapervasivefunction

24. PRINCIPLESOFMANAGEMENT ClassificationofPlanning Onthebasisofcontent StrategicPlanning –ItistheprocessofdecidingonLong-termobjectivesoftheorganization. –Itencompassesallthefunctionalareasofbusiness TacticalPlanning –Itinvolvesconversionofdetailedandspecificplansintodetailedandspecificactionplans. –Itistheblueprintforcurrentactionanditsupportsthestrategicplans.Onthebasisoftimeperiod Longtermplanning –Timeframebeyondfiveyears. –Itspecifieswhattheorganizationwantstobecomeinlongrun. –Itinvolvesgreatdealofuncertainty. Intermediatetermplanning –Timeframebetweentwoandfiveyears. –Itisdesignedtoimplementlongtermplans. Shorttermplanning –Timeframeofoneyearorless. –Itprovidebasisfordaytodayoperations.

25. PRINCIPLESOFMANAGEMENT PLANNINGPROCESS Thevariousstepsinvolvedinplanningaregivenbelow a)PerceptionofOpportunities: Althoughprecedingactualplanningandthereforenotstrictlyapartoftheplanningprocess,awarenessof anopportunityistherealstartingpointforplanning.Itincludesapreliminarylookatpossiblefuture opportunitiesandtheabilitytoseethemclearlyandcompletely,knowledgeofwherewestandinthelight ofourstrengthsandweaknesses,anunderstandingofwhywewishtosolveuncertainties,andavisionof whatweexpecttogain.Settingrealisticobjectivesdependsonthisawareness.Planningrequiresrealistic diagnosisoftheopportunitysituation. b)EstablishingObjectives: Thefirststepinplanningitselfistoestablishobjectivesfortheentireenterpriseandthenforeach subordinateunit.Objectivesspecifyingtheresultsexpectedindicatetheendpointsofwhatistobedone, wheretheprimaryemphasisistobeplaced,andwhatistobeaccomplishedbythenetworkofstrategies, policies,procedures,rules,budgetsandprograms.Enterpriseobjectivesshouldgivedirectiontothenature ofallmajorplanswhich,byreflectingtheseobjectives,definetheobjectivesofmajordepartments.Major departmentobjectives,inturn,controltheobjectivesofsubordinatedepartments,andsoondowntheline. Theobjectivesoflesserdepartmentswillbebetterframed,however,ifsubdivisionmanagersunderstand theoverallenterpriseobjectivesandtheimpliedderivativegoalsandiftheyaregivenanopportunityto contributetheirideastothemandtothesettingoftheirowngoals. c)ConsideringthePlanningPremises: Anotherlogicalstepinplanningistoestablish,obtainagreementtoutilizeanddisseminatecritical planningpremises.Theseareforecastdataofafactualnature,applicablebasicpolicies,andexisting companyplans.Premises,then,areplanningassumptions–inotherwords,theexpectedenvironmentof plansinoperation.Thisstepleadstooneofthemajorprinciplesofplanning.Themoreindividualscharged withplanningunderstandandagreetoutilizeconsistentplanningpremises,themorecoordinatedenterprise planningwillbe.Planningpremisesincludefarmorethantheusualbasicforecastsofpopulation,prices, costs,production,markets,andsimilarmatters.Becausethefutureenvironmentofplansissocomplex,it wouldnotbeprofitableorrealistictomakeassumptionsabouteverydetailofthefutureenvironmentofa

26. PRINCIPLESOFMANAGEMENT plan.Sinceagreementtoutilizeagivensetofpremisesisimportanttocoordinateplanning,itbecomesa majorresponsibilityofmanagers,startingwiththoseatthetop,tomakesurethatsubordinatemanagers understandthepremisesuponwhichtheyareexpectedtoplan.Itisnotunusualforchiefexecutivesin well-managedcompaniestoforcetopmanagerswithdifferingviews,throughgroupdeliberation,toarrive atasetofmajorpremisesthatallcanaccept. d)Identificationofalternatives: Oncetheorganizationalobjectiveshavebeenclearlystatedandtheplanningpremiseshavebeen developed,themanagershouldlistasmanyavailablealternativesaspossibleforreachingthoseobjectives. Thefocusofthisstepistosearchforandexaminealternativecoursesofaction,especiallythosenot immediatelyapparent.Thereisseldomaplanforwhichreasonablealternativesdonotexist,andquite oftenanalternativethatisnotobviousprovestobethebest.Themorecommonproblemisnotfinding alternatives,butreducingthenumberofalternativessothatthemostpromisingmaybeanalyzed.Even withmathematicaltechniquesandthecomputer,thereisalimittothenumberofalternativesthatmaybe examined.Itisthereforeusuallynecessaryfortheplannertoreducebypreliminaryexaminationthe numberofalternativestothosepromisingthemostfruitfulpossibilitiesorbymathematicallyeliminating, throughtheprocessofapproximation,theleastpromisingones. e)Evaluationofalternatives Havingsoughtoutalternativecoursesandexaminedtheirstrongandweakpoints,thefollowingstepisto evaluatethembyweighingthevariousfactorsinthelightofpremisesandgoals.Onecoursemayappearto bethemostprofitablebutrequirealargecashoutlayandaslowpayback;anothermaybelessprofitable butinvolvelessrisk;stillanothermaybettersuitthecompanyinlong–rangeobjectives.Iftheonly objectiveweretoexamineprofitsinacertainbusinessimmediately,ifthefuturewerenotuncertain,ifcash positionandcapitalavailabilitywerenotworrisome,andifmostfactorscouldbereducedtodefinitedata, thisevaluationshouldberelativelyeasy.Buttypicalplanningisrepletewithuncertainties,problemsof capitalshortages,andintangiblefactors,andsoevaluationisusuallyverydifficult,evenwithrelatively simpleproblems.Acompanymaywishtoenteranewproductlineprimarilyforpurposesofprestige;the forecastofexpectedresultsmayshowaclearfinancialloss,butthequestionisstillopenastowhetherthe lossisworththegain.

27. PRINCIPLESOFMANAGEMENT f)Choiceofalternativeplans Anevaluationofalternativesmustincludeanevaluationofthepremisesonwhichthealternativesare based.Amanagerusuallyfindsthatsomepremisesareunreasonableandcanthereforebeexcludedfrom furtherconsideration.Thiseliminationprocesshelpsthemanagerdeterminewhichalternativewouldbest accomplishorganizationalobjectives. g)FormulatingofSupportingPlans Afterdecisionsaremadeandplansareset,thefinalsteptogivethemmeaningistonumbersizethemby convertingthemtobudgets.Theoverallbudgetsofanenterpriserepresentthesumtotalofincomeand expenseswithresultantprofitorsurplusandbudgetsofmajorbalance–sheetitemssuchascashandcapital expenditures.Eachdepartmentorprogramofabusinessorotherenterprisecanhaveitsownbudgets, usuallyofexpensesandcapitalexpenditures,whichtieintotheoverallbudget.Ifthisprocessisdonewell, budgetsbecomeameansofaddingtogetherthevariousplansandalsoimportantstandardsagainstwhich planningprogresscanbemeasured. h)Establishingsequenceofactivities Onceplansthatfurnishtheorganizationwithbothlong-rangeandshort-rangedirectionhavebeen developed,theymustbeimplemented.Obviously,theorganizationcannotdirectlybenefitfromplanning processuntilthisstepisperformed. TYPESOFPLANS/COMPONENTSOFPLANNING Intheprocessofplanning,severalplansarepreparedwhichareknownascomponentsofplanning.Plans canbebroadlyclassifiedas a)Strategicplans b)Tacticalplans c)Operationalplans Operationalplansleadtotheachievementoftacticalplans,whichinturnleadtotheattainmentofstrategic plans.Inadditiontothesethreetypesofplans,managersshouldalsodevelopacontingencyplanincase theiroriginalplansfail. a)Strategicplans: Astrategicplanisanoutlineofstepsdesignedwiththegoalsoftheentireorganizationasawholeinmind, ratherthanwiththegoalsofspecificdivisionsordepartments.Itisfurtherclassifiedas

28. PRINCIPLESOFMANAGEMENT i)Mission: .Themissionisastatementthatreflectsthebasicpurposeandfocusoftheorganizationwhichnormally remainunchanged.Themissionofthecompanyistheanswerofthequestion:whydoestheorganization exists?Properlycraftedmissionstatementsserveasfilterstoseparatewhatisimportantfromwhatisnot, clearlystatewhichmarketswillbeservedandhow,andcommunicateasenseofintendeddirectiontothe entireorganization.MissionofFord:―weareaglobal,diversefamilywithaproudinheritance,providing exceptionalproductsandservices‖. ii)Objectivesorgoals: Bothgoalandobjectivecanbedefinedasstatementsthatreflecttheendtowardswhichtheorganizationis aimingtoachieve.However,therearesignificantdifferencesbetweenthetwo.Agoalisanabstractand generalumbrellastatement,underwhichspecificobjectivescanbeclustered.Objectivesarestatementsthat describe—inprecise,measurable,andobtainabletermswhichreflectthedesiredorganization‘soutcomes. iii)Strategies: Strategyisthedeterminationofthebasiclongtermobjectivesofanorganizationandtheadoptionofaction andcollectionofactionandallocationofresourcesnecessarytoachievethesegoals.Strategicplanning beginswithanorganization'smission.Strategicplanslookaheadoverthenexttwo,three,five,oreven moreyearstomovetheorganizationfromwhereitcurrentlyistowhereitwantstobe.Requiring multilevelinvolvement,theseplansdemandharmonyamongalllevelsofmanagementwithinthe organization.Top-levelmanagementdevelopsthedirectionalobjectivesfortheentireorganization,while lowerlevelsofmanagementdevelopcompatibleobjectivesandplanstoachievethem.Topmanagement's strategicplanfortheentireorganizationbecomestheframeworkandsetsdimensionsforthelowerlevel planning. b)Tacticalplans: Atacticalplanisconcernedwithwhatthelowerlevelunitswithineachdivisionmustdo,howtheymust doit,andwhoisinchargeateachlevel.Tacticsarethemeansneededtoactivateastrategyandmakeit work.Tacticalplansareconcernedwithshortertimeframesandnarrowerscopesthanarestrategicplans. Theseplansusuallyspanoneyearorlessbecausetheyareconsideredshort-termgoals.Long-termgoals, ontheotherhand,cantakeseveralyearsormoretoaccomplish.Normally,itisthemiddlemanager's responsibilitytotakethebroadstrategicplanandidentifyspecifictacticalactions.

29. PRINCIPLESOFMANAGEMENT c)Operationalplans Thespecificresultsexpectedfromdepartments,workgroups,andindividualsaretheoperationalgoals. Thesegoalsarepreciseandmeasurable.―Process150salesapplicationseachweek‖or―Publish20books thisquarter‖areexamplesofoperationalgoals.Anoperationalplanisonethatamanagerusesto accomplishhisorherjobresponsibilities.Supervisors,teamleaders,andfacilitatorsdevelopoperational planstosupporttacticalplans(seethenextsection).Operationalplanscanbeasingle-useplanora standingplan. i)Single-useplansapplytoactivitiesthatdonotrecurorrepeat.Aone-timeoccurrence,suchasaspecial salesprogram,isasingle-useplanbecauseitdealswiththewho,what,where,how,andhowmuchofan activity. ØProgramme:Programmeconsistsofanorderedlistofeventstobefollowedtoexecuteaproject. ØBudget:Abudgetpredictssourcesandamountsofincomeandhowmuchtheyareusedforaspecific project. ii)Standingplansareusuallymadeonceandretaintheirvalueoveraperiodofyearswhileundergoing periodicrevisionsandupdates.Thefollowingareexamplesofongoingplans: ØPolicy:Apolicyprovidesabroadguidelineformanagerstofollowwhendealingwithimportantareasof decisionmaking.Policiesaregeneralstatementsthatexplainhowamanagershouldattempttohandle routinemanagementresponsibilities.Typicalhumanresourcespolicies,forexample,addresssuchmatters asemployeehiring,terminations,performanceappraisals,payincreases,anddiscipline. ØProcedure:Aprocedureisasetofstep-by-stepdirectionsthatexplainshowactivitiesortasksaretobe carriedout.Mostorganizationshaveproceduresforpurchasingsuppliesandequipment,forexample.This procedureusuallybeginswithasupervisorcompletingapurchasingrequisition.Therequisitionisthensent tothenextlevelofmanagementforapproval.Theapprovedrequisitionisforwardedtothepurchasing department.Dependingontheamountoftherequest,thepurchasingdepartmentmayplaceanorder,or theymayneedtosecurequotationsand/orbidsforseveralvendorsbeforeplacingtheorder.Bydefining thestepstobetakenandtheorderinwhichtheyaretobedone,proceduresprovideastandardizedwayof respondingtoarepetitiveproblem.

30. PRINCIPLESOFMANAGEMENT ØRule:Aruleisanexplicitstatementthattellsanemployeewhatheorshecanandcannotdo.Rulesare ―do‖and―don't‖statementsputintoplacetopromotethesafetyofemployeesandtheuniformtreatment andbehaviorofemployees.Forexample,rulesabouttardinessandabsenteeismpermitsupervisorstomake disciplinedecisionsrapidlyandwithahighdegreeoffairness. d)Contingencyplans Intelligentandsuccessfulmanagementdependsuponaconstantpursuitofadaptation,flexibility,and masteryofchangingconditions.Strongmanagementrequiresa―keepingalloptionsopen‖approachatall times—that'swherecontingencyplanningcomesin.Contingencyplanninginvolvesidentifying alternativecoursesofactionthatcanbeimplementedifandwhentheoriginalplanprovesinadequate becauseofchangingcircumstances.Keepinmindthateventsbeyondamanager'scontrolmaycauseeven themostcarefullypreparedalternativefuturescenariostogoawry.Unexpectedproblemsandevents frequentlyoccur.Whentheydo,managersmayneedtochangetheirplans.Anticipatingchangeduringthe planningprocessisbestincasethingsdon'tgoasexpected.Managementcanthendevelopalternativesto theexistingplanandreadythemforusewhenandifcircumstancesmakethesealternativesappropriate. OBJECTIVES Objectivesmaybedefinedasthegoalswhichanorganisationtriestoachieve.Objectivesaredescribedas theend-pointsofplanning.AccordingtoKoontzandO'Donnell,"anobjectiveisatermcommonlyusedto indicatetheendpointofamanagementprogramme."Objectivesconstitutethepurposeoftheenterprise andwithoutthemnointelligentplanningcantakeplace.Objectivesare,therefore,theendstowardswhich theactivitiesoftheenterpriseareaimed. FeaturesofObjectives •Theobjectivesmustbepredetermined. •Aclearlydefinedobjectiveprovidesthecleardirectionformanagerialeffort. •Objectivesmustberealistic. •Objectivesmustbemeasurable. •Objectivesmusthavesocialsanction. •Allobjectivesareinterconnectedandmutuallysupportive. •Objectivesmaybeshort-range,medium-rangeandlong-range. •Objectivesmaybeconstructedintoahierarchy.

31. PRINCIPLESOFMANAGEMENT AdvantagesofObjectives •Cleardefinitionofobjectivesencouragesunifiedplanning. •Objectivesprovidemotivationtopeopleintheorganization. •Whentheworkisgoal-oriented,unproductivetaskscanbeavoided. •Objectivesprovidestandardswhichaidinthecontrolofhumaneffortsinanorganization. •Objectivesservetoidentifytheorganizationandtolinkittothegroupsuponwhichitsexistencedepends. •Objectivesactasasoundbasisfordevelopingadministrativecontrols. •Objectivescontributetothemanagementprocess:theyinfluencethepurposeoftheorganization,policies, personnel,leadershipaswellasmanagerialcontrol. ProcessofSettingObjectives Objectivesarethekeystoneofmanagementplanning.Itisthemostimportanttaskofmanagement. Objectivesarerequiredtobesetineveryareawhichdirectlyandvitallyeffectsthesurvivalandprosperity ofthebusiness.Inthesettingofobjectives,thefollowingpointsshouldbeborneinmind. •Objectivesarerequiredtobesetbymanagementineveryareawhichdirectlyandvitallyaffectsthe survivalandprosperityofthebusiness. •Theobjectivestobesetinvariousareashavetobeidentified. •Whilesettingtheobjectives,thepastperformancemustbereviewed,sincepastperformanceindicates whattheorganizationwillbeabletoaccomplishinfuture. •Theobjectivesshouldbesetinrealistictermsi.e.,theobjectivestobesetshouldbereasonableand capableofattainment. •Objectivesmustbeconsistentwithoneandother. •Objectivesmustbesetinclear-cutterms. •Forthesuccessfulaccomplishmentoftheobjectives,thereshouldbeeffectivecommunication. MANAGEMENTBYOBJECTIVES(MBO) MBOwasfirstpopularizedbyPeterDruckerin1954inhisbook,thepracticeofManagement‘.Itisa processofagreeingwithinanorganizationsothatmanagementandemployeesbuyintotheobjectivesand understandwhattheyare.Ithasapreciseandwrittendescriptionobjectivesahead,timelinesfortheir motoringandachievement.Theemployeesandmanageragreetowhattheemployeewillattemptto achieveinaperiodaheadandtheemployeewillacceptandbuyintotheobjectives.

32. PRINCIPLESOFMANAGEMENT Definition ―MBOisaprocesswherebythesuperiorandthemangersofanorganizationjointlyidentifyitscommon goals,defineeachindividual‘smajorareaofresponsibilityintermsofresultsexpectedofhim,anduse thesemeasuresasguidesforoperatingtheunitandassessingthecontributionofeachofitsmembers.‖ FeaturesofMBO 1.MBOisconcernedwithgoalsettingandplanningforindividualmanagersandtheirunits. 2.TheessenceofMBOisaprocessofjointgoalsettingbetweenasupervisorandasubordinate. 3.Managersworkwiththeirsubordinatestoestablishtheperformancegoalsthatareconsistentwiththeir higherorganizationalobjectives. 4.MBOfocusesattentiononappropriategoalsandplans. 5.MBOfacilitatescontrolthroughtheperiodicdevelopmentandsubsequentevaluationofindividualgoals andplans. StepsinMBO: ThetypicalMBOprocessconsistsof: 1)Establishingaclearandpreciselydefinedstatementofobjectivesfortheemployee 2)Developinganactionplanindicatinghowtheseobjectivesaretobeachieved 3)Reviewingtheperformanceoftheemployees 4)Appraisingperformancebasedonobjectiveachievement 1)Settingobjectives: ForManagementbyObjectives(MBO)tobeeffective,individualmanagersmustunderstandthespecific objectivesoftheirjobandhowthoseobjectivesfitinwiththeoverallcompanyobjectivessetbytheboard ofdirectors.Themanagersofthevariousunitsorsub-units,orsectionsofanorganizationshouldknownot onlytheobjectivesoftheirunitbutshouldalsoactivelyparticipateinsettingtheseobjectivesandmake responsibilityforthem.ManagementbyObjective(MBO)systems,objectivesarewrittendownforeach leveloftheorganization,andindividualsaregivenspecificaimsandtargets.Managersneedtoidentifyand setobjectivesbothforthemselves,theirunits,andtheirorganizations.

33. PRINCIPLESOFMANAGEMENT 2)Developingactionplans Actionsplansspecifytheactionsneededtoaddresseachofthetoporganizationalissuesandtoreacheach oftheassociatedgoals,whowillcompleteeachactionandaccordingtowhattimeline.Anoverall,top- levelactionplanthatdepictshoweachstrategicgoalwillbereachedisdevelopedbythetoplevel management.Theformatoftheactionplandependsontheobjectiveoftheorganization. 3)ReviewingProgress: Performanceismeasuredintermsofresults.Jobperformanceistheneteffectofanemployee'seffortas modifiedbyabilities,roleperceptionsandresultsproduced.Effortreferstotheamountofenergyan employeeusesinperformingajob.Abilitiesarepersonalcharacteristicsusedinperformingajoband usuallydonotfluctuatewidelyovershortperiodsoftime.Roleperceptionreferstothedirectioninwhich employeesbelievetheyshouldchanneltheireffortsontheirjobs,andtheyaredefinedbytheactivitiesand behaviorstheybelievearenecessary. 4)Performanceappraisal: Performanceappraisalscommunicatetoemployeeshowtheyareperformingtheirjobs,andtheyestablisha planforimprovement.Performanceappraisalsareextremelyimportanttobothemployeeandemployer,as theyareoftenusedtoprovidepredictiveinformationrelatedtopossiblepromotion.Appraisalscanalso provideinputfordeterminingbothindividualandorganizationaltraininganddevelopmentneeds. Performanceappraisalsencourageperformanceimprovement.Feedbackonbehavior,attitude,skillor knowledgeclarifiesforemployeesthejobexpectationstheirmanagersholdforthem.Inordertobe effective,performanceappraisalsmustbesupportedbydocumentationandmanagementcommitment. Advantages •Motivation–Involvingemployeesinthewholeprocessofgoalsettingandincreasingemployee empowerment.Thisincreasesemployeejobsatisfactionandcommitment. •BettercommunicationandCoordination–Frequentreviewsandinteractionsbetweensuperiorsand subordinateshelpstomaintainharmoniousrelationshipswithintheorganizationandalsotosolvemany problems. •Clarityofgoals •Subordinateshaveahighercommitmenttoobjectivestheysetthemselvesthanthoseimposedonthemby anotherperson.

34. PRINCIPLESOFMANAGEMENT •Managerscanensurethatobjectivesofthesubordinatesarelinkedtotheorganization'sobjectives. Limitations Thereareseverallimitationstotheassumptivebaseunderlyingtheimpactofmanagingbyobjectives, including: •Itover-emphasizesthesettingofgoalsovertheworkingofaplanasadriverofoutcomes. •Itunderemphasizestheimportanceoftheenvironmentorcontextinwhichthegoalsareset. •Companiesevaluatedtheiremployeesbycomparingthemwiththe"ideal"employee.Traitappraisalonly looksatwhatemployeesshouldbe,notatwhattheyshoulddo.Whenthisapproachisnotproperlyset, agreedandmanagedbyorganizations,self-centeredemployeesmightbepronetodistortresults,falsely representingachievementoftargetsthatweresetinashort-term,narrowfashion.Inthiscase,managingby objectiveswouldbecounterproductive. STRATEGIES Theterm'Strategy'hasbeenadaptedfromwarandisbeingincreasinglyusedinbusinesstoreflectbroad overallobjectivesandpoliciesofanenterprise.Literallyspeaking,theterm'Strategy'standsforthewar-art ofthemilitarygeneral,compellingtheenemytofightasperoutchosentermsandconditions.Accordingto KoontzandO'Donnell,"Strategiesmustoftendenoteageneralprogrammeofactionanddeploymentof emphasisandresourcestoattaincomprehensiveobjectives".Strategiesareplansmadeinthelightofthe plansofthecompetitorsbecauseamodernbusinessinstitutionoperatesinacompetitiveenvironment. Theyareausefulframeworkforguidingenterprisethinkingandaction.Aperfectstrategycanbebuiltonly onperfectknowledgeoftheplansofothersintheindustry.Thismaybedonebythemanagementofafirm puttingitselfintheplaceofarivalfirmandtryingtoestimatetheirplans. CharacteristicsofStrategy •Itistherightcombinationofdifferentfactors. •Itrelatesthebusinessorganizationtotheenvironment. •Itisanactiontomeetaparticularchallenge,tosolveparticularproblemsortoattaindesiredobjectives. •Strategyisameanstoanendandnotanendinitself. •Itisformulatedatthetopmanagementlevel. •Itinvolvesassumptionofcertaincalculatedrisks.

35. PRINCIPLESOFMANAGEMENT StrategicPlanningProcess/StrategicFormulationProcess 1.InputtotheOrganization:VariousInputs(People,Capital,ManagementandTechnicalskills,others) includinggoalsinputofclaimants(Employees,Consumers,Suppliers,Stockholders,Government, Communityandothers)needtobeelaborated. 2.IndustryAnalysis:Formulationofstrategyrequirestheevaluationoftheattractivenessofanindustry byanalyzingtheexternalenvironment.Thefocusshouldbeonthekindofcompactionwithinanindustry, thepossibilityofnewfirmsenteringthemarket,theavailabilityofsubstituteproductsorservices,the bargainingpositionsofthesuppliers,andbuyersorcustomers. 3.EnterpriseProfile:Enterpriseprofileisusuallythestartingpointfordeterminingwherethecompanyis andwhereitshouldgo.Topmanagersdeterminethebasicpurposeoftheenterpriseandclarifythefirm‘s geographicorientation. 4.Orientation,Values,andVisionofExecutives:Theenterpriseprofileisshapedbypeople,especially executives,andtheirorientationandvaluesareimportantforformulationthestrategy.Theysetthe organizationalclimate,andtheydeterminethedirectionofthefirmthoughtheirvision.Consequently,their values,theirpreferences,andtheirattitudestowardriskhavetobecarefullyexaminedbecausetheyhave animpactonthestrategy. 5.Mission(Purpose),MajorObjectives,andStrategicIntent:MissionorPurposeistheanswertothe question:Whatisourbusiness?ThemajorObjectivesaretheendpointstowardswhichtheactivatesofthe enterprisearedirected.Strategicintentisthecommitment(obsession)towininthecompetitive environment,notonlyatthetop-levelbutalsothroughouttheorganization. 6.PresentandFutureExternalEnvironment:Thepresentandfutureexternalenvironmentmustbe assessedintermsofthreatsandopportunities. 7.InternalEnvironment:InternalEnvironmentshouldbeauditedandevaluatedwithrespecttoits resourcesanditsweaknesses,andstrengthsinresearchanddevelopment,production,operation, procurement,marketingandproductsandservices.Otherinternalfactorsinclude,humanresourcesand financialresourcesaswellasthecompanyimage,theorganizationstructureandclimate,theplanningand controlsystem,andrelationswithcustomers.

36. PRINCIPLESOFMANAGEMENT 8.DevelopmentofAlternativeStrategies:Strategicalternativesaredevelopedonthebasisofananalysis oftheexternalandinternalenvironment.Strategiesmaybespecializeorconcentrate.Alternatively,afirm maydiversify,extendingtheoperationintonewandprofitablemarkets.Otherexamplesofpossible strategiesarejointventures,andstrategicallianceswhichmaybeanappropriatestrategyforsomefirms. 9.EvaluationandChoiceofStrategies:Strategicchoicesmustbeconsideredinthelightoftherisk involvedinaparticulardecision.Someprofitableopportunitiesmaynotbepursuedbecauseafailureina riskyventurecouldresultinbankruptcyofthefirm.Anothercriticalelementinchoosingastrategyis timing.Eventhebestproductmayfailifitisintroducedtothemarketataninappropriatetime. 10.Medium/ShortRangePlanning,ImplementationthroughReengineeringtheOrganization Structure,LeadershipandControl: ImplementationoftheStrategyoftenrequiresreengineeringtheorganization,staffingtheorganization structureandprovidingleadership.Controlsmustalsobeinstalledmonitoringperformanceagainstplans. 11.ConsistencyTestingandContingencyPlanning: Thelastkeyaspectofthestrategicplanningprocessisthetestingforconsistencyandpreparingfor contingencyplans. TYPESOFSTRATEGIES AccordingtoMichelPorter,thestrategiescanbeclassifiedintothreetypes.Theyare a)Costleadershipstrategy b)Differentiationstrategy c)Focusstrategy ThefollowingtableillustratesPorter'sgenericstrategies: a)CostLeadershipStrategy Thisgenericstrategycallsforbeingthelowcostproducerinanindustryforagivenlevelofquality.The firmsellsitsproductseitherataverageindustrypricestoearnaprofithigherthanthatofrivals,orbelow theaverageindustrypricestogainmarketshare.Intheeventofaprice

37. PRINCIPLESOFMANAGEMENT war,thefirmcanmaintainsomeprofitabilitywhilethecompetitionsufferslosses.Evenwithoutaprice war,astheindustrymaturesandpricesdecline,thefirmsthatcanproducemorecheaplywillremain profitableforalongerperiodoftime.Thecostleadershipstrategyusuallytargetsabroadmarket.Someof thewaysthatfirmsacquirecostadvantagesarebyimprovingprocessefficiencies,gaininguniqueaccessto alargesourceoflowercostmaterials,makingoptimaloutsourcingandverticalintegrationdecisions,or avoidingsomecostsaltogether.Ifcompetingfirmsareunabletolowertheircostsbyasimilaramount,the firmmaybeabletosustainacompetitiveadvantagebasedoncostleadership.Firmsthatsucceedincost leadershipoftenhavethefollowinginternalstrengths: •Accesstothecapitalrequiredtomakeasignificantinvestmentinproductionassets;thisinvestment representsabarriertoentrythatmanyfirmsmaynotovercome. •Skillindesigningproductsforefficientmanufacturing,forexample,havingasmallcomponentcountto shortentheassemblyprocess. •Highlevelofexpertiseinmanufacturingprocessengineering. •Efficientdistributionchannels. Eachgenericstrategyhasitsrisks,includingthelow-coststrategy.Forexample,otherfirmsmaybeableto lowertheircostsaswell.Astechnologyimproves,thecompetitionmaybeabletoleapfrogtheproduction capabilities,thuseliminatingthecompetitiveadvantage.Additionally,severalfirmsfollowingafocus strategyandtargetingvariousnarrowmarketsmaybeabletoachieveanevenlowercostwithintheir segmentsandasagroupgainsignificantmarketshare. b)DifferentiationStrategy Adifferentiationstrategycallsforthedevelopmentofaproductorservicethatoffersuniqueattributesthat arevaluedbycustomersandthatcustomersperceivetobebetterthanordifferentfromtheproductsofthe competition.Thevalueaddedbytheuniquenessoftheproductmayallowthefirmtochargeapremium priceforit.Thefirmhopesthatthehigherpricewillmorethancovertheextracostsincurredinoffering theuniqueproduct.Becauseoftheproduct'suniqueattributes,ifsuppliersincreasetheirpricesthefirm maybeabletopassalongthecoststoitscustomerswhocannotfindsubstituteproductseasily.Firmsthat succeedinadifferentiationstrategyoftenhavethefollowinginternalstrengths: •Accesstoleadingscientificresearch. •Highlyskilledandcreativeproductdevelopmentteam. •Strongsalesteamwiththeabilitytosuccessfullycommunicatetheperceivedstrengthsoftheproduct.

38. PRINCIPLESOFMANAGEMENT •Corporatereputationforqualityandinnovation.Therisksassociatedwithadifferentiationstrategy includeimitationbycompetitorsandchangesincustomertastes.Additionally,variousfirmspursuing focusstrategiesmaybeabletoachieveevengreaterdifferentiationintheirmarketsegments. c)FocusStrategy Thefocusstrategyconcentratesonanarrowsegmentandwithinthatsegmentattemptstoachieveeithera costadvantageordifferentiation.Thepremiseisthattheneedsofthegroupcanbebetterservicedby focusingentirelyonit.Afirmusingafocusstrategyoftenenjoysahighdegreeofcustomerloyalty,and thisentrenchedloyaltydiscouragesotherfirmsfromcompetingdirectly.Becauseoftheirnarrowmarket focus,firmspursuingafocusstrategyhavelowervolumesandthereforelessbargainingpowerwiththeir suppliers.However,firmspursuingadifferentiationfocusedstrategymaybeabletopasshighercostsonto customerssinceclosesubstituteproductsdonotexist.Firmsthatsucceedinafocusstrategyareableto tailorabroadrangeofproductdevelopmentstrengthstoarelativelynarrowmarketsegmentthattheyknow verywell.Somerisksoffocusstrategiesincludeimitationandchangesinthetargetsegments. Furthermore,itmaybefairlyeasyforabroad-marketcostleadertoadaptitsproductinordertocompete directly.Finally,otherfocusersmaybeabletocarveoutsub-segmentsthattheycanserveevenbetter. ACombinationofGenericStrategies Thesegenericstrategiesarenotnecessarilycompatiblewithoneanother.Ifafirmattemptstoachievean advantageonallfronts,inthisattemptitmayachievenoadvantageatall.Forexample,ifafirm differentiatesitselfbysupplyingveryhighqualityproducts,itrisksunderminingthatqualityifitseeksto becomeacostleader.Evenifthequalitydidnotsuffer,thefirmwouldriskprojectingaconfusingimage. Forthisreason,MichaelPorterarguedthattobesuccessfuloverthelong-term,afirmmustselectonlyone ofthesethreegenericstrategies.Otherwise,withmorethanonesinglegenericstrategythefirmwillbe "stuckinthemiddle"andwillnotachieveacompetitiveadvantage.Porterarguedthatfirmsthatareableto succeedatmultiplestrategiesoftendosobycreatingseparatebusinessunitsforeachstrategy.By separatingthestrategiesintodifferentunitshavingdifferentpoliciesandevendifferentcultures,a corporationislesslikelytobecome"stuckinthemiddle." However,thereexistsaviewpointthatasinglegenericstrategyisnotalwaysbestbecausewithinthesame productcustomersoftenseekmulti-dimensionalsatisfactionssuchasacombinationofquality,style, convenience,andprice.Therehavebeencasesinwhichhighqualityproducersfaithfullyfollowedasingle

39. PRINCIPLESOFMANAGEMENT strategyandthensufferedgreatlywhenanotherfirmenteredthemarketwithalower-qualityproductthat bettermettheoverallneedsofthecustomers. POLICIES Policiesaregeneralstatementsorunderstandingsthatguidemanagers‘thinkingindecisionmaking.They usuallydonotrequireactionbutareintendedtoguidemanagersintheircommitmenttothedecisionthey ultimatelymake.Thefirststepintheprocessofpolicyformulation,asshowninthediagrambelow,isto capturethevaluesorprinciplesthatwillguidetherestoftheprocessandformthebasisonwhichto produceastatementofissues.Thestatementofissuesinvolvesidentifyingtheopportunitiesand constraintsaffectingthelocalhousingmarket,andistobeproducedbythoroughlyanalyzingthehousing market.Thekitprovidestheuserwithaccesstoahousingdatabasetofacilitatethisanalysis. Thestatementofissueswillprovidethebasisfortheformulationofasetofhousinggoalsandobjectives, designedtoaddresstheproblemsidentifiedandtoexploittheopportunitieswhichpresentthemselves.The nextstepistoidentifyandanalyzethevariouspolicyoptionswhichcanbeappliedtoachievethesetof goalsandobjectives.Theoptionsavailabletoeachlocalgovernmentwilldependonlocalcircumstancesas muchasthebroadercontextandeachlocalauthoritywillhavetodevelopitsownuniqueapproachto addressingthehousingneedsofitsresidents.Animplementationprogramforrealizingthepolicy recommendationsmustthenbeprepared,addressingbudgetaryandprogrammingrequirements,and allocatingrolesandresponsibilities.Finally,theimplementationofthehousingstrategyneedstobe systematicallymonitoredandevaluatedagainstthestatedgoalsandobjectives,andthevariouscomponents ofthestrategymodifiedorstrengthened,asrequired.Ateachstepoftheway,eachcomponentofthe strategyneedstobediscussedanddebated,andapublicconsultationprocessengagedin.Theextentof consultationandtheparticipantsinvolvedwillvarywitheachstep. EssentialsofPolicyFormulation Theessentialsofpolicyformationmaybelistedasbelow: •Apolicyshouldbedefinite,positiveandclear.Itshouldbeunderstoodbyeveryoneintheorganization. •Apolicyshouldbetranslatableintothepractices. •Apolicyshouldbeflexibleandatthesametimehaveahighdegreeofpermanency. •Apolicyshouldbeformulatedtocoverallreasonableanticipatableconditions. •Apolicyshouldbefoundeduponfactsandsoundjudgment.

40. PRINCIPLESOFMANAGEMENT •Apolicyshouldconformtoeconomicprinciples,statutesandregulations. •Apolicyshouldbeageneralstatementoftheestablishedrule. ImportanceofPolicies Policiesareusefulforthefollowingreasons: •Theyprovideguidestothinkingandactionandprovidesupporttothesubordinates. •Theydelimittheareawithinwhichadecisionistobemade. •Theysavetimeandeffortbypre-decidingproblemsand •Theypermitdelegationofauthoritytomangersatthelowerlevels. DECISIONMAKING TheworddecisionhasbeenderivedfromtheLatinword"decidere"whichmeans"cuttingoff".Thus, decisioninvolvescuttingoffofalternativesbetweenthosethataredesirableandthosethatarenot desirable.InthewordsofGeorgeR.Terry,"Decision-makingistheselectionbasedonsomecriteriafrom twoormorepossiblealternatives". CharacteristicsofDecisionMaking •Decisionmakingimpliesthattherearevariousalternativesandthemostdesirablealternativeischosento solvetheproblemortoarriveatexpectedresults. •Thedecision-makerhasfreedomtochooseanalternative. •Decision-makingmaynotbecompletelyrationalbutmaybejudgmentalandemotional. •Decision-makingisgoal-oriented. •Decision-makingisamentalorintellectualprocessbecausethefinaldecisionismadebythedecision- maker. •Adecisionmaybeexpressedinwordsormaybeimpliedfrombehaviour. •Choosingfromamongthealternativecoursesofoperationimpliesuncertaintyaboutthefinalresultof eachpossiblecourseofoperation. •Decisionmakingisrational.Itistakenonlyafterathoroughanalysisandreasoningandweighingthe consequencesofthevariousalternatives.

41. PRINCIPLESOFMANAGEMENT TYPESOFDECISIONS a)ProgrammedandNon-ProgrammedDecisions:HerbertSimonhasgroupedorganizationaldecisions intotwocategoriesbasedontheprocedurefollowed.Theyare: i)Programmeddecisions:Programmeddecisionsareroutineandrepetitiveandaremadewithinthe frameworkoforganizationalpoliciesandrules.Thesepoliciesandrulesareestablishedwellinadvanceto solverecurringproblemsintheorganization.Programmeddecisionshaveshort-runimpact.Theyare, generally,takenatthelowerlevelofmanagement. ii)Non-ProgrammedDecisions:Non-programmeddecisionsaredecisionstakentomeetnon-repetitive problems.Non-programmeddecisionsarerelevantforsolvingunique/unusualproblemsinwhichvarious alternativescannotbedecidedinadvance.Acommonfeatureofnon-programmeddecisionsisthattheyare novelandnon-recurringandtherefore,readymadesolutionsarenotavailable.Sincethesedecisionsareof highimportanceandhavelong-termconsequences,theyaremadebytoplevelmanagement. b)StrategicandTacticalDecisions:Organizationaldecisionsmayalsobeclassifiedasstrategicor tactical. i)StrategicDecisions:Basicdecisionsorstrategicdecisionsaredecisionswhichareofcrucialimportance. Strategicdecisionsamajorchoiceofactionsconcerningallocationofresourcesandcontributiontothe achievementoforganizationalobjectives.Decisionslikeplantlocation,productdiversification,entering intonewmarkets,selectionofchannelsofdistribution,capitalexpenditureetcareexamplesofbasicor strategicdecisions. ii)TacticalDecisions:Routinedecisionsortacticaldecisionsaredecisionswhichareroutineand repetitive.Theyarederivedoutofstrategicdecisions.Thevariousfeaturesofatacticaldecisionareas follows: •Tacticaldecisionrelatestoday-to-dayoperationoftheorganizationandhastobetakenveryfrequently. •Tacticaldecisionismostlyaprogrammedone.Therefore,thedecisioncanbemadewithinthecontextof thesevariables. •Theoutcomeoftacticaldecisionisofshort-termnatureandaffectsanarrowpartoftheorganization. •Theauthorityformakingtacticaldecisionscanbedelegatedtolowerlevelmanagersbecause:first,the impactoftacticaldecisionisnarrowandofshorttermnatureandSecond,bydelegatingauthorityforsuch

42. PRINCIPLESOFMANAGEMENT decisionstolower-levelmanagers,higherlevelmanagersarefreetodevotemoretimeonstrategic decisions. DECISIONMAKINGPROCESS Thedecisionmakingprocessispresentedinthefigurebelow: 1.SpecificObjective:Theneedfordecisionmakingarisesinordertoachievecertainspecificobjectives. Thestartingpointinanyanalysisofdecisionmakinginvolvesthedeterminationofwhetheradecision needstobemade. 2.ProblemIdentification:Aproblemisafeltneed,aquestionwhichneedsasolution.Inthewordsof JosephLMassie"Agooddecisionisdependentupontherecognitionoftherightproblem".Theobjective ofproblemidentificationisthatiftheproblemispreciselyandspecificallyidentifies,itwillprovideaclue infindingapossiblesolution.Aproblemcanbeidentifiedclearly,ifmanagersgothroughdiagnosisand analysisoftheproblem. Diagnosis:Diagnosisistheprocessofidentifyingaproblemfromitssignsandsymptoms.Asymptomisa conditionorsetofconditionsthatindicatestheexistenceofaproblem.Diagnosingtherealproblem impliesknowingthegapbetweenwhatisandwhatoughttobe,identifyingthereasonsforthegapand understandingtheprobleminrelationtohigherobjectivesoftheorganization. Analysis:Diagnosisgivesrisetoanalysis.Analysisofaproblemrequires: •Whowouldmakedecision? •Whatinformationwouldbeneeded? •Fromwheretheinformationisavailable? Analysishelpsmanagerstogainaninsightintotheproblem. 3.SearchforAlternatives:Aproblemcanbesolvedinseveralways;however,allthewayscannotbe equallysatisfying.Therefore,thedecisionmakermusttrytofindoutthevariousalternativesavailablein ordertogetthemostsatisfactoryresultofadecision.Adecisionmakercanuseseveralsourcesfor identifyingalternatives: •Hisownpastexperiences •Practicesfollowedbyothersand •Usingcreativetechniques.

43. PRINCIPLESOFMANAGEMENT 4.EvaluationofAlternatives:Afterthevariousalternativesareidentified,thenextstepistoevaluate themandselecttheonethatwillmeetthechoicecriteria./thedecisionmakermustcheckproposed alternativesagainstlimits,andifanalternativedoesnotmeetthem,hecandiscardit.Havingnarrowed downthealternativeswhichrequireseriousconsideration,thedecisionmakerwillgoforevaluatinghow eachalternativemaycontributetowardstheobjective supposedtobeachievedbyimplementingthedecision. 5.ChoiceofAlternative:Theevaluationofvariousalternativespresentsaclearpictureastohoweachone ofthemcontributetotheobjectivesunderquestion.Acomparisonismadeamongthelikelyoutcomesof variousalternativesandthebestoneischosen. 6.Action:Oncethealternativeisselected,itisputintoaction.Theactualprocessofdecisionmakingends withthechoiceofanalternativethroughwhichtheobjectivescanbeachieved. 7.Results:Whenthedecisionisputintoaction,itbringscertainresults.Theseresultsmustcorrespond withobjectives,thestartingpointofdecisionprocess,ifgooddecisionhasbeenmadeandimplemented properly.Thus,resultsprovideindicationwhetherdecisionmakinganditsimplementationisproper. CharacteristicsofEffectiveDecisions Aneffectivedecisionisonewhichshouldcontainthreeaspects.Theseaspectsaregivenbelow: •ActionOrientation:Decisionsareaction-orientedandaredirectedtowardsrelevantandcontrollable aspectsoftheenvironment.Decisionsshouldultimatelyfindtheirutilityinimplementation. •GoalDirection:Decisionmakingshouldbegoal-directedtoenabletheorganizationtomeetits objectives. •EffectiveinImplementation:Decisionmakingshouldtakeintoaccountallthepossiblefactorsnotonly intermsofexternalcontextbutalsoininternalcontextsothatadecisioncanbeimplementedproperly. RATIONALDECISIONMAKINGMODEL TheRationalDecisionMakingModelisamodelwhichemergesfromOrganizationalBehavior.The processisonethatislogicalandfollowstheorderlypathfromproblemidentificationthroughsolution.It

44. PRINCIPLESOFMANAGEMENT providesastructuredandsequencedapproachtodecisionmaking.Usingsuchanapproachcanhelpto ensuredisciplineandconsistencyisbuiltintoyourdecisionmakingprocess. TheSix-StepRationalDecision-MakingModel 1.Definetheproblem. 2.Identifydecisioncriteria 3.Weightthecriteria 4.Generatealternatives 5.Rateeachalternativeoneachcriterion 6.Computetheoptimaldecision 1)Definingtheproblem Thisistheinitialstepoftherationaldecisionmakingprocess.Firsttheproblemisidentifiedandthen definedtogetaclearviewofthesituation. 2)Identifydecisioncriteria Onceadecisionmakerhasdefinedtheproblem,heorsheneedstoidentifythedecisioncriteriathatwillbe importantinsolvingtheproblem.Inthisstep,thedecisionmakerisdeterminingwhat‘srelevantinmaking thedecision.Thisstepbringsthedecisionmaker‘sinterests,values,andpersonalpreferencesintothe process.Identifyingcriteriaisimportantbecausewhatonepersonthinksisrelevant,anothermaynot.Also keepinmindthatanyfactorsnotidentifiedinthisstepareconsideredasirrelevanttothedecisionmaker. 3)Weightthecriteria Thedecision-makerweightsthepreviouslyidentifiedcriteriainordertogivethemcorrectpriorityinthe decision. 4)Generatealternatives Thedecisionmakergeneratespossiblealternativesthatcouldsucceedinresolvingtheproblem.Noattempt ismadeinthissteptoappraisethesealternatives,onlytolistthem. 5)Rateeachalternativeoneachcriterion Thedecisionmakermustcriticallyanalyzeandevaluateeachone.Thestrengthsandweaknessofeach alternativebecomeevidentastheycomparedwiththecriteriaandweightsestablishedinsecondandthird steps.

45. PRINCIPLESOFMANAGEMENT 6)Computetheoptimaldecision Evaluatingeachalternativeagainsttheweightedcriteriaandselectingthealternativewiththehighesttotal score. DECISIONMAKINGUNDERVARIOUSCONDITIONS Theconditionsformakingdecisionscanbedividedintothreetypes. Namelya)Certainty, b)Uncertaintyandc)Risk VirtuallyalldecisionsaremadeinanenvironmenttoatleastsomeuncertaintyHowever;thedegreewill varyfromrelativecertaintytogreatuncertainty.Therearecertainrisksinvolvedinmakingdecisions. a)Certainty: Inasituationinvolvingcertainty,peoplearereasonablysureaboutwhatwillhappenwhentheymakea decision.Theinformationisavailableandisconsideredtobereliable,andthecauseandeffect relationshipsareknown. b)Uncertainty Inasituationofuncertainty,ontheotherhand,peoplehaveonlyameagerdatabase,theydonotknow whetherornotthedataarereliable,andtheyareveryunsureaboutwhetherornotthesituationmay change.Moreover,theycannotevaluatetheinteractionsofthedifferentvariables.Forexample,a corporationthatdecidestoexpanditsOperationtoanunfamiliarcountrymayknowlittleaboutthe country,culture,laws,economicenvironment,andpolitics.Thepoliticalsituationmaybevolatilethateven expertscannotpredictapossiblechangeingovernment. c)Risk Inasituationwithrisks,factualinformationmayexist,butitmaybeincomplete.1oimprovedecision makingOnemayestimatetheobjectiveprobabilityofanoutcomebyusing,forexample,mathematical modelsOntheotherhand,subjectiveprobability,basedonjudgmentandexperiencemaybeusedAll intelligentdecisionmakersdealingwithuncertaintyliketoknowthedegreeandnatureoftherisktheyare takinginchoosingacourseofaction.Oneofthedeficienciesinusingthetraditionalapproachesof operationsresearchforproblemsolvingisthatmanyofthedatausedinmodelaremerelyestimatesand

46. PRINCIPLESOFMANAGEMENT othersarebasedonprobabilities.Theordinarypracticeistohavestaffspecialistsconicupwithbest estimates.Virtuallyeverydecisionisbasedontheinteractionofanumberofimportantvariables,manyof whichhaseanelementofuncertaintybut,perhaps,afairlyhighdegreeofprobability.Thus,thewisdomof launchinganewproductmightdependonanumberofcriticalvariables:thecostofintroducingthe product,thecostofproducingit,thecapitalinvestmentthatwillherequired,thepricethatcanbesetfor theproduct,thesizeofthepotentialmarket,andtheshareofthetotalmarketthatitwillrepresent.

47. PRINCIPLESOFMANAGEMENT UNITIII ORGANIZING DEFINITION AccordingtoKoontzandO'Donnell,"Organizationinvolvesthegroupingofactivitiesnecessaryto accomplishgoalsandplans,theassignmentoftheseactivitiestoappropriatedepartmentsandtheprovision ofauthority,delegationandco-ordination."Organizationinvolvesdivisionofworkamongpeoplewhose effortsmustbeco-ordinatedtoachievespecificobjectivesandtoimplementpre-determinedstrategies. NATUREORCHARACTERISTICSOFORGANIZING Fromthestudyofthevariousdefinitionsgivenbydifferentmanagementexpertswegetthefollowing informationaboutthecharacteristicsornatureoforganization, (1)DivisionofWork:Divisionofworkisthebasisofanorganization.Inotherwords,therecanbeno organizationwithoutdivisionofwork.Underdivisionofworktheentireworkofbusinessisdividedinto manydepartments.Theworkofeverydepartmentisfurthersub-dividedintosubworks.Inthiswayeach individualhastodothesaranworkrepeatedlywhichgraduallymakesthatpersonanexpert. (2)Coordination:Underorganizingdifferentpersonsareassigneddifferentworksbuttheaimofallthese personshappenstobethesome-theattainmentoftheobjectivesoftheenterprise.Organizationensures thattheworkofallthepersonsdependsoneachother‘sworkeventhoughithappenstobedifferent.The workofonepersonstartsfromwheretheworkofanotherpersonends.Thenon-completionoftheworkof onepersonaffectstheworkofeverybody.Therefore,everybodycompleteshisworkintimeanddoesnot hindertheworkofothers.Itisthus,clearthatitisinthenatureofanorganizationtoestablishcoordination amongdifferentworks,departmentsandpostsintheenterprise. (3)PluralityofPersons:Organizationisagroupofmanypersonswhoassembletofulfillacommon purpose.Asingleindividualcannotcreateanorganization. (4)CommonObjectives:Therearevariouspartsofanorganizationwithdifferentfunctionstoperformbut allmoveinthedirectionofachievingageneralobjective. (5)Well-definedAuthorityandResponsibility:Underorganizationachainisestablishedbetween differentpostsrightfromthetoptothebottom.Itisclearlyspecifiedastowhatwillbetheauthorityand responsibilityofeverypost.Inotherwords,everyindividualworkingintheorganizationisgivensome

48. PRINCIPLESOFMANAGEMENT authorityfortheefficientworkperformanceanditisalsodecidedsimultaneouslyastowhatwillbethe responsibilityofthatindividualincaseofunsatisfactoryworkperformance. (6)OrganizationisaStructureofRelationship:Relationshipbetweenpersonsworkingondifferent postsintheorganizationisdecided.Inotherwords,itisdecidedastowhowillbethesuperiorandwho willbethesubordinate.Leavingthetoplevelpostandthelowestlevelposteverybodyissomebody's superiorandsomebody'ssubordinate.Thepersonworkingonthetoplevelposthasnosuperiorandthe personworkingonthelowestlevelposthasnosubordinate. (7)OrganizationisaMachineofManagement:Organizationisconsideredtobeamachineof managementbecausetheefficiencyofallthefunctionsdependsonaneffectiveorganization.Inthe absenceoforganizationnofunctioncanbeperformedinaplannedmanner.Itisappropriatetocall organizationamachineofmanagementfromanotherpointofview.Itisthatmachineinwhichnopartcan affordtubeill-fittingornon-functional.Inotherwords,ifthedivisionofworkisnotdoneproperlyorposts arenotcreatedcorrectlythewholesystemofmanagementcollapses. (8)OrganizationisaUniversalProcess:Organizationisneededbothinbusinessandnonbusiness organizations.Notonlythis,organizationwillbeneededwheretwoormomthantwopeopleworkjointly. Therefore,organizationhasthequalityofuniversality. (9)OrganizationisaDynamicProcess:Organizationisrelatedtopeopleandtheknowledgeand experienceofthepeopleundergoachange.Theimpactofthischangeaffectsthevariousfunctionsofthe organizations.Thus,organizationisnotaprocessthatcanbedecidedforalltimestocomebutitundergoes changesaccordingtotheneeds.Theexampleinthiscasecanbethecreationorabolitionofanewpost accordingtotheneed. IMPORTANCEORADVANTAGESOFORGANIZING Organizationisaninstrumentthatdefinesrelationsamongdifferentpeoplewhichhelpsthemtounderstand asinwhohappenstobetheirsuperiorandwhoistheirsubordinate.Thisinformationhelpsinfixing responsibilityanddevelopingcoordination.Insuchcircumstancestheobjectivesoftheorganizationcanbe easilyachieved.Thatiswhy,itissaidthatOrganizationIsamechanismofmanagement.Inadditiontothat ithelpsintheotherfunctionsofmanagementlikeplanning,staffing,leading,controlling,etc.The importanceoforganizationoritsmeritsbecomesclearfromthefollowingfacts, (1)IncreaseInManagerialEfficiency:Agoodandbalancedorganizationhelpsthemanagerstoincrease theirefficiency.Managers,throughthemediumoforganization,makeaproperdistributionofthewhole workamongdifferentpeopleaccordingtotheirability.

49. PRINCIPLESOFMANAGEMENT (2)ProperUtilizationofResources:Throughthemediumoforganizationoptimumutilizationofallthe availablehumanandmaterialresourcesofanenterprisebecomespossible.Workisallottedtoevery individualaccordingtohisabilityandcapacityandconditionsantcreatedtoenablehimtoutilizehis abilitytothemaximumextent.Forexample,ifanemployeepossessestheknowledgeofmodemmachinery butthemodemmachineryisnotavailableintheorganization,inthatcase,effortsaremadetomake availablethemodemmachinery. (3)SoundCommunicationPossible:Communicationisessentialfortakingtherightdecisionattheright time.However,theestablishmentofagoodcommunicationsystemispossibleonlythroughan organization.Inanorganizationthetimeofcommunicationisdecidedsothatalltheusefulinformation reachestheofficersconcernedwhich.inturn,helpsthedecision-making. (4)FacilitatesCoordination:Inordertoattainsuccessfullytheobjectivesoftheorganization, coordinationamongvariousactivitiesintheorganizationisessential.Organizationistheonlymedium whichmakescoordinationpossible.Underorganizationthedivisionofworkismadeinsuchamanneras tomakealltheactivitiescomplementarytoeachotherincreasingtheirinterdependence.Inter-dependence givesrisetotheestablishmentofrelationswhich,inturn,increasescoordination. (5)IncreaseinSpecialization:Underorganizationthewholeworkisdividedintodifferentparts. Competentpersonsareappointedtohandleallthesub-worksandbyhandlingaparticularworkrepeatedly theybecomespecialists.Thisenablesthemtohavemaximumworkperformanceintheminimumtime whiletheorganizationgetsthebenefitofspecialization. (6)HelpfulinExpansion:Agoodorganizationhelpstheenterpriseinfacingcompetition.Whenan enterprisestartsmakingavailablegoodqualityproductatcheaprates,itincreasesthedemandforits products.Inordertomeettheincreasingdemandforitsproductsanorganizationhastoexpandits business.Ontheotherhand,agoodorganizationhasanelementofflexibilitywhichfarfromimpedingthe expansionworkencouragesit. ORGANIZINGPROCESS Organizationistheprocessofestablishingrelationshipamongthemembersoftheenterprise.The relationshipsarecreatedintermsofauthorityandresponsibility.Toorganizeistoharmonize,coordinateor arrangeinalogicalandorderlymanner.Eachmemberintheorganizationisassignedaspecific responsibilityordutytoperformandisgrantedthecorrespondingauthoritytoperformhisduty.The managerialfunctionoforganizingconsistsinmakingarationaldivisionofworkintogroupsofactivities andtyingtogetherthepositionsrepresentinggroupingofactivitiessoastoachievearational,well coordinatedandorderlystructurefortheaccomplishmentofwork.AccordingtoLouisAAllen,

50. PRINCIPLESOFMANAGEMENT "Organizinginvolvesidentificationandgroupingtheactivitiestobeperformedanddividingthemamong theindividualsandcreatingauthorityandresponsibilityrelationshipsamongthemfortheaccomplishment oforganizationalobjectives."Thevariousstepsinvolvedinthisprocessare: a)DeterminationofObjectives: Itisthefirststepinbuildingupanorganization.Organizationisalwaysrelatedtocertainobjectives. Therefore,itisessentialforthemanagementtoidentifytheobjectivesbeforestartinganyactivity. Organizationstructureisbuiltonthebasisoftheobjectivesoftheenterprise.Thatmeans,thestructureof theorganizationcanbedeterminedbythemanagementonlyafterknowingtheobjectivestobe accomplishedthroughtheorganization.Thisstephelpsthemanagementnotonlyinframingthe organizationstructurebutalsoinachievingtheenterpriseobjectiveswithminimumcostandefforts. Determinationofobjectiveswillconsistindecidingastowhytheproposedorganizationistobesetup and,therefore,whatwillbethenatureoftheworktobeaccomplishedthroughtheorganization. b)EnumerationofObjectives: Ifthemembersofthegrouparetopooltheireffortseffectively,theremustbeproperdivisionofthemajor activities.Thefirststepinorganizinggroupeffortisthedivisionofthetotaljobintoessentialactivities. Eachjobshouldbeproperlyclassifiedandgrouped.Thiswillenablethepeopletoknowwhatisexpected ofthemasmembersofthegroupandwillhelpinavoidingduplicationofefforts.Forexample,theworkof anindustrialconcernmaybedividedintothefollowingmajorfunctions–production,financing,personnel, sales,purchase,etc. c)ClassificationofActivities: Thenextstepwillbetoclassifyactivitiesaccordingtosimilaritiesandcommonpurposesandfunctionsand takingthehumanandmaterialresourcesintoaccount.Then,closelyrelatedandsimilaractivitiesare groupedintodivisionsanddepartmentsandthedepartmentalactivitiesarefurtherdividedintosections. d)AssignmentofDuties: Here,specificjobassignmentsaremadetodifferentsubordinatesforensuringacertaintyofwork performance.Eachindividualshouldbegivenaspecificjobtodoaccordingtohisabilityandmade responsibleforthat.Heshouldalsobegiventheadequateauthoritytodothejobassignedtohim.Inthe wordsofKimballandKimball-"Organizationembracesthedutiesofdesignatingthedepartmentsandthe personnelthataretocarryonthework,definingtheirfunctionsandspecifyingtherelationsthataretoexist betweendepartmentandindividuals."