Principles of Management Unit 2 Planning.pptx

Principles of Management

1. Kongunadu college of engineering and technology (AUTONOMOUS) (Approved by AICTE, New Delhi, Affiliated to Anna University, Chennai, Accredited by NAAC B++ Grade , Accredited by NBA, Recognized by UGC with 2(f) & 12(B) An ISO 9001:2015 certified Institution) Namakkal - Trichy Main Road, Thottiam , Trichy - 621215 SUBJECT CODE & NAME 20MG501 PRINCIPLES OF MANAGEMENT Prepared by, Dr. P. Dineshkumar M.E., Ph.D., Assistant Professor, Department of Agricultural Engineering, Kongunadu College of Engineering and Technology . 1 Dr. P. Dineshkumar / AP / AGE / KNCET

2. PLANNING Foundation of Planning - Purposes of Planning - Types of Plan - Process of Planning - Policies - Planning Tools and Techniques - Importance of Strategic Management - Process - Types of Organizational Strategies - MBO - Decision Making Process - Types of decision. Dr. P. Dineshkumar / AP / AGE / KNCET 2

3. INTRODUCTION Planning is the fundamental function of management. It is concerned with thinking before doing and deciding in advance what is to be done, how is to be done, when is to be done and who is to do it. Planning is the first and foremost function of management. It facilitates early achievement of objectives, which depends upon the efficiency of the planner. Planning is an intellectual process of thinking resorted to decide a course of action which helps to achieve the pre-determined objectives of the organization in future. Dr. P. Dineshkumar / AP / AGE / KNCET 3

4. DEFINITIONS Planning is deciding in advance what is to be done. It involves the selection of objectives, policies, procedures and programmes from among alternatives – M.S Hurley Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. It bridges the gap from where we are to where we want to go – Koontz And 0’ Donnell Planning is deciding the best alternatives among others to perform different managerial operations in order to achieve the pre-determined goals. – Henry Fayol Dr. P. Dineshkumar / AP / AGE / KNCET 4

5. Characteristics of planning Planning is the primary function of management It is goal oriented It is all pervasive It is an intellectual activity It is future Oriented It requires an integrated approach It is a continuous process Dr. P. Dineshkumar / AP / AGE / KNCET 5

6. Considering limiting factors Planning result in higher efficiency Planning contributes to objectives It should be flexible It should be participative It is information based It involves decision making Dr. P. Dineshkumar / AP / AGE / KNCET 6

7. PURPOSES OF PLANNING The primary purpose of planning is to create universal buy-in and understanding of the objectives and to put operational processes in place to guide the organization towards their achievement. Facilitates Accomplishment of Objectives Ensures Economy in Operations Precedes Control Provides for Future Contingency Facilitates Optimum Utilization of Resources Pre-requisites for other Managerial Functions All Pervasive Function Coordinates the Activities Provides for the Delegation of Authority Dr. P. Dineshkumar / AP / AGE / KNCET 7

8. Facilitates Accomplishment of Objectives It states the objectives of each department in the organization and of the enterprise as a whole. This helps personnel to see the enterprise in its entirety and see how their actions contribute to its ultimate goals. Planning forces the managers to consider the future and revise its plans if necessary for achieving the objectives. Dr. P. Dineshkumar / AP / AGE / KNCET 8

9. Ensures Economy in Operations Since planning emphasizes efficient operation and consistency, it minimizes costs and gains economical operation. Coordinated group effort, even flow of work and deliberate decisions are due to planning. Dr. P. Dineshkumar / AP / AGE / KNCET 9

10. Precedes Control Control involves those activities which are carried out to force events to conform to plans. Plans serves as standards of performance. Control seeks to compare actual performance with set standards. So control cannot be exercised without plans. Dr. P. Dineshkumar / AP / AGE / KNCET 10

11. Provides for Future Contingency Planning is required because future is uncertain. Planning enables the management to look into the future and discover suitable alternative course of action. Planning helps the management to have a clear-cut idea about the future and to frame a suitable programme for action. Even when the future is highly certain, planning is essential to decide the best course of action. Dr. P. Dineshkumar / AP / AGE / KNCET 11

12. Facilitates Optimum Utilization of Resources Various resources that are relevant to an organization namely funds, physical resources, manpower, technological know-how, etc., are by and large inadequate due to demand from competing organizations and have alternative uses. This necessitate the organization to make the best possible use of resources. Planning facilitates optimum use of available resources. Dr. P. Dineshkumar / AP / AGE / KNCET 12

13. Pre-requisites for other Managerial Functions The purposes of planning is to provide a conceptual and concrete basis for initiating and undertaking other managerial functions like staffing, organizing, directing and control. Planning is a primary function and it goes a long way to improve efficiency of other functions of management and makes the management tasks more effective. Dr. P. Dineshkumar / AP / AGE / KNCET 13

14. All Pervasive Function Planning is a function of managers at all levels though the scope, nature and extent of planning differs from one enterprise to another and from one level to another. Irrespective of the level and area of his operation, each and every manager has to perform this function. Dr. P. Dineshkumar / AP / AGE / KNCET 14

15. Coordinates the Activities Coordination is an important factor for the smooth functioning of an organization. As pointed out by H.G. Hicks, “ planning coordinates the activities of the organization toward defined and agreed upon objectives” If planning is absent, various divisions of the organization may pursue different objectives. Dr. P. Dineshkumar / AP / AGE / KNCET 15

16. Provides for the Delegation of Authority Planning provides for the delegation of authority to subordinates. Well-formulated plans serve as guides to subordinates and reduce risk involved in delegation of authority. Dr. P. Dineshkumar / AP / AGE / KNCET 16

17. TYPES OF PLANS Strategic Plans Establish the organization’s overall goals Seek to position the organization in terms of its environment Cover extended periods of time Operational Plans Specify the details of how the overall goals are to be achieved Cover a short time period Dr. P. Dineshkumar / AP / AGE / KNCET 17

18. Planning in the Hierarchy Organizations Dr. P. Dineshkumar / AP / AGE / KNCET 18

19. TYPES OF PLANS Based on the length of period covered by the plan, it may be classified as Long range planning, Medium range planning Short range planning. Dr. P. Dineshkumar / AP / AGE / KNCET 19

20. PROCESS OF PLANNING Dr. P. Dineshkumar / AP / AGE / KNCET 20

21. Being aware of opportunity Awareness of an opportunity is the real starting point for planning. It includes identifying all possible future opportunities and then analyzing them in the light of the organization's strengths & weaknesses. Awareness of the opportunity in terms of organizational capabilities helps in setting realistic objectives. So, as a first step, planning requires realistic diagnosis of the opportunity situation. Dr. P. Dineshkumar / AP / AGE / KNCET 21

22. Establishing objectives Opportunities provide the path for setting objectives. Objectives specify the end points of what is to be done, where the primary emphasis is to be placed and what is to be accomplished by the network of strategies, policies ,procedures, rules, budgets and programs. At first overall objectives of the organization are determined and based on that, the objectives of each department are laid down. Objectives should be clear, definite and simple. The objectives should be communicated to everyone in the organisation so that they fully contribute to the successful attainment of objectives. Dr. P. Dineshkumar / AP / AGE / KNCET 22

23. Considering the planning premises Planning premises is the boundary under which plans will operate. This boundary is determined by both anticipated internal and external environment. These factors affect the practicality of planning and need to be forecasted. The accuracy with which these factors are forecasted determines the success of planning. Dr. P. Dineshkumar / AP / AGE / KNCET 23

24. Identifying the alternative courses There are many methods of doing a work. On the basis of objectives of the organisation and the boundaries identified alternative courses of achieving the objectives are discovered. Dr. P. Dineshkumar / AP / AGE / KNCET 24

25. Comparing the alternatives in the light of goals sought All those alternative courses which meet the expectations of the minimum preliminary criteria are selected for intensive study. It will be seen as to what extent a particular alternative can help in the attainment of the objectives of the organisation . Every alternative has merits and demerits. For example, one course may appear to be the more profitable but require a large cash outlay and a slow payback, another may be less profitable but involve less risk still another may better suit the company in long-range objectives. After comparing all alternatives, the best alternative is selected. Dr. P. Dineshkumar / AP / AGE / KNCET 25

26. Formulating Supportive plans To give practical shape to the main plan, many subsidiary plans are needed. These subsidiary plans or sub plans are not independent plans but only a reflection of the main plan. For example, different plans for the purchase department, sales department, finance department, personnel department etc are prepared in light of the objectives of the organisation . Dr. P. Dineshkumar / AP / AGE / KNCET 26

27. Implementing the plans After the main plan and the subsidiary plans are formulated, they remain to be implemented. Implementation should be done carefully. Even the best plan will not achieve the objectives if badly implemented. For successful implementation plans should be communicated to everyone in the organisation . Dr. P. Dineshkumar / AP / AGE / KNCET 27

28. Reviewing plans The process of planning does not end with the implementation of plans. It is of great importance that there is a constant review of plans so as to ensure success in the uncertain future. The moment there appears to be changes in the internal and external environment, plans should be moulded accordingly. In this way we can say planning is a continuously moving process. Dr. P. Dineshkumar / AP / AGE / KNCET 28

29. POLICIES “ A policy is a verbal, written or implied over all guide setting up boundaries that supply the general limits and direction in which managerial action will take place ” - George . R.Terry Dr. P. Dineshkumar / AP / AGE / KNCET 29

30. Characteristics of a good policy A policy should be simple to understand. It should be flexible. A good policy should be co – related with organization objectives. It should be capable of being applied in different circumstances. A policy should not contradictory to any other policies of the same organization. A policy should be formulated after studying all relevant aspects of problems. It must reflect the internal and external business environment . It should be based on facts. It should be stated in clear terms. Dr. P. Dineshkumar / AP / AGE / KNCET 30

31. Types of Policies Originated policies Appealed policy Imposed policy Functional policies Policies on the basis of levels Dr. P. Dineshkumar / AP / AGE / KNCET 31

32. Originated policies It is a policy which is formulated by the managers in the organization for their subordinates actions as well as their own action . Appealed policy These policies are formulated to solve current problems or issue. It is inducted from the action and behavior of top management . Imposed policy It is a policy which is imposed by some external force like the government , trade union or a trade association. Dr. P. Dineshkumar / AP / AGE / KNCET 32

33. Functional policies Policies which are formulated for various functional areas of management is known as functional policies . Policies on the basis of levels Under this type of policy, policies are formulated for different levels of management like top management policies, upper middle management policies and middle management policies. Dr. P. Dineshkumar / AP / AGE / KNCET 33

34. PLANNING TOOLS AND TECHNIQUES Forecasting Contingency planning Scenarios Bench marketing Participative planning Use of staff planners Dr. P. Dineshkumar / AP / AGE / KNCET 34

35. Forecasting Forecasting is the process of predicting what will happen in the future. Almost every plan involves forecasts of some sort. The economist regularly report forecasts of economic conditions interest rates, unemployment, and trade deficits. among other issues. There are some based on qualitative forecasting. Qualitative forecasting uses experts opinions to predict the future. Also it is involved to use mathematical models and statistical analysis of historical data and surveys to predict the future events. Dr. P. Dineshkumar / AP / AGE / KNCET 35

36. Contingency Planning It identifies alternative courses of action that can be implemented to meet the needs of changing circumstances. Although it is not possible for anyone to predict when things will go wrong, it can be expected that they will. It is unlikely that any plan will ever be completely perfect. Changes will occur in the environment. When crisis and emergencies occur, managers and the organizations have contingency plans that are ready to be implemented. Contingency plans contain "trigger points" that indicate when pre-selected alternative plans should be activated. Dr. P. Dineshkumar / AP / AGE / KNCET 36

37. Scenario Planning It involves identifying several alternative future scenarios that may occur. Plans are then made to deal with each scenario as it occurs. For example, the Heart and Stroke Foundation of Ontario set out to design a new model for the health care funding, they wanted to challenge the organization to think in different ways about the future. The scenario planning process benefited them by helping the board and other invited experts to rehearse strategic development plans and tactics in five different realistic scenarios. Dr. P. Dineshkumar / AP / AGE / KNCET 37

38. Benchmarking It is a technique that uses external comparisons to better evaluate one's current performances and identify possible actions for the future. The purpose of it is to find out what other people and organizations are doing well at and plan how to incorporate these ideas into one's own operations. One of the benchmarking techniques are used to search for best practices. Best practices are things that lead to superior performance. It is considered that the best run organizations also emphasize internal benchmarking that encourages all members and work units to learn and improve by sharing one another's best practices. Dr. P. Dineshkumar / AP / AGE / KNCET 38

39. Participation and Involvement Includes, in all planning steps, the people who will be affected by the plans and/or who will be asked to help implement them. This process brings many benefits to the organization. Participation can increase creativity and information available for planning. Also, it increases the understanding and acceptance of plans, along with commitment to their success. Although its takes a long time, it can improve results by improving implementation. All employees participate in the planning process and are regularly updated about the company's program towards its goal. Dr. P. Dineshkumar / AP / AGE / KNCET 39

40. Use of Staff Planners Staff planners are employed to help coordinate planning for the organization as a whole or for one of its major components. They help bring focus and energy to accomplish important planning tasks. A risk involved is a tendency for a communication gap to develop between the staff planners and line managers. Everyone must work closely together, the resulting plans may be inadequate and people may lack commitment to implement the plans no matter who good they are. Dr. P. Dineshkumar / AP / AGE / KNCET 40

41. STRATEGIC MANAGEMENT A strategy is nothing but a tactics adopted to counter competitors actions. Strategies are regarded as specific programme of action for attaining the objectives of the organization by means of employing organization resources efficiently and economically . A strategy may also be necessary to tackle effectively and overcome successfully certain internal crisis. Dr. P. Dineshkumar / AP / AGE / KNCET 41

42. TYPES OF ORGANIZATIONAL STRATEGIES Stability strategy Product development Market development Vertical integration Merger Divestment or retreat Dr. P. Dineshkumar / AP / AGE / KNCET 42

43. IMPORTANCE OF STRATEGIC MANAGEMENT It guides the company to move in a specific direction. It defines organization’s goals and fixes realistic objectives, which are in alignment with the company’s vision. It assists the firm in becoming proactive, rather than reactive, to make it analyze the actions of the competitors and take necessary steps to compete in the market, instead of becoming spectators. It acts as a foundation for all key decisions of the firm. Dr. P. Dineshkumar / AP / AGE / KNCET 43

44. It attempts to prepare the organization for future challenges and play the role of pioneer in exploring opportunities and also helps in identifying ways to reach those opportunities. It ensures the long-term survival of the firm while coping with competition and surviving the dynamic environment. It assists in the development of core competencies and competitive advantage, that helps in the business survival and growth. Dr. P. Dineshkumar / AP / AGE / KNCET 44

45. STRATEGIC MANAGEMENT PROCESS Dr. P. Dineshkumar / AP / AGE / KNCET 45

46. Environmental Scanning Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it. Dr. P. Dineshkumar / AP / AGE / KNCET 46

47. Strategy Formulation Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate corporate, business and functional strategies. Dr. P. Dineshkumar / AP / AGE / KNCET 47

48. Strategy Implementation Strategy implementation implies making the strategy work as intended or putting the organization’s chosen strategy into action. Strategy implementation includes designing the organization’s structure, distributing resources, developing decision making process, and managing human resources. Dr. P. Dineshkumar / AP / AGE / KNCET 48

49. Strategy Evaluation Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as it’s implementation meets the organizational objectives. Dr. P. Dineshkumar / AP / AGE / KNCET 49

50. MANAGEMENT BY OBJECTIVES (MBO) Among contemporary management thinkers Peter F Drucker outshines all. He was born in Vienna in 1909. He was a professor of Management at Graduate school of business, New York university from 1950 to 1972. He has written many books and papers on management. He developed the concept of Management by Objectives (MBO) which is regarded as the modern approach. This concept is also known as the method of planning, setting standards, appraising performance and motivating. Drucker emphasized that performance of each job should be directed towards the achievement of whole business objectives. Dr. P. Dineshkumar / AP / AGE / KNCET 50

51. PROCESS OF MBO Dr. P. Dineshkumar / AP / AGE / KNCET 51

52. Define Organizational Goals Goals are critical issues to organizational effectiveness and they serve a number of purposes . Organizations can also have several different kinds of goals, all of which must be appropriately managed. And a number of different kinds of managers must be involved in setting goals. The goals set by the superiors are preliminary, based on an analysis and judgment as to what can and what should be accomplished by the organization within a certain period. Dr. P. Dineshkumar / AP / AGE / KNCET 52

53. Define Employees Objectives After making sure that employees’ managers have informed of pertinent general objectives, strategies and planning premises, the manager can then proceed to work with employees in setting their objectives . The manager asks what goals the employees believe they can accomplish in what time period, and with what resources. They will then discuss some preliminary thoughts about what goals seem feasible for the company or department. Dr. P. Dineshkumar / AP / AGE / KNCET 53

54. Continuous Monitoring of Performance and Progress MBO process is not only essential for making line managers in business organizations more effective but also equally important for monitoring the performance and progress of employees. Dr. P. Dineshkumar / AP / AGE / KNCET 54

55. Performance Evaluation Under this MBO process performance review are made by the participation of the concerned managers. Dr. P. Dineshkumar / AP / AGE / KNCET 55

56. Providing Feedback The filial ingredients in an MBO program are continuous feedback on performance and goals that allow individuals to monitor and correct their own actions. This continuous feedback is supplemented by periodic formal appraisal meetings which superiors and subordinates can review progress toward goals, which lead to further feedback . Dr. P. Dineshkumar / AP / AGE / KNCET 56

57. Performance Appraisal Performance appraisals are a regular review of employee performance within organizations. It is done at the last stage of MBO process. Dr. P. Dineshkumar / AP / AGE / KNCET 57

58. DECISION MAKING “The work of a manager performs to arrive at conclusions and judgment” – Allen . “Decision making is the selection of an alternative from two or more alternatives to determine an opinion or a course of action” – George Terry. Dr. P. Dineshkumar / AP / AGE / KNCET 58

59. DECISION MAKING PROCESS Dr. P. Dineshkumar / AP / AGE / KNCET 59

60. TYPES OF DECISIONS Programmed and non – programmed Programmed decisions deals with routine and repetitive type of problems. Specific rules and procedures are described for taking these decisions. Programmed decisions are made for solving both simplex and complex problems . Non programmed decisions relates to non routine and non related types of problems. Each decision will be taken separately by analyzing and evaluating each problem . They are used for solving complex problems. Dr. P. Dineshkumar / AP / AGE / KNCET 60

61. Major and minor decisions Decisions can also be classified into major and minor decision. Decision to install a plant worth rupees ten lakhs for opening a new plant is an example for major decision whereas purchase of stationery meant for office use is a minor decision. Dr. P. Dineshkumar / AP / AGE / KNCET 61

62. Strategic and tactical decisions Strategic decisions are taken at top level management and are crucial. They have long term implications and they relate to growth, development and profitability of the organization. These decisions require more resources, judgment and skill. Tactical decisions are taken at lower level management and have short term implication. They are concerned with simple routine and repetitive problems. Tactical decisions are taken with reference to predetermined rules and procedures and they require less judgment. Dr. P. Dineshkumar / AP / AGE / KNCET 62

63. Individual and group decisions Individual decisions are taken at individual level ands they are of routine nature. Example : Sanctioning of casual leave to a worker. When decisions are taken by two or more persons, these are known as group decisions . Group decisions are taken by superior managers in consultations with subordinates. For instance decision taken by a production manager in consultation with subordinates to change the color of the product is an example for group decision. Dr. P. Dineshkumar / AP / AGE / KNCET 63

64. Departmental, interdepartmental and enterprise decisions Departmental decisions pertain to concerned departments and they are taken by department heads. Example: Allotment of work load to an employee of a department by the departmental head. Interdepartmental decision are made by the managers of the affected department with the assistance of controlling manager. Slight change in product design is an example for interdepartmental decision. Enterprise decisions are taken at top level management i.e. at higher level by the board of directors. They include decision relating to opening of new plants introducing a new product, pricing decisions etc. Dr. P. Dineshkumar / AP / AGE / KNCET 64