principles of management gtu mba

7/31/2019 Principles of management GTU MBA

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CENTRALISATION AND DECENTRALISATION

The terms centralisation and decentralisation, however, are used to give various connotations.The semantic variations range from administrative, physical and functional centralisation to

decentralisation.

At the same time, decentralisation is taken to mean separation of facilities, a type of

organisation structure, and delegation of decision-making power. Its more common use in

management literature, however, shows extent of delegation of authority. Thus, centralisationcan be defined as the delegation of authority to the lowest levels of management.

Centralisation and decentralisation describe the manner in which decision-making

responsibilities are divided among managers at different levels of managerial hierarchy.

Decentralisation is different from delegation of authority. Delegation simply refers to the

entrustment of responsibility and authority from one individual to another, decentralisationrefers to the systematic delegation of authority in an organisation-wide context. Thus delegation

is said to be the process and decentralisation as the result of process. There can neither be

absolute centralisation nor absolute decentralisation. The concepts of centralisation anddecentralisation are nor absolute decentralisation. The concepts of centralisation an

decentralisation are two extreme points in matters of distributing authority in the organisationstructure, and in between these two points, there may be a continuum of authority distribution.

Benefits of Centralisation

Centralisation is the systematic and consistent reservation of authority at central point withinthe organisation.

This system results in certain advantages to the organisation

1. Facilitating Personal Leadership. Personal leadership can be a potent influence in the

success of a small organisation and during its early growth stages. The success and survival of

the small, young enterprise in the competitive market depends upon aggressiveness, singlenessof purpose, and flexibility. Under a talented and dynamic leader, centralisation in small

organisation may result in quick decisions, enterprising and imaginative action, and high

mobility .

2. Providing Integration. Certain amount of centralisation is necessary to unify and integrate

the total operation of the enterprise. Some sort of central direction is required to keep all partsof the organisation moving harmoniously together towards a common objective. Thus, it acts as

a binding force on the various parts of the organisation.

3. Uniformity of Action Centralisation brings uniformity in all actions in the organisation.

Thus, to the extent that the organisation wishes all its units to do the same thing in the same wayor the same time, there must be centralisation of appropriate decisions.

4. Handling Emergencies. When emergency decisions affecting all the units of the

organisation are to be taken, centralisation is necessary. The more acute emergency, or the more

acute competition requires greater centralized decision-making.

5. Other Benefits. Besides, centralisation minimizes duplication of work and wastages requires

easier control, and makes communication easier.

However, these advantages of centralisation are limited in certain circumstances and


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particularly in smaller organisations. A stage comes when decentralisation becomes desirable to

achieve its advantages and where the limitation of centralisation come in the way of successfulorganisational functioning.

Benefits of Decentralisation

Decentralisation has become the prevailing philosophy for organising activities on the part of

large organisations.

Many organisations, which were centralized at earlier stages, have been forced to go for

decentralisation simply because they could not cope up with the situation under centralizedauthority. This shows the benefits of decentralisation which are as follows:

1. Reducing Burden to Top Executives. Decentralisation is necessary for solving the problemsof expanding organisations. It is the means by which the chief executive can extend his

leadership over a giant organisation, when the chief executive makes operating decisions and

with problems of immediate urgency, he finds it almost impossible to adopt the relaxed and

contemplative point of view necessary for planning and thinking ahead. Decentralisationrelieves this pressure on the chief executive an provides him time to think for the future and to

make plans accordingly.

2. Facilitating Diversification. Decentralisation can facilitate the growth and diversification of

product lines. Divisionalization facilitates diversification an former is successful under

decentralisation. For under decentralisation, each product line is treated as separate unit andproper emphasis on all important matters such as present position, future prospects, an

comparative efficiency, can be given.

3. Ensuring Marketing Innovations. Customers require satisfaction in respect of supply of

qualitative products, regularity of supply, and at cheaper rates. Marketing innovations ensurebetter customer satisfaction. Each organisation has to carry on these marketing innovations for

its existence and growth. In decentralized organisation structure, higher level people get muchtime for the creativity and innovations. The impact of decentralisation on both product and

market has proved by the various organisations.

4. Motivating Mangers. Various research studies have shown that we organisation structure

itself can influence the people within the organisation. The extent to which the organisationfacilities participation, communication, delegation, mutual interaction, and interdependence,

motivates people for higher productivity. Decentralization tends to emphasise those desirable

characteristics in whatever type of structure it is found.

5. Encouraging Development of Managers. Managers are made, not born and decentralisation

is one of the best methods of developing managers in the organisations. Other methods ofmanagement development have their own contributions in this field. However, giving managers

a management job to do and to delegate authority for decision-making make them more mature

and competent and broad-based. The problem of succession is overcome this way and the future

growth and success of the organisation are ensured as most organisations find lack ofmanagerial talent a limiting factor in growth. Perhaps, the necessity of management

development is one of the compelling reasons for decentralisation.


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Functions of management

There are four basic functions of management, viz., planning, organization, direction andcontrol.

These functions are closely interlinked and interwoven in character. All executives or mangers,

regardless of their area and position, are o discharge these functions. These functions are theidentifying marks by which a manger can be differentiated form a non-manager. Of the four

functions, however, the upper or top executives are mostly preoccupied with the first two

functions-planning and organization, while the lower-ranking executives are largely busy with

direction and largely busy with direction and control. But the thinking functions of planning andorganisation cannot be separated in to water-tight compartments from the doing functions of

direction and control. Irrespective of their levels and spheres of activity, executives are required

to perform all the four functions in varying degrees.

1. Planning Is the rational and orderly thinking about ways and means for the realization of

certain goals. It involves thought and decision pertaining to a future course of action. Itanticipates and precedes action rather than making a reflective thinking abut the past events.

Absence of planning before doing implies rashness, imprudence or shortsightedness in the

performance of work. Before undertaking any work, is to be done, and who is to do the work. Inconsidering these points, managers have to clarify objectives or goals and to evolve policies and

procedures for guiding those who do the work; they have to chart the proposed lines of actionwith proper time schedules for the execution of work. For providing a factual basis for future

action, managers have to map out a programme indicating the best course of action to befollowed, fixing the targets and standards of work performance there in and evolving the

strategies and remedies for possible hindrances to the smooth flow of work. In other words,

programmes provide a complete road map for the guidance of managers to get things donethrough operators.

In a sense, planning and decisions making are synonymous. Like decision making, planning is

made for providing guide to action in problem areas. There is much common ground betweenthe steps planning and of decision making-diagnosis of the problem, development of alternative,

evaluation of alternative and selection of the best course of action. The decision phase of

planning is so important that many writers have treated planning as a synonym of decisionmaking.

2. Organization Provides the mechanism or apparatus for purposive, integrated and co-

operative action by two or more persons with a view to implementing any plan. With a fewpersons, organization calls for the allocation of tasks to individuals and the requires the efforts

of many people, several departments come into existence under the charge of different

managers who are tied together neatly by authority relationships for integrated action. That is,organization involves the division and subdivision of activities, into departments, sections and

jobs as well as the integration of activities and positions into a co-ordinated whole. The division

of activities entails three thing, viz., determination of total activities, grouping of such activities

and assignment of jobs to both managers and operators. The integration of activities is effectedthrough positions which are bound together in a consistent pattern by the fabric of inter-

relationships among enterprise functions, jobs and personnel. Delegation of authority is the

cement that holds the positions together as one entity.

The concept of organization has a number of implications. First, it has two aspects: technical or

mechanistic aspect pertaining to activities and social or humanistic aspect pertaining to people.For the personal contentment and social satisfaction of people, organization calls for the

matching of jobs with individuals and vice-versa. Secondly, as a mechanism for action,

organization is required to be changed when either the volume and nature of action or thepersonnel change. Although some amount of reorganization takes place with every personnel


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change, upper-level personnel change is more significant in effect. Thirdly, delegation of

authority takes place not only between management members, but it extends to operators aswell. In addition to managerial jobs, the operating jobs are also put to the same process of

delegation.

3. Direction is largely a function of human relations and motivation. This function is, of course,

denoted variously by different writers, such as command, leadership, motivation, execution or

actuating. The organizational mechanism is to be energized, activated or put into action for

carrying out the management plan. This is what is actually done through directing function toset the organization in motion. But human beings are not inanimate cogs in a machine; they

have emotions, aspirations, sentiments, capacity to participate or to withhold such participation.

Like a machine, they could not be ordered to do a predetermined work. With the purpose ofinducing the members of the organization to put forth their best endeavour, managers direct the

employees through the medium of leadership, guidance, supervision, communication and

counselling. Direction involves personal and social-group relationships. The working terms areinspired and motivated to do the work willingly and whole-heartedly because of providing

desirable job satisfaction and wanted team spirit.

4. Control ensures qualitative and quantitative performance of work in the organization for

completing plans and achieving objectives. Under the control function, measuring standards oryardsticks are established and communicated to managers so that they can regulate employee

performance and can work by self-control. Moreover, control brings to light any managementlapses that hinder satisfactory work progress, and thus it provides the managers with an

opportunity to take remedial action before it is too late. The control function furnishes new data

and facts that enable the managers to verify the accuracy of their decisions with regard toplanning, organizing and directing functions. Controlling as a process involves measurement,

evaluation and correction of performance in the light of standards established through planning.

That planning and controlling are inter-dependent can be explained form the nature of eitherfunctions. As control forces events to conform to plans, three can exist no control without

planning. Likewise, plans are not capable of self-achieving without the exercise of controlling

function. In the past, control was work-focused rather than work-focused,

Fayol's principles of management

Fayol evolved fourteen principles of management which may be briefly stated as follows

1. Division of work. The object of division of work is to derive the benefits from the principle

of specialisation which can be applied not only in technical work, put in all other work as well.Unlike Taylor, Fayol pointed out that division of work has its obvious limits.

2. Authority and responsibility. Authority and responsibility are correlated terms;

responsibility is the essential counterpart of authority and they go hand. An ideal manger isexpected to have official authority arising from official positions as well as his inherent

personal authority. Such person authority is compounded of intelligence experience, moral

worth, ability to lead, past services, etc.

3. Discipline. Discipline is in essence obedience, application, energy, behaviour, and outward

marks of respect shown buy employees. Discipline is what the leaders make it through theobservance of agreements, because agreements spell out to formalities of discipline. Three

requisites of discipline are (a) good supervisors at all levels, (b) clear and fair agreements, and

(c) judicious application of penalties of sanctions.


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4. Unity of direction. This principle requires than employee should receive orders form one

superior only. Dual command wreaks havoc in all concerns, since authority is undermined,discipline in jeopardy, order disturbed and stability threatened.

5. Unity of direction. Fayol discussed this principle of unity of direction in a different wayfrom that of unity of command. While unity of direction is concerned with the functioning of

the body corporate, unity of command is only concerned with the functioning of personnel at all

levels. For the accomplishment of a group of activities having the same objective, there should

be one head and one plan. A body with two heads is in the social as in the animal sphere amonster, and has difficulty in surviving.

6. Subordination of individual interest to general interest. Common interest must prevailover individual interest, but some factors like ambition, laziness, weakness and others tend to

reduce the importance of general interest.

7. Remuneration of personnel. As the prices of services rendered remunerations should be fair

and satisfactory to both the parties.

8. Centralization. Everything which goes to increase the importance of the subordinate's roleis decentralization, everything which goes to reduce it is centralization. The question of

centralization or decentralization holds the key to the utilization of all faculties of the personnel.

9. scalar chain. It is the chain of superiors or the line of authority form the highest executive to

the lowest one for the purpose of communication. The need for swift action should be

reconciled with due regard to the line of authority by using gang plank or direct contact.

10. Order. This is a principle of organization relating to things and persons material order

requires a place for everything and everything in its place and social demands the engagementof the right man in the right place.

11. Equity. Equity is greater than justice, since it results from the combination of kindlinessand justice. The application of equity requires much good sense, experience and good nature

with a view to securing devotion and loyalty form employees.

12. Stability of tenure of personnel. Stability of tenure is essential to get an employeeaccustomed to doing a new work and to enable him in performing it well. Instability of tenure is

an evidence of bad running of affairs.

13. Initiative. The freedom to purpose a plan and to execute it is what is known as initiative

that increases zeal and energy on the part of human beings. Since initiative is one of the

keenest satisfactions for an intelligent man to experience. Fayol advised managers to secure as

much initiative from employees as possible.

14. Esprit de corps. This is an extension of the principle of unity of command whereby team

work is ensured. To maintain proper esprit de corps in the organization, personality politics andabuse of written and communications are to to be guarded against.

Elements of Planning Planning consists of several individual plans or component parts that arebound together in a consistent structure of operations.


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Any complete and thorough planning must provide for the following elements:

1. Objectives

2. Policies

3. Procedures

4. Programmes

Characteristics of Delegation

Delegation has the following characteristics

1. Delegation is the authorization to a manager to act in a certain way independently. The

degree of delegation puts a manager to act within the limits prescribed by his superior.

Moreover, withing the limits he is not free to act arbitrarily but subject to provisions of

organisational policy, rules and regulation.

2. Delegation has a dual characteristic. A superior delegates authority to subordinates,

however a superior at the same time still retains authority. As Terry has observed, 'it issomething like imparting knowledge. You share with others who then possess the

knowledge, but you still retain the knowledge too.

3. Authority once delegated can be enhanced, reduced or withdrawn depending upon the

requirement. The changes in organization structure, organisation climate, policy,

procedure, and method require modifications in delegation of authority. Since, authority

is delegated to an individual, the authority can be recovered back fully in the case of hisexit from the organisation.

4. A manager cannot delegate authority which he himself does not process. Moreover,he does not delegate the entire authority to his subordinates because if he delegates all

his authority he cannot work.

5. Delegation may be specific or general. Similarly, it can be written or unwritten.

Delegation is specific when course of action for specific objectives are specified; it is

general when these are not specified, though objectives are specified.

Delegation of authority is the process through which a manager gives authority to others in

order to accomplish certain assignments.

Organisation units require the delegation of authority to their respective managers so that they

can manger their respective units. Every manger in the organisation has some activities assigned

by the superior. In order to perform these activities, he needs authority to take decisions aboutthese and to enforce them. In fact, authority vests in the owners of the organisation, an from

there, it is delegated to the chief executive. The chief executive cannot perform all the activities,hence, he assigns some activities to his subordinates and delegates them authority. This process

of delegation and redelegation from superiors to subordinates goes on till all the activities are

assigned to persons by whom these are performed.

Bases of Departmentation

Departmentation is effected by the following methods


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1. Functions. Important enterprise functions provide the usual basis for classifyingactivities into departments. Manufacturing, marketing, finance, personnel, accounting

and engineering are the typical functions of an industrial enterprise, and departments ma

be established on the basis of such functions. But all these functions are not alike inimportance from the business point of view. Marketing and manufacturing are the basic

functions of an industrial concern, and others are regarded as service functions because

they exist for supporting the main functions of the business. Accordingly, basic and

main functions must be given a higher organizational status than the status enjoyed byservice functions. Further more, the size, nature and volume of business have an

important say in creating departments. A small business may not require so many

departments, and it may be put under the manufacturing departments, viz. Marketing,manufacturing and finance. Purchasing, engineering and accounting may be put under

the manufacturing department, and accounting under finance. Conversely, large-sized

enterprises may be required to create more units than this classification of functionswarrants. For example, marketing department may be split into three separate ones like

sales, advertising, and market research & product design. This type of departmentation

is known by fictionalization.

2. Products. Products manufactured may be adopted for division as well as for subdivision purposes. When there are several product lines an each product line consists of

a variety of items, functional classification fails to give balanced emphasis on eachproduct. Slow-moving and outdated products may be given greater attention at the cost

of growing ones. For the sake of expansion and development of their products, many

large enterprises have created more or less autonomous, self-sufficient productsdivisions based on either one single product or a group of related products. A gigantic

structure with separate product lines is usually laid on this pattern of departmentation

which is technically called divisionalization. With favourable product and marketcharacteristics, divisionalization become the only choice available to large-sized

enterprises. Apart form this use, product or services may be made the basis of major

divisions by a departmental store, a banking concern and an insurance company. Again,manufacturing an marketing departments may subdivide their activities on the basis of

products.

3. Territories. Like the products basis, geographical regions are adopted for maindivision as well as for subdivision purposes. Units that are located at physically

dispersed areas are made so many self-contained divisions of the organization. Apart

form this divisionalization, marketing activities are very often subdivided on the basis ofgeographical areas.

It has almost the same advantages and disadvantages as are to be found in the case of

departmentation by products. There are two special advantages of this pattern ofgrouping activities. Being nearer to the market and becoming familiar with local

conditions, this classification help to cater to the needs of local people more

satisfactorily. In addition, the economy in transport cost, the local supply of rawmaterials or services and the convenience of supervision make a significant contribution

towards the lower cost of operation.

4. Customers. This basis of classification is widely followed in subdividing activities of

the marketing department. To give individual attention to diverse groups of buyers in

the market, sales activities are often split into several parts. When the products areoffered to an extensive market through numerous channels and outlets, it has the special


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merit of supplying goods in accordance with the peculiar needs of customers. Sales

being the exclusive field of its application, co-ordination may appear difficult betweensales function and other enterprise functions. Specialized sales staff may become idle

with the downward movement of sales to any specified group of customers.

5. Processes. The manufacturing activities may be subdivided on the basis of their

processes of production. Similar machines are grouped into separate sections that are

utilized for a distinct operation of the job. For example, lathe machine, drill machine,

grinding machine and milling machine are placed in each distinct unit. In office workalso, this basis of grouping activities has become common, e.g., filing department, mail

handling department and duplicating department. Cost and economy considerations urge

the use of electronic office equipments and other costly machine on the basis of thissubdivision. It is, however, not a suitable basis to be utilized in any mass production

arrangement.

Steps in Organization

The steps in organization may be stated as follows

1. Determination and enumeration of activities. The required activities are spelled out from

the objectives of the enterprise. The total work, operating an managerial, is broken down intocomponent activities that are to be performed by all personnel. The breakdown of activities is

carried as far down as to determine the job of each individual.

2. Grouping and assignment of activities. Correlated and similar activities are grouped into

divisions or departments first. And these divisional or departmental act5ivities are further

divided into sections and jobs. Different bases are adopted for dividing and subdividing

activities into different groups or blocks of work. Enterprise functions like sales. Production orfinance, the products manufactured and territorial regions are usually made the basis of primary

grouping. Secondary grouping is made on the basis of geographical areas, types of customers,equipments used, process or constituent parts of the major enterprise function.

3. Allocation of fixed duties to definite persons. Definite job assignments are made to

different subordinates for ensuring certainty of work performance. These job assignments arefirst made to different management members who, in turn, allocate the jobs among their

subordinates. Along with the allocation of duties to different positions, each job is to be staffed

by the placement of qualified personnel. To make any systematic recruitment and selection, job

requirements are first ascertained by the allocation of duties to different positions, and on thebasis of job descriptions, man specifications are prepared. In accordance with man

specifications which indicate qualification and experience expected form candidates for

different posts, positions are filled by selection, training and placement of individuals.

4. Delegation of authority. Corresponding to the nature of duties, commensurate authoritymust be granted to the subordinates for enabling them to make adequate work performance. As

authority without responsibility is a dangerous thing, so responsibility without authority is an

empty vessel. Authority and responsibility are correlated terms and they are terms to beconstants companions.

Delegation is a three tier concept that calls for assigning duties and delegating authority tosubordinates and demanding accountability from subordinates. Wherever duties are assigned to

subordinates, whether managers or operators, the other two aspects of delegation come into the


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picture. Division and subdivision of activities create a number of managerial and operating jobs

which are bound together in a consistent pattern by the delegation process. Absence ofdelegation in any enterprise implies that one person is performing the whole work of operation

and management with nobody else to assist him. In such a situation, no formal structure can be

designed as there is no proliferation of activities into levels. Fore establishing any organizationstructure, it is obvious therefore that delegation is to be effected in some way or other.

CONCEPT OF MANAGEMENT

Management is an activity process composed of some basic functions, for getting the objectiveof any enterprise accomplished through the efforts of its personnel. Wherever and whenever

objectives are to be achieved through organized andco-operative endeavour, management

becomes essential for directing and unifying the group efforts towards a common purpose. Ashuman aims and beliefs are mostly realized through the establishment of diverse associations in

our society, management is universally needed for operating all such organisation.

Management, viewed as a functional concept, is of equal necessity to the educational religious,charitable and other non-business institutions as it is required for business Organizations.

Furthermore, the greatest and the most comprehensive of our social organizations, viz., the

Government of all types needs management as others require, perhaps more than all other social

organizations. That the Government without requires a management process has been applypointed out in the statement: A Government without good management is a house built on sand.

Put in short, management is an essential accompaniment of all social organizations, and it is to

be found everywhere as a distinct, separate and dominate activity. The nature and significanceof the activity do not change even if it is called administration in some social in situations and

management in others.

Management is the only activating element of any enterprise for getting things done through it

personnel. The job of management is to provide dynamic leadership that combines the

productive but passive resources into a fruitful organization. Not only does it adapt itself to

existing opportunities, restrictions and pressures, but it exercises a positive influence as well as

to make the future events favourable for the enterprise. With a view to getting the expectedresults and seeing that things happen as they should, management has to become a creator of the

economy rather then its creature. Management forges ahead through innovations in operatingsituation and the adoptian of far-sighted planning. It visualize the future, initiates changes and

achieves the purpose of any enterprise under highly dynamic conditions. As an activity process,

management plans the future course of action, organizes people and their work, directs theoperation an controls the performance, and thus ensures the accomplishment of enterprise

objectives. Adaptations and innovations permeate through each of these phases of the

management process.

Management acts as a creative and invigorating force in the organisation. It creates result that is

bigger than the sum total of efforts put in by the group. Management adds real plus value to theoperation of any enterprise by enlisting as little extra value out of each person. It provides newideas, imaginations and visions to the group working an integrates its efforts in such a manner

as to account for better results. It ensures a smooth flow of work in the organization by focusing

on strong points, neutralizing weak link, overcoming difficulties and establishing team spirit.Management strives to secure the maximum result by the use of minimum resources.

CONCEPT OF MANAGEMENT

Systems Approach of Management Thought


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The systems approach, also labeled as modern theory of management, is a relatively new

approach though neither the terms management and organisation nor the system is a newconcept.

Over the past tow decades or so the systems approach has emerged as vigorous and lively. Now,

we are bombarded with reference to system in various walks of life. Everything is a system and

the system thinking is the by work. We have entered a period that forces man to find moreaccurate answers to questions involving the 'wholeness' of an operation. This age of synthesis

forces management to think out in new and different ways- as suggested by the systemsapproach. In this view the whole is not merely a combination of the system but distinct from it sparts. Before analyzing how an organisation functions as a system, it is imperative to analyse

the concept, and working of the system.

A system is defined as the assemblage of things connected or interdependent, so as to form a

complex unity; a whole composed of parts in orderly arrangement according to some scheme or

plan. This has been defined as 'an organised' or complex whole; an assemblage or combinationof things or parts forming a complex unitary whole.

Various authors on systems approach have attempted to develop a generalized theory which can

be applied to any system-physical, biological, or social. They have termed is as GeneralSystems Theory (GST). The theory is concerned with developing a systematic, theoretical

framework for describing the empirical world. Buckley describes its role as such, 'A which

functions as a whole by virtue of the inter-dependence of its parts i called a system and themethod which aims at discovering how this is brought about in widest variety of systems has

been called General Systems Theory. General Systems Theory seeks to classify systems by the

way their components are organised and to derive the laws, or typical patterns of behaviour, forthe different classes of systems singled but by the taxonomy.

The first basic stage in system management is the determination of organisation system. Since

organisation is a deliberate and purposive creations, the basic objectives of the organisation

should be determined before its creation. Determination of objectives is important becauseevery attempt is directed towards realization of these objectives. In the second stage,each

element of the organisation is arranged in some combination to provide desired results. Systemsdesign provides the overall framework for implementing systems concepts. It includes strategic

and comprehensive planning for the entire organisational system, as well as the development of

operation and facilitating sun-system. The third stage-operation and control-refers to conversionof inputs into outputs. Inputs may be in the form of information, materials, and energy. The

inputs are allocated to plan, though it is possible to eliminate parts of the planning required

during operations by designing system with predetermined input allocation structuring the

system to operate in a specified fashion and with more predictable results. Operation of thesystem requires some sort of control, that is, a mechanism for output or related characteristics,

comparing he measurement with the standard, and activating the unit to adjust inputs to correctthe deficiency. This is necessary to maintain the equilibrium of the system near the ideal point.The fourth stage pertains to review and evaluation, that is, to ascertain how well the system has

performed. This is different from the control in the sense that control refers to operating

efficiency, while the concept of review and evaluation is more comprehensive, and alwaysrelates the functioning of the system to its objectives. The review and evaluation occur at

periodic intervals during the life cycle of a system and lead to design changes in the present

system or recommendations for changes which may be operated in future systems.

Human relations Approach of Management Thought


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The classical approach which focused attention on the mechanical an physiological variables of

organisational functioning was tested on the field to increase the efficiency of organisations.

Surprisingly, positive aspects of these variables could not evoke positive response in work

behaviour, and researchers tried to investigate the reasons for human behaviour at the work.

They discovered that the real cause of human behaviour was something more than physiological

variables. Such findings generated a new phenomenon about the human behaviour and focusedattention of the human beings in the organisations. As such, this new approach his been called

'human approach of management'.

Even in the writings of classical approach, notably, Taylor, Fayol, Henry Gantt, Follet, Urwick,

and others, the human element in the organisation was recognised, but they emphasised it very

little. The human relations approach was born out o fa reaction to classical approach and duringthe last four decades, a lot of literature on human relations had been developed. The essence of

the human relations contributions is contained in two points; (i) organisational situation should

be viewed in social terms as well as in economic and technical terms, and (ii) the social processof group behaviour can be understood in terms of clinical method analogous to the doctor's

diagnosis of the human organism. Among human relations approach, there are many

contributions and many more researches are being carried on. These include contributions form

famous 'Hawthorne Experiments', many sociologists-Bakke, Selznic, Homans, dubin, andDalton; many psychologists-McGregor, Likert, Argyris, March and Simon, Leavitt, Blake,

Sayles, Brown, etc. There will be relatively lengthy discussion of the results and implications of

the Hawthorne studies because of their historical importance to the behavioural approach to theanalysis of management problems. In fact, for the first time, an intensive and systematic

analysis of human factor in organisations was made in the form of Hawthorne experiments.

CONFLICT MANAGEMENT

The concept of conflict, being an outcome of behaviors, is an integral part of human life.

Wherever there is interaction there is conflict. Conflict can be defined as a disagreement

between two or more individuals or groups, with each individual or group trying to gainacceptance of its view or objectives over others. Because people differ in their attitudes, values

and goals, conflict among them becomes unavoidable. Accordingly, the management is

concerned not so much with eliminating conflict which would be impossible, but to contain ti

and manage it for organizational and individual benefit.

The personal conflict is more emotional in nature and reflects feelings, anger, distrust, fear,

resentment, clash impersonality, antagonism, tension etc. The organizational conflict, on theother hand, involves disagreements on such factors as allocation of resources, nature of goals

and objectives, organizational policies and procedures, nature of assignments and distribution of

rewards. This conflict at its worst can lead to unnecessary stress, blockage in communication,

lack of cooperation, increased sense of distrust an suspicion and this results in lost friendshipsand reduced organizational effectiveness.

Conflict has always been considered as undesirable so that is should be avoided when possible

and resolved soon if it occurs Both the management school an the administrative school of

management relied heavily on developing such organizational structures that would specify

tasks, rules, regulations, procedures, authority relationships etc., so that any conflict can beavoided and if there is a conflict then such built-in rules and regulations would identify and

correct problems of conflict. The Human Relations School subscribed to similar theory that

conflict is avoidable by creating an environment of good will and trust. According to WilliamR.Scott, good human relations can prevent conflicts, whether they are between individual and


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organizational objectives, between line and staff personnel, between one's ability an authority

etc.

The modern management view is not so negative about conflict. It believes that conflict can be

helpful and constructive if handled properly. As a matter of fact, moderate level of conflict is

helpful in such organizations as Research and Development firms, advertising agencies, public

policy groups etc.

DEVICES FOR CONTROLLING OVERALL PERFORMANCE

In spite of exercising many and varied controls in various areas and segments of the company;the need for overall control arises from realizing the enterprise objectives, co-ordinating the

operations of functional, territorial or product units, regulating divisionalized units with

separate profit centres and assuring the financial soundness of the company by way of

reviewing capital expenditures and influencing profits.

DIRECTION

Management after planning, organising, and staffing functions, begins direction function. Till

now, in the organisation, suitable persons have come in and they have assumed their positionsas created through the organising process.

When various individuals are arranged in the organisational hierarchy, they become superiors

and subordinates. All the individuals in the organisation are both superiors and subordinates,except the individuals at the extreme top or at the extreme bottom. A superior manager directs

his subordinates as to how and when they have to perform various duties assigned to them. This

becomes necessary, as without this direction, human factors in the organisation become

inactive, consequently making physical factors useless. This process originates at the top andflows right upto the bottom. Thus, every manager in the organisation gives direction to his

subordinates as superior and receives direction as subordinate from his superior.

Direction may be defined as a function of management which is related with instructing,

guiding and inspiring human factor in the organisation to achieve organisational objectives. The

direction is not merely issuing order and instructions by a superior to his subordinates, but itincludes the process of guiding and inspiring them.

More Notes on DIRECTION
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INTERNATIONAL MANAGEMENT

The modern extent of telecommunications and ease in travel has made the world into one global

community. This means that the world is getting smaller and each part of the world is getting

closer to the other. Specially, since World War II, people, technology, capital goods and

services are crossing international borders like a daily routine. This has given rise to the pursuitof organizational objectives in an international setting transcending the boundaries of

nationalism and cultural groupism.

International management, in true international setting, involves management of multinationalcorporations. It is an aspect of management which involves conducting business and industrial

operations in foreign countries and is affected by cultural and national influence.

The True multinationalism involves more than the movements of investment capital or exportof goods, and it involves a free flow of capital, technology, goods an services, information and

managerial talent.

More Notes on INTERNATIONAL MANAGEMENT

MANAGEMENT DISCIPLINES

In modern times, management is based on inter-disciplinary study. Important advances haverecently been made in Economics, Accounting, Statistics and Mathematics and in areas directly

related to management. The following will be discussed briefly.


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1. Managerial Economics

2. Managerial Accounting

3. The Behavioral Sciences in Management

4. Quantitative Techniques in Management

5. Systems Analysis

6. Cybernetics

7. Information Systems & Computers.

More Notes on MANAGEMENT DISCIPLINES

MANAGERIAL PLANNING

Planning is the conscious determination of a further course of action to achieve the desired

result. Future events, instead of leaving them to chance, are made to happen in to certain

recognized manner through planning. There are several ways in which a particular thing can bedone. Planning involves choosing of a course of action from all available alternative for

accomplishing the desired results with greatest economy and certainty. Planning sketches a

complete mental picture of things yet to happen in the enterprise though the process of lookingahead. The proposed course of action is charted out in greater details with the help of a complex

chain of plans like policies, procedures, programmes and budgets focured on objectives of the

enterprise.

More Notes on MANAGERIAL PLANNINGSPAN OF MANAGEMENT

In management literature, span of management is also called as span of supervision or control.

However, the term span of management is more appropriate as compared to its alternatives

because span is one of management and not only of control or supervision which are merely apart of management. Span of management is referred to the number of subordinates which can

be effectively managed by superior.

A basic question arises: How many subordinates can be managed by a superior ? Is there anyideal number ? Actual spans in business organisation indicate that there is no one best number

that can be universally applied; however, the number is to be limited because human capacity islimited. This number has been made. Let us analyse the various approaches in determining ideal

span of management.

Classical Approach. The classical approach to the span of management has dealt with

generalizations embodying specific number of subordinates for an effective span. These persons

have suggested span of upper and top level from three to seven to eight subordinates. However,

more recent operational approach has suggested that there are too many variables inmanagement and no exact number can be fixed. The exact number can be fixed. The exact

number will depend upon underlying factors, all of which affect the difficulty and time

requirement of managing.

Graicunas Theory of Superior-Subordinate Relationships. Perhaps the most influential paper in

the past generation was that of V.A. Graicunas, a French Management Consultant, in 1933. This

study was not based upon empirical observation, but rather upon theoretical projection by

mathematics. He has analysed superior-subordinate relationships and developed a mathematicalformula based on the geometric increase in complexities of manging as the number of

subordinates increase.

More Notes on SPAN OF MANAGEMENT

THE BEHAVIOURAL SCIENCES IN MANAGEMENT
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Even since the early twenties, when the classic Hawthorne studies were conducted, behavioural

scientists have been focussing on organisations and the management of these organisation, as alegitimate scientific topic. Such scholars as Elton Mayo and his group at Harvard, who were

directly influenced by the Hawthorne studies, examined the social factors, including the concept

of leadership, as they affect employee satisfaction and motivation. From this group evolved aschool of research, generally called the human relations school. George Humans and William

Foote White began to study the interactions among people within a group, interactions between

groups, and the leadership of a group as important variables that affect both employee's morale

and employee productivity. The major contribution of these people was a re-examination of thetraditional concepts of organisation in terms of informal groups, employee morale an leadership

patterns.

In addition to the human relations school, individually oriented psychologists, such as Abraham

Maslow, Chris Argyris, Frederick Herzberg, David McClelland Lyman Porter, Marvin Dunnette

and many others, conducted considerable research concerning such concepts as individualneeds, the articulation of individual needs, with organisational goals and purposes, intrinsic job

factors, leadership styles and general predictors to satisfaction and motivation.

Flowing from these research activities there exists a proliferation of research an principles

which re of crucial interest for managers of organisation.

The experiments at the Hawthorne plant of Western Electric in Chicago, USA, began in 1924and formed the bedrock of the human relations movement. This movement shifted attention

away from formal organisation, though it accepted the basic concept of the legitimacy of

authority steaming from hierarchical controls. Later, new models, such as the implicitbargaining models and power equalization models, did not accept this legitimacy in its totality.

More Notes on THE BEHAVIOURAL SCIENCES IN MANAGEMENT

THE BUSINESS ENVIRONMENT

The business environment refers to those conditions and forces in the surroundings of a

business enterprise under which business operations are to be carried out effectively andefficiently. The success or failure of a business is considerably influenced by the impact of its

environment. The management of the environmental forces is an important task before everybusinessman of today and suitable decisions are required to be made in respect of various

developments going to take place for shaping the survival and growth of business. The business

environment includes the economic realities, political situation, social conditions andtechnological forces. The environment in which an individual or organisation operates has a

more or less direct bearing on his or its objectives and functions. This applies to a business

organisation as well as it does to any other type of organisation. The proper estimate of the

objectives of business and means to achieve them can, therefore, be made only after clearlyunderstanding the environment in which a business firm functions.

More Notes on THE BUSINESS ENVIRONMENTTHE INTERNATIONAL MANAGER

Most Americans managers are generally groomed for domestic market and are isolated from the

global stage. As Boris Yavitz puts it, Unlike European and Asian manager, who grow up

expecting to see international service, U.S. executives are required to prepare only for domestic

experience, with English as their only language.

Since the world is getting much smaller and MNCs are becoming a way of life, a manger must

have proper orientation towards : foreign people, ideas and resourcesMore Notes on THE INTERNATIONAL MANAGER
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Types of Decision

There are various ways of classifying decisions in an organisation. These base give five sets of

decisions.

1. Organizational or Personal Decisions : In an organisation, when an individual takesdecisions as an executive for the organisation, these are known as Organizational decisions. The

authority for taking such decisions can be delegated from a superior to a subordinate. Such

decisions affect Organizational functioning directly.

An executive can take decisions about himself which are personal decisions. These decisions

normally affect personal life of the decision-maker, though at many times they may affect

organisation also, such as, leaving of the organisation by an individual. Decision making powercannot be delegated to any one else in the case of personal decisions.

2. Routine or Strategic Decisions : Routine decisions are taken in the context of day-to dayoperation of the organisation. Mostly, they are of repetitive nature and related with the general

functioning. They do not require much analysis and evaluation and can be made quickly.

Strategic decisions are those which are taken during the current time period, but whose primaryeffect is flt during some future period. Strategic decisions affect Organizational structures,

objectives, facilities, and finances. These decisions are mostly non-repetitive in nature. Since

thy have fundamental effects on the organisation, they are taken after careful analysis an


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evaluation of various alternatives.

3. Policy or Operative Decisions: Policy decisions are taken by top management in the

organisation which determines the basic policies. The policy decisions are very important and

have long term impact. Tense decisions provide help in establishing the business such asdeciding location of plant, volume of production, sale and purchase decisions, policy decisions

regarding the employees etc.

Operative decisions are related with the day-to-day operation of the business. These are taken

generally by middle and lower managers who are more closely related with the supervision ofactual operations These decisions may be written or otherwise.

4. Programmed or Non-Programmed Decisions: Such classification of decisions is made on

the basis of the use of operational research. Programmed decisions are normally of repetitivenature and are take3n within the broad policy structure. These generally have short-run impact,

and are taken by lower managers, such as, granting leave to an employee, purchase of materials

in normal routine etc.

Non-programmed decisions are of non-repetitive nature. The necessity of such decisions arises

because of some specific circumstances. Thus, these are very important for the organisation;

such as, opening of a new branch at a new place, introducing a new product in the market, etc.

5. Individual or Group decisions: This classification is based on the basis of persons involved

in the decision-making process. Individual decisions are taken by a single individual. These aretaken is the context of routine or programmed decisions where the analysis of various variables

in simple and for which broad policies are already provided. Sometimes, important decisions

are taken by single individuals also.

Group decisions are taken by a group constituted for this specific purpose or by a standing

committee. These decisions are generally very important for the organisation. Group decisions

have certain positive value such as greater participation of individuals and quality in decisions,

and certain negative values such as delay in decision-making process and difficulty in fixing theresponsibility of decisions.

Decision-making Process

To solve a decision problem it is necessary that the decision-maker chooses the best of theavailable alternatives In the process, managers have to function in the following manner.

1. The Problems. The first step is to determine what the real and correct problem is and to find

out a satisfactory an what input data is required for this. A problem exists whenever one faces aquestion whose answer involves doubt and uncertainty.

2. Search for Alternatives. A problem can be solved in several ways, however, all the ways are

not equally satisfying. If there is only one way of solving a problem, no question of decision

arises. The managers, in order to get most satisfactory result of a decision, must try to find out

the various alternatives available. The practice of developing alternatives is the best guaranteefor ensuring adequate attention on the part of managers.

3. Evaluation of Alternatives. After the various alternatives are identified, the next step is toevaluate them and select one that will best contribute to the goal. In the various alternatives,


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there lie various tangible factors. The tangible factors can be assessed in terms of quantity such

as rupees, ma-hours, units of output, etc. There are intangible factors which cannot be assessedin terms of quality. However, both these tangible and intangible factors must be weighed in

deciding upon a course of action.

4. Comparison of Alternatives. The evaluation of various alternatives presents a clear picture

as to how each one of them contributes to Organizational objectives. A comparative study of all

such alternatives is made to find out which is the most satisfactory.

5. Selection of Alternatives. Comparative study gives the information about the way various

alternatives are contributing in the solution of problem. The bet among these should be selected.

However, while selecting, factors like risk, economy of efforts, timing and limiting factorsshould be considered adequately.

THEORIES OF DECISION-MAKING

In business, there are various theories for making decisions. Various alternatives are evaluated

in the context of the organisational objectives. For this evaluation purpose, normally three

approaches are considered.

1. Marginal Theory. This approach has been suggested by economists. This emphasises the

maximization of profit. The profit is maximum where marginal costs of inputs are equal to

marginal revenues from outputs. Marginal cost is the additional cost which is incurred fortaking one additional outputs. Marginal cost is the additional cost which is incurred for taking

one additional output. Similarly, marginal revenue is earned by selling one additional unit of

output. When marginal costs revenues differ, the profit cannot be maximum because, in thatcase, either more additional revenues can be earned at less additional cost, or additional

revenues earned would be less than additional costs. In the first case, profit is maximized by

additional output, and in the second case, it is maximized by reduction in output.

2. Mathematical Theory. This theory suggests the decision-making through buildingmathematical models. The models are constructed taking all factors affecting a decision, With

the development of operations research add computers for handling complex mathematicalmodels, this approach is commonly used by large-sized organisations where decision-making

problem is very complex. Mathematical techniques have given basis for analyzing difficult

situation; however, the role of experience and foresightedness in selecting an alternative cannotall together be avoided. Various techniques such as venture analysis, games theory, probability

theory, waiting theory, linear programming, etc., are utilised for decision model building.

3. Psychological Theory. The marginal and mathematical theories emphasise on maximizationof profits which is the treatment of a manger as 'economic man'. Some hold the view that good

organisations do not want profit maximization, rather they want maximization of satisfaction.Thus, manager is not an economic man, but an administrative man. The former selects bestalternative which combines various things. The manager in the latter approach involves in

finding out an alternative only when the profits go below the satisfactory level. The satisfactory

level may bot be maximum profits.More Notes on THEORIES OF DECISION-MAKING


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TYPES OF LEADERSHIP

The nature of guidance and direction varies according to the types of leadership. Leadership

may be broadly classified into personal and impersonal, formal and informal as well as intoautocratic an democratic.

(a) Personal leadership calls for a direct and face-to-face contact between the leader and his

followers in matters of giving guidance and direction. Supervisory managers at the

lowest level exercise personal leadership over the working personnel. But leadership of

top and middle managers over the rank and file workers becomes impersonal incharacter because of their lack of direct contact. That is, guiding and directing are

effected by top and middle managers through subordinates in the shape of plans, orders

and instructions.

(b) Formal leadership is extended to all managerial positions which are officiallyrecognized. But informal leadership arises spontaneously from any group of humanbeings, and the existence of such leadership may not be known in the formal

organization. Informal leadership forms the cement of the informal organization.

(c) Autocratic leadership calls for vesting of the power of decision making in the leaderwith little or no consultation of subordinates. In contrast, democratic leadership allows

employee participation in varying degrees for work accomplishment through common

consent or consultation. The techniques of direction are usually moulded by these twotypes of executive leadership which may exit at any level of management, whether top,

middle or bottom.

Autocratic leadership is based upon close supervision, clear and specific instructions

and commanding orders of the superior. It encourages quick decision and making

prompt action fosters unity of direction, avoids splits into factions and guides the

recalcitrant and less competent subordinates towards better work accomplishment.Autocratic leadership relies upon lesser degree of delegation. On the other hand, this

type of leadership demoralizes subordinates, retards the growth of their capacity and

lowers the quality of plans.

Democratic leadership requires joint action through the mutual support and concurrence

of subordinates in the plans. Benefits of democratic leadership include greater employee

co-operation, improved formulation of plans because of receiving new ideas andsuggestions, better employee morale, greater understanding of orders an instructions, as

well as the highest personal growth and development. Shortcomings of democraticleadership are manifested in absence of clear and complete instructions, the fear of

unauthorized alteration or modification of the plan and the employee expectation of

participation in all phases of decision making.

Important steps in planning The techniques of planning may b outlined to indicate a step-by-

step approach to the adoption of a comprehensive plan ready for execution.


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1. Determination of objectives. The first step in planning work is to determine the overall,

major objectives. These objectives set the pattern of the proposed course of action and shape thestructure of other subsidiary objectives in the organization. That is, major objectives are broken

down into departmental, sectional and individual objectives when derivative plans are

developed throughout the organization. Major objectives must be spelled out in realistic or

specific terms rather than the establishment of general philosophical or creed-type objectives.Creed-type objectives are completely useless in managerial planning. As a guide to action,

objectives must be specific, informative and clear enough to indicate what is to be done.

2. Establishment of planning premises. Planning premises are assumptions about the further

or understanding of the expected situation. On the stage of planning, they provide the setting or

back-drop against which all planning activities are carried out. Planning premises supplypertinent facts and information relating to the future, and as such, thy are vital to the success of

planning. Forecasts and trends analyses provides mot of the information required in planning.

3. Selection of the operating plan from alternatives. In business, there exists a number of

alternative courses of actions for achieving the desired results. All these courses of action mustbe found out for their comparative and analytical evaluation. With reference to considerations

like cost, risk and gain, all available alternatives are appraise to select a satisfactory course ofaction. In other words, the techniques of decision making are applied to choose the proposed

course of action from several alternatives. If alternatives are not developed, planning becomes a

straight-jacket pattern of activity and loses much of its beneficial results. The overallprogramme or the operating plan emerges from this steps in the planning process.

4. Preparation of derivative plans. The overall operating plan of the enterprise can not beexecuted effectively unless it is supported, enlarged and clarified by the preparation of other

derivative plans for each segment of the company. Within the framework of a primary and basic

operating plan, the derivative plans are developed in each area of the business to integrateobjectives with all relevant policies, procedures, programmes and budgets. The breakdown ofthe primary plan of action into departmental and sectional plans gives a realistic pictures of

things to come in future.

5. Timing and sequence of operations. Timing is an essential consideration in planning, and it

gives practical shape and concrete form to the programme. The starting and finishing times are

fixed for each piece of work so as to indicate when and within what time the work is to becommenced and completed. There are several cases on record to show that bad timing of

programmes has resulted in their failure. Further to maintain a symmetry of performance and a

smooth flow of work, the sequence of operations is to be arranged carefully by giving priorities

to some work in preference to others. Sequence determination is, of course, tied up with timingand both of them are encompassed in scheduling.

6. Securing participation. For the effective execution of the programme, the subordinate'sparticipation has been found to be of extreme importance. Plans must be communicated and

explained in greater details to the subordinated for increasing their understanding of the

proposed action and for enlisting their co-operation in the execution of plans. This participationimproves the equality of planning thorough the knowledge of additional facts, new visions and

revealing situations. Moreover, the participating mangers owe a personal obligation to execute

the plan as effectively as possible. The sky to the successful execution of plans lies in having a


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fully informed group of managers and employees. Accordingly, joint participation in planning

has become the rule rather than an exception now-a-days.

Characteristics of planning

Planning has a number of characteristics

A. Primacy: Planning is an important managerial function that usually precedes otherfunctions. Obviously, without setting the goals to reached and lines of action to be followed,

there is nothing to organize, to direct, or to control in the enterprise. But this should not lead usto think that planning is isolated from other managerial functions which have no impact on it.

B. Continuity: Planning is continuous and never-ending activity of a manger to keep the

enterprise as a going concern. One plan begets another plan to be followed by series of otherplans in quick succession. Actually, a hieracshy, of plans operates in the enterprise at any time.

Planning gets used up where tomorrow becomes today an calls for further planning day in and

day out. Again, incessant changes make replanning a continuous necessity.

C. Flexibility: Planning leads to the adoption of a specific course of action and the rejection ofother possibilities. The confinement to one course takes away flexibility. But if futureassumptions upon which planning is based prove wrong, the course of the action is to be

adapted to alter situations for avoiding any dead-lock. Accordingly, when the future can not be

moulded to conform to the course of action, flexibility is to be ingrained in planning for

adapting the course of action to demands of current situations.

D. Unity: Planning is made buy different managers at different times. Maintenance of

consistency or unity of planning is one of its essential requirements. Objectives provide thecommon focus for unifying managerial action in planning. Moreover, policies and procedures

introduce consistency of executive behaviour and action in matters of planning.

E. Precision: Planning must be precise as to its meaning, scope and nature. As guides for

action, planning is to be framed in intelligible and meaningful terms by way of pinpointing the

expected results. According to the capacities and facilities of the company, planning must berealistic in scope rather than dreams indicating pious desire. As planning errors are far more

serious than mistakes in other functions and cannot be offset by effective organizing or

controlling, planning precision is of utmost importance.

Benefits of Planning

There are many Benefits of Planning

1. Planning leads to more effective and faster achievement in any organization. It replaces

random operation by orderly and meaningful action. Planning guides the enterprise to traverse

along a safe and short path for reaching its destination.

2. Planning gives a competitive edge to companies that forecast and plan. In the context of

changing and uncertain business horizon, planning is the best way for ensuring an orderly

progress of the enterprise. As planning foresees the future an makes provision for it, planninggives an added strength to the business for its continuous growth and steady prosperity.


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3. Planning secures unity of purpose, direction and effort by focussing attention on objectives.

Isolated and distinct activities are co-ordinated towards one common goal, and at the same time,duplication, overlap and cross-purpose working are avoided throughout the organization. It

produces a mighty stream of operations and effects a thorough utilization of facilities.

4. Planning minimizes costs of performance. With a background knowledge of current

situations and future setting of action that would yield the greatest result at the least cost.

Because of consistency and balance of efforts, planning introduces and even flow of work

without any friction of dissipation of energy. It removes hesitancy, avoids crisis decisions,eliminates false steps and protects against improper deviations.

5. Planning has unique contributions towards the efficiency of other managerial functions. Theooverall picture of business presented through planning makes the functions of managerial

direction and control more effective in the organization and points out clearly the need for

further assistance or for revision in the course of action.

Forecasting

Forecasting underpins the planning work by indicating the future setting of business conditions.To base planning decisions on a solid foundation, forecasting provides mines of information

and pertinent facts relating to the future.

Forecasting implies the act of making a detailed analysis of the future to gain a foresight ofbackground situations and latent forces. Most of the important planning premises are merged in

forecasting of one type or another . Accordingly, planning without forecasting is an

impossibility. Fayol has aptly observed: The plan is the synthesis of the various forecasts:annual, long terms, short terms, special, etc.

Advantages of Forecasting

Forecasting has a number of advantages

(a) Forecasting plays a key role in managerial planning ans supplies vital facts and crucial

information.

(b) forecasting improves the quality of managerial personnel by compelling them to think

through the future, to look ahead and to make provision for it.

(c) Forecasting ensures better utilization of resources by extending the frontiers of control in

several directions and by revealing the areas where control is lacking.

(d) The employees are t rained for accepting changes without any serious resistance as well asfor facing unexpected occurrences courageously.

(e) Forecasting steers the enterprise safely for reaching its fixed destination, as outlined by theobjectives of the organization.


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(f) By focussing attention on the future forecasting helps the managers in adopting a definite

course and a set purpose in matters of planning.

Elements of forecasting

As an inference from known facts and given information forecasting required four well-marked

steps in analyzing the uncertain future.

In the first stage, the ground work is made for building the future estimates thereon. The known

results of past decades are scanned to ascertain the growth of the entire industry in which thecompany is engaged, the growth of the company itself as well as the growth of its product lines.

In the second stage, the future business is estimated. Projecting the prospects of the company is

over the known setting of past6 activities, and estimate of future business is made by managersfrom a number of probable trends studied by them. In the third stage, actual results are

compared with the estimated results. As a safeguard against wrong, anticipation the actuals are

always compared with the anticipated results. In the final stage, the forecasting process isrefined. In the light of experience and proficiency acquired, the forecasting technique is refined,

sharpened and adjusted suitably to meet the needs of the situation.

Matrix Organisation

Matrix organisation is the realization of a two-dimensional organisation which emanates

directly from the two dimensions of authority.

Two complementary organisations- the pure project organisation and functional organisation-

are merged to create the matrix organisation. Sometimes matrix and project organisations areconsidered as the same because of the same nature of authority relationships. For taking and

managing projects, separate identifiable units are created. In pure project organisation, complete

responsibility for the task as well as all the resources needed for its accomplishment are usuallyassigned to one project manager. In large projects, the organisational units for projects resemble

a regular division, relatively independent of any other division. In matrix organisation, the

project manager is usually not assigned complete responsibility for resources. Instead, he sharesthem with the rest of the orgnaisation. Pure project organisation is most effective when an

organisation is dealing with a small number of major projects. When the organisation has avariety of projects, ranging from large to small, it is often desirable to use a matrix organisation.

For programmes of major magnitudes, a project type of management may be established, butthe rest of the operations may be carried out by the functional organisation. In such a case, there

are well-established functional departments which have skills and capabilities for preformance

of a variety of programmes. Essentially programmes flow through the functional complex andreceive the services of these specialised departments.

In matrix orgnaisation, a project manager is appointed to co-ordinate the activities of theproject. Personnel are drawn from their respective administrative department. Upon completion

of the project, these people may return to their original departments for further reassignment. In


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the functioning of the matrix organisation, the unity of command principle is violated. Each

functional staff has two bosses-his administrative head and his project manager.

Motivation of Personnel

Motivation must begin with the managers who, in turn, are expected to motivate other

employees of the enterprise.

To motivate the managers, their basic wants and desires are to be satisfied by the enterprise.

Some of the important wants of the management personnel are: (a) opportunity for

development; (b) satisfactory spirit of the organisation grounded in high standards of justice,integrity and conduct; (c) status prestige and respect for the manager in the enterprise; (d)freedom of operation within the framework of a clearly defined character of right, duties and

obligations; and (e) satisfying the rewarding job. If these wants are not fulfilled, managementmembers are bound to develop frustration, discontent, and even bitterness in course of time, and

as a result their performance will come down to safe mediocrity.

There are three vital areas in which managerial wants are highlighted by decisions for them.First, placement decisions with respect to mangers should be made by systematic appraisal of

the managers performance, ability, potentiality and aptitude. Secondly, promotion decisions

become crucial to manger's motivation. Promotions must always be based upon measuredperformance and proven ability. Thirdly, remuneration of mangers should be high enough to

give the necessary status and prestige in the organisation. In respect of salary, what matters

more is not the absolute amount of remuneration but salary differentials between managers.

Communication

Communication involves an exchange of facts, feelings an information by two or more persons

and provides the means of putting the personnel into action in an organization People are to beinformed, guided and directed as to what should be done by them every now and then.

This informing is done through the use of communication. It conveys ideas, opinions ordecisions of the managers to subordinates at different levels of the organization and carries back

information, suggestions or responses from subordinates. Communication sets the employees in

individual jobs, regulates their flow of work, co-ordinates their efforts, and secures better and

higher work accomplishment. Management inaction comes into existence as a direct result ofcommunication. In the system of communication, managerial positions from various sources for

passing it on to relevant points.

Communication is broadly put into two categories-General Communication from one part of the

organization to its other parts and man-to-man, personnel communication between the superior

and the subordinate. General communication is carried on horizontally between chains ofcommand for securing co-ordination in operations and the flow of the communication can be

upward, downward or sidewise in the structure. Personal communication provides the basis for

action and co-operation in the enterprise and remains confined between persons within a chainof command. The flow of this communication is either upward or downward. Communication


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between managers of two parallel departments involves general communication in hi sense, not

personal communication as they do not come under the same chain of command.

Communication between persons implies both transmission and reception of a message. As a

vehicle for message, communication involves two minds and has a two-way effect in the courseof transmission. The sender of communication conveys something which may or may not be

properly understood, the receiver may either take the desired action or develop certain reactions

in response to such communication. Communication fails in those cases where the content is

misunderstood by the receiver and where some adverse response emanates from him. To makethe communication complete and effective, there should be clear understanding on the part of

the receiver without the growth of any unfavorable reactions in him. This two-pronged concept

of communication is vital for the successful operation of any enterprise. In communication withhis subordinates, the manager must study both their understanding and reaction. Without

considering responses or reactions of employees to the communication, the managerial task of

guiding and directing personnel remains unfulfilled.

Communication can be effected through several methods, such as spoken words, written workd,

physical expressions or significant gestures. The receiver may also indicate his understanding,acceptance and reaction through any one of the methods or through the maintenance of silence.

Whatever might be method adopted, there are four important steps in all communication. First,the communicator should have clear vision about the facts, opinions or information he wants to

convey. That is, he must get his ideas crystallized by thinking through the purport and purposeof the communication. Secondly, for making the communication understandable and acceptable

to the receiver, the wording, timing and manner of communication demand serious

considerations on the part of the communicator. Thirdly, actions and behaviour of thecommunicator should be consistent with his words. The old saying Actions speak louder than

words is self-explanatory. Accordingly, managers have to insure that their actions and

behaviour carry the see message as their words. Finally, to ascertain understanding andacceptance of the receiver, a follow-up to communication is to be arranged by the

communicator.

Importance of Communication

There are some importance of communication

1. Promotion of managerial efficiency. As management is a task of getting the week

accomplished through efforts of other personnel, it is communication that can deeppersonnel working in accordance with desires of managers. Management members deal

work personnel in giving orders and instructions, in allocating jobs and duties, in

approving work and recognizing performance, in explaining objectives and policies, and

in seeking their effective co-operation. In all positive it and negative actions, managershave to move with the help of communication in their dealing with human beings.

Accordingly, the efficiency of a manager lies in his ability to communicate with other

personnel.

2. Co-operation through understanding. Good communication induces human beings

to put efforts in their work performance. The importance of the work is required to bementally accepted before the doing of such work. That is, the will-to-do must precede

the actual doing. To provide this will-to-do, communication creates understanding and

acceptance on the part of employees. As there can be no faith in an activity withoutunderstanding it clearly, communication results in satisfactory performance through


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creating this faith. In short, effective communication increases understanding of

employees, gains their willing acceptance and leads them to greater efforts

3. Basic for leadership action. Leadership action is impossible without communication

between the leader and his followers. The leader can exert his influence only throughconveying ideas, feelings, suggestions and decisions to his followers. The followers too

can convey their responses, feelings, attitudes and problems to the leader through the

medium of communication. The two-way personal communication is essential for

maintaining man-to-man relationship in leadership Accordingly, effectiveness ofleadership is greatly determined by the adequacy and clarity of communication.

4. Means of co-ordination. Communication helps in securing desired co-ordination ofenterprise operations by communication network throughout the organization. As

teamwork is essential for the accomplishment of jobs in many cases, co-ordination,

appears to be of paramount importance. For the purpose of co-ordination, managerskeep the group fully informed of all facts and situations relating to the work. Secrecy

creates suspicion and separates people; common understanding of common problems

units them for showing a better record of their performance.

5. Provision of job satisfaction. Mutual trust and confidence between management andoperatives can be increased by the communication of what the manager wants and what

the employees perform. A clear-cut understanding provides job satisfaction toemployees, creates their confidence in the ability of managers and promotes their

loyalty towards the enterprise. That is to say, effective communication satisfies personal

and social needs of human beings and stimulates their job interest and enthusiasm.

Methods of Communication

There are three important methods of communication, viz., (a) verbal communication, (b)

written communication, and (c) gestural communication. Of them, gesticulation is often used as

a supplementary method of communication. A handshake, a pat on the back or other likemethod of encouragement is an attractive and powerful means of communications. A good

sense of humour may be worth a thousand words in obtaining employee acceptance of

communication.

Verbal communication is more effective than the written in conveying feelings and non-

standing problems. Moreover, opportunities are available for ascertaining immediate response,

calling further explanatio

principles of management gtu mba

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