Pom unit-ii, Principles of Management notes BBA I Semester OU

PRINCIPLES OF
MANAGEMENT
UNIT-2
PRESENTED BY
K.BALASRI PRASAD
B.Sc(KU), M.B.A(OU), NET(UGC), (Ph.D)(MGU)

UNIT II
Planning – Importance,
objectives, process, policies
and procedures, types of
planning, Decision making -
Process of decision making,
Types of decision,
Problems involved in

What Is Planning?
Planning
Involves defining the organization’s
goals, establishing an overall strategy,
and developing a comprehensive set of
plans to integrate and coordinate
organizational work
informal planning - nothing is written
down
little or no sharing of goals
general and lacking in continuity
formal planning - written

Reduce the
Impact of
Change
Provide
Direction
Minimize
Waste /
Redundancy
Set Control
Standards
Reasons
for Planning
Growing
complexities
Growth of
trade union
Rapid socio-
Economic
changes
Need for
R&D activity

Benefits of Planning
 Allows decisions to be made ahead of time.
 Permits anticipation of consequences.
 Provides direction and a sense of purpose.
 Provides a unifying framework; avoiding
piecemeal decision making.
 Improves competitive strength
 Achieves better coordination
 Helps identify threats and opportunities and
reduces risks.
 Facilitates managerial control through the
setting of standards for monitoring and
measuring performance.

Why Do Managers Plan?
/ Importance of planning
 Purposes of Planning
Planning is the primary management function
that establishes the basis for all other
management functions
Planning establishes coordinated effort
Planning reduces uncertainty
Planning reduces overlapping and wasteful
activities
Manage complexities & competition
Planning establishes goals and
standards used in controlling

Features/ nature of planning
 Planning is an intellectual process
 Planning determines the future course of
action
 Involves selection of suitable course of
action, means there are several alternatives
for achieving objectives
 All levels are concerned with the
determination of future course of action.
 Planning is the most basic to all
management functions
 Planning is pervasive function of
management

Steps in Planning
1. Being Aware of Opportunities
2. Establishing Objectives or Goals
3. Developing Premises
4: Identify / Determining Alternative
Courses
5. Evaluating Alternative Courses
6. Selecting a Course
7. Formulating Derivative Plans
8. Quantifying Plans by Budgeting

STEPS IN PLANNING
 Being aware of opportunity :In light of Market, Competition
Customer desire, Our strengths Our weaknesses
 Setting objectives or goals: Where we want to be& what we
want to accomplish & when
 Considering planning premises: In what environment will our
plans operate
 Identifying alternatives: What are the most promising
alternatives to accomplishing our objectives
 Comparing alternatives in light of goals sought Which
alternative meets our goals at lowest cost &at highest profit
 Choosing an alternative Selecting the course of action
 Formulating derivative plans such plans as to :- Buy
equipment Buy materials, Hire& train workers,
 Budgets: Develop such budgets as Volume & price of sales,
operating expenses necessary for plans, Capital expenditure

Types Of Plans
Breadth
Strategic
Operational
Specificity
Directional
Specific
Frequency of
Use
Single use
Time Frame
Long term
Short term

Types Of Plans
Types of Plans based on Breadth
Strategic plans - Apply to the entire
organization
establish organization’s overall goals
seek to position the organization in
terms of its environment
Operational plans - Specify the
details of how the overall goals are to
be achieved
tend to cover short time periods© Prentice Hall, 2002

Types Of Plans
Types of Plans based on Time
 long-term plans - time frame beyond three years
 short-term plans - cover one year or less
Types of Plans based on Specification
 Specific plans - clearly defined with little room
for interpretation
 required clarity and predictability often do not
exist
 Directional plans - flexible plans that set out
general guidelines
 provide focus without limiting courses of action

Types Of Plans
Types of Plans based on
frequency of use
Single-use plans - One-time plans
specifically designed to meet the
needs of a unique situation
Standing plans - Ongoing plans that
provide guidance for activities
performed repeatedly
include policies, procedures, and
rules 7-14

Managerial Decision Making
 Decision making: the process by which
managers respond to opportunities and threats
by analyzing options, and making decisions
about goals and courses of action.
 Decisions in response to opportunities:
managers respond to ways to improve
organizational performance.
 Decisions in response to threats: occurs when
managers are impacted by adverse events to the
organization.

Types of Decision Making
 Programmed Decisions: routine, almost automatic
process.
 Managers have made decision many times before.
 There are rules or guidelines to follow.
 Example: Deciding to reorder office supplies.
 Non-programmed Decisions: unusual situations that
have not been often addressed.
 No rules to follow since the decision is new.
 These decisions are made based on information,
and a manger’s intuition, and judgment.
 Example: Should the firm invest in a new
technology?

The Classical Model
Classical model of decision making: a
prescriptive model that tells how the decision
should be made.
Assumes managers have access to all the
information needed to reach a decision.
Managers can then make the optimum
decision by easily ranking their own
preferences among alternatives.
Unfortunately, mangers often do not have all
(or even most) required information.

The Classical Model
Rank each alternative
from low to high
Select best
alternative
List alternatives
& consequences
Assumes all information
is available to manager
Assumes manager can
process information
Assumes manager knows
the best future course of
the organization

The Administrative Model
 Administrative Model of decision making:
Challenges the classical assumptions that managers
have and process all the information.
 As a result, decision making is risky.
Bounded rationality: There is a large number of
alternatives and information is vast so that
managers cannot consider it all.
 Decisions are limited by people’s cognitive
abilities.
Incomplete information: Most managers do not
see all alternatives and decide based on

Why Information is Incomplete
Uncertainty
& risk
Ambiguous
Information
Time constraints &
information costs
Incomplete
Information

Decision Making Steps
Recognize need for
a decision
Frame the problem
Generate & assess
alternatives
Choose among alternatives
Implement chosen
alternative
Learn from feedback

1. Recognize need for a decision:
Managers must first realize the
need for which a decision must
be made.

Recognize need for
a decision
Frame the problem
Generate & assess
alternatives
Implement chosen
alternative
Learn from feedback

2. Frame the problem: managers
must frame problem for which
decision is to be made.

Recognize need
for
a decision
Frame the problem
Generate & assess
alternatives
Implement chosen
alternative
Learn from feedback

3. Generate alternatives: managers must develop feasible
alternative courses of action.
 If good alternatives are missed, the resulting
decision is poor.
 It is hard to develop creative alternatives, so
managers need to look for new ideas.
Evaluate alternatives: what are the advantages and
disadvantages of each alternative?
 Managers should specify criteria, then evaluate.

4. Choose among alternatives:
managers rank alternatives and
decide.
While ranking, all information
needs to be considered.

5. Implement chosen alternative:
Managers must now carry out the
alternative.
Often a decision is made and not
implemented.

6. Learn from feedback: managers should
consider what went right and wrong with the
decision and learn for the future.
 Without feedback, managers never learn from
experience and might repeat the same mistake.

Pom unit-ii, Principles of Management notes BBA I Semester OU

Pom unit-ii, Principles of Management notes BBA I Semester OU

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