2. Definition
Planning involves selecting enterprise objectives,
departmental goals, and programmes, and
determining the ways of reaching them. Planning,
thus, provides a rational approach to pre-selected
objectives.
- Koontz and O’Donnell
Planning is deciding in the present what to do in
future. It is the process whereby companies reconcile
their resources with their objectives and opportunities.
- Philip Kotler
3. Nature and Purpose of Planning
Planning decides the objectives, goals and course of
action in advance and the method of implementing and
achieving the plans. The nature of planning includes:
i. Primary planning
ii. Contributes to objectives
iii. Intellectual Activity
iv. Higher Efficiency (ratio between input and output)
v. Flexibility
vi. Consistency
4. Planning Process
Step-1: Analysing Business
Environment
In light of:
• The Market
• Competition
• What customers want
• Our strengths
• Our weaknesses
Step-2: Establishing Objectives
Where we want to be and what we want
to accomplish and when
Step-3: Setting Planning Premises
In what environment – internal or external
– will our plans operate?
Step-4: Identifying Alternatives
What are the most promising alternatives
to accomplishing our objectives?
Step-5: Evaluating Alternatives
Which alternative will give us the best
chance of meeting our goals at the lowest
cost and highest profit?
Step-6: Choosing an alternative
Selecting the course of action we will
pursue
Step-7: Formulating secondary
plans
Such as plans to:
• Buy equipment
• Buy materials
• Hire and train workers
• Develop a new product
Step-8: Quantifying plans by
making budgets
Developing such budgets as:
Volume and price of sales
Operating expenses necessary for plans
Expenditures for capital equipment
5. Alternative
s
(Colleges)
Brand Campus Placements Faculty Infra Convenienc
e
TOTAL
(30)
A 3 4 3 4 5 4 23
B 4.5 3 4 5 3 2 21.5
C 4 3 3 4 3 2 19
D 5 2 2 4 3 1 17
E 4 5 3 4 3 2 21
GOAL
MBA
Course
Alternatives
1 2 3 4 5
7. Mission or Purpose – The basic purpose or function or tasks of an
enterprise or agency or any part of it.
Objectives or Goals – The ends toward which activity is aimed.
Strategy – The determination of the basic long-term objectives of an
enterprise and the adoption of courses of action and allocation of resources
necessary to achieve these goals.
Policies – General statements or understandings that guide or channel
thinking in decision making.
Procedures – Plans that establish a required method of handling future
activities.
Rules – Spell out specific required actions or non actions, allowing no
discretion.
Program – A complex of goals, policies, procedures, rules, task
assignments, steps to be taken, resources to be employed, and other
elements necessary to carry out a given course of action.
Budget – A statement of expected results expressed in numerical terms.
8. Other Classification of Types of Plans
1. Strategic Plans
2. Tactical Plans
3. Operational Plans
4. Time Horizons of Plans
a. Long-range plans
b. Intermediate-range plans
c. Short-range plans
9. Strategic Plans
Strategic Plan is a comprehensive, unified and
integrated plan of the total organisation.
Strategic plans are formulated and implemented to
achieve strategies.
These plans are formulated by top level
management
These plans cover long-range of the time horizons.
Step 1
Identifying
/Definie
Business
Mission/p
urpose &
Obectives
Step 2
Environ
mental
Analysis
Step 3
Revise
Organis
ational
direction
Step 4
Alternative
Strategic
choice
Step 5
Strategy
impleme
ntation
Step 6
Strategic
Evaluation
& Control
Major Steps in Strategic Management Process
10. Long Range
Plans
Intermediate Range
Plans
Short Range Plans
Strategic Plans Tactical Operational Plans
Top-Level
Management
Medium-Level
Management
Lower-Level
Management
Time
Types
Time
Horizon
Types of Plans
Fig. Matrix of Types of Plans, Time Horizon and Management Levels
12. RELIANCE POWER
Mission
To attain global best practices and become a leading power generating
company.
To achieve excellence in project execution, quality, reliability, safety and
operational efficiency.
To relentlessly pursue new opportunities, capitalizing on synergies in the
power generation sector.
To consistently enhance our competitiveness and deliver profitable growth.
To practice highest standards of corporate governance and be a financially
sound company.
To be a responsible corporate citizen nurturing human values and concern
for society.
To improve the lives of local community in all our projects.
To be a partner in nation building and contribute towards India’s economic
growth.
To promote a work culture that fosters learning, individual growth, team spirit
and creativity to overcome challenges and attain goals.
To encourage ideas, talent and value systems and become the employer of
choice.
To earn the trust and confidence of all stakeholders, exceeding their
expectations.
13. BHEL
The major objectives of the company include
(a) improvement in quality and performance of BHEL's
products
(b) import substitution
(c) development of new products and processes
(d) exploring renewable energy sources
(e) development of life assessment and modernization
14. NMDC’s VISION, MISSION AND OBJECTIVES
VISION
To emerge as a global Environment friendly Mining Organization and also as a quality Steel
producer with a positive thrust on Social Development.
MISSION
To maintain its leadership as the largest iron ore producer in India, while establishing itself as a
quality steel producer and expanding business by acquiring and operating various iron ore,
coal and other mineral assets in India and abroad, rendering optimum satisfaction to all its
stake holders.
OBJECTIVES
Macro Objectives:
To expand the operations in the areas of Mining and Mineral Processing to meet the growing
demands from domestic and international Markets.
Achieve international standards in per capita productivity, value addition and cost
effectiveness.
To increase the iron ore production capacity to 67 MTPA by FY 2025.
Setting up of Steel Plant at Nagarnar.
Micro Objectives
Achieve growth by: (a) Expansion of existing m ines (b) Operating new mines fully owned by
NMDC or in Joint Venture
Give thrust to exploration and exploitation of iron ore and other strategic & critical minerals.
To maintain environment protection.
To conserve mineral resources through scientific mining.
To maintain high level of customer satisfaction.
To improve the quality of life of people in general and socio economic environment in and
15. DON’T SAVE WHAT IS LEFT AFTER SPENDING, SPEND
WHAT IS LEFT AFTER SAVING
---- Warren Buffet
SAVING= INCOME-EXPENDITURE
50,000 I= 50,000
Exp: 30,000 S= 20,000
____________ _______
20,000 Exp:
30,000
_____________
16. MANAGEMENT BY OBJECTIVES (MBO)
MOB is a strategic management model that aims to improve the
performance of an organization by clearly defining objectives that
are agreed to by both management and employees.
Peter Drucker (1955) first outlines the concept of MBO in his book
The Practice of Management
Management by objectives is directed towards achievement
of organizational and individual objectives
Employees get adequate and strong input
Synchronizing goals and subordinates objectives
Tracks Performance
Enhances organizational performance
17. Cascading of organizational goals and objectives
Specific objectives driven
Participate decision-making process
Performance evaluation and feedback
Explicit time period deadlines
MBO
Salient features of MBO
19. DECISION MAKING
Types of Decision
Decision Making Process
Rational Decision Making Process
Decision Making under different
conditions
20. Meaning
Process of choosing the best from
among the alternative solutions under
a given set of circumstances.
21. Types of Decisions
1. Strategic and Operational
2. Major and Minor
3. Programmed and Non-Programmed
4. Simple and Complex
5. Long-run and Short-run
6. Individual and Group decisions
22. Decision-Making Process
Identify and define the problem
Identification of Decision Criteria
Allocation of weights to criteria
Development of Alternatives
Analysis of Alternatives
Selection of an Alternative
Implementation of the Alternative
Evaluation of Decision Effectiveness
23. Rational Decision Making
Process
Rationality
Concept of ‘Rationality’ is defined in terms of
objectives and intelligent actions.
Must have clear understanding of
Alternative courses
Must have a desire to come to the best
solution by selecting alternatives.
24. A decision is rational if it satisfied the following conditions:
1. When decision making focuses on objectives of organisation, not
on personal needs.
2. When decision making is free from personal characteristics of the
decision-maker.
3. When decision making is based on factual information.
4. When all alternatives and their consequences are known.
5. When situation is assumed to be stable or normal.
6. When decision-maker has enough freedom, he is free from
interference of superiors.
7. When decision-making remains same despite the decision-maker
being changed.
25. DECISION MAKING UNDER DIFFERENT CONDITIONS
Decision Making under:
1. Certainty
2. Uncertainty
3. Risk
26. Decision Making under Certainty
People are reasonably sure about what will happen when
they make a decision.
Information is available and considered to be reliable.
Cause and affect relationship are known.
27. Decision Making under Uncertainty
People have only a meagre database, they do not
know whether or not the data are reliable.
Unsure about whether or not the situation may
change.
Can’t evaluate the interactions of the different
variables.
28. Decision Making under Risk
Factual information may exist, but it may be
incomplete.
To improve decision making, one may estimate the
objective probability of an outcome by using
mathematical models or judgement and experience,
29. ORGANIZATION
A formalized intentional structure of roles or
positions.
Formal Organization
The intentional structure of roles in a formally
organized enterprise.
Informal Organization
A network of interpersonal relationships that arise
when people associate with each other.
30. Organization structures
1. Entrepreneurial structure
2. Functional organisation structure
3. Product organisation structure
4. Geographical organisation structure
5. Decentralised business units
6. Strategic business units
7. Matrix organisation structure
8. Team structure
9. Virtual structure
32. Managerial Implications-
•Simple
•Timely decision-making
•Sensitive to environmental demands
•Operational flexibility
Limitations-
•Results in excessive depending on owner-manager, who
normally is not a professional manner.
•Can’t respond to increasing demand beyond a certain point.
Suitability-
•Catering to the needs of a local market by being small
33. 2. FUNCTIONAL ORGANISATION STRUCTURE
This structure is based on functions of business firm i.e. marketing, finance &
accounting, HR, Manufacturing, R&D and Engineeering
MD
GM
Chief
Production
Manager
Chief
Marketing
Manager
Chief
Finance
Manager
Chief
R&D
Manager
Manager
Production
Manager
Engineerin
g
Manager
Quality
Control
Manager
Employ
ment
Manager
T&D
Manager
Salary
Administ
ration
Manager
IR
Laboratory
Research
New Product Development
34. Advantages-
Effective in single business firms
Enhance operating efficiency & development of core competencies
Promotes maximum utilisaton of up-to-date technical skills
Promotes common values and goals among employees of department
Disadvantages-
Horizontal diversification of business reduces the efficiency
Dept members may see activities from narrow viewpoint (results in
absence of interdepartmental co-ordination and co-operation)
Interdepartmental policies result in conflicts
Narrow specialisations kill the initiative of entrepreneurs & zeal of
innovativeness and creativeness
36. Advantages-
Appropriate for firms producing multiple products
Co-ordination among functional areas are performed
Each dept is independent, most decisions can be made at
dept level without involving top mgt.
Responsibility and accountability for market share, sales, P&L
is clearly fixed
Disadvantages-
Unnecessary duplication of equipment and personnel among
various depts, results in loss of specialisation
Each dept will have functional areas, as such specialised
personnel and equipment cannot be procured
Some decisions like pay, promotion, pdt quality, design and
pricing strategy may be inconsistent between depts
Interdepartmental conflicts arise reg sharing of common
resources, allocation of expenditure etc.
39. STRATEGIC BUSINESS UNIT STRUCTURE
MD
GM
Strategically
Related
Business Units
Corporate Level Managers
Group Manager
SBU I
Group Manager
SBU II
Group
Manager
SBU III
Strategically
Related
Business Units
Strategically
Related
Business Units
40. MATRIX ORGANISATION STRUCTURE
Project C
Manager
HRs
Specialists
Finance
Specialists
Production
Specialists
Marketing
Specialists
R&D
Specialists
Project B
Manager
HRs
Specialists
Finance
Specialists
Production
Specialists
Marketing
Specialists
R&D
Specialists
Project A
Manager
HRs
Specialists
Finance
Specialists
Production
Specialists
Marketing
Specialists
R&D
Specialists
Manager
HRs
Manager
Finance
Manager
Production
Manager
Marketing
Manager
R&D
MD
GM
41. TEAM ORGANISATION STRUCTURE
1. Project Team- to handle special activities
1. Taskforce Team – consists of top level executives
and specialists
1. Venture team – group of individuals to bring
specific product or business into being.
44. Meaning
Delegation is the process of giving
authority to a subordinate in order to
perform the assigned activities by a
superior.
45. Nature
It gives direction to a manager in
performing his duties.
It has dual characteristics (though the
authority is delegated, it is still retained
with the superior).
Manager cannot delegate authority which
he does not possess.
It may be specific or general
It is an art rather than a science
46. Principles of Delegation
(i) Delegation of Results expected
(ii) Co-equal Authority and
Responsibility
(iii) Absoluteness of Responsibility
(iv) Creation of Accountability
(v) Unity of command
(vi) Limits of Authority
47. Benefits
Relieves the Managers from routine
work
Helps the managers to concentrate on
policy issues
Basis for effective functions
Effective and timely decisions
Empowers and develops subordinates
Satisfaction of subordinates
48. Barriers
Fear of loss of power
Avoidance of risk
Lack of confidence
Autocratic style
Fear of misuse of authority
Overconfidence of subordinates
50. Advantages of Centralisation
Facilitates personal supervision
Provides personal leadership
Promotes integration and co-
ordination
Promotes uniform action
To handle emergent situation
51. Disadvantages of
Centralisation
Delay in Communication
Delay in Decision-making
Fail to pay proper attention on policy
issues
Under utlisation of organisational
human resources
Employee dissatisfaction
52. Decentralisation
System effort to delegate to the lowest
levels all authority except that which
can only be exercised at central
points.
53. Factors determining degree of decentralisation
Cost pertaining to the decision
Desire for uniformity of policy
Size of the organisation
No. of levels in the organisation structure
History of the enterprise
Philosophy of the management
Decision for independence
Availability of managers with skill, knowledge and ability
Availability and use of control techniques
Need for decentralised performance in different geographical areas
Business dynamics and the need for adaptability to the situation
54. Benefits of Decentralisation
Effective communication
Reduces red-tapism
Fast decision making
Enhances employee job satisfaction
Executive development
Competitive advantage
55. LINE AND STAFF ORGANISATION
The relationships with which the managers in an organisation
deal with one another are broadly classified into two
categories i.e. Line and Staff.
Line and Staff are characterised by relationships but not by
department.
Line Relationship:
Relationship due to command is called line.
Staff Relationship:
Relationship due to offer of advice, suggestions etc. is called
staff relationship.
56. Marketing
Manager
Manager, Human
Resources
Manager
Finance
Manager
Production
Manager, R&D
Officers
Deputy Manager
Finance
Deputy Manager
Marketing
Officers
Salesmen Assistants
Assistants
Officers
Officers
Deputy Manager,
Human
Resources
Deputy Manager
R&D
Workforce
Officers
Deputy Manager
Production
Assistants
General
Manager
Managing
Director
Fig. Line and Staff Relationship in an organisation
Note: “_______” denotes line relationship “----------” denotes staff relationship
