Principles of Management Lec-2


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Principles of Management Lec-2

  1. 1. The Nature and Purpose of Planning
  2. 2. <ul><li>Plans are nothing planning is every thing </li></ul>
  3. 3. Planning Definition : Planning is the design of a desired future and of effective ways of bringing it about. ____________________ Planning is looking ahead in order to visualize and decide a future course of action to allow to achieve a desired goal.
  4. 4. Purposes of Planning <ul><li>In business (and in life ) things are so complex that without proper planning they can not be handled. </li></ul><ul><li>It is a pre- requisite not only to achieve success but even to survive in a complex and competitive world. </li></ul><ul><li>It helps in determining opportunities </li></ul><ul><li>It helps in identification of courses of action. </li></ul><ul><li>It helps in proper utilization of resources effectively. </li></ul><ul><li>It helps in working in an organized manner. </li></ul>
  5. 5. Nature of Planning 1. Planning is the most important function of management. 2. Planning has central role in linking all other managerial functions. 3. Planning is pervasive and oversees all other managerial functions.
  6. 6. Functions of Managers <ul><li>Planning </li></ul><ul><li>Staffing </li></ul><ul><li>Organizing </li></ul><ul><li>Leading </li></ul><ul><li>Controlling </li></ul>
  7. 7. Managerial Skills <ul><li>Human </li></ul><ul><li>Conceptual </li></ul><ul><li>Design </li></ul><ul><li>Technical </li></ul><ul><li>All functions and skills are linked to planning function. </li></ul>
  8. 8. Benefits of Planning <ul><li>Planning leads to success. </li></ul><ul><li>It acts as a bridge between where we are and where we want to be. </li></ul><ul><li>It helps in saving resources, money and time. </li></ul><ul><li>Jobs are well coordinated thus duplication of effort is avoided and skills and potentials are fully utilized. </li></ul>
  9. 9. Myths about Planning <ul><li>Planning that proves inaccurate is a waste of management time. </li></ul><ul><li>Planning can eliminate change. </li></ul><ul><li>Planning reduces flexibility. </li></ul>
  10. 10. Plan <ul><li>Is a pre-determined course of action . </li></ul><ul><li>It brings orderliness. </li></ul><ul><li>Avoids confusion. </li></ul><ul><li>Gives better use of resources. </li></ul><ul><li>Cuts waste. </li></ul><ul><li>Plans are changed or modified but not abandoned. </li></ul>
  11. 11. Effectiveness: is the achievement of objective. Efficiency: Is the achievement of objective with least amount of resources.
  12. 12. Effectiveness of Plans <ul><li>Effectiveness of plan pertains to the degree to which it achieves its objectives. </li></ul>
  13. 13. Efficiency of Plans <ul><li>Efficiency of plan refers to its attainment of objective at a reasonable cost. </li></ul>
  14. 14. Types of Plans <ul><li>Single use or one time plans </li></ul><ul><li>Standing Plans </li></ul><ul><li>Specific Plans </li></ul><ul><li>Subject Plans </li></ul><ul><li>Directional Plans </li></ul><ul><li>Short Term Plans </li></ul><ul><li>Long Term Plans </li></ul><ul><li>Operational Plans </li></ul><ul><li>Strategic Plans </li></ul>
  15. 15. Single Use or One Time Plan It is specifically designed to meet the needs of a unique situation and is created in response to non-programmed decisions that managers make.
  16. 16. Standing Plans Ongoing plans that provide guidance for activities repeatedly performed and are created in response to programmed decisions that managers make.
  17. 17. Non-Programmed Decision Unique decisions that require a custom-made solution.
  18. 18. Programmed Decision A repetitive decision that can be handled by a routine approach.
  19. 19. Specific Plans These plans are clearly defined and explicit and leave no room for interpretation.
  20. 20. Subject Plans These plans are limited to one particular aspect of an organization’s activates. eg. Marketing Production Recruitment Financial Manpower etc
  21. 21. Directional Plans These are flexible plans that set out general guide lines and permit considerable discretion to users.
  22. 22. Short Term Plans Plans that are formulated to cover a period of less than one year.
  23. 23. Long–Term Plans Plans that are formulated to extend upto beyond five years.
  24. 24. Operational Plans Plans that specify details on how overall objectives are to be achieved.
  25. 25. Strategic plans These plans are organization–wide, establish overall objectives and position an organization in term of its environments.
  26. 26. Cornerstone of Planning <ul><li>Objectives </li></ul><ul><li>Goals </li></ul><ul><li>Multiplicity of objectives </li></ul><ul><ul><li>Stated objectives </li></ul></ul><ul><ul><li>Real objectives </li></ul></ul><ul><li>Traditional objective setting </li></ul>
  27. 27. Objective It is a desired outcome for groups or an entire organization. Goal It is a desired out come for an individual.
  28. 28. Stated Objectives <ul><li>Official statements of what an organization says and what it wants public to believe. </li></ul>
  29. 29. Real Objectives Objectives that an organization actually pursues, as defined by the action of its Management.
  30. 30. Traditional Objective Setting Objectives are set at the top and then broken down into sub-objectives for each level in an organization. The top imposes its standards on every one below.
  31. 31. Principle of Planning The more thoroughly individuals charged with planning understand and agree to utilize consistent planning premises the more coordinated and realistic planning will be.
  32. 32. Components of Plans Mission Objectives Premises Policies Procedures Rules Budgets
  33. 33. Mission The purpose of an organization is called its mission.
  34. 34. Policies Guidelines that establish parameters for making decisions.
  35. 35. Premises This is the anticipated environment in which plans are expected to operate and include forecasts of the future and conditions that are likely to affect the operation in future.
  36. 36. Procedures A series of interrelated sequential steps that can be used to respond to a structured problem.
  37. 37. Rules Explicit statements that tells managers what they ought or ought not to do.
  38. 38. Structured problem It is a straightforward, familiar and easily defined problem. Non Structured problem A new problem for which information is ambiguous or incomplete.
  39. 39. Budget A budget is a numerical plan for allocating resources to specific activities. A budget is a statement of expected results expressed in numerical terms.
  40. 40. Types of Budget Revenue: A budget that projects future sales Expense: A budget that lists the primary activities by a unit and allocates amount to each Profit: A budget to determine a unit’s contribution to overall profit of an organization
  41. 41. Cash: A budget that forecasts how much an organization will have and how much it will need to meet expenses Capital Expenditure: A budget that forecasts investments in property, buildings and major equipment. Fixed: A budget that assumes a fixed level of sales or production. Variable: A budget that takes into account those cost that vary with volume of production.
  42. 42. Approaches to Budgeting <ul><li>Incremental (or traditional) </li></ul><ul><li>A budget that allocates funds to various activities according to allocations in the pervious period (and adjusted to cater for inflation etc) </li></ul><ul><li>Zero-base </li></ul><ul><li>A system in which budget requests start form scratch regardless of pervious budgetary allocations. </li></ul>
  43. 43. Steps in Planning <ul><li>Pre-requisite : Awareness of opportunities </li></ul><ul><li>1st: Establishing Objectives </li></ul><ul><li>2nd: Developing Premises </li></ul><ul><li>3rd: Determining Alternative Courses </li></ul><ul><li>4th: Evaluating </li></ul><ul><li>5th: Selecting Best Course </li></ul><ul><li>Post-requisite </li></ul><ul><ul><ul><ul><ul><li>Derivative or Supportive Plans </li></ul></ul></ul></ul></ul>
  44. 44. Awareness of Opportunities <ul><li>Not strictly a step in planning process. But it is a real starting point. </li></ul><ul><li>Managers must look at possible opportunities in the light of their organization's strengths and weaknesses </li></ul><ul><li>Must also look at future environment both external and internal. </li></ul><ul><li>Setting realistic objectives depends on this awareness. </li></ul>
  45. 45. 1 st Step: Establishing Objectives <ul><li>Selecting objectives for the entire organization. </li></ul><ul><li>Based on organizational objectives, establishing objectives for each subordinate work unit. </li></ul><ul><li>Organizational objectives give direction to the major plans, which define objectives for every major department. </li></ul><ul><li>Major departmental objectives control objectives of subordinate departments. </li></ul>
  46. 46. 2 nd Step: Developing Premises <ul><li>Developing premises is critical to planning. These include: </li></ul><ul><li>. Forecasts </li></ul><ul><li>. Basic Policies </li></ul><ul><li>. Existing Plans </li></ul><ul><li>. Anticipated Environment </li></ul>
  47. 47. 3 rd Step: Determining Alternative Courses <ul><ul><li>There is seldom a plan for which reasonable alternatives do not exist. </li></ul></ul><ul><ul><li>Common problem is not finding alternatives but reducing their numbers. </li></ul></ul><ul><ul><li>Most fruitful possibilities must be looked at. </li></ul></ul>
  48. 48. 4 th Step: Evaluating Alternative Courses <ul><ul><li>Evaluate courses by examining their strong and weak points. </li></ul></ul><ul><ul><li>Weigh them in the light of premises and objectives. </li></ul></ul><ul><ul><li>Complex courses can be evaluated with the help of operational research, mathematical and computing techniques. </li></ul></ul>
  49. 49. Evaluating Alternative Courses <ul><li>Establishing criteria </li></ul><ul><li>SFA test </li></ul>
  50. 50. 5 th Step: Selecting the Best Course <ul><ul><li>Selecting the best course is the real point of decision making. </li></ul></ul><ul><ul><li>. By establishing criteria, eg </li></ul></ul><ul><ul><li>Achieving objectives at least cost </li></ul></ul><ul><ul><li>Requiring least changes </li></ul></ul><ul><ul><li>Ensuring maximum return on investment </li></ul></ul><ul><ul><li>. SFA Test </li></ul></ul>