This presentation discusses about policies and planning premises in Principles of Management

1. POLICIES AND PLANNING
PREMISES
R.ArunKumar,AP/Mech,RIT

2. DEFINITION:
 Policy is a general guideline for decision making.
 According to Koontz and Weihrich, “Policies are general
statements of understandings which guides or channelize
thinking in decision making or subordinates.
R.ArunKumar,AP/Mech,RIT

3.  Policies deal with ‘How to do’ but it do not dictate terms to
subordinates.
 Policy is only a framework within which decisions must be
made.
R.ArunKumar,AP/Mech,RIT

4. NATURE OF POLICY:
1. Relationship to organization’s objectives:
 Policies are based on the objectives and they contribute towards
the attainment of objectives.
R.ArunKumar,AP/Mech,RIT

5. NATURE OF POLICY:
2. Clarity of policy:
 Policies are clear, definite and explicit leaving no room for
interpretation.
R.ArunKumar,AP/Mech,RIT

6. NATURE OF POLICY:
3. Guideline towards decision making:
 Prescribes the criteria for current and future actions.
R.ArunKumar,AP/Mech,RIT

7. NATURE OF POLICY:
4. Policies are written:
 Policies are stared with precise covering of all anticipated
conditions.
R.ArunKumar,AP/Mech,RIT

8. NATURE OF POLICY:
5. Consistency:
 Provides steadiness in various operations of an organization.
R.ArunKumar,AP/Mech,RIT

9. NATURE OF POLICY:
6. Balance of policy:
 Should maintain balance between stability and flexibility.
R.ArunKumar,AP/Mech,RIT

10. NEEDS FOR POLICY:
 Operationalize objectives.
 Save time and effort.
 Facilitate delegation of authority.
 Speedup decision making.
 Control administration.
R.ArunKumar,AP/Mech,RIT

11. POLICY FORMULATION PROCESS:
1. Definition of policy
2. Creation of policy alternatives
3. Evaluation of policy alternatives
4. Choice of policy
5. Communication of policy
6. Implementation of policy
7. Review of policy
R.ArunKumar,AP/Mech,RIT

12. TYPES OF POLICIES:
Classification on the basis of sources:
1. Originated or Formulated policies:
 Originated by top level managers, flows down the level of the
management.
 Acts as a guidelines for lower level units to formulate their own
unit policies.
R.ArunKumar,AP/Mech,RIT

13. TYPES OF POLICIES:
Classification on the basis of sources:
2. Appealed policies:
 Policies formulated on the request or appeal of lower level
managers.
R.ArunKumar,AP/Mech,RIT

14. TYPES OF POLICIES:
Classification on the basis of sources:
3. Implied policies:
 Sometimes policies are not clearly stated and the actions of top
level managers provides guidelines for actions at the lower levels.
R.ArunKumar,AP/Mech,RIT

15. TYPES OF POLICIES:
Classification on the basis of sources:
4. Externally imposed policies:
 Policies that are imposed by some external forces such as unions,
government, association, etc.
R.ArunKumar,AP/Mech,RIT

16. TYPES OF POLICIES:
Classification on the basis of functions:
 Production policy
 Sales policy
 Financial policy
 Personnel policy, etc.
R.ArunKumar,AP/Mech,RIT

17. TYPES OF POLICIES:
Classification on the basis of organization levels:
 Company policy
 Department policy
 Derivative policy
R.ArunKumar,AP/Mech,RIT

18. Advantages:
 Ensures uniformity in actions.
 Speeds up decision at lower levels.
 Delegation of Authority or work becomes easier.
 Gives practical shape to the objectives by elaborating and
directing the way in which the predetermined objectives are to be
attained.
R.ArunKumar,AP/Mech,RIT

19. PLANNING PREMISES:
 Usually plans are prepared for future, which are uncertain. Thus
the management makes certain assumptions about the future.
R.ArunKumar,AP/Mech,RIT

20. DEFINITION:
 According to Koontz and Weihrich, Planning premises are the
anticipated environment in which plans are expected to
operate.
 According to Dr.G.R.Terry, Planning premises are the
assumptions providing a background against which the
estimated events affecting the planning will take place.
R.ArunKumar,AP/Mech,RIT

21. IMPORTANCE:
 Well organized planning can be done.
 Risk of uncertainty reduces.
 Risk of flexibility reduces.
 Co-ordination becomes effective.
 Increases in profitability.
R.ArunKumar,AP/Mech,RIT

22. CLASSIFICATION:
1. Internal and External:
 Internal are assumptions considered within an organization.
e.g.: Man power, Resource availability, Capacity of a plant.
 External are assumptions considered outside an organization.
e.g.: Business environment, Demand in market, Technological
advancement
R.ArunKumar,AP/Mech,RIT

23. CLASSIFICATION:
2. Tangible and Intangible premises:
 Tangible are the assumptions that deals with numbers.
e.g.: Working hour, Monetary unit.
 Intangible are the assumptions that can’t be measured.
e.g.: Employee welfare, Motivation.
R.ArunKumar,AP/Mech,RIT

24. CLASSIFICATION:
3. Controllable and uncontrollable:
 Assumptions that are completely under control.
e.g.: Procedures, Organization structure.
 Assumptions that can’t be controlled by an organization.
e.g.: Population growth, Taxation policy of government.
R.ArunKumar,AP/Mech,RIT

25. Premises about raw materials:
 What type of material and quantity?
 What will be the price of raw material?
 Availability of raw material resource and transportation cost.
 Is there any possibility to prepare required raw material in the
company?
 If raw material is going to be purchased , should it be imported or
indigenously acquired?
R.ArunKumar,AP/Mech,RIT

26. Premises about personnel:
 How much skilled , unskilled , male, female, workmen, are needed
for implementation of a plan?
 How much training should be imparted in the context of new
technological development ?
 To make an estimate regarding present and future employees.
R.ArunKumar,AP/Mech,RIT

27. Premises about organization:
 What will be the structure of the organization?
 Coordination among departments.
 Whether to centralize or decentralize the authority?
R.ArunKumar,AP/Mech,RIT

28. Premises about basic policies:
 Whether to give importance to quality or low price?
 Premises about automation of office.
 Premises for capital.
 The methods of directing to be followed .
 Policies and rules of employment.
R.ArunKumar,AP/Mech,RIT