3. What is Management?
All managers work in organizations
Organizations – collections of
people who work together and
coordinate their actions to achieve a
wide variety of goals
4. 1.0 The Management Process
Resources
Human
Planning
Financial
Physical
Informational
Management Functions
Goal
Organizing Directing
Controlling
Achievements
5. Question?
Person responsible for supervising the use
of an organization’s resources to meet
its goals?
A. Team leader
B. Manager
C. President
D. Resource allocator
6. Managers
Managers –
The people responsible for supervising the use of an
organization’s resources to meet its goals
7. What is Management?
The planning, organizing, leading, and
controlling of human and other
resources to achieve organizational
goals effectively and efficiently
8. What is Management?
Resources include people, skills,
know-how and experience,
machinery, raw materials,
computers and IT, patents, financial
capital, and loyal customers and
employees
10. DEFINITIONS:
• F.W. Taylor - “Art of knowing what you want to do
and then seeing that it is done the best and cheapest
way”.
• Henry Fayol – “To Manage is to forecast, to plan, to
organize, to command, to co-ordinate and to
control”.
• Peter F.Drucker –”Management is work and as such
it has its own skills, its own tools and its own
techniques”.
• “Management is the art of getting things done
through and with people”.
11. The Universalism of
Management
Across Organizations of Different Size and Types
Business
Governmental Educational
Agencies
Institutions
Across Organizational Levels
Social
Services
Health Care
Delivery
Across Functional Areas
Top
Management
Middle
Management
Lower
Management
Production arketing Finance Personnel
M
13. MANAGEMENT AS SCIENCE OR ART:
Management is the art of getting
things done through others
MANAGEMENT AS A SCIENCE
PROVIDES PRINCIPLES AND AS AN
ART HELPS IN TACKLING
SITUATIONS.
14. •
•
•
•
•
•
Art
Practical know how
Technical skills
Concrete results
Creativity
Personalized nature
•
•
•
•
•
•
Science
Empirically Derived
Critically tested
General principles
Cause and effect relationship
Universal applicability
15. MANAGEMENT AS A PROFESSION ??
• Existence of an organized and systematic body of
knowledge,
• Formalized methods of acquiring knowledge and skills,
• Existence of an apex level body with
Professionalization as its goal,
• Existence of an ethical code to regulate the behavior of
the members of the profession,
• Charging of fees based on service and
16. A close scrutiny of management as a
profession reveals that it has a long
way to go to have a universal
acceptance of management as a
profession. Unlike other profession
such as medicine, law etc., the practice
of management is not restricted to
individuals with a special degree.
21. DIFFERENT ROLES OF A
MANAGER
INTERPERSONAL ROLES
INFORMATIONAL ROLES
DECISION ROLES
22. Interpersonal Roles:
1. The figurehead role (performing ceremonial/social duties
as
the organization’s chief)
2. The leader role
3. The liaison role (particularly communicating with the
outsiders)
Informational Roles:
1. The recipient role (receiving information about the
organization)
2. The disseminator role (passing information to
subordinates)
3. The spokesperson role (transmitting information to those
outside)
Decision Roles:
1. The entrepreneurial role
2. The disturbance-handler role
3. The resource allocator role
23. Levels of Management
Board of Directors
Managing Director
TOP
MANAGEME
NT
Executive Directors
MIDDLE
MGT
Marketing Manager
Finance Manager
Personnel Manager
Branch Manager
Chief Accountant
Labor Officers
Sale Officers
Finance Officers
LOWER MGT
24. FUNCTIONS OF TOP activities of the
LEVEL
1. To provide a basic sense of direction to the
company by setting its MANAGEMENTtranslating into clear
long range mission and
set of objectives
2. To design the organization structure of the company in terms of
differentiated and integrated activities, role of various positions,
authority & responsibility between them.
3. Top management must ensure the quality of personnel in terms
of their skills, orientations and commitment
4. To ensure that the resource conversion and exchange systems
are
designed and operated efficiently.
5. Periodic review of objectives for necessary modifications is a
part of this function
25. FUNCTIONS OF MIDDLE LEVEL
MANAGEMENT
To interpret and explain the plans and
policies formulated by top management
To monitor & control the operating
performance
To cooperate among themselves so as to
integrate the various activities of a
department
To train, motivate and develop supervisory
personnel; and
To lay down rules & regulations to be
followed by supervisory personnel.
26. FUNCTIONS OF LOWER LEVEL
MANAGEMENT
1. To plan day to day production within the goal laid
down by higher authorities
2. To assign jobs to workers and to make arrangements
for their training and development
3. To issue orders & instructions
4. To supervise & control workers’ operations and to
maintain personal contact with them
5. To arrange materials and tools and to maintain
machinery
6. To advise & assist workers by explaining work
procedures, solving their problems etc.
7. To maintain discipline and good human relations
among workers
8. To report feedback information and workers’
problems to the higher authorities.
27. FUNCTIONS OF MANAGEMENT
PLANNING:
Plans give the org its objectives and set up the best procedures for
reaching them.
ORGANISING:
It is the process of arranging and allocating work, authority and
resources among organization’s members so they can achieve the
org’s goals.
LEADING:
It involves directing, influencing, and motivating employees to perform
essential tasks.
CONTROLLING:
There are three main elements of controlling:
1. establishing standard of performance
2. measuring current performance
3. Comparing these performance to the established standards
4. taking corrective action
28. Organizational Performance
Efficiency
A measure of how well or how
productively resources are used to
achieve a goal
Effectiveness
A measure of the appropriateness of
the goals an organization is pursuing
and the degree to which they are
achieved.
31. Areas of Managers
Department
A group of managers and employees
who work together and possess
similar skills
or use the same
knowledge, tools,
or techniques
32. Levels of Management
• First line managers - Responsible for
daily supervision of the non-managerial
employees who perform many of the
specific activities necessary to produce
goods and services
• Middle managers - Supervise first-line
managers. Responsible for finding the
best way to organize human and other
resources to achieve organizational goals
33. Levels of Management
• Top managers –
Responsible for the performance of all
departments and have crossdepartmental responsibility.
Establish organizational goals and
monitor middle managers
Decide how different departments
should interact
Ultimately responsible for the success or
failure of an organization
34. Levels of Management
Chief executive officer (CEO) is
company’s most senior and important
manager
Central concern is creation of a smoothly
functioning top-management team
CEO, COO, Department heads
35. Relative Amount of Time That Managers
Spend on the Four Managerial Functions
Figure 1.4
36. Question?
What skill is the ability to understand, alter, lead, and
control the behavior of other individuals and
groups?
A. Conceptual
B. Human
C. Technical
D. Managerial
37. Managerial Skills
Conceptual skills
The ability to analyze and diagnose a situation and
distinguish between cause and effect.
Human skills
The ability to understand, alter, lead, and control the
behavior of other individuals and groups.
Technical skills
Job-specific skills required to perform a particular
type of work or occupation at a high level.
39. Core Competency
Specific set of departmental skills, abilities,
knowledge and experience that allows one
organization to outperform its competitors
40. Discussion Question
What is the biggest challenge for management in a
Global Environment?
Building a Competitive Advantage
B. Maintaining Ethical Standards
C. Managing a Diverse Workforce
D. Global Crisis Management
A.
41. Movie Example: Office Space
What type of manager
is Bill Lumbergh in the movie
― Office Space‖?
42. The Range of Management Activities
Planning
Investigating
Organizing
Communicating
Commanding
Securing Efforts
Coordination
Formulating purposes
Controlling
Staffing
Directing
Motivating
Leading
Innovating
Representing
Decision making
Activating
Evaluating
43. The Management Process under Pressure
When you are up to your elbows in alligators,
it’s hard to remember that your objective was to
drain the swamp.
45. The Evolution of Management Theory
The driving force behind the evolution of
management theory is to search for better ways
to utilize organizational resources.
Advances in management thought occur as
managers and researchers find better ways to
perform the principal management tasks:
planning, organizing, leading and controlling
organizational resources.
46. The Evolution of Management Theory
The evolution of modern management began
in the closing decades of the 19th century,
after the industrial revolution had swept
through Europe and America.
Many major economic, technical and cultural
changes were taking place at this time.
There has been a shift from small-scale crafts
production to large-scale mechanized
manufacturing. Managers began to search for
new techniques to manage their
organizations.
47. Scientific Management theory
Modern management began in the
late 19th century.
Organizations
were seeking ways to
better satisfy customer needs.
Machinery
was changing the way goods
were produced.
Managers
had to increase the efficiency
of the worker-task mix.
48. Job specialization
Adam Smith, 18th century economist,
found firms manufactured pins in two
ways:
Craft
-- each worker did all steps.
Factory -- each worker specialized in one step.
Smith found that the factory method had
much higher productivity.
Each
worker became very skilled at one,
specific task.
Breaking down the total job allowed for
the division of labor.
50. Job Specialization and
the Division of Labor
Adam Smith (18th century economist)
In a study of factories that
manufactured pins, he observed two
different ways of production:
- Craft-style—each worker did all steps.
- Production—each worker specialized in
one step.
51. Job Specialization and the Division of Labor
Job Specialization
process by which a division of labor
occurs as different workers specialize in
specific tasks over time
52. F.W. Taylor and Scientific
Management
Scientific Management
The systematic study of the
relationships between people and
tasks for the purpose of redesigning
the work process to increase
efficiency.
53. F.W. Taylor and Scientific Management
1) Study the way workers perform their tasks,
gather all the informal job knowledge that
workers possess and experiment with ways
of improving how tasks are performed:
Time-and-motion study
2) Codify the new methods of performing tasks
into written rules and standard operating
procedures
3) Carefully select workers who possess skills
and abilities that match the needs of the
task, and train them to perform the task
according to the established rules and
procedures
4) Establish a fair or acceptable level of
performance for a task, and then develop a
54. The 4 Principles
Four Principles to increase efficiency:
1. Study the way the job is performed now &
determine new ways to do it.
Gather detailed, time and motion information.
Try different methods to see which is best.
2. Codify the new method into rules.
Teach to all workers.
3. Select workers whose skills match the
rules set in Step 2.
4. Establish a fair level of performance and
pay for higher performance.
Workers should benefit from higher output.
55. Problems of Scientific Management
Managers often implemented only the
increased output side of Taylor’s plan.
They
did not allow workers to share in
increased output.
Specialized jobs became very boring, dull.
Workers ended up distrusting Scientific
Management.
Workers could purposely “under-
perform”
Management responded with increased
use of machines.
56. Problems with Scientific
Management
Managers frequently implemented only the
increased output side of Taylor’s plan.
Workers did not share in the increased output.
Specialized jobs became very boring, dull.
Workers ended up distrusting the Scientific Management
method.
Scientific Management brought many workers
more hardship than gain and a distrust of
managers who did not seem to care about
workers’ well-being.
57. Scientific Management
Defined by Frederick Taylor, late 1800’s.
The systematic study of the relationships
between people and tasks to redesign
the work for higher efficiency.
Taylor
sought to reduce the time a worker
spent on each task by optimizing the way the
task was done.
58. The Gilbreths
Frank and Lillian Gilbreth refined Taylor’s
methods.
Made
many improvements to time and motion
studies.
Time and motion studies:
1.
Break down each action into components.
2. Find better ways to perform it.
3. Reorganize each action to be more
efficient.
Gilbreths also studied fatigue problems,
lighting, heating and other worker issues.
59. Administrative Management
Seeks to create an organization that
leads to both efficiency and
effectiveness.
Max Weber developed the concept of
bureaucracy.
A formal
system of organization and
administration to ensure effectiveness and
efficiency.
Weber developed the Five principles shown in
61. Key points of Bureaucracy
Authority is the power to hold people
accountable for their actions.
Positions in the firm should be held based on
performance not social contacts.
Position duties are clearly identified. People
should know what is expected of them.
Lines of authority should be clearly identified.
Workers know who reports to who.
Rules, Standard Operating Procedures
(SOPs), & Norms used to determine how the
firm operates.
Sometimes, these lead to ―red-tape‖ and other
problems.
62. Fayol’s Principles
Henri Fayol, developed a set of 14
principles:
1. Division of Labor: allows for job specialization.
Fayol noted firms can have too much specialization leading to poor
quality and worker involvement.
2. Authority and Responsibility: Fayol included both
formal and informal authority resulting from special
expertise.
3. Unity of Command: Employees should have only
one boss.
4. Line of Authority: a clear chain from top to bottom of
the firm.
5. Centralization: the degree to which authority rests at
the very top.
63. Fayol’s Principles
6. Unity of Direction: One plan of action to guide
the organization.
7. Equity: Treat all employees fairly in justice and
respect.
8. Order: Each employee is put where they have
the most value.
9. Initiative: Encourage innovation.
10. Discipline: obedient, applied, respectful
employees needed.
64. Fayol’s Principles
11. Remuneration of Personnel: The payment
system contributes to success.
12. Stability of Tenure: Long-term employment is
important.
13. General interest over individual interest: The
organization takes precedence over the
individual.
14. Esprit de corps: Share enthusiasm or devotion
to the organization.
65. Behavioral Management
Focuses on the way a manager should
personally manage to motivate
employees.
Mary Parker Follett: an influential
leader in early managerial theory.
Suggested
workers help in analyzing their
jobs for improvements.
The worker knows the best way to improve
the job.
If workers have the knowledge of the task,
then they should control the task.
66. The Hawthorne Studies
Study of worker efficiency at the
Hawthorne Works of the Western
Electric Co. during 1924-1932.
Worker
productivity was measured at
various levels of light illumination.
Researchers found that regardless of
whether the light levels were raised or
lowered, productivity rose.
Actually, it appears that the workers
enjoyed the attention they received as
part of the study and were more
productive.
67. Theory X and Y
Douglas McGregor proposed the two
different sets of worker assumptions.
Theory
X: Assumes the average worker is
lazy, dislikes work and will do as little as
possible.
Managers must closely supervise and control
through reward and punishment.
Theory
Y: Assumes workers are not lazy,
want to do a good job and the job itself will
determine if the worker likes the work.
Managers should allow the worker great latitude,
and create an organization to stimulate the
worker.
68. Theory X v. Theory Y
Figure 2.3
Theory X
Theory Y
Employee is
lazy
Employee is not
lazy
Managers must
closely
supervise
Must create work
setting to build
initiative
Create strict
rules & defined
rewards
Provide authority
to workers
69. Theory Z
William Ouchi researched the cultural
differences between Japan and USA.
USA culture emphasizes the individual, and
managers tend to feel workers follow the Theory X
model.
Japan culture expects worker committed to the
organization first and thus behave differently than
USA workers.
Theory Z combines parts of both the USA
and Japan structure.
Managers stress long-term employment, workgroup, and organizational focus.
70. Management Science
Uses rigorous quantitative techniques to
maximize resources.
Quantitative management: utilizes linear
programming, modeling, simulation systems.
Operations management: techniques to
analyze all aspects of the production system.
Total Quality Management (TQM): focuses on
improved quality.
Management Information Systems (MIS):
provides information about the organization.
71. Organization-Environment Theory
Considers relationships inside and
outside the organization.
The
environment consists of forces, conditions,
and influences outside the organization.
Systems theory considers the impact of
stages:
Input: acquire external resources.
Conversion: inputs are processed into goods
and services.
Output: finished goods are released into the
environment.
72. Systems Considerations
An open system interacts with the
environment. A closed system is selfcontained.
Closed
systems often undergo entropy and
lose the ability to control itself, and fails.
Synergy: performance gains of the
whole surpass the components.
Synergy
system.
is only possible in a coordinated
73. The Organization as an Open System
Figure 2.4
Input Stage
Conversion
Stage
Output
Stage
Raw
Materials
Machines
Goods
Services
Human skills
Sales of outputs
Firm can then buy inputs
74. Contingency Theory
Assumes there is no one best way to
manage.
The
environment impacts the organization
and managers must be flexible to react to
environmental changes.
The way the organization is designed, control
systems selected, depend on the
environment.
Technological environments change
rapidly, so must managers.
75. Structures
Mechanistic: Authority is centralized at
the top. (Theory X)
Employees
closely monitored and managed.
Very efficient in a stable environment.
Organic: Authority is decentralized
throughout employees. (Theory Y)
Much
looser control than mechanistic.
Managers can react quickly to changing
environment.
76. The Gilbreths
Followers of Taylor: Frank & Lillian GILBRETH
(1878-1972) They continued with time and
motion studies.
Ø
Ø
Ø
Break up and analyze every individual action necessary
to perform a particular task into each of its component
actions
Find better ways to perform each component action
Reorganize each of the component actions so that the
action as a whole could be performed more efficiently-at
less cost in time and effort
78. Administrative Management
Theory
Max Weber
Developed the principles of bureaucracy as a formal
system of organization and administration designed to
ensure efficiency and effectiveness.
80. Weber’s Principles of Bureaucracy
1)
2)
3)
4)
5)
A manager’s formal authority derives from the
position he holds in the organization.
People should occupy positions because of their
performance, not because of their social standing
or personal contacts.
The extent of each position’s formal authority and
task responsibilities and it’s relationship to other
positions should be clearly specified.
Authority can be exercised effectively when
positions are arranged hierarchically, so employees
know whom to report to and who reports to them.
Managers must create a well-defined system of
rules, standard operating procedures, and norms
so they
can effectively control behavior .
81. Weber’s Principles of Bureaucracy
Bureaucracy: A formal system of organization and
administration designed to ensure efficiency and
effectiveness.
Authority: The power to hold people accountable
for their actions and to make decisions
concerning the use of organizational resources.
82. Rules, SOPs and Norms
Rules
formal written instructions that specify actions to be taken
under different circumstances to achieve specific goals
Standard Operating Procedures (SOPs)
specific sets of written instructions about how to perform a
certain aspect of a task
Norms
unwritten, informal codes of conduct that prescribe how
people should act in particular situations
83. Fayol’s Principles of
Management
Fayol had identified 14 principles that he thought were essential to
increase efficiency and effectiveness:
Division of Labor
Allows for job specialization. However; jobs can have too much
specialization leading to poor quality and worker dissatisfaction.
Authority and Responsibility
Managers have the right to give orders and the power to exhort
subordinates for obedience.
Unity of Command
Employees should only have one boss
Line of Authority
A clear chain of command from top to bottom of the firm.
Centralization
Authority should not be concentrated at the top of the chain of command.
84. Fayol’s Principles of Management
Unity of direction
There should be a single plan to guide the managers and the
workers.
Equity
All organizational members are entitled to be treated with justice and
respect.
Order
The arrangement of employees where they will be of the most value
to the organization and to provide career opportunities.
Initiative
Managers should allow employees to be innovative and creative.
Discipline
Obedient, applied, respectful employees are necessary for the
organization to function.
85. Fayol’s Principles of Management
Remuneration of personnel
An equitable uniform payment system that motivates
contributes to organizational success.
Stability of Tenure of Personnel
Long-term employment is important for the development of
skills that improve the organization’s performance.
Subordination of Individual Interest to the Common Interest
The interest of the organization takes precedence over that of
the individual employee.
Esprit de corps
Comradeship, shared enthusiasm foster devotion to the
common cause (organization).
86. Discussion Question?
Which of the following is the most
important aspect of Fayol’s principles of
management?
Division of Labor
B. Unity of Command
C. Remuneration of Personnel
D. Esprit de corps
A.
87. Behavioral Management Theory
Behavioral Management
The study of how managers should personally behave to
motivate employees and encourage them to perform at
high levels and be committed to the achievement of
organizational goals.
88. Behavioral Management
Mary Parker Follett
Concerned that Taylor ignored the human side of the
organization
Suggested workers help in analyzing their jobs
If workers have relevant knowledge of the task, then they should
control the task, they should participate in the work development
process
Unlike Fayol, she believed that power is fluid, it should flow to the
person who can best help the organization achieve its goals.
Her approach was very radical for her time.
89. The Hawthorne Studies
Studies of how characteristics of the work setting
affected worker fatigue and performance at the
Hawthorne Works of the Western Electric Company
from 1924-1932.
Worker productivity was measured at various levels of
light illumination.
90. The Hawthorne Studies
Human Relations Implications
Hawthorne effect — workers’ attitudes toward their
managers affect the level of workers’ performance
91. The Hawthorne Studies
This finding led many researchers to turn their
attention to managerial behavior and
leadership.
If supervisors could be trained to behave in
ways that would elicit cooperative behavior
from their subordinates, then productivity
could be increased.
From this view emerged the human relations
movement.
92. The Hawthorne Studies
Human relations movement
advocates that supervisors be behaviorally trained to
manage subordinates in ways that elicit their
cooperation and increase their productivity
93. Implications of the Hawthorne
Studies
Behavior of managers and workers in the work setting is
as important in explaining the level of performance as the
technical aspects of the task
Demonstrated the importance of understanding how the
feelings, thoughts, and behavior of work-group members
and managers affect performance
Led to the development of an area of management known
as ―organizational behavior‖:
The study of the factors that have an impact on how individuals
and groups respond to and act in organizations.
95. Management Science Theory
Management Science Theory
Contemporary approach to management that focuses on
the use of rigorous quantitative techniques to help
managers make maximum use of organizational
resources to produce goods and services.
It is like the contemporary extension of scientific
management developed by Taylor
96. Management Science Theory
Quantitative management
utilizes mathematical techniques, like linear
programming, modeling, simulation and chaos theory
Operations management
provides managers a set of techniques they can use to
analyze any aspect of an organization’s production
system to increase efficiency
97. Management Science Theory
Total quality management
focuses on analyzing an organization’s input,
conversion, and output activities to increase product
quality
Management information systems
help managers design systems that provide information
that is vital for effective decision making
98. Organizational Environment
Theory
Organizational Environment
The set of forces and conditions that operate beyond an
organization’s boundaries but affect a manager’s ability
to acquire and utilize resources
99. The Open-Systems View
Open System
A system that takes resources from its external
environment and transforms them into goods and
services that are then sent back to that environment
where they are bought by customers.
101. The Open-Systems View
Input stage
organization acquires resources such as raw materials,
money, and skilled workers to produce goods and
services
Conversion stage
inputs are transformed into outputs of finished goods
Output stage
finished goods are released to the external environment
102. Closed System
Closed system
A self-contained system that is not affected by changes
in its external environment.
Likely to experience entropy and lose its ability to control
itself
Entropy: The tendency of a closed system to lose its ability to
control itself and thus dissolve and disintegrate.
103. The Organization as an Open
System
Synergy
the performance gains that result from the combined
actions of individuals and departments
Possible only in
an organized system
104. Contingency Theory
Contingency Theory
The idea that the organizational structures and control
systems managers choose are contingent on
characteristics of the external environment in which the
organization operates.
―There is no one best way to organize‖
106. Type of Structure
Mechanistic Structure
Authority is centralized at the top.
Emphasis is on strict discipline and order
Employees are closely monitored and
managed.
Can be very efficient in a stable
environment.
107. Type of Structure
Organic Structure
Authority is decentralized throughout the organization.
Departments are encouraged to take a cross-
departmental or functional perspective
Works best when environment is unstable and rapidly
changing
108. Type of Structure
Nokia’s organic approach to operating:
Control is much looser and decentralized
Reliance on shared norms and common
expectations to guide organizational activities is
greater
Organic structure can react more quickly to a
changing environment
More expensive due to increasing coordination
costs
110. Overview of Planning
Objectives
End states or targets
Plans
Means to hit the
desired targets
Strategic, Tactical, Operational
Planning
Decision-making process focused on the future of
an organization and how it will achieve its goals
111. Types of Plans
Strategic plans
Broad future of the
organization
External environmental demands
Internal resources
Tactical plans
Translate strategic plans into specific goals
Specific parts of the organization
112. Types of Plans
Operational plans
Translate tactical plans
into specific goals and
Small units of the organization
Near term
actions
113. Types of Plans
Strategic Plans
Tactical Plans
Operational Plans
Time horizon
Typically 3-5 years
Often focused on 1-2
years in the future
Usually focused on the
next 12 months or less.
Scope
Broadest,originating
with a focus on the
entire organization
Rarely broader than a
strategic business unit
Narrower, usually centered on departments or
smaller units of the
organization
Complexity
The most complex and
general, because of the
different industries and
business potentially
covered
Somewhat complex but
more specific, because
of the more limited
domain of application
The least complex,
because they usually
focus on small
homogenous units
Adapted from Exhibit 8.1: Types of Plans: Key Differences
114. Types of Plans
Strategic Plans
Impact
Tactical Plans
Have the potential to
dramatically impact,
both positively and
negatively, the fortunes
and survival of the
organization
Can affect specific
businesses but
generally not the
fortunes or survivability
of the entire
organization
Impact is usually
restricted to specific
department or
organization unit
Moderate interdependence, must take into
account the resources
and capabilities of
several units within a
business
Low interdependence,
the plan may be linked to
higher-level tactical and
strategic plans but is less
interdependent with
them
Interdependence High interdependence,
must take into account
the resources and
capabilities of the entire
organization and its
external environments
Operational Plans
Adapted from Exhibit 8.1: Types of Plans: Key Differences
115. Organizational Levels
Corporate level (Strategic)
What industries should the firm be in?
What markets should the firm be in?
In which businesses should the firm invest money?
Business level (Tactical0
Who are our direct competitors?
What are their strengths and weaknesses? What
advantages do we have over them?
What are our own strengths and weaknesses?
What do customers value in our products/services?
116. Organizational Levels
Functional level (Operational)
What activities must my unit perform well in order to
meet customer expectations?
What information about competitors does my unit
need in order to help the firm compete effectively?
What are our unit’s strengths and weaknesses?
117. According to Syllabus
Types of Plan
Single Use Plans
Programm, Projects, Budgets, Standards,
Schedules
Repeated Use Plans
Objectives
Mission
Strategies
Policies
Rules n Methods
Procedures
118. Objectives: Objectives are very basic to the
organisation and they are defined as ends which the
management seeks to achieve by its operations. They
serve as a guide for overall business planning.
Strategy: strategy is a comprehensive plan for
accomplishing an organisation objectives. This
comprehensive plan will include three dimensions,
(a) determining long term objectives,
(b) adopting a particular course of action, and
(c) allocating resources necessary to achieve the
objective.
Policy: They are guides to managerial action and
decisions in the implementation of strategy.
Procedure: Procedures are routine steps on how to
carry out activities. Procedures are specified steps to
119. Method: Methods provide the prescribed ways or manner
in which a task has to be performed considering the
objective. It deals with a task comprising one step of a
procedure and specifies how this step is to be performed.
Rule: Rules are specific statements that inform what is to
be done. They do not allow for any flexibility or discretion.
Programme: Programmes are detailed statements about a
project which outlines the objectives, policies, procedures,
rules, tasks, human and physical resources required and
the budget to implement any course of action.
Budget: It is a plan which quantifies future facts and
figures. It is a fundamental planning instrument in many
organisations.
120. Planning Process
Analysis of
External
Environment
Analysis of Inner
Environment
Set of Goals to be
achieved
Establishing
Planning
Premises
Wal-Mart Venture in India
Govt, Tech, Mkt, Political,
Sociological,
Maruti India -- 5M
Nissan – Expand Dealership
Introduce low cost Datsun
Nissan – Fuel Costs,
Sales Forecasts, Gen Econo
Special Cond
121. Planning Process
Determining
Alternative
Course of Action
Fiat India Tie up with Tata n
break up, Renualt Mahindra Ti
Evalu & selecting
Best Course
Fiat India – Parallel Dealershi
Establishing
Sequence of
Activities
Formulation of
Long Range &
Functional Plans
Nissan – Mini Dealerships
Further break up of twns
Ponds – Olay – Fair n lovely
example
123. Analyzing the Environment
The Planning Process
Analyzing the environment
Forecasts: what does the future look like?
Environmental uncertainty
Contingency plans: identify key factors that could
affect the desired results and specify what actions
will be taken if key events change
Benchmarking
Investigation of the best results among
competitors and non competitors and the
practices that lead to those results
124. Discussion – Wall Mart & Easy
Day
Study complete business environment
Parameters Wal-Mart considers before entering a
country
Easy Day (Airtel Wal-Mart Joint Venture)
Fallout reasons
Future (Role Play Session)
Presentation – Advantages & Disadvantages of
Planning 5 slides
125. Setting Objectives
The Planning Process
Setting objectives
Priorities and multiple objectives
Establish which objectives are most
important and which have priorities,
Measuring objectives
Financial
performance
Profits relative to sales
Profits relative to assets
Many others
Non-financial
performance
126. Determining Requirements
The Planning Process
Determining requirements
Assess current performance
What will it take in order to get from
current levels of performance to that
level specified in the objectives?
What drives market share?
What capital will be required?
127. Assessing Resources
The Planning Process
Assessing resources
Resources required
What resources are needed to achieve the stated objectives?
Resources available
Do we have the needed human talent to meet the
requirements?
Do we have the financial resources available?
Do we have the required technology?
128. Developing Action Plans
The Planning Process
Developing action plans
Sequence and timing
Raw materials, manpower
and components must be
brought together in the right amounts
and sequences
Accountability
Who is accountable for which actions?
129. Implementing Plans
The Planning Process
Implementing Plans
Monitoring the implementation
Monitor the progress of the plan and its
implementation
Monitor the level of support that the plan
receives as it is being implemented
Monitor the level of resistance
Real-time adjustment
130. Monitoring Outcomes
The Planning Process
Monitoring outcomes
Unanticipated consequences
Negative unanticipated consequences
Positive unanticipated consequences
Feedback loop
Apply what has been learned to modify
and improve the planning process
131. Planning Tools
Budgets
Capital expenditure budget
Specifies the amount of money to be spent
on specific items that have long-term use
and require significant amounts
Expense budget
Includes all primary activities on which a
unit or organization plans to spend money
and the amount allocated for the upcoming
year
132. Planning Tools
Budgets
Proposed budget
Provides a plan for how much money is
needed, and is submitted to a superior or
budget review committee
Approved budget
Specifies what the manager is actually
authorized to spend money on and how
much
133. Planning Tools
Two budgetary approaches
Incremental budgeting approach
From the approved budget of the previous
year present arguments for why the
upcoming budget should be more or less
Zero-based budgeting approach
Justify all allocations of funds from zero
each year
134. What’s the planning of organizations?
Management by objectives
The strategic management process
Benchmarking / ISO9000 series /six sigma
Entrepreneurship: a special case of strategic planning
135. What’s the planning of
organizations?
The content of planning
Advantages and disadvantages of planning
Types of plans
136. Planning Encompasses:
Defining the organization’s objectives or goals.
Establishing an overall strategy for achieving those
goals.
Developing a comprehensive hierarchy of plans to
integrate and coordinate activities.
137. Advantages of Planning
It gives direction to managers and nonmanagers
alike.
Planning can reduce the impact of change.
It minimize waste and redundancy.
Planning establishes objectives or standards that
facilitate control.
138. Disadvantages of Planning
Planning may create rigidity.
can’t be developed for a dynamic
environment.
Formal plans can’t replace intuition and creativity.
Planning focuses managers’ attention on today’s
competition, not on tomorrow’s survival.
Formal planning reinforces success, which may
lead to failure.
Plans
139. Exhibit 4-1 Types of Plans
Breadth
Time frame
Specificity
Frequency
of use
Strategic Long term
Directional Single use
Tactical
Specific
Short term
Standing
140. Strategic and Tactical Plans
Strategic plans are plans that apply to the entire organization,
establish the organization’s overall objectives, and seek to
position the organization in terms of its environment.
Tactical plans (sometimes referred to as operational plans)
specify the details of how the overall objectives are to be
achieved.
Strategic and tactical plans differ in three primary ways—
their time frame, scope, and whether they include a known set
of organizational objectives.
141. Short-term and Long-term
Plans
Short-term plans are plans that cover less than one
year.
Long-term plans are plans that extend beyond five
years.
Their differences lie in the length of future
commitments and the degree of variability
organizations face.
142. Specific and Directional Plans
Specific plans have clearly defined objectives and leave
no room for misinterpretation.
Directional plans are flexible plans that set out general
guidelines.
143. Single-use and Standing Plans
Single-use plans are used to meet the needs of
particular or unique situation.
Standing plans are ongoing, and provide guidance for
repeatedly performed actions in an organization.
Editor's Notes
Workers who specialized became much more skilled at their specific tasksIncreasing job specialization increases efficiency and leads to higher organizational performance
Douglas McGregor proposed the two different sets of assumptions about workers.Theory X assumes the average worker is lazy, dislikes work and will do as little as possible.Workers have little ambition and wish to avoid responsibilityManagers must closely supervise and control through reward and punishment.Theory Y assumes workers are not lazy, want to do a good job and the job itself will determine if the worker likes the work.Managers should allow workers greater latitude, and create an organization to stimulate the workers.
