Management chap 2

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what is planning

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Management chap 2

  1. 1. A Global and Entrepreneurial Perspective MANAGEMENT
  2. 2. PRINCIPLES OF MANAGEMENT Sr. No. Chapter No. Chapter Heading 1 1 Management: Science, Theory and Practice (27th September 2010) 2 4 Essentials of Planning and Managing by Objectives (4th Oct) 3 5 Strategies, Policies and Planning Premises 4 6 Decision Making 5 7 The Nature of Organizing, Entrepreneuring, and Reengineering 6 8 Organization Structure: Departmentation 7 9 Line/ Staff Authority, Empowerment and Decentralization 8 10 Effective Organizing and Organization Culture 9 14 Human Factors and Motivation 10 15 Leadership 11 16 Committees, Teams and Group Decision Making 12 18 The System and Process of Controlling Sessionsal Evaluation External Evaluation 15 15 20 50 50 Quiz per Class Assignment & Presentation Mid-term Total Sessional External Exam
  3. 3. Chapter 2 Essentials of Planning and Managing by Objectives
  4. 4. TABLE OF CONTENTS 1. TYPES OF PLANS 2. STEPS IN PLANNING 3. OBJECTIVES 4. EVOLVING CONCEPTS IN MANANGEMENT BY OBJECTIVES
  5. 5. PLANNING  Selecting missions and objectives as well as the actions to achieve them, which requires decision making, that is, choosing a course of action amongst all alternatives Planning Implementation of Plans Controlling: Comparing plans with results Corrective Action
  6. 6. TYPES OF PLANS 1. Mission or Purposes 2. Objectives or Goals 3. Strategies 4. Policies 5. Procedures 6. Rules 7. Programs 8. Budgets
  7. 7. TYPES OF PLANS 1. Mission or Purpose “The basic purpose or function or tasks of an enterprise or agency or any part of it” The mission statement should guide the actions of the organization, spell out its overall goal, provide a sense of direction, and guide decision-making. It provides "the framework or context within which the company's strategies are formulated”  For example; some purposes are as under; Business • The production and distribution of good and services • To earn profits Court • Interpretation of laws and their application University • Teaching, research and providing services to the community Social Service • To serve humanity in general or any affected part of society
  8. 8. TYPES OF PLANS 2. Objectives or Goals: The end towards which the activity is aimed. 3. Strategy: Came out from the military use. It may be defined as: “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” 4. Policies: “General Statements or understandings that guide or channelize thinking in decision making” 5. Procedures: “Plans that establish a required method of handling future activities”  Procedures may or may not cut across the boundaries of different departments  These may also include the activities of third party contractors 6. Rules Rules spell out specific required actions or non actions, allowing no discretion
  9. 9. TYPES OF PLANS 7. Programs: Programs are 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; supported by budgets or  A program is a planned sequence and combination of activities designed to achieve specified goals within set policies. Programs normally involve  equipment  materials  money  personnel and  time 8. Budget: “Budget is a statement of expected results expressed in numerical terms” It includes the numerical statement in terms of expected cash flow, expenses and revenues, capital outlays or labor or machine-hour utilization.
  10. 10. STEPS IN PLANNING 1. Being Aware of Opportunities:  It’s a preliminary step and emphasizes on being aware of the external environment before setting any objectives.  It is recommended that a proper SWOT analysis of the given situation to be done for the company/ department  a realistic diagnosis of the situation would lead to setting realistic objectives 2. Establishing Objectives:  The objectives are set first for the enterprise and then for each sub-unit.  The goals are made long term and then broken down in details to short term goals  Objectives specify the end points for which the sequence of activities is being carried out
  11. 11. STEPS IN PLANNING 3. Developing Premises:  Premises: premises are assumptions about the environment in which the plan is to be carried out  Principle of Planning Premises: the more thoroughly individuals charged with planning understanding and agree to utilize consistent planning premises, the more coordinated enterprise planning would be  Forecasting is a major part of premising, it includes:  What kinds of markets will be there  What volume of sales  What prices  What products  What technical developments  Costs, wage rates, tax rates and policies  What new plants?  Political or social environment  Long terms trends etc
  12. 12. STEPS IN PLANNING 4. Determining Alternative courses:  It is important to search for and examine alternative courses of action, especially those not immediately apparent 5. Evaluating Alternative courses:  The alternatives are evaluated in the light of premises and goals, in terms of the profits, timelines, risks, uncertainty etc 6. Selecting a Course:  This is the point of decision making. Evaluation often leads to more than one better/ advisable courses. Some times one best course is selected and one is kept for contingency (mostly in production and security departments)  Some times two courses are adapted simultaneously
  13. 13. STEPS IN PLANNING 7. Formulating derivative plans:  Derivative plans are almost invariably required to support the basic plan 8. Quantifying plans by budgeting:  The overall budget of an enterprise represents the sum total of income and expenses, with resultant profit or surplus and the budgets of expenses, capital investment etc COORDINATION OF SHORT AND LONG RANGE PLANS
  14. 14. Board of Directors Top level Managers Middle level Managers Lower level Managers
  15. 15. OBJECTIVES Objectives are the ends towards which the organizational and individual activities are directed. The objectives are required to be “Verifiable” so as to determine the contribution of every manager towards those may be measured and verified THE NATURE OF OBJECTIVES  Hierarchy of objectives:  The objectives form a hierarchy, ranging from the broad aim to specific individual objectives  The topmost and the most important objective is the purpose or mission  The purpose or mission is to get translated in overall objectives  And then there are more specific objectives or the “Key result areas”; in which performance is essential for the success of the enterprise
  16. 16. OBJECTIVES  And then there are more specific objectives or the “Key result areas”; in which performance is essential for the success of the enterprise  The key result areas may be;  Market standing  Innovation  Productivity  Physical and financial resources  Profitability  Manager performance and development  Worker performance and attitude  Service  Quality
  17. 17. OBJECTIVES  Setting Objectives and the organizational hierarchy:  Managers at Different levels are concerned with different kinds of objectives  Board of Directors and Top level managers  Determine the purpose and the key result areas  Middle level managers  VP or Director of department etc are involved in setting of key result area objectives, division objectives and departmental objectives  Lower level managers  They set the objectives of the department and units as well as of their subordinates  Managers at each level set their personal objectives as well  Top-down approach: Objectives are management driven  Bottom-Up approach: Objectives must be set by the sub ordinates, which will keep them committed to and motivated towards the objectives.
  18. 18. Non verifiable Objectives • To make a reasonable profit • To improve communication • To improve productivity of the production department • To develop better managers Verifiable Objectives • To achieve a ROI of 12% at the end of the current fiscal year • To issue a two page monthly newsletter beginning July 1, 2010, involving not more than 40 working hrs of preparation (after the first issue) • To increase production output by 5% by Dec 31, 2010 without additional costs by maintaining the current quality level • To design and conduct a 40 hr in house program on “management”, to be completed by October 1, 2010, involving not more than 200 Whrs of the management dev staff and with at least 90% of the 100 managers passing the exam
  19. 19. OBJECTIVES  Multiplicity of Objectives:  Managers may get many objectives at the same time  It is wise to set the priority levels to all the objectives  The number of objectives assigned to a manager depends on how much would be performed by himself and how much would he be delegating to the subordinates and then would supervise and control  HOW TO SET OBJECTIVES:  The objectives must be specific, measurable, attainable, realistic and timed  Objectives must be challenging and priorities must be assigned to each of them  Should also be communicated and stated very clearly  Objectives should promote personal and professional growth and development
  20. 20. EVOLVING CONCEPTS OF MBO  MANAGEMENT BY OBJECTIVES:  A comprehensive managerial system that integrates many key managerial activities in a systematic manner and is consciously directed toward the effective and efficient achievement of organizational and individual objectives  BENEFITS:  People feel motivated when clear goals are effectively communicated to them  Improvement of managing through results-oriented planning  Clarification of organizational roles and structures as well as delegation of authority according to the results expected by the people occupying the roles  Encouragement of commitment to personal and organizational goals  Development of effective controls that measure results and lead to corrective actions
  21. 21. EVOLVING CONCEPTS OF MBO  FAILURES OF MBO 1. Failure to understand the philosophy of MBO by the managers or teams.  The benefit it provides to the teams also needs to be clearly explained  Its philosophy is built on the concepts of self control and self direction 2. Failure to give guidelines to goal setters is another problem  Managers need to know the enterprise goals, company policies and planning premises 3. The verifiable goals should also be flexible  The goals should be attainable and no unethical means should be adopted to achieve them  Unethical activities should be punished 4. Emphasis of short-run goals on long-run goals 5. In some areas, quantitative goals could not be set, but their importance could also not be negated for eg company image etc

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