Principle of Management

1. PRINCIPLE OF MANAGEMENT

2. 1. Planning-Introduction
1.What is Planning?
2.Characteristics of Planning
3.Elements of Planning
4.Planning Process: 7 Vital Steps of Planning
5.Importance of Planning
6.External Limitations on Planning
2. Management-Types of Plans
1. Strategic Plans
2. Tactical Plans
3. Operational Plans
4. Contingency Plan
Outlines: Unit
02 Management-Planning

3. 1.What is Planning?
Planning is the conscious, systematic process of making decisions about goals
and activities that an organization will pursue in the future.
A plan is a pre-determined course of action. Planning is essentially a process to
determine and implement actions to achieve organizational objectives.
Planning involves the task of deciding in advance-
•What to do?
•How to do?
•When to do it?
•Who will do it?

4. 2.Characteristics (Features/ Nature) of
Planning
1.Planning is goal-oriented
Planning is made to achieve desired objective of business.
2.Planning is looking ahead
Planning is based on forecasting
3.Planning is an intellectual process
Planning is a mental exercise involving creative thinking, sound judgement and
imagination.
4.Planning involves choice & decision making
A manager is surrounded by no. of alternatives. He has to pick the best
depending upon requirements & resources of the enterprises.
5.Planning is the primary function of management
Planning lays foundation for other functions of management.

5. 6.Planning is a Continuous Process
Planning is a never ending function due to the dynamic (Powerful) business
environment.
7.Planning is all Pervasive (Spreading widely)
It is required at all levels of management and in all departments of enterprise.
8.Planning is designed for efficiency
Planning leads to accompishment of objectives at the minimum possible cost.
9.Planning is Flexible
Flexibility means that everybody knows exactly what goal they are trying to
achieve.

6. 3.Elements of a Planning
•Objectives-Objectives are goals established to guide the activities of the
enterprise.
•Policies-A policy is a basic statement that guides action and decision
making. It sets behavioral limits on managers.
•Procedures and Methods-A procedure is a well thought out course of
action. It prescribes the specific way to do a particular job. Methods are
sub units of procedure. They indicate the techniques to be used to make
the procedure effective.
•Rules-A rule specified necessary course of action in respect of a
situation. It prescribes restriction and a definite and rigid course of action.
•Strategy-It is a plan of action designed to achieve long term or overall
aim.

7. •Programs-Programs are precise plans of action followed in proper sequence
in accordance with objectives, policies and procedures.
•Budgets-A budget is an estimate of men, money, material and machine
required for successful implementation of plans.
•Projects-A project is a particular job that needs to be done in connection
with the general programme.

8. 4.Planning Process: 7 Vital Steps of Planning
Setting Objectives
Developing Premises
Identifying Alternatives
Evaluating Alternatives
Selecting One Best
Alternative
Implementing Action Plan
Follow Up Action

9. Example:
1. Setting Objectives
A mobile phone company sets the objective to sell 2,00,000 units next year,
which is double the current sales.
2. Developing Premises
(Premises are assumptions, Thus assumptions about market demand, cost of
raw material, technology to be used, population growth, government policy
etc.)
The mobile phone company has set the objective of 2,00,000 units sale on the
basis of forecast done on the premises of favourable Government policies
towards digitisation of transactions.
3. Identifying Alternatives
The mobile company has many alternatives like reducing price, increasing
advertising and promotion, after sale service etc.

10. 4. Evaluating Alternatives
The mobile phone company will evaluate all the alternatives and check its pros
and cons.
5. Selecting One Best Alternative
Mobile phone company selects more T.V advertisements and online marketing
with great after sales service.
6. Implementing Action Plan
Mobile phone company hires salesmen on a large scale, creates T.V
advertisement, starts online marketing activities and sets up service workshops.
7. Follow Up Action
A proper feedback mechanism was developed by the mobile phone company
throughout its branches so that the actual customer response, revenue collection,
employee response, etc. could be known.

11. 5.Importance of Planning
1. It Helps to Set the Right Goals
2. It Sets Objectives and Standards for Controlling
3. It Reduces Uncertainty
4. It Eliminates Overlapping of Wasteful Activities
5. It Ensures Efficient use of Resources
6. It Promotes Innovation
7. It Improves Decision Making
8. It Boosts Motivation and Team Spirit
9. It Helps to Earn Credibility and Trust of Stakeholders
10. It Gives a Competitive Edge and Allows Strategic Positioning

12. 6.External Limitations on Planning
1.Political Climate- Change of government
2.Labour Union- Strikes, lockouts, agitations.
3.Technological changes- Modern techniques and equipment, computerization.
4.Policies of competitors- Eg. Policies of Coca Cola and Pepsi.
5.Natural Calamities- Earthquakes and floods.
6.Changes in demand and prices- Change in fashion, change in tastes, change in
income level, demand falls, price falls, etc.

13. Management-Types of
Plans
Plans commit the various resources in an organization to specific outcomes for
the fulfillment of future goals. Many different types of plans are adopted by
management to monitor and control organizational activities.

14. Strategic Plans
Strategic plans define the framework of the organization’s vision and how the
organization intends to make its vision a reality.
•It is the determination of the long-term objectives of an enterprise, the action
plan to be adopted and the resources to be mobilized to achieve these goals.
•Since it is planning the direction of the company’s progress, it is done by the
top management of an organization.
•It essentially focuses on planning for the coming years to take the organization
from where it stands today to where it intends to be.
•The strategic plan must be forward looking, effective and flexible, with a focus
on accommodating future growth.
•These plans provide the framework and direction for lower level planning.

15. Tactical Plans
Tactical plans describe the tactics that the managers plan to adopt to achieve the
objectives set in the strategic plan.
•Tactical plans span a short time frame (usually less than 3 years) and are usually
developed by middle level managers.
•It details specific means or action plans to implement the strategic plan by units
within each division.
•Tactical plans entail detailing resource and work allocation among the subunits
within each division.

16. Operational Plans
Operational plans are short-term (less than one year) plans developed to create
specific action steps that support the strategic and tactical plans.
•They are usually developed by the manager to fulfill his or her job
responsibilities.
•They are developed by supervisors, team leaders, and facilitators to support
tactical plans.
•They govern the day-to-day operations of an organization.

17. Contingency Plan
Contingency plans are made when something unexpected happens or when
something needs to be changed. Business experts sometimes refer to these
plans as a special type of planning.
A simple example of a contingency plan is to back up all website data in case a
website gets hacked. If this scenario happens, it’s easy to restore the data after
regaining access and changing passwords.

18. Hierarchy of Strategic Plan

19. Mission
The mission statement describes what the organization needs to do now to
achieve the vision.
The mission statement focuses on today and what the organization does.
When writing a mission statement, consider the following questions:
•What do we do today?
•Who do we serve?
•What are we trying to accomplish?
•What impact do we want to achieve?

20. Vision
The vision statement describes where the organization wants to be in the future.
The vision statement focuses on tomorrow and what the organization wants to
become.
When writing a vision statement, consider these questions:
•Where are we going moving forward?
•What do we want to achieve in the future?
•What kind of future society do we envision?

21. Value
The values statement defines what the organization believes in and how
people in the organization are expected to behave-with each other, with
customers and suppliers, and with other stakeholders.
When drafting a values statement, some questions to consider include:
•What do we stand for?
•What behaviors do we value over all else?
•How will we conduct our activities to achieve our mission and vision?
•How do we treat members of our own organization and community?

22. Example:
Mission:
We exist to nurture your well-being, so you can enjoy life today.
Vision:
To revolutionize insurance in Sri Lanka through world-class innovations and
deliver extraordinary stakeholder value.

23. Value:
1.Care
Caring for you every step of the way as a partner for life
2.Authenticity
Never leaving space to compromise on our authenticity
3.Courage
Being courageous to challenge the status to give customers the best solution
4.Innovation
Nurturing the spirit of innovation to upgrade customer lifestyles
5.Simplicity
We bring together world-class solutions to simplify the customer’s life
Unit 03