The document discusses policies, planning, and planning premises. It defines policies as general guidelines for decision making and outlines their nature, including their relationship to objectives, clarity, role in decision making, and need for consistency. It also describes the policy formulation process and different types of policies based on their sources and functions. Planning premises are defined as the anticipated environment in which plans will operate and assumptions that provide context for estimated events. The document classifies planning premises as internal/external and tangible/intangible and discusses their importance for effective planning. It provides examples of premises related to raw materials, personnel, organization, and basic policies.

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