PRINCIPLES OF MANAGEMENT-JNTUK-UNIT-2-2016-2018 BATCH

UNIT:2
sanjaykanagala,rimsmba,kakinada

 Nature and Definition
of Planning
 Principles of Planning
 Objectives of planning
 Planning process
 Types of plans
 Benefits and pitfalls of
planning.
 Principles of
organizing
 Organization levels
 Organizational designs
and structure
 Line and staff
organizations
 Approaches
 Delegation of authority
 Factors affecting
delegation of authority
 Span of management
 Centralization and
decentralization of
Authority.

 In simple words, planning is deciding in advance
what is to be done, when where, how and by
whom it is to be done. Planning bridges the gap
from where we are to where we want to go. It
includes the selection of objectives, policies,
procedures and programmes from among
alternatives. A plan is a predetermined course of
action to achieve a specified goal. It is an
intellectual process characterized by thinking
before doing. It is an attempt on the part of
manager to anticipate the future in order to
achieve better performance. Planning is the
primary function of management.

 Different authors have given different definitions of planning from time to
time. The main definitions of planning are as follows:
 According to Alford and Beatt, “Planning is the thinking process,
the organized foresight, the vision based on fact and experience
that is required for intelligent action.”
 According to Theo Haimann, “Planning is deciding in advance
what is to be done. When a manager plans, he projects a course
of action for further attempting to achieve a consistent co-
ordinate structure of operations aimed at the desired results.
 According to Billy E. Goetz, “Planning is fundamentally choosing
and a planning problem arises when an alternative course of
action is discovered.”
 According to Koontz and O’ Donnell, “Planning is an intellectual
process, conscious determination of course of action, the basing
of decision on purpose, facts and considered estimates.”
 According to Allen, “A plan is a trap laid to capture the future.”

 Planning is an Intellectual Process
 Planning Contributes to the Objectives
 Planning is a Primary Function of
Management
 A continuous Process
 Planning Pervades Managerial Activities

 Reduction of Uncertainty
 Better Utilization of Resources
 Increases Organizational Effectiveness
 Reduces the Cost of Performance
 Concentration on Objectives
 Helps in Co-ordination
 Makes Control Effective
 Encouragement to Innovation
 Increase in Competitive Strength
 Delegation is Facilitated

 Establishing objectives
 Establishment of Planning Premises
 Determining Alternative Courses
 Evaluation of Alternatives
 Selecting a Course of Action
 Formulating Derivative Plans
 Establishing Sequence of Activities
 Feedback or Follow-up Action

 Whether the business is large or small, company
heads set overall goals for the business and break
these down into objectives. Management has to
develop and implement plans to meet these
objectives. Depending on the type of business, the
time frame and the focus of management, objectives
can have different characteristics. The key for the
managers is to match plan implementation to the
type of objective
OBJECTIVES
 TIME-RELATED
 ROUTINE
 DEVELOPMENT

 Strategic Planning
◦ Long term and provides broad goals and direction
for the entire business
 Operational Planning
◦ Short term and identifies specific activities for each
area of business

 Step 1 – External Analysis
◦ Managers study factors outside the firm that can affect
effective operations: customers, competitors, the economy,
government
 Step 2 – Internal Analysis
◦ Managers study factors inside the business that can affect
success: operations, finances, personnel, other resources
 Step 3 – Mission
◦ Managers agree on the most important purposes or
directions for the firm based on the information collected
The first 3 steps are referred to as SWOT analysis –
the examination of strengths and weaknesses
along with opportunities and threats

Mission Statement – short, specific statement
of the businesses purpose
Vision – the companies reason for existing
 Step 4 – Goals
◦ Managers develop outcomes for the business to
achieve that fit within the mission
 Step 5 – Strategies
◦ Managers identify the effects expected from each
area of the firm if goals are to be achieved

 How will the work be done
 Who will do the work
 What resources will be need
 For a specific area of the business
It can include
◦ Developing budgets
◦ Planning inventory levels
◦ Purchasing raw materials
◦ Setting production levels and etc

 Goals
 Budgets
 Schedules
 Standards
 Policies
 Procedures
 Research

 A specific statement of a result the business
expects to achieve
 Characteristics of goals
◦ Goals must be specific and meaningful
◦ Goals must be achievable
◦ Goals should be clearly communicated
◦ Goals should be consistent with each other and with
overall company goals

 A specific financial
plan
 Financial budget
assist managers in
determining the
best way to use
available money

 A time plan for reaching objectives
 Valuable in planning the most effective
use of time

 A specific measure against which something
is judged
 Standard are set for:
◦ Goods and services produced
◦ Quality
◦ Amount of time tasks should take, etc.

 List of steps to be
followed for
performing certain
work
 A flowchart can be
used to show the
order in the steps
in a work
procedure

 To do a good deal
of planning,
managers need a
lot of information
 Research is used
to collect data and
provide
information
needed to improve
their planning
decisions

 Principle of Specialization
 Principle of Functional Definition
 Principles of Span of Control/Supervision
 Principle of Scalar Chain
 Principle of Unity of Command

 According to the principle, the whole work of
a concern should be divided amongst the
subordinates on the basis of qualifications,
abilities and skills. It is through division of
work specialization can be achieved which
results in effective organization.

 According to this principle, all the functions
in a concern should be completely and clearly
defined to the managers and subordinates.
This can be done by clearly defining the
duties, responsibilities, authority and
relationships of people towards each other.
Clarifications in authority-responsibility
relationships helps in achieving co-ordination
and thereby organization can take place
effectively.
 .

 According to this principle, span of control is
a span of supervision which depicts the
number of employees that can be handled
and controlled effectively by a single
manager. According to this principle, a
manager should be able to handle what
number of employees under him should be
decided. This decision can be taken by
choosing either fromal wide or narrow span.
There are two types of span of control:-

◦ Wide span of control- It is one in which a manager
can supervise and control effectively a large group
of persons at one time. The features of this span
are:-
 Less overhead cost of supervision
 Prompt response from the employees
 Better communication
 Better supervision
 Better co-ordination
 Suitable for repetitive jobs

 According to this span, one manager can effectively
and efficiently handle a large number of subordinates
at one time.
◦ Narrow span of control- According to this span, the work
and authority is divided amongst many subordinates and a
manager doesn't supervises and control a very big group of
people under him. The manager according to a narrow span
supervises a selected number of employees at one time.
The features are:-
 Work which requires tight control and supervision, for example,
handicrafts, ivory work, etc. which requires craftsmanship, there
narrow span is more helpful.
 Co-ordination is difficult to be achieved.
 Communication gaps can come.
 Messages can be distorted.
 Specialization work can be achieved.

◦ Managerial abilities- In the concerns where managers are
capable, qualified and experienced, wide span of control is
always helpful.
◦ Competence of subordinates- Where the subordinates are
capable and competent and their understanding levels are
proper, the subordinates tend to very frequently visit the
superiors for solving their problems. In such cases, the
manager can handle large number of employees. Hence
wide span is suitable.
◦ Nature of work- If the work is of repetitive nature, wide
span of supervision is more helpful. On the other hand, if
work requires mental skill or craftsmanship, tight control
and supervision is required in which narrow span is more
helpful.

◦ Delegation of authority- When the work is delegated to
lower levels in an efficient and proper way, confusions are
less and congeniality of the environment can be
maintained. In such cases, wide span of control is suitable
and the supervisors can manage and control large number
of subordinates at one time.
◦ Degree of decentralization- Decentralization is done in
order to achieve specialization in which authority is shared
by many people and managers at different levels. In such
cases, a tall structure is helpful. There are certain concerns
where decentralization is done in very effective way which
results in direct and personal communication between
superiors and subordinates and there the superiors can
manage large number of subordinates very easily. In such
cases, wide span again helps.

 Scalar chain is a chain of command or authority
which flows from top to bottom. With a chain of
authority available, wastages of resources are
minimized, communication is affected,
overlapping of work is avoided and easy
organization takes place. A scalar chain of
command facilitates work flow in an organization
which helps in achievement of effective results.
As the authority flows from top to bottom, it
clarifies the authority positions to managers at all
level and that facilitates effective organization.

 It implies one subordinate-one superior
relationship. Every subordinate is answerable
and accountable to one boss at one time.
This helps in avoiding communication gaps
and feedback and response is prompt. Unity
of command also helps in effective
combination of resources, that is, physical,
financial resources which helps in easy co-
ordination and, therefore, effective
organization.

Authority Flows from Top to Bottom
Managing Director
↓
Marketing Manager
↓
Sales/ Media Manager
↓
Salesmensanjaykanagala,rimsmba,kakinada

 There are different ways to define levels of
business organization such as the terms used in
business process modeling. This method has three
levels of organization -- the organizational level,
the process level and the business activity level.
Each level offers a different perspective of an
organization's activities. In business process
modeling, levels of organization help managers
analyze how to increase efficiency.
1. Business Process Modeling
2. Organizational Level
3. Process Level
4. Activity Level

 A business can use three levels of business
process modeling to analyze how work is
performed. Every work process must be
documented in a form that includes flowchart
symbols and written descriptions. This
written form shows how any product or
service is handled by different employees.
Using a flowchart, stakeholders such as
managers and employees can troubleshoot
problems and suggest improvements to the
way business activities are organized.

 At the organizational level, it's important to
consider all major functions of the business. An
organizational-level analysis might include
listing functions that support each product family
in a manufacturing company. Listing the
functions helps to define the business's overall
capacity to serve its customers. In a smaller
company, such as a construction company, there
might be only a few functions -- such as a sales
function, a project management function and an
accounting function. Other functions might be
important to the construction company, but
might be performed by outside labor, such as
subcontractors.

 Inside the organization, it's important to study
the flowcharts of all business activities in one
process. A process might consist of all activities
that support a major service that a company
provides to customers. Experts in different areas
of the business process can analyze how the
business process works in an interdisciplinary
task force. Experts in one activity might suggest
improvements for another business activity to
make it more efficient, with the end goal of
benefiting the customer.

 Inside a business process, each business activity consists
of a manager and employees who assist in creating very
detailed descriptions of work tasks performed. These
employees have firsthand knowledge of work tasks and
can suggest improvements to their own work. They also
understand how tasks performed by others in their activity
contribute to the activity's efficiency. When these task
experts participate in cross-functional task forces,
involving employees from different business processes,
they can suggest how changes at the organizational level
will impact their activity. A task force might decide that
one business activity should occur in a different order in
the sequence of work activities in a business process, or
chain of production.


 Organizational designs fall into two categories,
traditional and contemporary. Traditional designs
include simple structure, functional structure,
and divisional structure. Contemporary designs
would include team structure, matrix structure,
project structure, boundaryless organization, and
the learning organization. I am going to define
and discuss each design in order to give an
understanding of the organizational design
concept.


 1. Simple Structure
 2. Functional Structure
 3. Divisional Structure


A simple structure is defined as a design with low
departmentalization, wide spans of control, centralized
authority, and little formalization. This type of design is
very common in small start up businesses. For example in
a business with few employees the owner tends to be the
manager and controls all of the functions of the business.
Often employees work in all parts of the business and
don’t just focus on one job creating little if any
departmentalization. In this type of design there are
usually no standardized policies and procedures. When the
company begins to expand then the structure tends to
become more complex and grows out of the simple
structure.


A functional structure is defined as a design
that groups similar or related occupational
specialties together. It is the functional
approach to departmentalization applied to
the entire organization.


A divisional structure is made up of separate,
semi-autonomous units or divisions. Within
one corporation there may be many different
divisions and each division has its own goals
to accomplish. A manager oversees their
division and is completely responsible for the
success or failure of the division. This gets
managers to focus more on results knowing
that they will be held accountable for them.

 1. Team Structure
 2. Matrix Structure
 3. Project Structure
 4. Autonomous Internal Units
 5. Boudaryless Organization
 6. Learning Organization


A team structure is a design in which an organization
is made up of teams, and each team works towards a
common goal. Since the organization is made up of
groups to perform the functions of the company,
teams must perform well because they are held
accountable for their performance. In a team
structured organization there is no hierarchy or chain
of command. Therefore, teams can work the way they
want to, and figure out the most effective and
efficient way to perform their tasks. Teams are given
the power to be as innovative as they want. Some
teams may have a group leader who is in charge of
the group.


A matrix structure is one that assigns specialists from
different functional departments to work on one or more
projects. In an organization there may be different
projects going on at once. Each specific project is assigned
a project manager and he has the duty of allocating all the
resources needed to accomplish the project. In a matrix
structure those resources include the different functions of
the company such as operations, accounting, sales,
marketing, engineering, and human resources. Basically
the project manager has to gather specialists from each
function in order to work on a project, and complete it
successfully. In this structure there are two managers, the
project manager and the department or functional
manager.


A project structure is an organizational structure
in which employees continuously work on
projects. This is like the matrix structure;
however when the project ends the employees
don’t go back their departments. They
continuously work on projects in a team like
structure. Each team has the necessary
employees to successfully complete the project.
Each employee brings his or her specialized skill
to the team. Once the project is finished then the
team moves on to the next project.


Some large organizations have adopted this
type of structure. That is, the organization is
comprised of many independent
decentralized business units, each with its
own products, clients, competitors, and profit
goals. There is no centralized control or
resource allocation.

 A boundaryless organization is one in which its design is not defined by,
or limited to, the horizontal, vertical, or external boundaries imposed by
a predefined structure. In other words it is an unstructured design. This
structure is much more flexible because there is no boundaries to deal
with such as chain of command, departmentalization, and organizational
hierarchy. Instead of having departments, companies have used the
team approach. In order to eliminate boundaries managers may use
virtual, modular, or network organizational structures. In a virtual
organization work is outsourced when necessary. There are a small
number of permanent employees, however specialists are hired when a
situation arises. Examples of this would be subcontractors or
freelancers. A modular organization is one in which manufacturing is the
business. This type of organization has work done outside of the
company from different suppliers. Each supplier produces a specific
piece of the final product. When all the pieces are done, the organization
then assembles the final product. A network organization is one in which
companies outsource their major business functions in order to focus
more on what they are in business to do.


A learning organization is defined as an organization
that has developed the capacity to continuously learn,
adapt, and change. In order to have a learning
organization a company must have very
knowledgeable employees who are able to share their
knowledge with others and be able to apply it in a
work environment. The learning organization must
also have a strong organizational culture where all
employees have a common goal and are willing to
work together through sharing knowledge and
information. A learning organization must have a
team design and great leadership. Learning
organizations that are innovative and knowledgeable
create leverage over competitors.

 DEALS WITH THE AUTHORITY RELATIONSHIPS
 i.e THE PROBLEMS OF LINE AND STAFF
 WHAT IS POWER, RESPONSIBILITY AND
AUTHORITY?
 WHAT ARE AUTHORITY RELATIONSHIPS?

 POWER IS THE ABILITY OF INDIVIDUALS OR
GROUPS TO INDUCE OR INFLUENCE THE
BELIEFS OR ACTIONS OF OTHER PERSONS
OR GROUPS
 POWER:
1. LEGITIMATE
2. EXPERT
3. REFERENT
4. REWARD
5. COERCIVE

 AUTHORITY IN AN ORGANISATION IS THE
POWER IN A POSITION ( AND THROUGH IT
THE PERSON OCCUPYING THE POSITION ) TO
EXERCISE DISCRETION IN MAKING DECISIONS
AFFECTING OTHERS.
 IT IS POWER, BUT IN AN ORGANISATIONAL
SETTING

 LINE FUNCTIONS ARE THOSE WHICH HAVE
DIRECT RESPONSIBILITY FOR
ACCOMPLISHING THE OBJECTIVES OF THE
ENTERPRISE.
 STAFF REFERS TO THOSE ELEMENTS OF THE
ORGANISATION THAT HELP THE LINE TO
WORK MOST EFFECTIVELY IN
ACCOMPLISHING THE PRIMARY OBJECTIVES
OF AN ENTERPRISE.

 STAFF FUNCTIONS : PURCHASE,
ACCOUNTING, PERSONNEL, & QUALITY
CONTROL.
 LINE: PRODUCTION, MARKETING & SALES,
FINANCE.
 WHY CONFUSION?

 THERE IS A LINE OF AUTHORITY FLOW FROM
SUPERIOR TO SUBORDINATE KNOWN AS THE ‘
‘

 THE CLEARER THE LINE OF AUTHORITY
FROM THE ULTIMATE AUTHORITY FOR
MANAGEMENT IN AN ENTERPRISE TO EVERY
SUBORDINATE POSITION , THE MORE
EFFECTIVE WILL BE REPONSIBLE DECISION
MAKING AND ORGANISED
COMMUNICATION.

 STAFF RELATIONSHIP IS ADVISORY.
 THE FUNCTION OF PEOPLE IN STAFF POSITION
IS TO INVESTIGATE , RESEARCH AND GIVE
ADVICE TO LINE MANAGERS TO WHOM THEY
REPORT.

 LINE AND STAFF ARE DISTINGUISHED BY
THEIR AUTHORITY RELATIONSHIPS AND NOT
WHAT THEY DO
 E.g. THE PR DEPT IS PURELY STAFF..
BUT WITHIN THE DEPT THERE WILL BE LINE
AND STAFF RELATIONSHIPS

 IT IS THE POWER WHICH AN INDIVIDUAL OR
DEPARTMENT MAY HAVE DELEGATED TO IT
OVER SPECIFIED PROCESSES , PRACTICES,
POLICIES , OR OTHER MATTERS RELATING TO
ACTIVITIES UNDERTAKEN BY PERSONNEL IN
DEPARTMENTS OTHER THAN ITS OWN.

1. THEIR ADVICE IS CRITICAL AS THEY HAVE
SPECIALISED KNOWLEDGE IN THEIR AREAS
2. THE ADVICE COULD BE CRITICAL IN
SOLVING A PROBLEM

 DANGER OF UNDERMINING LINE AUTHORITY
 LACK OF RESPONSIBILITY
 THINKING IN A VACUUM
 MANAGERIAL PROBLEMS

 UNDERSTANDING AUTHORITY
RELATIONSHIPS
 MAKE LINE LISTEN TO STAFF
 KEEP STAFF INFORMED
 COMPLETED STAFF WORK - i.e ADVICE NOT
CONTROL
 MANAGERS HAVE RESPONSIBILITY AND ARE
ACCOUNTABLE

 IT IS THE FUNDAMENTAL ASPECT OF
DELEGATION
 IT IS MORE OF HOW MUCH OF AUTHORITY IS
TO BE DELEGATED RATHER THAN WHAT KIND
OF AUTHORITY IS TO BE DELEGATED.

 THE PRIMARY PURPOSE OF DELEGATION IS TO
MAKE ORGANISATION POSSIBLE
 ENABLES DECISION MAKING
 EFFECTIVE SUPERVISION

1. WHEN DECISION MAKING POWER IS
VESTED IN A SUBORDINATE BY A
SUPERIOR
2. SUPERIORS CANNOT DELEGATE
AUTHORITY WHICH THEY DO NOT
HAVE.

 THE DETERMINATION OF RESULTS
EXPECTED FROM PERSONS IN A POSITION
 THE ASSIGNMENT OF TASKS TO PERSONS IN
A POSITION
 THE DELEGATION OF AUTHORITY FOR
ACCOMPLISHING THESE TASKS
 THE HOLDING OF PEOPLE RESPONSIBLE FOR
THE ACCOMPLISHMENT OF THESE TASKS.

 PRINCIPLE OF DELEGATION BY RESULTS EXPECTED
 PRINCIPLE OF FUNCTIONAL DEFINITION
 SCALAR PRINCIPLE
 AUTHORITY PRINCIPLE
 PRINCIPLE OF UNITY OF COMMAND
 PRINCIPLE OF ABSOLUTENESS OF RESPONSIBILITY
 PRINCIPLE OF PARITY OF AUTHORITY AND
RESPONSIBILITY

 AUTHORITY DELEGATED TO AN INDIVIDUAL
MANAGER SHOULD BE ADEQUATE TO ENSURE
THE ABILITY TO ACCOMPLISH RESULTS
EXPECTED.
BACK

 THE MORE A POSITION OR A DEPARTMENT HAS
CLEAR DEFINITIONS OF RESULTS EXPECTED ,
ACTIVITIES TO BE UNDERTAKEN , ORGANISATIONAL
AUTHORITY DELEGATED, AND AUTHORITY AND
INFORMATIONAL RELATIONSHIPS WITH OTHER
POSITIONS UNDERSTOOD, THE MORE ADEQUATELY
THE RESPONSIBLE INDIVIDUALS CAN CONTRIBUTE
TOWARDS ACCOMPLISHING ENTERPRISE
OBJECTIVES.
BACK

 MAINTAINANCE OF INTENDED DELEGATION
REQUIRES THAT DECISIONS WITHIN THE
AUTHORITY COMPETENCE OF INDIVIDUALS BE
MADE BY THEM AND NOT BE REFERRED
UPWARD IN THE ORGANISATION STRUCTURE.

 THE MORE COMPLETELY AN INDIVIDUAL
HAS A REPORTING RELATIONSHIP TO A
SINGLE SUPERIOR , THE LESS THE PROBLEM
OF CONFLICT IN INSTRUCTIONS AND THE
GREATER THE FEELING OF PERSONAL
RESPONSIBILITY FOR RESULTS.

 THE RESPONSIBILITY OF SUBORDINATES TO
THEIR SUPERIORS FOR PERFORMANCE IS
ABSOLUTE , ONCE THEY HAVE ACCEPTED
AN ASSIGNMENT AND THE POWER TO
CARRY IT OUT, AND THE SUPERIORS
CANNOT ESCAPE RESPONSIBILITY FOR THE
ORGANISATION ACTIVITIES OF THEIR
SUBORDINATES.

 THE RESPONSIBILITY FOR ACTIONS CANNOT
BE GREATER THAN THAT IMPLIED BY
AUTHORITY DELEGATED NOR SHOULD IT BE
LESS.

 RECEPTIVENESS
 WILLINGNESS TO LET GO
 WILLINGNESS TO LET OTHERS MAKE MISTAKES
 WILLINGNESS TO TRUST SUBORDINATES
 WILLINGNESS TO ESTABLISH AND USE BROAD
CONTROLS

 FAILURE TO PLAN PROPERLY
 FAILURE TO DELEGATE AUTHORITY
 FAILURE TO BALANCE DELEGATION
 GRANTING AUTHORITY WITHOUT
RESPONSIBILITY
 HOLDING PEOPLE RESPONSIBLE WHO DO NOT
HAVE AUTHORITY

 WHAT IS IT?
 HOW MUCH TO DECENTRALISE?
1. Verifiable objectives
2. Technique of organisation i.e. state each
manager’s duites and responsibilities
3. Character of top leadership
4. Stretch span of management to the
maximum
5.Promote managers only when they have good
subordinates to take their place

 COSTLINESS OF THE DECISION
 UNIFORMITY OF POLICY
 HISTORY OF THE ENTERPRISE
 MANAGEMENT PHILOSOPHY
 ENVIRONMENTAL INFLUENCES
 AVAILABILITY OF MANAGERS

Decentralization
 The delegation of decision making authority to
managers throughout the organization
Centralization Decentralization
Minimum freedom Maximum freedom

Benefits of Decentralization
 Lower-level managers are more informed
about local conditions
 Managers acquire decision-making
experience that trains them to assume
leadership roles in organization
 Managerial independence leads to greater
motivation

Costs of Decentralization
 Managers may make goal incongruent decisions
 Duplication of services (accounting and
advertising)
 Increased cost of accumulating and processing
information
 Managers may waste time arguing about shared
services

 Most companies adopt a blend of
decentralized and centralized functions
(decentralize marketing but centralize tax
planning)
 Decentralization is most successful when
organization's segments are relatively
independent
Diversified Single Industry Single
Product Line Multi-Product Product
No Problems Common Problems

 Decentralization cannot work unless top
management is willing to abide by its
managers' decisions
 Stepping in and overriding managers'
decisions will quickly result in motivational
problems

 Be careful to separate these two ideas
 Profit centres hold a manager accountable
for revenues & expenses
 Decentralized manager has the freedom to
make decisions
 Cost centre may be more decentralized than
a profit centre if the cost centre manager
has more authority

 write the Nature and Definition of Planning?
 Discuss Principles and Objectives of Planning
 What is Planning process? Explain different
Types of plans?
 Write the Benefits and pitfalls of planning.
 What is meant by Principles of organizing?
Discuss various Organization levels with
suitable diagrams?

1. Discuss various Organizational designs and
structure with suitable diagrams
2. What is meant Line and staff organization?
Write various Approaches of Delegation of
authority?
3. What are the Factors affecting delegation of
authority?
4. What is Span of management ?
5. Discuss Centralization and decentralization
of Authority with an illustration.

PRINCIPLES OF MANAGEMENT-JNTUK-UNIT-2-2016-2018 BATCH

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