Subject

“Technological Innovation Management

and Entrepreneurship”
Subject Code:18ES51
Faculty: ANJALI R K
03 Credits 40-CIE marks
60-SEE Marks
Module-1 Management and Planning

Introduction
Meaning , Importance and scope of Management
Characteristics of Management
Nature of Management
Management Functions or The Process of Management
Functional Areas of Management
Management: A Science or Art?
Management: A Profession?
Management and Administration
Role of Management
Managerial skills
Levels of Management
Evolution of Management
Planning-Meaning
Nature of Planning
Importance of Planning
Types of Planning
Types of Plans
Steps in Planning
Decision-making
 Management-Introduction
Meaning , Importance and scope of Management

The objectives of this lesson are to enable to define

management; to describe the nature and scope of
management; to know the difference between
management and administration; to understand
various levels of management; and to describe the
various skills that are necessary for successful
managers.
Management is a function of guidance and leadership
control of efforts of a group of individuals in order to
achieve the goals/objectives of an organization
 History of Management
Management is a vital aspect of the economic life of man, which
is an organized group activity. It is considered as the
indispensable institution in the modern social organization
marked by scientific thought and technological innovations.
One or the other form of management is essential wherever
human efforts are to be undertaken collectively to satisfy
wants through some productive activity, occupation or
profession.
Evolution of Management :
Before Industrial revolution
After Industrial revolution ( Beginning from Later half of 18 th
century)
 Factors of Production and role of 4 Ms
• Factors of production is an economic term that describes
the inputs used in the production of goods or services in
order to make an economic profit.
• These include any resource needed for the creation of a
goods or services.
• The factors of production include land, labour, capital and
entrepreneurship. The state of technological progress can
influence the total factors of production and account for
any efficiencies not related to the four typical factors.
• In management aspects same factors of production are
known as 4 Ms. They are Money, Men, Materials and
Market.
 ELEMENTS OF MANAGEMENT
 A well defined ambiance within which management must
perform.
 A good organization that gives shape of management
 A need for planning, Implementation and monitoring
 Self content
 Need for leadership and direction
 A good and effective communication network
 Effective co-ordination
 Constant evaluation, monitoring and control.
 Innovation of new ideas and techniques
 It is the critical element in the economic growth of the
country.
 7 Success factors for the introduction
of innovation management
• Management Commitment
to Innovation.
• Strategic orientation. ...
• Clear responsibilities. ...
• Innovation culture. ...
• Change Management. ...
• Integration of all employees. ...
• Collaboration.
 Need for Management
A business develops in course of time with
complexities. With increasing complexities
managing the business has become a difficult task.
The need of existence of management has increased
tremendously.
Management is essential not only for business
concerns but also for banks, schools, colleges,
hospitals, hotels, religious bodies, charitable trusts
etc. Every business unit has some objectives of its
own. These objectives can be achieved with the
coordinated efforts of several personnel.
 Concept of Professional Management
• Professional Management refers to the seasoned approach in
administering the organization. In such organizations the top
management positions and even the lower management position are held
by professional people. They have the professional qualifications,
administrative & technical skills and also the good amount of experience
in managing business affairs.
• According to Louis Allen Professional Management defined as
follows:"A Professional manager is one who specializes in the work of
planning, organizing, leading and controlling the efforts of others and
does so thought systematic use of classified knowledge, a common
vocabulary and principles and who subscribes to the standard of practice
and code of ethics establish by recognized body".
Concept of professional Management in India-
“Managers are born not made”- how far this works out in India
 Definitions of Management
Peter F. Drucker defines, "management is an organ; organs can
be described and defined only through their functions".
According to Terry, "Management is not people; it is an activity
like walking, reading, swimming or running. People who
perform Management can be designated as members, members
of Management or executive leaders."
Ralph C. Davis has defined Management as, "Management is
the function of executive leadership anywhere.“
Henry Fayol, "To mange is to forecast and plan, to organize, to
Compound, to co-ordinate and to control."
Mary Parker Follett defines management as the "art of getting
things done through people". This definition calls attention to
the fundamental difference between a manager and other
personnel of an organization.
 Definitions of Management
• John F Mee states “Management is the art of securing maximum
results with minimum efforts so as to secure maximum prosperity
for employer and employee and give the public the best possible
service”.
• According to Koontz and O’Donnel, “Management is the
direction and maintenance of an internal environment in an
enterprise where individuals working in groups can perform
efficiently and effectively towards the attainment of group goals”.
It is the art of getting the work done through and with people in
formally organized groups.
• Joseph L Massie defines as “Management is the process by which
a cooperative group directs actions towards common goals”.
 Concepts of Management
From the view point of economics, Sociology,
psychology, statistics and anthropology
management has different meanings. There are
four views of management:
(1) Management is a process.
(2) Management is a discipline.
(3) Management is a human activity.
(4) Management is a career.
 IMPORTANT CHARACTERISTICS OF
MANAGEMENT
• Stable
• Applicable to all organization
• Transparent
• Approaches are to be clear and goal oriented
• Simple and effective
• Should be responsive to all the external elements/factors
• Should have well defined goals with effective means of
accomplishment.
• Should have good management principles
• It should provide conducive atmosphere for work
• Universal application
 CHARACTERISTICS OF MANAGEMENT
• Management is a continuous process
• Management is an art as well as science
• Management aims at achieving predetermined objectives
• Management is a factor of production
• Management is decision-making
• Management is needed at all levels
• Management aims at maximum profit
• Dynamic
• Management is a profession
• Management as a career
• Management is a discipline
 NATURE OF MANAGEMENT
• Multidisciplinary
• Dynamic nature of principles
• Relative not absolute principles
• Management – science or art
• Universality of management
 Objectives of Management
• Proper utilization of resources
• Improvisation of performance
• Mobilization of best talent
• Planning for future
 Importance of Management
• Achievement of group objectives
• Optimum utilization of resources
• Minimization of cost
• Meeting with the competition
• Increasing in profit
• Smooth running of business
• Provides innovation
• Change of growth
• Concern about social benefits
• Development of Economy
 Scope of Management
Scope of management is not limited only to business organizations but it is extended to all
type of entities such as public, private, formal, informal, service and nonservice etc.,--
Extended scope of the management can be seen in these important areas of life:
Developing management
Distribution management
Financial management
Marketing management
Personnel management
Production management
Office management
Transport management
Purchase management
Sales management
Supply chain management
Business Management like—Hospital, Hotel, Educational, Stores
Sectoral Managements like Agriculture, Industry, banks etc.,
Area managements Like rural, urban etc.,
 Functional areas of Management
A function is a group of similar activities. There is divergence of
view on “What functions are undertaken by managers in
organizations?” Some management experts classify these
functions into four types and others classify into five types and
some others classify them as seven items.
Henry Fayol - Planning, organizing, commending, coordinating, controlling
Luther Gulick - Planning, organizing, staffing, directing, coordinating, reporting
and budgeting (POSDCORB)
Lyndall Urwick -Planning, organizing, commanding, coordinating, communi-
cating, forecasting, and investigating.
E.F.L. Brech - Planning, organizing, motivating, coordinating, controlling
Koontz and O’Donnell - Planning, organizing, staffing, directing (leading),
controlling.
 Planning
For our purpose we shall designate the following five as the functions of
the manager. In addition we briefly refer to “Innovation and
representation as two additional managerial functions considered
important by Earnest Dale.
1. Planning: Planning is the primary function of management. It is looking
ahead and preparing for the future. It determines in advance what should be
done. It is conscious determination of future course of action. Planning
involves
1. determination of specific objectives, programs, setting policies,
strategies, rules and procedures and preparing budgets.
2. Planning is a function which is performed by managers at all levels
– top, middle and supervisory. Plans made by top management for the
organization as a whole may cover periods as long as five to ten years,
whereas plans made by low level managers cover much shorter periods.
3.Planning involves determining why to take action? What action? How
to take action? When to take action?
 Organizing and Staffing
2. Organizing: Organizing is the distribution of work in group-wise or section wise for effective performance.
Once the managers have established objectives and developed plans to achieve them, they must design and
develop a human organization that will be able to carry out those plans successfully. Organizing involves
• Dividing work into convenient tasks or duties.
• Grouping of such duties in the form of positions.
• Grouping of various positions into departments and sections.
• Assigning duties to individual positions.
• Delegating authority to each position so that the work is carried out as planned.
According to Koonz O’Donnel, “Organization consists of conscious coordination of people towards a desired
goal”. One has to note that different objectives require different kinds of organization to achieve them.

3. Staffing: Staffing involves managing various positions of the organizational

structure. It involves selecting and placing the right person at the right position. Staffing
includes identifying the gap between manpower required and available, identifying the
sources from where people will be selected.
selecting people,
training them,
fixing the financial compensation and appraising them periodically.
The success of the organization depends upon the successful performance of staffing function.
 Directing and Controlling
(4) Directing: Planning, organizing and staffing functions are concerned with the
preliminary work for the achievement of organizational objectives. The actual
performance of the task starts with the function of direction. This function can be called by various names namely
“leading”, “directing”, “motivating”, “activating” and so on.
Directing involves these sub functions:
(a) Communicating: It is the process of passing information from one person to
another.
(b) Leading: It is a process by which a manager guides and influences the work
of his subordinates.
(c) Motivating: It is arousing desire in the minds of workers to give their best to
the enterprise.
(d) Coordinating: Integrated efforts of members with mutual understanding.

(5) Controlling: Planning, organizing, staffing and directing are required to realize
organizational objectives. To ensure that the achieved objectives confirm to the preplanned objectives control function
is necessary. Control is the process of checking to determine whether or not proper progress is being made
towards the objectives and goals and acting if necessary to correct any deviations. Control involves three
elements:
(a) Establishing standards of performance.
(b) Measuring current performance and comparing it against the established standard.
(c) Taking action to correct any performance that does not meet those standards.
 Innovation and Representation
(6) Innovation: Innovation means creating new ideas which may
be either results in the development of new products or finding
new uses for the old ones. A manager who invents new products
is an innovator. A salesman who persuades Eskimos to purchase
refrigerator is an innovator. One has to note that innovation is
not a separate function but a part of planning.
(7) Representation: A manager has to spend a part of his time in
representing his organization before various groups which have
some stake in the organization. A manager has to be act as
representative of a company. He has dealings with customers,
suppliers, government officials, banks, trade unions and the
like. It is the duty of every manager to have good relationship
with others.
 Whether the Management a Science or an
Art or a Profession
There is great controversy whether management is science or art. It is an art in the
sense of possessing of managing skill by a person. It is a science also because of
developing principles or laws which are applicable in a place where a group of
activities are coordinated. In fact management is both science and art as it clear
from the following discussion:
Management as science:
Science is a systematized study of body of knowledge. We call a discipline scientific if
its
(1) Methods of inquiry are systematic and empirical.
(2) Information can be ordered and analyzed; and
(3) Results are cumulative and communicable.
Science denotes two types of systematic knowledge; natural or exact and behavioural
or inexact.
management is in the category of behavioural science.
 Management as an art
Management is the art of getting things done through others in
dynamic situations. A manager has to coordinate various
resources against several constraints to achieve predetermined
objectives in the most efficient manner.
Manager has to constantly analyze the existing situation, determine
objectives, seek alternatives, implement, and control and make
decision.
Features of art:
Use of Knowledge
Creativity and Innovation
Personal touch
Constant practice
 A comparison between science and art
Science Art
Advances by knowledge Advances by practices
Process Feels
Predicts Guesses
Defines Describes
Measures Opines
Impresses Expresses
Management uses both scientific knowledge and art in
managing an organization. As the science of management
increases so should the art of management. A balance
between the two is needed.
 MANAGEMENT: A PROFESSION
“Profession” possesses the following characteristics:
(1) Existence of an organized knowledge.
(2) Formalized method of acquiring training and expertise.
(3) Existence of professional association.
(4) Existence of an ethical code to regulate the behaviour.
(5) Charging of fees based on service with due regard to social interest.
Management has no fixed norms for managerial behaviour. There is no uniform
code of conduct or licensing of managers. There are no restrictions to
individuals to possess an academic degree.
However, ‘professionalization’ of management started and it is essential
nowadays to acquire some professional knowledge or training. In this regard
government of India has started six national institutes of management and a
number of universities and institutions are offering MBA programmes.
 MANAGEMENT AND ADMINISTRATION

Various views expressed by thinkers of management led to the emergence of there

approaches:
(1) Administration is above management.
(2) Administration is a part of management.
(3) Management and administration are same.
“Administration is that phase of business enterprise that concerns itself with the overall
determination of institutional objectives and the policies necessary to be followed
in achieving those objectives. Management on the other hand is an executive
function which is primarily concerned with carrying of broad policies laid down by
the administration”.
The basic point of controversy between management and administration lies in forms
of coverage of activities. The content of policy formulation is higher at higher levels; it
is lower at lower levels, while executive is more at lower levels and lower at higher
levels. Hence, it becomes unimportant whether policy formulation function is known
as administration or management.
Differences between administration and management

Characteristics Administration Management

Functions Planning, Organising and Leading, motivating and

staffing controlling
Status Acts as a owner Acts as a agency

Skills Requires good Requires good technical

administrative skills skills
Levels in the organization Top level Middle or lower level

Position Managing Director,Owner, Managers, supervisors,

CEO, etc., Foremen etc.,
Objectives Makes the policies, Implements the plans and
objectives and goals to be policies
achieved
involvement No direct involvement Direct involvement in the
production or services execution of plans and
achieving goals
 Roles of Manager
According to Henry Mintzberg An organized set of behaviour belonging to an
identified office or position is called as Manager.
A manager performs planning, organizing, directing and controlling to achieve the
organizational objectives. It has been questioned whether these functions provide
an adequate description of the management process.
Interpersonal role:This role is concerned with his interacting with people
both organizational members and outsiders.
There are three types of interpersonal roles:
(1) Figure head role:In this role manager has to perform duties of ceremonial
nature such as attending social functions of employees, taking an important
customer to lunch and so on.
(2) Leader role:Manager’s leader role involves leading the subordinates
motivating and encouraging them.
(3) Liaison:In liaison role manager serves as a connecting link between his
organization and outsiders. Managers must cultivate contacts outside his
vertical chain to collect information useful for his organization
 Roles of Manager
Informational roles: It involves communication.
There are three types of informational roles:
(1) Monitor:In his monitoring role, manager continuously
collects information about all the factors which affects his
activities. Such factors may be within or outside
organization.
(2) Disseminator:In the disseminator role, manager
possesses some of his privileged information to his
subordinates who otherwise not be in a position
to collect it.
(3) Spokesperson: As a spokesperson manager represents his
organization while interacting with outsiders like
customers, suppliers, financers, government and other
 Roles of Manager
Decisional roles: Decisional role involves choosing most appropriate alternative
among all so that organizational objectives are achieved in an efficient manner. In his
decisional role manager perform four roles:
1. Entrepreneur:As an entrepreneur, a manager assumes certain risks in terms
of outcome of an action. A manager constantly looks out for new ideas and
seeks to improve his unit by adopting it to dynamic environment.
2.Disturbance handler:In this role manager works like a fire-fighter manager
contains forces and events which disturb normal functioning of his organization.
The forces and events may be employee complaints and grievances, strikes,
shortage of raw materials etc.
3. Negotiator:In his role of negotiator, manager negotiates with various groups
in the organization. Such groups are employees, shareholders and other outside
agencies.
4.Resource allocator: Manager divides the work and provides required resources and
facilities to carry out the allotted work.
 Skills of Manager
• Top Management- Conceptual Skills
• Middle Management -Human Relations Skills
• Low Management -Technical Skills
Characteristics of Professional Managers
 Managers are responsible and accountable
 Managers balance competing goals and set priorities
 Managers think analytically and conceptually
 Managers are mediators
 Managers make difficult decisions
 Competencies required for Managers
Combination of Knowledge, skills, behaviour and
attitudes that contributes to personal effectiveness.
Concept of Global Managers/Corporate managers
Communication skills
Self competencies
Global competencies
Diversity competencies
Ethics competencies
Cross cultural competencies
Change competencies
 Levels of Management
People in an organization are arranged in an hierarchy and they all have the
relationship of superior-subordinates.
Every manager in an organization performs all five management functions. The relative
importance of these functions varies along the managerial levels. Some of these
levels are merged into one on the basis of nature of functions performed and
authority enjoyed. E.F.L. Brech has classified management levels into three
categories – Top Management, Middle Management and Supervisory/Lower Level
as shown in fig 1.3.

Board of Directors, Chairman, Chief Executive

Top
Department Heads, Divisional Heads, Section Heads
Middle
Senior Supervisor, Front Line Supervisors
Lower
 Top level management
• Top management of a company consists of owners/shareholders, Board of
Directors, its Chairman, Managing Director, or the Chief Executive, or the
General Manager or Executive Committee having key officers. Top management
is the ultimate source of authority and it lays down goals, policies and plans for
the enterprise. It devotes more time on planning and coordinating functions. It is
accountable to the owners of the business of the overall management. The
important functions of top management include :
(a) To establish the objectives or goals of the enterprise.
(b) To make policies and frame plans to attain the objectives laid.
(c) To set up an organizational frame work to conduct the operations as
per plans.
(d) To assemble the resources of money, men, materials, machines and
methods to put the plans into action.
(e) To exercise effective control of the operations.
(f) To provide overall leadership to the enterprise.
 Middle level management
Middle management of a company consists of heads of functional departments viz. Purchase
Manager, Production Manager, Marketing Manager, Financial controller, etc. and
Divisional and Sectional Officers working under these Functional Heads. The job of
middle management is to implement the policies and plans framed by the top management.
It serves as an essential link between the top management and the lower level or operative
management. The following are the main functions of middle management :
(a) To interpret the policies chalked out by top management.
(b) To prepare the organizational set up in their own departments for fulfilling the objectives
implied in various business policies.
(c) To recruit and select suitable operative and supervisory staff.
(d) To assign activities, duties and responsibilities for timely implementation of the plans.
(e) To compile all the instructions and issue them to supervisor under their control.
(f) To motivate personnel to attain higher productivity and to reward them properly.
(g) To cooperate with the other departments for ensuring a smooth functioning of the entire
organization.
(h) To collect reports and information on performance in their departments.
(i) To report to top management
(j) To make suitable recommendations to the top management for the better execution of plans
and policies.
 Lower level management
It is placed at the bottom of the hierarchy of management, and actual operations are
the responsibility of this level of management. It consists of foreman, supervisors,
sales officers, accounts officers and so on. Lower or operative level management
involves
a) They are in direct touch with the rank and file or workers.
b) Their authority and responsibility is limited.
c) They pass on the instructions of the middle management to workers. They
interpret and divide the plans of the management into short-range operating
plans.
d) They are also involved in the process of decisions-making.
e) They have to get the work done through the workers.
f) They allot various jobs to the workers, evaluate their performance and report to
the middle level management.
g) They are more concerned with direction and control functions of management.
h) They devote more time in the supervision of the workers.
 Evolution of management thought
1700 to 1800 highlights the industrial revolution and the factory system highlights the industrial
revolution and the factory system highlighted the importance of direction as a managerial
function. Several economists during this period explained the concept of management.
For example, Adam Smith explained the concept of division of labour, Jacques Turgot explained
the importance of direction and control, and Baptiste explained the importance of planning.
But management is emerged as a separate discipline in the second half of 19 th century with the
introduction of Joint Stock Company. The evaluation of management thought during this
period can be classified into three parts namely
(1) Early management approaches represented by Taylor’s scientific management, Foyal’s
administrative management.
(2) Neo-classical approaches by Max Weber’s Bureaucratic management and human relations
movement.
(3) Modern management approaches, represented by behavioural approach,
quantitative/management science approach, systems approach and contingency
approach.
FORCES BACKING MANAGEMENT THOUGHTS
Political Forces
Social Forces
Economic Forces
 Early management approaches
Scientific Management
Objectives of Scientific Management—
1. Scientific management means application of the scientific methods to the problem of
management.
2.It conducts a business or affairs by standards established by facts or truth gained through
systematic observation, experiments, or reasoning.
Fredrick W. Taylor (1856-1915):He is known as ‘father of scientific management’.
Taylor’s philosophy and ideas are given in his book, ‘Principles of Scientific
Management’ published in 1911.
TAYLOR’S FOUR PRINCIPLES OF SCIENTIFIC MANAGEMENT
Taylor’s Principle Related Management Activity ----
1. Develop a science for each job with standardized work implements and efficient
methods for all to follow. Complete time-and-motion study to determine the best
way to do each task.
2. Scientifically select workers with skills and abilities that match each job, and train
them in the most efficient ways to accomplish tasks. Use job descriptions to select
employees, set up formal training systems, and establish optimal work standards
to follow.
 Taylor’s Scientific Management
3. Ensure cooperation through incentives and provide the work environment that
reinforces optimal work results in a scientific manner. Develop incentive pay, such
as piece-rate system, to reward productivity, and encourage safe condition by using
proper implements.
4. Divide responsibility for managing and for working, while supporting individuals
in work groups for what they do best. Some people are more capable of
managing, whereas others are better at performing tasks laid out for them.
Promote leaders who guide, not do, the work; create a sense of responsibility
for group results by panning tasks and helping workers to achieve those results.
Taylor summed up his approach in these words:
• Science, not rule of thumb
• Harmony, not discord
• Cooperation and not individualism
• Maximum output, in place of restricted output
• The development of each man to his greatest efficiency and prosperity.
 Scientific Management
Henry Gantt (1861-1919):He was a consulting engineer who specialized in
control system for shop scheduling. He sought to increase workers efficiency
through scientific investigation.
• He developed the Gantt Chart that provides a graphic representation of the flow
of the work required to complete a given task.
• The chart represents each planned stage of work, showing both scheduled times
and actual times.
• Gantt Charts were used by managers as a scheduling device for planning and
controlling work.
• Gantt devised an incentive system that gave workers a bonus for completing their
job in less time than the allowed standards. His bonus systems were similar to the
modern gain sharing techniques whereby employees are motivated to higher
levels of performance by the potential of sharing in the profit generated.
In doing so, Gantt expanded the scope of scientific management to encompass the
work of managers as well as that of operatives.
 Scientific Management
Frank (1868-1924) and Lillian (1878-1972) Gilbreth:
Frank Gilbreth, a construction contractor by back ground, gave up his
contracting career in 1912 to study scientific management after hearing
Taylor’s speak at a professional meeting. Along with his wife Lillian, a
psychologist, he studied work arrangements to eliminate wasteful hand-
body-motion. Frank specialized in research that had a dramatic impact on
medical surgery and, through his time and motion findings, surgeons saved
many lives.
• Lillian is known as ‘first lady of management’ and devoted most of her
research to the human side of management.
• Frank Gilbreth is probably best known for his experiments in reducing the
number of motions in bricklaying.
• The man and wife team developed a classification scheme for the various
motions (17 basic hand motions) used to complete a job referring a motion
as a therblig.
• Gilbreths also experimented with the design and use of the proper tools
and equipments for optimizing work performance.
 Objectives Scientific management
1. To assess industrial and market tendencies and to regularize
continuous operation.
2. To earn profit from given expenditure by minimizing waste
work and waste movements
3. To provide safe and healthy working environment
4. To build character through proper work
5. To develop self realization and self satisfaction among
workers thereby improving their morale.
6. To give better opportunity for individual through scientific
methods of working
7. To ensure happier and social life to workers
8. To promote justice among the workers by treating them equal
9. To perform planned and balanced operations.
 Henry Fayol’s Administrative Management
(1841–1925)
Henry Fayol was a French Mining Engineer turned into a leading industrialist
and successful manager. Fayol provided a broad analytical framework of
the process of administration. He used the word Administration for what
we call Management. Foyal focused on general administrative and
managerial functions and processes at the organizational level.
According to Fayol, all managerial tasks could be classified into one of the
following six groups:
• Technical (related to production);
• Commercial (buying, selling and exchange);
• Financial (search for capital and its optimum use);
• Security (protection for property and person);
• Accounting (recording and taking stock of costs, profits, and liabilities,
keeping balance sheets, and compiling statistics);
• Managerial (planning, organizing, commanding, coordinating and
control);
 Foyal’s 14 principles of management
1. Division of work
2. Authority and responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual interest to general interest
7. Remuneration
8. Centralization
9.Scalar chain
10. Order
11.Equity
12.Stability of tenure of personnel
13.Initiative
14.Esprit de Corps
 Neo-classical approaches
Max Weber’s Bureaucratic management---
Max Weber a German sociologist developed a theory of authority structures and described
organizational activities on the basis of authority relations. He described an ideal type of
organization that he called a bureaucracy, a form of organization characterized by division of
labour, a clearly defined hierarchy, detailed rules and regulations, and impersonal
relationships. WEBER’S IDEAL BUREAUCRACY
The Elements of Bureaucracy are:
• Labour is divided with clear definition of authority and responsibility that are
legitimatized as official duties.
• Positions are organized in a hierarchy of authority, with each position under
the authority of a higher one.
• All personnel are selected and promoted based on technical qualifications,
which are assessed by examination or according to training and experience.
• Administrative acts and decisions are recorded in writing. Recordkeeping
provides organizational memory and continuity over time.
• Management is separate from the ownership of the organization.
• Management is subject to rules and procedures that will insure reliable,
predictable behaviour. Rules are impersonal and uniformly applied to all
employees.
 Human Relations approaches
The human rationalists (also known as neo-classicists) focused as human aspect of
industry. They emphasize that organization is a social system and the human
factor is the most important element within it. Elton Mayo and others conducted
experiments (known as Hawthorne experiments) and investigated informal
groupings, informal relationships, patterns of communication, patterns of internal
leadership etc. Elton Mayo is generally recognized as father of Human Relations
School.
The human relationists, proposed the following points as a result of Hawthorne
Experiments:
(1) Social system
(2) Social environment
(3) Informal organization
(4) Group dynamics
(5) Informal leader
(6) Non-economic reward
 Modern Management Approaches
Behavioural Approach
This is an improved and more matured version of human relations approach. Behavioural Scientists
regard the classical approach as highly mechanistic, which finds to degrade the human spirit.
They prefer more flexible organization structures and jobs built around the capabilities and
aptitudes of average employees. The behavioral approach has laid down the following
conclusions.
1. he behaviorists attach great weightage on participative and group decision-making.
2. Behavioral Scientists encourage self direction and control instead of imposed
control.
3. Behavioral Scientists consider the organization as a group of individuals with
certain goals.
4. In view of behavioural scientists the democratic-participative styles of leadership
are desirable, the autocratic, task oriented styles may also be appropriate in
certain situation.
5. They suggest that different people react differently to the same situation. No
two people are exactly alike and manager should tailor his attempts to influence
his people according to their needs.
6. They recognize that organizational conflict and change are inevitable.
 Quantitative Approach
Quantitative approach (also known as management approach) started during Second
1. World War during which each participant country of the war was trying to seek
solutions to a number of new and complex military problems.
2. The interdisciplinary teams who were engaged for this purpose were known as
operation research teams.
3. These operation research teams developed quantitative basis for making military
decisions. These quantitative tools later are used to make business, industry and
enterprise decisions.
4. The focus of quantitative approach is on decision making, and to provide tools and
techniques for making objectively rational decisions.
5. Objective rationality means an ability and willingness to follow reasonable,
unemotional and scientific approach in relating means with ends and in visualizing
the totality of the decision environment.
6. This approach facilitates disciplined thinking while defining management problems
and establishing relationships among the variables involved. This approach is
widely used in planning and control activities where problems can be defined in
quantitative terms.
 Systems Approach

A system is a set of interdependent parts which form a unit as a

whole that performs some function. An organization is also a
system composed of four independent parts namely,
Task,
Structure,
People
Technology.
The central to the system approach is ‘holism’ which means that
each part of the system bears relation of interdependence with
other parts and hence no part of the system can be accurately
analyzed and understood apart from the whole system.
A system can be open or closed system. In open system, a system
interacts with surrounding. An organization is open system
because it interacts with it.
 Contingency Approach

According to this approach, management principles and concepts have no

general and universal application under all conditions.
There is no best way of doing things under all conditions. Methods and
techniques which are highly effective in one situation may not give the
same results in another situation.
This approach suggests that the task of managers is to identify which
technique in a situation best contribute to the attainment of goals.
Managers therefore have to develop a sort of situational sensitivity and
practical selectivity.
Contingency views are applicable in designing organizational structure, in
deciding degree of decentralization, in motivation and leadership
approach, in establishing communication and control systems, in
managing conflicts and in employee development and training.
 PLANNING
Learning Objectives:
❒ To introduce the meaning and definitions of
management.
❒ Analyze the nature and importance of planning.
❒ Discuss various types of planning.
❒ Understand types of plan.
❒ Present steps in planning.
❒ Understand the meaning and types of decisions.
❒ Discuss steps in rational decision making.
❒ Present decision environment.
 Introduction
One of the characteristic of human being is that he plans. Planning is
the first and foremost function of management. Planning is the
process of deciding in advance what is to be done, who is to do it,
how it is to be done and when it is to be done. It is the process of
determining a course of action, so as to achieve the desired results. It
helps to bridge the gap from where we are, to where we want to go.
It makes it possible for things to occur which would not otherwise
happen.
Planning is a higher order mental process requiring the use of
intellectual faculties, imagination, foresight and sound judgment.
Planning is a process which involves anticipation of future course of
events and deciding the best course of action. It is a process of
thinking before doing. To plan is to produce a scheme for future
action; to bring about specified results, at specified cost, in a
specified period of time.
 Meaning and definitions of Planning
According to Koontz and O’Donnel “Planning is deciding in
advance what to do, how to do it, when to do it and who is
to do it. It bridges the gap from where we are and to where
we want to go. It is in essence the exercise of foresight”.
According to M.S. Hardly “Planning is deciding in advance
what is to be done.
Heying and Massie define “Planning is that function of the
manager in which he decides in advance what he will do.
It is a decision making process of a special kind. It is an
intellectual process in which creative mind and
imagination are essential”.
 6 Ps of Planning
 Purpose
 Philosophy
 Promise
 Policies
 Priorities
 Procedures
Benefits and Elements of Planning:
Benefits
(1) Planning focus managers to think ahead.
(2) It leads to development of performance standards.
(3) Having to formulate plans forces management to articulate clear
objectives.
(4) Planning makes organization to be better prepared for sudden
developments.
Elements
1. What will be done – what are the objectives of business in the short and
in the long run?
2. What resources will be required?
3. How it will be done?
4. Who will do it?
5. When it will be done?
 MYTHS ABOUT PLANNING
(i) Planning does no attempt to make future decisions.
(ii) Planning is not just forecasting or making
projections
• Are we in right business?
• What are our basic goals and objectives?
• When shall our present products become obsolete?
• Are our markets expanding or shrinking?
• Do we want to merge or go for takeover?
(iii) Planning is not a static process.
 Features of Planning
(1) Planning is primarily concerned with looking into future. It
requires forecasting the future.
(2) Planning involves selection of suitable course of action. It
means there are several ways to achieving objectives.
(3) Planning is undertaken at all levels of the organization because
managers at all level are concerned with determination of future
course of action.
(4) Planning is flexible. Planning involves selection of best course
of action under specific environment. If environment changes
an adjustment is needed between various factors of planning.
(5) Planning is pervasive and continuous managerial function
 Nature and Scope of planning
Nature
Planning: A Rational Approach
Planning: An Open System Approach
Flexibility of Planning
Pervasiveness of Planning
Planning is a Continuous Process
Planning concerns all Managers
Plans are arranged in a Hierarchy
Planning Commits an Organization into the Future
 Importance of planning
Importance
• Planning is essential in modern business
• Planning affects performance
• Primacy of planning
• Planning anticipates problems and minimizes
uncertainties
• To focus attention on objectives
• To facilitate effective control
• To increase organizational effectiveness
• Planning helps in the process of decision making
 BASIC PRINCIPLES OF PLANNING
Principle of contribution to objective
Principle of limiting factors
Principle of pervasiveness of planning
Principle of navigational change
Principle of flexibility
 Objectives of Planning
“Objectives are the goals, aims or purposes that the organizations wish to achieve
over varying periods of time”.
(1) Objectives are multiple in numbers
(2) Objectives are tangible or intangible
(3) Objectives have a priority
(4) Objectives are generally arranged in hierarchy
(5) Objectives some time clash with each other
Requirements of Sound Objectives
(1) Objectives must be clear
(2) Objectives must support one another.
(3) Objectives must be consistent with organizations mission.
(4) Objectives should be consistent over period of time.
(5) Objectives should be rational, realistic and not idealistic.
(6) Objectives should start with word ‘to’ and be followed by an action verb.
(7) Objectives should be periodically reviewed.
 ESSENTIAL STEPS IN PLANNING
1. Establishing Verifiable Goals or Set of Goals to be Achieved
2. Establishing Planning Premises
The planning premises can be classified as below:
(1) Internal and External premises.
(2) Tangible and Intangible premises.
(3) Controllable and non-controllable premises.
3. Deciding the planning period
4. Findings Alternative Courses of Action
5. Evaluation and selection of alternative
6. Developing derivative/supportive plans
7. Measuring and controlling the process
 ADVANTAGES OF PLANNING
A sound blue print for plans with specific objective and
action statements has numerous advantages for the
organization which are as follows :
1. Focuses Attention on Objectives
2. Ensures Economical Operation
3. Reduces Uncertainty
4. Facilitates Control
5. Encourages Innovation and Creativity
6. Improves Motivation
7. Improves Competitive Strength
8. Achieves Better Coordination
 Limitations of Planning
Sometimes, planning fails to achieve the expected results.
There are many causes of failure of planning in practice.
1. Lack of reliable data
2. Lack of initiative
3. Costly process
4. Rigidity in organizational working
5. Non-acceptability of change
6. External limitations
7. Psychological barriers
 MEASURES TO OVERCOME
LIMITATIONS OF PLANNING
1. Setting Clear-cut Objectives
2. Management Information System
3. Carefully Premising
4. Business Forecasting
5. Dynamic Managers
6. Flexibility
7. Availability of Resources
8. Cost-Benefit Analysis
 TYPES OF PLANNING
Though the basic process of planning is same yet there are
several ways in which an organization can undertake planning
process.
Dimension Types of planning
1.Coverage of activity Corporate and functional planning
2.Importance of contents Strategic and tactical/operational planning
3.Time period involved Long term and short term planning
4. Approach adopted Proactive and reactive planning
5. Degree of formalization Formal and Informal planning
 Differences between strategic and
operational planning
Strategic planning
1. It decides major goals and policies of allocation of resources to achieve these goals.

2. It is carried at higher level of management

3. It is long term
4. It is more uncertain because of long term
5. It is less detailed.
Operational planning
6. It decides the detailed use of resources to achieve these goals.
7. It is carried at lower level of management.
8. It is short term.
9. It is generally based on past performance of the organization and is less uncertain.
10. It is more detailed.
Ex: Launching the product is strategic plan whereas involving in production is operative
plan.
 Hierarchy in plans
 Mission or purpose
 Objectives
 Strategies
 Policies
 Procedures & rules
 Programmes & projects
 Budgets
 Quotes & targets
 Single used and multi used plans
Single used plans or Non-repititive plans
Programmes
Projects
Budgets
Multi used plans or repititive plans
Mission,
Objectives,
Strategies,
Policies,
Procedures
rules
 DECISION-MAKING
Decision-making is an essential part of modern management. Whatever a manager
does he does by making decisions. A manager makes hundreds of decisions
consciously or subconsciously every day. Decisions are made by the managers and
actions are taken by others. Major decisions are taken carefully and consciously by
the application of human judgment and experience where as minor decisions are
made almost subconsciously using rules.
Decision making is commitment to something, a point of view, a principle or course of
action. It is selecting the best among alternative courses of action.
The decision-making has the following factors.
(1) Decision-making implies that there are various alternatives and the most
desirable alternative is chosen to solve the problem.
(2) Existence of alternatives suggests that the decision-maker has freedom to choose
an alternative of his liking.
(3) Decision-making like any other managerial process is goal oriented. It implies
that the decision maker attempts to achieve some results through decision making.
 CHARACTERISTICS OFDECISION MAKING
The essential characteristics of decision making are given below:
1. It is a process of choosing a course of action from among the
alternative courses of action.
2. It is a human process involving to a great extent the application of
intellectual abilities.
3. It is the end process preceded by deliberation and reasoning.
4. It is always related to the environment. A manager may take one
decision in a particular set of circumstances and another in a different
set of circumstances.
5. It involves a time dimension and a time lag.
6. It always has a purpose. Keeping this in view, there may just be a
decision not to decide.
 Types of Decisions
Decisions are classified in a number of ways as below:
Programmed and non-programmed decisions:
Major and minor decisions:
Simple and complex decisions:
Strategic and tactical or operational decisions:
Individual and group decisions:
Analytical decisions
Adoptive decisions
Judgmental decisions
 Decision Making Process
A decision is rational if appropriate means are chosen to
reach the desired end. The following steps are involved
in the process decision making.
(1) Recognizing the problem.
(2) Deciding priorities among the problems.
(3) Diagnosing the problem.
(4) Developing alternative solutions or courses of activities.
(5) Evaluating alternatives.
(6) Converting the decision into effective action and follow
up of action.
 ENVIRONMENT OF DECISION-MAKING
A decision-maker may not have the complete knowledge
about decision alternatives or about the outcome of a
chosen alternative. This problem may be highly
complex and uncertain. These conditions of knowledge
are referred to as the ‘environment of decision making’-
bounded rationality behind manager’s decision making.
The environment may be of three types
Decision-making under certainty
Decision-making under risk
Decision making under uncertainty