1.Chapter 1Introduction to Management

2. Syllabus Definitions & Characteristics Management Science or Art Development of Management Thought Scope of Management Functions of Management Contribution by Management Experts 3. What is Management? All managers work in organizations Organizations collections ofpeople who work together and coordinate their actions to achieve a wide variety of goals 4. 1.0 The Management ProcessResourcesHuman Planning Financial Physical InformationalManagement Functions GoalOrganizing DirectingControllingAchievements 5. Question? Person responsible for supervising the use of an organizations resources to meet its goals? A. Team leader B. Manager C. President D. Resource allocator 6. Managers Managers The people responsible for supervising the use of anorganizations resources to meet its goals 7. What is Management? The planning, organizing, leading, and controlling of human and other resources to achieve organizational goals effectively and efficiently 8. What is Management? Resources include people, skills,know-how and experience, machinery, raw materials, computers and IT, patents, financial capital, and loyal customers and employees 9. 5 Ms of Management 1. Money 2. Manpower 3. Materials 4. Machinery 5. Methods 10. DEFINITIONS: F.W. Taylor - Art of knowing what you want to doand then seeing that it is done the best and cheapest way. Henry Fayol To Manage is to forecast, to plan, toorganize, to command, to co-ordinate and to control. Peter F.Drucker Management is work and as suchit has its own skills, its own tools and its own techniques. Management is the art of getting things donethrough and with people. 11. The Universalism of Management Across Organizations of Different Size and TypesBusinessGovernmental Educational Agencies InstitutionsAcross Organizational LevelsSocial ServicesHealth Care DeliveryAcross Functional AreasTop Management Middle Management Lower ManagementProduction arketing Finance Personnel M 12. CHARACTERISTICS OF MANAGEMENT 1. 2. 3. 4. 5. 6. 7. 8. 9.Universal Process Purposeful Creative Group Phenomenon Social Process Multidisciplinary Continuous Process Intangible Both Science and Art 13. MANAGEMENT AS SCIENCE OR ART: Management is the art of getting things done through others MANAGEMENT AS A SCIENCE PROVIDES PRINCIPLES AND AS AN ART HELPS IN TACKLING SITUATIONS. 14. Art Practical know how Technical skills Concrete results Creativity Personalized nature Science Empirically Derived Critically tested General principles Cause and effect relationship Universal applicability 15. MANAGEMENT AS A PROFESSION ?? Existence of an organized and systematic body of knowledge, Formalized methods of acquiring knowledge and skills, Existence of an apex level body with Professionalization as its goal, Existence of an ethical code to regulate the behavior of the members of the profession, Charging of fees based on service and 16. A close scrutiny of management as a profession reveals that it has a long way to go to have a universal acceptance of management as a profession. Unlike other profession such as medicine, law etc., the practice of management is not restricted to individuals with a special degree. 17. Copyright 2006 Thomson Business and Economics. All rights reserved.118 18. Copyright 2006 Thomson Business and Economics. All rights reserved.119 19. Management Skills and Functions Differences among management levels in skill needed and the functions performed:PlanningControllingOrganizingCopyright 2006 Thomson Business and Economics. All rights reserved. Leading120 Exhibit 20. DIFFERENT ROLES OF A MANAGER INTERPERSONAL ROLES INFORMATIONAL ROLES DECISION ROLES 21. Interpersonal Roles: 1. The figurehead role (performing ceremonial/social duties as the organizations chief) 2. The leader role 3. The liaison role (particularly communicating with the outsiders) Informational Roles: 1. The recipient role (receiving information about the organization) 2. The disseminator role (passing information to subordinates) 3. The spokesperson role (transmitting information to those outside) Decision Roles: 1. The entrepreneurial role 2. The disturbance-handler role 3. The resource allocator role 22. Levels of Management Board of Directors Managing DirectorTOP MANAGEME NTExecutive DirectorsMIDDLE MGTMarketing ManagerFinance ManagerPersonnel ManagerBranch ManagerChief AccountantLabor OfficersSale OfficersFinance OfficersLOWER MGT 23. FUNCTIONS OF TOP activities of the LEVEL 1. To provide a basic sense of direction to the company by setting its MANAGEMENTtranslating into clear long range mission and set of objectives 2. To design the organization structure of the company in terms of differentiated and integrated activities, role of various positions, authority & responsibility between them. 3. Top management must ensure the quality of personnel in terms of their skills, orientations and commitment 4. To ensure that the resource conversion and exchange systems are designed and operated efficiently.5. Periodic review of objectives for necessary modifications is a part of this function 24. FUNCTIONS OF MIDDLE LEVEL MANAGEMENT To interpret and explain the plans and policies formulated by top management To monitor & control the operating performance To cooperate among themselves so as to integrate the various activities of a department To train, motivate and develop supervisory personnel; and To lay down rules & regulations to be followed by supervisory personnel. 25. FUNCTIONS OF LOWER LEVEL MANAGEMENT 1. To plan day to day production within the goal laid down by higher authorities 2. To assign jobs to workers and to make arrangements for their training and development 3. To issue orders & instructions 4. To supervise & control workers operations and to maintain personal contact with them 5. To arrange materials and tools and to maintain machinery 6. To advise & assist workers by explaining work procedures, solving their problems etc. 7. To maintain discipline and good human relations among workers 8. To report feedback information and workers problems to the higher authorities. 26. FUNCTIONS OF MANAGEMENT PLANNING:Plans give the org its objectives and set up the best procedures for reaching them. ORGANISING:It is the process of arranging and allocating work, authority and resources among organizations members so they can achieve the orgs goals. LEADING:It involves directing, influencing, and motivating employees to perform essential tasks. CONTROLLING:There are three main elements of controlling: 1. establishing standard of performance 2. measuring current performance 3. Comparing these performance to the established standards 4. taking corrective action 27. Organizational Performance Efficiency A measure of how well or how productively resources are used to achieve a goal Effectiveness A measure of the appropriateness of the goals an organization is pursuing and the degree to which they are achieved. 28. Figure 1.1 29. Levels of ManagementFigure 1.3 30. Areas of Managers Department A group of managers and employees who work together and possess similar skills or use the same knowledge, tools, or techniques 31. Levels of Management First line managers - Responsible for daily supervision of the non-managerial employees who perform many of the specific activities necessary to produce goods and services Middle managers - Supervise first-line managers. Responsible for finding the best way to organize human and other resources to achieve organizational goals 32. Levels of Management Top managers Responsible for the performance of all departments and have crossdepartmental responsibility. Establish organizational goals and monitor middle managers Decide how different departments should interact Ultimately responsible for the success or failure of an organization 33. Levels of Management Chief executive officer (CEO) iscompanys most senior and important manager Central concern is creation of a smoothly functioning top-management team CEO, COO, Department heads 34. Relative Amount of Time That Managers Spend on the Four Managerial FunctionsFigure 1.4 35. Question? What skill is the ability to understand, alter, lead, and control the behavior of other individuals and groups? A. Conceptual B. Human C. Technical D. Managerial 36. Managerial Skills Conceptual skills The ability to analyze and diagnose a situation and distinguish between cause and effect. Human skills The ability to understand, alter, lead, and control the behavior of other individuals and groups. Technical skills Job-specific skills required to perform a particular type of work or occupation at a high level. 37. Skill Types NeededFigure 1.5 38. Core Competency Specific set of departmental skills, abilities, knowledge and experience that allows one organization to outperform its competitors 39. Discussion Question What is the biggest challenge for management in aGlobal Environment? Building a Competitive Advantage B. Maintaining Ethical Standards C. Managing a Diverse Workforce D. Global Crisis Management A. 40. Movie Example: Office Space What type of manager is Bill Lumbergh in the movie Office Space? 41. The Range of Management Activities PlanningInvestigatingOrganizingCommunicatingCommandingSecuring EffortsCoordinationFormulating purposesControllingStaffingDirectingMotivatingLeadingInnovatingRepresentingDecision makingActivatingEvaluating 42. The Management Process under PressureWhen you are up to your elbows in alligators, its hard to remember that your objective was to drain the swamp. 43. Chapter Two The Evolution of Management Thought 44. The Evolution of Management Theory The driving force behind the evolution ofmanagement theory is to search for better ways to utilize organizational resources. Advances in management thought occur asmanagers and researchers find better ways to perform the principal management tasks: planning, organizing, leading and controlling organizational resources. 45. The Evolution of Management Theory The evolution of modern management beganin the closing decades of the 19th century, after the industrial revolution had swept through Europe and America. Many major economic, technical and culturalchanges were taking place at this time. There has been a shift from small-scale craftsproduction to large-scale mechanized manufacturing. Managers began to search for new techniques to manage their organizations. 46. Scientific Management theory Modern management began in thelate 19th century. Organizationswere seeking ways to better satisfy customer needs. Machinerywas changing the way goods were produced. Managershad to increase the efficiency of the worker-task mix. 47. Job specialization Adam Smith, 18th century economist,found firms manufactured pins in two ways: Craft-- each worker did all steps. Factory -- each worker specialized in one step. Smith found that the factory method hadmuch higher productivity. Eachworker became very skilled at one, specific task. Breaking down the total job allowed forthe division of labor. 48. The Evolution of Management Theory 49. Job Specialization and the Division of Labor Adam Smith (18th century economist) In a study of factories thatmanufactured pins, he observed two different ways of production: - Craft-styleeach worker did all steps. - Productioneach worker specialized inone step. 50. Job Specialization and the Division of Labor Job Specialization process by which a division of laboroccurs as different workers specialize in specific tasks over time 51. F.W. Taylor and Scientific Management Scientific Management The systematic study of therelationships between people and tasks for the purpose of redesigning the work process to increase efficiency. 52. F.W. Taylor and Scientific Management 1) Study the way workers perform their tasks,gather all the informal job knowledge that workers possess and experiment with ways of improving how tasks are performed: Time-and-motion study 2) Codify the new methods of performing tasks into written rules and standard operating procedures 3) Carefully select workers who possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures 4) Establish a fair or acceptable level of performance for a task, and then develop a 53. The 4 Principles Four Principles to increase efficiency:1. Study the way the job is performed now & determine new ways to do it. Gather detailed, time and motion information. Try different methods to see which is best.2. Codify the new method into rules. Teach to all workers.3. Select workers whose skills match the rules set in Step 2. 4. Establish a fair level of performance and pay for higher performance. Workers should benefit from higher output. 54. Problems of Scientific Management Managers often implemented only theincreased output side of Taylors plan. Theydid not allow workers to share in increased output. Specialized jobs became very boring, dull. Workers ended up distrusting Scientific Management. Workers could purposely under-perform Management responded with increased use of machines. 55. Problems with Scientific Management Managers frequently implemented only theincreased output side of Taylors plan. Workers did not share in the increased output. Specialized jobs became very boring, dull. Workers ended up distrusting the Scientific Management method. Scientific Management brought many workersmore hardship than gain and a distrust of managers who did not seem to care about workers well-being. 56. Scientific Management Defined by Frederick Taylor, late 1800s. The systematic study of the relationshipsbetween people and tasks to redesign the work for higher efficiency. Taylorsought to reduce the time a worker spent on each task by optimizing the way the task was done. 57. The Gilbreths Frank and Lillian Gilbreth refined Taylorsmethods. Mademany improvements to time and motion studies. Time and motion studies: 1.Break down each action into components. 2. Find better ways to perform it. 3. Reorganize each action to be more efficient. Gilbreths also studied fatigue problems,lighting, heating and other worker issues. 58. Administrative Management Seeks to create an organization thatleads to both efficiency and effectiveness. Max Weber developed the concept ofbureaucracy. A formalsystem of organization and administration to ensure effectiveness and efficiency. Weber developed the Five principles shown in 59. Bureaucratic Principles Figure 2.2 Written rulesSystem of task A Bureaucracy should have relationshipsFair evaluation and rewardHierarchy of authority 60. Key points of Bureaucracy Authority is the power to hold people accountable for their actions. Positions in the firm should be held based on performance not social contacts. Position duties are clearly identified. People should know what is expected of them. Lines of authority should be clearly identified. Workers know who reports to who. Rules, Standard Operating Procedures (SOPs), & Norms used to determine how the firm operates. Sometimes, these lead to red-tape and other problems. 61. Fayols Principles Henri Fayol, developed a set of 14principles: 1. Division of Labor: allows for job specialization. Fayol noted firms can have too much specialization leading to poor quality and worker involvement.2. Authority and Responsibility: Fayol included both formal and informal authority resulting from special expertise. 3. Unity of Command: Employees should have only one boss. 4. Line of Authority: a clear chain from top to bottom of the firm. 5. Centralization: the degree to which authority rests at the very top. 62. Fayols Principles 6. Unity of Direction: One plan of action to guide the organization. 7. Equity: Treat all employees fairly in justice and respect. 8. Order: Each employee is put where they have the most value. 9. Initiative: Encourage innovation.10. Discipline: obedient, applied, respectful employees needed. 63. Fayols Principles 11. Remuneration of Personnel: The payment system contributes to success. 12. Stability of Tenure: Long-term employment is important. 13. General interest over individual interest: The organization takes precedence over the individual.14. Esprit de corps: Share enthusiasm or devotion to the organization. 64. Behavioral Management Focuses on the way a manager shouldpersonally manage to motivate employees. Mary Parker Follett: an influential leader in early managerial theory. Suggestedworkers help in analyzing their jobs for improvements. The worker knows the best way to improve the job. If workers have the knowledge of the task, then they should control the task. 65. The Hawthorne Studies Study of worker efficiency at theHawthorne Works of the Western Electric Co. during 1924-1932. Workerproductivity was measured at various levels of light illumination. Researchers found that regardless of whether the light levels were raised or lowered, productivity rose. Actually, it appears that the workersenjoyed the attention they received as part of the study and were more productive. 66. Theory X and Y Douglas McGregor proposed the twodifferent sets of worker assumptions. TheoryX: Assumes the average worker is lazy, dislikes work and will do as little as possible. Managers must closely supervise and control through reward and punishment.TheoryY: Assumes workers are not lazy, want to do a good job and the job itself will determine if the worker likes the work. Managers should allow the worker great latitude, and create an organization to stimulate the worker. 67. Theory X v. Theory Y Figure 2.3 Theory XTheory YEmployee is lazyEmployee is not lazyManagers must closely superviseMust create work setting to build initiativeCreate strict rules & defined rewardsProvide authority to workers 68. Theory Z William Ouchi researched the culturaldifferences between Japan and USA. USA culture emphasizes the individual, and managers tend to feel workers follow the Theory X model. Japan culture expects worker committed to the organization first and thus behave differently than USA workers. Theory Z combines parts of both the USAand Japan structure. Managers stress long-term employment, workgroup, and organizational focus. 69. Management Science Uses rigorous quantitative techniques tomaximize resources. Quantitative management: utilizes linear programming, modeling, simulation systems. Operations management: techniques to analyze all aspects of the production system. Total Quality Management (TQM): focuses on improved quality. Management Information Systems (MIS): provides information about the organization. 70. Organization-Environment Theory Considers relationships inside andoutside the organization. Theenvironment consists of forces, conditions, and influences outside the organization. Systems theory considers the impact ofstages: Input: acquire external resources. Conversion: inputs are processed into goods and services. Output: finished goods are released into the environment. 71. Systems Considerations An open system interacts with theenvironment. A closed system is selfcontained. Closedsystems often undergo entropy and lose the ability to control itself, and fails. Synergy: performance gains of thewhole surpass the components. Synergysystem.is only possible in a coordinated 72. The Organization as an Open System Figure 2.4 Input StageConversion StageOutput StageRaw MaterialsMachinesGoods ServicesHuman skillsSales of outputs Firm can then buy inputs 73. Contingency Theory Assumes there is no one best way tomanage. Theenvironment impacts the organization and managers must be flexible to react to environmental changes. The way the organization is designed, control systems selected, depend on the environment. Technological environments changerapidly, so must managers. 74. Structures Mechanistic: Authority is centralized atthe top. (Theory X) Employeesclosely monitored and managed. Very efficient in a stable environment. Organic: Authority is decentralizedthroughout employees. (Theory Y) Muchlooser control than mechanistic. Managers can react quickly to changing environment. 75. The Gilbreths Followers of Taylor: Frank & Lillian GILBRETH (1878-1972) They continued with time and motion studies. Break up and analyze every individual action necessary to perform a particular task into each of its component actions Find better ways to perform each component action Reorganize each of the component actions so that the action as a whole could be performed more efficiently-at less cost in time and effort 76. Administrative Management Theory AdministrativeManagement The study of how tocreate an organizational structure that leads to high efficiency and effectiveness. 77. Administrative Management Theory Max Weber Developed the principles of bureaucracy as a formalsystem of organization and administration designed to ensure efficiency and effectiveness. 78. Webers Principles of BureaucracyFigure 2.2 79. Webers Principles of Bureaucracy 1) 2)3)4)5)A managers formal authority derives from the position he holds in the organization. People should occupy positions because of their performance, not because of their social standing or personal contacts. The extent of each positions formal authority and task responsibilities and its relationship to other positions should be clearly specified. Authority can be exercised effectively when positions are arranged hierarchically, so employees know whom to report to and who reports to them. Managers must create a well-defined system of rules, standard operating procedures, and norms so they can effectively control behavior . 80. Webers Principles of Bureaucracy Bureaucracy: A formal system of organization andadministration designed to ensure efficiency and effectiveness. Authority: The power to hold people accountablefor their actions and to make decisions concerning the use of organizational resources. 81. Rules, SOPs and Norms Rules formal written instructions that specify actions to be taken under different circumstances to achieve specific goals Standard Operating Procedures (SOPs) specific sets of written instructions about how to perform a certain aspect of a task Norms unwritten, informal codes of conduct that prescribe how people should act in particular situations 82. Fayols Principles of Management Fayol had identified 14 principles that he thought were essential toincrease efficiency and effectiveness: Division of Labor Allows for job specialization. However; jobs can have too muchspecialization leading to poor quality and worker dissatisfaction. Authority and Responsibility Managers have the right to give orders and the power to exhortsubordinates for obedience. Unity of Command Employees should only have one boss Line of Authority A clear chain of command from top to bottom of the firm. Centralization Authority should not be concentrated at the top of the chain of command. 83. Fayols Principles of Management Unity of direction There should be a single plan to guide the managers and theworkers. Equity All organizational members are entitled to be treated with justice andrespect. Order The arrangement of employees where they will be of the most valueto the organization and to provide career opportunities. Initiative Managers should allow employees to be innovative and creative. Discipline Obedient, applied, respectful employees are necessary for theorganization to function. 84. Fayols Principles of Management Remuneration of personnel An equitable uniform payment system that motivatescontributes to organizational success. Stability of Tenure of Personnel Long-term employment is important for the development of skills that improve the organizations performance. Subordination of Individual Interest to the Common Interest The interest of the organization takes precedence over that of the individual employee. Esprit de corps Comradeship, shared enthusiasm foster devotion to the common cause (organization). 85. Discussion Question? Which of the following is the most important aspect of Fayols principles of management?Division of Labor B. Unity of Command C. Remuneration of Personnel D. Esprit de corps A. 86. Behavioral Management Theory Behavioral Management The study of how managers should personally behave tomotivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals. 87. Behavioral Management Mary Parker Follett Concerned that Taylor ignored the human side of theorganization Suggested workers help in analyzing their jobs If workers have relevant knowledge of the task, then they shouldcontrol the task, they should participate in the work development process Unlike Fayol, she believed that power is fluid, it should flow to the person who can best help the organization achieve its goals. Her approach was very radical for her time. 88. The Hawthorne Studies Studies of how characteristics of the work settingaffected worker fatigue and performance at the Hawthorne Works of the Western Electric Company from 1924-1932. Worker productivity was measured at various levels oflight illumination. 89. The Hawthorne Studies Human Relations Implications Hawthorne effect workers attitudes toward theirmanagers affect the level of workers performance 90. The Hawthorne Studies This finding led many researchers to turn theirattention to managerial behavior and leadership. If supervisors could be trained to behave inways that would elicit cooperative behavior from their subordinates, then productivity could be increased. From this view emerged the human relationsmovement. 91. The Hawthorne Studies Human relations movement advocates that supervisors be behaviorally trained tomanage subordinates in ways that elicit their cooperation and increase their productivity 92. Implications of the Hawthorne Studies Behavior of managers and workers in the work setting isas important in explaining the level of performance as the technical aspects of the task Demonstrated the importance of understanding how thefeelings, thoughts, and behavior of work-group members and managers affect performance Led to the development of an area of management knownas organizational behavior: The study of the factors that have an impact on how individualsand groups respond to and act in organizations. 93. Theory X vs. Theory YFigure 2.3 94. Management Science Theory Management Science Theory Contemporary approach to management that focuses onthe use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services. It is like the contemporary extension of scientific management developed by Taylor 95. Management Science Theory Quantitative management utilizes mathematical techniques, like linearprogramming, modeling, simulation and chaos theory Operations management provides managers a set of techniques they can use toanalyze any aspect of an organizations production system to increase efficiency 96. Management Science Theory Total quality management focuses on analyzing an organizations input,conversion, and output activities to increase product quality Management information systems help managers design systems that provide informationthat is vital for effective decision making 97. Organizational Environment Theory Organizational Environment The set of forces and conditions that operate beyond anorganizations boundaries but affect a managers ability to acquire and utilize resources 98. The Open-Systems View Open System A system that takes resources from its externalenvironment and transforms them into goods and services that are then sent back to that environment where they are bought by customers. 99. The Organization as an Open SystemFigure 2.4 100. The Open-Systems View Input stage organization acquires resources such as raw materials, money, and skilled workers to produce goods and services Conversion stage inputs are transformed into outputs of finished goods Output stage finished goods are released to the external environment 101. Closed System Closed system A self-contained system that is not affected by changesin its external environment. Likely to experience entropy and lose its ability to control itself Entropy: The tendency of a closed system to lose its ability tocontrol itself and thus dissolve and disintegrate. 102. The Organization as an Open System Synergy the performance gains that result from the combinedactions of individuals and departments Possible only in an organized system 103. Contingency Theory Contingency Theory The idea that the organizational structures and controlsystems managers choose are contingent on characteristics of the external environment in which the organization operates. There is no one best way to organize 104. Contingency TheoryFigure 2.5 105. Type of Structure Mechanistic Structure Authority is centralized at the top. Emphasis is on strict discipline and order Employees are closely monitored andmanaged. Can be very efficient in a stable environment. 106. Type of Structure Organic Structure Authority is decentralized throughout the organization. Departments are encouraged to take a cross-departmental or functional perspective Works best when environment is unstable and rapidly changing 107. Type of Structure Nokias organic approach to operating: Control is much looser and decentralized Reliance on shared norms and commonexpectations to guide organizational activities is greater Organic structure can react more quickly to a changing environment More expensive due to increasing coordination costs 108. Chapter 2Planning 109. Overview of Planning Objectives End states or targets Plans Means to hit the desired targets Strategic, Tactical, Operational Planning Decision-making process focused on the future of an organization and how it will achieve its goals 110. Types of Plans Strategic plans Broad future of the organization External environmental demands Internal resources Tactical plans Translate strategic plans into specific goals Specific parts of the organization 111. Types of Plans Operational plans Translate tactical plansinto specific goals and Small units of the organization Near termactions 112. Types of Plans Strategic PlansTactical PlansOperational PlansTime horizonTypically 3-5 yearsOften focused on 1-2 years in the futureUsually focused on the next 12 months or less.ScopeBroadest,originating with a focus on the entire organizationRarely broader than a strategic business unitNarrower, usually centered on departments or smaller units of the organizationComplexityThe most complex and general, because of the different industries and business potentially coveredSomewhat complex but more specific, because of the more limited domain of applicationThe least complex, because they usually focus on small homogenous unitsAdapted from Exhibit 8.1: Types of Plans: Key Differences 113. Types of Plans Strategic Plans ImpactTactical PlansHave the potential to dramatically impact, both positively and negatively, the fortunes and survival of the organizationCan affect specific businesses but generally not the fortunes or survivability of the entire organizationImpact is usually restricted to specific department or organization unitModerate interdependence, must take into account the resources and capabilities of several units within a businessLow interdependence, the plan may be linked to higher-level tactical and strategic plans but is less interdependent with themInterdependence High interdependence, must take into account the resources and capabilities of the entire organization and its external environmentsOperational PlansAdapted from Exhibit 8.1: Types of Plans: Key Differences 114. Organizational Levels Corporate level (Strategic) What industries should the firm be in? What markets should the firm be in? In which businesses should the firm invest money? Business level (Tactical0 Who are our direct competitors? What are their strengths and weaknesses? What advantages do we have over them? What are our own strengths and weaknesses? What do customers value in our products/services? 115. Organizational Levels Functional level (Operational) What activities must my unit perform well in order to meet customer expectations? What information about competitors does my unit need in order to help the firm compete effectively? What are our units strengths and weaknesses? 116. According to Syllabus Types of Plan Single Use Plans Programm, Projects, Budgets, Standards, Schedules Repeated Use Plans Objectives Mission Strategies Policies Rules n Methods Procedures 117. Objectives: Objectives are very basic to theorganisation and they are defined as ends which the management seeks to achieve by its operations. They serve as a guide for overall business planning. Strategy: strategy is a comprehensive plan for accomplishing an organisation objectives. This comprehensive plan will include three dimensions, (a) determining long term objectives, (b) adopting a particular course of action, and (c) allocating resources necessary to achieve the objective. Policy: They are guides to managerial action anddecisions in the implementation of strategy. Procedure: Procedures are routine steps on how tocarry out activities. Procedures are specified steps to 118. Method: Methods provide the prescribed ways or mannerin which a task has to be performed considering the objective. It deals with a task comprising one step of a procedure and specifies how this step is to be performed. Rule: Rules are specific statements that inform what is tobe done. They do not allow for any flexibility or discretion. Programme: Programmes are detailed statements about aproject which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action. Budget: It is a plan which quantifies future facts andfigures. It is a fundamental planning instrument in many organisations. 119. Planning Process Analysis of External Environment Analysis of Inner Environment Set of Goals to be achievedEstablishing Planning PremisesWal-Mart Venture in India Govt, Tech, Mkt, Political, Sociological, Maruti India -- 5MNissan Expand Dealership Introduce low cost DatsunNissan Fuel Costs, Sales Forecasts, Gen Econo Special Cond 120. Planning Process Determining Alternative Course of ActionFiat India Tie up with Tata n break up, Renualt Mahindra TiEvalu & selecting Best CourseFiat India Parallel DealershiEstablishing Sequence of Activities Formulation of Long Range & Functional PlansNissan Mini Dealerships Further break up of twnsPonds Olay Fair n lovely example 121. Planning Process Formulation of Action PlanTATA Nano new plant and relocationMeasuring & Controlling the processBajaj Auto Talks fail 122. Analyzing the EnvironmentThe Planning Process Analyzing the environment Forecasts: what does the future look like? Environmental uncertainty Contingency plans: identify key factors that could affect the desired results and specify what actions will be taken if key events change Benchmarking Investigation of the best results among competitors and non competitors and the practices that lead to those results 123. Discussion Wall Mart & Easy Day Study complete business environment Parameters Wal-Mart considers before entering a country Easy Day (Airtel Wal-Mart Joint Venture) Fallout reasons Future (Role Play Session) Presentation Advantages & Disadvantages of Planning 5 slides 124. Setting ObjectivesThe Planning Process Setting objectives Priorities and multiple objectives Establish which objectives are most important and which have priorities, Measuring objectives Financial performanceProfits relative to sales Profits relative to assets Many others Non-financialperformance 125. Determining RequirementsThe Planning Process Determining requirements Assess current performance What will it take in order to get from current levels of performance to that level specified in the objectives? What drives market share? What capital will be required? 126. Assessing ResourcesThe Planning Process Assessing resources Resources required What resources are needed to achieve the stated objectives? Resources available Do we have the needed human talent to meet the requirements? Do we have the financial resources available? Do we have the required technology? 127. Developing Action PlansThe Planning Process Developing action plans Sequence and timing Raw materials, manpower and components must be brought together in the right amounts and sequences Accountability Who is accountable for which actions? 128. Implementing PlansThe Planning Process Implementing Plans Monitoring the implementation Monitor the progress of the plan and its implementation Monitor the level of support that the plan receives as it is being implemented Monitor the level of resistance Real-time adjustment 129. Monitoring OutcomesThe Planning Process Monitoring outcomes Unanticipated consequences Negative unanticipated consequences Positive unanticipated consequences Feedback loop Apply what has been learned to modify and improve the planning process 130. Planning Tools Budgets Capital expenditure budget Specifies the amount of money to be spent on specific items that have long-term use and require significant amounts Expense budget Includes all primary activities on which a unit or organization plans to spend money and the amount allocated for the upcoming year 131. Planning Tools Budgets Proposed budget Provides a plan for how much money is needed, and is submitted to a superior or budget review committee Approved budget Specifies what the manager is actually authorized to spend money on and how much 132. Planning Tools Two budgetary approaches Incremental budgeting approach From the approved budget of the previous year present arguments for why the upcoming budget should be more or less Zero-based budgeting approach Justify all allocations of funds from zero each year 133. Whats the planning of organizations? Management by objectives The strategic management process Benchmarking / ISO9000 series /six sigma Entrepreneurship: a special case of strategic planning 134. Whats the planning of organizations? The content of planning Advantages and disadvantages of planning Types of plans 135. Planning Encompasses: Defining the organizations objectives or goals. Establishing an overall strategy for achieving thosegoals. Developing a comprehensive hierarchy of plans to integrate and coordinate activities. 136. Advantages of Planning It gives direction to managers and nonmanagersalike. Planning can reduce the impact of change. It minimize waste and redundancy. Planning establishes objectives or standards that facilitate control. 137. Disadvantages of Planning Planning may create rigidity.cant be developed for a dynamic environment. Formal plans cant replace intuition and creativity. Planning focuses managers attention on todays competition, not on tomorrows survival. Formal planning reinforces success, which may lead to failure. Plans 138. Exhibit 4-1 Types of Plans BreadthTime frameSpecificityFrequency of useStrategic Long termDirectional Single useTacticalSpecificShort termStanding 139. Strategic and Tactical Plans Strategic plans are plans that apply to the entire organization,establish the organizations overall objectives, and seek to position the organization in terms of its environment. Tactical plans (sometimes referred to as operational plans) specify the details of how the overall objectives are to be achieved. Strategic and tactical plans differ in three primary ways their time frame, scope, and whether they include a known set of organizational objectives. 140. Short-term and Long-term Plans Short-term plans are plans that cover less than oneyear. Long-term plans are plans that extend beyond five years. Their differences lie in the length of future commitments and the degree of variability organizations face. 141. Specific and Directional Plans Specific plans have clearly defined objectives and leaveno room for misinterpretation. Directional plans are flexible plans that set out general guidelines. 142. Single-use and Standing Plans Single-use plans are used to meet the needs ofparticular or unique situation. Standing plans are ongoing, and provide guidance for repeatedly performed actions in an organization.