PERSPECTIVE MANAGEMENT

Dr. Meena Sharma

 PERSPECTIVE MANAGEMENT

PREPARED BY
Dr. MEENA SHARMA

MAHATMA EDUCATION SOCIETY’S

PILLAI’S INSTITUTE OF MANAGEMENT
STUDIES AND RESEARCH
NAVI MUMBAI
 Perspective Management

Contents
1. Introduction to Management – Science, Theory & Practice, Environment of
Management, Managers & Entrepreneurs, Managerial Roles & Skills, Manager’s
Social & Ethical Responsibilities.

2. Planning – Role, Need for planning, Types of Planning, Levels of Planning,

Corporate Planning & Long range planning

3. Organizing –Nature, Types of organizations, Designing Organization structure,

Delegation and Autonomy

4. Leadership & Management – Role of committees & Group decision Making in

Management, organizational communication, Management of Change

5. Control process & Techniques: Use of Information Technology for controlling

Reference texts

1. Essential of Management – Harold Koontz and Heinz Weihrich

2. Management text and cases – VSP Rao and V Hari Krishna
3. Management principles and practices – Dr. M. Sakthivel Murugan
4. Principles of Management –Davar
5. Essentials of Management – Massie, –Joseph L.
6. Principles of management – G. R. Terry
7. Management and organization – L.A. Allen
 CHAPTER – I

INTRODUCTION TO MANAGEMENT

¾ Meaning and definition of management

¾ Nature of management
¾ Management and administration
¾ Importance of management
¾ Levels of management
¾ Principles of management
¾ Environment of management
¾ Managers and entrepreneurs
¾ Functions of management
¾ Managerial roles and skills
¾ Manager’s social and ethical responsibilities
Introduction

Management is needed to manage individual, local, regional, national or public problems.

Everybody, from the head of the family to the Prime Minister of a country or the
Managing Director of a company is engaged in the management of the different types of
affairs that he comes across in the performance of his obligations. It is also needed to
manage specific resources and operations such as personnel management, financial
management or marketing management etc. Increasing size of business units, the growth
of technical knowledge, changes in the methods of production, joint stock companies
with separation between ownership and management, increasing government interference
in business and the growth of labour movement, which have caused the growth of
functional specialists, has also increased the importance of the study of management as a
subject. Today, it has developed as a specialized knowledge and it is often considered as
a profession itself. As a science, management has its own principles and as an art, it has
its skill of application.

Meaning and Definition of Management

Management has been defined by different people in several ways such as plan of action,
the art of maximizing efficiency, a social process, method of getting things done through
the efforts of other people, direction of action by a co-operative group towards a common
goal, art and science of decision-making and executive leadership, etc. In its wider sense,
it denotes utilization of available resources to achieve some objectives. It is considered as
a method, system or a discipline which adds effectiveness to human activities and brings
order to them.

In a more specific sense, management is defined to include the functions of planning,

organizing, staffing, forecasting, coordinating, commanding, controlling, motivating the
efforts of others to achieve the specific objectives. Management can precisely be called
the rule-making and the rule-enforcing body.

Management is the process of getting activities completed efficiently and effectively with
and through other people.

According to Henri Fayol : “ To manage is to forecast and to plan, to organize, to

command, to co-ordinate and to control, to foresee and provide means to examine the
future and drawing up the plan of action. To organize means building up the dual
structure. To command means maintaining activity among the personnel. To co-ordinate
means binding together. To control means seeing that everything occurs in conformity
with established rules and expressed command”.

F.W. Taylor: “Management is the art of knowing exactly what you want to do and
seeing that they do it in the best and cheapest way”.

Harold Koontz: “Management is the art of getting things done through and with people
in formally organized groups”.
Management is:

Efficiency
Getting work
done through
others Effectiveness

Concept of Management from different viewpoints:

• Productivity : Art of securing optimum productivity

• Human Relations : Art of getting things done through people
• Decision making : Art of correct decision making
• Leadership : Art of executive leadership
• Coordination: Manager is what a manager does.

Management focuses on the entire organization from both a short and a long-term
perspective. Management is the managerial process of forming a strategic vision, setting
objectives, crafting a strategy and then implementing and executing the strategy.

Management goes beyond the organization’s internal operations to include the industry
and the general environment. The key emphasis is on issues related to environmental
scanning and industry analysis, appraisal of current and future competitors, assessment of
core competencies, strategic control and the effective allocation of organizational
resources.

Art and Science

It has its rules, principles and laws having universal applicability. But the result of all
managerial policies always depends upon the personal skill of the manager. Besides
being a science, it very much takes the form of an art.

Management is both art and science. It is the art of making people more effective than
they would have been without you. The science is in how you do that. With the growth
and development in the principles and techniques of management, it is now very much
becoming a profession. It needs special training.

1. As a science: Science is a systematized body of knowledge based on certain

principles, capable of general application. This knowledge is obtained through the
process of observation, experimentation and testing. Key elements are ;
Systematic body of knowledge, universal principles, scientific experiments,
cause-and-effect relationship, validity and predictability.
 2. As an art: Art is the application of knowledge and personal skills to achieve
results. Practical knowledge, personal skill, result-oriented approach, creativity
and continuous practice are the key elements. Management is basically an art as it
involves the use of knowhow and skills like any other art such as music, painting,
sculpture, etc. The practical knowledge acquired in the areas of planning,
decision-making and motivating helps the managers to tackle problems in a better
way.
3. As a profession: Specialized body of knowledge, formal education and training,
service motive, representative association, and code of conduct. It is an (a)
occupation for which specialized knowledge, skills and training are required and
(b) these skills are used for larger interests of the society and (c) the success of
these skills is not measured in monetary terms always.

Management and Administration

Distinction between Management and Administration

Points of Administration Management

Distinction
1. Nature It is a determinative or thinking It is an executive or doing
function function
2 Type of work It is concerned with the It is concerned with the
determination of major implementation of policies.
objectives and policies
3 Level of It is mainly a top-level function It is largely a middle and lower
authority level function
4 Influence Administrative decisions are Managerial decisions are
influenced mainly by public influenced mainly by objectives
opinion and other outside and policies of the organization.
forces.
5 Direction of It is not directly concerned with
It is actively concerned with
human efforts direction of human efforts. direction of human efforts in
the execution of plans.
6 Main functions Planning and control are the Directing and organizing are
main functions involved in it. the main functions involved in
it.
7 Skills required Conceptual and human skill Technical and human skill

8 Usage Used largely in government and Used mainly in business

public sector. organizations.
9 Illustrations Minister, Commander, Managing Director, General
Commissioner, Registrar, Vice- Manager, Sales Manager,
chancellor, Governor, etc. Branch manager, etc.
 Management Top Management

Middle Management

Administration
Supervisory management

Importance of Management

Maximum
production at
minimum cost

Optimum Cost
utilization of reduction by
resources eliminating
waste

Importance
of
Management
Brings Coordination
cooperation in of human
conflicting efforts
interests
Maintains
dynamic
equilibrium
Levels of Management

The term ‘levels of management’ refers to a line of demarcation between various

managerial positions. In every organization there is a chain of superiors and subordinates
from the highest level to the lowest. This chain is known as chain of command or scalar
chain. The chain consists of a series of managerial positions like chief executive,
departmental heads, section officers and supervisors. The level of manager in this chain
determines his authority and status. Generally, this chain is divided into three levels of
management;

Top level management

Middle level management

Front –line/Supervisory

Management

Top Managers

Responsible for…

• Laying down the overall objectives and broad policies of the enterprise.
• Organizing the business into various departments and divisions.
• Provides guidance and direction.
• Coordinating the work of different departments.
• Monitoring business environments
• Maintaining good public relations
Middle Managers

Responsible for…

• Setting objectives consistent with top management goals, planning, strategies, etc.
• Issues detailed instructions.
• Coordinating and linking groups, departments, and divisions.
• Monitoring and managing the performance of subunits and managers who report
to them.
• Implementing the changes or strategies generated by top managers
• Participates in operating decisions,
• Trains other managers.

First-Line Managers

Responsible for…

• Managing the performance of entry-level employees

• Teaching entry-level employees how to do their jobs
• Making schedules and operating plans based on middle management’s
intermediate-range plans

Team Leaders

Responsible for..

• Facilitating team performance

• Managing external relationships
• Facilitating internal team relationships

Principles of Management

A principle is a fundamental statement of fact which establishes a cause-and–effect

relationship. A principle may be descriptive or prescriptive. A principle is called
descriptive, if it simply describes a relationship between variables. It is known as
prescriptive or normative, when it indicates what a person should do.

The nature of principles of management; universal, flexible, cause-and-effect

relationship, equality and human aspects.

Need for principles of management; to increase efficiency, to highlight the true nature
of management, to aid in training of managers, to improve research and to attain social
goals.
Scientific management

F.W. Taylor is the Father of Scientific management. According to him Scientific

Management means knowing exactly what you want men to do and seeing that they do it
in the best and cheapest way.

Principles of Scientific Management

1. Science not rule-of-thumb

2. Development of each employee to his greatest efficiency
3. Close cooperation between workers and management
4. Equal division of work and responsibility
5. Maximum prosperity for both employers and employees
6. Cooperation not individualism- mental revolution

Fayol’s Principles of Management

Henry Fayol suggested the following 14 principles of management in order to make the
job of managing more effective.

1. Division of work 8. Centralization

2. Authority and responsibility 9. Scalar Chain
3. Discipline 10.Order
4. Unity of command 11.Equity
5. Unity of direction 12. Stability of tenure
6. Subordination of individual interest to general interest 13. Initiative
7. Remuneration of personnel 14. Esprit de corps

Environment of Management

All organizations whether they are engaged in business or non-business activities draw
the inputs from the environment, convert the inputs into outputs and send them back to
the environment. The environment of the business consists of two components- internal
as well as external environment.

Internal refers to the various systems inside the organization such as, technology,
structure, processes and people. External environment have a bearing on the successful
functioning and survival of the business. The external environment affecting the
organization is divided into two major categories – Direct action and indirect action
environment. Direct consists of those factors that directly affect and are affected by the
organization’s operations. These factors would include suppliers, labour unions, the
various laws of land, customers and competitions. The indirect environment consists of
those factors that may not have an immediate, direct effect on operations but nevertheless
influence the activities of the firm. These include such as technology, socio-cultural and
political factors, general economic conditions and so on.
The manager’s success lies in understanding the trend in the environment. The trends
contain signals and give clues about the potential opportunities and impending threats.

The investment in large business enterprise today runs into hundreds of crores of rupees.
The gestation period is too long. During this period many things may change.

For eg; the case of the Enron Power Project in Maharashtra. The agreement to construct a
mega power project was entered into by the U.S. Enron power corporation and the then
Maharashtra government. The company also commenced the work. In the meantime, the
changes in the state government resulted in the reversal of the earlier government’s
decision, causing lot of embarrassment to the parties involved. This case demonstrates the
need for close monitoring of the potential threats in the environment.

In one of the example converting the threats in to opportunities by the organizational

decisional is , when the crude oil prices were hiked in 1973 by the OPEC countries it
created a have on petro-based industries. Automobile companies as a result were forced
to change to small fuel efficient cars. In this case, the threat was converted into an
excellent opportunity. Small car thus has become the fashion of the day.

Managers & Entrepreneurs

The entrepreneur brings in overall change through innovation for the maximum social
good. Human values remain scared and inspire him to serve society. He has firm belief in
social betterment and he carries out this responsibility with conviction. In the process, he
accelerates personal, economic as well as human development. The entrepreneur is a
visionary and an integrated man with outstanding leadership qualities. With a desire to
excel, the entrepreneur gives top leadership qualities, priority to research and
development, etc. Entrepreneurial activities, encompasses all fields/sectors and fosters a
sport of enterprise for the welfare of mankind.

Concept of Entrepreneurship

Entrepreneur Entrepreneurship Enterprise

Person Process of Action Object

Functions of Management

Management is what management does. It is the art of getting things done through and
with people in formally organized groups. Management includes two types of functions:

i) Preparation for actual work, i.e., management in preparation, which includes

planning and organization, and
ii) Getting the actual work done, i.e., management in action, to include direction,
motivation, coordination and control.

A manager is a man who gets things done by working with people and other resources in
order to achieve an objective. He coordinates the activities of others rather than performs
the operations himself.

According to George Terry, ‘The four functions of management – planning, organizing,

actuating and controlling - constitute the management processes.

Planning Organizing

Functions of
Controlling Management Staffing

Directing

Planning is the ongoing process of developing the business' mission and objectives and
determining how they will be accomplished. Planning includes both the broadest view of
the organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a
specific goal. It involves taking decisions in advance of action. The process of planning
consists of:

• Establishing objectives
• Making forecasts
• Formulating policies, Procedures and rules
• Drawing programmes, schedules, budgets, etc.
Organizing is establishing the internal organizational structure of the organization. The
focus is on division, coordination, and control of tasks and the flow of information within
the organization. It is in this function that managers distribute authority to job holders.
The process of organizing involves:

• Identifying the activities necessary to achieve the objectives

• Grouping the activities into manageable units
• Assigning duties or tasks to appropriate individuals
• Delegating necessary authority to individuals and fixing responsibilities for
results
• Defining authority-responsibility relationships among individuals

Staffing is filling and keeping filled with qualified people all positions in the business.
Recruiting, hiring, training, evaluating and compensating are the specific activities
included in the function. In the family business, staffing includes all paid and unpaid
positions held by family members including the owner/operators. It is concerned with
human resources. Its aim is to fit individuals and jobs, i.e., right man for the right job.
Staffing consists of the following activities:

• Manpower planning, i.e., determining the number and quality of employees

required in organization
• Recruitment, selection and placement
• Training and development
• Appraisal, promotion and transfer
• Employee remuneration, etc.

Directing is influencing people's behavior through motivation, communication, group

dynamics, leadership and discipline. The purpose of directing is to channel the behavior
of all personnel to accomplish the organization's mission and objectives while
simultaneously helping them accomplish their own career objectives. Directing is
concerned with the execution of plans. it initiates organized action and breathes life into
the organization. It constitutes the life spark of the enterprise and sets into motion like the
electric power. Directing is also known as management in action. It involves:

• Influencing, guiding and motivating the subordinates for the achievement of

organizational objectives.
• Supervision, motivation, leadership and communication are the sub-functions of
directing.

Controlling is a four-step process of establishing performance standards based on the

firm's objectives, measuring and reporting actual performance, comparing the two, and
taking corrective or preventive action as necessary. The essence of control is in
determining whether the activity is achieving the desired results. It is to ensure that
everything in the organization occurs in accordance with the predetermined plans. The
process of control consists of the following steps:
 • Setting standards or norms for the desired performance
• Measuring the actual performance
• Interpreting and comparing actual performance with the set standards
• Analyzing deviations to fix responsibility
• Taking corrective actions

No business can succeed without proper planning and without direction; no plan can be
put in operation. Better operation and correct performance of business can be achieved
only by motivation, co-ordination and control of its different activities.

Achievement of the objectives of business requires

Planning Organizing Staffing Direction Control

Of

Men Money Materials Machines Methods

Managerial Roles & Skills

Manager

Works for Definite Objectives

With the assistance of

Administrative Skills Technical Skills

i) Planning i) Production
ii) Organizing ii) Purchase
iii) Motivating iii) Finance
iv) Directing iv) Marketing
v) Controlling v) Office & Records
vi) Coordinating vi) Personnel

To satisfy the interests of

i) Business
ii) Employees
iii) Consumers
iv) Community

Managerial Roles

According to Mintzberg (1973), managerial roles are as follows:

1. Informational roles

2. Decisional roles

3. Interpersonal roles
Interpersonal Informational Decisional

Figure head Monitor Entrepreneur

Leader Disseminator Disturbance handler

Liaison Spokesperson Resource Allocator and

negotiator

1. Informational roles: This involves the role of assimilating and disseminating

information as and when required. Following are the main sub roles,which managers
often perform:

a. Monitor-collecting information from organizations, both from inside and outside of the

Organization

b. Disseminator-communicating information to organizational members

c. Spokesperson-representing the organization to outsiders

2. Decisional roles: It involves decision making. Again, this role can be subdivided

in to the following:

a. Entrepreneur-initiating new ideas to improve organizational performance

b. Disturbance handlers-taking corrective action to cope with adverse situation

c. Resource allocators-allocating human, physical, and monetary resources

d. Negotiator - negotiating with trade unions, or any other stakeholders

3. Interpersonal roles: This role involves activities with people working in the
organization. This is supportive role for informational and decisional roles. Interpersonal
roles can be categorized under three subheadings:

a. Figurehead-Ceremonial and symbolic role

b. Leadership-leading organization in terms of recruiting, motivating etc.

c. Liaison-liasoning with external bodies and public relations activities.

Management Skills

Katz (1974) has identified three essential management skills: technical, human, and
conceptual.

Technical Skills Human Skill

Conceptual Skill Motivation to Manage

Technical skills: The ability is to apply specialized knowledge or expertise. All jobs
require some specialized expertise, and many people develop their technical skills on the
job. Vocational and onthejob training programs can be used to develop this type of skill.

Human Skill: This is the ability to work with, understand and motivate other people
(both individually and a group). This requires sensitivity towards others issues and
concerns. People, who are proficient in technical skill, but not with interpersonal skills,
may face difficulty to manage their subordinates,. To acquire the Human Skill, it is
pertinent to recognize the feelings and sentiments of others, ability to motivate others
even in adverse situation, and communicate own feelings to others in a positive and
inspiring way.

Conceptual Skill: This is an ability to critically analyze, diagnose a situation and

forward a feasible solution. It requires creative thinking, generating options and choosing
the best available option.

Manager’s Social & Ethical Responsibilities

To be truly effective, organizations should interact with their external environment. The
external environment can be divided into the general or mega environment and the
specific task environment. Social responsibility refers to the obligation of a business firm
to enhance the condition of society along with its own interests. Business firms are
accountable to six major stakeholder groups: shareholders, employees, customers,
creditors and suppliers, society and the government.

Social responsiveness refers to the ability of a firm to implement policies and take part in
activities that would benefit both society and the firm. The following categories are
generally considered when measuring social responsiveness: contributions, fund-raising,
volunteerism, recycling, diversity policies, direct corporate investment, quality of work
life, attention to consumers and pollution control. The need to measure social
responsiveness led to the development of social audits. Social audits are of two types -
audits required by the government and voluntary audits. Although social audits are not
legally mandatory, many organizations make social involvement disclosures in their
annual reports. This shows the growing concern among major firms about their social
responsibility.

The ethical conduct of an organization depends on the ethical standards of its managers.
Business should be conducted in a manner that it earns the good will of all concerned
through quality, transparency and good values. Three types of management have been
identified, depending on the ethical or moral nature of their decisions. These are moral,
amoral and immoral management. Moral management is in the best interests of the
organization in the long run. However, most companies follow the principles of amoral
management. To conduct business in an ethical manner, managers should be aware of the
factors that affect ethical behavior. Through mechanisms such as top management
commitment, code of ethics, ethics committees, ethics audits, ethics training and ethics
hotlines, managers can inculcate ethical behavior in the employees.

Responsibilities to various groups

Towards the customers

Production and supply of quality goods and services at an affordable price is the primary
responsibility of business. Customer service should be the motto of the business. It
involves offering a fair deal to the customer by indulging in ethical business practice.
Therefore, every manager in order to serve the customers in an effective way should
restrain from:

• Making misleading advertisements aimed at deceiving the consumer;

• Giving wrong or false information about the ingredients, quality, origin, etc., of
the product.
• Entering into collusive agreements with other firms to exploit the customers;
• Making false claims of being an authorized dealer/importer of certain goods; and
• Giving misleading names to the products, etc.

Towards the Employees

• Proper election, training and promotion;

• Recognition of the value of human resource;
• Maintaining cordial relations with employees;
• Recognition and encouragement of constructive unionism;
• Fair wage in relation to the cost of living;
• Better working conditions;
• Initiating appropriate measures for the development of human resource; and
• Increase in productivity and efficiency by recognition of merit, by providing
opportunities for creative talent and incentives.
Towards the Shareholders

Shareholders are the real owners of a corporation. In view of the several practical
limitations for them in overseeing the day-to-day operations of the business, an
organization must strive to provide:

• Security to their funds

• Fair rate of return on their investment
• Correct information about the operations of the company; and
• Proper appreciation of the value of their investment in the company by identifying
new opportunities that contributes for the growth of business.

Towards the Creditors/suppliers

Creditors or suppliers provide the necessary inputs to the business. Business management
has certain responsibilities to them. These can be discharges by;

• realizing the importance of maintaining good business relations with them;

• meeting the payment obligations timely;
• providing true and correct picture about the financial aspects of the company; and
• Helping them grow along with the growth of the company, etc.

Towards Government

Government provides various facilities for the development of business. Infrastructural

facilities like roads, telecommunication, transport, banking, insurance, etc. Therefore,
business also in turn owes to the government in the following ways:

• business enterprises should act like law-abiding citizens;

• taxes and other duties should be paid timely and honestly;
• Compliance with the rules and regulations as stipulated by various laws of the
land, and
• Supplementing the governments’ efforts in the developmental activities, etc.

Towards the society at large

Any business can exist as long as it enjoys societal sanction. If it fails to safeguard the
interests of the society, the pressure from various segments of the society mounts up. An
organization can act in a socially responsible way by:

• Properly deciding the product policies in line with the national priorities;
• Preventing the creation of monopolies;
• Ensuring hygienic disposal of smoke and waste and other effluents;
• Providing to the community accurate information about its working; and
 • Preserving the national resources of the nation by not indulging in reckless
exploitation of the resources, etc.

Questions

1. What is management? Distinguish clearly between management and

administration.
2. “Management is the art of getting things done through and with people in
formally organized groups”. Do you agree? Give reasons.
3. ‘Managers should be leaders but leaders need not be managers’. (Koontz)
Comment.
4. Explain the functions of management.
5. Describe in brief Fayol’s Principles of management.
6. Briefly describe the social responsibilities of business.
7. If you are a practicing manager, analyze the various skills you posses in relation
to the level o your job.
8. Select the two best companies and explain how they responded to changes in the
environment.

Case Study

Function of Management

The Personal Manager of Bharti Steels, an engineering unit based at Salem, has been
banging the executive conference table of the company for some months asserting that
the true function of management is to take care of the needs of the staff and let the staff
take care of the goals of the organization. The Marketing Manager has, on the other hand,
been expressing the view that the real function of management is to take care of the
market and staff must fall in line with the objectives, plans and priorities of the company.

Questions

• Which of these views is correct and why?

 CHAPTER – II

PLANNING

¾ Meaning and definition of Planning

¾ Role and need for planning
¾ Characteristics of a good plan
¾ Types of planning
¾ Levels of planning
¾ Corporate planning and Long-range planning
Meaning and Definition

Management starts with planning. Good management starts with good planning.

Planning is the most basic function of management. Planning and forecasting are two
essential conditions for the success of any human activity.

Planning means looking ahead or thinking before acting, i.e., anticipating problems and
developing their solution. Planning is deciding in advance what is to be done, when
and where it is to be done, how it is to be done and by whom. It is a projected course
of action. It involves the functions of decision making and problem solving, i.e., the
selection of business objectives from amongst the various alternatives and deciding the
future course of action for achieving those objectives. “It is a kind of future picture
wherein proximate events are outlined with some distinctness whilst remote events
appear progressively less distinct”.

According to Henry Sick: Planning is defined as “the relevant information from the
past and the present and the assignment of the probable future development so that a
course of action may be determined to enable the organization to meet its objectives”.

Planning formally correlates the organization to its present and future environment. Once
the objectives are chosen, the manager has to formulate policies and programme to
achieve them within a certain specified time. He has to decide what is to be done, how,
when and where it is to be done and who is to do it. Planning is the most important step
in the process of getting results by adjusting present actions in view of the established
goals. It enables the management to be a step ahead of each activity.

In the words of Fayol: “Planning means to assess the future and make provision for it”.

Terry has defined a plan as a ‘predetermined integrated programme. It requires ability

to foresee, to look ahead purposefully”.

Planning includes determination of the objectives, policies, rules, programmes, strategies,

budgets and procedures. The task of planning is to minimize the risk and to give at the
same time full advantage of the available opportunities.

It bridges the gap from where we are and where we want to go. Good planning must be
flexible and capable of adjustment to the changing circumstances. Planning may be for
the entire enterprise as a whole and also for each department of the enterprise. It may be
short-term as well as long-term. It is an essential preliminary to every effective action.
 Identification Right Time
What is to be done When it is to be
done

Planning is looking
Ahead

Right Place Right Methods

Where it is to be How it is to be done
done

Planning pervades all managerial activity. It is an intellectual process. It is always goal

oriented. It is a primary function and involves a choice between alternative courses of
action. It is an interdependent and a consistent process. It is direct towards efficiency.

Without a plan you will never succeed. If you happen to make it to the goal, it will have
been by luck or chance and is not repeatable. You may make it as a flash-in-the-pan, an
overnight sensation, but you will never have the track record of accomplishments of
which success is made.

Figure out what your goal is (or listen when your boss tells you). Then figure out the best
way to get there. What resources do you have? What can you get? Compare strengths and
weaknesses of individuals and other resources. Will putting four workers on a task that
takes 14 hours cost less than renting a machine that can do the same task with one worker
in 6 hours? If you change the first shift from an 8 AM start to a 10 AM start, can they
handle the early evening rush so you don't have to hire an extra person for the second
shift?

Look at all the probable scenarios. Plan for them. Figure out the worst possible scenario
and plan for that too. Evaluate your different plans and develop what, in your best
judgment, will work the best and what you will do if it doesn't.

The key terms of planning are defined as follows:

Vision :Nonspecific directional and motivational guidance for the entire organization.
Top managers normally provide a vision for the business. It is the most emotional of the
four levels in the hierarchy of purposes.

Mission: An organization's reason for being. It is concerned with scope of the business
and what distinguishes this business from similar businesses. Mission reflects the culture
and values of top management.
Objectives: Objectives refine the mission and address key issues within the organization
such as market standing, innovation, productivity, physical and financial resources,
profitability, management and worker performance and efficiency. They are expected to
be general, observable, challenging, and untimed.

Goals: Goals are specific statements of anticipated results that further define the
organization's objectives. They are expected to be SMART: Specific, Measurable,
Attainable, Rewarding, and Timed.

Need for planning

Planning is one of the most important project management and time management
techniques. Planning is preparing a sequence of action steps to achieve some specific goal.
If you do it effectively, you can reduce much the necessary time and effort of achieving
the goal.

To focus
attention on
objectives

Making control Caring for future

effective uncertainty and
change

Importance
of Planning
Improving Securing coherent
motivation and and consistent
morale decisions
Operations in
securing
economy

A plan is like a map. When following a plan, you can always see how much you have
progressed towards your project goal and how far you are from your destination.
Knowing where you are is essential for making good decisions on where to go or what to
do next.

One more reason why you need planning is again the 80/20 Rule. It is well established
that for unstructured activities 80 percent of the effort give less than 20 percent of the
 valuable outcome. You either spend much time on deciding what to do next, or you are
taking many unnecessary, unfocused, and inefficient steps.

Planning is also crucial for meeting your needs during each action step with your time,
money, or other resources. With careful planning you often can see if at some point you
are likely to face a problem. It is much easier to adjust your plan to avoid or smoothen a
coming crisis, rather than to deal with the crisis when it comes unexpected.

Characteristics of a good Plan

1. Simple
2. Clearly defined objectives
3. Proper analysis and classification of actions to establish standards
4. Plan must be Flexible and dynamic
5. Balanced practicable and suitable according to the size and form of the business
6. Maximum utilization of available resources.
7. Comprehensive and includes each and every aspect of the objectives.

Types of Planning
The process of planning may be classified into different categories on the basis of nature
of planning, duration of planning or the use of planning.

Business Plans

On the basis On the basis On the basis On the basis

Of nature of time of levels of management of use

i) Formal i) Short-term i) Top level i) Standing Plans

ii) Informal ii) Long-term ii) Middle level ii) Single use plans
iii) Lower level

Formal and Informal Planning: Planning is formal when it is reduced to writing. It

would be advantageous to prepare a formal plan for the success of the enterprise when
the number of action is large, as it will facilitate adequate control and pinpoint the
weaknesses, if any.

An informal plan is one which is not reduced to writing but is conceived in the mind of
the manager. Informal planning may be adopted if the number of actions to be taken is
less and the actions have to be taken in a short period.
Sort and Long-range planning: The difference between short and long-range planning
is based on the period which is kept in view while formulating a plan. Generally, short-
term planning is one which covers a period from one to twelve months. Long-range
planning usually covers a period of usually more than five years. In between, there may
be medium-term plans. Short-term plans must be formulated in a manner consistent with
long-term plans. Both the plans are complementary and not competitive to each other.
Short-term planning is considered as ‘tactical planning’ and long-term planning is taken
as ‘strategic planning’.

Long-term planning has an enduring effect on the business and is the responsibility of the
top management. It involves determination of the long-range goals and the laying down
of procedure, programmes and policies to achieve those goals. It is concerned more with
distant future. It involves the work of increasing or reducing the resources of the business
also. Short-term plans are concerned with immediate futures. It takes into account the
available resources only and is mainly concerned with the current operations of the
business.

Single –use and Standing planning: A single-use planning is one which sets a course of
action for a particular set of circumstances and is used up once the particular goal is
achieved. They may include programmes, budgets, projects and schedules. This plan is
prepared by lower- level management. These plans are also called ‘specific planning’.

Standing planning is one which is designed to be used over and over again. Standing
plans are of a permanent nature and are meant for repeated use. Objectives, policies,
procedures, methods, rules and strategies are included in standing plans. Its nature is
mechanical. It helps the higher executives to reduce their work load. Standing planning is
also called ‘Routine planning’. These plans are prepared by top-level management.

Examples of plans or planning

• Architectural planning
• Business plan
• Comprehensive planning
• Enterprise Architecture Planning
• Event Planning and Production planning
• Family planning
• Financial planning
• Land use planning
• Marketing plan
• Network resource planning
• Strategic planning
Corporate Planning & Long range planning

Corporate planning and long-range planning is the process of determining the major
objectives , policies and strategies that will govern the acquisition, use and disposition of
resources to achieve those objectives of an organization and is done at high /top level of
the organization. It provides the answer to the basic questions like;
• Where are we now?
• Where we want to go?
• Why do we want to go?
• How we will go? Etc.

Features of corporate planning:

i) Systematic: Corporate planning is a

systematic way of setting the Long-term goals of a company and deciding the
means to achieve them – taking internal as well as external factors into account.
ii) Continuous: Corporate planning is a
continuous, on-going process. Corporate plans move in tune with internal as
well as external changes. They are subject to revision and updating from time to
time.
iii) Company –wide plan: Corporate
plan is a kind of master plan covering the company as a whole. All functional
plans are offshoots of the corporate plan.
iv) Long-term view: Corporate planning
takes a long-term view of business and does not deal with day-to-day
operations.
v) Top level activity: Establishing long-
term corporate goals and the means of achieving these, is a top management
responsibility. Of course, in the process of building corporate goals, inputs from
executives working at various levels are also taken into account.
vi) Forward looking: Corporate
planning tries to put the company ahead of its rivals through a careful
evaluation of all relevant internal as well as external factors having a bearing on
overall performance. The whole exercise is forward looking in nature, in that it
tries to match a company’s internal strengths with external opportunities and
utilize the corporate resources in the best possible way.
vii) Comprehensive: Corporate planning
covers both strategic planning and operational planning. Strategic planning is
designed to help companies achieve competitive advantage –by trying to
exploit external opportunities through unique internal capabilities. Operational
plans such as production plan, marketing plan, and finance plan are designed to
implement strategic plans.
Every company has its own strategies, corporate mission, planning, organization vision
etc.

Eg; Public sector giant HMT which prided itself, for a long time on its dominance in the
Indian wrist watch market. The company was on a high tide for a long time and failed to
understand the shift in the consumer preference towards the trendier, sleek quartz
watches. It took the market for granted and in the meantime HMT’s traditional markets
captured by TITAN with its innovative marketing strategies and changed the face of the
Indian watch market.

Corporate planning Vs. Long-range planning

Corporate planning is the comprehensive planning of business operations for effective

implementation of corporate policies and attainment of corporate goals. It involves
preparation of strategic plans and determination of objectives to be pursued in the long-
run as well as short-run. It commits resources for a future period that can be clearly
looked into. It has nothing to do with the range. For example, in groundnut cultivation,
resources are deployed for a few months and the time frame of a corporate plan is less
than a year. On the other hand, in iron and steel industry, the resources are deployed,
having a long-term framework in mind.

Long-range planning is a part of corporate planning. It is a plan that covers many ears
and affects many departments or divisions of an organization in a major way. It is
concerned with the preparation of realistic estimates for distant future. It indicates the
extent of future time horizon which is fairly long in nature and which can be
meaningfully expressed in the form of tentative goals by management. The time horizon
of a long-term plan is usually dependent on the nature of industry in which it is pressed
into service. Such planning is basically concerned with the economic, financial and
technological aspects of the environment with special reference to the problems of
corporate growth.

Questions

1. Define Planning? Explain the various steps involved in the planning process.
2. “………….a manager organizes staffs, directs and controls to assume the
attainment of goals according to plans”. – (Koontz). Explain and show how
planning is the most basic of all management functions.
3. “Planning is looking ahead”. Comment.
4. “Planning is an intellectual process”. Explain in 50 words.
5. Explain the various types of planning.
6. What do you mean by standing plans? How do they differ from single-use plans?
 Case Study

Ramesh Publishing Company

Mr. Ramesh was the founder off a publishing company specializing in accounting books.
Within a short span of time, the company prospered and grew very fast. Its sales rose
from Rs. 60,000 the first year to Rs. 6 lakhs three years later. The editing, production and
sales staff grew almost as fast.

But the company was having problems, and of late uncertainty and confusion grew in the
company. New people were making decisions to the best of their ability but many of
them did not fit together. One of Mr. Ramesh’s key associates suggested that the
company ought to have better planning and certainly needed clear policies to guide
decision making, but Mr. Ramesh was unimpressed. His response was that if he took time
off to plan and develop policies today, he might not have a company tomorrow, and that
he had no choice but to spend his time meeting today’s problems as they came up.

Questions

• If you were one of the newer managers in the company and had taken a course in
the basics of management, what would you say to Mr. Ramesh?
• Outline exactly how would you show him that planning and policy making are
important to the company if it has to grow effectively.
Exercise

Raju was the maintenance supervisor for Hyderabad Products Company (HPC), producer
of plastic pipe and fittings. In early December, 2000, he was tole by the plant manager to
make plans to refurbish the number 4 extruding machine. This was to be done before
January 13 and 14. The extruding machine was an important part of HPC. Raju had been
keeping a checklist of needed repairs. But, carrying out repairs had not been possible
because the machine had not been shut down for a single day since August. Raju stayed
on the job late that evening to inspect the machine and to update his checklist. He
checked the stores section to see whether all the spares are readily available or not. The
next day, Raju held a meeting with his maintenance workers so that they would get ready.
Over the next several days, he looked at each repair item and prepared a written task
assignment schedule. He assigned each task to the worker, he considered most competent
to do it. Raju knew that after the machine was shut down, he would encounter some
unexpected defects. After all, everything does not go exactly as planned. So, he picked up
his best worker, Babu Lal, to handle the unexpected repairs and help the other workers
when needed.

When the workers returned from the Pongal holidays, Raju handed over each person a list
of that person’s repair task for the machine. On January 16, he held a final meeting to
prepare for the shutdown. Raju worked some extra hours that weekend. But because
everything had been planned well, the machine was back on line in good condition on
Monday morning.

In your view, was Raju an effective planner?

 CHAPTER – III

ORGANIZING

¾ Meaning and definition of organizing

¾ Nature of organization
¾ Types of organizations
¾ Organizational structure and designing
¾ Delegation and Autonomy
Meaning and Definition

The term organizing has come from the word ‘organism’. Different parts of a body
perform different functions in close co-operation with each other. It is a process by which
men relate themselves to each other to get work done. It is a system of co-operative
activities of two or more persons.

Organizing provides the necessary framework for the management. Management derives
its authority from organization. Management integrates the interest of the organization
into those of the society.

Organizing is the creation of a structure of duties and functions so as to identify and

divide work. It defines responsibility and delegates authority. It involves the assignment
of the grouped activities to various managerial levels.

Organizing is the creation of a harmonious structure of authority responsibility

relationship. It is the mechanism through which management directs, coordinates and
controls the business. It aims at achieving optimum coordination of the functions of any
business and its workers.

According to L.A.Allen, organizing is ‘ the process of identifying and grouping the work
to be performed, defining and delegating responsibility and authority, establishing
relationships for the purpose of enabling people to work most effectively together in
accomplishing objectives’.

Delegation of Identification of
Authority activities

Organizing

Assignment of Grouping of
activities activities
 Organizing is the human relationship in group activity equivalent to social structure. It is
concerned with the authority structure of an enterprise. It involves the extent of
delegation, degree of work, specialization, span of control and use of specialists as well
as informal organization.

In the words of Terry: “the task of organizing is to harmonize a group of different

personalities, to fuse various interests and to utilize abilities – all towards a given
direction”.

Organizational Structure

Each organization has an organizational structure. Organizational structure is described

on the organization chart that shows all the positions in an organization and their formal
relationships to one anther. It illustrates an organization’s overall shape and the levels of
management in a comprehensible manner. Ideally, in developing an organizational
structure and distributing authority, managers' decisions reflect the mission, objectives,
goals and tactics that grew out of the planning function.

Organizational Chart

Organizational chart shows the hierarchical structure of the organization with the number
of management levels. Scope of authority and status of the individuals as indicated by the
location of their positions in relation to other positions. Organisations’ activities are
grouped in terms of departments (whether by function, by territory and so on).

Chairman

Manager Manager Manager

Production Marketing Finance

Manufacturing Quality Sales Advertising Accounting Taxes

The organization chart of any company enables one to understand easily three classical
principles of organizing, viz., chain of command, unity of command and span of control.

Chain of command

Chain of superiors from top to bottom ranging from ultimate authority to lower ranks. It
also suggests the routes through which information flows within an organization and
facilitates quick communication between one link of the chain and the other. It is also
called ‘scalar chain‘.

Chairman

Production
Manager

Plant
Manager

Department
Head

Supervisor

Unity of command

One subordinate - one boss. If the efforts of subordinates are to be effectively coordinated,
it is necessary that they must have a reporting relationship with only one superior. Unity
of command principle avoids the confusion as to who should report to whom and who
should issue orders to whom.
Span of Control

Span of control refers to the number of subordinates that report directly to a manager.

Division of Labor

Division of labor is captured in an organization chart, a pictorial representation of an

organization's formal structure. An organization chart is concerned with relationships
among tasks and the authority to do the tasks. Eight kinds of relationships can be
captured in an organizational chart:

1. The division/specialization of labor

2. Relative authority

3. Departmentation

4. Span of control

5. The levels of management

6. Coordination centers

7. Formal communication channels

8. Decision responsibility

Delegation of Authority

Authority is legitimized power. Power is the ability to influence others. Delegation is

distribution of authority. Delegation frees the manager from the tyranny of urgency.
Delegation frees the manager to use his or her time on high priority activities.

Delegation of authority is guided by several key principles and concepts:

Exception principle - Someone must be in charge. A person higher in the organization

handles exceptions to the usual. The most exceptional, rare, or unusual decisions end up
at the top management level because no one lower in the organization has the authority to
handle them.

Scalar chain of command - The exception principle functions in concert with the
concept of scalar chain of command - formal distribution of organizational authority is in
a hierarchial fashion. The higher one is in an organization, the more authority one has.
Decentralization - Decisions are to be pushed down to the lowest feasible level in the
organization. The organizational structure goal is to have working managers rather than
managed workers.

Parity principle - Delegated authority must equal responsibility. With responsibility for a
job must go the authority to accomplish the job.

Span of control - The span of control is the number of people a manager supervises. The
organizational structure decision to be made is the number of subordinates a manager can
effectively lead. The typical guideline is a span of control of no more than 5-6 people.
However, a larger span of control is possible depending on the complexity, variety and
proximity of jobs.

Unity principle - Ideally, no one in an organization reports to more than one supervisor.
Employees should not have to decide which of their supervisors to make unhappy
because of the impossibility of following all the instructions given them.

Line and staff authority - Line authority is authority within an organization's or unit's
chain of command. Staff authority is advisory to line authority. Assume a crew leader
reports to the garden store manager who in turn reports to the president. Further assume
that the crew leader and store manager can hire and fire, and give raises to the people
they supervise. Both the crew leader and store manager have line authority. To contrast,
assume that the president has an accountant who prepares monthly financial summaries
with recommendations for corrective action. The accountant has staff authority but not
line authority.

Departmentation

Departmentation is the grouping of jobs under the authority of a single manager,

according to some rational basis, for the purposes of planning, coordination and control.
The number of departments in an organization depends on the number of different jobs,
i.e., the size and complexity of the business.

Farm businesses are most likely to have departments reflecting commodities and services.
For example, a large dairy farm might be organized into dairy, crop, equipment and
office departments. The dairy department might be further divided into milking, mature
animal and young stock departments.

Informal Structure

The formal structure in each organization that has been put in place by management has
an accompanying informal structure. Management does not and cannot control the
informal structure.
The informal structure has no written rules, is fluid in form and scope, is not easy to
identify, and has vague or unknown membership guidelines.

For management, the informal structure may be positive or negative. Positive qualities
include the ability to quickly spread information and provide feedback to the information.
The informal structure gives people a sense of being in the know. Management can feed
information into the informal structure at very low cost. The informal structure can also
help satisfy employees' social needs.

The negative qualities of the informal structure mirror the positive qualities in several
ways. The more juicy a rumor, the more likely is the informal structure to repeat it,
expand it and make it into the "truth." Management may not know what information is
flowing through the informal structure. Employees can waste a great deal of time
nurturing and participating in the informal structure. Finally, the informal structure can
fence out new employees, "rate breakers," and change agents no matter the extent to
which the formal structure makes them a part of the organization.

Types of organizations/Organizational designing

The organizations are in different sizes and may be producing single product or multiple
products may be operating in small geographic area or different areas in the world. To
cope with these varied objectives, strategies and situations, managers adopt different
designs or organization structure. The different types of organizational designs are;

1. Formal and Informal

2. Line organization
3. Functional organization
4. line and staff

Formal Organization: It refers to the structure of jobs and position with clearly defined
functions and relationships. Under a formal organization, the activities of two or more
persons are consciously co-ordinated towards a given objective. In formal organization,
every subordinate must obey his superior, whether he likes him or not. As such
everybody becomes responsible for the performance of a given task.

Characteristics of a Formal Organization

• Formal organization is consciously designed.

• It provides for specialization.
• It is based on delegated authority.
• It is based on ideal relationship i.e., the authority, responsibility and
accountability of each level is clearly defined.
• The principle of unity of command is usually observed.
• It is deliberately impersonal.
• It is usually supported by organizational charts.
 • It is based on the ‘rabble hypothesis’ of the nature of man, i.e., there will be the
same kind of reaction if human beings are punished or rewarded.

Informal organization: It refers to the personal relationships developing spontaneously

as people work together outside the formal organizational structure, like friendship, etc.,
which are unconsciously co-ordinated. In this case, a subordinate may offer an advice to
his superior as his friend. Management cannot be effective unless it recognizes and makes
use of the informal organization.

Characteristics of an Informal Organization

• An informal organization arises spontaneously.

• It is based on personal attitudes, emotions, likes and dislikes etc.
• It provides for social satisfaction to its members.
• It is an integral part of a total organization and the management cannot eliminate
it.
• It has no place in the formal chart.
• It is a net-work of personal and social relations.
• It has its own rules and traditions.
• It is indefinite and has no structure.

A manager can establish or cancel any of the formal organizations. However, he can
neither create nor cancel an informal organization. Informal relationships do affect the
workers behavior. A good management must recognize the impact of informal groups if it
wants to succeed.

Difference between formal and informal organizations

Basis Formal Organization Informal Organization

1 Formation Deliberately planned and Emerges spontaneously as a

created by management
2 Purpose To achieve planned goals of the
organization
3 Structure A well-defined structure of
tasks and relationships
4 Flexibility Rigid, stable and predictable
5 Focus Jobs, functions and technical
aspects
6 Standards of Standards of behavior are
behaviour prescribed and enforced by
result of social interactions
among people
To provide social satisfaction to
members
No clear-cut structure. A
complex network of relations
Flexible, unstable and
unpredictable
Interests and other human
aspects
Standards of behavior are
evolved by mutual consent
 management among members
7 leadership Managers act as leaders by Members voluntarily choose
virtue of their superior position their leaders
8 Communication Formally established or official Members communicate
lines of communication according to convenience
9 Organization Official structure, can be shown Unofficial structure, not shown
Chart in the form of a chart on the chart of the company
10 Rules and Written and fixed Oral norms
Regulations

Line Organization: It is also known as military or departmental or scalar type

organization and is the oldest form of organization structure. It is called military system
for the reason that it was followed in the army in its pure form.

Line organization is characterized by clear cut division of authority and responsibility. It

does not make any provision for staff specialist. It provides for downward flow of
authority and upward flow of responsibility. The authority flows directly and vertically
from the boss to sub-executives, from the man at the top to the man at the bottom, i.e.,
only one chain of command. Every manager enjoys general authority over all the lower
managers in the organization hierarchy.

Koontz and O’Donnel have defined organization as, “Authority relationships in an

organization position where one person has responsibility for the activities of another
person”.

No subordinate is required to obey two bosses. The command is given to the subordinates
through the immediate superiors and the number of subordinates whose work is directly
commanded by the superiors is kept within reasonable limits.

Features of Line organization

• Chain of command
• Chain of communication, and
• Carrier of accountability

Line, as a chain of command, establishes superiors’ right to order and subordinates’

obligation to obey the orders. Line also serves as a means of communication between the
members of the organization. Vertical communication flows through the line relationship.
Line facilitates effective communication. As a carrier of accountability, line organization
makes all superiors accountable for the activities of their subordinates. Since the line
organization is established through the authority-responsibility relationships, the
assignment of activities will go down to the lowest levels of management where actual
work is done and the accountability for tasks assigned will automatically be created
throughout the management hierarchy.
Line organization may be classified into two types

1) Pure line organization: Wherein the activities at every level are the same and
everybody performs the same type of work. The divisions exist solely as a basis
of control and direction. It is simple in nature and is possible only in small
enterprise units not in bigger enterprises.

PRODUCTION
MANAGER

FORMAN ‘X’ FORMAN ‘Y’ FORMAN ‘Z’

WORKERS WORKERS WORKERS

2) Departmental line organization: In this the business is first divided into broad
departments which are put in charge of various departmental heads. These
departmental heads have complete authority and control over their departments.
They form an autonomous body in themselves. They purchase their own raw
materials, hire their own labour and do all what is necessary for the working of
their departments. The only interrelationship between the various departments is
such as the general manager or the chief executive may establish. The flow of
authority under this system can be shown by means of the following diagrams:
 PRODUCTION
MANAGER

FORMAN FORMAN FORMAN FORMAN

SPINNING WEAVING DYEING DEPT. FINISHING
DEPT. DEPT. DEPT.

WORKERS WORKERS WORKERS WORKERS

The line organization, whether pure of departmental, is best suited where,

• The scale of operation is small,
• The work is simple and of routine type,
• Machines used are mainly automatic,
• The labour management relations are simple, and
• Where the process of manufacture is continuous.
The success of such an organization depends mainly upon the capacity of the general
manager and the departmental head. Under a strong man, capable of carrying a great
responsibility, this system thrives best.

Merits and Demerits of Line organization

MERITS DEMERITS
• Simple and economic • Over loading
• Accountability • Lack of specialization
• Discipline • Creates confusion
• Speedy action • Lacks coordination
• All-round development • Dictatorial tendencies
• Self-confidence • Causes inefficiency
• Flexible • Instability
Functional Organization: Functional organization is based upon the existence of
functional authority in the organization. It is established by grouping activities of the
enterprise into certain major functional departments. Under this system, the whole task of
management and direction of subordinates is divided according to the type of work
involved, and thus, the scope of the work is kept limited but the area of authority is left
unlimited.

“Functional organization refers to the organization which is divided into a number of

functions such as finance, production, sales, personnel, office and research and
development and each of the functions are performed by an expert”. The following
diagram illustrates the functional organization:

GENERAL
MANAGER

PRODUCTION MARKETING FINANCE PERSONNEL

PLANT ‘A’ PLANT ‘B’ PLANT ‘C’

Under this system each worker receives instructions not only from one supervisor, but
from a group of specialists. He does not remain under one boss, but has as many as his
work warrants. The system proves successful in concerns manufacturing a limited line of
products and where organization is not complicated, e.g., Shoe manufacturing.
Merits and Demerits of Functional organization

MERITS DEMERITS

• Specialization • Complexity
• Efficiency • Narrowness
• Control • Delay
• Economy • Lack of coordination
• Better Supervision • Instability

Difference between Line Organization and Functional Organization

LINE ORGANISATION FUNCTIONAL ORGANISATION

1. All functions are performed by one man, Of the various functions each function is
who need not be an expert performed by an expert
2. Decision-making - action, doing of actual Advisory – Knowing, thinking and
work planning
3. Centralized authority Decentralized authority

4. One superior to one subordinate Several advisors to one subordinate

5. Fixed responsibility No Fixed responsibility

6. More flexible Less flexible

7. Engaged in both physical and mental Only mental specialized work

work
8 Less expensive simple and routine Costly – specilaised suitable for big
business

Line and Staff Organization: This is an improvement over the other two types of
organizational structures. It tries to maintain a balance between too much concentration
of control under line system and too much division of function under functional
organization. Under this system, the staff organization does not exist independently, but a
body of experts is employed more or less permanently to assist the line officials. Thus,
staff makes investigation, collects information, chalks out plans and prepares schemes.
The line officials select the best scheme and give instructions accordingly. The role of
staff is essentially one of advice and assistance and to provide for expert and specialized
services. The staff occupies only an advisory capacity. They have no control over the
workers or the foremen, and thus, they cannot give them any direct instructions. They
simply assist the line officials by providing advice on special subjects. The final decision
is taken by the top officer, who may, at his own responsibility, reject the advice of the
expert staff, if not satisfied.

To illustrate, a production manager who is directly responsible for achieving the fixed
targets may be advised and supported by an industrial engineer who is not directly
responsible for those production targets. Similarly, a marketing manager who is
responsible for the selling of goods may obtain wide support from the market research
manager who collects market information.

“Line and staff organization came into being as a result of inability of the departmental
managers to investigate, think and plan at the same time, as they were performing the
ordinary tasks of production and selling. Consequently, the work of investigation,
research, recording, standardization and advising, i.e., the work of the experts was wholly
distinguished and separated from the routine process of manufacturing and selling with
the result that there arose a clear demarcation between’ thinking’ and ‘doing’, the staff
being the ‘thinkers’ and the line being the ‘doers’.”

Line and Staff organization

Board of Directors

Managing Director
Director of Public Or Personal
Relations General Manager Assistant

Market
Research Sales Manager Production Manager Industrial
Officer Engineer

Asstt. Sales Foremen

Manager

Salesmen Workers
Merits and Demerits of Line and Staff organization

Merits Demerits
• Efficient • Confusion in
Management organization
• Greater • Harmful to
Coordination business
• Quick action • Conflict between
• Balanced decision line and staff
• Training • Expensive
Facilities • Ineffectiveness of
• Discipline staff
• Flexibility

Delegation and Autonomy

Delegation is the dynamics of management. It is a total philosophy or concept how to

manage people. Just as authority is key to the manager’s job, delegation of authority is
the key to organization. Manager’s competence is not judged by the work he actually
performs on his own but by his ability to multiply himself through others, i.e., to obtain
results through others. Delegation of authority is indispensable for the success of
management. Delegation is an art of management and has certain working rules and
principles. It leads to managerial development and makes specialized service available to
the business.

According to L.A.Allen –“It is the ability to get results through others. It is the dynamics
of management; it is the process a manager follows in dividing the work assigned to him
so that he performs that part which only he, because of his unique organizational
placement, can perform effectively and so that he can get others to help him with what
remains’.
Questions

1. “Organization is an important tool to achieve enterprise objectives.” Discuss.

2. What do you understand by informal organization? How does it differ from
formal organization?
3. Explain the term organization. Why is it regarded as the foundation upon which
the whole structure of management is built.
4. What is line organization? State its advantages and disadvantages.
5. Distinguish between line organization and functional organization.
6. ‘Line and staff’ are characterized by relationship and not by departmental
activities’. (Koontz), Discuss.
 CHAPTER – IV

LEADERSHIP AND MANAGEMENT

¾ Meaning and definition of leadership

¾ Need for leadership
¾ Types of leadership
¾ Functions of a leader
¾ Qualities of a good leader
¾ Role of committees in group decision making in management
¾ Organizational communication
¾ Management of change
¾ Management Vs. Leadership
Meaning and Definition of Leadership
Leadership is the process of influencing the behavior of the people. Leaders are the
moving spirits and guiding stars of inspiration to their followers. A leader interprets the
objectives of the business, suggests course of action and guides people to achieve the set
objectives. He seeks active support and acceptance of the employees in following the
proposed course of action. A successful leader is able to influence his subordinates by his
conduct and expression to carry out his wishes and command.

In the words of Koontz, O’Donnel, ‘Leadership is the ability of a manager to induce

subordinates to work with confidence and zeal.’

According to Allen, ‘a leader is one who guides and directs the people. He must give
their efforts, direction and purpose’.

Need for Leadership

Right leadership is the soul of any organization. Effective and successful leadership leads
an organization to achieve business goals. Good leadership is essential for the success of
a business because of;
• Imperfect organizational structure,
• Occurrence of fast technical, economic and social changes,
• Internal imbalances due to growth,
• Human nature and behavior, and
• Psychological reasons.

Types of leadership
Leadership may be ;
I) Laissez-faire Leadership
II) Autocratic leadership
III) Democratic leadership
IV) Intellectual or functional leadership
V) Institutional leadership
VI) Paternalistic leadership

Laissez –faire leadership is free from any interference by the superior in the work of
subordinates. The leader only fixes the goals and leaves the steps to achieve them entirely
to his subordinates. The leader even does not check the performance. Such a leadership
generally proves to be a failure.

An autocrat leader does not entertain any suggestions or initiative from his subordinates.
He expects complete obedience to his command. Such a leadership is difficult to last for
long.
Democratic leadership is a compromise between laissez faire and autocratic leadership.
In this, solutions to the problems are found out by mutual discussions. It is more
rewarding and stable.

Intellectual or functional leadership is based on informal authority. Leadership is

acquired by technical superiority such as Accountant, Engineer, etc.

Under institutional leadership, a person becomes leader and commands authority

because of his high official position though he may not be an expert in the field of
activity, e.g., IAS officers acting as directors of some enterprises.

Paternal leadership is based on sentiments and emotions of the people. A paternal

leader though gives protection and support to all his subordinates but under him no one
grows. The worker is spoiled like a pampered child.

Leadership basically is a process of motivation. Different leaders have different styles to

motivate the people. Some leaders motivate their subordinates by introducing a severe
system of punishment for the disobedient ones, while others adopt persuation and active
participation as their techniques of motivation. An effective leader can motivate his
workers better by enlisting their voluntary cooperation, directing and disciplining them
and by keeping open channels of communication.

Functions of a Leader
A leader has to undertake three major functions as given below in order to guide and
motivate the employees and to understand their feelings and emotions:

• Developing voluntary cooperation

• Proper communication
• Direction and discipline

Voluntary cooperation may be obtained by offering friendliness and reposing trust in the
subordinates. It can be obtained by inviting subordinates for a democratic participation
and giving necessary support to the subordinates. A leader must maintain consistent and
fair behavior. He must establish his reputation for genuineness of purpose and integrity of
character. He must adopt a positive approach and help in removing the legitimate
grievances of the employees in order to seek their best cooperation. He must also
recognize differences in individual temperaments of the subordinates and change his
behavior to suit each individual.

Two way communications between the manager and workers are indispensable for good
leadership. Information, must flow both upward and downward, i.e., from the leader to
the subordinate and vice-versa. Due consideration must be paid to differences in personal
view-point, difficulties of language, organizational distances and inferred meaning. All
communications must be complete, clear and easily understandable. Undesirable
behavior of the subordinate must immediately de disciplined and corrected by adopting
fair and impersonal methods. Power must be used with humility and with a sense of
obligation to use it carefully and discretely.

Qualities of a good leader

1) Good personality – physical and mental fitness

2) Emotional stability
3) Good understanding and better judgment and foresight
4) Balanced approach and behavior
5) Ability to guide and motivate subordinates
6) Communicating skill
7) Sociability
8) Technical superiority with sound general education
9) Sincere, fair and honest dealings
10) Courage to accept responsibility.

Role of committees
“A committee consists of a group of people specifically designated to perform some
administrative acts. It functions only as a group and requires the free interchange of ideas
among its members”. There is no piece of work in a modern business house which does
not affect the work in other departments. For example, If the production manager wants
to change the product even slightly, the sales manager would be deeply concerned
because he has to convince his customers that the change is all to the good. Similarly, the
sales manager cannot follow a policy without consulting the finance manager or the
production manager.

The decisions in a particular department should be made by the managers with the
committees of the departments. This committee should preferably be presided over by the
general manager. This will ensure that when a decision is arrived at, all departments are
consulted and that, therefore, when the decision is put in to effect all departments will co-
operate. When important policy decisions are arrived at only through committees, the
various departmental managers will automatically begin to consider the viewpoints of
other departments when they decide matters.

Benefits of committees

Committees have become popular with business organizations on account of the

following advantages:
ƒ These provide opportunities for pooling of ideas and lead to integrated group
judgment. Personal bias and prejudice is eliminated from decisions and the
problems are looked at from diverse angles.
ƒ Committees promote co-ordination of various activities of an enterprise. This is
possible because committee work develops awareness of the problems of other
organizational units among members.
 ƒ Committees secure co-operation of the various parts of the organization in the
execution of plans. When an executive participates in the formulation of a plan in
a committee, he naturally acquires a special interest in its execution.
ƒ Committees train members in the problems of various divisions and make for
continuity as some members may stay on the committees while others retire.
ƒ Committees provide a safeguard against the evils of the concentration of power
and bring about dispersal of authority.

Group decision making in Management

It is quite common in organizations that some decisions are taken by a manager
individually while some decisions are taken collectively by a group of managers.
Individual decisions are taken where the problem is of routine nature, whereas important
and strategic decisions which have a bearing on many aspects of the organization are
generally taken by a group. Group decision making is preferred these days because it
contributes for better coordination among the people concerned with the implementation
of the decision.

Rational decision –making process contains the following steps

a) Define the problem “A problem well defined is a problem half-solved”. Wrong

definition of the problem leads to wrong solutions. The problem has to be
examined from different angles so as to identify the exact causes. Unless exact
causes are identified, right decisions cannot be taken.

b) Analyze the problem The problem has to be thoroughly analyzed. The past
events that contributed to the problem, the present situation and the impact of the
problem on the future have to be examined. Problems do not grow up overnight.
The geneses of the problem and the various contributing factors have to be
analyzed. Proper analysis of the problem helps the manager to assess the scope
and importance of the problem.

c) Develop alternatives There are hardly few problems for which there are not
many alternatives. Effective decision-making depends on the development of, as
many alternative solutions, as possible. The underlying assumption is that a
decision selected from among many alternatives tends to be a better one.The
ability to identify and develop alternative courses of action depends on the
manager’s creativity and imagination.

d) Evaluate alternatives Alternatives have to be evaluated in the light of the

objectives to be achieved, and the resources required. Evolution involves a
through scruitiny of the relative merits and demerits of each of the alternatives in
relation to the objectives sought to be achieved by solving the problems.

e) Select and implement the decision After weighing the pros and cons in detail,
the best alternative has to be selected and implemented. It may not always be
 possible to select the best alternative for a given problem for want of complete
information, time and resources. In such a case, the manager ha to satisfy with
limited information and optimize the yields under a given set of circumstances.

Once an alternative is selected, it has to be implemented in a systematic way. The

required resources for the implementation and the necessary cooperation from the
people concerned with or affected by the decision have to be ensured.

f) Follow-up and feed back Once the decision is implemented, it has to be closely
monitored. Adequate follow-up measures have to be taken. Constant follow-up
helps to take corrective measures as and when necessary and enables to identify
the shortcomings or negative consequences of the decision. It provides valuable
feed-back on which the decision may be reviewed or reconsidered.

Management of Change

In large scale organizations, changes seldom occur without a bit of chaos. Usually change
agents try to minimize it by imposing some order on the change process. Change
becomes orderly when it is planned and implemented in a systematic way. The process of
planned change comprises the following steps:

1. Identify the need for change: The manager should identify the forces demanding
change. Those forces may be internal or external. Internal forces include;
employee turnover, change related role conflicts, mounting problems from its
growing size, any other internal change like; introduction of new department due
to expansion in sales, production, etc. External sources include; technological
changes, new marketing strategies, new production techniques, etc.

2. Diagnose the problem: This step involves the identification of the root cause.
Several techniques are used for diagnosis, e.g. interviews, attitude surveys, team
meetings, questionnaires, etc. Where the problem can be traced to a single
department, the focus of diagnosis is limited to that area. If the problem has wider
implications and affects a large number of departments, organizational analysis is
required. Organizational analysis includes exhaustive study of organizational
goals, principles, practices and performance at a macro level. After such an
exhaustive analysis, the change agent would be in a position to identify the areas
where modifications have to be made.
 Types of organizational change

Structure

Technology Strategy Products

Culture/people

3. Plan the change: This is a critical step in the management of change. It involves
answering three important questions (i) when to bring the change (timing), (ii)
how to bring the change (methods), and (iii) who will introduce the change
(change agent). While introducing change, reactions from people must be
carefully assesses. People affected by change must be consulted; the likely impact
should be explained patiently; sufficient time to pick up new skills should be
given and adequate reward to those who follow change should be indicated.

4. Implement the change: While implementing any change programme, managers

encounter three programmes- resistance, power and control.

Implementation of change: action steps

Problem Implication Action Steps

Resistance Need to motivate • Invite participation from people.
• Offer appropriate rewards.
• Encourage open communication. Explain
why change is essential.

Control Need to manage the • Use multiple and consistent leverage points.
transition • Develop organizational arrangements for
transition.
• Build in feedback machinations.

Power Need to shape the • Assure the support of key groups.

political domain • Use leader behavior to get support of change.
• Use symbols and language.
 5. Follow-up and feedback: Management of change is incomplete without proper
follow-up. Organization must evaluate the effects of change. Objectives must be
present and be compared with the performance to see the degree of success in
change. End results should be operationally defined and measurements must be
done both before and after the implementation of change.

Management versus Leadership

A burning question is how management differs from leadership. For some, there is no
difference. But increasing complexity drives ever greater specialization, so we really
need to recognize that leadership and management are two different functions. This is the
same as saying they serve two different purposes. A clear way of differentiating the two
is to say that

¾ Leadership promotes new directions while management executes existing

directions as efficiently as possible. But the work of the manager is not just the
mundane monitoring of daily operations. It includes getting the most complex
projects done, like putting the first man on the moon. Unfortunately, management
is mistakenly seen as task-oriented, controlling and insensitive to people's needs.
By contrast, leaders are portrayed as emotionally engaging, visionary and
inspiring. But, separating leadership from management in terms of style is a dead
end, simply because leadership can be shown by quiet or forceful arguments
based on hard facts.
¾ An inspiring leader induces us to change direction while an inspiring manager
motivates us to work harder to get a tough job done on time.

The best managers are very strategic about themselves. They recognize that time and
other resources are scarce, that competitive pressures demand efficient use of everything.
Being strategic about themselves is the same thing as being a proactive, studious investor
who regularly monitors his or her investments in order to shift them around to get a better
return. Managers also have to be strategic about the business. It is not enough to do the
work efficiently, it is essential to do the right things. Both of these imperatives can be
thought of in terms of wise investment. Management is primarily a decision making role.
Managers are charged with the responsibility to make a profit and this requires them to
make sound decisions.

By contrast, leadership is strictly informal influence. Leaders persuade people to change

direction. This way of thinking about leadership means that it is not a position and that
there is no such thing as autocratic leadership. It is vitally important to recast leadership
in this way. Otherwise, how can we explain the leadership of Martin Luther King who
influenced the Supreme Court to outlaw segregation on buses without any formal
authority over this body? We confuse ourselves when we call senior executives leaders.
The truth is that they are managers by virtue of their positions and they only show
leadership when they influence people informally, like Martin Luther King did, to change
direction. Leadership is an occasional act; management is an ongoing role.
Organizational Communication
Communication is an ever present activity. It is the means by which people exchange
information with one another in an organization. Communication is as necessary to an
organization as the blood stream to a person. Every manager has to communicate in the
form of instructions, reports, notices, advertisements, etc. He also receives various
communications in the form of suggestions, ideas, complaints, praise, etc.

Communication is a process of transmitting information from one person to another and a

means by which organized activity is justified. It encircles all functions of management
and without it no function can be performed.

Characteristics of communications

• Communication is an exchange of information between two or more persons.

• It is a two-way traffic of transmitting information from one person to another.
• It is a continuous process.
• It is a pervasive function which covers all levels of authority.
• Its main purpose is to cause mutual understanding.
• It has a circular flow which leads to some response or reaction.

Objectives of communication

1. To exchange information for better understanding

2. To motivate employees
3. To educate people and spread knowledge
4. To change people’s attitude, behavior and action
5. To fill up gaps between level of decisions and levels of their implementation
 Message

Flow of
Communicator Communication Communicatee

Feedback

Importance of communication

Communication is one of the most important functions of management. It may cement an

organization or disrupt. It promotes managerial efficiency and induces the human
elements in an organization to develop a spirit of cooperation. It has become one of the
most vital factors in the efficient performance of management.
• Efficient and smooth running of an enterprise
• Basis of decision making
• Proper planning and coordination
• For higher productivity at minimum cost
• Morale building
• Democratic management
• Binds people together
• Creates mutual trust and confidence.
Effective communication Process

Clarification

Participation
Essential elements
of communication
Evaluation

Motivation Transmission

1. Clarity: Every communication involves transmitting of an idea and unless the

idea is clearly formulated and understood by the communicator, the
communication is likely to be misunderstood. Contents of communication must
be clear and not vague and confusing.
2. Participation: Good communication must be a two-way traffic, i.e., it must
include telling by the communicator and listening by the recipient of the
information.
3. Transmission: transmission of communications must be simple, clear and
complete to ensure the desired result.
4. Motivation: A successful communication must arouse response. It must be
clearly understood, accepted and acted upon by the person for whom it is meant.
5. Evaluation: Communication must provide for the assessment of their results by
surveys or investigations, etc. to ascertain the effectiveness of each type of
communication.

Questions

1) ‘Managers should be leaders but leaders need not be managers’. Discuss.

2) What do you mean by leadership in business? What are the essential qualities of a
good business leader?
 Case Study

Choice of a leader
Mr. Sumit Mishra is the Managing Director of an oil manufacturing company. To
increase sales, the Board of Directors wanted to start a full-fledged marketing
department; Mr. Mishra is entrusted with the task of finding a suitable candidate to head
the proposed marketing department. After considering a number of candidates, he has
narrowed down his choice to two persons: Mr. Vinod Agrawal and Mr. Ravi Kapoor.

Mr. Agrawal has an excellent track record in the company. During his fruitful association
with the company, to be precise 15 years, he has always shown a high degree of
enthusiasm and initiative in his work. He is still young (38years) dynamic and aggressive.
He is result-oriented and is more interested in ends rather than means. One of the workers,
testifying his leadership qualities, remarked thus: “though he is harsh at times, you will
know where you stand when you work with him. When you have done a good job, he lets
you know it”. Mr. Agrawal is willing to shoulder additional responsibilities. He decides
things quickly and when action is required, he is ‘always on his toes’.

During his 20 years tenure in the Company, Mr. Ravi Kapoor has endeared himself to all
his colleagues by his superior workmanship and pleasing manners. He always believes in
the principle of employee participation in the decision making process. Unlike Mr.
Agrawal, he encourages his subordinates to come out with innovative ideas and useful
suggestions. Before arriving at a decision he always makes it a point to consult his
subordinates. Not surprisingly, all his subordinates are very pleased to work under him
and praise his leadership qualities. They readily admit that the participative climate has
encouraged them to use their talents fully in the service of the organization. Company
records also bear evidence for the increase in the production soon after Ravi Kapoor
became the head of his department.

Questions
ƒ Analyze the leadership qualities and styles of Mr. Vinod Agrawal and Mr. Ravi
Kapoor.
ƒ Between the two people, whom would you recommend for the position of a
marketing manager? Why?
 CHAPTER –V

CONTROL PROCESS AND TECHNIQUES

¾ Meaning and definition of controlling

¾ Process of controlling
¾ Planning and Control
¾ Tools and Techniques of Control
¾ Use of information technology for controlling
Meaning and definition of controlling

Control or controlling techniques are nothing new to business. They are as old as the
business itself. Controlling is necessary for even the very best can be improved. Control
implies information combined with action. It is a process of directing a set of variables
towards predetermined objectives.

Managerial function of control implies measurement and correction of the performance

of subordinates in order to make sure that enterprise objectives and the plans devised to
attain them are accomplished. Process of control ensures that what is done is what was
intended. Thus, control is the function of management which comes at the end but is
never ending. It is a function to be exercised at each level of management and not related
to the top management only.

In the words of Koontz & O’Donnell, “Controlling is the measuring and correcting of
activities of subordinates to assure that events conform to plans”.

According to G.Terry ,” Controlling can be defined as the process of determining what

is to be accomplished, that is the standard; what is being accomplished, that is the
performance; evaluating the performance; and if necessary applying corrective measures
so that the performance takes place according to plans, that is, in conformity with the
standard”.

David Shetson , the meaning and purpose of control is:

1. Knowing exactly what work is to be done as to; quantity, quality and time
available.
2. Knowing what resources are available for doing the work as to; personnel,
materials, and other facilities.
3. Knowing that the work has been done or is being done; with the resources
available, within the time available, at a reasonable cost and in accordance with
the required standard of quality.
4. Knowing immediately of any delays, hold-ups or variations as to ; what happened,
its cause and remedy.
5. Knowing what is being done, remove such hindrances as to; who is doing, how it
is being done, what it is costing and when it will be completed.
6. Knowing about the completed work as to; time finished, quantity and final cost.
7. Knowing that resources are guarded against; in what way, by whom, at what cost
and with what provision for periodic inspection.

Process of controlling
The process of control consists of the following steps:
™ Establishment of standards
™ Measuring actual or expected performance against the established standards.
™ Finding out reasons for not reaching the standards
™ Correcting deviations from standards and plans.
 Standards
(Plans)

Corrective Actual
action Performance

Controlling
Process

Analysis of Measurement
deviations of performance

Comparison of
actual and
standard

Planning and control

Planning without control is useless and control without planning is meaningless. Planning
is looking ahead and control is looking back. Planning is the determination of objectives,
goals, strategies, policies and programmes of an organization to give purpose and
direction to the activities of the organization over a specified period of time. It is
anticipatory. It reduces confusion and uncertainty. Control, on the other hand, is the
direction of the operations of an enterprise towards predetermined standards and
monitoring the progress in this regard for the purpose of correction and feed back.

Planning Actions Controlling

Interrelationship between Planning and Control

Controlling and planning are inter-linked. Managerial planning seeks consistent,

integrated and articulated programmes while management control seeks to compel events
to conform to plans. Control will be much better if the plans are more clear, complete and
well coordinated and cover a longer period. The best control corrects deviations from
plans before they occur. The next best detects them as they occur. Thus, planning and
control are inter-dependent and complementary to each other.

Techniques of Control
A variety of tools and techniques are used by managers, now-a-days, to put their house in
order and to ensure better control over the use of resources at various levels. A manager
has many controlling techniques at his disposal. He employs these at various points of
time, depending on the suitability of a particular technique.

Control Techniques

Traditional Control techniques Modern Control techniques

ƒ Personal Observation Return on Investment Control

ƒ Statistical Reports and Analysis
ƒ Cost control
ƒ Budgetting
ƒ Production Planning and control
ƒ Inventory Control
ƒ External Audit Control
ƒ Break Even Analysis
ƒ Standard Costing
ƒ Financial Statement Analysis
Programme Evaluation and Review
Technique (PERT)
Critical Path Method (CPM)
Management Information System (MIS)
Total Quality Management (TQM)
Quality Control
Management Audit

Statistical data: statistical analysis of the various aspects of the operations of the
business helps a great deal in its better control. It provides necessary feed-back. It
facilitates comparison between performance and standards. Data must be clearly
presented either in the form of tables or charts. It must clearly indicate the trend for
effective control.

Break-even point analysis: It is generally used to determine profitability of a given

course of action as compared with the alternatives. It aims at the formulation of ratios
between profit and sales after taking into account the gross revenues, fixed and variable
expenses.
Breakeven point analysis is the analysis of cost behavior in relation to changing volume
of sale and its impact on profits. Breakeven point is the volume of sale or the point of
production at which there is no profit no loss. When the sales increase over the breakeven
volume, there will be profit.
Special reports and analysis: If the routine accounting and statistical data is inadequate
for an effective control, special reports and analysis is used.

Internal and external audits: Audits, besides ensuring arithmetical accuracy, establish
substantial accuracy of the records of the business. Internal auditors give independent
appraisal of the operations of the business. They may suggest improvements in policies,
procedures, exercise or authority, etc., to make control more effective. They are
concerned with all the aspects of business.

Budget: Exercise of control through the pre-determined costs is popularly known as

budget. An efficient businessman, in order to achieve maximum production at minimum
cost, plans his budget much in advance on the basis of past experience and judgment and
estimation about the future business opportunities. Budgeting helps a businessman in
regulating and increasing the efficiency of his business. Profitability of a business will
largely depend upon proper budgeting and budgetary control.

Return on Investment: it measures the relationship between the amount of net profits
and the size of investment in an enterprise. It is a key measure of overall performance,
and an important technique of financial control. It can be calculated as:

Net Income Sales

ROI = ----------------------- X ----------------------------
Sales Total Investment

PERT and CPM : These are the techniques useful for planning, scheduling and
implementing time bound projects involving performance of variety of complex, diverse
and inter-related activities. Under both the techniques all activities of a project are
integrated in a logical sequence to find out the minimum time required to complete the
project.

Total Quality management (TQM) : TQM refers to meeting the requirements of

customers consistently by continuous improvement in the quality of work of all
employees. For achieving total quality, three things are essential:
a) Meeting customer’s requirement
b) Continuous improvement through management process and
c) Improvement of all employees.

Use of information technology for controlling

Modern civilization has become complicated and sophisticated and has to survive in a
competitive world. There is widespread use of computers in handling information to a
business. There is bulk collection of data which is needed for planning, decision-making
and control by the managerial people. Management Information System (MIS is helpful
to the management in undertaking managerial functions smoothly and effectively.
The systems model of management shows that communication is needed for carrying out
the managerial functions and for linking the organization with its external environment.
The management information system (MIS) provides the communication link that makes
managing possible. MIS is an integrated technique for gathering relevant information
from whatever source it originates, and transferring it into usable form for the decision-
makers in management. It is a system of communications primarily designed to keep all
levels of organizational personnel abreast of the developments in the enterprise that affect
them. MIS provides working tools for all the management personnel in order to take the
best possible action at the right time with respect to the operations and functions of the
enterprise for which they are largely responsible. The emphasis of MIS is on information
for decision-making.

MIS and its role:

1. MIS performs a useful triple service function to management. MIS is a three

phase process – data generation, data processing and information transmission.
Management information system enhances management’s ability to plan, measure
and control performance by taking necessary and appropriate action at a right time.

2. Facilitates total performance by providing more specialized and technical kind of

information for the concerned managers. It provides multiple types of information
for all management levels on a large variety of organizational matter.

3. MIS takes into account important dimensions such as (1) real time requirement
(how timely the information should be), (2) Frequency requirement (how often
the information must be available), (3) accuracy requirement(how detailed or
correct the information must be), (4) data reduction requirement(what volumes of
data is to be processed), (5) distribution requirement(where the information must
be supplied), (6) storage requirement (where the information must be stored), MIS
provides answers to all these questions.

4. MIS reduces overload of information. MIS undertakes a painstaking collection of

all forms and regular charts and reports, and then subjects them to a series of
interpretation, refinement, consolidation. Thus, the information is literally
churned out of the available and procured data.

Any firm, large or small, uses MIS for its daily business. Not all MIS are computer -
based. Smaller organizations may use MIS by manual system. However, large
organizations use computers (hardware) in conjunction with the programmes (software)
that give direction to the computer what to do. One advantage of having computer-based
MIS is that the computer has an impressive capability for analyzing huge quantities of
data in a more accurate fashion and removes any perceived complexities in interpretation
of data.
Questions

1. Define control and discuss the elements of controlling process.

2. “Planning looking forward and control looking backward” explain this
statement.
3. “Controlling ensures an efficient performance of other managerial
functions”. Comment.
4. Discuss the techniques of control.
5. Comment on Management Information System as a technique to
controlling.

Case Study

Financial Performance Management

ABC Cements is the leader among comparable companies in the cement industry. Since
its formation, it has progressed fast. The excellent performance of the company is mainly
due to it Managing Director who is widely respected. The M.D. hired a management
consultant to suggest ways and means of increasing the return on investment. The
consultant made the following report:
There are three ways to increase return on investment:
i) Introduction of new varieties, improvement of the existing products and
modification of price structure.
j) Increase in prices, extension of credit facilities and reduction in investment on
inventory.
k) Reduce assets as also capital while maintain current profits so that the rate of
return on investment moves up.

Questions

• Analyze the case.

• What set of alternative would appeal to you the most and why?
 Management Personalities (Gurus)

They say the ‘pen is mightier than the sword’. The power of words is so intense it can
cut through systems, strategies, operations and perception of masses. That’s the force of
verbal expression. When words are expressed with clarity, vision and profound
perceptions they evolve into management thoughts and principles. People with this gift
then become what we have phrased ‘Management Gurus’. Internationally there are
renowned personalities known for their management concepts and practices. The likes of
such ‘management celebrities’ are Tom Peters, Edward DeBono, Philip Kotler, Peter
Senge, Bob Watermann, Stephen Covey and many more.

Micro-scoping on India, we too have prominent ‘Management Gurus’, from legends to

contemporary trend setters. But before we delve into our journey on their works, a
noticeable fact is that these business thinkers have studied, travelled, worked, operated,
managed and made their presence felt in many parts of the globe. Indian management
personalities are C.K.Prahlad, Sumantra Ghoushal, Gita Piramal, Ram Charan, Arindam
Chaudhuri and more.

A Glimpse of Management Gurus

Philip Kotler – Marketing management

Elton Mayo – Motivational theory
Richard T. Pascale – ‘Seven - S’
Michael Porter – Competitive Strategy
F.W. Taylor – Father of Scientific management
John P. Kotter - Leadership
Theodore Levitt – Marketing Myopia
Rosabeth Moss Kanter – Entrepreneurial Model
Rensis Likert – Likert Scale for attitude measurement
Henry Gantt – Gantt Bar Chart for managing projects
Mary parker – ‘A prophet of Management
Peter Drucker – Management by Objectives (MBO)
Henri Fayol – Modern Management
Charles Handy – The Making of Managers
Abraham maslow – Hierarchy of Needs
John Adair – Action-Centred Leadership
Chester Barnard – Decision – Making in the organization
Warren Bennis – ‘Managers do things right. Leaders do the right thing’
Edward De Bono – Leteral thinking
Alfred D. Chandler – Strategy and structure
H.Igor Ansoff – Strategic management
Chris Argyris – Knowledge for Action
Meredith Belbin – Team- Building
James MacGregor Burns - Transactional Leadership
Douglas McGregor – Theory X and Theory Y
Max Weber – Managerial Hierchies
 Reg Revans – Action Learning
Robert S. Kaplan – Balanced Scorecard

Indian Management Gurus

C.K Prahlad - In search of Excellence

Gita Piramal - Business Legends, Business Mantras
Sumantra Ghoushal - Transnational Management
Ram Charan – Profitable growth is every ones Business
Arindam Chaudhuri - Count your chickens before they hatch
Promod Batra – Management Thoughts
Shiv Khera – Winning Strategy
Venkatram Ramaswamy – Customer competence
Vijay Vishwanath – Art of developing Leaders
Partha Bose - Alexander the Great’s Art of Strategy
Rita Bhimani – Corporate Peacock
Jeetendra Jain – Sack the CEO
Ashwath Damodaran –Corporate Finance

The phrase “Management Guru’ describes a person who is intellectual, experienced,

ingenious and a person who develops business perspectives that provide beneficial
outlooks and practices. With reference to the adage ‘An idea is only a thought until it is
materialised’, the most successful Business Thinkers are those who have ensured the
successful implementation of their thoughts.