Unit 2

Functions of Management
Planning Organising Staffing Directing /leading Coordinating/controlling Reporting Budgeting

Planning
Planning is a continuous process of making present entrepreneurial decisions(risk taking) systematically and with best possible knowledge of their futurity, organising systematically the efforts needed to carry out these decisions and measuring the result of those decisions against the expectations through an organised systematic feedback Peter Drucker Planning involves selection of mission and objectives and the actions to achieve them; it requires decisionsmaking that is, choosing from alternative future courses of action. Heinz Weihrich and Harold Koontz

Nature of planning
Planning is goal-oriented:- means for achieving set of objectives Planning is an intellectual or rational process:- requires managers to apply their imagination, creativity and their analytical skills to tackle problematic situations Planning is a primary function:- it is the initial activity in the management process Planning is All-pervasive:- it extends throughout the organisation and an essential aspect of management at all executive levels It is forward-looking:- concerned with anticipating the future It is perpetual process:- continuous process. Goes as long as the organisation exists It is an integrated process:- plans made at different levels are interdependent and interrelated. (top level strategic plans, middle level tactical plans, lower level operational plans) Planning involves choice:- it is essentially a decision making process that involves the selection of suitable course of action.

Significance of planning
Helps managers to meet the challenges posed by the environment and minimising the risks associated with them It is a pre-requisite First step in the management process, and helps coordinate and control various tasks and make sure that the resources are used optimally. Focus attention on objectives Offsets uncertainty and risk Provides guidelines for decision-making Increases organisational effectiveness(achieve objectives with the available resources) Provides efficiency in operations Ensures better coordination Facilitates control Encourages innovation and creativity Facilitates delegation

Types of plans
Levels Top level Middle-level Bottom level Time long-term intermediate term short term Scope strategic Tactical Operational

Plans based on frequency of use

Single use plans:- aimed to achieve a specific goal and designed to deal with a unique, nonrecurring situation Standing plans:- specific actions which have been developed for dealing with recurring situations. (policies, procedures and rules are associated with standing plans. Program, budgets and projects are common to both types of plans.)

Programs
Programs:- large scale single-use plans that coordinate a complex set of activities to achieve important non-recurring goals. Spell out the steps to be taken, the resources to be used and the time period within which the task is to be achieved, who should do what and how. Serve as a useful guide for day-to-day operations. A complex of goals, policies, procedures, rules task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action.

Budgets
Outlines the expected results of a given future period in numerical terms. It is a plan of action or blueprint designed to achieve a specific goal. It quantifies the plan and establishes the target for actual operations. It indicates the financial resources necessary for supporting the various activities included in a program. A statement of expected results expressed in numerical terms

Projects
A project is similar to a program, but is smaller in scale and less complex. It may a component of a program, or It may be a selfcontained, single-use plan. It helps in the precise allocation of duties and effective control and easy implementation of the plan.

Policies
It is the most general form of a standing plan. It specifies the broad parameters within which organisation members are expected to operate in pursuit of organisation goals. Statements that guide managers thought processes and behaviours when they make decisions. General statements or understandings that guide or channelize thinking in decision making. Policies do not specify what actions should be taken, but provide general boundaries for action. They indicate direction in which top management wants to channelize the energies of people in the organisation. Flexible and broad in their scope.

Procedures
It is a chronological sequence of steps to be undertaken to achieve an objective. It is more specific than a policy as it outlines steps to be followed under certain circumstances. Procedures are guides to action that specify in detail the manner in which activities are to be performed. These are plans that establish a required method of handling future activities. Well-established and formally laid down procedures are called Standard Operating Procedures (SOPs) They ensure uniformity in action Provide step by step instructions regarding the action to be taken.

Rules
Simplest type of standing plans. A rule is a statement that spells out what should or should not be done in a particular situation. Spell out specific required actions or non-actions, allowing no discretion. Rigid plan do not allow deviation Helps employees to behave in a desired manner Very little flexibility

Mission or purposes
The basic purpose or function or tasks of an enterprise or agency or any part of it. The mission of Du Pont - better things through chemistry

Strategy
They provide the direction or a sense of purpose to an organisation They form the basis for operational plans and influence the other areas of management It refers to the determination of the mission (or purpose) and the basic long term objectives of an organisation and the adoption of courses of action and allocation of resources necessary to achieve these aims

Three levels of strategy

Corporate level Business level Functional level

Planning process
Being aware of opportunities Setting objectives or goals Considering planning premises

Identifying alternatives
Comparing alternatives in light of goals sought Choosing an alternative Formulating supporting plans Quantitying plans by budgets

Planning process

Being aware of opportunity:- in light of the market, competition, what customers want, our strengths , our weaknesses Setting objectives or goals:- where we want to be and what we want to accomplish and when Considering planning premises:- in what environment, internal or external- will our plans operate? Identifying alternatives:- what are the most promising alternatives to accomplish our objectives? Comparing alternatives in light of foals sought:- which alternative will give us the best chance of meeting our goals at the lowest cost and highest profit? Choosing an alternative:- selecting the course of action we will pursue Formulating supporting plans:- such as plans to buy equipment, buy materials, hire and train workers, develop a new product Numberising plans by making budgets:-develop such budgets as volume and price of sales operating expenses necessary for plans, expenditures for capital equipment.

Planning premises
Defined as the anticipated environment in which plans are expected to operate. They include assumptions or forecasts of the future and known conditions that will affect the operation of plans

Prerequisites for effective planning

Establishing the right climate for planning Clear and specific objectives Planning premises ( assumptions of external and internal environment in which the plan is to be carried out) Initiative at top level Participation in planning process Communication of planning elements Integration of long-term and short-term plans An open systems approach Management information system

Limitations of planning
Lack of accurate information Time consuming process Expensive Inflexibility Resistance to change Environmental constraints Lack of ability and commitment False sense of security Reluctance to establish goals

Definition of organising
determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom and where decisions are to be made stephen P Robbins the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives- LA Allen Organising refers to grouping of activities and resources in a logical fashion.

organisation
A formalised intentional structure of roles or positions Formal organisation means the intentional structure of roles in a formally organised enterprise. Informal organisation is a network of interpersonal relationships that arise when people associate with one another.- not appear in an organisational chart

Department
One aspect of organising is the establishment of departments. The word department designates a distinct area, division, or branch of an organisation over which a manager has authority for the performance of specified activities.

Span of control / span of management

The principle of span of management is a limit to the number of subordinates a manager can effectively supervise, but the exact number will depend on the impact of underlying factors. Wide span of management is associated with few organisational levels (flat structure) A narrow span with many organisation levels (tall structure)

Pros and corns

Narrow spans Adv:- close supervision, close control, fast communication between subordinates and superiors Dis adv:- superiors tend to get too involved in subordinates work, many levels of management, high sots due to many levels, excessive distance between lowest level and top level Wide spans Adv:- superiors are forced to delegate, clear policies must be made, subordinates must be carefully selected Dis adv:- tendency of overloaded superiors to become decision bottlenecks, danger of superiors loss of control, requires exceptional quality of managers

Factors influencing the span of management

Narrow spans ( a great deal of time spent with subordinates) Little or no training of subordinates Inadequate or unclear authority delegation Unclear plans for nonrepetitive operations Nonverifiable objectives and standards Fast changes in external and internal environments Use or poor or inappropriate communication techniques, including vague instructions Ineffective interaction of superior and subordinate Ineffective meetings Greater number of specialities at lower and middle levels Incompetent and untrained manager Complex task Subordinates unwillingness to assume responsibility and reasonable risks Immature subordinates

Wide span (very little time spent with suboridinates) Through training of suboridnates Clear delegation and well-defined tasks Well-defined plans for repetitive operations Varifiable objectives used as standards Slow changes in external and internal environments Use of appropriate techniques, such as proper organisation sttructure and written and oral communication Effective interaction between superiro and subordiate Greater number of specialities at upper levels(top managers concerned with external environment) Competent and trained manager Simple task Subordinates willingness to assume responsibility and reasonable risks Mature subordinates

Fundamentals of organising
The structure must reflect objectives and plans because activities derive from them It must reflect the authority available to an enterprises management. An organisation structure, like a plan, must reflect its environment Since the organisation structure is staffed with people, the grouping of activities and authority relationships of an organisation structure must take into account of peoples limitations and customs.

Organising process
Establishing enterprise objectives Formulating supporting objejectives, policies, and plans Identifying, analysing and classifying the activities necessary to accomplish these objectives Grouping these activities in light of the human and material resources available and the best way, under the circumstances, of using them Delegating to the head of each group the authority necessary to perform the activities Trying the groups together horizontally and vertically, through authority relationships and information flows.

Departmentation
by enterprise function :-Grouping of activities according to the functions of enterprise such as production, sales, and financing by territory or geography:-Grouping of activities by area or territory is common in enterprises operating over wide geographic areas- north, southwest, central region eastern region etc. by customer group:-Grouping of activities that reflects a primary interest in customers- community-city banking, corporate banking, institutional banking, agricultural banking, real estate and mortgage loans etc.

Departmentation
By product:- grouping of activities according to products or product lines, especially in multiline, large enterprises- instrument division, indicator lights division, industrial tools division, electronic meter division Matrix organisation:- the combination of functional and project or product patterns of departmentation in the same organisation.

Strategic business unit

Distint businesses set up as units in a larger company to ensure that certain products or product lines are promoted and handled as though each was an independent business eg:- general electric Criteria:- should have its own mission, disctinct from the missions of other SBUs., have definable groups of competitors, prepare its own integrative plans, fairly distinct from those of other SBUs; manage its own resources in key area; and be of an appropriate size, neither too large nor too small.

Virtual organisation
A group of independent firms or people that are connected through, usually, information technology, may suppliers, customers and even competing companies. The aim is to gain access to another firms competence, to gain flexibility, to reduce risks, or to respond rapidly to market needs. They coordinate their activities through market where each party sells its good and services.

refer
Entrepreneur and intrapreneur Innovation and entrepreuneur Reengineering Advantages and disadvantages each departmentations Difference between authority and power

Authority and Power

Authority is the right in a position to exercise discretion in making decisions affecting others Power is the ability of individuals or groups to induce or influence the beliefs or actions of other persons or groups. Refer :- Bases or power Empowerment:- employees at all levels in the organisation are given the power to make decisions without asking their superiors for permission.

Bases of power
Legitimate power Expert power Referent power Reward power Coercive power

Concept of line and staff

Managerial positions at various levels require different types and amount of authority for decision-making . These different authority relationships revolve around the concept of line and staff functions in the organisation. Line functions are those which directly influence the accomplishment of organisational objectives Staff functions are those which facilitate the work of the line personnel towards the achievement of organisational objectives.

 In an academic institution the position of faculty is considered as line in nature, and the position of research staff is not. In a manufacturing firm, production and sales (and sometimes finance) are considered as line functions and purchasing, accounting, personnel, plant maintenance and quality control are considered as staff functions.

 Line and staff functions are defined on the basis of two viewpoints the functional viewpoint and authority relationships viewpoint Functional view point:- line functions are those which have direct bearing on the achievement of organisational objectives, and staff functions are those which assist line functions to attain these objectives

 Authority relationship view point:-Line and staff arte two types of authority that are based on functions. Line authority is the direct authority exercised by a superior over his subordinates, so that his orders and instructions are carried out in a proper manner. Staff function is advisory in nature. The main staff functions are investigation, research, and giving advise to line managers on how to accomplish tasks.

3 forms of authority
Line authority:- the relationship in which a superior exercises direct supervision over a subordinate Staff relationship is advisory . The function of people in a pure staff capacity is to investigate, research and give advise to line managers. Functional authority:- it is the right delegated to an individual or a department to control specified processes, practices, policies, or other matters relating to activities undertaken by persons in other deparments.

Line and Staff conflict

Due to various factors
Viewpoint of line managers
Lack of accountability (in staff ) Encroachment of line authority Dilution of authority Theoretical bias

View point of Staff managers

lack of proper use of staff Resistance to new ideas Lack of proper authority

The nature of line and staff relationships

Different background Lack of demarcation between line and staff authority Lack of proper understanding of authority

Avoidance of line and staff conflict

Clarity in relationship Proper use of staff Completed staff work Hold staff accountable for the result

Organisation structure
Organisation structure refers to the hierarchical arrangement of various positions in an enterprise. It also defines the relationship between various positions, departments and persons. It helps in allocating authority and responsibility formally and decides who is to report to whom and who is to direct to whom. It defines the formal relationship into managerial hierarchy.

Decentralisation of authority
Decentralisation is the tendency to disperse decision making authority in an organised structure.
Complete centralisation (no organisation structure) complete decentralisation (no organisation structure)

Authority delegated Authority not delegated

Different kinds of centralisation

Centralisation of performance pertains to geographic concentration, it characterizes, eg:- a company operating in a single location Departmental centralisation:- referes to concentration of specialised activities, generally in one department. Eg:- maintenance for a whole plant may be carried out be a single department Centralisation of management:- is a tendency to restrict delegation of decision making. A high degree of authority is held by managers at or near the top of the organisational hierarchy

Delegation of authority
Authority is delegated when a superior gives a subordinate discretion to make decisions. Clearly superiors cannot delegate authority which they do not have, whether they are board members, presidents, vice presidents or supervisors.

Process of delegation
Determining the results expected from a position Assigning tasks to the position Delegating authority for accomplishing these tasks Holding the person in that position responsible for the accomplishment of the tasks

Decentralisation of authority
Refers to systematic delegation of authority at all levels of management and in all departments of the organisation for taking decisions and actions appropriate at the respective levels.

Factors affecting the degree of decentralisation

Nature of growth of the organisation Outlook of the topmanagement Size and dispersal of operations Extent of diversification Nature of functions Availability of able managers

Techniques and methods of decentralisation

Establishment of appropriate centralistion Development of manager Provision for communication and co-operation Establioshoig adequaate controls Advatages of decentralisations

Advantages of decentralisation
Top management free from operational responsibilities Manager development Better and speedier decisions Permits management by objectives and selfcontrol

Disadvantages of decentralisation
Lack of coordination Costly Lack of able managers Inconsistencies Narrow outlook of executives Improper handling of emergency situation

Coordination functions in organisation

Meaning and definition
Coordination harmonizes, synchronizes and unifies individual efforts for better action and for the achievement of the business objectives
Henry Fayol

Coordination is the process whereby an executive develops an orderly pattern of group efforts among his subordinates and secures unity of action in the pursuit of a common purpose
Mcfrland

Nature and features

It is a managerial acgtivity It is an orderly arrangement of group efforts Its purpose is to secure unity of action towards common objectives It is a continuous process. The need of coordination is always felt so long as the organisation is in existence Coordination is needed at all levels of management. It is to be achieved by all managers Coordination is the essence of managing. Each of the functions of management is an exercise in managing

Objectives or coordination
Harmony f goals ( to bring unity of action) Total accomplishment Economy and efficiency Good human relations

Importance of coordination
Unity of command Unit of diversification Increase in efficiency Development of employees Emphasis upon human relations Increase in morale

Types of coordination
Internal coordination:-inside the organisation
Vertical co-ordination Horizontal co-ordination

External coordination:- outside the organisation, with customers, suppliers, government etc.

Coordination principle
Principle of direct contacts Principle of coordination at the earlier stage Principle of continuity Principle of reciprocal relations

refer
Steps for achieving effective Coordination Techniques or methods to ensure effective coordination Factors which make coordination difficult Essentials for effective coordination

Communication
Refer EC Meaning Features/nature of communication Ingredients/elements of communication Purpose/objectives of communication Importance of communication Functions of communication Types of communication Barriers or breakdowns in communication Guidelines for effective communication

System and process of controlling

Meaning and definition
Controlling is determining what is being accomplished, that is, evaluating the performance and, if necessary, applying corrected measures so that the performance takes place according to the plan George R Terry

Nature of controlling
Managerial control is a pervasive function Controlling is a dynamic/continuous process Control leads to post-mortem of past events It is forward looking Control is action-oriented

Objectives of controlling
To enable managers to find out errors and defects in course of work and take corrective action To provide proper direction to work effort in conformity with the plan of action To establish a control environment To institute regular risk assessment To provide accurate information and two-way communication To ensure ongoing monitoring

Importance/significance of controlling
Controlling helps in achieving the objective Efficient use of resources Facilitates decision-making Improves employee morale Helps in achieving better coordination Helps in better planning

Limitations of controlling
External factors Difficulty in setting standards Fixing of responsibility Variation and its causes

Process of controlling
Setting objectives Establishing standards Measuring performance Comparison of actual performance with standards and Correcting deviation

refer
Tools and methods to do comparative analysis and measure performance Types of control

Controlling techniques
Traditional

Personal observation Statistical data Special reports and analysis Operational audit Control through costing Break even analysis Budget and budgetary control
Return on investment Responsibility accounting PERT/CPM Management information system Management audit

Modern