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8/8/2019 Management Principles & Practices
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By Dileep Tanksali
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Defi itio :
Pl i g is the rocess of
setti g go ls d choosi g
the means to achieve thesegoals
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Concept:
Primar management concept
Involves goals & plans
Goals are desired outcomefor individuals orgroups or entire organisations
Goals are objectives
Plans document how goals are going to be met hey describe resourceallocations schedules and
other necessaryactions
Managers develop both goals & plans Inplanning there is hierarchy Mission
statement, vision statement, strategic plans,operational plans
Planning involves decision making
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Importance: Primaryfunction - establishes the basis for all other
functions and sets the directionfor the organisation Without plans - Managers will not know how to
organise, lead or control- How to organise people & resources
effectively will not beknown- Goals cannot beachieved- Managers cannot lead with
confidence
- Important decisions cannot be taken- Control is not possible- Organisations effectivefunctioning &
future will beaffected
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Types ofplans:Strategic plans
- Mission, Vision, Objectives or Goals
- Strategies positioning the organisationin terms of its environment
- Apply to entire organisation, establishthe overall goals and position the
organisationOperational plans
- Plans that specify how overall goals areto beachieved
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Long term plans- Timeframe beyond 3 years
Short term plans- Covering 1 year or less
Specific plans
- Clearly defined leaveno room for interpretation includes budgets ( Increasing output by 10 %)
Directional plans- Flexibleand set out general guidelines ( improving profitsby 5 to 10 %)
Single useplans
- One timeplan specifically designed to meet needs ofaunique situation includes programmes
Standing plans- Ongoing plans providing guidancefor activities performedrepeatedly includepolicies, rules & procedures
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Essential features ofplanning:
1) Precedes all other managerial functions
2) Gives shape to ideas
3) Covers the whole organisation
4) Is hierarchical
5) Is based onfacts, figures, trends,
surveys, studies, research etc.6) Takes contingencies into account
7) Involves resources & their distribution
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8) Consists of schedules and actions
9) Involves decision making
10) Concentrates on outcomes
11) Makes goals measurable & quantifiable12) Reduces uncertainty
13) Sets standards
14) Reduces overlapping
15) Provides the basefor controlling
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Principles ofplanning
Involves threeareas ofplanning purpose &nature ofplanning, the structure & nature ofplans, Theprocess ofplanning
A) Thepurpose & nature ofplanning
- Contribution to accomplishment of objectives
- Objectives should be clear
- Planning should precedeall managerial
functions
- Plans should beefficient cost should be offset
by contribution
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B) The structure ofplans
Planning premises should be consistent
Strategies & policies should be understood andimplemented
C) Theprocess ofplanning Limiting & critical factors should be taken care
of
Commitments involved in decisions should befollowed byactions
Flexibility should be built into plans to deal withunexpected events
Navigational change ( redrawing plans) to movetowards the desired goals
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Steps inplanning process:A) Being aware of opportunities
- Within the organisation & outside
- Possiblefuture opportunities SWOTanalysis
B) Establishing objectives
- For entire organisation & thenfor each
subordinate unit- For long term as well as short term
- deciding on outcomes
C) Developing Premises
- Utilising consistent planning premises
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E) Determining alternate courses
- Examining alternate courses
- Analysing promising alternatives
F) Evaluating alternate courses- Weighing premises in light of goals &
premises
- Variables & limitations to be considered
G) Selecting a course
- Adopting aplan
- Sometimes following several courses
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H)Formulating derivativeplans
- Derivativeplans to support basic plans
I) Numberising plans by budgeting
- Plans to be converted into budgets- Departmentwise budgets
J) Coordination of short term & long term
plans - Short rangeplans should match
with long rangeplans
- Correcting inconsistencies
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Planning premises:
Anticipated environment in which plans are
expected to operate. They include
assumptions or forecasts of thefutureandknown conditions that will affect the
operation of theplans.
Difference betweenforecasts that areplanning premises and forecasts that are
translated into futureexpectancies usually in
financial terms
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Environmental forecasting
Values and areas offorecasting:
- Compel thinking ahead
- Discloses areas lacking control
- Helps to unify & coordinateplans
Environmental forecasting areas
- Economic- Social
- Political legal
- Technological
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Barriers inplanning:
Lack of - vision
- Clarityabout objectives and
goals
- Consistent planning premises- Perfect information
Narrow approach of departments
Dynamic environment plans focus on todays competition
Rigidity
Uncertainty & risk
Variation in standards
Reliance onpast data & success
Suppression of intuition & creativity
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Definition: Organising is theprocess of
creating an organisational structure.
Organisational Structure: Theformal
arrangement of jobs withinan organisation.Organisational Design: Developing or
changing an organisations structure.
Organisational design involves decisions
about sixkeyelements : Work specialisation,Departmentalisation, Chain of command,
Span of control, Centralisation &
Decentralisationand Formalisation.
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Organising Involves:
Identification & Classification of required
activities.
The grouping ofactivities necessary to attainobjectives.
Theassignment ofeach grooping to a manager
with authoritynecessary.
Theprovisionfor coordination horizontally &vertically.
An organisation structure clarifies who is to do
what job and who is responsiblefor what results.
Organisation implies aformalised intentional
structure of roles ofpositions.
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Principles of organisation:
Thereare 13 principles
Purpose of organising-(Points 1 & 2), The cause
of organising(Point 3), The structure oforganisationAuthority(Points 4 to 9), The
structure of organisationDepartmentised
Activity(Point 10), Theprocess of organising
(Points 11 to 13)
1)Unity of objectives :
- Structure which enables individuals to
contribute to enterprise objectives.
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2)Organisational Efficiency :
- A structure which facilitates achievement
of objectives with minimum costs &
unsought consequences.
3) Span of management :
- Each managerial position having under it a
manageablenumber ofemployees.
4) Scalar Principle :
- Clear line ofauthorityfrom top
management to lowest level employee
with clear responsibilities.
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5) Delegation :
- Authority delegated to managers should be
adequate to ensure their ability to accomplish
expected results.
6) Absoluteness of Responsibility :
- The responsibility of subordinates to superiors
for performance should beabsolute.
7) Parity of Authority & Responsibility :
- The responsibility should be commensurate
with authority.
8) Unity ofCommand :
- An individual reporting to a single Superior
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9) Authority level decisions :
- Decisions within theauthority ofa manager
should not be referred upward.
10) Functional definition :
- Clarityabout results expected, activities to be
undertaken, theauthorityan informal
relationship with other position.
11) Balance :
- Balancing broad spans of management against
inefficiencies of communication.
- Balancing lobs from multiple command against
gains from expertness & uniformity in
delegation.
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- Balancing offunctional specialisationagainst
advantages ofestablished semi-independent
units.
12) Flexibility- Devices & techniques ofanticipating and
reacting to charge.
- Inflexibility leads to resistance to charge,
complicated procedures, or meeting
environmental charges.
13) Leadership Facilitation :
- Designing & maintaining anenvironment for
performance.
- Organisation should promote leadership.
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Formal & Informal Organisation
Formal Organisation
The intentional structure of roles inaformally
organised enterprise. Formal does not meaninflexibility. Individual effort ina group
situation must be channelled toward group &
organisational goals.
Refers to formal structure ofan organisation.
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Informal Organisation
A network ofpersonal and social relations
not established or required by theformal
organisation but spontaneous as peopleassociate with oneanother.
It includes such informal groups within
the organisation such as bowling team,
cheers group or morning coffee
regulators.
These groups areformed onaccount of
common inter.
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Departmentation:
Organisational Structure
Departmentation means grouping activities &
people info departments based on certain basicpatterns.
Thepatterns ofDepartmentationareas follows :
Functional Departmentation :
Grouping ofactivities inaccordance withfunctions over an organisation.
Grouping could be like Marketing, Engineering,
Production, financeetc
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The terms used to describe thefunctional
grouping can be different for different
types of organisationfor Ex. For rail-road
operations, traffic, financeFunctional Departmentation most widely
employed basis.
Co-ordination ofactivities through rules &
procedure.
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Territorial Departmentation :
Useful for large scalefirms whoseactivities arephysically
or geographically dispersed.
This method used when similar operations undertakes in
different geographic areas.
It is also most often used in sales & production but not in
finance, which is concentrated at Headquarters.
Product or Product lives Departmentation
Used in multiline, large scaleenterprises.
Divisionexecutive has extensiveauthority over the
manufacturing, sales and engineering functions relating to
aproduct or product line.
Divisionexecutives responsiblefor profits.
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Customer Departmentation :
Customers key to the way theactivities are grouped.
Activities arranged to cater to clearly define customer
group.
For example ina bank grouping ofactivities like corporate
banking, Institutional banking, agricultural banking, retail
banking etc
Matrix or Grid Organisation :
Project or product management
Combining offunctional or project or product patterns
Used inEngineering, R&B, Construction, aerospaceetc
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Matrix management can be madeeffective
byfollowing certain guidelines:
Defining objectives ofproject or task
Clarifying roles, authority & responsibilitiesof manager & team members.
Balancing power offunctional & project
management
Selecting experienced manager to provideleaders.
Installing appropriate cost, time & qualify
that report deviationfrom standards
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Strategic Business Units :
Distinct little businesses set upan units ina
larger companyfor handling aproduct or
product line This ensures that each product or product line
offered by the company receives the same
attentionas it would if it were developed,
produced & market byan independent company
To be called SBU a business unit must meet
following criteria
Have definable groups of competitors
Prepare its own integrativeplans
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Manage its resources inkeyareas
Must haveproper sizeneither too large
nor too small
SBU manager responsiblefor all activities
of theproduct
Technique ofpreserving entrepreneurial
attention
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Line & Stall Structure:
Concept:
Widely held view that livefunctions are those that have
direct impact onaccomplishment of the objectives of the
organisation
Stafffunctions are those that help the livepersons work
most effectively inaccomplishing objectives
Traditionallyproduction & slides considered livefunctions
and purchasing, accounting, personnel, plant maintenance
and quality control as Stafffnctions
But actuallyeven the so called Stafffunctions are
important inaccomplishment of objectives
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Nature of line & Staff Relationship
Line & staffarea matter of relationship
Lineauthority gives a superior alive ofauthority over asubordinate
Liveauthority is an uninterpted scale or series of steps which iscalled the scalar principle
Nature of staff relationship is advisory investigating research &
giving advice to live managers
Some managers regard line & staffas type of departments
But line & staff is distinguished byauthority relationshipand notby what people do
Public relations department may be thought as stall departmentsbut within that department thereare line relationships
Though some departments may be considered as live or stafftheir activities do not characterise the department. Line & staff
are characterised by relationships.