Introduction to Management

concepts and Managerial skills 16

U. S . RAI
 Contents

1.1 Definitions of management, role and importance of

management.
1.2 Management characteristics and principles, levels of
management and their functions; management, administration
and organization, relation between management and
administration.
1.3 Functions of management: planning, organizing, leading /
directing, staffing and controlling.
1.4 Types of planning and steps in planning
1.5 Types of organization, Steps in organizing
1.6 Functional areas of management.
1.7 Managerial skills.
U. S . RAI
 Introduction

 Management is the art of getting work done through

people with satisfaction for employer, employees
and public.
It is the process of designing and maintaining an
environment in which individuals, working together
in groups, effectively accomplish selected aims.
All organizations need management for directing
and unifying the group efforts through collective
action towards a common objective.

U. S . RAI
 Introduction

 Management may be called an Art as well as Science : Art

because it requires a range of skills to coordinate and get
work done from others and Science because management
techniques are concepts based on measurements and factual
determinations
 The block diagrams given below are representing the
working of an organization without management and with
management.
 Management is the process of effectively utilizing resources
like manpower, money, materials and machinery to achieve
goals of enterprise through proper methods.

U. S . RAI
U. S . RAI
 Definitions of Management

1. Mary Parker Follet : Management is the art of getting

things done through people.
2. George R Terry: Management is a process consisting of
planning, organizing, actuating and controlling performed
to determine and accomplish the objectives by the use of
people and resources.
3. Ralph C Devis : Management is the function of executive
leadership anywhere”.
4. William Spriegal : Management is that function of an
enterprise which concerns itself with the direction and
control of various activities to attain business activities.
U. S . RAI
 Definitions of Management

5. Peter Ferdinand Drucker: Management is a

multipurpose organ that manages a business and manages
managers and manages workers and work.
6. Donald J Clough: Management is the art and science of
decision making and leadership.
7. Joseph L Massie: Management is the process by which a
cooperative group directs actions towards common goals.
8. F.W. Taylor: Management is the art of knowing what you
want to do and then seeing that it is done in the best and
cheapest way.

U. S . RAI
 Definitions of Management

9. John F Mee: Management is the art of securing

maximum results with minimum efforts so as to
secure maximum prosperity for employer and
employee and give the public the best possible
service.
10.Harold Koontz: It is the art of getting the work
done through and with people in formally
organized groups.

U. S . RAI
 Role of Management

• In any organizational unit, whether it is a company or a

section in a company, the manager stands between the
organization and its environment. The role of the
management is to ensure that the goals of the organization
are achieved.
• Today, the society has become very complex and a change
in one part generates changes in other parts. These changes
are reflected in both tangible and intangible forms.
• Tangible changes are concerned with changes in technology,
size of organization, specialization of work and theories
which affect the society. Intangible changes are changes in
attitude, human values, culture, etc.
U. S . RAI
 Role of Management

• Management ensures that all the activities are designed

effectively such that the working of each individual
employee will contribute to the attainment of the
organizational goals.
• Management encourages all individual activities that will
lead to reaching organizational goals and discourages those
individual activities that will hinder the accomplishment of
the organization objectives.

U. S . RAI
 Importance of Management

• Optimum utilization of resources: Management brings all

the available resources -men, money, machines, materials
and methods together for optimum utilization.
• Expansion and diversification: Management helps the
organization to achieve its goals efficiently, systematically,
easily and quickly. It helps the organization to face
competition to grow, expand and diversify.
• Reduction of employee’s absenteeism and turnover:
Management motivates people. It provides different
incentives to the employees which include positive,
negative, monetary and non-financial incentives. These
incentives increase the willingness and efficiency of the
employees. U. S . RAI
 Importance of Management

• This increases the productivity and profitability of the

organization. Management also develops team spirit and
increases the efficiency within the organization. It reduces
labour turnover and absenteeism.
• Utilization of the benefits of science and technology:
Management utilizes the advancements made in the field of
Science and Technology to provide industries with the latest
machines and the consumers with the latest products.
• Encouraging initiative and innovation: Management
encourages initiative from employees and inspires them to
give their suggestions for the growth of the organization.
Initiative gives satisfaction to the workers and success to the
organization. U. S . RAI
 Importance of Management

• Management also encourages innovation. It brings

innovative ideas, modern methods, and latest techniques to
the organization.
• Minimizing wastage: Management minimizes the wastage
of materials, men and monetary resources by doing work
through proper arrangement, manufacturing and control.
Managers motivate subordinate to reduce wastage.
Reduction in wastage brings a higher return to the firm.

U. S . RAI
 Importance of Management

• Team work: Management always builds a team spirit in the

organization. The combined effort of work and unity lead to
the prosperity within the Organization. Team work plays an
important part in the success of Organization.
• Motivation: Management motivates employees by sharing
the profits in the form of bonus. It also provides many
incentives to the employees. This motivates the employee to
work harder, which results in higher efficiency in
production.

U. S . RAI
 Importance of Management

• Reduction in labour turnover: Employee turnover takes

place when some employees leave the organization and
others join in their place. Frequent labour turnover increases
the selection and training cost. Management creates a sense
of responsibility among the employees and helps to reduce
labour turnover in the organization.
• Higher efficiency: Proper management ensures that the
efficiency of the organization is high with higher return at
minimum investment.

U. S . RAI
 Importance of Management

• Improving the quality of life of the workers:

Management offers bonus and incentives to the employees
for their work. It provides a healthy work environment. It
also provides medical and insurance faculties to worker and
their families. It provides a financial stability which helps in
boosting the workers’ lives.
• Cordial industrial relations: Management ensures
industrial peace. It gives more importance to the ‘Human
Element’ in business. It applies positive motivation. All this
improves the relations between the employees and the
employers.
U. S . RAI
 Importance of Management

• Corporate image: Efficient and effective management

maintains a good image and goodwill of organization. This is
because of quality of products and services offered by the
organization and also due to the social responsibility of
organization towards society.
• Promotes national development: Management is regarded as a
key to the economic development of nation. It puts resources to
the optimum use. It leads to capital formation and technological
advancement. It generates handsome revenue for government. It
increases national income and standard of living of people. Thus,
it leads to development across all sectors, and significant growth
throughout the nation.
U. S . RAI
 Importance of Management

• It helps society: For any organization, profit is not the only

objective. It provides the society with a regular supply of
good quality goods and services at reasonable prices. It
provides employment opportunities to people. It pays taxes
to the government which is used for developing the nation.
As part of Corporate Social Responsibility, many
organizations use their profits to build hospitals, schools,
colleges, etc. In this way it contributes towards the uplift of
society.

U. S . RAI
Management Characteristics

U. S . RAI
 Management Characteristics

1. Universal: The principles and concepts of management

are applicable to every type of industry. All the
organizations, whether profit-making or not, require
management for managing their activities. Hence it is
universal in nature. However, the practice of management
may vary from one organization to another according to
their nature.
2. Goal Oriented: All organizations have objectives that are
laid down. Management achieves the organizational goals
by coordinating the efforts of the personnel.

U. S . RAI
 Management Characteristics

3. Continuous process: The process of management consists

of functions like planning, organizing, directing and
controlling the resources to ensure that resources are used
to the best advantages of the organization. Management
involves continuous planning, organizing, directing and
controlling.
4. Multi-dimensional: Management is not confined to the
administration of people only, but it also manages work,
processes and operations, which makes it a multi-
dimensional. It is the unifying force which integrates
human and other resources to obtain the desired objectives.
U. S . RAI
 Management Characteristics

5. Group activity: An organization consists of various

members who have different needs, expectations and
beliefs. Every person joins the organization with a different
motive, but after becoming a part of the organization, he
works for achieving the same goal. This requires
supervision, teamwork and coordination, and it is achieved
by, management.
6. Dynamic function: Management is not static. Over a
period of time new principles, concepts and techniques are
developed and adopted by management. It changes
according to the social changes.
U. S . RAI
 Management Characteristics

The working of an organization depends upon various

factors like social, political, legal, technological,
economical, etc. A slight change in any of these factors
will affect the organization’s growth and performance. To
overcome these changes, management formulates
strategies and implements them.
7. Authority: Management represents a system of Authority
– a hierarchy of command and control. Managers at
different levels possess varying degrees of authority.

U. S . RAI
 Principles of Management

Taylor’s Principles of Scientific Management

F.W. Taylor is regarded as father of Scientific Management.

His principles of scientific management are-

1. Science, Not Rule of Thumb: This means using scientific

methods to study work and determine the most efficient
way of performing specific tasks instead of working by
"rule of thumb" or habit.

U. S . RAI
 Principles of Management

2. Development of each and every person to his or her

greatest efficiency: Employees should be scientifically
selected and placed depending upon their skills,
capabilities and aptitudes. They should be provided proper
training to learn the best method of doing a job.
3. Harmony, Not Discord: Harmony means there should be
complete agreement on ideas and opinions between
workers and management. Discord or difference in opinion
will lead to conflicts.

U. S . RAI
 Principles of Management

4. Cooperation, Not Individualism: This lays stress on

mutual cooperation between workers and the management.
Cooperation, mutual confidence, sense of goodwill should
prevail among both, managers as well as workers. It will
replace internal competition with cooperation.
5. Maximum output in place of restricted output: By
maximizing the production efficiency, the earnings of
employees and employers will also increased.

U. S . RAI
 Principles of Management

6. Financial Incentives: According to this principle the

wages paid should be as per performance of the worker. An
efficient worker should be paid more than an inefficient
worker. This will motivate the workers to become more
efficient.

U. S . RAI
 Principles of Management

Henry Fayol’s Principles of management

U. S . RAI
 Principles of Management

Henry Fayol’s Principles of management

Henry Fayol presented 14 principles of management as
general guides for management process and management
practice. They are:
1. Division of work: According to this principle, work
should be divided among workers according to their
personal aptitude and skills. Division of work leads to
specialization which is necessary for efficient utilization of
labour. This will result in increased efficiency and
productivity.
U. S . RAI
 Principles of Management

2. Authority and Responsibility: Managers need to have the

authority (and with it responsibility) to command their
teams. When managers have teams reporting to them they
are usually responsible for the team's performance.
Authority and Responsibility should go hand in hand and
must be related to one another. An executive can do justice
to his responsibility only when he has authority.
Responsibility without Authority or vice versa is
meaningless.

U. S . RAI
 Principles of Management

3. Discipline: Discipline is absolutely necessary for efficient

functioning of all sections of an organization. Discipline is
described as “respect for agreements that are directed at
achieving obedience, application, and the outward marks of
respect”. Fayol declares that discipline requires good
superiors at all levels, clear and fair agreement and judicious
application of penalties.
4. Unity of command: This principle relates to the functioning
of personnel. According to this principle, an employee
should receive orders and instructions from one superior
only. This principle is useful to avoid confusions, mistakes
and delays in work.
U. S . RAI
 Principles of Management

5. Unity of direction: This is a broader concept than unity of

command. It deals with the functioning of the body
corporate. According to this principle, each group of
activities having the same objective must have one head
and one plan.
6. Subordination of individual interest to general interest:
In any organization, the interest of the organization should
be above that of the individual. This is necessary to
maintain unity and avoid friction among employees.

U. S . RAI
 Principles of Management

7. Remuneration of personnel: Remuneration is the price

paid by the organization to its employees for the services
rendered by them. The remuneration and methods of
payment should be fair and provide maximum satisfaction
to employee and employer.
8. Centralization: Centralization means the concentration of
authority with top management. In a centralized
organization, power is held by head office or a small
number of managers, whereas decentralized organizations
allow departments and individuals to make decisions.

U. S . RAI
 Principles of Management

According to Fayol, it is important to have a balance between

centralization and decentralization for proper working. The
appropriate level of centralization will depend on the
organizational structure and objectives.
9. Scalar chain: The unbroken line of authority from the
highest level to the lowest level is called scalar chain.
Managers are regarded as ‘Chain of Superiors” from the
highest to the lowest ranks and the unbroken line of
command and authority should be maintained. However
the chain may be short-circuited when scrupulous
following of it would be detrimental for the organization
U. S . RAI
 Principles of Management

10. Order: According this principle, everything(material)and

everyone (human being), has a specific place in the
organization. They should be arranged such that right
material/right person should be located at the right place
for effective functioning.
11. Equity: According to this principle, managers should treat
all employees/subordinates with fairness, kindness and
justice. This will make the employees to be more loyal and
devoted towards the organization.

U. S . RAI
 Principles of Management

12. Stability of tenure of personnel: Stable and secure work

force is an asset to an enterprise. Stability of tenure means
ensuring that employees do not leave the company.
Instability is a result of bad management and increases the
costs of unnecessary labour turnover.
13. Initiative: Initiative is conceived as thinking and
execution of a plan. It is one of the keenest satisfactions for
an intelligent employee. Managers should encourage and
motivate the employees to take initiative which will help
the organization to improve.

U. S . RAI
 Principles of Management

Employee initiative can include employee suggestions, new

ideas, solutions to a problem and dealing with situations
without being asked to do so.
14. Esprit de corps: This principle of management
emphasizes the need for team work, i.e. harmony and
understanding among the employees and shows the
importance of communication in obtaining such team
work.
“Union is strength” is the essence of this principle.

U. S . RAI
 Levels of Management and their functions

People in an organization are arranged in hierarchy and they

all have the relationship of superior-subordinates.
The term “Levels of Management’ refers to a line of
demarcation between various managerial positions in an
organization.
The number of levels in management increases when the size
of the business and work force increases and vice versa.
The level of management determines a chain of command, the
amount of authority & status enjoyed by any managerial
position.
U. S . RAI
 Levels of Management and their functions

Every manager in an organization performs all five

management functions. The relative importance of these
functions varies along the managerial levels. There may be as
many levels in the organization as the number of superiors in a
line of command. Some of these levels are merged into one on
the basis of nature of functions performed and authority
enjoyed.
Management may be broadly classified as top level, middle
level and lower level management.

U. S . RAI
Levels of Management and their functions

U. S . RAI
 Levels of Management and their functions

1. Top Level Management: It consists of Board of

Directors, Chief Executives, Managing Directors, General
managers and Owners. The top management is the ultimate
source of authority and it manages goals and policies for
an enterprise. It devotes more time on planning and
coordinating functions.
The functions of the top management can be summarized
as follows –
a) To lay down the objectives and broad policies of the
enterprise.
U. S . RAI
 Levels of Management and their functions

b) To issue necessary instructions for preparation of

department budgets, procedures, schedules etc.
c) To prepare strategic plans & policies for the enterprise.
d) To appoint the executives for middle level i.e.
departmental managers.
e) To control& coordinate the activities of all the
departments.
f) To maintain a contact with the outside world.
g) To provide guidance and direction.

U. S . RAI
 Levels of Management and their functions

h) To be responsible towards the shareholders for the

performance of the enterprise.
i) To design/redesign the organization system
j) To shoulder financial responsibilities and related functions.

U. S . RAI
 Levels of Management and their functions

2. Middle Level Management

This level comprises of branch managers and departmental
managers like marketing manager, production manager, HRD
manager, R&D manager, etc. They are responsible to the top
management for the functioning of their departments. They
devote more time to organizational and directional functions.
In small organization, there is only one layer of middle level
of management but in big enterprises, there may be senior and
junior middle level management.
 Their functions are -
U. S . RAI
 Levels of Management and their functions

 Their functions are -

a. To execute the plans of the organization in accordance with
the policies and directives of the top management.
b. To establish the organization.
c. To make plans for the sub-units of the organization.
d. To participate in employment & training of lower level
management.
e. To interpret and explain policies of top management to
lower level.

U. S . RAI
 Levels of Management and their functions

f. To coordinate the activities within the division or

department.
g. To send important reports and other important data to top
level management.
h. To evaluate performance of junior managers.
i. To inspire lower level managers towards better
performance.

U. S . RAI
 Levels of Management and their functions

3. Lower Level Management: This level is also known as

supervisory level or operative level of management. It
consists of Supervisors, Foremen, Section officers,
Superintendents, Inspectors, etc. Supervisory management
refers to those executives whose work has to be largely
with personal oversight and direction of operative
employees. They are concerned with direction and
controlling function of management.
Their functions are -
a. To assign jobs and tasks to various workers.
U. S . RAI
 Levels of Management and their functions

a. To guide and instruct workers for day to day activities.

b. To be responsible for the quality and quantity of
production.
c. To be responsible for maintaining good relation in the
organization.
d. To act as a link between top management and workers.
e. To communicate workers problems, suggestions, and
recommendatory appeals etc. to the
f. higher level and higher level goals and objectives to the
workers.
U. S . RAI
 Levels of Management and their functions

g. To solve the grievances of the workers.

h. To supervise & guide the sub-ordinates.
i. To provide necessary training to the workers.
j. To arrange necessary materials, machines, tools etc. for
getting the things done.
k. To prepare periodical reports about the performance of the
workers.
l. To ensure discipline in the enterprise.
m. To motivate workers.

U. S . RAI
 Management, Administration and Organization

Management:
• It is defined as an art of managing people and their work, for
achieving a common goal by using the organization’s resources.
• It creates an environment under which the manager and his
subordinates can work together for the attainment of objectives of
organization.
• Management brings together 5M’s of the organization, i.e. Men,
Material, Machines, Methods, and Money for achieving the desired
output.
• The main functions of management are planning, organizing,
staffing directing and controlling

U. S . RAI
 Management, Administration and Organization

Administration:
• Administration relates to top level of management.
• They are the either owners or business partners who invest
their capital in starting the business. They get their returns
in the form of profits or as a dividend.
• The functions of administration are legislative and largely
determinative. It does not need technical ability.
• It makes policies and decides the goals of an enterprise to be
achieved. It is not directly concerned with the
implementation of the policies.
U. S . RAI
 Management, Administration and Organization

Administration:
• It frames the organizational structure and exercises control
over the enterprise.
• It is mainly concerned with decision making, policy making
and making necessary adjustments
• It coordinates finance, production and distribution.

U. S . RAI
 Management, Administration and Organization

Organization:
• Organization is the framework of management. It is the function of
putting together the different parts of an enterprise into working
order.
• Management carries out the policies of Administration through the
frame work of organization.
• It is the foundation upon which the whole business is built. Without
efficient organization, no management can perform its function
smoothly. Strong organization contributes greatly to the continuity
and the success of an enterprise. A poor organization structure
makes good performance impossible, no matter how good the
individuals are.
U. S . RAI
 Management, Administration and Organization

Organization:
• It is a structure of relationships among the individuals
working together for a common goal.
• Organization is concerned with the building, developing and
maintaining of a structure of working relationships in order
to accomplish the objectives of the enterprise.
• Organization means the determination and assignment of
duties to individuals and also the establishment and the
maintenance of authority relationships among the grouped
activities.
U. S . RAI
 Management, Administration and Organization

Relation between Management and Administration

The major differences between management and
administration are given below:
1. Management is a systematic way of managing people and
things within the organization. Administration is defined as an
act of governing the whole organization by a group of people.
2. Management is an activity of business and functional level,
whereas Administration is a high-level activity.
3. Management focuses on policy implementation; policy
formulation is performed by the Administration.
U. S . RAI
 Management, Administration and Organization

Relation between Management and Administration

4. Functions of administration include legislation and
determination. Functions of management are executive and
governing.
5. Administration takes all the important decisions of the
organization while Management makes decisions under the
boundaries set by the Administration.
6. A group of persons, who are employees of the organization
is collectively called Management. Administration represents
the owners of the organization.
U. S . RAI
 Management, Administration and Organization

7. Management can be seen in profit making organizations like

business enterprises. Administration is found in government and
military offices, clubs, hospitals, religious organizations and all
non-profit making enterprises.
8. Management is all about plans and actions, but Administration
is concerned with framing policies and setting objectives.
9. Management plays an executive role in the organization.
Administration’s role is decisive in nature. 10. The manager
looks after the management of the organization, whereas
administrator is responsible for the administration of the
organization.
U. S . RAI
 Management, Administration and Organization

11. Management focuses on managing people and their work.

Administration focuses on making the best possible utilization
of the organization’s resources.is a structure of relationships
among the individuals working together for a common goal.
Organization is concerned with the building, developing and
maintaining of a structure of working relationships in order to
accomplish the objectives of the enterprise.
Organization means the determination and assignment of
duties to individuals and also the establishment and the
maintenance of authority relationships among the grouped
activities.
U. S . RAI
 Management, Administration and Organization

The differences between Management and Administration can

be summarized under two categories: -
1. On the Basis of Functions:
Basis Management Administration

Meaning Management is an art of getting things Administration is concerned

done through others by directing their with formulation of broad
efforts towards achievement of objectives, plans & policies.
predetermined goals.
Nature Management is an executing function. Administration is a decision-
making function.
Process Management decides who should do the Administration decides what
activities assigned by Administration & is to be done & when it is to
how he should do them. be done.
U. S . RAI
 Management, Administration and Organization

Basis Management Administration

Function Management is a doing Administration is a thinking

function because managers function because plans &
get work done under their policies are determined
supervision. It is productive.under it. It is non
productive.
Skills Mainly requires technical and Mainly requires conceptual
human skills and human skills

Level Middle & lower level Top level function

function
U. S . RAI
 Management, Administration and Organization

2. On the Basis of Usage:

Basis Management Administration

Applicability It is applicable to business It is applicable to government,

concerns i.e. profit-making military organizations, schools,
organization. hospitals etc.
Influence Management decisions are Administration is influenced by
influenced by the values, public opinion, govt. policies,
opinions, beliefs & decisions of religious organizations, customs
the managers. etc.
Status Management constitutes the Administration represents owners
employees of the organization of the enterprise who earn return
who are paid remuneration (in on their capital invested & profits
the form of salaries & wages). in the form of dividend.

U. S . RAI
 Functions of Management

There are basically five primary functions of management.

U. S . RAI
 Functions of Management

1. Planning
• It is the first step of management function.
• Planning is deciding in advance what to do, how to do, when to do,
who will do and where to do.
• Planning is essential for utilizing all available resources in the best
way to achieve goals, to develop and establish the enterprise.
• It is a process by which a manager anticipates the future and
discovers alternatives to get the work done. Then he decides how
best to achieve goals, profit and applying best strategies.
• Without proper planning, the activities of the enterprise will
become confused and ineffective.

U. S . RAI
 Functions of Management

2. Organizing
• Organizing is the second function of management. It
follows planning. It is the process by which structure and
allocation of jobs is done.
• Organizing refers to the relationship between people, work
and resources to achieve goals.
• This involves dividing the work into convenient tasks, and
grouping them properly into departments and sections. Then
the jobs are allotted to proper people with the necessary
amount of authority and responsibility.
U. S . RAI
 Functions of Management

3. Staffing
• Staffing is a process of recruitment, selection,
acquiring, training, appraising employees. It is a
continuous process.
• Employees are the most important resources of any
organization. The right staff is very important for a
company because they can change and ensure the
organization’s success.

U. S . RAI
 Functions of Management

4. Directing
• Directing is a process in which the managers instruct, guide and
overview the performance of the workers to achieve the
company’s goals.
• It includes functions like Leadership, communication,
motivation and supervision.
• Leadership: It is the quality of the manager to inspire confidence
and trust in his subordinates, get maximum cooperation from
them and guide their activities to create an organized effort.
• Communication: It is the process by which ideas are transmitted,
received and understood by others for producing desired results.
U. S . RAI
 Functions of Management

It may be verbal or written orders, reports, instructions, etc.

Ineffective communication leads to confusion, misunderstanding
and dissatisfaction.
• Motivation : Motivation means inspiring the subordinates to do
work or to achieve company objectives efficiently.
• Supervision: Supervision is necessary to ensure that work is
going on as per the established plan and the workers are doing
work as they were directed to.

U. S . RAI
 Functions of Management

5. Controlling
• It is a continuous process which measures the current
performance and guides it towards the predetermined goal.
This process helps the managers evaluate the company’s
performance and know whether any change is needed.
Controlling involves the following steps:
• Setting up or establishment of standards.
• Measuring the actual performance.
• Comparing the actual performance with established standards.
• Take corrective actions if needed.

U. S . RAI
 Types of planning

Planning can be classified on the basis of coverage of activities,

importance of contents in planning, approach adopted in planning
process, time dimension and degree of formalization in planning
process.
1. Coverage of activity: Corporate and functional planning
2. Importance of contents: Strategic and tactical/operational
planning
3. Time period involved: Long term and short term planning
4. Approach adopted: Proactive and reactive planning
5. Degree of formalization: Formal and Informal planning

U. S . RAI
 Corporate and functional planning

Corporate planning:
• The planning activities at the corporate level which cover the entire
organizational activities are called corporate planning.
• The focus in corporate planning is to determine long term objectives
as a whole and to generate plans to achieve these objectives bearing
in mind the probable changes in dynamic environment. Corporate
planning is the basis for functional planning.
Functional planning:
• It is derived from corporate planning. It is undertaken for each major
function of the organization like production, marketing, finance etc.,
• As functional planning is derived out of corporate planning, it
contributes to the corporate planning.
U. S . RAI
 Strategic, Tactical and Operational Planning

Strategic Planning:
• Strategic planning is a process in which the top management
determines its vision for the future and identify the goals and
objectives for the organization. It sets the directions in which the
organization wants to proceed in future.
• Strategic planning involves a time span of more than one year and for
most of the organization it ranges from the next 3 and 5 years.
• It takes into account all the external factors, strengths and
weaknesses, risks, etc. and makes a long term policy for the
organization.
• Examples of strategic planning may be diversification of business
into new lines, new products, planned grown rate in sales etc.
U. S . RAI
 Strategic, Tactical and Operational Planning

Tactical planning:
• It is an extension of strategic planning. Tactical plans are
created for all levels of organization. It is concerned with
the integration of various organizational units. It involves
how the resources should be used to achieve the strategic
goals.
Operational planning:
• This planning is done by lower level management. It is
concerned with day to day operations of the organization. It
is detailed and specific and usually based on past
experiences.
U. S . RAI
 Strategic, Tactical and Operational Planning

It covers functional aspects like finance, production human

resources, etc. The time span for operational planning is
less than one year.
• The examples of operational planning may be adjustment
of production within available capacity, increasing the
efficiency of the operating activity by analyzing past
performance.

U. S . RAI
 Long and short term planning

• The long term planning is strategic in nature and

involves more than one year period and can extend to
15 to 20 years or so.
• Short term planning usually covers one year. Short term
plans are made with reference to long term plans
because short term plans contribute to long term plans.

U. S . RAI
 Long and short term planning

• The long term planning is strategic in nature and

involves more than one year period and can extend to
15 to 20 years or so.
• Short term planning usually covers one year. Short term
plans are made with reference to long term plans
because short term plans contribute to long term plans.

U. S . RAI
 Proactive and reactive plans

• Planning is an open system approach and hence it is

affected by environmental factors which keep on
changing continuously. The organization’s response to
these changes differs. Based on these responses planning
may be proactive and reactive.
Proactive planning: It involves designing suitable courses of
action in anticipation of likely changes of environment.
• Managers adopting proactive changes do not wait for
environment to change, but take action in advance of
environmental changes. For this, continuous scanning of
• environment is necessary.
U. S . RAI
 Proactive and reactive plans

• Reactive planning:
• In reactive planning response comes after
environmental changes take place. By the time
organization responds to change in environment there
may be further change in environment.
• Hence this type of planning is suitable in the
environment which is fairly stable over a long period of
time.

U. S . RAI
 Formal and informal planning

Formal Planning:
• Large organizations undertake planning in a formal way.
Generally a separate corporate planning cell is formed at
higher level. The cell is staffed by people of different
backgrounds like engineers, economists, statisticians etc.,
depending upon the nature. The cell continuously
monitors the environment. When environment shows
some change, the cell analyses the environment and
suggest suitable measures to take the advantage of the
changing environment. This type of planning is rational,
systematic, regular and well documented and called
formal planning.
U. S . RAI
 Formal and informal planning

Informal planning:
• Informal planning is undertaken generally by small
organizations. This planning process is based on
manager’s experience, intuitions rather than based on
systematic evaluation of environmental changes.
• This planning process is part of manager’s regular
activity and is suitable for small organizations.

U. S . RAI
 Steps in planning

The planning process is different from one plan to another

and one organization to another.
The steps generally involved in planning are as follows:
1. Establishing goals/objectives:
2. Establishing planning premises:
3. Deciding the planning period:
4. Identification of alternatives
5. Evaluation and selection of alternative
6. Developing derivative/supportive plans
7. Measuring and controlling the process

U. S . RAI
 Steps in planning

1. Establishing goals/objectives:
• The first step in planning process is to determine the enterprise
objectives. These are set by upper level managers after number of
objectives has been carefully considered.
• The objectives set depend on the number of factors like mission
of the organization, abilities of the organization etc., Once the
organizations objectives are determined, the section wise or
department wise objectives are planned at the lower level.
• Defining the objectives of every department is a very essential
one; then only clear cut direction is available to the departments.
Control process is very easy if the objectives are clearly defined.

U. S . RAI
 Steps in planning

2. Establishing planning premises:

• This is the second step in planning. It involves the conditions
under which planning activities will be undertaken.
• Planning premises are planning assumptions or factors like the
expected environmental factors, pertinent facts and information
relating to the future such as general economic conditions,
population trends, competitive behaviour etc.
• The planning premises can be classified as below:
(a) Internal and External premises.
(b) Tangible and Intangible premises.
(c) Controllable and non-controllable premises.
U. S . RAI
 Steps in planning

3. Deciding the planning period:

• Once the long term objectives and planning premises are decided,
the next task is to decide the period of the plan.
• Some plans are made for a year and in others it will be decades.
Companies generally base their period on a future that can
reasonably be anticipated.
4. Identification of alternatives:
• The next step in planning is identifying alternatives. A particular
objective can be achieved through various actions. For example
an organization’s objective is to grow further which can be
achieved in several ways like expanding in the same field of…..
U. S . RAI
 Steps in planning

….business or product line, diversifying in other areas,

joining hands with other organization, acquiring other
organizations and so on. With each category there may be
several alternatives.
5. Evaluation and selection of alternative:
• After the alternatives are identified, the next step is to
evaluate the alternatives according to the premises and goals,
and to select the best course of action.
• This is done with the help of quantitative techniques and
operations research. In addition, software packages are
available for evaluating alternatives.
U. S . RAI
 Steps in planning

6. Developing derivative/supportive plans:

After the best plan is selected, various other plans are
derived so as to support the main plan. These may be plans
for buying equipment, buying raw material etc. They are
derivative plans /supportive plans formulated to support the
main plan.
7. Measuring and controlling the process:
Managers need to check the progress of their plans so that
remedial action can be taken to make plan work or change
the plan if it is unrealistic. Hence process of controlling is a
part of any plan.
U. S . RAI
 Types of Organization

• Organization involves identification and grouping of

activities to be performed and dividing them among the
individuals and creating authority and responsibility
relationship among them for the accomplishment of
organizational objectives.
• Organizing being process, consists of departmentalization,
linking of departments, defining authority and responsibility
and prescribing authority relationships. The organization
structure is the result of this process.

U. S . RAI
 Organization structure

• An organization structure shows the authority and

responsibility relationship between the various positions of
the organization by showing who reports to whom.
• It is a set of planned relationships between groups of related
functions and between physical factors and personnel
required for the achievement of organizational goal.
• A good organization structure should not be static but
dynamic. It should be subject to change from time to time in
the light of changes in the business environment.

U. S . RAI
 Principles of Organization

In order to facilitate the achievement of objectives,

management thinkers have laid down certain principles of
organization.
These principles are guidelines for planning organization
structure. Therefore, thorough understanding of the principles
of organization is essential for good organization.
Few common principles of organization are discussed below:
1) Objectives: The objectives of the enterprise influence the
organization structure. Every part of the organization and
organization as a whole should be geared to the basic objective
determined by the enterprise.
U. S . RAI
 Principles of Organization

2) Specialization: Effective organization must promote

specialization. The activities of the enterprise should be
divided according to functions and assigned to persons
according to their specialization.
3) Span of control: The number of subordinates that an
executive or managers can supervise directly is called span of
control. A manager can directly supervise only a limited
number of workers. Hence, it is necessary to have a proper
number of subordinates answerable to a manager. A maximum
of six is normally acceptable for this purpose. Span of control
may be wide or narrow depending upon many factors.
U. S . RAI
 Principles of Organization

4) Exception: This principle requires that organization structure

should be so designed that managers are required to go through
the exceptional matters only. All the routine decisions should be
taken by subordinates, where as problems involving unusual
matters and policy decision should be referred to higher levels.
5) Scalar principle: This is also known as chain of command.
There must be clear lines of authority running from the top to the
bottom. Authority is the right to decide, direct and coordinate.
Every subordinate must know who his superior is and to whom
policy matters beyond his own authority must be referred for
decision.
U. S . RAI
 Principles of Organization

6) Unity of command: Each subordinate should have only one

supervisor whose command he has to obey. Dual subordination
must be avoided, for it causes uneasiness, disorder, and
indiscipline and undermine of authority.
7) Delegation: Proper authority should be delegated at the lower
levels of the organization also. The authority delegated must be
equal to responsibility i.e. the manager should have enough
authority to accomplish the task assigned to him.
8) Responsibility: A superior should be held responsible for the
acts of his subordinates. No superior should be allowed to avoid
responsibility by delegating authority to his subordinates.
U. S . RAI
 Principles of Organization

9) Authority: Authority is the tool by which a manager is able

to accomplish the desired objective. Hence, the authority of
each manager must be clearly defined. Authority and
responsibility must be coexistent in the organization.
10) Efficiency: The organization should be able to attain the
mission and objectives at minimum cost.
11) Simplicity: The organization structure should be as simple
as possible with minimum number of levels. A large number
of levels of organization means difficulty of effective
communication and coordination.

U. S . RAI
 Principles of Organization

12) Flexibility: The organization should be flexible, should be

adaptable to changing circumstances. It should permit expansion
and replacement without dislocation and disruption of the basic
design. A sound organization must avoid complicated
procedures, red-tape and excessive complication of control so
that it may adapt itself easily and economically to business and
technical changes.
13) Balance: There should be reasonable balance in the size of
various departments, between centralization and
decentralization. There must be balance in the formal structure
as regards to factors having conflicting claims.
U. S . RAI
 Principles of Organization

14) Stability: It refers to the capacity of the organization to

withstand the losses of key personnel without much loss to the
working.
15) Communication: It is the process of transmitting
instructions, ideas, suggestions and information within the
organization and to outside customers, suppliers and all those who
are affected. Good two way communication is essential for
effective functioning.
16) Unity of direction: There must be one objective and one plan
for a group of activities having the same objective. Unity of
direction facilitates unification and coordination of activities at
various levels.
U. S . RAI
 Principles of Organization

17) Personal abilities: As organization is a formal group of

people there is need for proper selection, placement and training.
Organization structure must ensure optimum use of human
resources.

U. S . RAI
 Types of organization

The common types of organization are:

1. Line, Military or Scalar Organization
2. Functional Organization
3. Line and Staff Organization
4. Project Organization

U. S . RAI
 Line, Military or Scalar Organization

• Line organization is the simplest and oldest type of

organization. It is also known as scalar or military
organization.
• This is called military organization as it resembles old
military organizations where discipline is of high order.
Orders and instructions issued from the top level is followed
by the people below.
• The line organization represents the structure in a direct
vertical relationship in which authority flows vertically
downward from top to bottom throughout the organization.

U. S . RAI
 Line, Military or Scalar Organization

• As the flow of authority moves from top to bottom, this is

also called line or scalar organization.
• People at different levels know to whom they are
accountable.
• The quantum of authority is highest at the top and reduces at
each successive level.
• The superior communicates his decision and orders to his
subordinates. The subordinates, in turn, can communicate
them to those who are immediately under them.

U. S . RAI
 Line, Military or Scalar Organization

• Figures below represent the structure of line organization.

• Figure a represents a line organization having three main departments

like production, finance and marketing. Here the flow of authority is
from general manager to each department head, superintendent,
foreman and then workers.
U. S . RAI
 Line, Military or Scalar Organization

• In figure below, the authority flows from works manager to

Superintendent to foreman and then to workers.

U. S . RAI
 Advantages of line organization

• The advantages of line organization are

1. It is simple and easy to understand.
2. Is flexible and easy to expand or contract.
3. There is a clear division of authority and responsibility,
hence no scope of shifting the responsibility.
4. There is a clear channel of communication, so there is no
chance of confusion.
5. It encourages speedy action.
6. It is strong in discipline.

U. S . RAI
 Disadvantages of line organization

1. There is lack of specialisation.

2. Departmental heads are over-burdened with various routine jobs,
so they do not have time for further expansion and planning.
3. It overloads a few key executives.
4. Due to lack of specialization, there may be chances of accidents,
wastage of material and man hours.
5. Chances of delay in communicating the orders of General
Manager or any other departmental head to the workers and,
therefore, possibility of distortion, due to long channel.
6. It encourages dictatorial way of working.
7. It has no means of rewarding good workers.
U. S . RAI
 Applications of line organization

Applications:
1. Suitable for factories of small and medium size, where the
number of subordinate and operational staff is less.
2. Suitable for continuous process such as sugar, paper, oil
refining, spinning and weaving industries, textiles, etc.
3. Suitable where labour problems are not difficult to solve.
4. Suitable where automatic plants are used.

U. S . RAI
 Functional Organization

The line organization does not provide specialists in the

structure. Many jobs require specialized knowledge.

U. S . RAI
 Functional Organization

• In functional organization the specialists are made available in

the top positions throughout the enterprise. The functional
organization was introduced by F.W. Taylor.
• Under functional organization, various activities of the
enterprise are classified according to certain functions like
production, marketing, finance, personnel etc., and are put
under the charge of functional specialists
• A functional in charge directs the subordinates throughout the
organization in his particular area of business operation. This
means that subordinates receive orders and instructions not
from one superior but from several functional specialists.

U. S . RAI
 Functional Organization

Advantages of functional organization

1. Due to specialisation quality of work is better.
2. This system provides more specialized knowledge and
guidance to individual workers through experts.
3. It helps mass production by standardization and
specialisation.
4. If any operation needs improvement, it can be improved
even up to the last moment.
5. Considerable expansion of the factory is possible.

U. S . RAI
 Functional Organization

6. As expert guidance is available, chances of accidents,

wastage of materials, man and machine hours are reduced.
This will reduce prime cost.
7. Unnecessary overloading of responsibilities will not be
there, as was in the case of line organization.
8. No special knowledge of workers is required as the
instructions are supplied by drawing and experts.
9. The line executives are spared from routine specialized
decisions.

U. S . RAI
 Functional Organization

Disadvantages of functional organization

1. As each worker is responsible to all experts, it becomes
difficult to maintain discipline
2. By employing high waged experts, the total cost of job
may become high.
3. As line workers will not be using their skills, their
initiative cannot be utilised.
4. It is very difficult to fix up the responsibility to any one
foreman in case something goes wrong.

U. S . RAI
 Functional Organization

Disadvantages of functional organization

5. Proper co-ordination of the work of different departments
is required but it is difficult to maintain as everybody is
working individually.
6. Lack of coordination among functional executives will
delay decision making.
7. Industrial relationships become more complex.

U. S . RAI
 Line and Staff Organization

Figures below represent line and staff organization. Here the

line executives are marked vertically and staff executives are
placed horizontally.

(G.M.: General Manager; W.M.: Works Manager; Suptd : Superintendent;

F/M : Foreman; B.O.D: Board Of Directors)
U. S . RAI
 Line and Staff Organization
• Line and staff organization has advantages of both line and
functional organization.
• Here, the line executives have supervisory authority and
control over subordinates. Authority flows from top to bottom
as it does in the line organization
• In addition, specialists called staff are recruited to advise the
line executives on important matters. The final decision
whether to accept and implement the recommendations of
staff lies with line executives.
• The staff officials do not have any power of command in the
organization as they are employed only to provide expert
advice to the line manager.
U. S . RAI
 Advantages of Line and Staff Organization
(1) Specialized and expert advice from staff executives is
available.
(2) Reduction of burden on line managers.
(3) Better decisions, as staff specialists help the line managers
(4) Unity of command
(5) Flexible when compared to functional organization.
(6) Less wastage of material, man and machine hours.
(7) Quality of product is improved.
(8) Has all advantages of both line and functional
organization.
U. S . RAI
 Disadvantages of Line and Staff Organization
(1) If allocation of duties between line and staff is not clear, it
may give rise to confusions.
(2) There might be conflict between line and staff executives.
(3) Since staff is not accountable, they may not perform well.
(4) Product cost will increase because of high salaries of staff
executives.
• Now-a-days this type of organization is preferred for medium
and large scale industries, depending upon internal structure,
nature of productive activities and span of business area.
• It is applied in automobile industries and other intermittent
nature of industries
U. S . RAI
 Project Organization
When an organization takes up a new project, a Project
Organization is set up in order to complete the project.
It comprises of specialists from different functional areas of
the parent organization. If needed experts are hired from
outside also.
The team of specialists work simultaneously to achieve the
goals of the project.
After the project is completed the team is dissolved. So it is a
temporary in nature.

U. S . RAI
 Advantages of Project Organization
• It does not interfere with the functioning of the
existing organization.
• Decision making is quick.
• It allows maximum usage of specialist knowledge.
• It provides the maximum attention that a project
needs.

U. S . RAI
 Disadvantages of Project Organization
• The members are recruited for a short period so it
creates a feeling of insecurity and uncertainty.
• There may be conflicts among specialists.
• The project manager may not have complete
authority over team members.
• Sometimes decision may be difficult due to
pressures from different specialists.

U. S . RAI
 Project Organization Structure
Applications:
• In IT companies like L&T, Infosys, TCS, Wipro, etc where business is
mainly project based.

U. S . RAI
 Project Organization Structure
• The members are recruited for a short period so it
creates a feeling of insecurity and uncertainty.
• There may be conflicts among specialists.
• The project manager may not have complete
authority over team members.
• Sometimes decision may be difficult due to
pressures from different specialists.

U. S . RAI
 Steps in organizing
While organizing, a manager differentiates and integrates the
activities of his organization. Steps in organizing are:

U. S . RAI
 Steps in organizing
• Determination of objectives:
• The first step in organizing is to know the objectives
of the enterprise.
• Objectives determine resources and the various
activities which need to be performed and the type of
organization which needs to be built for this purpose.
• Objectives also serve as guidelines for the
management and workers. They bring about unity of
direction in the organization.

U. S . RAI
 Steps in organizing
 Identification and grouping of activities: To achieve the
objectives, the process of organization is divided into
functions and sub-functions. Then similar activities or
related activities are combined and grouped into
departments.
 This will enable the people to know what is expected of
them as members of the group and will help in avoiding
duplication of efforts. For example, the total activities of an
enterprise may be divided into major functions like
production, purchasing, marketing, finance, human resource,
etc. Each function is further subdivided into various jobs.
U. S . RAI
 Steps in organizing
 Assignment of duties: After classifying and grouping the
activities into various jobs, they should be allotted to the
individuals for ensuring certainty of work performance.
 Each individual should be given a specific job to do
according to his ability, skill, and knowledge and made
responsible for that.
 Delegation of authority: Authority without responsibility
is dangerous and responsibility without authority is an
empty vessel. Hence, corresponding to the responsibility
authority is delegated to the subordinates for enabling them
to show work performance.
U. S . RAI
 Steps in organizing
Providing physical facilities and proper environment:
 Provision of right type of physical facilities and proper
environment is essential for the smooth running of an
organization.
 Physical facilities mean proper tools, machinery, etc.
 Right environment means proper lighting, ventilation,
heating/cooling arrangements at the place of work, proper
hours of work, rest intervals, safety devices, job satisfaction
and above all, human approach by management.

U. S . RAI
 Functional areas of Management
There are four functional areas of management namely production,
finance, marketing and human resource (personnel).

U. S . RAI
 Functional areas of Management
Production management:
Production Management is the management of productive
processes that convert inputs into goods and services. The
inputs are men, material, equipment, technical knowledge, etc.
It is also known as manufacturing management or operational
management. The main objective of Production Management
is: “To produce goods and services of right quality and quantity
at the right time and right manufacturing cost” This department
is generally put under production manager and he is responsible
for all production related activities. This area has a number of
activities; few of them are given below:
Production management…
U. S . RAI
 Functional areas of Management
……Production management
 (1) Purchasing: This is related to the purchase of various
materials required by the organization. Purchasing involves
procuring right quantity of materials of the right quality,
 at the right time and at the right price from the right
supplier.
 (2) Materials management: This involves storing of
materials and issues of materials to various departments.
 (3) Research and Development: It deals with improving
the existing products and process and developing new
products and process.
U. S . RAI
 Functional areas of Management
Marketing Management:
 Marketing Management is planning, organizing, controlling
and implementing of marketing programmes and policies to
distribute the organization’s products to the buyers to
generate an acceptable profit.
 The major objectives of marketing management are:
creation of demand, customer satisfaction, market share,
generation of profits, creation of good will and public
image.
 The sub-activities are:
Marketing Management….

U. S . RAI
 Functional areas of Management
……Marketing Management
The sub-activities are:
 (1) Advertising: Involves giving information about
products to buyers.
 (2) Marketing research: It is related to the systematic
collection and analysis of data relating to the marketing of
goods and services.
 (3) Sales management: It involves management efforts
directed towards movement of products and services from
producers to consumers.

U. S . RAI
 Functional areas of Management
Financial Management:
 Financial Management is planning, organizing, directing and
controlling the financial activities like procurement and utilization of
funds of the enterprise. It means applying management principles to
financial resources of the enterprise. The objectives are:
 1) To ensure regular and adequate supply of funds to the organization.
 2) To ensure adequate returns to the shareholders
 3) To ensure optimum funds utilization
 4) To ensure safety on investments
 5) To plan a sound capital structure
 The functions are financial planning and forecasting, determination of
capital composition, fund investment, maintaining proper liquidity,
disposal of surplus and financial controls.
U. S . RAI
 Functional areas of Management
Human Resource (Personnel) Management:
Human Resource Management includes the processes of planning,
selecting, recruiting and inducting employees in an organization. The
objectives include
a) Effective utilization of human resources
b) Motivation
c) Creating policies and procedures
d) Growth and development of Human resources.
The functions of human resource management include man power
planning, recruitment, selection, performance appraisal, training, wage
and salary administration, compensation and rewards, industrial
relations, employee communication and personnel record maintenance.
U. S . RAI
 Managerial Skills
 Managerial skills are certain abilities or attributes that an
executive should possess in order to fulfill specific tasks in
an organization such as his role duties, dealing with
subordinates and co-workers, all of which allows for the
easy flow of activities in the organization. These can be
developed through learning and practical experience as a
manager.
 Managerial skills are crucial for various positions and at
different levels of a company, from top leadership to
intermediate supervisors to first level managers

U. S . RAI
 Managerial Skills
Three Types of Managerial Skills
 The three types of managerial skills that are essential are:
 Technical skills
 Conceptual skills
 Human or interpersonal
management skills

U. S . RAI
 Managerial Skills
Technical skills
 Technical skills involve the knowledge of and proficiency in
activities involving methods, processes and procedures. For
example, mechanics work with tools and their supervisors
should have the ability to teach them how to use these tools.
 The skills are acquired through education or experiences in
particular industry .These skills involve the use of tools,
equipment, procedures, and techniques of the industry.
 Technical skills are most important for supervisory level or first-
level managers. As we go through a hierarchy from the bottom to
higher levels, the technical skills lose their importance.

U. S . RAI
 Managerial Skills
Conceptual Skills:
Conceptual skills are the abilities to see the organization as a
whole, to recognize inter relationships among different functions of
the business and external forces and to guide effectively the
organization efforts.
 It is easier to learn technical skills than the conceptual skills.
 These skills help in making long-range plans and decisions for
expanding the business (forecasting).
 The conceptual skills will help managers to look outside their
department’s goals. So, they will make decisions that will satisfy
overall business goals.

U. S . RAI
 Managerial Skills
 Conceptual skills are vital for top managers, less critical for mid-
level managers, and not required for first-level managers.
 These can be classified as Decision Making skills and
Organizational skills.
Decision making skills:
 It is the ability of a person to take timely and accurate decisions.
This requires mental ability and presence of mind.
Organizational skills:
 It helps to select and fix right people at right work.

U. S . RAI
 Managerial Skills
Human or Interpersonal Managerial Skills
 These skills represent the ability of a manager to work
effectively with people.
 They help to build a team and create an environment in which
people feel secure and free to express their opinions. As seen in
above figure, these skills are equally essential or managers at all
levels in the company.
 They are classified as:
Communicating skills:
 It is the ability to convey information to the other. Improper,
insufficient and poorly expressed information can create
confusion.
U. S . RAI
 Managerial Skills
Motivating skills:
 It inspires people to do what the manager wants them to do.
The motivation may be positive or negative.
 Positive motivation includes rewards, Negative motivation
includes punishment, threats, etc.
Leadership skills:
 This skill helps the manager to lead the people working
under him. It is the ability to inspire confidence and trust in
the subordinates in order to have maximum cooperation
from them.

U. S . RAI
U. S . RAI