MANAGEMENT

UNIT – I
PRINCIPLES AND
MANAGEMENT AND PLANNING
ORGANIZATIONAL
BEHAVIOUR
MBA – I | VCEW
 SYLLABUS
UNIT – I – MANAGEMENT AND PLANNING
Nature, Scope and Significance of Management, Evolution
and Development of Management Thought. Process and
functions of management – POSDCORB - Levels of
management. Nature and purpose of planning - Planning
process, managing by Objective (MBO) strategies- Types of
strategies
What is Meant by Management?
Management is the act of getting people together to
accomplish desired goals and objectives using available
resources efficiently and effectively. It is an operative force
in all complex organizations trying to achieve some stated
objectives. Management may be defined in many different
ways.
 DEFINITION OF MANAGEMENT
 According to Lawrence A Appley - "Management is the
development of people and not the direction of things".
 According to Joseph Massie - "Management is defined as

the process by which a co-operative group directs

action towards common goals".
NATURE, SCOPE AND SIGNIFICANCE
OF MANAGEMENT
 NATURE OF MANAGEMENT
The nature of management can be described as follows
 Management is Goal Oriented

 Management is Universal

 Management is a Integrative Force

 Management is a Social Process

 Management is Multidisciplinary

 Management is a Continuous process

 Management is Intangible

 Management is an art, as well as science

MANAGEMENT IS GOAL ORIENTED

Management has no justification to exist without Goals.

Management goals are called group goals or organizational
goals. The basic goal of management is to ensure efficiency
and economy in the utilization of human, Physical, and
financial resources. The success of the management is
measured by the extent to which the established goals one
achieved.
MANAGEMENT IS UNIVERSAL
Management is an essential element of every organized
activity irrespective of the size or type of activity.
Whenever two or more persons are engaged in working
for a common goal, management is necessary. All types of
organizations e.g, family, club, university, government,
army, cricket team or business, require management.
Thus management is a pervasive activity.
MANAGEMENT IS AN INTEGRATIVE FORCE
The Essence of the management lies in the co-ordination of
individual efforts in to a team. Management reconciles the
individual goals with organizational goals.
MANAGEMENT IS A SOCIAL PROCESS
Management is a social process because it concerned with
interpersonal relations. Human factor is the most
important element in management.
MANAGEMENT IS MULTIDISCIPLINARY
Management has to deal with human behaviour under
dynamic conditions. Therefore, it depends upon wide
knowledge derived from several disciplines like
engineering, sociology, psychology, economics,
anthropology etc. The vast body of knowledge in
management draws upon other fields of the study.
MANAGEMENT IS A CONTINOUS PROCESS
Management is a dynamic and an on-going process. The
Cycle of management continues to operate so long as
there is organized action for achievement of group goals.
MANAGEMENT IS INTANGIBLE
Management is an unseen or invisible force. It cannot be
seen but its presence can be felt everywhere in the form
of results. However, the managers who perform the
functions of management are very much tangible and
visible.
MANAGEMENT IS AN ART AS WELL AS SCIENCE
Management is also a discipline involving specialised training
and an ethical code arising out of its social obligations. On
the basis of these characteristics, management may be
defined as a continuous social process involving the
coordination of human and material resources in order to
accomplish desired objectives. It involves both the
determination and accomplishment of organizational goals.
SCOPE OF MANAGEMENT
 Production Management

 Marketing Management

 Financial Management

 Personnel Management
PRODUCTION MANAGEMENT
(a) Designing the Product
(b) Location and Layout of plant and building
(c) Planning and control of factory operations.
(d) Operation of purchase and storage of materials
(e) Inventory cost and quality control
(f) Research and Development etc.
MARKETING MANAGEMENT
(a) Marketing research has to be done to determine the
needs and expectation of consumers.
(b) Planning and developing suitable products
(c) Setting appropriate prices.
(d) Selecting the right channel of distribution.
(e) Promotional activities like advertising and salesmanship
to communicate with the customers.
FINANCIAL MANAGEMENT
(a) Selecting the appropriate source of funds.
(b) Raising the required funds at the right time.
(c) Administration of earnings.
(d) Estimating the volume of fund.
PERSONNEL MANAGEMENT
 Man power planning

 Recruitments

 Selection

 Training

 Appraisal

 Promotions and Fund Transfer

 Compensation

 Employee Welfare services and personnel records and

research etc.
 SIGNIFICANCE OF MANAGEMENT
 It helps in Achieving Group Goals
 Optimum Utilization of Resources
 Establishes Sound Organization
 Establishes Equilibrium
 Essentials for Prosperity of Society
 IT HELPS IN ACHIEVING GROUP GOALS
It arranges the factors of production, assembles and organizes the
resources, integrates the resources in effective manner to achieve
goals. It directs group efforts towards achievement of pre-determined
goals. By defining objective of organization clearly there would be no
wastage of time, money and effort. Management converts
disorganized resources of men, machines, money etc. into useful
enterprise. These resources are coordinated, directed and controlled
in such a manner that enterprise work towards attainment of goals.
 OPTIMUM UTILIZATION OF RESOURCES
Management utilizes all the physical & human resources
productively. This leads to efficacy in management. Management
provides maximum utilization of scarce resources by selecting its
best possible alternate use in industry from out of various uses. It
makes use of experts, professional and these services leads to use
of their skills, knowledge, and proper utilization and avoids
wastage. If employees and machines are producing its maximum
there is no under employment of any resources.
It gets maximum results through minimum input by
proper planning and by using minimum input & getting
maximum output. Management uses physical, human and
financial resources in such a manner which results in best
combination. This helps in cost reduction.
 ESTABLISHES SOUND ORGANIZATION
No overlapping of efforts (smooth and coordinated functions). To
establish sound organizational structure is one of the objective of
management which is in tune with objective of organization and for
fulfilment of this, it establishes effective authority & responsibility
relationship i.e. who is accountable to whom, who can give instructions
to whom, who are superiors & who are subordinates. Management fills
up various positions with right persons, having right skills, training
and qualification. It ensures that all jobs should be cleared to everyone
 ESTABLISHES EQUILIBRIUM

It enables the organization to survive in changing

environment. It keeps in touch with the changing
environment. With the change is external environment, the
initial co-ordination of organization must be changed. So it
adapts organization to changing demand of market /
changing needs of societies. It is responsible for growth and
survival of organization.
 ESSENTIALS FOR PROSPERITY OF SOCIETY

Efficient management leads to better economical production which

helps in turn to increase the welfare of people. Good management
makes a difficult task easier by avoiding wastage of scarce resource.
It improves standard of living. It increases the profit which is
beneficial to business and society will get maximum output at
minimum cost by creating employment opportunities which
generate income in hands. Organization comes with new products
and researches beneficial for society.
EVOLUTION AND DEVELOPMENT OF
MANAGEMENT THOUGHT
 EVOLUTION OF MANAGEMENT THOUGHT
This evolution of management thought can be studied in
the following broad stages:
 Classical Approach

 The Neo-classical theory of Management

 The Modern Theory of Management

 CLASSICAL APPROACH

It includes the following three streams of thought:

i) Bureaucracy

ii) Scientific Management

iii) Administrative Management
 THE NEO-CLASSICAL THEORY OF MANAGEMENT

It includes the following two streams:

(i) Human Relations Approach
(ii) Behavioural Sciences Approach
 THE MODERN THEORY OF MANAGEMENT

It includes the following three streams of thought:

(i) Quantitative Approach to Management (Operations
Research)
(ii) Systems Approach to Management

(iii) Contingency Approach to Management

DEVELOPMENT OF MANAGEMENT THOUGHT

The development of management thought is the result of

contributions made by pioneering management thinkers
and experts from other social sciences such as
economics and psychology.
Management thought has a long history. It is as old as human
civilization itself. Management in one form or the other has
been a significant feature of economic life of mankind
throughout ages. Management thought is an evolutionary
concept It has develop along with and in line with the growth of
social, political, economic and scientific institutions.
Management thought has its origin in the ancient times. It
developed gradually along with other socioeconomic
developments.
The contributor‘s to management though are many. They
include Management philosophers, management
practitioners and scholars. Modem management is based
on the solid foundations laid down by management
thinkers from the early historical period.
PROCESS AND FUNCTIONS OF
MANAGEMENT
 MANAGEMENT PROCESS

The term management is explained in different ways. For

example, it is said that management is what management
does. Here, management is explained with reference to its
basic functions which include planning, organising,
coordinating and controlling.
Similarly, management is described as a process which involves
various elements. Management process is a continuous one and
is run by the managers functioning at different levels.
Management is now recognised as a distinct process in which
managers plan, organise, lead, motivate and control human
efforts in order to achieve well defined goals. In fact, process
means a series of activities/operations undertaken/conducted
for achieving a specific objective. Process is a systematic way of
doing things.
For example, in a factory there is a production process.
Similarly, in the management process, resources and
human efforts are used in an orderly manner for
achieving specific objectives. The management process
suggests functions to be performed by the managers
 DEFINITION OF MANAGEMENT PROCESS
According to D. E. McFarland, "Management is the distinct
process by which the managers create, direct, maintain
and operate purposive organisation through systematic,
co-coordinated and cooperative human efforts.
ELEMENTS OF THE MANAGEMENT
PROCESS
FUNCTIONS OF MANAGEMENT
PLANNING: Planning is the primary function of management. It
involves determination of a course of action to achieve desired
results/objectives. Planning is the starting point of management
process and all other functions of management are related to
and dependent on planning function. Planning is the key to
success, stability and prosperity in business. It acts as a tool for
solving the problems of a business unit. Planning plays a pivotal
role in business management It helps to visualize the future
problems and keeps management ready with possible solutions.
ORGANISING: Organising is next to planning. It means to bring the
resources (men, materials, machines, etc.) together and use them
properly for achieving the objectives. Organisation is a process as
well as it is a structure. Organising means arranging ways and means
for the execution of a business plan. It provides suitable
administrative structure and facilitates execution of proposed plan.
Organising involves different aspects such as departmentation, span
of control delegation of authority, establishment of superior-
subordinate relationship and provision of mechanism for co-
ordination of various business activities.
STAFFING: Staffing refers to manpower required for the
execution of a business plan. Staffing, as managerial
function, involves recruitment, selection, appraisal,
remuneration and development of managerial personnel.
The need of staffing arises in the initial period and also
from time to time for replacement and also along with the
expansion and diversification of business activities. Every
business unit needs efficient, stable and cooperative staff
for the management of business activities.
Manpower is the most important asset of a business unit.
In many organisations, manpower planning and
development activities are entrusted to personnel
manager or HRD manager. 'Right man for the right job' is
the basic principle in staffing.
DIRECTING: Directing as a managerial function, deals with guiding and
instructing people to do the work in the right manner.
Directing/leading is the responsibility of managers at all levels. They
have to work as leaders of their subordinates. Clear plans and sound
organisation set the stage but it requires a manager to direct and lead
his men for achieving the objectives. Directing function is quite
comprehensive. It involves Directing as well as raising the morale of
subordinates. It also involves communicating, leading and motivating.
Leadership is essential on the part of managers for achieving
organisational objectives.
COORDINATING: Effective coordination and also integration of activities of
different departments are essential for orderly working of an Organisation.
This suggests the importance of coordinating as management function. A
manager must coordinate the work for which he is accountable. Co-ordination
is rightly treated as the essence of management. It may be treated as an
independent function or as a part of organisms function. Coordination is
essential at all levels of management. It gives one clear-cut direction to the
activities of individuals and departments. It also avoids misdirection and
wastages and brings unity of action in the Organisation. Co-ordination will not
come automatically or on its own Special efforts are necessary on the part of
managers for achieving such coordination.
CONTROLLING: Controlling is an important function of
management. It is necessary in the case of individuals
and departments so as to avoid wrong actions and
activities. Controlling involves three broad aspects: (a)
establishing standards of performance, (b) measuring
work in progress and interpreting results achieved, and
(c) taking corrective actions, if required. Business plans
do not give positive results automatically.
Managers have to exercise effective control in order to
bring success to a business plan. Control is closely linked
with other managerial functions. It is rightly treated as
the soul of management process. It is true that without
planning there will be nothing to control It is equally true
that without control planning will be only an academic
exercise Controlling is a continuous activity of a
supervisory nature.
MOTIVATING: Motivating is one managerial function in which a
manager motivates his men to give their best to the Organisation.
It means to encourage people to take more interest and initiative
in the work assigned. Organisations prosper when the employees
are motivated through special efforts including provision of
facilities and incentives. Motivation is actually inspiring and
encouraging people to work more and contribute more to achieve
organisational objectives. It is a psychological process of great
significance.
COMMUNICATING: Communication (written or oral) is necessary for
the exchange of facts, opinions, ideas and information between
individual‘s and departments. In an organisation, communication is
useful for giving information, guidance and instructions. Managers
should be good communicators. They have to use major portion of
their time on communication in order to direct, motivate and co-
ordinate activities of their subordinates. People think and act
collectively through communication. According to Louis Allen,
"Communication involves a systematic and continuing process of
telling, listening and understanding".
 POSDCORB
Luther Gullic gave a new formula to suggest the elements of
Management Process i.e. basic functions of management. According
to him, management process may be indicated by the word
"PODSCORB. Here, “P” states for 'planning'. "O" for 'organising', "D"
for 'directing', "S" for 'Staffing', "CO" for 'Coordinating, "R" for
'Reporting' and "B" for 'Budgeting'. Gullic coined the word
"PODSCORB" to suggest seven functions of management.
LEVELS OF MANAGEMENT
 LEVELS OF MANAGEMENT
There are Three Levels of Management, they are:
 Administrative or Top Level of Management

 Executive or Middle Level of Management

 Supervisory or Lower Level of Management

TOP LEVEL OF MANAGEMENT
The Top Level Management consists of the Board of Directors
(BOD) and the Chief Executive Officer (CEO). The Chief Executive
Officer is also called General Manager (GM) or Managing Director
(MD) or President. The Board of Directors are the
representatives of the Shareholders, i.e. they are selected by the
Shareholders of the company. Similarly, the Chief Executive
Officer is selected by the Board of Directors of an organization.
The main role of the top level management is summarized as
follows:-
 The top level management determines the objectives, policies and
plans of the organization.
 They mobilises (assemble and bring together) available resources.

 The top level management does mostly the work of thinking,

planning and deciding. Therefore, they are also called as the
Administrators and the Brain of the organization.
 They spend more time in planning and organising
 They prepare long-term plans of the organization which are
generally made for 5 to 20 years.
 The top level management has maximum authority and
responsibility. They are the top or final authority in the
organization. They are directly responsible to the Shareholders,
Government and the General Public. The success or failure of the
organization largely depends on their efficiency and decision
making.
 They require more conceptual skills and less technical Skills.
MIDDLE LEVEL OF MANAGEMENT
The Middle Level Management consists of the Departmental
Heads (HOD), Branch Managers, and the Junior Executives.
The Departmental heads are Finance Managers, Purchase
Managers, etc. The Branch Managers are the head of a branch
or local unit. The Junior Executives are Assistant Finance
Managers, Assistant Purchase Managers, etc. The Middle level
Management is selected by the Top Level Management.
The middle level management emphasizes more on following tasks:-
 Middle level management gives recommendations (advice) to the
top level management.
 It executes (implements) the policies and plans which are made by
the top level management.
 It co-ordinate the activities of all the departments.

 They also have to communicate with the top level Management and
the lower level management
 They spend more time in co-ordinating and communicating.
 They prepare short-term plans of their departments which are
generally made for 1 to 5 years.
 The Middle Level Management has limited authority and
responsibility. They are intermediary between top and lower
management. They are directly responsible to the chief executive
officer and board of directors.
 Require more managerial and technical skills and less conceptual
skills.
LOWER LEVEL OF MANAGEMENT
The lower level management consists of the Foremen and
the Supervisors. They are selected by the middle level
management. It is also called Operative / Supervisory
level or First Line of Management.
The lower level management performs following activities:-
 Lower level management directs the workers / employees.
 They develop morale in the workers.
 It maintains a link between workers and the middle level
management.
 The lower level management informs the workers about the
decisions which are taken by the management. They also inform the
management about the performance, difficulties, feelings, demands,
etc., of the workers.
 They spend more time in directing and controlling.

 The lower level managers make daily, weekly and monthly plans.

 They have limited authority but important responsibility of

getting the work done from the workers. They regularly report
and are directly responsible to the middle level management.
 Along with the experience and basic management skills, they
also require more technical and communication skills.
NATURE AND PURPOSE OF PLANNING
 NATURE OF PLANNING
 Planning is goal-oriented
 Primacy of Planning
 Pervasiveness of Planning
 Efficiency, Economy and Accuracy
 Co-ordination
 Limiting Factors
 Flexibility
 Planning is an intellectual process
 PLANNING IS GOAL-ORIENTED: Every plan must contribute in some
positive way towards the accomplishment of group objectives.
Planning has no meaning without being related to goals.
 PRIMACY OF PLANNING: Planning is the first of the managerial
functions. It precedes all other management functions.
 PERVASIVENESS OF PLANNING: Planning is found at all levels of
management. Top management looks after strategic planning.
Middle management is in charge of administrative planning. Lower
management has to concentrate on operational planning.
 EFFICIENCY, ECONOMY AND ACCURACY: Efficiency of plan is
measured by its contribution to the objectives as economically as
possible. Planning also focuses on accurate forecasts.
 CO-ORDINATION: Planning co-ordinates the what, who, how, where
and why of planning. Without co-ordination of all activities, we
cannot have united efforts.
 LIMITING FACTORS: A planner must recognize the limiting factors
(money, manpower etc.) and formulate plans in the light of these
critical factors.
 Flexibility: The process of planning should be
adaptable to changing environmental conditions.
 Planning is an intellectual process: The quality of
planning will vary according to the quality of the mind
of the manager.
 PURPOSE / OBJECTIVES OF PLANNING
 To manage by objectives

 To offset uncertainty and change

 To secure economy in operation

 To help in co-ordination

 To make control effective

 To increase organizational effectiveness

 To manage by objectives: All the activities of an organization are
designed to achieve certain specified objectives. However,
planning makes the objectives more concrete by focusing
attention on them.
 To offset uncertainty and change: Future is always full of
uncertainties and changes. Planning foresees the future and
makes the necessary provisions for it.
 To secure economy in operation: Planning involves, the
selection of most profitable course of action that would
lead to the best result at the minimum costs.
 To help in co-ordination: Co-ordination is, indeed, the
essence of management, the planning is the base of it.
Without planning it is not possible to co-ordinate the
different activities of an organization.
 To make control effective: The controlling function of management
relates to the comparison of the planned performance with the
actual performance. In the absence of plans, a management will
have no standards for controlling other's performance.
 To increase organizational effectiveness: Mere efficiency in the
organization is not important; it should also lead to productivity
and effectiveness. Planning enables the manager to measure the
organizational effectiveness in the context of the stated objectives
and take further actions in this direction.
 PLANNING PROCESS
Planning function of management involves following steps:-
 Establishment of objectives

 Establishment of Planning Premises

 Choice of alternative course of action

 Formulation of derivative plans

 Securing Co-operation

 Follow up / Appraisal of plans

ESTABLISHMENT OF OBJECTIVES
 Planning requires a systematic approach.

 Planning starts with the setting of goals and objectives to be

achieved.
 Objectives provide a rationale for undertaking various activities as
well as indicate direction of efforts.
 Moreover objectives focus the attention of managers on the end
results to be achieved.
 As a matter of fact, objectives provide nucleus to the planning
process. Therefore, objectives should be stated in a clear, precise
and unambiguous language. Otherwise the activities undertaken
are bound to be ineffective.
 As far as possible, objectives should be stated in quantitative
terms. For example, Number of men working, wages given, units
produced, etc. But such an objective cannot be stated in
quantitative terms like performance of quality control manager,
effectiveness of personnel manager.
 Such goals should be specified in qualitative terms.

 Hence objectives should be practical, acceptable,

workable and achievable
ESTABLISHMENT OF PLANNING PREMISES
 Planning premises are the assumptions about the lively shape of
events in future.
 They serve as a basis of planning.

 Establishment of planning premises is concerned with

determining where one tends to deviate from the actual plans and
causes of such deviations.
 It is to find out what obstacles are there in the way of business
during the course of operations.
 Establishment of planning premises is concerned to take such step
that avoids these obstacles to a great extent.
 Planning premises may be internal or external. Internal includes
capital investment policy, management labour relations,
philosophy of management, etc. Whereas external includes socio-
economic, political and economical changes.
 Internal premises are controllable whereas external are non-
controllable.
CHOICE OF ALTERNATIVE COURSE OF ACTION
 When forecast are available and premises are established, a
number of alternative course of actions have to be considered.
 The merits, demerits as well as the consequences of each
alternative must be examined before the choice is being made.
 For this purpose, each and every alternative will be evaluated by
weighing its pros and cons in the light of resources available and
requirements of the organization.
 After objective and scientific evaluation, the best
alternative is chosen.
 The planners should take help of various quantitative
techniques to judge the stability of an alternative.
FORMULATION OF DERIVATIVE PLANS
 Derivative plans are the sub plans or secondary plans which help in the
achievement of main plan.
 Secondary plans will flow from the basic plan. These are meant to support and
expedite the achievement of basic plans.
 These detail plans include policies, procedures, rules, programmes, budgets,
schedules, etc. For example, if profit maximization is the main aim of the
enterprise, derivative plans will include sales maximization, production
maximization, and cost minimization.
 Derivative plans indicate time schedule and sequence of accomplishing various
tasks.
SECURING CO-OPERATION
 After the plans have been determined, it is necessary rather advisable
to take subordinates or those who have to implement these plans into
confidence.
 Subordinates may feel motivated since they are involved in decision
making process
 The organization may be able to get valuable suggestions and
improvement in formulation as well as implementation of plans.
 Also the employees will be more interested in the execution of these
plans.
FOLLOW UP / APPRAISAL OF PLANS
 After choosing a particular course of action, it is put into action.
 After the selected plan is implemented, it is important to appraise its
effectiveness.
 This is done on the basis of feedback or information received from
departments or persons concerned.
 This enables the management to correct deviations or modify the plan.
 This step establishes a link between planning and controlling function.
 The follow up must go side by side the implementation of plans so that in
the light of observations made, future plans can be made more realistic.
MANAGING BY OBJECTIVE (MBO)
 MANAGING BY OBJECTIVE (MBO)
Managing by Objectives (MBO) is a process of defining objectives
within an organization so that management and employees agree to
the objectives and understand what they need to do in the
organization. The process of setting objectives in the organization to
give a sense of direction to the employees is called as Management by
Objectives. It refers to the process of setting goals for the employees
so that they know what they are supposed to do at the workplace.
The concept of Managing by Objectives (MBO) was first given by
Peter Drucker in 1954 book. The Practice of Management‘. It can be
defined as a process whereby the employees and the superiors
come together to identify common goals, the employees set their
goals to be achieved, the standards to be taken as the criteria for
measurement of their performance and contribution and deciding
the course of action to be followed.
 DEFINITION OF MBO
According to George Odiome, “MBO is a process whereby superior
and subordinate managers of an Organisation jointly define its
common goals, define each individual's major areas of
responsibility in terms Of results expected of him and use these
measures as guides for operating the unit and assessing the
contribution of each of its members."
STEPS IN MANAGEMENT BY OBJECTIVES (MBO)
 Goal setting

 Manager-Subordinate involvement

 Matching goals and resources

 Implementation of plan

 Review and appraisal of performance

 GOAL SETTING: The first phase in the MBO process is to define the
organizational objectives. These are determined by the top
management and usually in consultation with other managers. Once
these goals are established, they should be made known to all the
members. In setting objectives, it is necessary to identify "Key-Result
Areas' (KRA).
 MANAGER-SUBORDINATE INVOLVEMENT: After the organizational
goals are defined, the subordinates work with the managers to
determine their individual goals. In this way, everyone gets involved in
the goal setting.
 MATCHING GOALS AND RESOURCES: Management must ensure
that the subordinates are provided with necessary tools and
materials to achieve these goals. Allocation of resources should
also be done in consultation with the subordinates.
 IMPLEMENTATION OF PLAN: After objectives are established and
resources are allocated, the subordinates can implement the plan.
If any guidance or clarification is required, they can contact their
superiors.
 REVIEW AND APPRAISAL OF PERFORMANCE: This step involves
periodic review of progress between manager and the
subordinates. Such reviews would determine if the progress is
satisfactory or the subordinate is facing some problems.
Performance appraisal at these reviews should be conducted, based
on fair and measurable standards.
MBO PROCESS
 STRATEGIES
Strategy is an action that managers take to attain one or
more of the organization’s goals. Strategy can also be
defined as “A general direction set for the company and its
various components to achieve a desired state in the
future. Strategy results from the detailed strategic
planning process”.
 TYPES OF STRATEGIES
 Vertical integration

 Intensive

 Diversification

 Defensive
VERTICAL INTEGRATION STRATEGIES
 When a company expands its business into areas that are at different
points on the same production path, such as when a manufacturer
owns its supplier and/or distributor.
 Vertical integration can help companies reduce costs and improve
efficiency by decreasing transportation expenses and reducing
turnaround time, among other advantages.
 Backward and forward integration are types of vertical integration.
INTENSIVE STRATEGIES
 Market penetration:- Seeking increase the market share for

present product in present market.

 Market development:- Introducing a current product in a

new market area.

 Product development:- Seeking increased in sales by improving

or modifying present product.

DIVERSIFICATION STRATEGIES
 Diversification is a corporate strategy to increase sales volume
from new products and new markets.
 The other three strategies are usually pursued with the same
technical, financial, and merchandising resources used for the
original product line, whereas diversification usually requires a
company to acquire new skills, new techniques and new
facilities
DEFENSIVE STRATEGIES
RETRENCHMENT
 Retrenchment :- corporate level strategies.
 Seeks to reduced the size or diversity of organizations operation.
 Reduction in expenditure in order to become financial stable.

DIVESTITURE
 Selling a division or part of organization.
 Used to raised capital for further strategies acquisition or investment.
 When firm try to focus on their core strength lessening their level of
diversification.
LIQUIDATION
 Selling all companies assets.

 Recognizing of defeat.

 Cease operation than to continue loosing large sum of money.

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