MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Technological Innovation &

Management Entrepreneurship
Subject Code: BEC501

Module -1a
Management

Page 1
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Management is a function of guidance and leadership control of efforts of a

group or individuals in order to achieve goals/objectives of an organization.

Simplest definition is that it is defined as the art of getting things done

through people. Management can also be defined as the process consisting of
planning, organizing, actuating, and controlling performed to determine and
accomplish the use of people and resources.

Is systematic way of doing things.

Putting together 4Ms- Money, Men, Material, and Machines together is

management

Management is the life-giving element of an organization.

Management is the creative process which integrates and utilizes various

available resources effectively and efficiently to accomplish the goal of an
organization.

The person who is responsible to develop the ideas to plan and to get things
done through the workers is titled as “Manager”

A manager is one who contributes to the organizational goals indirectly by

directing the

efforts by others not performing the task by himself

A person who is makes his contribution to the organizational goals directly

by performing the task by himself is the worker
Before the industrial revolution, there were no manufacturing industries.
There were few individuals who were carrying out the production of the
commodities. This was mostly family oriented and head of the family was managing
the business. During the later half of 18th century, industrial revolution had
started and factory systems had evolved. Then on, management became necessary.

MEANING
Managing is one of the most important activities of human life. To accomplish
aims that could not be achieved individually, people started forming groups.
Managing has become essential to ensure the coordination of individual efforts.
Management applies to all kinds of organizations and to managers at all
organizational levels. Principles of management are now used not only for
managing business but in all walks of life viz., government, military, social and
educational institutions. Essentially, management is same process in all forms of

Page 2
 MANAGEMENT & ENTREPRENEURSHIP MODULE 1

organization. But it may vary widely in its complexity with size and level of
organization. Management is the life giving element of any organization.
Definitions suggested by some of the management experts are presented
below:
Henri Fayol: "Management is conduct of affairs of business, moving
towards its objective through a continuous process of improvement and
optimization of resources".
Koontz: "Management is the process of designing and maintaining an
environment in which individuals, working together in groups, efficiently
accomplish selected aims".
Mary Parker Follett: "Management is the art of getting things done
through people".
George R. Terry: "Management is a process consisting of planning,
organizing, actuating and controlling, performed to determine and accomplish the
objectives by use of people and resources".

ILO: "Management is the complex of continuously coordinated activity by

means of which any undertaking administration/public or private service
conducts its business".
Lawrence A. Appley: "Management is guiding human and physical
resources into a dynamic, hard hitting organization until that attains its
objectives to the satisfaction of those served and with a high degree of morale
and sense of attainment on the part of those rendering the service".

Management – Nature/ Characteristics

• Management is Goal oriented.
• Management is Universal.
• Management is an Integrative force.
• Management is a social process.
• Management is continuous process.
• Management is a 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 utilization of

Page 3
 MANAGEMENT & ENTREPRENEURSHIP MODULE 1

human ,physical and financial resources.

Management is Universal
• Management is an essential element of every organized activity irrespective of the size
or type of activity.
• Wherever two or more people are engaged in working for a common goal, management
is necessary.
• Managers at all levels perform the same basic functions.
• All types of organization e.g., family, club, university, government, army, cricket team or
business require management.

Management is an Integrative force.

• The essence of management lies in the coordination 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 factors is the most important element in management.
• According to Appley, “Management is the development of people not the direction of
things.
• A good manager is a leader not a boss.

Management is continuous process.

• Management is a dynamic and an ongoing process.
• The cycle of Management continues to operate so long as there is organized action for
the achievement of group goals.

Management is a Art as well as Science.

• Management is also a discipline involving specialized training and an ethical code arising
out of its social obligations.
• It involves both the determination and the accomplishment of organizational goals.

Page 4
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

The need of management are given below.↓

1. Optimum utilisation of resources,

2. Expansion and diversification,
3. Reduction of employers absenteeism and turnover,
4. Utilises the benefits of science and technology,
5. Encourages initiative and innovation,
6. Minimises wastages,
7. Team work,
8. Motivation,
9. Reduction in labour turnover,
10. Higher efficiency,
11. Improves the quality of life of the workers,
12. Cordial industrial relations,
13. Corporate image,
14. Promotes national development,
15. It helps society.

Page 5
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Importance of management are discussed below.↓

1. Optimum utilisation of resources

Management brings all the available resources together. All these available
resources are important for achieving the objective of the organization which are:

 Men,
 Money,
 Machines,
 Methods,
 Optimum (best)
 Utilization (use)

2. Expansion and diversification

Management helps the organization to achieve its objectives efficiently,

systematically, easily and quickly. It helps the organization to face the cut-
throat competition to grow, expand and diversify.

3. Reduction of employers absenteeism and turnover

Management motivates people. It provides different incentives to the employees.

This includes positive, negative, monetary and non financial incentives. These
incentives increase the willingness and efficiency of the employees. This
increases the productivity and profitability of the organization.

Management also develops team spirit and increases the efficiency within the
organization. It in addition reduces labor turnover and absenteeism.

4. Utilises the benefits of science and technology

Man has made rapid progress within the field of Science and Technology.
Management utilizes the benefits of this progress. It provides industries with the
latest machines. It provides the consumers with the newest products.

5. Encourages initiative and innovation

Management spurs initiative. This means it initiative the employees to make

their own plans and to execute these plans. It inspires the employees to give
their suggestions. Initiative gives satisfaction to the laborers and success to the
organization.

Management in addition encourages innovation. It brings innovative ideas,

modern methods, latest techniques to the organization.

6. Minimises wastages

Page 6
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Management minimizes the wastages of human, waste materials and monetary

resources. Work is done through arrangement, proper manufacturing and
Control. Managers motivate subordinate to reduce wastages. Reduction in
wastage's brings a higher return to firm.

7. Team work

Management always builds a team spirit in the organization. The combine effort
of work and unity lead to the prosperity within the organization. Team work
plays an important part in the success of organization.

8. Motivation

Management motivates employees by sharing their profits by the mean of bonus.

They also give a good amount of incentives to the employees. This motivation
zeal the employee to work harder, which results in higher efficiency in
production.

9. Reduction in labour turnover

Management helps to reduce labor turnover in the organization. Employee

turnover takes place when some employees leave the organization, and others
join in their place. Frequent labor turnover increases selection and training cost.

Management creates a sense of responsibility among the employees who brings

down labor turnover.

10. Higher efficiency

Management always wants that his employees should produce higher efficiency.
Productivity is the relationship between returns and costs. Higher returns at
minimum investment then the organization is said to be more proficient.

11. Improves the quality of life of the workers

Management provides bonus and incentive to the employees for their work. It
gives a healthy work environment to the workers. It also provides medical and
insurance faculties to worker and their families. It provides a financial stability
which helps in boosting life of the workers.

12. 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.

13. Corporate image

Page 7
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

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.

14. 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 tech
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.

15. It helps society

In management, profit is not only the objective of business. Today, the

managers are combining profit objective with social purposes. They are
providing society with a regular supply of good quality goods and services at
reasonable prices. They are also providing employment opportunities to people.
They in addition pay high taxes to the government. These taxes are used for
improving nations. Nowadays, managers are using part of their profits to build
hospitals, schools, colleges, etc. for civilization. So it is helping humanity in
many ways.

Conslusion: The need and importance of Management are universally accepted.

The survival progress and success of an organization greatly depend on its

management. There is a wide gap between Europe and Asia. This gap is called
the ‘Science and Technology Gap.’ Even so, in reality, it is the ‘Management
Gap.’ Japan and Germany were totally destroyed in the second world war but
today these countries are highly developed. This is because these countries are
well managed.

So, management is required in all aspects of life.

FUNCTIONS OF MANAGEMENT
Though many authors have defined several functions of management,
there are five essential and well accepted functions of management. They are:
> Planning.
> Organising.
> Staffing.
> Directing (leading) and
> Controlling.
PLANNING:
Planning is an executive function that is referred to as decision making.
It involves missions and objectives and the actions to achieve them. This

Page 8
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

requires decision making, that is, choosing future courses of action from
available alternatives. This involves the following:
> Setting short and long term goals for organization.
> Selecting objectives, strategies and policies for accomplishing the
planned goals.
> Deciding in advance what to do, how to do, who has to do, when to
do and where to do.
> Planning bridges the gap from where we are now to where we want be
in future.
ORGANIZING:
Organizing is a part of management that involves in establishing an
intentional structure of roles for people to fill in an organization. To organize a
business well, it is required to provide all the useful things for its proper
functioning. They are raw materials, tools, capital and personnel. The purpose of
an organization structure is to help in creating an environment for human
performance. This involves in:
> Determination of activities required to achieve goals.
> Grouping these activities into department.
> Assigning such groups of activities to managers.
> Forming delegation of authority.
> Making provisions for coordination of activities.

STAFFING:
Staffing is considered as an important function which makes provision for
man power to fill different positions. It involves in building the human
organization by filling, and keep filling the staff. This is done by identifying work-
force requirements, taking inventory of people available, recruiting new staff,
selecting, placing, promoting, apprising, planning their career, training the staff to
accomplish their tasks effectively and efficiently. This involves in:
> Finding the right person for right job.
> Selecting the personnel.
> Placement, training and developing new skills required for present and
future jobs.
> Creating new positions.
> Apprising the staff and planning their growth and promotions etc.

DIRECTING:
After planning, organizing and staffing, the next important function of

Page 9
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

management is directing or leading the people towards the defined objectives.

Directing involves three sub-functions namely communication, leadership and
motivation. Communication is the process of passing information and
understanding from one person to another. Leadership is the process by which a
manager guides and influences the work of his subordinates. Motivation means
arousing desire in the minds of employees of an organization to perform their best.
If properly motivated, the employees will put their best efforts with dedication,
loyalty and carry out the assigned task effectively. There are two types of
motivations viz., financial and non-financial. Financial motivations are in the form
of salary, bonus, profit-sharing, rewards etc. The common non-financial
motivations are job security, promotions, recognition, praise, felicitation etc.
CONTROLLING:
Controlling is measuring and correcting of activities of subordinates to make
sure that the work is going on as per the plans. It measures performance
against goals and plans, shows where short falls or deviations exist and takes
necessary corrective actions to achieve the goals. Controlling generally relates to
the measurement of achievement. This involves three elements.
> Establishing standards of performance.
> Measuring performance and comparing with established standards.
> Taking necessary corrective action to meet the set standards.
With accomplishment of this function, the "Management Cyele" is said to be
complete.

Page 10
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

ROLES OF MANAGER
Manager in any organization plays variety of roles responding to a particular
situation. The three important roles played by a manager are Interpersonal roles,
Decision roles and Informational roles.
(i) Interpersonal roles: These includes figurehead, leader and liaison roles:
In figurehead role, the manager will perform some duties that are casual and
informal ones like, receiving and greeting visiting dignitaries, attending to
social functions of employees, entertaining customers by offering parties and
lunches etc.
As a leader, managers motivate, direct and encourage his subordinates. He
also reconciles the needs with the goals of the organization.
In the role of liaison, the manager works like a liaison officer between top
management and the subordinate staff. He also develops contacts with
outside people and collects useful information for the well being of the
organization.

(ii) Decision roles: There are four decision roles played by a manager. They are
resource provider, arbitrator, entrepreneur and negotiator.
As a resource allocator, the manager divides the work, provides required
resources and facilities to carryout the allocated work and delegates
required authority among his subordinates. He decides who has to do what
and who gets what.
As a arbitrator, a manager works like a problem solver. He finds solutions of
various un-anticipated problems both within and outside the organization.
As an entrepreneur, a manager continuously looks for new ideas and tries to
improve the organization by going along with changing work environment.
He also acts as a negotiator negotiates with the employees and tries to resolve
any internal problems like trade agreements, strikes and grievances of
employees.

(iii) Information roles: A manager plays as monitor, spokesman and

disseminator.
A manager monitors his environment and collects information through his
personal contacts with colleagues and subordinates.
As a spokesman, he communicates the information/goals of organization to
his staff, and the progress of work to his superiors. He also communicates
the performance of company to shareholders and the rules and
responsibilities to his subordinates.
As a disseminator, the manager passes some of the information directly to his

Page 11
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

subordinates and to his bosses.

LEVELS OF MANAGEMENT
Although all managers perform almost the same functions of management -
planning, organizing, directing and controlling, there are levels among them.
These are top management, middle management and first line or supervisors.
The top management consists of Chairman, Directors, Company Presidents, Vice-
Presidents, CEO's. These are the people who make policies for the company, set
goals and targets. They should possess conceptual and design skills.
Middle management is essentially a vast and diverse group that include finance
manager, sales manager, marketing manager, personnel manager, departmental
heads etc.
The lower level managers are the supervisors and foremen. They are basically
one step above the workers

The various levels and skilled required at different management levels are shown
below.

MANAGERIAL SKILLS
To be a successful manager, you’ll have to master a number of skills. To get
an entry-level position, you’ll have to be technically competent at the tasks
you’re asked to perform. To advance, you’ll need to develop strong interpersonal
and conceptual skills. The relative importance of different skills varies from job
to job and organization to organization, but to some extent, you’ll need them all
to forge a managerial career. Throughout your career, you’ll also be expected to
communicate ideas clearly, use your time efficiently, and reach sound decisions.

Page 12
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Technical Skills

You’ll probably be hired for your first job based on your technical skills—the
ones you need to perform specific tasks—and you’ll use them extensively during
your early career. If your college major is accounting, you’ll use what you’ve
learned to prepare financial statements. If you have a marketing degree and you
join an ad agency, you’ll use what you know about promotion to prepare ad
campaigns. Technical skills will come in handy when you move up to a first-line
managerial job and oversee the task performance of subordinates. Technical
skills, though developed through job training and work experience, are
generally acquired during the course of your formal education.

Interpersonal Skills

As you move up the corporate ladder, you’ll find that you can’t do
everything yourself: you’ll have to rely on other people to help you achieve the
goals for which you’re responsible. That’s why interpersonal skills—the ability
to get along with and motivate other people—are critical for managers in mid-
level positions. These managers play a pivotal role because they report to top-
level managers while overseeing the activities of first-line managers. Thus, they
need strong working relationships with individuals at all levels and in all areas.
More than most other managers, they must use “people skills” to foster
teamwork, build trust, manage conflict, and encourage improvement.

Conceptual Skills

Managers at the top, who are responsible for deciding what’s good for the
organization from the broadest perspective, rely on conceptual skills—the
ability to reason abstractly and analyze complex situations. Senior executives
are often called on to “think outside the box”—to arrive at creative solutions to
complex, sometimes ambiguous problems. They need both strong analytical
abilities and strong creative talents.

Communication Skills

Effective communication skills are crucial to just about everyone. At all

levels of an organization, you’ll often be judged on your ability to communicate,
both orally and in writing. Whether you’re talking informally or making a formal
presentation, you must express yourself clearly and briefly. Talking too loudly,
confused, and using poor grammar reduce your ability to influence others, as
does poor written communication. Confusing and error-riddled documents, and
they will reflect poorly on you.

Time-Management Skills

Page 13
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Managers face multiple demands on their time, and their days are usually
filled with interruptions. Ironically, some technologies that were supposed to
save time, such as voicemail and e-mail, have actually increased workloads.
Unless you develop certain time-management skills, you risk reaching the end
of the day feeling that you’ve worked a lot but accomplished little. What can
managers do to ease the burden? Here are a few common-sense suggestions:

Decision-Making Skills

Every manager is expected to make decisions, whether alone or as part of a

team. Drawing on your decision-making skills is often a process in which you
must define a problem, analyze possible solutions, and select the best outcome

MANAGEMENT AND ADMINISTRATION

There is lack of concurrence among management writers over the meaning
and use of the words management and administration.
One group of management writers feels that administration involves
"thinking". It is a top level function that centers around the preparation of plans,
rules, policies and objectives of an organization. Where as management involves
"doing" and is a lower level function, concerning with execution and direction of
policies and operations. Hence, administration is more important at lower levels.
Another group of management writers feels management as comprehensive
general term that includes administration. Management is regarded as
comprehensive general function covering entire process of planning, organizing,
directing and controlling. Administration is regarded as a branch of management
that comprises of two functions - planning and controlling. According to them, the
function of management is divided into two categories - the upper level
management usually called as administrative management and the lower level
management which is termed as operative management.
According to Peter Drucker, the basic difference between management and
administration lies in use of these terms in different fields. According to him,
managing of business enterprises is called management and managing non
business organizations is called administration. Hence financial performance
plays key role in management. But in managing non business organizations
like educational institutions, government offices, military etc., administration is
more priority than financial decisions.
Administration is the function in industry concerned with determination of the
corporate policy, the coordination of finance, production and distribution, the
settlement of compass of the organization under the ultimate control of the
executives".
"Management is the function in industry concerned with the execution of polity

Page 14
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

within the limits setup by the administration and the employment of the
organization for the particular objects set before it". (Oliver Sheldon)
"Administration is primarily the process and the agency used to establish the
object or purpose which an undertaking and its staff are to achieve, secondarily,
administration has to plan and stabilize the broad lines of principles which will
govern action. These broad lines are in turn called policies. Management is the
process and the agency through which the execution of policy is planned and
supervised". (G.E. Milward)
"Administration is that phase of business enterprise that concerns with
overall determination of institutional objectives and the policies necessary to be
followed in achieving those objectives. Administration predetermines the specific
goals and lays down the broad areas within which those goals are to be attained.
Administration is a determinative function, management on the other hand is an
executive function - which is primarily concerned with the carrying out of the
broad policies laid down by the administration. (William R. Spriegal)
Thus administration is a "thinking" function and management is a "doing"
function. According this concept, managers get salary and administration staff get
dividends.

Administration determines the policies upon which the enterprise is to be

conducted while the function of management is to carry out the policies that are
laid down by the administrative group.

Page 15
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

The differences between administration and management are listed below:

Characteristic Administration Management
1. Main functions Planning, Organizing Leading, motivating and
and Staffing controlling.
2. Status Acts as owner Acts as an agency
3. Skills Requires good Requires more technical
administrative skills skills.
4. Level in the Top level Lower level
organization
5. Position Managing Director, Managers, Supervisors,
Owner, CEO, etc., Foremen etc.,
6. Objectives Makes the policies, Implements the plans and
objectives and goals to be policies
achieved.
7. Involvement No direct involvement Directly involves in the
in production or services execution of plans
and achieving goals.

MANAGEMENT AS A SCIENCE, ART OR PROFESSION

Managing, like any other practice - whether medicine, music composition,
engineering, accounting or even cricket - is an art. It is a know-how. It is doing
things in the light of the realities of a situation. Under 'art' one normally learns
the "how" of a phenomenon. It is the art of getting things done through others
in dynamic and mostly non-repetitive situations.
Science is an organized knowledge. A discipline can be called scientific if its
methods of inquiry are systematic and practical, information can be
accumulated and analysed and results are commutative and communicable.
The essential feature of any science is the application of scientific methods to
the development of knowledge. Being systematic means being orderly and
unbiased. All the scientific information collected first as raw data is finally
arranged in order and analysed with the help of statistical tools. Science is also
cumulative in that what is discovered is added to that which has been found
before. We learn from past mistakes and go in right direction in future. On the
basis of the above discussions of science, it can be accepted that management
is also a science.

It is seen that management is partly an art and partly a science.

Management does not possess the characteristics of a profession. A profession
is expected to have organized and systematic knowledge, formalized methods of
acquiring training and experience, ethical code to regulate the behavior of the

Page 16
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

members of the profession, charging of fees based on service etc. Unlike

medicine and law, the management does not have any fixed norms of
managerial behavior. There is no uniform code of conduct or licensing of
managers. Lawyers and doctors take up profession after obtaining a valid
academic qualification where as a manager job is not restricted to individuals
with a special academic degree only. Based on this, it can be concluded that
management is not a profession. However, the present trend is towards the
professionalisation of management.
Nowadays, it has become essential to acquire management degrees or
training in management to be called as good manager. There is increased
demand for qualified managers with M.B.A degree after graduation. This gave
scope for establishment of large number of business schools in India. Managing
a business is no longer just a matter of a family or institution. In this contest,
one should remember Peter Drucker's opinion on management. "A degree in
management does not by itself make an individual a professional manager any
more than does a degree in philosophy make an individual a philosopher". By
insisting on holding a degree, we are over emphasizing knowledge and
completely over looking skill. This leads to loosing of good and skilled managers
who do not have required degree. There have been good examples of efficient
managers without any professional managerial degree. Some of them are, Ford
of Ford Motors, Bill Gates of Microsoft, Jemshedji Tata, Birla, Dhiru Bhai
Ambani of Reliance group etc.
But nowadays, management has become a profession than art or science.

……………………………….

Page 17
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Technological Innovation &

Management Entrepreneurship

MODULE – 1b

PLANNING

Page 18
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

PLANNING

NATURE OF PLANNING
Planning is the most basic function of management. It is referred to as
"deciding in advance" as to what to do, how to do, when to do and who has to do
it etc. It is an intellectual process, which requires a manager to think before
acting. It is nothing but thinking in advance. As regarded by Koontz and
O'Donnell, planning is a continuous process. A manager should continuously
watch the progress of the plans like a navigator who constantly checks where his
ship is going in the vast ocean. Planning involves selection of objectives and goals
and determines the ways and means of achieving them. Thus planning bridges
the gap from where we are to where we want to be. A plan is to be ri gid in the
sense that it should not be modified or altered under the influence of local
disturbances. A plan should be flexible to change to adapt to the changing
situating without undue cost. This calls for flexibility in the areas like technology,
market, finance, personnel and organization. Planning is vital at all levels of an
organization. Top level managers are concerned with long range planning involving
2 to 5 years, middle level managers are concerned with medium range planning
involving few months to one year and lower level managers are concerned with
planning the activities of daily or week or up to a month, where as a worker plans
his day's work.
Nature of planning indicates essential quality or general characteristics of
planning. Any planning involves four essential qualities:
(i) It must contribute to accomplish purpose and objectives.
(ii) It must be considered as parent exercise in all processes.
(iii) It must spread through all management functions and
(iv) It must be efficient in such a manner so as to achieve the designed
goals at the least cost.
Planning is non-static and is basically a discrete exercise. It is dynamic in
nature. It is a blue print to which the accomplishment must confirm.

Page 19
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

IMPORTANCE OF PLANNING
Without planning, business decisions would become difficult. Planning is the
beginning of all other functions of management. Planning is important because:

(i) It overcomes uncertainty and change and minimizes risk.

(ii) It facilitates effective control.
(iii) It focuses attention and concentration only on the objectives of
enterprise.
(iv) It makes economic operation and leads to success.
(v) It forms the bridge between the present and the future.

(i) Uncertainty and minimize risk

In the today's complex organizations, decision making cannot be relied
only upon intuition, planning plays a vital role in decision making in such
complex situations. Planning provides logical facts and procedure to managers
for making decisions. This logical decision making based on plans to
organization minimizes uncertainty and risk. In a developing country like
India, with rapidly changing social and economic conditions, planning helps
the managers to cope up with uncertainty and risk.

(ii) Effective Control

Planning sets goals, targets and means to accomplish these goals. These
goals and plans become standards or bench marks against which
performance can be measured. Thus good plans help effective control on the
activities.

(iii) Focuses attention and concentration on the objectives of the enterprise

Planning helps the manager to focus their attention on the goals and
activities of organization. This makes the entire organization to walk
towards the goals and create coordination in accomplishing the goals.

(iv) Economic operation and leads to success

Mere planning does not ensure success, but planning leads to success.
This is because if the work is planned in advance, there will be no confusions
arising and things will happen as per plan and achieve goals. This results in
economical operation and reduces uncoated expenditure.

(v) Bridge between present and future

Plans bridge gap between present and future. There is a vast gap between
what we are today and what we want to be in future. A proper and systematic

Page 20
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

plan forms the bridge between these two. Without plans, it is very difficult to
accomplish goals. Hence planning is very important for success of any
organization.

TYPES OF PLANS
Based on nature of planning, the planning is classified as strategic
planning (long range planning) and tactical planning (short range planning).
The strategic plans are done at top level of management and are generally
long term plans, where as tactical plans and done at lower levels and are of
short term in nature.

The differences between strategic and tactical planning are given below.
Strategic planning Tactical planning
1. It is long term. 1 It is short term.
.
2. Done at top management. 2. Done at lower levels of
management.
3. It consists of major goals and 3. It consists of use of facilities
policies of an organization and resources.
resources and facilities to
accomplish the goals.

4. It is less detailed, focuses only 4. It is more detailed since it caters

on long term goals. today-to-day operations
and activities of the
organization.
5. performance and
5. It is based on long term goals. It is based on
and is more uncertain. less uncertain.
For example, Tatas idea of marketing a car at a price of Rs. 1 lakh is a
strategic plan. How to make that, what resources are required, how and
where to manufacture, how to assemble, etc., are tactical plans.
Based on their use, plans are classified as single use plans and standing
plans. Single use plans are developed to achieve a specific end. After reaching
that target, that plan becomes useless. On the other hand, standing plans
are designed for situations that often repeat. These plans can be used again
and again.

Standing plans:
These are the policies, procedures, rules and methods of any organization.

Page 21
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

(i) Policies:
As defined by Terry, "Policy is a verbal, written or implied overall guide,
setting up boundaries that supply the general limits and direction in which
managerial action will take place". Thus a policy is a general guideline for
decision-making. They deal with "how to do" the work. They only provide a
framework within which decisions must be made by the management in different
areas of organization. There are several policies in different functions of any
organization like personal policy, promotion policy, marketing policy, purchase
policy, pricing policy, training policy, recruitment policy, distribution policy,
payment policy, wages and incentives policy etc.
The policies are classified on the basis of sources like original policies,
appealed policies, implied policies and externally imposed policies, or are
classified on the basis of functions like personnel policy, promotion policy,
pricing policy, distribution policy, investment policy etc., or may be on the basis of
level of organization like: top level policy, departmental policy, shop level policy
etc.

(ii) Procedures:
Procedures are the detailed guidelines that are used to carry out the policies.
A procedure provides a detailed set of instructions for performing a sequence of
actions involved in doing a certain piece of work. Procedures are to be followed
every time when that activity is performed. Procedures may also exist for
conducting meetings of board of directors, shareholders, issuing raw materials
from stores, packaging of finished goods, inspection etc.

The difference between policy and procedures are given below:

Policy Procedure
1. General guidelines of the 1. General guidelines at the action
organization. level.
2. Top level activity. 2. Departmental activity.
3. Policies fulfill the objectives 3. Procedures guide the way to
of an organization. implement the policies.
4. Policies are often made 4. Procedures are always made
without after
any study or analysis. thorough study and analysis of
work.

(iii) Rules:
Rules are detailed and recorded instructions that a specific action must
or must not be done under the given instructions. Reporting time to office,
lunch time, availing of leaves, use of LTC facility etc., are some of the
examples that follow rules. A rule is different from a policy or procedure.

Page 22
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Since it does not give a guide to thinking, it is not a policy. Since it is not a
sequential procedure hence it is not a procedure.

(iv) Methods:
A method is a prescribed way in which one step of a procedure is to be
carried out. Thus a method is a part of procedure. A procedure has a number
of steps, each step may have number of methods to do it. Methods help in
increasing the effectiveness of a procedure.

STEPS IN PLANNING AND PLANNING PREMISES

The main steps involved in planning are as follows:
1. Being aware of opportunities: This is very first step and starting point for
planning. Once we are aware of opportunities, we can think of setting
realistic objectives.
2. Establishing objectives: It is very important to establish objectives for the
entire enterprise and the objectives for each subordinate work units.
That is, the major objectives are broken down into departmental and
individual objectives. It is a very crucial step in planning.
3. Developing planning premises: The third step in planning is to establish
planning premises. It is the process of creating assumptions about the
future on the basis of which the plan will be ultimately formulated.
Planning premises are important for the success of planning as they reveal
facts and information relating to the future such as economic conditions,
production costs competition, availability of material, resources and
capital, government policies, population trends etc. This tells about which
plan is to be carried out. There three types of planning premises:
(i) Internal and external premises: Internal premises are premises within
the organization. Some of the examples are: policies, forecasts,
investment, availability of equipment, capability of work force, funds
flow etc. External premises are premises outside the organization.
They include: Government policies, technological changes,
business environment, economic conditions, population, buying
power, political stability, sociological factors, demand etc.
(ii) Tangible and intangible premises: Tangible premises are the measurable
premises. For example, population, investment, demand etc., are
tangible premises. Intangible premises are those which cannot be
quantitatively measurable. Examples of this are: business environment,
economic conditions, technological change etc.
(iii) Controllable and uncontrollable premises: Some of the premises are

Page 23
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

controllable like, technical man power, input technology, machinery,

financial investment etc. Some other premises like, strikes, non-availability
of raw material, change in government policies, socioeconomic changes,
phase-shift in technology, wars etc., are uncontrollable by the organization.
4. Determination of alternative course: Next step is to search and identify some
alternative courses of action. It is very rare that for a plan there will be no
alternatives. In this step alternatives are listed.

5. Evaluating the alternatives and selecting the best course of action:

Once the alternatives are found, then the next step is to evaluate them with
respect to the premises and goals. A desired and best suitable alternative is
selected by comparative analysis with reference to cost, risk, and gain etc.,
keeping in mind the goals and objectives.
6. Formulating derivative plan: In order to complete the task, the selected plan
must be translated into programs, working plans and financial
requirements in the sub-units. These sub-derived plans from main plan are
termed as derivative plans.
7. Monitoring and controlling the plan: This is the last step in planning. Each
activity of plan is monitored on a continuous basis and if any deviation or
shortfall is noticed, then the manager will initiate suitable corrective action.

HIERARCHY OF PLANS(STEPS)
The plans are generally arranged in a hierarchy within any organization. It
starts at the top with objectives and goals of an organization. The second level
is strategies. As discussed earlier, there are two types of strategies namely
single use plans and standing plans. The third level is action plans. The
hierarchy of plans is shown below.

Page 24
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

The top management sets the goals and objectives. These occupy the top
priority. The goals or objectives include long-term plans and strategies of an
organization. For example, a company aims to improve their production by
20% during next 2 years. Such objectives are very broad ideas and are
achieved by strategies. Strategies are carried out by means of two types of
plans known as single-use-plans and standing plans. Single use plans are
developed to achieve a specific goal after reaching the goal, the plan is
dissolved. Examples of single use plans are budgets, construction of a
bridge, dam or a shopping complex etc. Whereas standing plans are
developed for projects that happen again and again. Admission procedure in
a college, overhauling procedure of an aircraft, recruitment procedure of an
organization etc., are some of the examples of standing plans. Action plans
are the plans executed by the lower level organization. These are routine
plans executed by the foreman and supervisors of the shop.

LIMITATIONS OF PLANNING

Page 25
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

1. Time Consuming

Planning involves the collection of data, analysis of data, forecasting, etc. All this
consumes a lot of precious time. Therefore, planning is a time-consuming activity.

2. Costly

Planning is the work of experts. They get paid very high salaries to make good
plans. Companies spend an enormous amount of money in collecting and
analysing data. Therefore, planning is a costly affair.

3. Rigid

Most plans are very rigid. They don't change as per the changing environment.
They neither get revised nor modified. The non-flexibility of plans creates many
problems for the organisation.

4. Gap between Plans and Achievement

The workers do not make any plans. The managers make plans. The workers only
execute these plans. So the workers are not entirely interested in achieving these
plans. Therefore, there is a gap between plans and achievement.

5. Problem for Technical Staff

The technical or creative staff do not like planning. They feel it is only paperwork.
It is so, since, it limits their creativity.

6. Resistance to Change

Planning brings many changes in the organisation. However, people do not like
changes. So, they do not give full cooperation. Without their cooperation, the plans
cannot succeed.

7. Paperwork

Planning requires a lot of paperwork. The plans are made and again remade.
Copies of finalised plans are given to the top management and subordinates. There
is also a need to prepare many reports.

8. Causes Frustration

Sometimes managers fail to achieve the planned targets despite putting their best
efforts. This failure can frustrate them and lower their level of motivation. It can
cause the managers to lose their initiative.

Page 26
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

9. Dangers of Over-Targeting

Some managers do over-targeting. That is, they fix very high targets that are
almost impossible to achieve. Such over expectations cause many problems.

10. Dangers of Under-Targeting

Some managers do under-targeting. That is, they fix lower targets that are easy to
achieve. Such under expectations hinders the growth and performance of the
organisation. The under targeting happens in the government institutions.

11. Danger of Human Error

Plans depend on forecasts. Forecasting requires a lot of experience and judgement.

If the manager has less experience and is poor in judgement, then the predictions
will be wrong. If the forecasts are wrong, it is obvious that the plans will fail. Even
experienced managers make errors while forecasting and planning. So, there is a
danger of human error.

12. Inter-Departmental Rivalries

Planning requires coordination and cooperation of all the departments. If there

exist any inter-departmental rivalries and disputes, then the plans will fail. For
example, Production Department wants to produce Product A, but the Marketing
Department insists on selling Product B

DECISION MAKING
Planning is an intellectual process, which requires a manager to think
before acting. Through planning, managers of any organization decide what
to do, when to do, how to demand who has to do. Hence decision-making is
an integral part of planning. It is defined as "the process of choosing among
alternatives". Decision-making occurs at many stages of planning process.
Decision-making and choosing the best alternative is probably the most
important activity of the planning process.
Decision-making is part of all the functions of the management. In
planning, through decision-making, objectives and goals are prepared. In
organizing, the managers decide upon the choice of structure, type of
organization, work allocation, delegation of authority and responsibility etc.
In directing, managers decide the course of action, the instructions to be
given, providing directions etc. In controlling the managers decide on fixing
the standards, how to control, what to control etc.

Page 27
 MANAGEMENT & ENTREPRENEURSHIP MODULE 1

TYPES OF DECISIONS
Decisions are classified as follows:
(i) Pragmatic and non-pragmatic decisions
(ii) Individual and collective decisions
(iii) Minor and major decisions
(iv) Strategic and routine decisions
(v) Simple and complex decisions
(vi) Temporary (Adhoc) and permanent decisions etc.

(i) Pragmatic decisions are those decisions taken within the purview of the
policies, rules or procedures. These are also called programmed or routine
decisions or structured decisions. These types of decisions are taken
frequently and are repetitive in nature. Sanctioning an hour's permission,
placing purchase order etc., are some examples of pragmatic decisions.
Non-pragmatic decisions are otherwise called as strategic decisions or non
programmed decisions or policy decisions. These decisions involve heavy
expenditure and are generally taken by top management.
(ii) Individual and collective decisions:
Decisions may be taken by an individual or a group of individuals. If the
decisions are taken by single person, they are called individual decisions and if
taken by a committee or group of people, than they are called collective
decisions. Individual decisions are taken where the problem is of routine
nature, and definite rules and procedures exist. Inter departmental decisions
and important strategic decisions are generally taken by a group. Group
decision-making has advantages like increased acceptance, better
communication and better co-ordination. It has some disadvantages also like,
delay in arriving at decision, groups may be indecisive, and groups may
compromise or dominate. To utilize the advantages of group decisions and
avoid its disadvantages, two new techniques are proposed known as 'Nominal
group techniques' and Delphi Techniques.
In nominal group technique, the members independently generate their idea
and give in writing. The ideas are summarised and discussed for clarity and
evaluation. Finally each member silently gives his rating and opinion about
each idea through voting system. The one with maximum vote is selected as
the group's decision. In Delphi technique, persons who are physically
dispersed and anonymous to one another are asked to send their opinion on a
topic through mail. A carefully designed questionnaire is circulated for this
purpose. The responses are summarized into a feedback report and sent back

Page 28
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

to them with a second questionnaire. A final summary is developed on the

basis of replies received second time.
(iii) Minor and major decisions: Minor decisions are those decisions related to day-
to-day and periodical occurrences. Purchase of stationary, granting leave and
permissions etc., are some examples of minor decisions. Major decisions are
those decisions generally taken by top management. Some of them are purchasing
new machinery, employing new technology, hiring
new people etc., are some of the major decisions.

(iv) Strategic and routine decisions: Strategic decisions are similar to major
decisions and are generally taken by top management. Some examples are
price increase/discount, change in product range etc. Routine decisions are
decisions related to day-to-day operations of an organization that are routine in
nature.
(v) Simple and complex decisions: A simple decision is one that is related to
a problem with few number of variables. When there are many variables,
the decisions making will be complex.
(vi) Temporary and permanent decisions: Some decisions are to be taken
depending on situation till the solution is found. A decision is taken to
meet an unexpected solutions are temporary in nature. These are
generally taken by shop managers. Permanent decisions are taken on a
permanent basis.

Page 29
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

STEPS IN DECISION MAKING:

(i) Recognition of problem:

The first step in decision-making is the problem recognition. A problem may
exist either due to a deviation from the past experience, a deviation from the
plan, people bringing problems to the manager or problems arising from
competition.

(ii) Deciding priorities among problem:

The manager should identify the problems which he can solve, the problems
which he feels that his subordinates can solve and the problems which are to be
referred to the higher officers. With this decision, the manager is left with very few
problems to solve.

(iv) Problem diagnosis:

Correct diagnosis of the problem is very important for any manager.
Managers should follow systems approach in diagnosing a problem. He should
make a thorough study of all the sides of a problem coupled with organization
before arriving at solution. If the diagnosis is made correctly, then finding

Page 30
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

solution becomes easy.

(iv) Development of alternate solutions:

After having diagnosed the problem, the next step is to find alternate
solutions. For every problem there will be some alternate solutions. It is very
rare that there is a problem with only unique solution. Alternatives do exist.
Sometimes, in the absence of past history of alternate solutions, the manager
has to depend only on his own ability in finding alternatives.

(v) Studying and comparing the affect of alternatives:

The alternative solutions are measured and compared for their
consequences. This involves a comparison of the quality and acceptability of
these alternatives.

(vi) Implementation of the decision into action:

The next step is to convert the decision into action. This requires the
communications of the decisions to the concerned employees in clear and simple
terms. If there is any opposition or non-acceptance from the employees, steps
should be taken to convince them to accept the same.

(vii) Study of result:

After having implementing the decision, the manager has to carry out the
follow up action. If the result is not satisfactory, the manager has to take necessary
corrective action or modify his decision.

During the process of decision-making, the managers face many

difficulties. Some of them are:
1. Incomplete information
2. Non-conducive environment
3. Opposition by subordinates
4. Improper communication
5. Wrong timing
6. Statutory regulations
7. Government policies
8. External influence
9. Lack of support.

…………………………………

Page 31
 MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Review Questions

1. Define Management. List and explain the functions of Management?

2. Briefly Explain the Importance of Management.

3. Write about roles of management?

4. Explain the Levels of Management.

5. Describe the Managerial skills required at various levels of Management.

6. Distinguish between Management and Administration.
7. Is management a science, art or profession? Explain.
8. Discuss in brief the nature of management.
9. Explain the modern management approaches.
10. Explain the Characteristics of Planning.
11. Explain the various steps involved in Planning.
12. Bring out the difference between policy and procedures.
13. Explain the types of Plans.
14. Explain the Limitations of planning.
15. Explain all the steps involved in decision making with a neat diagram.

Page 32
MANAGEMENT & ENTREPRENEURSHIP MODULE 1

Page 33