DEPARTMENT OF

ELECTRONICS AND COMMUNICATION ENGINEERING

TECHNOLOGICAL INNOVATION MANAGEMENT

AND ENTREPRENEURSHIP
BEC501
V SEMESTER
MODULE 1 NOTES
 DEPARTMENT OF
ELECTRONICS AND COMMUNICATION ENGINEERING

MODULE 1 CONTENTS
CHAPTER 1- MANAGEMENT
 Nature and Functions of Management – Importance
 Definition
 Management Functions
 Levels of Management
 Roles of Manager
 Managerial Skills
 Management & Administration
 Management as a Science
 Art & Profession (Selected topics of Chapter 1, Text 1)

CHAPTER 2 - PLANNING
 Planning-Nature
 Importance
 Types
 Steps and Limitations of Planning
 Decision Making – Meaning,
 Types and Steps in Decision Making (Text 1)

Text Book 1: Principles of Management – P.C Tripathi, P.N Reddy, McGraw Hill Education, 6th
Edition, 2017
 CHAPTER 1
NATURE AND FUNCTION OF MANAGEMENT
1. IMPORTANCE OF MANAGEMENT
Q.: Explain the importance of management. (7M)

 Management is a critical element in the economic growth of a country

 The 4 factors which serves as a resource are people, money, material and machines, by bringing
together the 4 factors the management enables a country to experience a substantial level of
economic development.
 The country with enough income and manpower can still be poor if it does not have proper
managers to coordinates these resources.
 Without management a country’s resource can never become production.
 Management is essential in all organization, be it a business activity or any other activity
 Principles of management are universal. It is not only applied for managing business, it is
applied for other organizations like education, military, social and government.
 Thus management is same process in all organization but varies with complexity depending on
size of organization.
 Management is dynamic in every organization
 The term dynamic means coordinating current organizational activities and planning for future.
 It settles disputes and promotes leadership within the organization.
 The quality and performance of the management determines the success of the organization.

2. DEFINITION OF MANAGEMENT
Q.: Define Management. (VTU - 1M) or Give different definitions of management as interpreted by
management scholars (VTU - 7M) *****

 Definition 1:Mary Parker Follett:“Management is the art of getting things done through people"
 This definition defines fundamental difference between a manger and personnel of an organization.
 Manager is one who contributes to the organization goals indirectly by directing the efforts of
others – not by performing the task himself.
 Person who is not a manager makes his contribution to the organizations goal directly by
performing the tasks by himself.
1
Page

 Sometimes the person can play both roles simultaneously. For example, sales manager can perform
 managerial role by directing sales team to meet the goals set up by the organization and non-
managerial role by handling customers directly in negotiating the deals.
 2 weakness of Mary Parker Follett’s definition are:
1. The use of term “Art” in defining the management: Which says management is an Art which
is half-truth. Art deals with application of knowledge, management also involves gaining of
knowledge i.e. science.
2. The definition does not involve various functions of manager.

 Definition 2: Elaborate definition of management is given by 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".
 The 4 management activities included in this process are:
1. Planning: the manager thinks of their actions in advance
2. Organizing: the manager coordinates humans and Materials resources
3. Actuating: the manager motivates and direct subordinates
4. Controlling: the manager ensures that there is no deviation from the plan

3. MANAGEMENT FUNCTIONS OR THE PROCESS OF MANAGEMENT

Q.: Define management. Explain any 4 management functions. (VTU - 10M) or List and explain 4
basic function of management. (VTU – 10M) or Explain the process of management (10M) *****

 Though many authors have defined several functions of management, there are 6 essential and well
accepted functions of management. They are:
1. Planning
2. Organising
3. Directing
4. Controlling
5. Innovating
6. Representing
 Management process is a circular continuous movement which is carried out in order starting from
planning till representing, as shown in figure 1.
2
Page
 Figure 1: Management Process

1. PLANNING

 Planning is the function that determines “what” should be done in “advance”. It is looking ahead and
preparing for future.
 It determines what is to be done, how it is to be done and where the things need to be done. It also
includes who as to do it and how results are to be evaluated.
 It is a process of deciding the business objectives and charting out the methods of attaining those
objectives.
 Planning is not only done at the organization levels, it is made at all divisions, department and sub-units.
 Thus, planning in performed by mangers at all 3 levels – top, middle and first-line manger levels.
 Plans made by the top managers of the organization may take long period of over years (5-10 years).
 Plans made by middle and first-line managers may take shorter period of over few months, weeks or
sometimes within few days.

2. ORGANISING

 To organize a business well, it is required to provide all the useful resources for its proper functioning.
Resources like people, money, raw materials, and tools.
 Organizing can be divided into 2 sections:
1. Human organization
2. Material organization
 Human organization:
 Once the managers define the objectives, and plans to achieve then, they must design and develop
3

human organization to carry out the plan successfully.

Page
  The purpose human organization is creating an environment for human performance by identifying
and grouping work among people so same interest and defining roles and responsibility for each
individual and establishing the relationship.
 Staffing is also an important function in building human organization. In staffing manager finds the
right person for each job.
 Staffing also provides manager the authority of hiring adequate manpower for all the positions in
the organization.
 Staffing also involves selecting and training of future managers and encouraging all to have a
disciplined approach towards work.
 Material organization:
 The purpose of material organization is to utilize the proper raw material required for production at
the right point of time.
 It includes process like Procurement, inspection, storage and monitoring of components.

3. DIRECTING

 In directing the manager explains his people what they have to do and help them do it to the best of
their ability.
 This function can be called as leading, directing, motivating, actuating and so on.
 Directing involves 3 sub-sections: Leadership, Motivation and Communication.
1. Leadership: Leadership is a process by which a manger guides and influences the work of his
subordinates.
2. Motivation: Motivation means encouraging workers to give their best. 2 classification of motivation
are: financial motivation which takes the form of salary, bonus, etc. and non-financial motivation
takes the form of job security, appreciation, etc.
3. Communication: Communication is the processing of passing information from one person to
another.

4. CONTROLLING

 Controlling is measuring and correcting of activities of subordinates to make sure that the work is
going on as per the plans.
 Controlling generally relates to the measurement of achievement. This involves three elements.
1. Establishing standards of performance.
2. Measuring current performance and comparing with established standards.
4

3. Taking necessary corrective action to meet the set standards.

Page
 5. INNOVATING

 These days it is not necessary for an organization to grow big, but it is necessary for the organization to
grow better.
 This makes innovation an important function of a manager.
 Innovation means creating new ideas which improves the product, process and practice.
 For example, innovation can be implemented in packaging (Creating trail packs), distribution, and
business models.

6. REPRESENTING

 A manager also needs to spend part of his time in representing the organization before various outside
groups which have some stake in the organization.
 These stakeholders can be government, suppliers, customers, etc.
 Every function has 2 dimensions:
1. Substantive Dimension – Defines what is done and How it is done.
2. Procedural Dimension - Defines where is it done.

4. LEVELS OF MANAGEMENT
Q.: Describe the levels of management. (VTU – 5M) *****

 There are 3 levels of management as shown in figure 2.

Figure 2: Management levels

1. Top Management: It is a Top Management which defines policies for the company and consist of
Chairman, Directors, President, Vice-President and CEO.
2. Middle Management: It is a vast and diverse group that includes Manager in Project, Sale,
Marketing and department Heads.
5

3. First-line Management: It is a lower management group made up of Supervisors, and Foreman.

Page
  There are 2 approaches to management:
1. Top-Down approach: The top-down approach to management is a strategy in which the decision-
making process occurs at the Top management level and is then communicated to the lower levels.
2. Bottom-Up approach: Bottom-up approach is a strategy in which the actual work will be initiated
by the workers at the first-line management level and is integrated in middle and top management.
 Time management in different levels are as follows:
1. Plans made by the top managers of the organization may take long period of over years (5-10 years).
2. Plans made by middle and first-line managers may take shorter period of over few months, weeks
or sometimes within few days.

5. ROLES OF A MANAGER
Q.: Explain 10 different roles played by manager. (VTU – 10M) or List and explain the roles of a
manager (VTU – 10M) *****

 Manager in any organization plays variety of roles responding to a particular situation.

 The three important roles played by a manager are:
1. Interpersonal roles
2. Decision roles
3. Informational roles

1. INTERPERSONAL ROLES
 These includes figurehead, leader and liaison roles.
FIGUREHEAD ROLE
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.
LEADER
As a leader, managers motivate, direct and encourage his subordinates. He also try to adapt the individual
needs with the goals of the organization.
LIAISON
In the role of liaison, the manager must develop contacts with outside people and collects useful information
for the well-being of the organization.
6
Page
2. INFORMATION ROLES
 A manager plays as monitor, disseminator and spokesman.
MONITOR
A manager monitors his environment and collects information through his personal contacts with
colleagues and subordinates.
DISSEMINATOR
As a disseminator, the manager passes some of the information directly to his subordinates.
SPOKESMAN
As a spokesman, he communicates the information of organization before various outside groups which
have stakes in the organization. These stakeholders are government officials, suppliers, customers etc.
He also communicates the performance of company to shareholders and the rules and responsibilities to
his subordinates.

3. DECISION ROLES
 There are four decision roles played by a manager. They are entrepreneur, disturbance handler,
resource allocator and negotiator.
ENTREPRENEUR
As an entrepreneur, a manager continuously looks for new ideas and tries to improve the organization
by going along with changing work environment.
DISTURBANCE HANDLER
As a disturbance handler, manager works like a fire fighter by given solutions to various problems that
arises in the company – Customer may go bankrupt, suppliers may back off from his contract and so on.
RESOURCE ALLOCATOR
As a resource allocator, the manager divides the work, provides required resources and facilities to carry
allocated work and delegates required authority among his subordinates. He decides who has to do what
and who gets what.
NEGOTIATES
As a negotiator, manager negotiates with the employees and tries to resolve any internal problems like
trade agreements, strikes and grievances of employees.
7
Page
6. MANAGERIAL SKILLS
Q.: List and explain managerial skills with the help of skill- mix diagram (VTU – 10M) or Explain
skill-mix at different levels of management (VTU – 10M). *****

 A manager should possess basic 3 major skills:

1. Conceptual skill
2. Technical skill
3. Human relations skill

1. CONCEPTUAL SKILLS
 Conceptual skill refers to the ability of a manager to take in abstract, his innovative and creative
ability and his ability to assess the environment.
 Managers at the top are responsible for deciding what’s good for the organization.
 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.

2. TECHNICAL SKILLS
 The technical skill is the managers understanding of the nature of job that the people around him
have to perform.
 It refers to person’s knowledge in any type of process or techniques.
 There are 3 things a manager must know about technical skills:
1. Which skill should be employed?
2. What is the role of each skill employed?
3. How are different skills interrelated?

3. HUMAN RELATIONS SKILL

 Human relations skill is an ability to interact effectively with people at all levels.
 This skill in manager has an ability to:
 Recognize the feelings and sentiments of others
 To judge the outcome of various course of action he may undertake
 To examine his own concepts and values which enables to develop useful attitude.

Figure 3 shows the skill-mix of a manager with the change in his levels.
8
Page
At top management, technical skill becomes least important and conceptual and human relations skills seems
to be important aspect.
Middle management is the equal combination of all skills embedded in a manager.
At supervisory level. Conceptual skill becomes least important and technical and human relations skills seems
to be important aspect.

.
Figure 3: Skill-Mix at different management levels

7. MANAGERIAL EFFECTIVENESS
 According to Peter Drucker, manager’s performance can be measured in terms of 2 concepts:
1. Efficiency: It is the ability of the manager to do somethings correctly i.e., at lowest possible cost.
2. Effectiveness: It is the ability of the manager to do correct things i.e. achieve high levels of value.
 Maximizing efficiency and effectiveness often creates conflict between 2 goals.
 Manager needs both, but efficiency is important and effectiveness is critical.

8. 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.
 Management involves "doing" and is a lower level function, concerning with execution and
direction of policies and operations.
 Another group of management writers feels that:
 Management is regarded as comprehensive general function covering entire process of planning,
organizing, directing and controlling.
9

 Administration is regarded as a branch of management that comprises of two functions - planning

Page
 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.
 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.
 Figure 4 shows the time spent in administrative and managerial functions at different levels where top
level spends more time in administration activity and as it moves down in the organization more time is
spent in management activity.

Figure 4: Time spent in administrative and managerial functions at different levels

9. MANAGEMENT – A SCIENCE OR AN ART?

1. MANAGEMENT AS A SCIENCE
 Science is an organized knowledge. A discipline can be called scientific if its:
 Methods of inquiry are systematic and practical: Being systematic means being orderly and unbiased.
 Information can be accumulated and analysed: All the scientific information collected first as raw
10

data is finally arranged in order and analysed with the help of statistical tools.
Page

 Results are cumulative and communicable: Science is also cumulative in that what is discovered is
 added to that which has been found before.
 The essential feature of any science is the application of scientific methods to the development of
knowledge.
 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.

2. MANAGEMENT AS AN ART
 Under science one learns “why” of a phenomenon and under art one learns “how” of it.
 It is the art of getting things done through others in dynamic and mostly non-repetitive situations.
 Art is concerned with the understanding of how a practical work can be accomplished. Management in
this sense is more of an art.
 Managing, like any other practice such as medicine, music composition, engineering, accounting or
even cricket - is an art.
 Thus management involves both elements – those of a science and or an art. While certain aspects of
management make it a science, certain others which involve application of skill make it an art.

10. MANAGEMENT – A PROFESSION?

 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 the following characteristics:
 Organized and systematic knowledge
 Formalized methods of acquiring training and experience
 Ethical code to regulate the behavior of the members of the profession
 Charging of fees based on service
 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 factors,
it can be concluded that management is not a profession.
 However, the present trend is towards the professionalization of management. Nowadays, it has
become essential to acquire management degrees or training in management to be called as good
manager.
11

 There is increased demand for qualified managers with M.B.A degree after graduation.
Page

 Peter Drucker's opinion on management is: "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 overlooking
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.

QUESTION BANK
MODULE 1 CHAPTER 1

1. Define Management? Explain any 4 management functions. (10M - Mar 2022, July 2023)*****
2. Explain the roles of a manager. (10M - Mar 2022, Feb 2023, July 2023) *****
3. List and explain managerial skills with the help of skill-mix diagram. (10M – July 2023, Aug 2022)
*****
4. Give different definition of management as interpreted by management scholars. (7M – Feb 2021)
5. Describe levels of management. (7M – Feb 2021)
6. Explain 10 different roles played by manager. (10M – Aug 2022) *****
7. Distinguish between management and administration. Draw the diagram for time spend in
administrative and managerial function at different levels. (6M – Feb 2023) ***
8. Discuss modern approaches of management. (6M – Feb 2021)

12
Page
 CHAPTER 2
PLANNING
1. NATURE OF PLANNING

 Planning is the beginning process of management. Manager must plan before organize, staff, direct or
control.
 Planning sets all other function into action. Without planning other function produces confusion or
sometimes nothing. This is called as “Principle of Primacy of Planning”.
 Planning as 3 sub-systems:
 Environmental sub-system: Includes factors like population changes, governmental actions
 Competitive sub-system: Includes past and present actions of competitors
 Internal sub-systems: Includes unique features of firm like location, facilities, personnel etc.
 It is an intellectual process, which requires a manager to think before acting. 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.
 According to 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. They call it the principle of navigational change.
 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 first-line managers are concerned with planning the activities of
daily or week or up to a month.
 There are various levels of planning:
 Strategic planning: It is a long-term planning which involves question like what business should
the organization be in the decade from now?
 Tactical planning: It is a short-term planning which involves question like what are our short-term
financial and personnel needs?
 Contingency planning: It is a planning for what to do if there is a change in government policy
 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.
13
Page
2. IMPORTANCE OF PLANNING***
Define planning. Describe importance of planning. (8M – Feb 2023)

1. Minimize risk and Uncertainty

In the today's complex organizations, decision making cannot be relied only upon intuition, planning plays
a vital role in decision making. 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.
2. Leads to success
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.
3. Focuses attention on the organization’s goals
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.
4. Facilitates Control
In Planning, manager sets goals, targets and means to accomplish these goals. These goals and plans
become standards or benchmarks against which performance can be measured. Thus good plans help
effective control on the activities.
5. Trains Executives
Planning is also an excellent means for training executives. They involved in activities of organization,
and the plans arouse their interest in the various aspects of planning.

14
Page
3. TYPES OF PLANS / HIERARCHY OF ORGANISATIONAL PLANS *****
Explain the Hierarchy of organizational plan with the help of a diagram. (10M – Aug 2022)

 Types of plans that are arranged in a hierarchy within the organizational is as shown in the figure below:

Figure: Hierarchy of organizational plans

1. VISION
 At the top of this hierarchy is the vision.
 Vision is the dream that an entrepreneur creates about the direction of the business in
 future. It describes aspiration, beliefs and values of the organization.

A vision should be brief, focused, clear and inspirational to an organizations employee.

Vision should be linked to customer’s needs and convey general strategy.

2.
MISSION

 Mission is the unique aim of an organization.

 It is an organizations specialization in area like service, product, client.

 Mission
Examplespecifies general
of mission: strategyquality
“imparting for achieving vision.
education to women”.
 The mission statements can be multiple points which may also mention cultural values. Ex: Corporate
unity, business ethics, quality.
 It may be changes over time of few years with new opportunities or new market conditions.
15
Page
3. OBJECTIVES
 Objectives are goals or aims that a management whishes the organization to achieve in pursuit of it
mission.
 These are the end point for all business activities.
 Only after these end point manager can decide kind of organization, personnel, qualification, supervisor
and direction of the work.
 Objectives should be described by the word purpose.
 Purpose of the organization should be its primary role which is defined by the society. Ex: purpose of
each university is to impart education.
 Purpose is therefore the broad aim which applies to the organization and society.
 Objectives are the specific targets to be reached by an organization.

CHARACTERISTICS OF OBJECTIVES ***

Explain any 5 important characteristics of objectives in planning (10M – July 2023)
1. Objectives are multiple in number: every business or organization can have multiple objectives with
various key areas like: Market standing, innovation, productivity, resources, profit, manager
performance, work performance and public responsibility.
2. Objectives changes over time: Due to economical, technical, social, political or ethical changes
objectives may change according to the current trends.
3. Objectives are either tangible or intangible: objectives key areas like Market standing, innovation,
productivity, resources, profit are tangible which are measured and manager performance, work
performance and public responsibility are intangible which cannot be measured.
4. Objectives have a priority: At given time accomplishment of one objective is important than others. Ex:
Objective of maintain the minimum cash balance is more important than meeting due dates on account.
5. Objectives are generally arranged in a hierarchy: generally, organization objectives are defined at the
top, followed by divisional or departmental objectives. Next come objectives of each section and finally
individually objectives.
6. Objectives sometimes clash with each other: A entire organization is break down into multiple units
like production, sale, finance, etc. each unit defines the individual objectives which must clash with
other unit’s objectives. Ex: Ex: Production unit defining the objectives – Low cost, and Sales unit
defining the objectives – High Quality.
16
Page
 REQUIREMENTS OF SOUND OBJECTIVES
1. Objectives must be clear and acceptable: clarity is measure of peoples understanding and also accepted
by people.
2. Objectives must support one another: Objectives should interfere with one another.
3. Objectives must be precise and measurable: Objectives must always precise in terms of goals and
measurable in terms of standards of “how well” and “how much”. Ex: Quality education – Result,
Newer teaching – Activity.
4. Objectives should always remain valid: Manager should constantly review and reassess the objectives
from time to time.

ADVANTAGES OF OBJECTIVES
1. They provide basis of planning
2. They act as motivator
3. They facilitate coordination among various groups
4. They function as a basis for managerial control.
5. They facilitate better management
6. They reduce misunderstandings.

4. STRATEGIES
 Strategy is defined as a giving a response to a competitive environment by performing SWOT
(Strength, Weakness, Opportunity and Threat) analysis.
 The 2 activities involved in strategy formylation are: Environmental appraisal and Corporate appraisal.
 Environmental appraisal: It is done by analyzing the components and attributes of environment.
 The components of external environment are:
1. Political and legal component: Stability of government, Industrial licensing law, fiscal policies and
restriction on capital movement.
2. Economical component: Level of economic development, trends in price, exchange rate, supply of
labors, raw martials and capital.
3. Competitive components: Identification of competitor, analysis of their performance, anti-
monopoly laws and rules, protection of patents.
4. Social and cultural components: Literacy level of population, religious and social characteristics,
rate of social change.
17
Page
  Corporate appraisal: This involves the analysis of company strengths and weakness. The company
strengths may lie in its outstanding leadership, excellent product design, low-cost manufacturing skill,
personal relationship with the customer, efficient transportation and logistics, effective sales
promotions, effective sales promotion, and so on.
 Any of this strengths represents unique skill or resources that can determine the company’s competitive
edge are called its core competency.

MODE OF STRATEGY FORMULATION

5. OPERATIONAL PLANS *****

List some of the standing plans and single-use plans and explain. (6M – Feb 2021)
 Based on their use, plans are classified as standing plans and single use plans.
 Standing plans are designed for situations that often repeat. These plans can be used again and again.
 Single use plans are developed to achieve a specific end. After reaching that target, that plan becomes
18

useless.
Page
 STANDING PLANS
 Standing plans are designed for situations that often repeat. These plans can be used again and again.
 Ex: Bank uses same plan for loan application for each new client.
 There are 4 types of standing plans: policies, procedures, methods and rules of any organization.

1. POLICIES
 A policy is a general guideline for decision making. It sets up the boundaries around decision.
 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".
 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,
payment policy etc.
 Types of policies
1. Classifications on the basis of sources: Policies may be divided into
 Originated policies - Established formally by top managers for the purpose of guiding
action of their sub-ordinates.
 Appealed policies – Arises from the appeal made by the subordinates against supervisor.
 Implied policies – These policies are stated neither in writing or verbally. Only by watching
the actual behavior of the supervisor these policies are made.
 Externally imposed policies – Policies imposed by external agencies such as government,
trade associations.
2. Classifications the basis of functions: Classification like personnel policy, promotion policy,
pricing policy, distribution policy, investment policy etc.
3. Classifications on the basis of organizational level: Classification like Top level policy,
departmental policy, shop level policy etc.

2. 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.
19

 Procedures may also exist for conducting meetings of board of directors, shareholders, issuing raw
Page
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 organization. 1. General guidelines at the action level.
2. Top level activity. 2. Departmental activity.
3. Policies fulfill the objectives of an 3. Procedures guide the way to implement the
organization. policies.
4. Policies are often made without any study 4. Procedures are always made after thorough
or analysis. study and analysis of work.

3. 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.

4. 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. 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.

SINGLE-USE PLAN
 Single use plans are developed to achieve a specific end. After reaching that target, that plan
becomes useless.
 The major types of these plans are: Programmes and Budget.
1. PROGRAMMES
 Programmes are precise plan which needs to be made to carry out non-routine and non-repetative
task.
 The essential key factors of every programme are time and budget.
 Single step in a programme is set up as a project. Ex: If a company need some personnel, then
hiring process as to be set up, which is a project.
20

 A schedule specifies the time where each action takes place and Budget specifies the money for each
Page
 action.
2. BUDGET
 Budget is a financial quantitative statement prepared before time period.
 Budgets are the plan for future period. They are expressed in numerical terms.
 Important budgets are sales budget, production budget, etc.

BUSINESS PLAN
A good business plan must have the following characteristics:
 It must provide full information on all topics to reader
 It must be an objective tone
 It must not be over critical of past mistakes
 It should not be full of technical details

4. STEPS IN PLANNING AND PLANNING PREMISES*****

Discuss various steps involved in planning (7M/10M – Feb 2021)
The main steps involved in planning are as follows:
1. Establishing verifiable goals or set a goals to be achieved: the first step in planning is to determine
the enterprise objectives set by top managers. 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.
2. Establishing 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,
21

population, investment, demand etc., are tangible premises. Intangible premises are those which
Page
 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 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.
3. Deciding the planning period: Businesses vary considerably in their planning period from years to
decades. There are 3 classes of planning period: Time for new product development, Time required to
recover capital investment and Commitment time.
4. Finding alternative courses of action: 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. Developing derivative plans: 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. Establishing and deploying action plans: action represents the lowest level of execution. The action
plan identifies particular activities necessary for the purpose and specifies the who, what, when, where
and how of each action.
8. Measuring and controlling the progress: 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.

5. LIMITATIONS OF PLANNING*****
Explain the limitations of planning. (8M – Mar 2022)

1. Planning is 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. Planning is expensive: 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 analyzing data. Therefore,
planning is a costly affair.
22

3. Planning is Restrictive: Planning sometimes restricts the organization to risk-free opportunities. Is

Page
 forces the manager to work within the limits.
4. Planning is limited: The scope of planning is limited in organizations with rapidly changing situations.
5. Planning is inflexible: Establishment of advance plan tends to make administration inflexible. When
sudden changes like business recession, change in government policy etc. takes place there is a need to
do fresh plan which alters the original plan.
6. 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.
7. Resistance to Change: Planning brings many changes in the organization. However, people do not
like changes. So, they do not give full cooperation. Without their cooperation, the plans cannot succeed.
8. 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.

6. DECISION MAKING DEFINTION

Decision making 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.

7. TYPES OF DECISIONS*****
Decisions are classified into 7 categories:
1. Programmed and Non-programmed decisions
2. Major and Minor decisions
3. Routine and Strategic decisions
4. Sequential and Bear-by-the-tail decisions
5. Individual and Group decisions
6. Simple and Complex decisions
7. Heuristics and Intuitive decisions

1. PROGRAMMED AND NON-PROGRAMMED DECISIONS

Explain programmed and non-programmed decisions. (4M/ 6M – Aug 2022, July 2023, Feb 2023)
23

 Programmed decisions are those that are made in accordance with some policy, rule and procedure.
Page

 These decisions are generally repetitive, and routine hence easy for the manager to make.
  Example: determining salary payment to employee who have been ill, recording office supplies and
son on.
 Non-programmed decisions are non- repetitive in nature.
 These decisions are not arisen before, so it deserves custom-tailored treatment and handled by non-
programmed decisions.
 Example: Failing product line, allocation of resource, and so on.
 In case of programmed decisions, each manager is guided by same set of rules whereas in non-
programmed decisions, manager may bring his own personal beliefs, values and judgments in
decisions process.
 Manager usually spends more time in making routines, unimportant, programmed decisions and less
time for making non-routines, important, non-programmed decisions. This is called as “Gresham’s
Law of Decision making”.

2. MAJOR AND MINOR 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.
Major and minor decisions can be measured in 4 ways:
1. Degree of futurity of decision: A decision which has a long range impact like replacement of men
by machinery which lies under major decision. The decision to store raw materials maybe considered
as minor decision which doesn’t have long range impact.
2. Impact of decision on other functional areas: If decision affects only one function it is a minor
decision like shifting from book ledger to loose leaf ledger. If decision affects more than functional
areas then it is a major decision like preparing department’s profit and loss account.
3. Qualitative factors that enter the decision: A decision which involves certain subjective factors is
an important decision. The subjective factors are principles of conduct, ethical values, social and
political beliefs.
4. Recurrence on decisions: Decisions which are rare and have no rules are treated as major decisions
like renew of office subscription to business and decision is made at top level. Decisions which
reoccur very often and have rules becomes minor decisions like day-to-day spot decision and
decision is made at lower level.
24
Page
3. 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.

4. SEQUENTIAL AND BEAR-BY-THE-TAIL DECISIONS

In sequential decision the manager makes a decision one part at a time, once the result of first part is known,
then the second part can will be decided and so on. Hence series of decisions can be made to solve one
main problem. Bear-by-the-tail decisions are like making important or difficult decisions.

5. 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,
then 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 summarized 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 to them with a
second questionnaire. A final summary is developed on the basis of replies received second time.
25
Page
 6. 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.
 Decisions in which the problem is simple and the outcome has high degree of certainty. These are
called routine decision. Ex: Standard operating procedure.
 Decisions in which the problem is simple and the outcome has low degree of certainty. These are
called judgmental decision. Ex: Product promotion.
 Decisions in which the problem is complex and the outcome has high degree of certainty. These are
called analytical decision. Ex: Area of production.
 Decisions in which the problem is complex and the outcome has low degree of certainty. These are
called adaptive decision. Ex: change is corporate plan according to change in environment.

7. HEURISTICS AND INTUITIVE DECISIONS

 Heuristics are rules of thumb which organizations evolve from their experience. Ex: Cut down on
advertising in a recession.
 Intuitive are decisions which relies on feelings rather than facts.

8. STEPS IN DECISION MAKING / RATIONAL DESCION MAKING

PROCESS*****
Explain all steps in rational decision making with a neat block diagram (8M – Feb 2023) or explain the
steps involved in decision making (7M – Feb 2021)

Step 1: Recognizing the 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.
26

Step 2: Deciding priorities among problem: The manager should identify the problems which he can solve,
Page
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.
Step 3: Diagnosing the Problem: 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 solution becomes easy.
Step 4: Developing alternative solutions or courses of action: 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.
Step 5: Measuring and comparing the effect of alternative solution: The alternative solutions are
measured and compared for their consequences. This involves a comparison of the quality and acceptability of
these alternatives.
Step 6: Converting the decision into effective 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.
Step 7: Follow-up: 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.

QUESTION BANK
MODULE 1 CHAPTER 2

1. Define planning. Explain any 4 limitations of planning. (Mar 2022)

2. Explain the types of decision making. (Mar 2022)
3. List and explain any 5 importance characteristics of objectives in planning (July 2023)
4. Explain programmed and non-programmed decisions. (Aug 2022, July 2023, Feb 2023)
5. Define planning. Describe importance of planning. (Feb 2023)
6. Explain all steps in rational decisions making with a neat block diagram (Feb 2023) or steps
involved in decisions making. (Feb 2021)
7. Discuss steps involved in planning. (Feb 2021)
8. List some of the standing plans and single use plans and explain. (Feb 2021)
27

9. Explain the hierarchy of organizational plan with the help of a diagram. (Aug 2022)
Page