TIME Module 1

TECHNOLOGICAL INNOVATION MANAGEMENT AND

ENTREPRENEURSHIP

BEC501
V SEMESTER
MODULE 1
 MODULE 1 CONTENTS

CHAPTER 1- MANA GEMENT

1) Nature and Functions of Management – Importance
2) Definition
3) Management Functions
4) Levels of Management
5) Roles of Manager
6) Managerial Skills
7) Management & Administration
8) Management as a Science
9) Art & Profession (Selected topics of Chapter 1, Text 1)

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

o 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.
o The country with enough income and manpower can still be poor if it does not have proper managers to
coordinates these resources.
o 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
o 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.
o Thus management is same process in all organization but varies with complexity depending on size of
organization.
 Management is dynamic in every organization
o The term dynamic means coordinating current organizational activities and planning for future.
o It settles disputes and promotes leadership within the organization.
o 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"
o This definition defines fundamental difference between a manger and personnel of an organization.
o Manager is one who contributes to the organization goals indirectly by directing the efforts of others – not
by performing the task himself.
o Person who is not a manager makes his contribution to the organizations goal directly by performing the
tasks by himself.
o 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.
o 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".
o 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.

i. 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.

ii. 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:
i. Human organization
ii. Material organization

 Human organization:
i. Once the managers define the objectives, and plans to achieve then, they must design and develop
human organization to carry out the plan successfully.
ii. 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.
iii. Staffing is also an important function in building human organi zation. In staffing manager finds the
right person for each job.
 iv. Staffing also provides manager the authority of hiring adequate manpower for all the positions in the
organization.
v. Staffing also involves selecting and training of future managers and encouraging all to have a disciplined
approach towards work.
 Material organization:
i. The purpose of material organization is to utilize the proper raw material required for production at the
right point of time.
ii. It includes process like Procurement, inspect ion, storage and monitoring of components.

iii. 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.
i. Leadership: Leadership is a process by which a manger guides and influences the work of his subordinates.
ii. Motivation: Motivation means encouraging workers to give their best. 2 cl assification 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.
iii. Communication: Communication is the processing of passing information from one person to another.

iv. 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.
i. Establishing standards of performance.
ii. Measuring current performance and comparing with established standards.
iii. Taking necessary corrective action to meet the set standards.

v. 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.

vi. 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:
i. Substantive Dimension – Defines what is done and How it is done.
ii. 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.

a. Top Management: It is a Top Management which defines policies for the company and consist of Chairman,
Directors, President, Vice -President and CEO.
b. Middle Management: It is a vast and diverse group that includes Manager in Project, Sale, Marketing and
department Heads.
c. First-line Management: It is a lower management group made up of Supervisors, and Foreman.
 Figure 2: Management levels

 There are 2 approaches to management:

a. 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.
b. 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:
a. Plans made by the top managers of the organization may take long period of over years (5-10 years).
b. 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:
a. Interpersonal roles
b. Decision roles
c. Informational roles

1. INTERPERSONAL ROLES
a. 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.

2. INFORMATION ROLES
a. 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
a. 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.

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:

i. Conceptual skill
ii. Technical skill
iii. 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:
i. Which skill should be employed?
ii. What is the role of each skill employed?
iii. 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.

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 shows the skill-mix of a manager with the change in his levels

7. MANAGERIAL EFFECTIVENESS
 According to Peter Drucker, manager’s performance can be measured in terms of 2 concepts:
i. Efficiency: It is the ability of the manager to do somethings correctly i.e., at lowest possible cost.
ii. 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:
i. Administration involves "thinking". It is a top level function that centers around the preparation of plans, rules,
policies and objectives of an organization.
ii. 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:
i. Management is regarded as comprehensive general function covering entire process of planning, organizing,
directing and controlling.
ii. Administration is regarded as a branch of management that comprises of two functions - planning and controlling.
iii. 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.
i. Managing of business enterprises is called management and
ii. Managing non business organizations is called administration.
 iii. Hence financial performance plays key role in management.
iv. But in managing non business organizations like educational institutions, government offices, military etc.,
administration is more priority than financial decisions.
 Figure 1.4 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.

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:
i. Methods of inquiry are systematic and practical: Being systematic means being orderly and unbiased.
ii. Information can be accumulated and analysed: All the scientific information collected first as raw data is finally
arranged in order and analysed with the help of statistical tools.
iii. 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.

[Link] – 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 behaviour 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 behaviour. 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.
 There is increased demand for qualified managers with M.B.A degree after graduation.
 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.
 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:
i. Strategic planning: It is a long-term planning which involves question like what business should the organization
be in the decade from now?
ii. Tactical planning: It is a short-term planning which involves question like what are our short-term financial and
personnel needs?
iii. 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.

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.
 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

I. 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.

II. MISSION
 Mission is the unique aim of an organization.
 It is an organizations specialization in area like service, product, client.
 Mission specifies general strategy for achieving vision.
 Example of mission: “imparting quality 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.

III. 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.

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.

IV. 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:
i. Political and legal component: Stability of government, Industrial licensing law, fiscal policies and restriction on
capital movement.
ii. Economical component: Level of economic development, trends in price, exchange rate, supply of labors, raw
martials and capital.
iii. Competitive components: Identification of competitor, analysis of their performance, anti-monopoly laws and
rules, protection of patents.
iv. Social and cultural components: Literacy level of population, religious and social characteristics, rate of social
change.
 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

  The planning mode is systematic and rational. The essence of this mode is in being different, i.e., in combining activities in
such a way that they deliver a unique mix of values that are different from rivals. It is not that the rivals cannot imitate this
combination. But imitation of a combination of activities is certainly more difficult than the imitation of one or two activities
because it requires different equipment, different employee behaviour, different skills, different company image and different
management systems. Thus a medical soap manufacturer, with a large sale force calling on dermatologists and drug stores,
advertising in medical journals, sending direct mail to doctors, attending medical conferences and doing research at its own
skin care institute, cannot easily trade off its present mix of activities for some other soap manufacturer’s mix where the soap
manufactured is of different
variety (with deodorants and softeners), selling through super markets and promotion is through price reduction.

 Entrepreneurial mode is one in which a proactive, bold plan is drawn to seek new opportunities on the basis of intuition.
Also known as the “inside-out” mode, it believes that the greatest constraint on a company’s performance is its own mindset.
With enough ambition or “stretch” and with the right core competencies, just about anything is possible. Thus, a
manufacturer may decide to outperform competition singly or in combination by rigorous pursuit of cost reduction or by
differentiating the product or service-creating unique niche or by focusing on a particular buyer group.

 Adaptive mode (also known as the “outside-in mode”) is reactive and timid. This mode is generally used to formulate
strategies for solving problems as they come. This mode believes that an organisation is a “prisoner of its environment” and
can do only what the world around it allows. The task of the managers is to create the best possible fit between their
organisation’s internal strengths and weaknesses, and whatever external opportunities and threats there may be.

V. 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 useless.

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

a. Originated policies - Established formally by top managers for the purpose of guiding action of their sub-ordinates.
b. Appealed policies – Arises from the appeal made by the subordinates against supervisor.
c. Implied policies – These policies are stated neither in writing or verbally. Only by watching the actual behavior of
the supervisor these policies are made.
d. 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.
 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 organization. 1. General guidelines at the action level.
2. Top level activity. 2. Departmental activity.
3. Policies fulfil the objectives of an organization. 3. Procedures guide the way to implement the policies.
4. Policies are often made without any study or 4. Procedures are always made after thorough study
analysis. 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.
 A schedule specifies the time where each action takes place and Budget specifies the money for each 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:
a. 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.
b. 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.
c. 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.
3. Planning is Restrictive: Planning sometimes restricts the organization to risk-free opportunities. Is 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)

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

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.

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.

Step 2: 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.

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)

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