Unit – 2: PLANNING

I. Definition of planning

Planning is the fundamental management function, which involves deciding beforehand, what
is to be done, when is it to be done, how it is to be done and who is going to do it. It is an
intellectual process which lays down an organization's objectives and develops various
courses of action, by which the organisation can achieve those objectives. It chalks out exactly,
how to attain a specific goal.
In the words of Koontz and O’Donnell, “Planning involves selecting enterprise objectives,
departmental goals, and programmes, and determining the ways of reaching them. Planning
provides rational approach.”
Planning is a process, and a plan is the outcome of this process. Planning is the process of
deciding how the organisation can get where it wants to go and what it will do to get there.
Planning is nothing but thinking before the action takes place. It helps us to take a peep into
the future and decide in advance the way to deal with the situations, which we are going to
encounter in future. It involves logical thinking and rational decision making.

Three main types of planning

1. Strategic
2. Tactical
3. Operational

Strategic Plans
Strategic plans are designed with the entire organization in mind and begin with an
organization's mission. Top-level managers, such as CEOs or presidents, will design and
execute strategic plans to paint a picture of the desired future and long-term goals of the
organization. Essentially, strategic plans look ahead to where the organization wants to
be in three, five, even ten years. Strategic plans, provided by top-level managers, serve as
the framework for lower-level planning.
Developing long-term strategies for achieving growth, improving productivity and
profitability, boosting return on investments, improving customer service, and finding
ways to give back to the community in which it operates.

Tactical Plans
Tactical plans support strategic plans by translating them into specific plans relevant to a
distinct area of the organization. Tactical plans are concerned with the responsibility and
functionality of lower-level departments to fulfil their parts of the strategic plan.
Tactical plans are usually developed in the areas of production, marketing, personnel,
finance, and plant facilities.

Operational Plans
Operational plans sit at the bottom of the totem pole; they are the plans that are made
by frontline, or low-level, managers. All operational plans are focused on the specific
procedures and processes that occur within the lowest levels of the organization.
Managers must plan the routine tasks of the department using a high level of detail.

The process of linking strategic goals and objectives to tactical goals and objectives. It
describes milestones, conditions for success and explains how, or what portion of, a
strategic plan will be put into operation during a given operational period. An operational
plan addresses four questions:
• Where are we now?
• Where do we want to be?
• How do we get there?
• How do we measure our progress?
Scheduling employees each week, assessing ordering and stoking inventory, creating a
monthly budget, developing a promotional advertisement for the quarter to increase the
sales of certain product, or outlining an employee’s performance goals for the year.

Distinction between Strategic and operational

Basis of Distinction Strategic Operational

Time Span Long period of time Short period of time

Scope Coves the whole enterprise Specific department/functional area

Level of Management Top level Middle and lower level

Basis Based on organisational Based on Strategic plans

Objectives
Nature Relatively broad and general Detailed and specific

Resources Involves acquisition and Involves the utilization of given

allocation of resources resources efficiently
Environment Involves analysis and Involves analysis of the Internal
forecasting of external environment
environment

Characteristics of Planning
 1. Managerial function
Planning is a first and foremost managerial function provides the base for other
functions of the management, i.e., organising, staffing, directing, and controlling, as
they are performed within the periphery of the plans made.

2. Goal oriented
It focuses on defining the goals of the organisation, identifying alternative courses of
action, and deciding the appropriate action plan, which is to be undertaken for
reaching the goals.

3. Pervasive
It is pervasive in the sense that it is present in all the segments and is required at all
the levels of the organisation. Although the scope of planning varies at different levels
and departments.

4. Continuous Process
Plans are made for a specific term, say for a month, quarter, year and so on. Once that
period is over, new plans are drawn, considering the organization’s present and future
requirements and conditions. Therefore, it is an ongoing process, as the plans are
framed, executed, and followed by another plan.

5. Intellectual Process
It is a mental exercise at it involves the application of mind, to think, forecast, imagine
intelligently and innovate etc.

6. Futuristic
In the process of planning, we take a sneak peek of the future. It encompasses looking
into the future, to analyse and predict it so that the organisation can face future
challenges effectively.

7. Decision making
Decisions are made regarding the choice of alternative courses of action that can be
undertaken to reach the goal. The alternative chosen should be best among all, with
the least number of the negative and highest number of positive outcomes.

Planning is concerned with setting objectives, targets, and formulating plan to accomplish
them. The activity helps managers analyse the present condition to identify the ways of
attaining the desired position in future. It is both, the need of the organisation and the
responsibility of managers.

Importance of Planning

1) It helps managers to improve future performance, by establishing objectives and

selecting a course of action, for the benefit of the organisation.

2) It minimises risk and uncertainty, by looking ahead into the future.

3) It facilitates the coordination of activities. Thus, reduces overlapping among activities

and eliminates unproductive work.

4) It states in advance, what should be done in future, so it provides direction for action.

5) It uncovers and identifies future opportunities and threats.

 6) It sets out standards for controlling. It compares actual performance with the
standard performance and efforts are made to correct the same.

Planning is present in all types of organisations, households, sectors, economies, etc. We need
to plan because the future is highly uncertain and no one can predict the future with 100%
accuracy, as the conditions can change anytime. Hence, planning is the basic requirement of
any organization for the survival, growth, and success.

II. STRATEGIC PLANNING

CONCEPT
Planning is related with future. A planning process involves different
degrees of futurity. Some parts of the organisation require planning for
many years into the future while others require planning over a short period
only. For instance, capital expenditure is related to long- term period while
budget for a year is of short-term nature. The former is called strategic
planning or long-range planning.

‘Strategic planning’ may be defined as the process of determining the

objectives of the organisation and the resources to be used to attain these
objectives, as also the policies to govern the acquisition, utilisation and
disposition of these resources.
Examples of strategic planning in an organisation are —diversification of
business into new lines, planned growth rate in sales, type of products to be
offered, etc. Strategic planning encompasses all the functional areas of
business and is affected within the existing and longterm framework of
economic, technological, social and political factors. It also involves the
analysis of various environmental factors—particularly with regard to how
an organisation relates to its environment. Generally, for most of the
organisations, strategic planning period ranges between three to five years.

PROCESS OF STRATEGIC PLANNING

The process of strategic planning consists of the following steps

1. Determination of Mission and Objectives

Strategic planning starts with the determination of the mission for the
organisation. The principal objectives for which the organisation has been
set up should be clearly defined. Strategic planning is concerned with an
organisation’s long-term relationship to its external environment. So, the
business mission should be fixed in terms of social impact of the
organisation.

2. Environmental analysis
In order to identify the opportunities and threats, the external environment
of the organisation is analysed. A list of important factors likely to affect
the organisation’s activities is prepared.
3. Self- appraisal
In the next step, the strengths and weaknesses of the organisation are
analysed. Such an analysis will enable the enterprise to capitalize on its
strengths and to minimise its weaknesses. The enterprise can utilise the
external opportunities by concentrating on its internal capacity. By
matching its strengths with the environmental opportunities, an enterprise
can face competition and achieve growth.

4. Strategic decision-making
Strategic alternatives are then generated and evaluated. After that, a
strategic choice is made to reduce the performance gap. The organisation
must select the alternative that is best suited to its capabilities. For instance,
in order to grow, an enterprise may enter into new markets or develop new
products or sell more in the present markets.
Choice of strategy depends upon external environment, managerial
perception, the managers’ attitude towards risk, past strategies and
managerial power and efficiency.

5. Strategy implementation and control

Once the strategy is determined, it must be translated into tactical
operational plans. Programmes and budgets are developed for each
function. Short term operational plans are prepared to use the resources.
Control should be developed to evaluate performance as the strategy is put
into use.
Wherever actual results are below the expectation, the strategy should be
reviewed or reappraised. It must be modified and adapted to the changes in
the external environment.

IMPORTANCE

1. Financial benefits
Firms that make strategic plans have good sales, low costs, high EPS
(Earnings Per Share) and high profits. Companies like Reliance, Infosys,
Tata, Wipro, Deloitte, etc. are the giants who report good financial results
as a result of sound strategic planning.

2. Guide to organisational activities

Strategic planning guides members towards organisational goals. It unifies
organisational activities and efforts towards the long-term goals. It focuses
on specific goals making it clear for members to know the direction towards
which they have to move.

3. Competitive advantage
In the world of globalisation, firms which have competitive advantage have
better sales and financial performance. Future can be predicted through
strategic planning. It enables managers to anticipate problems before they
arise and solve them before they become worse.

4. Minimises risk
Strategic planning provides information to assess risk and frame strategies
to minimise risk and invest in safe business opportunities. Chances of
making mistakes and choosing wrong objectives and strategies, thus, get
reduced.

5. Beneficial for companies with long gestation gap

The time gap between investment decisions and income generation from
those investments is called gestation period. During this period, changes in
technological or political forces can affect implementation of decisions and
plans may, therefore, fail. Strategic planning discounts future and enables
managers to face the threats and opportunities. Huge capital investments in
projects is followed by expected financial returns.

6. Promotes motivation and innovation

Strategic planning involves managers at top levels. They are not only
committed to objectives and strategies but also think of new ideas for
implementation of strategies. This promotes motivation and innovation. It
also provides motivation to people at lower levels when they know their
efforts are contributing towards organisational goals.

7. Optimum utilization of resources

Strategic planning makes best use of resources to achieve maximum output.
Resources are scarce and strategic planning helps in their use in the areas
where they are required most.

LIMITATIONS OF STRATEGIC PLANNING

1. Lack of knowledge
Strategic planning requires lot of knowledge, training, and experience.
Managers should have high conceptual skills and abilities to make strategic
plans. If they do not have the knowledge and skill to prepare strategic plans,
the desired results will not be achieved. It will also result in huge financial
losses for the organisation.

2. Interdependence of units
If business units at different levels (corporate level, business level and
functional level) are not coordinated, it can create problems for effective
implementation of strategic plans.

3. Managerial perception
In order to avoid developing risky objectives and strategies which they will
not be able to achieve, managers may land up framing sub-optimal goals
 and plans. Sometimes, short-term commitments also defer making long-
term strategies.

4. Financial considerations

Strategic planning requires huge amount of time, money and energy.

Managers may be constrained by these considerations in making effective
strategic plans.
These limitations are by and large, conceptual and can be overcome through
rational, systematic, and scientific planning. Researchers have proved that
companies which make strategic plans outperform those which do not do
so.

III. ENVIRONMENTAL ANALYSIS AND DIAGNOSIS

Environmental Analysis
Environmental analysis is the study of organizational environment to
identify and indicate those environmental factors that can significantly
influence organizational operations and managers strategic decision
making. Environmental analysis is the discerning (seeing and
understanding well) of those aspects of the environment, which shall have
the greatest influence on the organisation’s ability to achieve its objectives.

Environment Diagnosis
Environment diagnosis is an exercise attempted to identify the factors of
causes in the environment that affect the function of an organisation and
use such identification as a base for developing plans or strategic to
improve or maximize the dynamism and effectiveness of the organisation.
Environment analysis is a tool of environmental diagnosis.

Environmental Analysis & Diagnosis

Definition
In order to survive and flourish in a highly competitive and turbulent
environment, every organisation must strike a happy balance between
environment, values and resources (Thompson). Because organisations are
open systems, environmental factors inevitably influence them, and it is up
to managers to ensure that this influence is harnessed in a positive way,
leading to organisational success (P.S. Thomas).

Environmental analysis is the process of monitoring an organisational

environment to identify both present and future threats and opportunities
that may influence the firm‘s ability to reach its goals.
 The purpose of environment analysis and diagnosis is to identify the ways
in which changes in various organizational factors may directly and
indirectly influence the organisation and management. Managers
commonly perform environment analysis in order to understand different
activities and happenings inside and outside their organisation and thereby
increase the chances of framing sound and effective organisations and
managerial strategies by coping with the probable demands of the
environment.

NEEDS AND IMPORTANCE

1. Environmental factors are primary impact makers on corporate strategy of

organisations.

2. Such analysis helps in anticipating opportunities and to plan alternative

responses to those opportunities.

3. It helps in determining threats and developing an early warning system to

prevent threats to the organisation or to determine the risks that may be
faced by organisation in its future operations.
4. It helps to identify those adjustments or adaptations, which are required for
greater accomplishment of organizational objectives.

5. It is sort of SWOT (Strengths, Weaknesses, Opportunities and Threats)

analysis which helps in deciding about the rights course of action for
managerial to successfully negotiate with the prevalent circumstances
around the organisation in order to ensure its survival, growth and
development.

6. Environmental information strengthens the planning process and strategy

formulation.

TECHNIQUES OF ENVIRONMENTAL ANALYSIS

AND DIAGNOSIS
• Environmental analysis or scanning is a process by which organisations
monitor their internal and external environments to spot opportunities and
threats affecting their business.
• The basic purpose is to help management determine the future direction of the
organisation. Scanning simply involves reviewing and evaluating whatever
information about internal and external environments can be gleaned from
several distinct sources.

1. SWOT Analysis
 SWOT is an acronym for the internal strengths and weaknesses of a firm
and the external opportunities and threats facing that firm. SWOT analysis
helps managers to have a quick overview of the firm’s strategic situation
and assess whether there is a sound fit between internal resources, values
and external environment.

The primary purpose of SWOT analysis is to identify the key internal

and external factors that are important to achieving the goals. One useful
way of putting SWOT analysis to good effect is to exploit market
opportunities by leveraging on the strengths of a firm.

At the same time a firm can also convert its weaknesses or threats into
strengths or opportunities by proactively taking appropriate steps.
Key Issues in SWOT Analysis
 SWOT Analysis helps managers finding answers to questions such as:
What the firm is good at doing? What the firm is weak at doing; What kind
of opportunities need to be exploited keeping the strengths and weaknesses
of the firm in mind; What strategies have to be chalked out to ward off
environmental threats etc. It is a strong tool that certainly helps in strategy
formulation and selection.
SWOT analysis does not address how the company can identify the
elements for their own company. Many organizational executives may not
be able to determine what these elements are, and the SWOT framework
provides no guidance.

2. TOWS Matrix
The TOWS matrix is used for strategic planning and helps marketers
identify opportunities and threats and measure them against internal
strengths and weaknesses. It is actually a variant of the SWOT analysis
which focuses attention on external opportunities and threats and compares
them to a company’s internal strengths and weaknesses.
(SWOT analysis aims to use strengths and weaknesses to reduce threats
and maximize opportunity). TOWS and SWOT are acronyms for different
arrangements of the words Strengths, Weaknesses, Opportunities and
Threats.

TOWS, basically, tries to answer the following four questions

1. Strengths and Opportunities (SO)- How can your current strengths help
you to capitalize on your opportunities?

2. Strengths and Threats (ST)- How can your current strengths help you
identify and avoid current and potential threats?
 3. Weaknesses and Opportunities (WO)- How can you overcome your
current weaknesses by using your opportunities?

4. Weaknesses and Threats (WT)- How can you best diminish your
weaknesses and avoid current and potential threats?

3. WOTS-UP Analysis

• As mentioned previously a SWOT analysis is a strategic planning tool that

assesses an organization’s Strengths, Weaknesses, Opportunities and
Threats. Two other terms are interchangeably used in business analysis to
convey the same; TOWS analysis or WOTS up analysis. Regardless, the
elements in each abbreviation are the same.

• The basic purpose of a SWOT analysis is to evaluate the internal and

external environment of a project, business, or organization. The Strengths
and Weaknesses are the internal factors, while Opportunities and Threats
refer to the external factors.

All types of organizations, including businesses, non-profit groups,

and government agencies, can use SWOT/TOWS/WOTS-up analysis
SWOT or WOTS-up analysis helps an organisation to think
strategically and capitalize on its strengths, assess opportunities and
minimize threats. It also helps managers avoid, if not alleviate,
weaknesses.

4. BCG Matrix
The BCG Matrix was developed by The Boston Consulting Group, a
strategic management consulting firm, to analyse the performance of
products. The BCG Matrix compares various businesses in an
organization’s portfolio on the basis of relative market share and market
growth rate.
Relative market share is determined by the ratio of a business’s market
share (in terms of unit volume) compared to the market share of its largest
rival. Market growth rate is the growth in the market during the previous
year relative to growth in the economy as a whole.
The combinations of high and low market share and high and low business
growth rate provide four categories for a corporate portfolio. The matrix
measures product performance by growth and market share.

It is a two-by-two graph, with market growth shown on the vertical axis

and market share charted on the horizontal axis. The quadrants are then
labelled as four business categories: cash cows, dogs, question marks and
stars.
5. Competitor Analysis
Competitor analysis seeks to assess the strengths and weaknesses of
current and potential competitors of any business. The goal of competitor
analysis is to be able to predict a competitor’s probable future actions,
especially those made in response to the actions of the focal business.
Competitor analysis is always about detecting change in and around
competitors and assessing what change implies for the competitor itself,
for the marketplace in general, or for own business.

For identifying competitors

1. Whom does one usually compete against? Who are firm’s most intense
competitors? Who are less intense but can still impact firm’s performance?
Who are the ones that come out with substitutes?
2. Is it possible to divide various competitors into strategic groups on the
basis of their skills, capabilities, and strategies?
3. Who are the potential competitors or potential entrants? Is it possible to
check their entry?

For understanding and evaluating competitors

1. What are the objectives and strategies of competitors?
2. What about their size? Growth profile?
3. What about competitors’ organisational culture?
 4. What is the cost structure of competitors? Do they enjoy any cost
advantage? What about their profitability picture?
5. Information regarding competitors’ image and current positioning? And
their current and past strategies?
6. Who are the most successful competitors in the market currently?
Reasons for their competitive success?
7. Are they able to exploit our weaknesses and serve customer needs
better than us? How are they doing this? Any possibility of competitors’
becoming stronger and stronger?
8. What kind of capabilities and skill sets are being deployed by
competitors to outwit others in the marketplace currently?

The principal task of a marketer while carrying out a competitor analysis

is to correctly assess the magnitude of existing competition and put
appropriate strategies in place so as to meet the present and potential needs
of customers.
Analyzing the strengths and weaknesses of competitors—by setting up a
competitive intelligence wing specially for this purpose collecting
information from various sources such as trade and professional sources,
channel members, customers, investors, bankers, shareholders, and
government agencies—would help a firm prepare a strategic profile in
terms of current strategies, resource strengths, capabilities and competitive
shortcomings etc.
The information obtained through competitor analysis often helps a firm,
understand, interpret, and predict its competitor’s actions and initiatives.

IV. BUSINESS ENVIRONMENT

Micro Environment
Micro Environment is defined as the nearby environment, under which the
firm operates. The micro environment in marketing includes all those
micro factors that affect business strategy, decision making and
performance. It consists of those elements which are controllable by the
management.
 Components of Micro Environment

Customers

Media Competitors

Components
of Micro
Employees Environment
Suppliers

Marketing
The general
intermediaries
public

1. Customers
The customers are the central part of any business as they tend to attract
and retain most of the customers to generate revenue. Therefore,
organizations must adopt a marketing strategy that attracts the potential
customers and retains the existing customers by taking into consideration
the wants and needs of customers and by providing the after sales
services and value-added services.

2. Competitors
The competitors of an organization can have a direct impact on business
strategies. The organization must know how to do a competitive analysis
of competitors and have a competitive advantage. An organization must
understand, what value added services their competitor is providing or
the unique selling point of their competitors. How they can differentiate
from their competitors. What benefits a company can offer to the
customers which competitors does not offer.

3. Suppliers
Actions of a supplier can influence the business strategy, as they provide
the materials for production. For instance, if their services will not
reasonable and timely that will affect the production time and the sales
due to delayed process of production.

4. The general public

The organisation has a duty to satisfy the public. Any actions of a
company must be considered from the angle of the general public and
how they are affected. The public have the power to help you reach goals;
just as they can also prevent from achieving them.

5. Marketing Intermediaries
 If the product the organisation produces is taken to market by 3 rd party
resellers or market intermediaries such as retailers, wholesalers, etc. then
the marketing success is impacted by those 3rd party resellers. For
example, if a retail seller is a reputable name, then this reputation can be
leveraged in the marketing of the product.

6. Employees

Skilled employees can help an organization to achieve organizational

goals and objectives. As skilled and experienced employees have
expertise to support organization to get success. The training and
development process helps the employees to work effectively and
efficiently in order to achieve the organizational goals, specifically in
service sector.

7. Media
The way media acts can make or break an organization. Organization
should manage to keep a good relationship with media as whatever it
shows will directly influence the organization business. If media will
show positive aspect, this will increase the business of organization and
vice-versa.
Macro Environment

Macro Environment refers to the general environment, that can affect the
working of all business enterprises. It consists of all the forces that shape
opportunities, but also pose threats to the company and and affect the micro-
environment.

Component s of M acro Environment

1. Demographic forces

Different market segments are typically impacted by common

demographic forces, including country/region; age; ethnicity; education
level; household lifestyle; cultural characteristics and movements.

2. Economic factors
The Economic forces relate to factors that affect consumer purchasing
power and spending patterns. The economic environment can impact
both the organisation’s production and the consumer’s decision-making
process.

3. Technological factors
The skills and knowledge applied to the production, and the technology
and materials needed for production of products and services can also
impact the smooth running of the business and must be considered.

4. Political and legal forces

 Sound marketing decisions should always take into account political
and/or legal developments relating to the organisation and its markets.

5. Social and cultural forces

The Socio-Cultural forces link to factors that affect society’s basic
values, preferences, and behaviour. The basis for these factors is formed
by the fact that people are part of a society and cultural group that shape
their beliefs and values.

6. Natural/physical forces
The Earth’s renewal of its natural resources such as forests, agricultural
products, marine products, etc must be taken into account. There are also
the natural non-renewable resources such as oil, coal, minerals, etc that
may also impact the organisation’s production.

Micro and macro environments have a significant impact on the success of

marketing campaigns, and therefore the factors of these environments should
be considered in-depth during the decision-making process of a strategic
marketer. Considering these factors will improve the success of an
organisation’s marketing campaign and the reputation of the brand in the
long term.

V. DECISION-MAKING
It is the process of choosing a course of action from among alternatives to
achieve a desired goal

➢ Process of identifying and choosing alternatives

➢ According to Haynes and Massie, “Decision-making is a process of
selection from a set of alternative courses of action which is thought to
fulfill the objectives of the decision more satisfactorily than others.”
DECISION MAKING PROCESS
Decision-making Process

1. Identify the decision

To make a decision, you must first identify the problem you
need to solve. Try to clearly define the nature of the
decision you must make.

2. Gather relevant information

Once you have identified your decision, it’s time to gather the
information relevant to that choice. Do an internal assessment,
seeing where your organization has succeeded and failed in
areas related to your decision. Also, seek information from
external sources, including studies and market research.

3. Identify the alternatives

As you collect information, you will probably identify several
possible paths of action, or alternatives. You can also use your
imagination and additional information to construct new
alternatives. In this step, you will list all possible and desirable
alternatives.

4. Weigh the evidence / Evaluate the alternatives

Weigh the evidence for or against said alternatives. See what
companies have done in the past to succeed in these areas.
Identify potential pitfalls for each of your alternatives, and
weigh those against the possible rewards.
 5. Choose among alternatives
Select the alternative that seems to be the best. Your choice in
Step 5 may very likely be the same or similar to the alternative
you placed at the top of your list at the end of Step 4.

6. Take action
You’re now ready to take some positive action by beginning to
implement the alternative you chose in Step 5. Once you’ve
made your decision, act on it! Develop a plan to make your
decision tangible and achievable.

7. Review your decision

In this final step, consider the results of your decision and
evaluate whether or not it has resolved the need you identified in
Step 1. If the decision has not met the identified need, you may
want to repeat certain steps of the process to make a new
decision.

THEORIES OF DECISION-MAKING
1. Perfect Rationality / The Rational Economic Man Model (The
classical Theory)
❖ Rationality implies a consistent and value maximising choice
❖ Rational business decision effectively and efficiently assures the
attainment of aims
❖ Selecting the best solution to the problem
❖ it is idealistic and advocates perfect and fully scientific decisions

Based on the following assumptions

➢ Clear and well-defined goal
➢ Fully objective and rational
➢ Can identify the problem clearly and precisely
➢ Knows all the alternatives available and the consequences
➢ Knows the best consequence
➢ Has the full freedom to choose the alternative

2. Bounded Rationality / The Administrative Man Model ( The

Behavioral Theory)
➢ Prof. Herbert Simon, The Principle of bounded rationality to
explain the decision-making behavior in real life.
➢ Due to several constrains, managers are unable to make perfectly
rational decisions.
➢ It is descriptive model
 Implications
❑ Does not make an exhaustive search for alternatives
❑ Does not search for best solution but satisfactory
❑ Does not have complete knowledge of alternative course of action
and their consequences

Perfect Rationality and Bounded Rationality

A Comparison
S.N Perfect Rationality Bounded Rationality
1. Maximizes - Selects the best Satisfies - Looks for a course of action
alternatives that is satisfactory

2. Deals with the ‘ real world ‘ in all its Recognizes that the world he perceives
complexity ( He is rational) is a drastically simplified model of the
buzzing, blooming confusion that
constitutes the real world

3. Rationality requires a complete Knowledge of consequences is always

knowledge and anticipation of the fragmentary. Since these consequences
consequences that will follow on lie in the future, Imagination must
each other supply the lack of experienced feeling

4. Rationality requires a choice among In actual behavior only a few of all

all possible alternative behaviors possible alternatives ever come to mind

Techniques to Decision-making
u Probability Theory uLinear Programming

u Game Theory u Simulation (Monte

Carlo Technique)
u Queuing Theory
(Waiting line Theory) u Network Analysis
u Replacement
Theory u Decision Tree
GROUP DECISION-MAKING

Definition
The Group Decision Making is the collective activity wherein several
persons interact simultaneously to find out the solution to a given
statement of a problem. In other words, group decision making is a
participatory process wherein multiple individuals work together to
analyse the problem and find out the optimum solution out of the
available set of alternatives.