LECTURE NOTES

PRINCIPLES OF MANAGEMENT
UNIT-2

Topic: Nature, Scope, Objective and Significance of Planning,

Elements and Steps of Planning
Planning is the conscious, systematic process of making
decisions decisions about goals and activities that an organization will pursue
in the future.

A plan is a pre-determined course of action. Planning is essentially a process to

determine and implement actions to achieve organizational objectives.

Planning involves the task of deciding in advance –

 What to do?
 How to do?
 When to do it?
 Who will do it?

A manager has to answer four basic questions while formulating a plan –

 Where are we now realistic assessment of current situation?

 Where do we want to be?
 Gap between where we are and where we want to be?
 How do we get there?

Nature of Planning

 Planning is goal oriented – Plans arise from objectives. Objectives

provide guidelines for planning.
 It is a primary function – Planning provides the basis foundation from
which all future management functions arise.
 It is persuasive – It is required at all levels of management. It is not an
exclusive function of any management level or department. Managers
have to plan for every change that occurs in an organization. However,
the scope of planning differs at all levels and among different
department.
  It is mental activity – Planning is a mental process involving –
imagination, foresightedness and sound judgment. Plans are based on
careful analysis of internal and external factors influencing business
activities. It is carried out in a logical and systematic manner.
 It is a continuous process – It is an ongoing process of adapting the
organization with the changes in business environment. Since a business
exist in a dynamic environment it is necessary to continuously plan
based on changing business needs and situations.
 It involves choice – it is essentially a choice among various alternative
course of action. A manager has to select the best alternative after
careful analysis and evaluation.
 It is forward looking – Planning means looking ahead and preparing for
the future. It involves analysis of the future needs and requirements of
the business and preparing for it.
 It is flexible – Planning is based on future forecast of events and
situations. Since future is uncertain, plans are flexible enough to adapt
with future change of events.
 It is an integrated process – Plans are structured in a systematic and
logical sequence where each plan or step is highly inter-dependent and
mutually supportive.
 It includes effective and efficient dimensions – Plans aim at optimum
utilization of resources to be efficient and are based on predetermined
objectives to measure effectiveness of the plan.

Elements of a Plan

 Objectives – Objectives are goals established to guide the activities of

the enterprise.
 Policies – A policy is a basic statement that guides action and decision
making. It sets behavioural limits on managers.
 Procedures and Methods – A procedure is a well thought out course of
action. It prescribes the specific way to do a particular job. Methods are
sub units of procedure. They indicate the techniques to be used to make
the procedure effective.
 Rules – A rule specified necessary course of action in respect of a
situation. It prescribes restriction and a definite and rigid course of
action.
 Strategy – It is a plan of action designed to achieve long term or overall
aim.
 Programs – Programs are precise plans of action followed in proper
sequence in accordance with objectives, policies and procedures.
 Budgets – A budget is an estimate of men, money, material and machine
required for successful implementation of plans.
  Projects – A project is a particular job that needs to be done in
connection with the general programme.

Planning Process

(1) Establishment of objectives

It involves identification of goals and objectives of the organization by carefully

examining the internal and external environment affecting the business.

(2) Developing premises

Premises are assumptions about the environment in which plans are made and
implemented. Thus, assumptions about market demand, cost of raw material,
technology to be used, population growth, government policy etc. are to be
made while formulating a plan.

(3) Evaluating and selection of alternatives

Changes in the external environment pose different alternatives for

organizations to carry out a particular task. Different alternatives are
evaluated against factors like costs, risks and benefits involved in following a
specific course of action and the best alternative is chosen.
(4) Formulating derivative plans

Derivative plans are secondary plans formulated to support the basic plan. E.g.
Detailed plans formulated for various departments, units, activities etc.
Derivative plans indicate the time schedule and sequence of performing
various tasks.

(5) Securing cooperation and participation

Manager must involve people from various departments and take their
suggestions and criticisms to rectify the defects in the plan if any. Participation
of employees in formulation of plans motivates them to carry out the plan with
best of their abilities.

(6) Providing for follow up

Plans are constantly reviewed to ensure their relevance and effectiveness with
the changing dynamics in the business environment. It helps to develop sound
plans for the future and avoiding mistakes that surface after or while
implementing a plan.

Approaches to Planning

Top-down approach

 Authority and responsibility is centralized at the top.

 The top management defines the mission and lays down strategies and
plan of action required to achieve stated goals.
 The blueprint of the plan is passed on to the people working at lower
levels who do not participate in the planning process.
 The success of this approach depends upon the qualification, experience
and capabilities of top management.

Bottom-up approach

Lower-level managers are responsible for preparation and implementation of

plans (make functional plans which are approved by top management)

Composite approach

In such a approach the lower and middle management is responsible of

drafting out plans in accordance with guidelines and boundaries stated by the
top management. Every plan is up for a discussion and debate and a middle
path is chosen to facilitate smooth implementation of plans.
Team approach

In such a approach a team of managers having relevant experience and skills in

various functional areas are assigned the job of planning. The plans are then
approved by the top management.

Types of Planning
Strategic Planning Operational Planning
Time Horizon 5 years or more Under a year
Adapt to changes in Implement internal
Purpose
external environment goals
Overall organizational Internal tasks and
Activity controlled
performance operation
Decision making Many decisions Focus on one decision
Organizational level Middle and lower
Top management
involvement management
Basis of planning Judgmental Exact data & standards
Predictability Uncertain Highly certain
Accuracy 25 – 30% 80-90%
Management function Planning & forecasting Controlling
Control over outcome Less control Complete control

Tactical or coordinated planning

 Less detailed than short term plans

 Concerned with implementation of strategic plans by coordinating the
work of different departments
 Integrate all organizational units based on results obtained by
implementing short term plans
 Ensures commitment to strategic plans
Formal & Informal Planning

 Formal – It is a well planned document with written record of what the

organization intends to do within a given time frame.
 Informal – It is an unstructured, poorly designed plan which are orally
communicated and not recorded.

Functional & corporate Planning

 Corporate – It is a comprehensive plan that outlines the broad objectives

of a company.
 Functional – It involves planning for a particular unit. Deals with parts
such as – marketing, finance, production, HR in a related manner.

Proactive & Reactive Planning

 Proactive – Managers anticipate the challenges and risks of the future

and prepare alternative plans and take suitable steps in order to adapt
with unforeseen changes.
 Reactive – Managers plan to react to an external event.

Importance of Planning

 It provides direction.
 It focuses on organizational objectives and goals
 It helps in optimum utilization of resources
 It reduces risks of uncertainty
 It facilitates decision making
 It encourages innovation and creativity
 It facilitates control
 Establishes a sound organization
 Improves standard of living of people
 Reduces costs
Topic: Decision Making Organizing Principles
What Is Management Decision Making?

Management decision-making identifies problems, evaluates alternatives, and

makes choices to attain organizational goals. It's a crucial aspect of running a
business or organization effectively, as management decisions can significantly
impact various aspects such as operations, finances, human resources, and
overall performance.

Factors Influencing Management Decision-Making

Internal Factors

 Organizational Culture: The organization's values, beliefs, and norms

can influence decision-making processes.

 Organizational Structure: The hierarchy, division of labor, and

communication channels affect how decisions are made and
implemented.

 Resources: The availability of financial, human, and technological

resources can limit or expand decision-making options.

 Leadership Style: The leadership approach of top management

influences decision-making processes and outcomes.

External Factors

 Economic Conditions: Factors such as inflation, unemployment rates,

and GDP growth can impact decision-making, especially in areas like
budgeting and investment.

 Market Conditions: Customer preferences, competition, and industry

trends affect decisions related to marketing, pricing, and product
development.

 Legal and Regulatory Environment: Laws and regulations at local,

national, and international levels influence decisions regarding
compliance, risk management, and business operations.
  Technological Changes: Advances in technology can create
opportunities or threats that require managerial decisions related to
innovation, automation, and digital transformation.

 Political Environment: Government policies, stability, and geopolitical

factors can affect decision-making, particularly in international
expansion and trade.

Individual and Group Dynamics

 Decision-Maker Characteristics: Personal traits, experiences, biases,

and cognitive limitations can influence how managers perceive and
analyze information, leading to different decision outcomes.

 Group Dynamics: Groupthink, power dynamics, and communication

effectiveness can influence decision-making within teams or
committees.

Risk and Uncertainty

 Risk Tolerance: Management's willingness to take risks affects

decision-making, particularly when considering uncertain outcomes.

 Information Availability: The quality, relevance, and timeliness of

information impact decision-making effectiveness, especially in
complex or ambiguous situations.

Ethical Considerations

Ethical Standards: Moral principles and values guide decision-making and

affect choices related to social responsibility, sustainability, and stakeholder
interests.Rational Decision Making vs. Intuitive Decision Making

Here's a comparison between rational decision-making and intuitive decision-

making:

Aspect Rational Decision Making Intuitive Decision Making

 Decision-making process Decision-making process
Definition based on systematic analysis based on gut feelings,
and logic instincts, and experience

Step-by-step approach Often involves quick,

involving gathering, analyzing, unconscious processing of
Process
and evaluating information information without
before making a decision conscious deliberation

Emphasizes logical reasoning, Relies on intuition, pattern

Analysis data analysis, and problem- recognition, and past
solving techniques experiences

Relies heavily on factual Incorporates both factual

Information
information, data, and information and subjective
Use
evidence perceptions

Effective for complex decisions

Effective for quick decisions
Complexity requiring thorough analysis
in situations where time and
Handling and consideration of multiple
resources are limited
factors

Can be efficient in situations

May be time-consuming and
Time and where quick decisions are
resource-intensive due to
Resources needed, saving time and
extensive analysis
resources

Certainty Aims to minimize uncertainty More comfortable with

 by making decisions based on uncertainty, often making
known information and decisions in ambiguous or
probabilities uncertain situations

Involves assessing risks, Relies on instincts to assess

Risk
probabilities, and potential risks and make decisions
Management
outcomes systematically under uncertainty

Generally leads to more Outcomes may be less

Outcome predictable outcomes due to predictable due to reliance
Predictability systematic analysis and on intuition and subjective
planning judgments

Decision-making may be
Typically involves multiple
Decision-Maker more individual-centric,
stakeholders and structured
Involvement relying on the intuition of
decision-making processes
the decision-maker

Crisis management,
Strategic planning, financial
Examples emergency response,
analysis, investment decisions
creative problem-solving

What is Span of Control?

The span of control refers to the number of employees a supervisor manages.

It’s like a manager’s team size. The span of control is also called the span
of management, span of supervision, or span of authority.

In the past, managers had fewer subordinates, but with technology, they can
handle more. Hierarchical organizations had small spans, but flatter structures
increased the span. Nowadays, non-hierarchical setups are emerging, affecting
the concept’s importance.

The ideal span varies, based on factors like the organization’s structure,
technology, and managerial abilities. No perfect theory exists due to these
complexities. Elliott Jaques suggests managers handle as many direct reports
as they can know personally.

In short, a span of control helps managers understand their team size and
impacts delegation and changes in organizational structures.

Characteristics of Span of Control

some characteristics/features of the span of control.

Quantity of Subordinates

The span of control means the number of employees a manager or supervisor

is responsible for overseeing. Imagine it as the size of a manager’s team,
indicating how many people are directly reporting to them.

Organizational Structure

The span of control is influenced by the company’s structure. In hierarchical

setups, managers typically have fewer subordinates, while flatter organizations
allow for wider spans, enabling managers to handle more employees.

Technology Impact

Advances in technology have expanded the span of control. With efficient tools
and communication platforms, managers can effectively supervise more
subordinates, streamlining their tasks.

Decision-making Speed

A wider span of control can speed up decision-making. As communication is

direct and streamlined, important information reaches decision-makers faster,
allowing for quicker responses to challenges and opportunities.

Optimal Range

Determining the ideal span of control is complex and varies for each
organization. It depends on factors like the manager’s abilities, the nature of
work, and employee competencies. There is no one-size-fits-all approach, and
it requires careful evaluation to find the right balance between effective
supervision and delegation.

Types of Span of Control

Usually, the span of control types includes two – a wide and narrow span of
control.

Wide Span of Control

A wide span of control means a manager oversees a larger number of

subordinates. In simpler terms, they have a big team to manage. It’s common
in flatter organizations with fewer management layers.

With efficient technology and capable managers, a wide span is manageable,

promoting faster communication and decision-making. However, it requires
effective delegation and may not suit every situation, as some employees
might need more personalized supervision.

Narrow Span of Control

A narrow span of control means a manager supervises only a few subordinates,

leading a smaller team. It’s typical in hierarchical organizations with multiple
management layers. With fewer direct reports, managers can provide more
personalized attention and guidance.

However, communication may take longer, and decision-making could be

slower. It suits complex tasks or less experienced employees who need closer
supervision. Overall, a narrow span allows for greater control but may require
more managerial resources.

Factors Affecting Span of Control

The span of control in organizations is affected by many factors. Some of them

include the followings:

Nature of Work

The complexity and type of work influence the span of control. If tasks are
repetitive and straightforward, a wider span may be possible. However,
complex work that requires closer supervision may lead to a narrower span.
Manager’s Capability

A manager’s skills and experience affect their ability to handle a larger team.
Capable managers with strong leadership skills can manage more subordinates
effectively, while inexperienced managers may need a smaller span.

Employee Skills

The competencies of employees play a role in determining the span. Well-

trained and independent employees can be managed in larger groups, while
less experienced ones may require more guidance in smaller teams.

Organizational Structure

The hierarchical setup impacts the span. Tall structures with multiple
management levels often have narrower spans, whereas flatter structures
allow for wider spans.

Technology

Advanced tools and communication platforms enable the efficient

management of larger teams. With the right technology, managers can handle
more subordinates without compromising effectiveness.

Manager’s Other Responsibilities

If a manager has additional administrative tasks or responsibilities outside their

team, it may limit the span of control. Divided attention could impact effective
supervision.

Importance of Span of Control

An effective span of control provides various benefits to organizations. The

followings are its some importance.

Efficient Communication

An effective span of control ensures smooth communication flow within the

organization. With the right number of subordinates, managers can relay
information promptly, leading to quicker decision-making and response to
challenges.
Optimal Resource Allocation

A well-balanced span of control allows for efficient resource allocation.

Managers can effectively delegate tasks to their team members, maximizing
their skills and expertise while avoiding unnecessary workload jams.

Enhanced Employee Engagement

A suitable span of control fosters better manager-subordinate relationships.

With manageable team sizes, managers can provide personalized attention,
fostering employee satisfaction, motivation, and engagement.

Improved Decision-Making

An appropriate span of control promotes faster decision-making. Managers

can gather input from their team members and use it to make informed
choices, leading to better outcomes and adaptability in dynamic environments.

Streamlined Supervision

With the right span, managers can strike a balance between control and
autonomy. They can oversee their subordinates effectively, ensuring tasks are
performed to standard, while also empowering employees to take ownership
of their responsibilities.

What is Line and Staff Organisation?

Line and staff organisation is a way for businesses and organisations to

structure themselves. It has two main parts: the line structure and the staff
structure. The line structure is all about the chain of command. It includes the
managers who make decisions and oversee the day-to-day work. The
employees report directly to these managers and do the tasks. The staff
structure is about having specialised people who support the line managers
and employees. These specialised staff members know a lot about specific
things like finance, HR, marketing, or legal matters. They give advice,
guidance, and specialised help to managers to make good decisions and solve
problems. The line and staff organisation helps make things run smoothly and
efficiently by using everyone’s skills and knowledge effectively.

Features of Line and Staff Organisation

A Line and Staff Organisation has some unique parts that make it stand out:
1. Mix of Doers and Advisors: This setup combines the doers, who are the
line managers, and the advisors, who are in the staff positions. It’s a team
where everyone has a specific role.
2. Clarity on Who’s in Charge: In this setup, the line managers are in charge.
They’re the ones responsible for getting the company’s main goals done.
3. Staff are Helpers: The staff’s roles are to help and give advice. They don’t
call the shots, but they’re important because of their expert knowledge.
4. Expert Help: Staff positions provide expert help in specific areas like money
matters, hiring people, legal stuff, and technical work. This means that the
line managers can get expert advice when needed.
5. Flexible Setup: This kind of organisation is flexible because you can add or
remove staff roles based on what the company needs.
6. Better Decision-Making: When the line managers’ practical know-how is
combined with the staff’s expert knowledge, one can get the best of both
worlds. This can lead to better decisions.
7. Chance of Conflicts: There can be some clashes between line and staff
roles because of the two types of authority. This is especially true if it’s not
clear who’s supposed to do what or if communication isn’t good.
8. Reliance on Staff Advice: The line managers often need to rely on the
advice of the staff. This means that the staff roles are really important for the
company to work well.

Suitability of Line and Staff Organisation

The suitability of a line and staff organisation depends on various factors and
needs to be carefully considered. While it offers advantages, it may not be
the best fit for every organisation.
1. Size and Complexity: The line and staff structure works best for larger
organisations with complex operations. It provides the necessary support and
expertise to handle various functions.
2. Expertise and Support Needs: If an organisation requires specialised
knowledge in areas like finance, HR, or marketing, the line and staff structure
can be helpful. Staff members with expertise in these areas can offer valuable
support and guidance.
3. Clear Role Differentiation: For the line and staff organisation to work
effectively, there should be a clear distinction between line managers and
staff experts. Line managers should be comfortable delegating tasks and
seeking advice, while staff members need to provide support without
overstepping their boundaries.
4. Effective Communication and Collaboration: Success in a line and staff
organisation relies on good communication and collaboration between line
managers and staff members. If the organisation fosters open
communication, respect, and a willingness to work together, this structure
can be successful.
5. Organisational Culture: The suitability of a line and staff organisation
depends on the organisation’s culture. If the organisation values teamwork
and shared decision-making, and appreciates the expertise of staff members,
this structure can fit well.
6. Flexibility and Adaptability: Organisations that need to be flexible and
adaptable to changing circumstances may find the line and staff structure
suitable. Staff experts can provide specialised knowledge and skills as
needed, allowing the organisation to adjust quickly.
7. Organisational Goals and Strategy: It’s important to align the line and staff
structure with the organisation’s goals and strategy. If including staff experts
helps achieve strategic objectives and improves overall performance, then
this structure is a good choice.

Advantages of Line and Staff Organisation

1. Clear Chain of Command: It has a clear and direct chain of command. This
helps in decision-making, task delegation, and accountability.
2. Specialised Expertise: It includes specialised staff members with expertise
in areas like finance, HR, marketing, or law. They offer valuable advice and
support to managers, helping them make better decisions.
3. Efficiency and Productivity: With specialised staff, the organisation
becomes more efficient and productive. Staff members handle research,
analysis, planning, and coordination, allowing managers to focus on their
main responsibilities.
4. Better Decision-Making: Staff experts contribute to better decision-
making. They provide insights, alternative perspectives, and expert advice,
leading to improved evaluation, risk management, and identification of
opportunities.
5. Flexibility and Adaptability: The line and staff organisation is flexible and
adaptable to changing circumstances. Staff members can be added or
removed based on the organisation’s needs, adjusting expertise and
resources quickly.
6. Career Development: Staff positions offer career growth opportunities.
Staff members can specialise, acquire knowledge and skills, and progress
without transitioning into management roles.
7. Focus on Core Competencies: Employees can focus on their strengths.
Managers oversee operations and goals, while staff members provide
specialised support and services.
8. Improved Organisational Control: It enhances control and coordination.
Managers make decisions, and staff members assist in executing policies,
procedures, and strategies effectively.
9. Enhanced Communication: It promotes effective communication within
the organisation. Managers and staff collaborate, exchange information, and
share knowledge for better coordination, problem-solving, and innovation.

Disadvantages of Line and Staff Organisation

While a Line and Staff Organisation structure has its benefits, it also comes
with certain disadvantages:
1. Communication Challenges: The line and staff structure can create
communication problems. Line managers and staff members may struggle to
share information effectively, leading to misunderstandings and delays in
decision-making.
2. Potential Conflict: Differences in perspectives, authority, and priorities can
cause conflicts between line managers and staff members. Line managers
may feel undermined, while staff members may feel ignored. This conflict can
hinder collaboration and overall organisational effectiveness.
3. Power Struggles: The presence of staff specialists can sometimes lead to
power struggles. Line managers may resist taking advice from staff members,
creating an imbalance in decision-making authority and resistance to change.
4. Over-emphasis on Staff Roles: Organisations may place too much focus on
staff roles, which can lead to inefficient allocation of resources. Staff
members may become too involved in day-to-day operations instead of
focusing on their specialised areas.
5. Lack of Accountability: The inclusion of staff positions can create confusion
regarding accountability. It may be difficult to determine who is ultimately
responsible for decisions and their outcomes.
6. Complexity and Bureaucracy: The line and staff organisation can introduce
complexity and bureaucracy. Decision-making processes may become slower,
and the organisation may become less agile if multiple layers of approval or
coordination are required.
7. Potential Resistance to Change: Implementing a line and staff structure
may face resistance from line managers and employees who perceive it as a
threat to their authority or job roles. Resistance to change can hinder the
successful adoption of the new structure.
8. Difficulty in Staff Integration: Integrating staff members into the
organisation’s culture and promoting collaboration between line and staff
functions can be challenging. It requires effective communication, respect,
and a supportive work environment.
Delegation and Decentralization

Delegation and Decentralization are two terms which are mostly

misunderstood as the same. Delegation of authority means assigning work to
subordinates and giving them authority to do it. However, Decentralization
means the dispersal of authority throughout the organisation.

What is Delegation?
Delegation of authority means assigning work to subordinates and giving
them authority to do it. Delegation takes place when a superior grants some
discretion to a subordinate. The subordinate must act within the limits
prescribed by the superior. Delegation enables managers to distribute the
workload to others. By reducing the workload for routine matters, they can
concentrate on more important work. It helps to improve the job
satisfaction, motivation and morale of subordinates. It satisfies their needs
for recognition, responsibility and freedom.
What is Decentralization?
Decentralization means the dispersal of authority throughout the
organisation. It refers to a systematic effort to delegate to the lowest levels
all authority except which can be exercised at central points. It is the
distribution of authority throughout the organisation. In a decentralised
organisation, the authority of major decisions is vested with the top
management and balance authority is delegated to the middle and lower
levels.
Difference between Delegation and Decentralization:
Basis Delegation Decentralization

Delegation of authority Decentralization refers to a

means assigning work systematic effort to delegate to
Meaning to subordinates and the lowest levels all authority
giving them authority except which can be exercised
to do it. at central points.

As control is in the
Freedom of hands of superior, less More freedom is given to
action freedom is given to subordinates to take decisions.
subordinates.

This process is done as

This is the result of policy
Status a result of division of
decision of top level.
work.
Basis Delegation Decentralization

It has narrow scope as

It has wide scope as it is
it is limited to the
Scope extended to the lowest level of
superior and his
management.
subordinate.

It aims to enhance the role of

It aims to reduce
Aim subordinates in the
workload of superior.
organisation.

It is a necessary act
It is an optional policy decision
because no individual
Nature and is done at the discretion of
can perform all tasks
top management.
on his own.

It is responsibility of It is the responsibility of top-

Responsibility
every manager. level management.

The maximum
Authority is systematically
Authority authority is retained at
distributed at every level.
top level.

Effective Organizing
Introduction: -

Organizing is the second function of management following planning.

Organizing process results in a structure of the organization. Organising in
general, means systematic arrangement of activities. Organising synchronises
and combines human, physical and financial resources. Organising as a process
relates to sub-dividing and grouping of activities.
Organising becomes necessary when more than one person work towards
achieving some common objective. In that case, it is important to define the
role of each person, define his authority and responsibility and coordinating
and synchronizing the team as a whole to attain the objectives. Organising
does this job. Without organising it would not be possible to attain the
objectives since no one would be clear as what he is supposed to do. There
would be overlapping and clashes over the work. Organising determines the
work to be done by the employee and give him the right to use materials,
machinery, equipment, etc.

The work of the organisation is divided into a number of job positions.

Relationships are then established among the different positions in the
organisation. The outcome of the organising process is a set of formal
relationships which is known as organisation structure. In this lesson, we shall
study about the process of organising which leads to the setting up of an
organisation structure.

Meaning and definition of organizing: –

The word organization is derived from the word ‘organism’. As is the case with
organism, each part has its own role, working independently, but has a definite
relationship with the main body Similarly, under organising, the entire business
is divided into different parts and perform their own function but they are all
related to the main objectives of the business. Thus, organization means
dividing the whole organisation into various departments and departmental
positions and the relationship between them. Moreover, in order to run their
work smoothly, their authority and responsibility have to be prescribed.
It must be made clear that the need for an organization arises only when there
are a couple of people working in the enterprise. If there is only one person, he
is expected to perform all the functions single-handedly and there will be no
need to divide the work. In the absence of division of work, organization is
meaningless.

Definitions of organization: –

Different scholars have been given different views about the meaning of
organization.

According to Haney, “Organization is harmonious adjustment of specialised

parts for the accomplishments of some common purpose or purposes.

According to Haimann, “Organization is the process of defining and grouping

the activities of the enterprise and establishing the authority relationship
among them.”

According to Mc Farland, “An identifiable group of people contributing their

efforts towards the attainment of goals is called organization.”

According to Chester Barnard, “Organizing is a function by which the concern

is able to define the role positions, the jobs related and the co-ordination
between authority and responsibility. Hence, a manager always has to
organize in order to get results.
A study of the above-mentioned definitions makes it clear that organization is
a process to define and classify the functions to be performed for the
attainment of the objectives of the organization, and also establish relationship
among different organisational positions.

Before we get into further discussion, it is important to understand the

meaning of Responsibility, Authority, and Accountability.

(i) Responsibility: Responsibility is the obligation of a subordinate to perform

the assigned duties. When a subordinate accepts duties, he has to perform
those duties in the manner desired by the superior.

(ii) Authority: Authority includes the right to take decision, right to issue
orders and the right to take action if orders are not carried out. When a person
is given certain duties to perform, he must be given necessary authority also to
perform those duties as well. Otherwise, he will not be able to do the task
assigned. An engineer for example, who is responsible for the completion of a
project, has the authority to command his subordinates, procure the needed
material, seek assistance of experts otherwise, he will not be able to work
effectively. No person should be given any authority unless certain duties have
been assigned to him. Authority should always follow responsibility otherwise
authority could misused.

(iii) Accountability: After assigning duties and granting authority, one more
relationship gets created which is known as accountability. Accountability
means answerability. Each subordinate becomes answerable to his superior for
performance of work and use of authority. Accountability flows upward and
cannot be delegated. It is absolute. Each subordinate is accountable to his
superior who in turn is accountable to his own superior. In this way, every
person becomes accountable to top management. Accountability ensures that
the work is done as planned and authority is properly used. An important
principle of accountability is the principle of single accountability. A person
should be accountable to one superior only. If a person is accountable to two
or more persons, he may avoid the work.

Characteristics of organizing: –

From the study of the various definitions given by different management

experts we get the following characteristics of organizing.

(1) Division of work: Division of work is the basis of an organization. There can
be no organization where work is to be done by an individual. Under division of
work the entire work is divided into many parts. Each part of it is further sub
divided into sub- parts. Individuals are assigned their part of work. This piece of
work when performed repeatedly, gradually makes that person an expert.
Thus, under organization an effort is made to achieve the objectives
successfully by way of division of work.

(2) Coordination: Organising coordinates the work of different persons for the
attainment of objectives. Under it the entire work is divided and subdivided
into different job positions and their authority and responsibility is clearly
defined. Thus, superior subordinate relationships also get established.
Everyone knows his role in the organisation and there are no overlapping and
clashes over work responsibilities.

(3) Plurality of persons: Organization is a group of many persons who

assemble to fulfil a common purpose. An organization structure cannot be
created (or need not be created) when there is only an individual to perform
the entire work.

(4) Common objectives: Organisation aims at achieving the common

objectives. There are various parts of an organization each performing their
own functions. But each function has been designed to achieve common
objectives.

(5) Well-defined Authority and Responsibility: Under organization,

relationships are established between different positions right from the top to
the bottom. It is clearly specified as to what will be the responsibility of every
position and adequate authority is given to fulfil the responsibility assigned.
There should be parity between authority and responsibility. If responsibility is
more than authority, work cannot be performed and if authority is more than
responsibility, there will be misuse of authority.

(6) Organization is a structure of relationship: Organising defines the role

positions and also relationship between these positions in the organization and
defines responsibility and authority for the performance of these functions. It
establishes superior subordinate relationships. This way, it establishes a
structure for achieving organisational goals.

Importance of Organizing

The importance of organizing becomes clear with the help of the following
points:

(1) Benefits of Specialization: Under organizing all the activities are subdivided
into various works or jobs. Each sub work is assigned to competent persons
who become experts by doing a particular job time and again. In this way,
division of work leads to specialization.
(2) Clarity in Working Relationship: Organizing clarifies the working relations
among job positions. It establishes authority and responsibility. It specifies who
is to report to whom. Therefore, communication becomes effective. It also
helps in fixing accountability.

(3) Optimum Utilization of Resources: Organizing leads to optimum utilization

of resources. Each job positions is clearly defined along with its authority and
responsibility. It avoids confusion and duplication of any job. Consequently,
there is optimum utilization of all the available resources e.g., material,
machine, financial, human resource, etc. in the organization.

(4) Adaptation to Change: Organizing process makes the organization capable

of adapting to any change. This becomes possible only because there exists a
clear network of relationships right from the top to the lower level. It also
makes communication of any sort easy and effective.

(5) Effective Administration: organizing makes administration effective by

clarifying the authority of each position and its responsibility. Everyone also
knows to whom he is accountable to. In this way, the confusion on authority is
put to an end and effective administration becomes possible.

(6) Development of Personnel: Organizing helps develop personnel through

delegation of authority. A superior can delegate his authority to subordinate. It
provides the subordinates with the opportunity to take higher level decisions.
It not only motivates them but also gives them a chance to show their
creativity. Consequently, it helps them to grow and develop.

(7) Expansion and Growth: The process of organizing allows the employees the
freedom to take decisions which helps them to grow. They are always ready to
face new challenges. This situation can help in the development of the
enterprise. This helps in increasing the earning capacity of the enterprise which
in turn helps its development.

Principles of organization or Requisites of an Ideal and Sound Organization: –

1. Principle of unity of objectives: All activities in an organization should aim at

achieving common goals. All departmental goals must be clearly defined and
should aim at achieving the overall goal of organization. Also, efforts must be
made to synchronize the individual goals with organizational goals.

2. Principle of specialization: Sound and effective organization rests on

specialization. When an employee takes special type of knowledge and skill in
any area, it is known as specialization. By dividing the work into small tasks,
each employee is required to perform a task repeatedly. In this way, he
becomes an expert in his area and benefits the organization by specializing in
it.

3. Principle of coordination: Organization establishes coordination.

Coordination is obtained by group efforts with clearly defined roles that
emphasize on unity of action.

4. Principle of parity of authority and responsibility: Authority is the power or

right to give orders, make decisions, and enforce obedience. Responsibility is
the obligation to perform the duties assigned. There should a balance between
them otherwise more authority than required will lead to abuse of authority.
Similarly, without adequate authority, responsibility cannot be fulfilled
effectively as the employee will not be having powers to make decisions and
enforce his orders.

5. Principle of delegation: Process of transferring authority and creation of

responsibility between superior and subordinates to accomplish a certain task
is called delegation of authority. A superior can
delegate authority but not responsibility. Responsibility is absolute. The
ultimate responsibility vests with him only. He would be answerable to his
superior for non performance of work by his subordinates. Also, the principle
of parity of authority and responsibility should not be disobeyed in delegation
as well.

6. Scalar Principle: Under this principle all the people working in the
organization should be bound with one another from top to bottom in a
vertical chain. For example, Board of Directors > General Manager >
Departmental Manager > Supervisor > Foreman > Workers.

7. Principle of unity of command: Subordinates should receive orders from

single superior at a time and all subordinates should be accountable to that
superior only. More superiors lead to confusion, delay and shirking of work.

8. Principle of span of control: Span of control refers to the number of

employees under the direct supervision of the superior. Larger span of control
is more difficult to supervise and coordinate. However, it depends upon a
number of factors like the ability of the superior and nature of his work etc.
Span of control determines the number of levels in the organisation.

9. Principle of flexibility: Organizational structure must be flexible considering

the environmental dynamism. Sometimes, change may need to be
incorporated in the organization structure due to changes in the
environmental factors and in that condition, organization structure should
have capability to permit the change.
10. Principle of simplicity: This principle emphasizes the simplicity of
organizational structure. The structure of organization should be simple with
minimum number of levels so that its employee can understand duties and
authority easily. Also, simple structure is cost effective and easy to understand.

Steps in the process of organizing

1. Determining the activities to be performed to achieve the objectives of the

organization: After defining the objectives of the organization, as the next
step, it necessary to determine the activities to be performed to achieve those
objectives. At this step, a list of activities is prepared and each major activity is
divided into smaller parts. For instance, manufacturing garments may require
activities such as purchase of raw material, purchase of manufactured goods,
production, quality control, advertisement, sales, finance, accounting,
arrangement of employees and research & development etc.

2. Grouping Similar Activities: The next step is to group the activities on the
basis of similarity or relatedness. This is known as classification of activities.
The activities of same nature are grouped together and assigned to a particular
department. e.g., purchase of raw material, purchase of manufactured parts,
etc. are given to the purchase department. Similarly, financial arrangements,
maintenance of accounts can be given to finance department.

3. Assignment of Duties: At this stage, the tasks are assigned to each post. e.g.,
the purchase of raw material and manufactured goods will be assigned under
the purchase manager. In the same way the finance manager will be given the
responsibility of making financial arrangements. While assigning these duties,
it is important to match the nature of the work and the capabilities of the
person to whom the work is assigned. Also necessary authority is assigned to
them for the
performance of work. This is necessary to avoid conflict and confusion and to
ensure that work is performed as planned.

4. Establishing Reporting Relationships: Last step is to define the

interrelationships among various positions. When two or more than two
persons are required for the attainment of common goals, for proper
administration it is important that their interrelationship must be defined very
clearly . One should know as to who he is superior to and who is his
subordinate. For example, the purchase manager will be the superior for all
the employees of the purchase department and subordinate to the general
manager. A clear organizational structure is drawn and all the employees are
made aware of it. This ensures overall control and a coordinated effort
towards the achievements of predetermined goals of business.
Formal and informal organisation

Organizations are basically classified on the basis of relationships. There are

two types of organizations formed on the basis of relationships within an
enterprise. In other words, two kinds of relationship can be established among
the employees, firstly, the relationship that is definite and has been defined
before hand and secondly, those relations which are not definite and have not
been defined before hand. We will now study them in detail.

Formal organization: – A formal organization means an organization in which

the responsibilities, authority and mutual relationships among all the
employees working in an enterprise are clearly defined. This structure of the
organization is created after a lot of deliberation and is based on the division of
work. Each individual knows his relationship with others and knows who is his
superior and who is his subordinate. Formal organization is bound by rules and
procedures and everything is done according to these pre-determined rules
and procedures.

According to Chester Bernard, “An organization is formal when the activities of

two or more persons are consciously coordinated towards a common
objective.”

Main characteristics of Formal Organization: –

(1) It is deliberated created- This organization is deliberated created for the

successful attainment of the objectives of the concern.

(2) It is based on rules and procedures and is Impersonal – Formal organization

it is based on rules and procedures and not on personal relationship but
working relationships.

(3) Formal Authority- In formal organisation, authority is vested in the office or

post for the performance of the responsibility assigned and flows downwards.
It can also be delegated.

(4) Based on division of work- The main foundation of formal organization is

division of work.

(5) Defined Inter-relationship- A formal organization is a system that clearly

explains the inter-relationship between various job positions. Thus, everybody
knows his relationship with other organisational positions and also his
authority and responsibility.
(6) It is more stable- Under this organization changes are not introduced as per
desires but as per major changes in external environment. Though it is flexible
but stable as well.

Informal Organization

According to Chester Bernard, “That organization is informal where the mutual

relations are established unconsciously for common objectives.”

An informal organization is that organization which is not established

deliberately but comes into existence because of common interests, likes,
dislikes and religious and communal relations within the formal set up. The
network of social groups based on friendly relations can be called as informal
organization. It emerges from the formal organization and it is not based on
any rules and procedures. In this organization an individual does not help
another individual in his activities simply because he is responsible for it but
because of friendly relationships. For example, in a formal organization a
communication follows a prescribed path. Communication flows from foreman
to manager through a supervisor but in an informal organization a foreman can
directly communicate to manager as they may share a mutual friendly relation
which may emerge out of any common interest or friendly relationship. Not
only this, a foreman or supervisor can talk directly to the general manager.
Thus, in an informal organization no stringent rules or procedures are followed
but is completely based on mutual friendly relationships.

Main characteristics of Informal Organization

(1) It is not deliberated created: – An informal organization is not deliberately

created but comes into existence on the basis of friendly relationship and
common interests.

(2) No written rules and procedures: No written rules and procedures govern
informal organisation but gradually some norms do emerge informally like
helping the member of their group to find solution to the problems related to
his work or his own self, protecting the members of their community from the
managerial exploitation etc.

(3) It is Personal: – Under this the feelings of individuals are kept in mind and
nothing is imposed upon them.

(4) No formal Authority: – No formal authority relationships exist in an

informal organisation. Relationships are based on mutual friendly relationships
among members.
(5) No place on organization chart: – An informal organization has no place on
the organization chart. Organization chart is a diagram which clarifies the
relationship among various posts established in the organization.

(6) Existence: the existence of informal organisation depends upon the formal
organisation.

For a concern both formal and informal organizations are important. Formal
organization originates from the set organizational structure and informal
organization originates from formal organization. They are the two phases of
same concern.

What is Planning?
Planning is ascertaining prior to what to do and how to do. It is one of the
primary managerial duties. Before doing something, the manager must form
an opinion on how to work on a specific job. Hence, planning is firmly
correlated with discovery and creativity. But the manager would first have to
set goals. Planning is an essential step what managers at all levels take. It
needs holding on to the decisions since it includes selecting a choice from
alternative ways of performance.

Importance of Planning
Planning is definitely significant as it directs us where to go, it furnishes
direction and decreases the danger of risk by making predictions. The
significant advantages of planning are provided below:

 Planning provides directions: Planning assures that the objectives are

certainly asserted so that they serve as a model for determining what
action should be taken and in which direction. If objects are well
established, employees are informed of what the company has to do
and what they need do to accomplish those purposes.
 Planning decreases the chances of risk: Planning is an activity which
permits a manager to look forward and predict changes. By determining
in prior the tasks to be completed, planning notes the way to deal with
changes and unpredictable effects.
 Planning decreases overlapping and wasteful activities: Planning works
as the foundation of organising the activities and purposes of distinct
branches, departments, and people. It assists in avoiding chaos and
confusion. Since planning guarantees precision in understanding and
action, work is conducted on easily without delays.
  Planning encourages innovative ideas: Since it is the primary function of
management, new approaches can take the form of actual plans. It is the
most challenging project for the management as it leads all planned
actions pointing to growth and of the business.
 Planning aids decision making: It encourages the manager to look into
the future and make a decision from amongst several alternative plans
of action. The manager has to assess each option and pick the most
viable plan.

Organizational Planning and Execution in Three Levels - Strategic, Tactical,

Operational

The Strategic Level

The strategy level is the big picture. It is long-term focused and a point where
the executive management focuses on the vision and mission of an
organization. It could be a clearly spelled out two-year to Five-year vision for
the company. The executives are most concerned and involved at this level a
lot more. For IT professionals and IT Leaders, this helps to understand what
direction the company is heading to and how the IT initiatives can support that
path. An important question for the leaders at this level is, "What is the right
direction for the company?"

The Tactical Level

The tactical level is for the mid-term. Depending on the company type, it can
be planned for six months to two years on the time horizon. It can be focused
on specific business departments, unlike the strategic level of planning, which
focuses on the entire company. The tactical level is a middle management
stage where activities and actions are developed to support a company's
strategy. An essential question for the leaders at this level is, " What activities
and projects to be planned in strategic alignment?"

The operation level is for the short-term. This level is focused on day-to-day
running and detail-level processes for specific outcomes. The managers
prepare the operational plan to run the business, and this planning can be for
three to six months. The primary responsibility of the management is to ensure
the day-to-day operations are running as expected and aligned with the
organizational strategy.

So, even though the strategy is created and developed for the entire business
over the long term, the alignment must be ensured through the bottom-up
from day-to-day activities. Therefore, those at the bottom of the organization
hierarchy to the middle management level must always ask: Are our decisions
and actions aligned with the business strategy and vision?

What is the decision-making process?

Decision-making process

Decision making is the process of making choices by identifying a decision,

gathering information, and assessing alternative resolutions.

Using a step-by-step decision-making process can help you make more

deliberate, thoughtful decisions by organizing relevant information and
defining alternatives. This approach increases the chances that you will choose
the most satisfying alternative possible.

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature
of the decision you must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what
information is needed, the best sources of information, and how to get it. This
step involves both internal and external “work.” Some information is internal:
you’ll seek it through a process of self-assessment. Other information is
external: you’ll find it online, in books, from other people, and from other
sources.

Step 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.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you
carried out each of the alternatives to the end. Evaluate whether the need
identified in Step 1 would be met or resolved through the use of each
alternative. As you go through this difficult internal process, you’ll begin to
favor certain alternatives: those that seem to have a higher potential for
reaching your goal. Finally, place the alternatives in a priority order, based
upon your own value system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the
alternative that seems to be best one for you. You may even choose a
combination of alternatives. 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.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the
alternative you chose in Step 5.

Step 7: Review your decision & its consequences

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. For example, you might want to gather more detailed or
somewhat different information or explore additional alternatives.
setting objectives and formulating strategies

Developing Objectives
Objectives are what organizations want to accomplish – the end results they
want to achieve – in a given time frame. In addition to being accomplished
within a certain time frame, objectives should be realistic (achievable) and be
measurable, if possible. "To increase sales by 2 percent by the end of the year"
is an example of an objective an organization might develop. You have
probably set objectives for yourself that you want to achieve in a given time
frame. For example, your objectives might be to maintain a certain grade point
average and get work experience or an internship before you graduate.

Objectives help guide and motivate a company's employees and give its
managers reference points for evaluating the firm's marketing actions.
Although many organizations publish their mission statements, most for-profit
companies do not publish their objectives. Accomplishments at each level of
the organization have helped PepsiCo meet its corporate objectives over the
course of the past few years. PepsiCo's business units (divisions) have
increased the number of their facilities to grow their brands and enter new
markets. PepsiCo's beverage and snack units have gained market share by
developing healthier products and products that are more convenient to use.

A firm's marketing objectives should be consistent with the company's

objectives at other levels, such as the corporate level and business level. An
example of a marketing objective for PepsiCo might be "to increase by 4
percent the market share of Gatorade by the end of the year".

What is Strategy?

Strategy refers to a plan or approach designed to achieve a specific goal. It

involves making choices and decisions about using resources effectively and
overcoming challenges. It helps to determine the best course of action to
achieve long-term success and stay ahead of competitors.
Amazon is a company known for its strategic excellence. Its success lies in its
customer-centric approach and relentless focus on innovation. Strategic
initiatives, such as Prime membership and personalized recommendations,
have propelled it to become a dominant player in eCommerce globally

Strategy formulation

Strategy formulation refers to strategic planning or long-range planning. It is

connected with developing an organization’s mission objectives, strategies, and
policies. This begins with analyzing the situation: finding the strategic fit
between external opportunities and internal strengths. Also, while working
around external threats and weaknesses. As analyzing the strategic factors in
the light of the current situations. Opportunity divided by capacity is the
essence of strategy. A company cannot exploit an opportunity without the
capacity (resources).

his critical process employs various analytical techniques such

as SWOT (Strengths, Weaknesses, Opportunities, Threats), VRIO (Value, Rarity,
Imitability, Organization), PESTEL (Political, Economic, Social, Technological,
Environmental, Legal) etc. It is done to analyse the dissect market dynamics and
pinpoint opportunities. This stage is pivotal in aligning organizational efforts
and resources. It fosters a culture of innovation and adaptability and paving a
roadmap for sustainable growth and success.

Levels of Strategy Formulation

Strategy formulation occurs at various organisational levels. Each focus on
different aspects of the organization’s goals and operations. Here are the
primary levels of strategy formulation:
Corporate-Level Strategy
Corporate-level strategy is the highest level of strategy formulation. It focuses
on the overall scope and direction of the organization. It involves decision-
making by the top management regarding which businesses to engage in and
how to allocate resources among them.
Example: Alphabet Inc., Google’s parent company, formulating a strategy to
diversify its business portfolio beyond search engines into areas like
autonomous vehicles (Waymo) and healthcare (Verily).
Business Level Strategy
Business-level strategy concerns how the organization plans to compete
successfully in specific markets. It involves developing unique value
propositions and competitive advantages.
Example: Toyota adopted a differentiation strategy by focusing on producing
high-quality, reliable vehicles and pioneering hybrid technology with the Prius.
Functional Level Strategy
This strategy focuses on the specific actions. It also includes processes within
various departments (like marketing, finance, operations, etc.) to support the
business-level strategy.
Example: Coca-Cola’s marketing department is developing a global advertising
campaign to strengthen the brand’s presence and appeal to a younger
audience.

Process of Strategy Formulation

Defining Mission and Vision:
This foundational step articulates the organization’s core purpose (mission)
and long-term aspirations (vision). The mission serves as a guiding principle,
delineating the organization’s raison d’être and the value it intends to offer.
Concurrently, the vision paints a picture of what the organization aspires to
become. It serves as a beacon guiding its strategic decisions and actions.
Together, they form the cornerstone influencing the organisation’s culture,
direction, and goals.
Example: Google’s mission to “organize the world’s information and make it
universally accessible and useful” clearly outlines its purpose and the value it
aims to bring to users. Its vision of “a world where information is accessible
and useful” portrays its long-term aspiration to facilitate information
accessibility globally.

Setting Objectives
Once the mission and vision are defined, the next step is establishing concrete
objectives aligning with them. These objectives are specific, measurable,
achievable, relevant, and time-bound (SMART). It serves as milestones that the
organization aims to achieve within a specified timeframe. Setting clear
objectives is crucial as it provides a focused direction. It enables the
organization to channel its efforts effectively towards achieving its mission and
realizing its vision.
Example: A startup setting a SMART objective to achieve a 20% market share in
its niche within the first five years of operation, aligning with its mission to
become a leader in its industry and its vision to revolutionize its sector with
innovative solutions.
Strategy Development
At this juncture, teams brainstorm and develop various strategies. It considers
the organization’s strengths, weaknesses, opportunities, and threats (SWOT).
This stage is crucial for laying a solid foundation for the forthcoming steps. It
ensures the strategies are grounded in a deep understanding of internal and
external environments.
Example: Amazon is leveraging its technology and logistics competency to
expand into new markets and product categories.
Strategy Evaluation and Choice
Following the development phase, the strategies are scrutinized based on their
feasibility and potential effectiveness in achieving the set objectives. This
involves a critical analysis where the pros and cons of each strategy are
weighed. It ensures the adoption of the most promising strategy for
implementation.
Example: Netflix evaluated various content strategies before investing heavily
in original programming to differentiate itself in a crowded market.
Implementation Planning
This phase is characterized by meticulous Planning to pave the way for the
successful implementation of the chosen strategy. It encompasses delineating
responsibilities, setting realistic timelines, and allocating necessary resources.
A well-crafted plan at this stage serves as a blueprint for action in the
subsequent phase.
Example: Tesla outlining a detailed plan for the rollout of its electric vehicle
charging infrastructure, including timelines, budget allocations, and
partnerships.
Strategy Implementation
Strategy implementation implies the transition of strategy from paper to
practice. The organization mobilizes its resources to execute the plan, adjusting
based on real-time feedback and changing circumstances. This stage is vital for
translating strategic visions into tangible actions and achievements.
Example: Starbucks is implementing its strategy of expanding globally by
opening stores in various countries and adapting its menu to suit local tastes.
Monitoring and Control
This stage involves continuously monitoring the strategy’s performance to
ensure alignment with the organization’s objectives and the dynamic market
conditions. It allows for timely interventions and adjustments, helping to
maintain the strategy’s effectiveness and relevance in a fluctuating business
environment.
Example: Coca-Cola regularly monitors the performance of its marketing
campaigns and makes adjustments based on consumer feedback and market
trends.
Feedback and Adjustment
Feedback is a pivotal aspect of this phase, where inputs from various
stakeholders are collected and analyzed. This facilitates necessary adjustments
to the strategy. It ensures it remains attuned to the evolving needs and
preferences of the market, thereby sustaining its effectiveness and relevance.
Example: Apple gathering feedback on the initial version of its iOS software. It
makes adjustments based on user suggestions and identified issues.

Review and Assessment

This final step involves periodic reviews to assess the strategy’s effectiveness.
It allows for a comprehensive evaluation and necessary recalibrations. This
ensures the strategy aligns well with the organization’s goals, fostering
continuous improvement and steering it towards its envisioned success.
Example: Samsung conducts a periodic review of its smartphone strategy. This
is done to assess its effectiveness and make essential adjustments to stay
competitive.

Strategize to Win: Top 5 Tips for Successful Strategy Formulation

Deep Market Research
Diving deep into market research ensures a comprehensive understanding of
the current landscape, emerging trends, and customer preferences.
Example: Netflix astutely observed the evolving consumer shift towards digital
content. By transitioning from a DVD rental model to online streaming, they
positioned themselves at the forefront of the entertainment industry,
capitalizing on the burgeoning demand for on-demand content.
Leverage Core Competencies
Every organization possesses unique strengths and capabilities. By identifying
and building upon these core competencies, businesses can carve a niche for
themselves.
Example: Apple has always prioritized design and innovation. This focus has
enabled them to introduce products that set industry standards and resonate
deeply with consumers.
Stakeholder Engagement
Engaging key stakeholders in the strategy formulation offers diverse insights
and ensures widespread commitment to the chosen direction.
Example: Starbucks exemplifies this by involving its baristas in product
development. Such engagement has birthed popular innovations, like the Flat
White, reflecting employee creativity and customer preferences.
Flexibility and Adaptability
While a clear strategic roadmap is invaluable, adapting to changing
circumstances is equally crucial.
Example: Microsoft showcased this adaptability by evolving its focus from the
Windows OS to embrace the potential of cloud computing with Azure, thereby
staying relevant and competitive in a rapidly changing tech landscape.
Continuous Monitoring and Feedback
A successful strategy is not static; it requires regular reviews and adjustments
based on performance metrics and stakeholder feedback.
Example: Toyota employs this principle through its Kaizen approach,
emphasizing continuous improvement. By consistently seeking feedback and
making iterative refinements, they maintain their reputation for quality and
innovation in the automotive industry.