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 organization can achieve those objectives.
It chalks out exactly, how to attain a specific goal.
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.
According to Koontz and O’Donnel, “Planning is deciding in advance what to do, how to do it,
when to do it and who is to do it. It bridges the gap from where we are to where we want to go.”
Planning is the continuous managerial process of anticipating and forecasting the future.
environment of the business organization, the formulation of the long term and short term
goals. to be achieved and selecting the strategies for their realization.
Planning is also a management process, concerned with defining goals for a company's future
direction and determining the missions and resources to achieve those targets.
To meet objectives, managers may develop plans, such as a business plan or a marketing plan.
The planning process provides the information top management needs to make effective
decisions about how to allocate the resources in a way that will enable the organization to reach
its objectives.
Productivity is maximized and resources are not wasted on projects with little chance of success.
Importance of Planning
 It helps managers to improve future performance, by establishing objectives and selecting a
course of
action, for the benefit of the organisation.
 It minimises risk and uncertainty, by looking ahead into the future.
 It facilitates the coordination of activities. Thus, reduces overlapping among activities and
eliminates
unproductive work.
It states in advance, what should be done in future, so it provides direction for action.
 It uncovers and identifies future opportunities and threats.
 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.
Characteristics of Planning
Steps in Planning
FORMULATING PLANS
The planning process can be condensed into five essential questions we must ask ourselves.
Where are we now? (Situation analysis)
l Where do we want to go? (Priorities, goals, targets)
l How will we get there? (Strategy, organization and management)
l How will we know where we arrive? (Monitoring and evaluation)
l What new problems do we have? (Forward planning)
DECISION MAKING
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.
Decision-making is perhaps the most important component of a manager's activities.
It plays the most important role in the planning process. When the managers plan, they decide
on many matters as what goals their organisation will pursue, what resources they will use, and
who will perform each required task.
According to Andrew Smilagyi, “Decision making is a process involving information, choice of
alternative
actions, implementations, and evaluation that is directed to the achievement of certain stated
goals.”
Decision making is described as the essence of a manager's job because it is utilized in all four
managerial functions of planning, organizing, leading and controlling. Decisions, both large and
small,
are made every day by managers and they have the potential to affect others.
Characteristics of Decision
Making
Decision making is a selection process.
• Decision making is the end process. It is preceded by detailed discussion and selection of
alternatives.
• Decision making is the application of intellectual abilities to a great extent.
• Decision making is a dynamic process.
Decision making is situational.
• A decision may be either negative or positive.
• Decision making involves the evaluation of available alternatives through critical appraisal
methods.
• Decision is taken to achieve the objectives of an organisation.
Type of Decisions
Decisions taken by organization may be classified under various categories depending upon the
scope,importance and the impact that they create in the organization.
The following are the different types of decisions
a. Programmed and Non-programmed Decisions
b. Operational and Strategic Decisions
c. Organizational and Personal Decisions
d. Individual and Group Decisions
a. Programmed and Non-programmed Decisions
Programmed decisions are normally repetitive in nature. They are the easiest to make.
For example: making purchase orders, sanctioning of different types of leave, increments in
salary, settlement of
normal disputes, etc. Managers in dealing with such issues of routine nature usually follow the
established procedures
On the other hand, nonprogrammed decisions are different in that they are non-routine in
nature. They are related to some exceptional situations for which there are no
established methods of handling such things. For example: Issues related to handling a serious
industrial
relations problem, declining market share, increasing competition, problems with the
collaborator,
growing public hostility towards the organization fall in this category.
b. Operational and Strategic Decisions
Operational or tactical decisions relate to the present. The primary purpose is to achieve high
degree of
efficiency in the company‘s ongoing operations. Better working conditions, effective supervision,
prudent use of existing resources, better maintenance of the equipment, etc., fall in this
category.
On
the other hand, expanding the scale of operations, entering new markets, changing the product
mix,
shifting the manufacturing facility from one place to the other, striking alliances with other
companies,
etc., are strategic in nature. Such decisions will have far reaching impact on the organization.
c. Organizational and Personal Decisions
Decisions taken by managers in the ordinary course of business in their capacity as managers
relating to
the organizational issues are organizational decisions. For example: decisions regarding
introducing a
new incentive system, transferring an employee, reallocation or redeployment of employees etc.
are
taken by managers to achieve certain objectives.
As against such decisions, managers do take some
decisions which are purely personal in nature. However, their impact may not exactly confine to
their
selves and they may affect the organization also. For example: the manager‘s decision to quit
the
organization, though personal in nature, may impact for the organization.
d. Individual and Group Decisions
It is quite common that some decisions are taken by a manager individually while some
decisions are
taken collectively by a group of managers. Individual decisions are taken where the problem is of
routine
nature, whereas important and strategic decisions which have a bearing on many aspects of the
organization are generally taken by a group
Group decision making is preferred these days because it
contributes for better coordination among the people concerned with the implementation of
the
decision
ORGANISING
Organizing is the function of management that involves developing an organizational structure
and allocating human resources to ensure the accomplishment of objectives. The structure of
the organization is the framework within which effort is coordinated.
Organising is the process of identifying and grouping the work to. be performed, defining and
delegating
responsibility and authority, and establishing relationships for the purpose of enabling people
to. work
most effectively together in accomplishing objectives.
Organising is that managerial process which seeks to define the role of each individual (manager
and operator) towards the attainment of enterprise objectives
Organizing is the function of management which follows planning. It is a function in which the
synchronization and combination of human, physical and financial resources takes place. All the
three
resources are important to get results. Therefore, organizational function helps in achievement
of
results which in fact is important for the functioning of a concern
Organising is the establishment of authority relationships with provisions for co-ordination
between
them, both vertically and horizontally in the enterprise structure”. -Koontz and O ‘Donnell
Classification of Organizations
Organizations are basically classified on the basis of relationships. There are two types of
Organizations formed on the basis of relationships in an organization
Formal Organization - This is one which refers to a structure of well defined jobs each bearing a
measure of authority and responsibility. It is a conscious determination by which people accomplish
goals by adhering to the norms laid down by the structure. This kind of organization is an arbitrary
set
up in which each person is responsible for his performance. Formal organization has a formal set up
to achieve pre- determined goals
Informal Organization - It refers to a network of personal and social relationships which
spontaneously originates within the formal set up. Informal organizations develop relationships
which are built on likes, dislikes, feelings and emotions. Therefore, the network of social groups
based on friendships can be called as informal organizations. There is no conscious effort made
to have informal organization. It emerges from the formal organization and it is not based on
any rules and regulations as in case of formal organization.
For a concerns working both formal and informal organization are important. Formal
organization originates from the set organizational structure and informal organization
originates from formal organization. For an efficient organization, both formal and informal
organizations are required. They are the two phase of a same concern.
LINE ORGANIZATION
Line organization is the most oldest and simplest method of administrative organization.
According to this type of organization, the authority flows from top to bottom in a concern. The
line of command is carried out from top to bottom. This is the reason for calling this
organization as scalar organization which means scalar chain of command is a part and parcel
of this type of administrative organization. In this type of organization, the line of command
flows on an even basis without any gaps in communication and co-ordination taking place.
Features of Line Organization
1. It is the most simplest form of organization.
2. Line of authority flows from top to bottom.
3. Specialized and supportive services do not take place in these organization.
4. Unified control by the line officers can be maintained since they can independently take
decisions in their areas and spheres.
5. This kind of organization always helps in bringing efficiency in communication and bringing
stability to a concern
Merits of Line Organization
???
Simplest
Unity of Command
Better discipline
Fixed responsibility
Flexibility
Prompt decision
Demerits of Line Organization
????
Over reliance
Lack of specialization
Inadequate communication
Lack of Co-ordination
Authority leadership
Line and Staff Organization
Line and staff organization is a modification of line organization and it is more complex than line
organization. According to this administrative organization, specialized and supportive activities
are attached to the line of command by appointing staff supervisors and staff specialists who
are attached to the line authority. The power of command always remains with the line
executives and staff supervisors guide, advice and council the line executives. Personal Secretary
to the Managing Director is a staff official
Features of Line and Staff
Organization
There are two types of staff :
a. Staff Assistants- P.A. to Managing Director, Secretary to Marketing Manager.
b. Staff Supervisor- Operation Control Manager, Quality Controller, PRO
2. Line and Staff Organization is a compromise of line organization. It is more complex than line
concern.
Division of work and specialization takes place in line and staff organization.
4. The whole organization is divided into different functional areas to which staff specialists are
attached.
5. Efficiency can be achieved through the features of specialization.
Power of command remains with the line executive and staff serves only as counselors.
Merits of Line and Staff
Organization
???
Relief to line of executives
Expert advice
Benefit of Specialization
Better co-ordination
Benefits of Research and Development
Training
Demerits of Line and Staff
Organization
????
Lack of understanding
Lack of sound advice
Line and staff conflicts
Costly
Assumption of authority
Staff steals the show
DELEGATION OF AUTHORITY
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the
manager should delegate authority. Delegation of Authority means division of authority and
powers downwards to the subordinate. Delegation is about entrusting someone else to do parts
of your job.
Delegation of authority can be defined as subdivision and sub-allocation of powers to the
subordinates in order to achieve effective results
Delegation is the assignment of authority to another person (normally from a manager to a
subordinate) to carry out specific activities. It is the process of distributing and entrusting work
to another person. Delegation is one of the core concepts of management leadership.
Delegation means devolution of authority on subordinates to make them to perform the
assigned duties or tasks.
It is that part of the process of organization by which managers make it possible for others to
share the work of accomplishing organizational objectives.
Delegation consists of granting authority or the right to decision-making in certain defined areas
and
charging the subordinate with responsibility for carrying through the assigned tasks.
Elements of Delegation
1. Authority - in context of a business organization, authority can be defined as the power and
right of a person to use and allocate the resources efficiently, to take decisions and to give
orders so as to achieve the organizational objectives. Authority must be well- defined. All people
who have the authority should know what is the scope of their authority is and they shouldn’t
misutilize it.
Authority is the right to give commands, orders and get the things done. The top level
management has greatest authority.
Authority always flows from top to bottom. It explains how a superior gets work done from his
subordinate by clearly explaining what is expected of him and how he should go about it.
Authority
should be accompanied with an equal amount of responsibility. Delegating the authority to
someone
else doesn’t imply escaping from accountability. Accountability still rest with the person having
the
utmost authority.
Responsibility - is the duty of the person to complete the task assigned to him. A person who is
given
the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for
which he
was held responsible are not completed, then he should not give explanations or excuses.
Responsibility
without adequate authority leads to discontent and dissatisfaction among the person.
Responsibility flows from bottom to top. The middle level and lower level management holds
more responsibility.
The person held responsible for a job is answerable for it. If he performs the tasks assigned as
expected, he is bound for praises.
While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.
3. Accountability - means giving explanations for any variance in the actual performance from
the expectations set. Accountability cannot be delegated. For example, if ’A’ is given a task with
sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is done well,
responsibility rest with ’B’, but accountability still rest with ’A’.
The top level management is most accountable. Being
accountable means being innovative as the person will think beyond his scope of job.
Accountability, in
short, means being answerable for the end result. Accountability can’t be escaped. It arises from
responsibility.
CENTRALIZATION
Centralization refers to the process in which activities involving planning and decision-making
within an organization. In a centralized organization, the decision-making powers are retained in
the head office,and all other offices receive commands from the main office.
Centralization refers to that organizational structure where decision-making power is confined to
the top management, and the subordinates need to follow the instructions of their seniors.
Centralization of authority is essential for the small-scale organizations which lack resources and
finance
Centralization is said to be a process where the concentration of decision making is in a few
hands. All
the important decision and actions at the lower level, all subjects and actions at the lower level
are
subject to the approval of top management.
According to Allen, “Centralization” is the systematic and consistent reservation of authority at
central
points in the organization.
DECENTRALIZATION
Decentralization refers to a specific form of organizational structure where the top
management delegates decision-making responsibilities and daily operations to middle and
lower
subordinates. The top management can thus concentrate on taking major decisions with greater
time
abundance.
In a decentralized organization, lower level managers are given decision-making authority and
the power to run their own departments. Decentralization include better, more timely decisions
and increased motivation.
Decentralisation implies the dispersal of decision-making power at lower levels of management.
When the power to take decisions and formulate policies does not lie with one person at the top
but is passed on to different persons at various levels, it will be a case of decentralization
The following are the main objectives which a decentralized system of organization seeks to
achieve:
To relieve the burden of work on the chief executive.
To develop the managerial faculties.
To motivate the lower level of workers.
Decentralisation is referred to as a form of an organisational structure where there is the
delegation of authority by the top management to the middle and lower levels of management
in an organisation.
In this type of organisation structure, the duty of daily operations and minor decision-making
capabilities are transferred to the middle and lower levels which allow top-level management to
focus more on major decisions like business expansion, diversification etc.
Delegation refers to the assigning a portion of work and the associated responsibility by a
superior to a subordinate.
In simple words, when delegation is expanded on an organisational level, it is called
decentralisation.
“Decentralisation refers to tire systematic effort to delegate to the lowest levels all authority
except that which can only be exercised at central points.” —Louis A. Allen
Importance of Decentralisation
Rapid decision making
Administrative development
Development of executive skills
Promotes growth
Higher control
Objectives of Decentralization
Decentralization is an important strategical decision. It changes the whole organizational
structure right
from the top management to the bottom level. Like other business strategies, decentralization is
also
purposeful.
Advantages of Decentralisation
1. Reduces the burden on top executives
2. Facilitates diversification
3. Executive Development
4. It promotes motivation
5. Better control and supervision
Disadvantages of Decentralisation
1. Uniform policies not Followed
2. Problem of Co-Ordination