UNIT-II PLANNING,

ORGANIZING AND CONTROL

Planning-Steps in planning process-Forecasting and types of planning-
Management by objectives(MBO)-Decision Making techniques. Organizing-
Organizational Structure/Design-Line and Staff Authority and Responsibility
Relationships-Delegation of Authority and Decentralization-Motivation-
Process of Controlling and Types of control.
 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 organisation’s objectives and
develops various courses of action, by which
the organisation can achieve those objectives.
• Planning involves selecting missions and
objectives and the actions to achieve them.
An important aspect of planning is decision
making - that is, choosing the right
alternatives for the future course of action.
Characteristics of Planning
 Characteristics of Planning
• Planning is looking into future
• It is a continuous process
• It is done by all
• It is the basis for all the managerial functions
• It is essential in all the levels of management
• It helps in discovering the best alternative course of
action
• It requires a considerable amount of time
• It directs the member of the organization
• It is an interdisciplinary process
• It leads to growth and prosperity of the organization
 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 minimizes 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.
 STEPS IN PLANNING PROCESS

✓Identification of opportunities- Market, competition, what customers

want, our strength, weaknesses
✓Establishment of Objectives- where we want to be, what we want to
accomplish and when
✓Developing Planning Premises- In what environment-internal or
external- will our plans operate
✓Identification of Alternatives-what are the most promising alternatives to
accomplishing our objectives
✓Evaluation of Alternatives- Which alternative will give us the best
change of meeting our goals at the lowest cost and highest profit?
✓Selecting an Alternatives- Selecting the course of action we will pursue
✓Implementing action plan- Such as plans to: Buy equipment, Buy
material, Hire and train workers and develop a new product
✓Reviewing
 Types of Planning
• Plans commit the various resources in an
organization to specific outcomes for the
fulfillment of future goals. Many different
types of plans are adopted by management to
monitor and control organizational activities.
Three such most commonly used plans are
hierarchical, frequency-of-use (repetitiveness)
and contingency plans.
 Management By Objectives
• Management by Objectives (MBO) is a
strategic approach to enhance the
performance of an organization. It is a process
where the goals of the organization are
defined and conveyed by the management to
the members of the organization with the
intention to achieve each objective.
Benefits of Management by Objectives
• Management by objectives helps employees appreciate
their on-the-job roles and responsibilities.
• The Key Result Areas (KRAs) planned are specific to each
employee, depending on their interest, educational
qualification, and specialization.
• The MBO approach usually results in better teamwork
and communication.
• It provides the employees with a clear understanding of
what is expected of them.
• Every employee is assigned unique goals.
• Managers help ensure that subordinates’ goals are
related to the objectives of the organization.
 Decision Making
• Decision making is defined as the selection of
a course of action from a set of alternatives.
• Every decision-making process produces an
outcome that might be an action, a
recommendation, or an opinion.
 Rationality in Decision making
• Effective decision making must be rational
• Require complete information, understanding of
alternative courses of action, ability to analyse
and evaluate the alternatives
• Limited or Bounded Rationality
Limitations of time, information, dislike of risk, or
desire to play it safe,
Herbert Simon has called this as “Satisficing”
 Steps in Decision Making
• Establishing objectives
• Classifying and prioritizing objectives
• Developing selection criteria
• Identifying alternatives and limiting factor
• Evaluating alternatives against the selection criteria-
Quantitative factors(time and cost) and
Qualitative factors (technological change, political climate
Marginal analysis- Compare additional revenues with additional cost
Cost effective Analysis- Finding the least cost way of achieving
organizational goals
• Choosing the alternative that best satisfies the selection criteria
A. Experience (past) B. Experimentation (try and decide) C. Research and
Analysis (understanding, analysis, finding relationship between variables
and constraints, cause and effect relationship , simulations, modelling
• Implementing the decision
TYPES OF DECISION
• Programmable and non programmable
decisions
• Individual and group decisions
• Personal and organizational decisions
• Initiative and approval decisions
• Certain and ambiguity decisions
• Strategic and operative decisions
• Adaptive and innovative decisions
ORGANIZING
• Organizing involves assigning tasks, grouping tasks
into departments, delegating authority, and
allocating resources across the organization.
• During the organizing process, managers
coordinate employees, resources, policies, and
procedures to facilitate the goals identified in the
plan.
• Where workers are specialists, managers can group
those employees into departments so their work is
appropriately directed and coordinated.
• In short, work should be divided, and the right
people should be given the right jobs to reduce
redundancy and inefficiency.
PURPOSE OR IMPORTANCE OF
ORGANIZING

➢To facilitate administration

➢To Increase the efficiency of
management
➢To facilitate growth and
Diversification
➢To Optimum use of man and
material resources
➢To facilitate Co-ordination and
Communication
➢To stimulate creativity and initiative
ORGANIZATIONAL STRUCTURE
• Formal pattern of interactions and
coordination to link the task of
Individual & groups in achieving goals.

PURPOSE OF ORGANIZATIONAL
STRUCTURE

➢Help to improve team work

➢Location of decision making
➢Pattern for communication &
co-ordination
➢Helps to know the roles
TYPES OF ORGANIZATION
STRUCTURE:

• Functional Structure
• Divisional Structure
• Matrix Structure
• Team Structure
• Network Structure
Functional Structure
Divisional /Geographic Structure
Matrix Structure
Team Structure
Network Structure
FORMAL AND INFORMAL ORGANIZATION
• “System of well defined jobs, bearing a definite measure of
authority, responsibility and accountability”-Allen

• Informal organization refers to the relationship between people in

the organization based on personal attitudes, emotions, prejudices,
likes, dislikes etc
LINE AND STAFF AUTHORITY

• Line functions are those which have direct responsibility for

accomplishing the objectives of the enterprise
• Staff function refer to those elements of the organization that
help the line function to work most effectively in
accomplishing the primary objectives of the enterprise
DEPARTMENTATION
• Process of grouping activities into departments.
Departmentation is the process of grouping of work activities
into departments, Divisions and other homogenous units.

• Koontz and O’Donnel Defined “A Departmentation is a

process of dividing the large monolithic functional
organization into small and flexible administrative units

DEPARTMENTATION BY DIFFERENT STRATEGIES

• Departmentation by time
• Departmentation by enterprise function
• Departmentation by customer
• Departmentation by process or equipment
• Departmentation by product or service
 SPAN OF CONTROL
Span of control refers to the number of persons a manager can control effectively
to achieve the goals of the organization.
CENTRALISATION AND
DECENTRALISATION

✓Centralisation is the systematic and consistent

reservation of authority at central points within an
organisation. It is the process of transferring and
assigning decision-making authority to higher levels
of an organizational hierarchy.

✓Decentralisation applies to the systematic

delegation of authority in an organisation wide
context. It is the process of transferring and
assigning decision-making authority to lower levels
of an organizational hierarchy.
ADVANTAGES OF DECENTRALISATION:

➢It reduces the burden of the management.

➢It facilitates growth.
➢It enables the department staff members to complete
work early.
➢It encourages the development of employees by
providing them opportunities.
➢It increases motivation.

DISADVANTAGES:
➢Increase of complexity of coordination decentralised
orgn. units.
➢Requires high degree of self motivation and self
control.
➢Not suitable for small firms
 DELEGATION OF AUTHORITY

➢ Delegation of authority can be defined as

subdivision and sub- allocation of powers to
the subordinates in order to achieve effective
results.
➢ Delegation of authority is a process which
enables a person to assign works to others and
delegate them with adequate authorities to do
it.
➢ Basil,” Delegation consists of granting
authority or the right to make decisions in
certain defined areas and charging the
subordinate with responsibility for carrying
through an assigned task”
 FEATURES OF DELEGATION
❑It is an authorisation to a manager to act in a certain manner.
❑Delegation has dual characterisitics. A sub ordinate receives authority
from his superior, but at the same time, his superior still retains all his
original authority.
❑A superior cannot delegate the entire authority to his subordinate.
❑Delegation does not mean a manager loosing his control and power.
❑Delegation may be general / specific, Written or oral.
TYPES OF DELEGATION
➢Over delegation
➢Under Delegation.

PROCESS OF DELEGATION

➢Determination of results expected.

➢Assignment of duties
➢Delegation of authority.
➢Creation of obligation or
accountability.
 CONTROLLING

➢Controlling is the process of regulating

organizational activities so that the
actual Performance conforms to
expected organizational goals and
Standards .
➢Controlling measures the deviation of
actual performance from Standard
Performance and discovers the causes
of such deviations and also helps in
taking corrective action
NATURE OF CONTROLLING

❖Controlling process is
universal
❖Controlling is a
continuous Process
❖Controlling is forward
looking
❖Control is Closely
related to planning
❖Controlling is a
pervasive function
Process of Control
Types of control

• Personal control
• Behavioral control
• Output control
• Premise control
• Special alert control
 Types of Control Systems
• Personal Control
Shape and influence the behavior of a person in a face-to-face
interaction.
Managers question and investigate to better understand subordinates.
The result is more possibilities for learning to occur and competencies to
develop.
• Output Control
Forecast appropriate performance goals for each division,
department, and employee – then measure actual performance
relative to these goals .
The achievement of these goals is a sign that the company’s strategy is
working.
• Behavior Control
Establish a system of rules and procedures to direct the actions
or behavior of divisions, functions, or individuals.
The result is standardization, predictability, and accuracy.

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Premise control

• The purpose of premise control is to

monitor regularly whether the
assumptions underlying a strategy
generated during the time of formulation
is valid during implementation also.

• This assumptions are

inflation, technology, interest rates,
regulation, and demographic/social
changes, competitors and suppliers
Special Alert control

•Special alert control is undertaken

to assess the impact of any major
environmental event.
•It is based on trigger mechanism
for rapid response and immediate
reassessment of strategy in the
light of sudden and unexpected
events .