Management Theory and

Practice

F.Y.B.B.A.(I.B.) Sem. I
F.Y.B.B.A.(E.F.B.M.) Sem. I
 Ch. No. 03
Functions of Management : I
Planning
Forecasting
Decision Making
Organizing
Staffing
 Functions of Management :
Planning
• Definition :
“Planning is the selection and relating of
facts and making and using of
assumptions regarding the future in the
visualisation and formalisation of proposed
activities believed necessary to achieve
desired result.”
- George R. Terry
 Functions of Management :
Planning
• Definition :
“Planning may be broadly defined as a
concept of executive action that embodies
the skills of anticipating, influencing and
controlling the nature and direction of
change.”
- McFarland
* Plan is a commitment to a particular course of actions
believed necessary to achieve specific results.
 Functions of Management :
Planning
• Features :
1. Planning is a process,
2. Looking into future,
3. Selection of suitable course of action,
4. Undertaken at all levels of the organisation,
5. Flexibility,
6. Pervasive & continuous managerial function.
 Functions of Management :
Planning
• Importance :
1. Primacy of planning,
2. To offset uncertainty & change,
3. To focus attention on objectives,
4. To help in coordination,
5. To help in control,
6. To increase organisational effectiveness.
 Functions of Management :
Planning
• Types :
1. Purpose or mission,
2. Objectives,
3. Strategies,
4. Policies,
5. Rules and procedures,
6. Programmes or projects,
7. Budgets.
 Functions of Management :
Planning
• Purpose or Mission :
“ The purpose or mission of an organisation
is a general enduring statement of the
organisation, the intent of which embodies
the decision maker’s philosophy; it implies
the image which the organisation seeks to
project.”
 Functions of Management :
Planning
• Objectives :
• Objectives or goals are the end results
towards which activities are aimed.
• A deliberate & purposive creation, has
objective or set of objectives.
• In large organisations, objectives are
arranged in hierarchy in which the
objective of a lower unit contributes to the
realisation of a higher unit objective.
 Functions of Management :
Planning
• Strategies & Policies :
• Strategies are the complex plans for bringing the
organisation from a given posture to a desire
position in the future period.
• It includes the broad concepts of an
organisation’s operation.
• Policies are general statements or
understandings which provide guidance in
decision making to various manager.
 Functions of Management :
Planning
• Procedure :
“ A procedure is a series of related tasks that
make up the chronological sequence and the
established way of performing the work to be
accomplished.”
Rules :
“ A rule is specific guide for action, established
authoritively, and utilised in order to inform
employees of conditions under which designated
activities are to be performed.”
 Functions of Management :
Planning
• Projects :
1. Project activity is definable in terms of specific
objectives.
2. Project activity is unique, infrequent or
sometimes even unfamiliar to the organisation,
3. Project activity is complex in respect to
independence of various task accomplishment,
4. Project activity is critical to the organisation in
terms of realisation of its objectives.
 Functions of Management :
Planning
• Budget :
1. Budget is a plan of expected results expressed
in numerical terms,
2. It expresses organisational & departmental
objectives and programmes in financial & non-
financial quantities,
3. It anticipates operating results over some
future period of time,
4. Budget provides guidelines for action and also
standards for control.
 Forecasting
• Definition :
“Business Forecasting refers to the
statistical analysis of the past and current
movement in the given time series so as to
obtain clues about the future pattern of
those movements.”
- Neter and
Wasserman
 Forecasting
• Features :
1. Relates to future event,
2. Defines the probability of happening of
future events,
3. Analysis of past,
4. Analysis of various factors may require
the use of statistical tools & techniques.
 Forecasting
• Importance :
1. Promotion of organisation,
2. Key to planning,
3. Coordination and control,
4. Success of organisation under risk.
 Forecasting
• Techniques :
1. Historical Analogy Method,
2. Survey Method,
3. Opinion Poll,
4. Business Barometers,
5. Time Series Analysis,
6. Extrapolation,
7. Regression Analysis,
8. Input – Output Analysis,
9. Econometric Models.
 Decision Making
• Definition :
“Decision Making is a conscious and
human process, involving both individual
and social phenomenon based upon
factual and value premises, which
concludes with a choice of one behavioral
activity from among one or more
alternatives with the intention of moving
toward some desired state of affairs.”
 Decision Making
• Types :

1. Strategic Decisions,

2. Tactical Decisions.
 Decision Making
1. Strategic Decisions :
• Major decision affects the whole organisation,
• Contributes directly in the achievement of the
organisational goals,
• Related with the oraganisational practices,
• Course of action, objective and commitment to
direct are the important parts,
• Non programmed decision.
 Decision Making
2. Tactical Decisions : Features –
• Related with the day to day operations,
• Derived out of strategic decisions,
• Outcome is of short term in nature and
affects narrow part of the organisation,
• Authorities may be delegated to the lower
levels regarding decisions.
 Decision Making
• Process :
1. Specific objective,
2. Problem Identification,
3. Search for alternatives,
4. Evaluation of alternatives,
5. Choice of alternatives,
6. Action,
7. Results / Feedback.
 Decision Making
• Techniques :
1. Operations Research,
2. Decision Tree,
3. Linear Programming,
4. Game Theory,
5. Queuing Theory / Waiting Line Theory
 Decision Making
1. Operations Research (OR) :
• “ The quantitative study of an
organisation in action carried out in order
to find ways in which its functions can be
improved is called as OR.”
• “ OR is the application of specific
methods, tools, and techniques to
operations of system with optimum
solution to the problem.”
 Decision Making
• Features of OR :
1. OR emphasises models,
2. It quantifies the variables in a problem to
the extent possible,
3. OR emphasises the goal in the problem
area,
4. It incorporate the important variables to
the solution,
5. Mathematical Simplified Technique.
 Decision Making
2. Decision Tree :
Steps :
i) Defining the alternatives available,
ii) Estimation of the probabilities available,
iii) Calculation of Payoff.
 Decision Making
3. Linear Programming :
• Optimum allocation of resources in the
organisation.
• Mathematical Technique,
• Programming = Systematic Decision
Making process,
• Features – i) Objective Function, ii)
Constraints, iii) Non-negative Conditions,
iv) Linear Relationship.
 Decision Making
4. Game Theory :
• Decision Making under competitive
situation,
• Science of Conflict,
• Set of Rules,
• Features – i) Conflict of Interest, ii) Player
selects own course of action, iii) Outcome
of each player may represent the gain.
 Decision Making
5. Queuing Theory or Waiting Line
Theory :
* Problem arises because of too much
demand or too less demand,
* Proper Utilisation of resources
 Organising
• Definition :
“Organisation 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
in accomplishing objectives.”
- Louis A. Allen
 Organising
• Importance / Need / Aspects :
1. Division of Work,
2. Departmentation,
3. Hierarchy,
4. Coordination.
 Organising
• Types :
1. Formal Organisation,
a. Line, Military or Scalar Organisation,
b. Functional Organisation,
c. Line and Staff Organisation,
d. Matrix Structure,
2. Informal Organisation.
 Organising
1. Formal Organisation :
a. Prescribed structure of roles and relationships
consciously coordinated towards the common
goal,
b. Objectives – Productivity, Profitability, Growth,
etc.
c. Hierarchical, Pyramid-shared, Bureaucratic,
d. Based on Superior-Subordinate Relationship,
e. Rewards for Desired Results.
 Organising
2. Informal Organisation :
a. Natural and spontaneous structure,
b. Goals and tasks are predominantly
centered around the individual or a
group,
c. No perfect structure,
d. Based on friendship, common values
and interests.
 Organising
• Line / Military Organisation :
1. Direct Vertical Relationship,
2. Full freedom to Departmental Heads,
3. No Provision for Staff Specialists,
4. Simple Operations,
5. Existence of Superior-Subordinate Relationship,
6. Direct instructions to subordinates by boss,
7. Decisions by superiors within the scope of
authority.
 Organising
• Functional Organisation :
Taylor’s Functional System

Line and Staff Organisation :

• Administration Work divided into Two parts –
i. Staff responsible for Planning,
ii. Staff responsible for Execution.
* Staff Personnel may consist of Personal Staff,
Specialist Staff and General Staff.
 Organising
• Matrix Organisation :
1. Each employee reports to Functional
Manager and Group Manager both,
2. Multiple Command System,
3. Two chains of command,
4. Vertical and Horizontal Structures
operates simultaneously,
5. Due to globalisation emerging system.
Elements of Organising
Designing Jobs:Job design is the determination of an individual’s work-
related responsibilities. The most common form is job specialization.
Grouping Jobs: After jobs are designed, they are grouped into departments.
The most common bases for departmentalization are function, product,
customer, and location.
Establishing Reporting Relationships:
starts with clarifying the chain of command. The span of management
partially dictates whether the organization is relatively tall or flat.
Distributing Authority: starts with delegation. Delegation is the process by
which the manager assigns a portion of his or her total workload to others.
Systematic delegation throughout the organization is decentralization.
Coordinating Activities: Coordination is the process of linking the activities
of the various departments of the organization.
Differentiating Between Positions: A line position is a position in the direct
chain of command that is responsible for the achievement of an organization’s
goals. In contrast, a staff position provides expertise, advice, and support for
line positions.
Process of Organising
 Delegation of Authority
• Definition :
“Delegation is the dynamics of management. It is
the process which the manager follows in dividing the
work assigned to him. So that he performs, that part
which only he, because of his unique organisational
placement, can perform effectively and so that he can
get others to help him with what remains. If the manager
requires his subordinate to perform the work, he must
entrust him with part of the rights and powers, otherwise
he would have to exercise himself to get that work done.”
- Louis A.
Allen
 Delegation of Authority
• Need / Advantages :
1. Relieves the manager from heavy
workload,
2. Leads to better decisions,
3. Speeds up decision making,
4. Helps in training subordinates and
building morale,
5. Helps in creating Formal Organisational
Structure.
 Delegation of Authority
• Obstacles of Delegation :
A. On the part of the Manager :
1. Autocrat and unwilling manager,
2. Superiority complex,
3. Lack of confidence in subordinates,
4. Unfamiliar with the concept of Delegation
of Authority,
5. Fear of the subordinate’s performance.
 Delegation of Authority
• Obstacles of Delegation :
B. On the part of the Subordinates :
1. May not like to take decisions,
2. May refuse to take authority,
3. No adequate sources available to
discharge the responsibilities,
4. Lack of self-confidence,
5. No personal gains.
 Decentralisation
• Definition :
“ Decentralisation means the division
of a group of functions and activities into
relatively autonomous units with overall
authority and responsibility for their
operation delegated to a head of each
unit.”
- Earl P. Strong
Difference between Delegation and
Decentralisation
1. Delegation is a process, but decentralisation is
the end result,
2. In delegation responsibility is not delegated,
but in decentralisation responsibilities are also
delegated,
3. Delegation is essential in the management
process, whereas decentralisation is optional,
4. Control over the subordinate’s performance is
observed in delegation, but in decentralisation
the power to control is with the concern
departmental head.
 Staffing
Definition :
“ The Management function of staffing involves
managing the organisation structure through proper and
effective selection, appraisal and development of
personnel to fill the roles designed into the structure.”
- Koontz and O’Donnell
 Staffing
Sub – functions of Staffing :
1.Manpower Planning,
2.Development,
3.Determination of Employment Standards,
4.Determining the Sources,
5.Selection and Placement,
6.Training,
7.Other Functions.
Importance of staffing