UNIT 2: Management Planning: Strategic Planning and Management ,Meaning and concepts of Planning,

Nature of Planning, Role and Importance of Planning , Types of Planning, Process of Planning, Steps in
Planning, Decision Making Process- Concept, types of Decisions. Significance and applications Organizing
Resources Concept, Process of Organizing, Forms of Organizational Structure, Formal and informal
organization, Line and staff structure, Functional structure , Span of Control.

Meaning and concepts of Planning:

Definition: 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. 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.

Characteristics of Planning

1. Managerial function: Planning is a first and foremost managerial function provides the base for other functions
of the management, i.e. organising, staffing, directing and controlling, as they are performed within the
periphery of the plans made.
2. Goal oriented: It focuses on defining the goals of the organisation, identifying alternative courses of action and
deciding the appropriate action plan, which is to be undertaken for reaching the goals.
3. Pervasive: It is pervasive in the sense that it is present in all the segments and is required at all the levels of the
organisation. Although the scope of planning varies at different levels and departments.
4. Continuous Process: Plans are made for a specific term, say for a month, quarter, year and so on. Once that
period is over, new plans are drawn, considering the organisation’s present and future requirements and
conditions. Therefore, it is an ongoing process, as the plans are framed, executed and followed by another plan.
5. Intellectual Process: It is a mental exercise at it involves the application of mind, to think, forecast, imagine
intelligently and innovate etc.
6. Futuristic: In the process of planning we take a sneak peek of the future. It encompasses looking into the
future, to analyse and predict it so that the organisation can face future challenges effectively.
7. Decision making: Decisions are made regarding the choice of alternative courses of action that can be
undertaken to reach the goal. The alternative chosen should be best among all, with the least number of the
negative and highest number of positive outcomes.

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

Planning

Definition: 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. 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.

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

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

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

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

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

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

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

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

Importance of Planning

• 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.

PLANNING PROCESS

STEP 1: Recognizing need for action

STEP 2: Gathering necessary Information

STEP 3: Laying down objectives

STEP 4: Determining Planning Premises

STEP 5: Examining alternative courses of action

STEP 6: Evaluation of action patterns

STEP 7: Determining Secondary Plans

STEP 8: Implementation of Plans

COMPONENT PARTS/TYPES OF PLANNING

Standing Plans: lead to the development of policies, procedures and rules etc.

Single use Plans:

Planning Components

Standing or Multiple use Plans Single use Plans

1. Strategies 1. Programmes
2. Policies 2. Budgets
3. Procedures 3. Schedules
4. Rules

DECISION MAKING

Concept of Decision Making: Managers have to take decisions all the time. They spent a great time in making
decisions. Managers are evaluated and rewarded on the number and importance of their decisions. Because of the stress
and conflict involved, many managers are reluctant to make decisions.

A decision is that act of choosing among two or more options. Decision making is the process of thought and
deliberation that leads to decision. It is imprortant for managers to learn about good decision making for many reasons.

“Every activity of management is based on decision.”- P.F.Drucker

“Decision making is the selection based on some criteria from two or more possible alternatives.”-George R.Terry

“A direction is the act of choice wherein an executive forms a conclusion about what must be done in a given situation.
A decision represents behavior chosen from a number of possible alternatives.”- D. E. Mc Farland.

NATURE, FEATURES AND CHARACTERISTICS OF DECISION MAKING

1. Decision making is based on rational thinking. The manager tries to force various possible effects of a decision
before deciding a particular one.
2. It involves the evaluation of various alternatives available. The selection of beats alternative will be made only
when pros and cons of all of them are discussed and evaluated.
3. It si a process of selecting the best from among alternatives available.
4. It involves certain commitment. Management is committed to every decision it takes.
5. Decision making is the end product because it is preceded by decisions and deliberations.
6. Decision making is aimed to achieve organizational goals.

DECISION MAKING PROCEDURE

Step 1: Recognizing the problem

Step 2; Analyzing the Problem

Step 3: Generating Alternatives

Step 4: Evaluation alternatives

Step 5: Choosing the best Alternative

Step 6: Implementing and verifying the decision

TYPES OF MANAGERIAL DECISIONS

1. Organizational and Personal Decision

2. Routine and Strategic Decisions
3. Programmed and Non-Programmed Decisions
4. Policy and Operative Decisions

DECISION TREE

Decision tree is the most powerful and popular tool for classification and prediction. A Decision tree is a flowchart like
tree structure, where each internal node denotes a test on an attribute, each branch represents an outcome of the test, and
each leaf node (terminal node) holds a class label.

Construction of Decision Tree :

A tree can be “learned” by splitting the source set into subsets based on an attribute value test. This process is repeated
on each derived subset in a recursive manner called recursive partitioning. The recursion is completed when the subset
at a node all has the same value of the target variable, or when splitting no longer adds value to the predictions. The
construction of decision tree classifier does not require any domain knowledge or parameter setting, and therefore is
appropriate for exploratory knowledge discovery. Decision trees can handle high dimensional data. In general decision
tree classifier has good accuracy. Decision tree induction is a typical inductive approach to learn knowledge on
classification.

Decision Tree Representation :

Decision trees classify instances by sorting them down the tree from the root to some leaf node, which provides the
classification of the instance. An instance is classified by starting at the root node of the tree, testing the attribute
specified by this node, then moving down the tree branch corresponding to the value of the attribute as shown in the
above figure. This process is then repeated for the subtree rooted at the new node.

The decision tree in above figure classifies a particular morning according to whether it is suitable for playing tennis
and returning the classification associated with the particular leaf.(in this case Yes or No).

For example, the instance

(Outlook = Rain, Temperature = Hot, Humidity = High, Wind = Strong )

would be sorted down the leftmost branch of this decision tree and would therefore be classified as a negative instance.

In other words we can say that decision tree represent a disjunction of conjunctions of constraints on the attribute values
of instances.

(Outlook = Sunny ^ Humidity = Normal) v (Outlook = Overcast) v (Outlook = Rain ^ Wind = Weak)

Strengths and Weakness of Decision Tree approach

• The strengths of decision tree methods are:

• Decision trees are able to generate understandable rules.
• Decision trees perform classification without requiring much computation.
• Decision trees are able to handle both continuous and categorical variables.
• Decision trees provide a clear indication of which fields are most important for prediction or classification.

The weaknesses of decision tree methods:

 • Decision trees are less appropriate for estimation tasks where the goal is to predict the value of a continuous
attribute.
• Decision trees are prone to errors in classification problems with many class and relatively small number of
training examples.

Decision tree can be computationally expensive to train. The process of growing a decision tree is computationally
expensive. At each node, each candidate splitting field must be sorted before its best split can be found. In some
algorithms, combinations of fields are used and a search must be made for optimal combining weights. Pruning
algorithms can also be expensive since many candidate sub-trees must be formed and compared.

ORGANIZING

Concept:

Organizing is the larger activity of managing. It is essentially the process that creates a structure, which is maintained.
Organizing process includes:

i. The determination of activities necessary to accomplish the objectives.

ii. The grouping of activities and assigning them to specified positions/person.
iii. The creation of network of positions/persons for managings.

Organizing thus refers to the process of organizing or to the structure that evolves out of this process, and the activities
which are carried out with it.

“Organization is to determine the activities to accomplish a job and arrange the distribution of activities among the
people.”- L. Urwick

“Organization is a harmonious adjustment of specialized parts for the accomplishment of some common purpose or
purposes.”- L.H.Haney

NATURE AND CHARACTRISTICS OF ORGANIZATION

1. Organization is a Social System

2. Formed on the basis of mutual interest.

IMPORTANCE OF ORGANISING

1. It facilitates co-ordination
2. It facilitates management
3. It facilitates growth and diversity
4. It provides scope for training and development
5. It provides for optimum use of technological innovations
6. It ensures an optimum use of human resources.

PROCESS OF ORGANISING

Step 1: Determining activities

Step 2: Grouping of activities

Step 3: Assigning duties

Step 4: Delegating authority

Step 5: Co-ordinating activities

PRINCIPLES OF ORGANISATION

1. Principle of co-ordination
2. Principle of unity of command
3. Principle of scalar chain
4. Principle of definition
5. Principle of exception
6. Principles of objectives
7. Principle of specialization
8. Principle of authority and responsibility
9. Principle of balance
10. Principle of simplicity
11. Principle of span of control.
12. Principle of flexibility
13. Principle of continuity
14. Principle of efficiency

FORMAL AND INFORMAL ORGANIZATION

i. Formal Organization
• It is deliberately impersonal
• It is based on ideal relationship
• It is based on rabble hypothesis of the nature of man
ii. Informal Organization
• It is based on personal attitudes
• These are small groups and can overlap

TYPES OF ORGANIZATION STRUCTURE

1. Line organization
2. Functional Organization
3. Line and staff Organization
4. Project Organization
5. Matrix Organization
6. Committee Organization

SPAN OF CONTROL

In simple words, span of control means the manageable number of subordinates of a superior. The bigger the number of
the subordinates a manager controls, the broader is her/his span of control.

In a hierarchical business organization of sometime in the past it was not uncommon to see average spans of 1-to-4 or
even less, i.e. one manager supervised four employees on average. In the 1980s corporate leaders flattened many
organizational structures causing average spans to move closer to 1-to-10. That was made possible primarily by the
development of inexpensive information technology. As information technology was developed capable of easing many
middle manager tasks – tasks like collecting, manipulating and presenting operational information – upper managers
found they could hire fewer middle managers to do more work managing more subordinates for less money.

The current shift to self-directed cross-functional teams and other forms of non-hierarchical structures, have made the
concept of span of control less important.

Theories about the optimum span of control go back to V. A. Graicunas. In 1933 he used assumptions about mental
capacity and attention span to develop a set of practical heuristics. Lyndall Urwick (1956) developed a theory based on
geographical dispersion and the need for face to face meetings. In spite of numerous attempts since then, no convincing
theories have been presented. This is because the optimum span of control depends on numerous variables including
organizational structure, available technology, the functions being performed, and the competencies of the manager as
well as staff. An alternative view is proposed by Elliott Jaques[1] that a manager may have up to as many immediate
subordinates that they can know personally in the sense that they can assess personal effectiveness.

Factors affecting span of control

These are the factors affecting span of control:

Geographical dispersion, if the branches of a business are widely dispersed, then the manager will find it difficult to
supervise each of them, as such the span of control will be smaller.

Capability of employees: if employees are highly capable, need little supervision, and can be left on their own, e.g.,
Theory Y type of people, they need not be supervised closely as they are motivated and take initiative to work; as such,
the span of control may be broader.

Capability of managers, an experienced manager with good understanding of the tasks, good knowledge of the
workers and good relationships with the workers, will be able to supervise more workers

Value-add of the manager: a manager that is adding value by training and developing new skills in the workers will
need a more narrow span of control than one who is focused only on performance management (this is the reverse of the
capability of workers point above)

Similarity of task: if the tasks that the subordinates are performing are similar, then the span of control can be wider, as
the manager can supervise them all at the same time.

Volume of other tasks: if the manager has other responsibilities, such as membership of committees, involvement in
other projects, liaising with stakeholders, the number of direct reports will need to be smaller

Required administrative tasks: if the manager is required to have regular face-to-face meetings, complete appraisal
and development plans, discuss remuneration benefits, write job descriptions and employment contracts, explain
employment policy changes, and other administrative task:, span of control may be reduced.

Business process streamlining, effectiveness, and efficiency can reduce the span of control.

Advantages of a narrow span of control.

• The manager can supervisor each of his subordinates intimately.

• The nature of work is usually complicated.
• Effective communication between the subordinates and their manager.
• More layers in the hierarchy of management.

Disadvantages of a narrow span of control

• Too much control over employees might hamper their original talent and creativity.
• Extended hierarchy of control results in a long time in decision-making.
• Narrow span of controlling prevents cross-functional problem-solving.
• On the other hand, a span of control is wide when a manager manages or controls up to 20 subordinates.
• Advantages of a wide span of control.
• In a wide span of control, subordinates are more independent.
• Fewer layers in the hierarchy of management.
• The nature of work is repetitive.
• Less direct communication between subordinates and managers.

Disadvantages of a wide span of control.

• Ineffective management.
 • Increased workload on managers.
• The roles of team members are not clearly defined.
• Less communication between managers and subordinates reduces the control of the manager.

1. Line Organization

Production Manager

Supervisor A Supervisor B Supervisor C

Worker 1 Worker 2 Worker 3 Worker 1 Worker 2 Worker 3 Worker 1 Worker 2 Worker 3

- It represents a direct vertical relationship through which authority flows.

- This is the simplest and oldest form of internal organization.
- This organization is also known as scalar organization.
- Authority flows from the top to the lower levels.
- Every person is incharge of all the persons under him and he himself is accountable to his superior only.
- `Responsibility flows upward.
- Everybody is responsible for his work and is accountable to his superior.
- Since authority and responsibility flows in an unbroken straight line, it is called the line organization.

2. Functional Organisation

-In this type of organization there are number of specialists each having authority over a particular function or a group
of related functions throughout the organization.

- Each specialist has a control over the functions under his charge, no matter where that function is performed in the
organization.

-He controls all the individuals working in that functional area.

- For instance, a human resource department would recruit, train and develop people for all the other departments of an
organization.

- Functional organisations can be used at higher levels as well as at lower levels of management.

- At higher levels it involves grouping of all functions into major functional departments and placing each department
under an expert executive.

- Each functional head issues orders throughout the organization with respect to function in question.

Merits of Functional Organization

Specialization- Better division of labour takes place which results in specialization of function and it’s consequent
benefit.

Effective Control- Management control is simplified as the mental functions are separated from manual functions.
Checks and balances keep the authority within certain limits. Specialists may be asked to judge the performance of
various sections.

Efficiency- Greater efficiency is achieved because of every function performing a limited number of functions.
Economy- Specialization compiled with standardization facilitates maximum production and economical costs.

Expansion- Expert knowledge of functional manager facilitates better control and supervision.

Demerits of Functional Organization

Confusion- The functional system is quite complicated to put into operation, especially when it is carried out at low
levels. Therefore, co-ordination becomes difficult.

Lack of Co-ordination- Disciplinary control becomes weak as a worker is commanded not by one person but a large
number of people. Thus, there is no unity of command.

Difficulty in fixing responsibility- Because of multiple authority, it is difficult to fix responsibility.

Conflicts- There may be conflicts among the supervisory staff of equal ranks. They may not agree on certain issues.

Costly- Maintainance of specialist’s staff of the highest order is expensive for a concern.

3. Line and Staff Organisation

- Because of the inherent drawbacks of line organization and functional organization, they are rarely used in pure
forms.
- The line organization centralizes too much and the functional organization diffuses too much.
- To eliminate the drawbacks of both types of organisations the new organization structure- the line and staff
organization is evolved.
- In this type of organization structure, there are two types of relationships-Line relationship and staff
relationship.
- Line relationship is a staff relationship is advisory in nature.

Merits of Line and Staff Organization

Relief to line of executives- In a line and staff organization, the advice and counseling which is provided to the line
executives divides the work between the two. The line executive can concentrate on the execution of plans and they get
relieved of dividing their attention to many areas.

Expert advice- The line and staff organization facilitates expert advice to the line executive at the time of need. The
planning and investigation which is related to different matters can be done by the staff specialist and line officers can
concentrate on execution of plans.

Benefit of Specialization- Line and staff through division of whole concern into two types of authority divides the
enterprise into parts and functional areas. This way every officer or official can concentrate in its own area.

Better co-ordination- Line and staff organization through specialization is able to provide better decision making and
concentration remains in few hands. This feature helps in bringing co-ordination in work as every official is
concentrating in their own area.

Benefits of Research and Development- Through the advice of specialized staff, the line executives, the line
executives get time to execute plans by taking productive decisions which are helpful for a concern. This gives a wide
scope to the line executive to bring innovations and go for research work in those areas. This is possible due to the
presence of staff specialists.

Training- Due to the presence of staff specialists and their expert advice serves as ground for training to line officials.
Line executives can give due concentration to their decision making. This in itself is a training ground for them.

Balanced decisions- The factor of specialization which is achieved by line staff helps in bringing co-ordination. This
relationship automatically ends up the line official to take better and balanced decision.
Unity of action- Unity of action is a result of unified control. Control and its effectivity take place when co-ordination
is present in the concern. In the line and staff authority all the officials have got independence to make decisions. This
serves as effective control in the whole enterprise.

Demerits of Line and Staff Organization

Lack of understanding- In a line and staff organization, there are two authority flowing at one time. This results in the
confusion between the two. As a result, the workers are not able to understand as to who is their commanding authority.
Hence the problem of understanding can be a hurdle in effective running.

Lack of sound advice- The line official get used to the expertise advice of the staff. At times the staff specialist also
provide wrong decisions which the line executive have to consider. This can affect the efficient running of the
enterprise.

Line and staff conflicts- Line and staff are two authorities which are flowing at the same time. The factors of
designations, status influence sentiments which are related to their relation, can pose a distress on the minds of the
employees. This leads to minimizing of co-ordination which hampers a concern’s working.

Costly- In line and staff concern, the concerns have to maintain the high remuneration of staff specialist. This proves to
be costly for a concern with limited finance.

Assumption of authority- The power of concern is with the line official but the staff dislikes it as they are the one more
in mental work.

Staff steals the show- In a line and staff concern, the higher returns are considered to be a product of staff advice and
counseling. The line officials feel dissatisfied and a feeling of distress enters a concern. The satisfaction of line officials
is very important for effective results.

4. Project Organisation

-It consists of a number of horizontal organizational units to complete projects of long duration.
- Each project is vitally important to the organization.
- The size of the project team varies from one project to another.
- The activities of a project team are co-ordinated by the project manager who has the authority to obtain advice
and assistance of experts both inside and outside the organization.
- The core concept of project organization is to gather a team of specialists to work on and complete a particular
project.
- The project staff is separate and independent of the permanent functional departments.
- Project team is a temporary set up. Once the project is complete, the team is disbanned and the functional
specialists are assigned some other projects.

5. Matrix Organisation
- Also called grid organization is a hybrid structure combining two complementary structures- functional
departmentation wioth pure project structure.
- Functional structure is a permanent feature of the matrix organization and retains authority for the overall
operation of the functional units.
- Project departments are created whenever specific projects require a high degree of technical skill and other
resources for a temporary period.
- Functional departments create a vertical chain of command while the project team forms the horizontal lines,
thereby making a matrix.
- Matrix organization hs been developed to meet the need of a large and complex organization which require a
structure more flexible and technically oriented rather than the functional structures.

6. Committee Organisation
- A committee is not a separate type of organization.
 - A committee is a device of attaching a group of individuals to line departments.
- It is a group of people, usually on the same authoritative level, specially designed to perform managerial tasks
and a committee meeting is a gathering of these people for the purpose of thrashing out a problem.
- A committee with its report enables the line executive to arrive at the right decision.
- Eg. Of committees- Advisory committee, Executive Committee.

Line and Staff Conflict

Line and staff structure is based on the assumption that both will help and support each other. But often, there are
conflicts between the two and the both accusing each other. There is a lack of understanding and both try to dominate
each other. Some of the reasons of conflict between the two are:

1. Line Managers have the following complaints against staff

(a) Staff officers claim credit for programmes which are successful but do not want to share responsibility for
their failure. The blame for the unsuccessful task is thrust on line managers even though they act on the
advice of the staff.
(b) Staff officers are more theoretical than practical. They tend to give advice which has not been tested earlier.
They emphasize their field of specialization without giving much thought to the overall interest of the
company.
(c) Though the staff officers are well qualified and have good knowledge in their field but they try to dominate
the line officers. This creates conflict between line and staff officials.
(d) Staff officers do not remain contended by giving advice only. They try to persuade the line for
implementing whatever they have suggested. They trespass their filed of activity and enter the area meant
for line people.
2. Staff personnel have the following complaints against line managers
(a) Line officers do not make proper use of expert knowledge of the staff. They do not consult staff personnel
at the planning level where they can make practical suggestions.
(b) Staff people feel that their advice is not properly implemented by the line personnel. Line officers do not
consult staff while implementing the advice. When staff officers try to guide persons in implementing the
programmes then they are accused of interference.
(c) Line officers are not generally enthusiastic about the new ideas suggested by the staff. They resist new
things and insist on following the traditions.
(d) Staff officers do not have authority to implement their ideas. They should be given authority like line
officers in supervising the implementation of their suggestions.

All the complaints of both line and staff personnel are based on lack of understanding. These conflicts are not based on
ideologies. Proper demarcation of their fields and mutual trust can help in improving the efficiency of both line and staff
personnel.