PRINCIPLES OF

MANAGEMENT

Dr. Shiv Kant Tiwari

Assistant Professor
GLA University, Mathura

MODULE I

Planning:
Concept, objectives, nature,
importance and limitations of
planning, planning process.
Concept of Decision Making and its
Importance, forms, techniques and
process.
2

1
 Concept of Planning
• An organization can succeed in effective utilization of its
human, financial and material resources only when its
management decides in advance its objectives, and
methods of achieving them. So, it is the process by which
managers establish goals and define the methods by
which these goals are to be attained.

• Planning is the process of deciding in advance what is to

be done, who is to do it, how it is to be done and when it is
to be done. It is the process of determining a course of
action, so as to achieve the desired results.

Definitions of Planning
• According to Weihrich and Koontz, “Planning involves
selecting missions and objectives and the actions to
achieve them; it requires decision making, which is
choosing from among alternative future courses of
action.”

• According to George R. Terry, “Planning is a method /

technique of looking ahead and a constructive reviewing
of future needs so that present action can be adjusted in
view of the established goals.”

2
Nature of Planning

3
 Advantages and Limitations
of Planning
Advantages: Limitations :
• Reduces uncertainty • Limitations of forecasts
• Ensures economical • Rigidity in administration
operations • Time consuming process
• Facilitates control • Costly affair
• Improves motivation • Influence of external
• Gives competitive edge factors
• Avoids duplication of • Psychological factors.
efforts.

4
 Planning Process

Steps in Planning Process

• Step # 1. Perception of Opportunities: Awareness of
opportunities in the external environment as well as
within the organisation is the real starting point for
planning. Setting objectives depends on the awareness.

• Step # 2. Establishing Objectives: The major

organisational and unit objectives are set in this stage.
This is to be done for the long term as well as for the short
range.

5
 Steps in Planning Process
• Step # 3. Planning Premises: After determination of
organisational objectives, the next step is establishing
planning premises that is the conditions under which
planning activities will be undertaken. Planning premises
are planning assumptions the expected environmental
and internal conditions.

• Step # 4. Identification of Alternatives: The fourth step

in planning is to identify the alternatives. Various
alternatives can be identified based on the organisational
objectives and planning premises. The concept of various
alternatives suggests that a particular objective can be
achieved through various actions.

Steps in Planning Process

• Step # 5. Evaluation of Alternatives: The various
alternative course of action should be analysed in the
light of premises and goals. There are various techniques
available to evaluate alternatives. The evaluation is to be
done in the light of various factors.

• Step # 6. Choice of Alternative Plans: This is the real

point of decision-making. An analysis and evaluation of
alternative courses will disclose that two or more .ire
advisable and beneficial. The fit one is selected.

6
 Steps in Planning Process
• Step # 7. Formulation of Supporting Plan: After
formulating the basic plan, various plan are derived so as
to support the main plan. In an organisation there can be
various derivative plans like planning for buying
equipment, buying raw materials, recruiting and training
personal, developing new product etc.

• Step # 8. Establishing Sequence of Activities: After

formulating basic and derivative plans, the sequence of
activities is determined so those plans are put into action.
After decisions are made and plans are set, budgets for
various periods and divisions can be prepared to give
plans more concrete meaning for implementation.

7
 Concept of Decision Making
• The word decision has been derived from the Latin word
‘decidere’ which means ‘a cutting away or cutting off in a
practical sense’.
• Thus, a decision involves a cut of alternatives between those
that are desirable, and those that are not desirable.

• Decision-making is the act of making a choice among

available alternatives. There are innumerable decisions that
are taken by human beings in day-to-day life. In business
undertakings, decisions are taken at every step.
• Decision making can be regarded as an outcome of mental
processes (cognitive process) leading to the selection of a
course of action among several alternatives.

Definitions of Decision Making

• According to Koontz, “Decision making is the selection of

course of action from among alternatives; is the core of
planning”.

• According to George R. Terry, “Decision-making is the

selection, based on some criteria from two or more possible
alternatives.”

8
 Decision Making

Process – Decision Making

1
7
2

Implement
the alternative Diagnose
the problem

6
3
Selection STEPS OF DECISION
of the best
MAKING PROCESS
alternative Collect
information
4

Evaluation Developing
5
of alternatives alternatives

9
 Process of Decision-Making
1. Identification of problem: Managers identify the problem,
is any deviation from a set of expectations. Scan the internal
and external environment.
2. Diagnose the problem: Find cause of the problem helps
to define the problem; its causes, dimensions, degree of
severity(harshness) and origin. The exact reason is found
and the problems is said to have been diagnosed.
3. Collect information: Managers collect information from
the internal and external environment. Information provides
inputs for generating solutions. Information can be
quantitative or qualitative. It should be reliable, adequate
and timely so that right action can be taken at the right time.

Process of Decision-Making

4. Developing alternatives: Alternatives means developing

two or more ways of solving the problem. Managers develop
as many solutions as possible to choose the best, creative
and most applicable alternative to solve the problem.

5. Evaluation of alternatives: All the alternatives are

weighed against each other with respect to their strengths
and weakness. Alternatives are evaluated in terms of
acceptable criteria to analyze their impact on the problem.

10
 Process of Decision-Making
6. Selection of the best alternative: After evaluating the
alternatives, managers screen the non-feasible alternatives
and select the most appropriate alternative to achieve the
desired objective.
• Alternative can be selected through the following
approaches such as experience, experimentation and
research and analysis.

7. Implement the alternative: The selected alternative should

be accepted and implemented by the organizational
members. Implementations must be planed. Those who will
be affected by implementations should participate in the
implementations process to make it effective and fruitful.

Techniques of Decision Making

11
 Techniques of Decision Making
• Qualitative / Non-Quantitative Technique is helpful not
only for problem dealing with objectives but also for
problem dealing with means to accomplish the objectives.
In application, these techniques are highly personal and
considered the natural way to make a decision.
• Generally, there are four qualitative techniques:
1. Intuition: Is characterized by the use of inner feeling or
the gut-feeling of the decision-maker.
• An intuitive decision maker approaches a problem with
multiple methods, using trial and error to find a solution
and tends not to structure information gathering or
evaluation.

Qualitative Techniques
2. Facts: The old statement that “a decision should be based
on adequate facts” is still widely accepted. When facts are
used in decision making, the decision has its root in the
factual data which implies that the premises on which the
decisions based are sound, solid and intensely applicable
to the particular situation.
3. Experience: Experience is a valuable asset to drive at a
decision; Person’s past experience provides the guidelines
for decision making.
4. Considered Opinions: For considered opinion, relevant
data are collected and analyzed. The results are discussed
in a group meeting. Opinions of various participants are
sought and analyzed to arrive at a decision.

12
 Heading
• Pt.1
• Pt.2
• Pt.3
• Pt.4
• Pt.5

26

13