LESSON

3
FUNCTIONS OF MANAGEMENT
CONTENTS
3.0 Aims and Objectives
3.1 Introduction
3.2 Managerial Functions
3.3 Planning
3.3.1 Nature of Planning
3.3.2 Importance of Planning
3.3.3 Advantages of Planning
3.3.4 Disadvantages of Planning
3.3.5 Planning Process
3.4 Objectives
3.4.1 Features of Objectives
3.4.2 Advantages of Objectives
3.4.3 Process of Setting Objectives
3.5 Strategies
3.5.1 Characteristics of Strategy
3.5.2 Strategy Formulation
3.5.3 Business Strategy
3.6 Policies
3.6.1 Essentials of Policy Formulation
3.6.2 Importance of Policies
3.7 Decision Making
3.7.1 Characteristics of Decision Making
3.7.2 Types of Decisions
3.7.3 Decision Making Process
3.7.4 Characteristics of Effective Decisions
3.8 Global Planning
3.8.1 Why Plan Globally?
3.8.2 Global Strategic Planning Process
3.8.3 Nature of Planning Process
3.9 Let us Sum up
3.10 Lesson-end Activities
3.11 Keywords
3.12 Questions for Discussion
3.13 Suggested Readings
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3.0 AIMS AND OBJECTIVES
This lesson is intended to introduce the students and management about the different
functions of management. After studying this lesson you will be able to:
(i) Briefly describe the term-management
(ii) Discuss various managerial function
(iii) Explain different steps to be followed by a manager while performing controlling
operation
(iv) Differentiate between co-ordination and communication
(v) Explore the nature of planning in an organisation
(vi) Describe-objectives, policies and decision making concept
(vii) Understand the need of globalisation for an International firm
3.1 INTRODUCTION
Management is an activity consisting of a distinct process which is primarily concerned
with the important task of goal achievement. No business enterprise can achieve its
objectives until and unless all the members of the enterprise make an integrated and
planned effort under the directions of a central coordinating agency. This central
coordinating agency is technically known as 'management' and the methodology of getting
things done is known as 'management process'.
The process of management involves the determination of objectives and putting them
into action. According to McFarland, "Management is the process by which managers
create, direct, maintain and operate purposive organisations through systematic,
coordinated and cooperative human effort".
According to G. R. Terry -"Management is a distinct process consisting of planning,
organising, actuating and controlling, performed to determine and accomplish stated
objectives by the use of human beings and other resources".
Figure 3.1: Process of Management
Under management as a process, management is considered as a continuing activity
made up of basic management functions. The process is on going and continuing. It
assumes a cyclical character.
1. Planning: Denotes the determination of short-to-long-range plans to achieve the
objectives of organisation.
2. Organising: Indicates the development of sound organisation structure according
to predetermined plans.
3. Direction: Means stimulating and motivation of personnel of the organisation
according to predetermined plans.
1. MEN
2. MACHINERY
3. MATERIALS
4. MONEY
5. MARKET
RESOURCES
INPUTS
Planning Directing
Organising Controlling
GOALS
END
RESULTS
OUTPUTS
BASIC RESOURCES
(Process of management)
Stated objectives
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Functions of Management
4. Controlling: Offers assurance that directs action i.e., plan- in-action, is taking
place as per plan.
We have an ongoing cycle of planning - action - control - replanning. Control function
closes the system loop by providing adequate and accurate feedback of significant
deviations from planned performance in time. Feedback can affect the inputs or any of
the managerial functions or the process so that deviations can be removed and goals can
be accomplished.
3.2 MANAGERIAL FUNCTIONS
A manager is called upon to perform the following managerial functions:
(1) Planning
(2) Organising
(3) Staffing
(4) Directing
(5) Motivating
(6) Controlling
(7) Co-ordinating and
(8) Communicating.
The following figure explains the functions of Manager.
Figure 3.2: Functions of Manager
1. Planning: When management is reviewed as a process, planning is the first function
performed by a manager. The work of a manager begins with the setting of
objectives of the organisation and goals in each area of the business. This is done
through planning. A plan is a predetermined course of action to accomplish the set
objectives. It is today's projection for tomorrow's activity. Planning includes
objectives, strategies, policies, procedures, programmes, etc. As it involves making
choices, decision-making is the heart of planning.
2. Organising: Organising includes putting life into the plan by bringing together
personnel, capital, machinery, materials etc., to execute the plans. While, planning
decides what management wants to do, organising provides an effective machine
for achieving the plans.
3. Staffing: Staffing involves filling the positions needed in the organisation structure
by appointing competent and qualified persons for the job. This needs manpower
Decision-making
on knowledge of
experience
Controlling
Planning
Organising
Directing
Motivating
Communicating
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planning, scientific selection and training of personnel, suitable methods of
remuneration and performance appraisal.
4. Directing: Direction involves managing managers, managing workers and the work
through the means of motivation, proper leadership, effective communication as
well as co-ordination. A manager must develop the ability to command and direct
others.
5. Motivating: Motivation is a managerial function to inspire and encourage people
to take required action. Motivation is the key to successful management of any
enterprise. Motivation can set into motion a person to carry out certain activity.
6. Controlling: Control is the process of measuring actual results with some standard
of performance, finding the reason for deviations of actual from desired result and
taking corrective action when necessary. Thus, controlling enables the realisation
of plans. A manager must adopt the following steps in controlling:
Identify potential problems.
Select mode of control.
Evaluate performance in terms of planning.
Spot significant deviations.
Ascertain causes of deviations.
Take remedial measures.
7. Co-ordination: Co-ordination is concerned with harmonious and unified action
directed toward a common objective. It ensures that all groups and persons work
efficiently, economically and in harmony. Co-ordination requires effective channels
of communication. Person-to-person communication is most effective for co-
ordination.
8. Communication: It means transfer of information and under-standing from person
to person. Communication also leads to sharing of information, ideas and knowledge.
It enables group to think together and act together.
Check Your Progress 1
1. Explain the process of management.
2. What are the functions of a manager?
3.3 PLANNING
Planning means looking ahead. It is deciding in advance what is to be done. Planning
includes forecasting. According to Henry Fayol - "purveyance, which is an essential
element of planning, covers not merely looking into the future but making provisions for
it. A plan is then a projected course of action". All planning involves anticipation of the
future course of events and therefore bears an element of uncertainty in respect of its
success. Planning is concerned with the determination of the objectives to be achieved
and course of action to be followed to achieve them. Before any operative action takes
place it is necessary to decide what, where, when and who shall do the things. Decision-
making is also an important element of planning. Planning determines both long-term and
short-term objectives and also of the individual departments as well as the entire
organisation. According to Fayol - "The plan of action is, at one and the same time, the
result envisaged, the line of action to be followed, the stages to go through, and the
methods to use. It is a kind of future picture wherein proximate events are outlined with
some distinctness...." Planning is a mental process requiring the use of intellectual faculties'
imagination, foresight, sound judgement etc.
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Planning is deciding in advance what is to be done. It involves the selection of objectives,
policies, procedures and programmes from among alternatives. A plan is a predetermined
course of action to achieve a specified goal. It is a statement of objectives to be achieved
by certain means in the future. In short, it is a blueprint for action.
According to Louis A Allen - "Management planning involves the development of forecasts,
objectives, policies, programmes, procedures, schedules and budgets".
According to Theo Haimann - "Planning is deciding in advance what is to be done.
When a manager plans, he projects a course of action, for the future, attempting to
achieve a consistent, co-ordinated structure of operations aimed at the desired results".
According to Koontz O'Donnel - "Planning is an intellectual process, the conscious determination
of courses of action, the basing of decisions on purpose, acts and considered estimates".
3.3.1 Nature of Planning
1. Planning is goal-oriented: Every plan must contribute in some positive way towards
the accomplishment of group objectives. Planning has no meaning without being
related to goals.
2. Primacy of Planning: Planning is the first of the managerial functions. It precedes
all other management functions.
3. Pervasiveness of Planning: Planning is found at all levels of management. Top
management looks after strategic planning. Middle management is in charge of
administrative planning. Lower management has to concentrate on operational
planning.
4. Efficiency, Economy and Accuracy: Efficiency of plan is measured by its
contribution to the objectives as economically as possible. Planning also focuses on
accurate forecasts.
5. Co-ordination: Planning co-ordinates the what, who, how, where and why of
planning. Without co-ordination of all activities, we cannot have united efforts.
6. Limiting Factors: A planner must recognise the limiting factors (money, manpower
etc) and formulate plans in the light of these critical factors.
7. Flexibility: The process of planning should be adaptable to changing environmental
conditions.
8. Planning is an intellectual process: The quality of planning will vary according
to the quality of the mind of the manager.
3.3.2 Importance of Planning
As a managerial function planning is important due to the following reasons:-
1. To manage by objectives: All the activities of an organisation are designed to
achieve certain specified objectives. However, planning makes the objectives more
concrete by focusing attention on them.
2. To offset uncertainty and change: Future is always full of uncertainties and
changes. Planning foresees the future and makes the necessary provisions for it.
3. To secure economy in operation: Planning involves, the selection of most profitable
course of action that would lead to the best result at the minimum costs.
4. To help in co-ordination: Co-ordination is, indeed, the essence of management,
the planning is the base of it. Without planning it is not possible to co-ordinate the
different activities of an organisation.
5. To make control effective: The controlling function of management relates to the
comparison of the planned performance with the actual performance. In the absence
of plans, a management will have no standards for controlling other's performance.
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6. To increase organisational effectiveness: Mere efficiency in the organisation is
not important; it should also lead to productivity and effectiveness. Planning enables
the manager to measure the organisational effectiveness in the context of the stated
objectives and take further actions in this direction.
3.3.3 Advantages of Planning
All efforts are directed towards desired objectives or results. Unproductive work
and waste of resources can be minimised.
Planning enables a company to remain competitive with other rivals in the industry.
Through careful planning, crisis can be anticipated and mistakes or delays avoided.
Planning can point out the need for future change and the enterprise can manage
the change effectively.
Planning enables the systematic and thorough investigation of alternative methods
or alternative solutions to a problem. Thus we can select the best alternative to
solve any business problem.
Planning maximises the utilisation of available resources and ensures optimum
productivity and profits.
Planning provides the ground work for laying down control standards.
Planning enables management to relate the whole enterprise to its complex
environment profitably.
3.3.4 Disadvantages of Planning
Environmental factors are uncontrollable and unpredictable to a large extent.
Therefore planning cannot give perfect insurance against uncertainty.
Planning is many times very costly.
Tendency towards inflexibility to change is another limitation of planning.
Planning delays action.
Planning encourages a false sense of security against risk or uncertainty.
3.3.5 Planning Process
The planning process involves the following steps:
1. Analysis of External Environment: The external environment covers
uncontrollable and unpredictable factors such as technology, market, socio-economic
climate, political conditions etc., within which our plans will have to operate.
2. Analysis of Internal Environment: The internal environment covers relatively
controllable factors such as personnel resources, finance, facilities etc., at the disposal
of the firm. Such an analysis will give an exact idea about the strengths and weakness
of the enterprise.
3. Determination of Mission: The "mission" should describe the fundamental reason
for the existence of an organisation. It will give firm direction and make out activities
meaningful and interesting.
4. Determination of Objectives: The organisational objectives must be spelled out in
key areas of operations and should be divided according to various departments
and sections. The objectives must be clearly specified and measurable as far as
possible. Every member of the organisation should be familiar with its objectives.
5. Forecasting: Forecasting is a systematic attempt to probe into the future by
inference from known facts relating to the past and the present. Intelligent
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forecasting is essential for planning. The management should have no stone unturned
in reducing the element of guesswork in preparing forecasts by collecting relevant
data using the scientific techniques of analysis and inference.
6. Determining Alternative course of Action: It is a common experience of all
thinkers that an action can be performed in several ways, but there is a particular
way which is the most suitable for the organisation. The management should try to
find out these alternatives and examine them carefully in the light of planning
premises.
7. Evaluating Alternative Courses: Having sought out alternative courses and
examined their strong and weak points, the next step is to evaluate them by weighing
the various factors.
8. Selecting the Best: The next step - selecting the course of action is the point at
which the plan is adopted. It is the real point of decision-making.
9. Establishing the sequence of activities: After the best programme is decided
upon, the next task is to work out its details and formulate the steps in full sequences.
10. Formulation of Action Programmes: There are three important constituents of
an action plan:
The time-limit of performance.
The allocation of tasks to individual employees.
The time-table or schedule of work so that the functional objectives are
achieved within the predetermined period.
11. Reviewing the planning process: Through feedback mechanism, an attempt is
made to secure that which was originally planned. To do this we have to compare
the actual performance with the plan and then we have to take necessary corrective
action to ensure that actual performance is as per the plan.
3.4 OBJECTIVES
Objectives may be defined as the goals which an organisation tries to achieve. Objectives
are described as the end- points of planning. According to Koontz and O'Donnell, "an
objective is a term commonly used to indicate the end point of a management programme."
Objectives constitute the purpose of the enterprise and without them no intelligent planning
can take place.
Objectives are, therefore, the ends towards which the activities of the enterprise are
aimed. They are present not only the end-point of planning but also the end towards
which organizing, directing and controlling are aimed. Objectives provide direction to
various activities. They also serve as the benchmark of measuring the efficiency and
effectiveness of the enterprise. Objectives make every human activity purposeful. Planning
has no meaning if it is not related to certain objectives.
3.4.1 Features of Objectives
The objectives must be predetermined.
A clearly defined objective provides the clear direction for managerial effort.
Objectives must be realistic.
Objectives must be measurable.
Objectives must have social sanction.
All objectives are interconnected and mutually supportive.
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Objectives may be short-range, medium-range and long-range.
Objectives may be constructed into a hierarchy.
3.4.2 Advantages of Objectives
Clear definition of objectives encourages unified planning.
Objectives provide motivation to people in the organisation.
When the work is goal-oriented, unproductive tasks can be avoided.
Objectives provide standards which aid in the control of human efforts in an
organisation.
Objectives serve to identify the organisation and to link it to the groups upon which
its existence depends.
Objectives act as a sound basis for developing administrative controls.
Objectives contribute to the management process: they influence the purpose of
the organisation, policies, personnel, leadership as well as managerial control.
3.4.3 Process of Setting Objectives
Objectives are the keystone of management planning. It is the most important task of
management. Objectives are required to be set in every area which directly and vitally
effects the survival and prosperity of the business. In the setting of objectives, the following
points should be borne in mind.
1. Objectives are required to be set by management in every area which directly and
vitally affects the survival and prosperity of the business.
2. The objectives to be set in various areas have to be identified.
3. While setting the objectives, the past performance must be reviewed, since past
performance indicates what the organisation will be able to accomplish in future.
4. The objectives should be set in realistic terms i.e., the objectives to be set should be
reasonable and capable of attainment.
5. Objectives must be consistent with one and other.
6. Objectives must be set in clear-cut terms.
7. For the successful accomplishment of the objectives, there should be effective
communication.
3.5 STRATEGIES
The term 'Strategy' has been adapted from war and is being increasingly used in business
to reflect broad overall objectives and policies of an enterprise. Literally speaking, the
term 'Strategy' stands for the war-art of the military general, compelling the enemy to
fight as per out chosen terms and conditions. A strategy is a special kind of plan formulated
in order to meet the challenge of the policies of competitors. This type of plan uses the
competitors' plan as the background. It may also be shaped by the general forces operating
in an industry and the economy.
Edmund P Learned has defined strategies as "the pattern of objectives, purposes or goals
and major policies and plans for achieving these goals, stated in such a way as to define
what business the company is in or is to be and the kind of company it is or is to be".
Haynes and Massier have defined strategy as the planning for unpredictable contingencies
about which fragmentary information is available.
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According to David I Cleland and William R King, "Strategy is the complex plans for
bringing the organisation from a given posture to a desired position in a further period of
time".
In the words of Haimann, "Strategy is a policy that has been formulated by the top
management for the purpose of interpreting and shaping the meaning of other policies".
According to C. T. Hardwick and B. F. Landuyt, "The word strategy is used to signify
the general concept and salient aspect of gamesmanship as an administrative course
designed to bring success".
According to Koontz and O' Donnell , "Strategies must often denote a general programme
of action and deployment of emphasis and resources to attain comprehensive objectives".
Strategies are plans made in the light of the plans of the competitors because a modern
business institution operates in a competitive environment. They are a useful framework
for guiding enterprise thinking and action. A perfect strategy can be built only on perfect
knowledge of the plans of others in the industry. This may be done by the management
of a firm putting itself in the place of a rival firm and trying to estimate their plans.
3.5.1 Characteristics of Strategy
(1) It is the right combination of different factors.
(2) It relates the business organisation to the environment.
(3) It is an action to meet a particular challenge, to solve particular problems or to
attain desired objectives.
(4) Strategy is a means to an end and not an end in itself.
(5) It is formulated at the top management level.
(6) It involves assumption of certain calculated risks.
3.5.2 Strategy Formulation
There are three phases in strategy formation
Determination of objectives.
Ascertaining the specific areas of strengths and weakness in the total environment.
Preparing the action plan to achieve the objectives in the light of environmental forces.
3.5.3 Business Strategy
Seymour Tiles offers six criteria for evaluating an appropriate strategy.
Internal consistency: The strategy of an organisation must be consistent with its other
strategies, goals, policies and plans.
Consistency with the environment: The strategy must be consistent with the external
environment. The strategy selected should enhance the confidence and capability of the
enterprise to manage and adapt with or give command over the environmental forces.
Realistic Assessment: Strategy needs a realistic assessment of the resources of the
enterprisemen, money and materialsboth existing resources as also the resources,
the enterprise can command.
Acceptable degree of risk: Any major strategy carries with it certain elements of risk
and uncertainty. The amount of risk inherent in a strategy should be within the bearable
capacity of the enterprise.
Appropriate time: Time is the essence of any strategy. A good strategy not only provides
the objectives to be achieved but also indicates when those objectives could be achieved.
Workability: Strategy must be feasible and should produce the desired results.
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3.6 POLICIES
A policy is a standing plan. Policies are directives providing continuous framework for
executive actions on recurrent managerial problems. A policy assists decision-making
but deviations may be needed, as exceptions and under some extraordinary circumstances.
Policy-making is an important part of the process of planning. Policies may be described
as plans which are meant to serve as broad guides to decision making in a firm. Policies
exist at various levels of the enterpriseCorporate level, divisional level and departmental
level. Policies are valuable because they allow lower levels of management to handle
problems without going to top management for a decision each time.
3.6.1 Essentials of Policy Formulation
The essentials of policy formation may be listed as below:
A policy should be definite, positive and clear. It should be understood by everyone
in the organisation.
A policy should be translatable into the practices.
A policy should be flexible and at the same time have a high degree of permanency.
A policy should be formulated to cover all reasonable anticipatable conditions.
A policy should be founded upon facts and sound judgment.
A policy should conform to economic principles, statutes and regulations.
A policy should be a general statement of the established rule.
3.6.2 Importance of Policies
Policies are useful for the following reasons:
1. They provide guides to thinking and action and provide support to the subordinates.
2. They delimit the area within which a decision is to be made.
3. They save time and effort by pre-deciding problems and
4. They permit delegation of authority to mangers at the lower levels.
Check Your Progress 2
1. What are the importance of planning?
2. Explain the steps in the process of planning.
3. Explain the phases in the formulation of strategies.
4. What are the essentials of policy formulation?
3.7 DECISION MAKING
The word decision has been derived from the Latin word "decidere" which means "cutting
off". Thus, decision involves cutting off of alternatives between those that are desirable
and those that are not desirable. Decision is a kind of choice of a desirable alternative. A
few definitions of decision making are given below:
In the words of Ray A Killian, "A decision in its simplest form is a selection of alternatives".
Dr. T. G Glover defines decision "as a choice of calculated alternatives based on
judgement".
In the words of George R. Terry, "Decision-making is the selection based on some
criteria from two or more possible alternatives".
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Felix M. Lopez says that "A decision represents a judgement; a final resolution of a
conflict of needs, means or goals; and a commitment to action made in face of uncertainty,
complexity and even irrationally".
According to Rustom S. Davar, "Decision-making may be defined as the selection based
on some criteria of one behaviour alternative from two or more possible alternatives. To
decide means to cut off or in practical content to come to a conclusion".
Fremont A. Shull Andrew L Delbecq and Larry L Cummings define decision making as
"a conscious human process involving both individual and social phenomenon based upon
factual and value premises which concludes with a choice of one behavioural activity
from among one or more alternatives with the intention of moving toward some desired
state of affairs".
From the above definitions, we can conclude that, Decision Making involves the process
of establishing goals, tasks and searching for alternatives for a decision problem.
3.7.1 Characteristics of Decision Making
Decision making implies that there are various alternatives and the most desirable
alternative is chosen to solve the problem or to arrive at expected results.
1. The decision-maker has freedom to choose an alternative.
2. Decision-making may not be completely rational but may be judgemental and
emotional.
3. Decision-making is goal-oriented.
4. Decision-making is a mental or intellectual process because the final decision is
made by the decision-maker.
5. A decision may be expressed in words or may be implied from behaviour.
6. Choosing from among the alternative courses of operation implies uncertainty about
the final result of each possible course of operation.
7. Decision making is rational. It is taken only after a thorough analysis and reasoning
and weighing the consequences of the various alternatives.
3.7.2 Types of Decisions
Programmed and Non-Programmed Decisions: Herbert Simon has grouped
organizational decisions into two categories based on the procedure followed. They are:
Programmed decisions: Programmed decisions are routine and repetitive and are made
within the framework of organizational policies and rules. These policies and rules are
established well in advance to solve recurring problems in the organization. Programmed
decisions have short-run impact. They are, generally, taken at the lower level of management.
Non-Programmed Decisions: Non-programmed decisions are decisions taken to meet
non-repetitive problems. Non-programmed decisions are relevant for solving unique/
unusual problems in which various alternatives cannot be decided in advance. A common
feature of non-programmed decisions is that they are novel and non-recurring and
therefore, readymade solutions are not available. Since these decisions are of high
importance and have long-term consequences, they are made by top level management.
Strategic and Tactical Decisions: Organizational decisions may also be classified as
strategic or tactical.
Strategic Decisions: Basic decisions or strategic decisions are decisions which are of
crucial importance. Strategic decisions a major choice of actions concerning allocation
of resources and contribution to the achievement of organizational objectives. Decisions
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like plant location, product diversification, entering into new markets, selection of channels
of distribution, capital expenditure etc are examples of basic or strategic decisions.
Tactical Decisions: Routine decisions or tactical decisions are decisions which are
routine and repetitive. They are derived out of strategic decisions. The various features
of a tactical decision are as follows:
Tactical decision relates to day-to-day operation of the organization and has to be
taken very frequently.
Tactical decision is mostly a programmed one. Therefore, the decision can be
made within the context of these variables.
The outcome of tactical decision is of short-term nature and affects a narrow part
of the organization.
The authority for making tactical decisions can be delegated to lower level managers
because : first, the impact of tactical decision is narrow and of short-term nature
and Second, by delegating authority for such decisions to lower-level managers,
higher level managers are free to devote more time on strategic decisions.
3.7.3 Decision Making Process
The decision making process is presented in the figure below:
Figure 3.3: Decision-making process
Specific Objective: The need for decision making arises in order to achieve certain
specific objectives. The starting point in any analysis of decision making involves the
determination of whether a decision needs to be made.
Problem Identification: A problem is a felt need, a question which needs a solution. In
the words of Joseph L Massie "A good decision is dependent upon the recognition of the
right problem". The objective of problem identification is that if the problem is precisely
and specifically identifies, it will provide a clue in finding a possible solution. A problem
can be identified clearly, if managers go through diagnosis and analysis of the problem.
1. Diagnosis: Diagnosis is the process of identifying a problem from its signs and
symptoms. A symptom is a condition or set of conditions that indicates the existence
of a problem. Diagnosing the real problem implies knowing the gap between what
is and what ought to be, identifying the reasons for the gap and understanding the
problem in relation to higher objectives of the organization.
2. Analysis: Diagnosis gives rise to analysis. Analysis of a problem requires:
Who would make decision?
What information would be needed?
From where the information is available?
Analysis helps managers to gain an insight into the problem.
3. Search for Alternatives: A problem can be solved in several ways; however, all
the ways cannot be equally satisfying. Therefore, the decision maker must try to
Specific Objectives Identification of
Problems
Search for
alternatives
Evaluation of
alternatives
Results Action Choice of alternatives
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Functions of Management
find out the various alternatives available in order to get the most satisfactory result
of a decision. A decision maker can use several sources for identifying alternatives:
His own past experiences
Practices followed by others and
Using creative techniques.
4. Evaluation of Alternatives: After the various alternatives are identified, the next
step is to evaluate them and select the one that will meet the choice criteria. /the
decision maker must check proposed alternatives against limits, and if an alternative
does not meet them, he can discard it. Having narrowed down the alternatives
which require serious consideration, the decision maker will go for evaluating how
each alternative may contribute towards the objective supposed to be achieved by
implementing the decision.
5. Choice of Alternative: The evaluation of various alternatives presents a clear
picture as to how each one of them contribute to the objectives under question. A
comparison is made among the likely outcomes of various alternatives and the best
one is chosen.
6. Action: Once the alternative is selected, it is put into action. The actual process of
decision making ends with the choice of an alternative through which the objectives
can be achieved.
7. Results: When the decision is put into action, it brings certain results. These results
must correspond with objectives, the starting point of decision process, if good
decision has been made and implemented properly. Thus, results provide indication
whether decision making and its implementation is proper.
3.7.4 Characteristics of Effective Decisions
An effective decision is one which should contain three aspects. These aspects are
given below:
1. Action Orientation: Decisions are action-oriented and are directed towards relevant
and controllable aspects of the environment. Decisions should ultimately find their
utility in implementation.
2. Goal Direction: Decision making should be goal-directed to enable the organization
to meet its objectives.
3 Effective in Implementation: Decision making should take into account all the
possible factors not only in terms of external context but also in internal context so
that a decision can be implemented properly.
Check Your Progress 3
1. What are the characteristics of Decision-Making?
2. Explain the types of decisions.
3. Explain the characteristics of effective decisions.
3.8 GLOBAL PLANNING
Globalisation reflects a business orientation based on the belief that the world is becoming
more homogeneous and that distinctions between national markets are not only fading,
but, for some products will eventually disappear. As a result, companies need to globalise
their international strategy by formulating it across markets to take advantage of underlying
market, cost, environmental and competitive factors.
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3.8.1 Why Plan Globally?
International firms have found it necessary to institute formal global strategic planning to
provide a means for top management to identify opportunities and threats from all over
the world, formulate strategies to handle them and stipulate how to finance the strategies
implementation. Global strategic plans not only provide for constancy of action among
the firm's managers worldwide but also require the participants to consider the ramifications
of their actions on the other geographical and functional areas of the firm.
3.8.2 Global Strategic Planning Process
Global strategic planning is the primary function of managers. The process of strategic
planning provides a formal structure in which managers:
Analyse the company's external environments
Analyse the company's internal environments
Define the company's business and mission
Set corporate objectives
Quantify goals
Formulate strategies and
Make tactical plans.
The steps mentioned above may not be in a sequential form. In practice, there is
considerable flexibility in the order in which firms take up these items.
3.8.3 Nature of Planning Process
Planning shapes strategy and defines the means to achieve goals. It is the matching of
markets with products and other corporate resources so that the long term competitive
advantage of the firm gets strengthened. In other words, the process of planning seeks
to answer question regarding what the firm expects to achieve and what method the
firm is going to use to this end. It decomposes problems and issues, applies rational tools
on the basis of available information, and finalises action to achieve the goal. In small
firm, planning may be ad hoc. But in large firms, especially in multinational corporations
that operate in varying environments, the process of planning is more systematic and
comprehensive.
3.9 LET US SUM UP
No business enterprise can achieve its objectives until and unless all the members of the
enterprise make an integrated and planned effort under the directions of a central
coordinating agency. This central coordinating agency is technically known as
'management'. The process of management involves the determination of objectives and
putting them into action. When management is reviewed as a process, planning is the
first function performed by a manager. The work of a manager begins with the setting of
objectives of the organisation and goals in each area of the business. This is done through
planning. A plan is a predetermined course of action to accomplish the set objectives.
decision involves cutting off of alternatives between those that are desirable and those
that are not desirable. Decision is a kind of choice of a desirable alternative.
3.10 LESSON END ACTIVITY
Under management as a process, management is considered as a continuing activity
made up of basic management functions. Discuss.
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Functions of Management
3.11 KEYWORDS
Management Functions
Planning
Strategies
Strategy Formulation
Policies
Decision Making
3.12 QUESTIONS FOR DISCUSION
1. Describe the process of management and explain how it can be used to accomplish
results in any organisation?
2. Name the various functions which constitute the process of management and discuss
each of them briefly.
3. "Decision making is the primary task of the management". Discuss this statement
and explain the process of decision making.
4. What are the essential characteristics of a good decision? How can a manager
make effective decisions?
3.13 SUGGESTED READINGS
A Dassgupta, Indian Business and Management, Dept. of Business Management and
Industrial Administration, University of Delhi 1969.
Appley Lawrence, Management in Action: The Art of Getting Things Done Through
People, American Management Association, New York, 1956.
Burack, Elmer H and Robert D Smith, Personnel Management: Human Resources
System Approach, West Publishing Co., New York, 1977.
Charles R. DeCarlo, Systems Design and Nature of Work, US Dept. of Labor Govt
Printing Office, Washington D.C., 1969. Louis A Allen, Management and Organization,
McGraw Hill, New York, 1958.
Metcalf H C and L Urwick (Ed) Dynamic Administration the Collected Papers of
Mary Parket Follet, Harper and Row, New York, 1941.
George R Terry, Principles of Management, Richard D Irwin Inc., Homewood, Illinois,
1968.
Institute of Personnel Management, Functions of Personnel Department in India,
Calcutta 1973.
Louis A Allen, Management and Organization, McGraw Hill, New York, 1958.
Prasad L.M, "Business Policy: Strategic Management" Sultan Chand and Sons, New
Delhi (2000)
Robert N. Anthony, "Planning and Control Systems: A Framework for Analysis"
Harvard University Press, Boston (1965)
Terry T. R. Principles of Management, Richard D Irwin, Homewood, 1960.
P.G. Aquinas, Organizational Behaviour, Excel Books, New Delhi.