Business Studies XII NEB Notes

Business Studies XII | HSEB Notes
Unit 1: Nature of Management

Concept and meaning of management
Resources are very limited in supply. All resources are to be managed by human. However, human have unlimited wants. Therefore, there are limited resources and unlimited wants and desire. Complete satisfaction is very necessary for better functioning of every aspect of the society. Therefore, for complete satisfaction in life resources are to be managed properly in such a way that human achieve complete utility and benefit simultaneously. Thus, to manage all resources available in such a way that it gives complete satisfaction to human beings is the theoretical meaning of management.

To go on a deeper level, management can be defined as art and skill of getting things done through others is called management. More elaboration is given by George R Terry. According to Terry-“management is the distinct process consisting of planning, organizing, activating, and controlling activities performed to determine and accomplishes the objectives by the use of people and resources.” If we give our attention towards the definition we find that terry perceives the management as a process a systematic way of doing things. The four management activities are included under the process and they are planning, organizing, activating and controlling.
MANAGEMENT = MANAGE+MEN+T (TACTFULLY)



Basically, there are 5 concepts of management. They are:
1.  Functional concept
Management basically is the task of planning, coordinating, motivating and controlling the efforts of other towards the goals and objectives of the organization. According to this concept, management is what a manager does (planning, executing, and controlling)
2.  Human relation concept
According to this concept, Management is the art o getting things done through and with people in organized groups. It is the art of creating an environment in which people can perform and individuals could cooperate towards attaining of group goals. It is an art of removing blanks to such performance a way of optimizing efficiency in reaching goals.
3.  Leadership and decision making concept
According to this concept, management is the art and science of preparing, organizing, directing human efforts applied to control the forces and utilize the materials of nature for the benefits to man.
4.  Productive concept
According to this concept, management may be defined as the art of securing maximum prosperity with a minimum effort so as to secure maximum prosperity and happiness for both employer n employee and provide best services thereby.
5.   Integration concept
According to this concept, management is the coordination of human and material resources towards the achievement of organizational objectives as well as the organization of the productive functions essential for achieving stated or accepted economic goal.
These above definition of management, given by different writers and authorities, are found giving different senses. Virtually, the five concepts are found developed by the authorities emphasizing in different aspects. However, it has been realized by many that it will not be fair to define management based upon any one aspect. Management can be taken as process-managerial process or social process either engage in planning, organizing, staffing, directing and controlling or mobilizing the group activities to achieve the corporate goals.

To overcome the limitations of the above concepts, Theo Haimann, the leading management expert has explained three basic concepts of management as under:


a. Management as a process:-
Management is a process. It includes the process of planning, controlling, coordinating, motivating, and staffing. These processes are the series of interrelated sequential functions. Processes refer to accomplish these mentioned activities. Management is the efforts of organizational members to accomplish the organizer’s objectives. This concept is very simple because
i.  It is very simple and very easy to understand
ii.  It indicates functions of management as a process
iii.  It recognizes management as a universal process
b.  Management as a discipline
the term management is used as a subject of instructions. It is a specific branch of knowledge which is studied in campuses and schools like economics, sociology, mathematics, political science etc. the scholars of management have found that the information and management are used in practical life for better functioning. The scope of managenent is being increased day to day as a discipline

c.  Management as a noun:
The word management itself refers as a noun. There are many kinds of employees in an organization . some people are involved in managerial function and some are involved in operating functions. The individuals who manage the organization and departments are managers. As a noun, the term management is used as single name of  managers, board of directors, managing directors, departmental managers etc are included in management.
Thus, theo haiman the leading management expert expiained the meaning and concept of management.
Characteristics of Management
1.  Universality:- management is applied in government as well as non government sectors. It is used in business and other type of organizations. Broadly, the management is applied in society, nations and also houses. In other words the principle of management is applicable in every area. Therefore, management is universal activity
2.  Integrative:- according to size and nature of business organizations, many departments may be establishes. Departments, managers, customers, government, investors, society etc must be integrated for the smooth operation of the organization. Therefore, management is an integrative process.
3.  Goal oriented:- management is the means to achieve organizational goals. Management maximizes efficiency of human effort for the operation of organizational job. The success of management can be accessed on the basis of attainment of organizational goals.
4.  Art and science:- management is the scientific Art. It contains special knowledge, technique and principles. It applies that special knowledge, techniques and principles to practical situations for better results.
5.  Profession:- management is the profession. It has own study mechanism on a whole series of cannons. Policies and laws. It is based on a systematic study curriculum. The management techniques, knowledge and principles are applied in practice. It is necessary to study the full syllabus of management in a states period of time for the managerial job in any organization.
6.  Distinct entity:- management is a distinct activity. It has proved that management is a specialized art and science and only technically qualified people can lead the organization.
7.  Pervasive function:- management is necessary for the success of all levels of management. The principles and methods of management can be applied for the smooth functioning of different departments and operational units. It is applicable for the lower level, middle level and top level management
8.  Group effort:- management directs group efforts to the accomplishment of organizational goal. It is a collective force of group efforts of persons.
9.  Intangible:- management is an intangible activity which cannot be seen. It is bound by a web relationship between levels of employees. It makes and enforces rules for better results. It can be judged by its effectiveness on the basis of objectives
10. Social process:- management is concerned with inter-relations and human behavior. Management creates mutual understanding and cooperation among the employees. Management jobs are related to the human actions.
Management as science, art and profession
Management as a science
Management as a science, it has systematized body of knowledge, concept and principles. Management deals different problems and issues by using quantitative models and decision making techniques and issues by using quantitative models and decision making techniques to arrive at right decisions. As a science management contains concepts, hypothesis, theories, experimentation all verified and tested accordingly to clarify about cause and effect relationship between many facts or events occurred.
→management is systematic body of knowledge with theories, concepts, principles, experiments and functions which are systematically and logically analyzed
→the theories related to management are applicable and used in all types of organization irrespective of size, type, capital and so on. However, the usage and method may vary according to the situation of organization and time.
→all the managerial knowledge and practices are developed through various observations and experiments which are researched and experiment based
→tests of management theories are applied in situational and judgmental cases which help in prediction of future events.
→management is not a pure science but a social science
→management relates itself to cause and effect relationship. Results of modern management are acceptable to all employees. Good and efficient management system enhances the purity in organization.
Management as an art
Management includes the activities of planning, organizing, direction, decision making, regulating and integration of all resources which requires special skill and art. According to Mary Parker,” management is an art of getting things done through others. Management enables a manager to get thongs done through employees.”
→management performs non programmed and non routine work using creativity and innovations
→management accomplishes any job within time and budget to achieve organizational goals with ease.
→managers apply their interest, ability and skills for solving contemporary issues through decisions which ignite their creativity. They can use their skills in field of job performance, solving exceptional issues, forming objectives etc.
→managers must posses practical knowledge not only theoretical acquired from experiences which helps in working according to situation
→managerial activities are practices by using knowledge, ability and skill to solve the problems.
Management as a profession
In general sense, profession means occupation. Occupation is rendering service. Similarly management is a distinct profession backed up by specialization. As a professional activity all management efficient people should have academic qualification and personal qualification from any body. Here profession is not only an occupation of specialized skill but these skills should be applicable in large scale and interest of society as a whole.
→management is a separate discipline which includes research, observations and practice
→management requires formal education and training with updates of professionalism.
→professional managers must be joined in an association that follow rules and regulation according to the objectives set.
→a professional association requires code of conduct to maintain self discipline ethical behavior. Violation of code must be punishable
→organizations should be responsible towards society. An organization gets its birth in a society, lives and grows in a society and finally liquidates or dissolves in a society. Thu, an organization has responsibility towards members of society such as consumer, investors, employees and shareholders.
Functions of Management
1.  Planning:- planning means the determination what is to be done, how and where is to be done, who is to do it and how the results are to be evaluated. Planning consists of :-
a.  Establishing objectives
b.  Formulating rules and regulations
c.  Developing programs
d.  Scheduling
e.  Budgeting
2.  Organizing:- it means identification and grouping the activities to be performed and dividing them among the individuals and creating authority and responsibility relationships among then for the accomplishment of organizational objectives. It consists of :-
a.  Determination of objectives and identification of activities necessary to achieve the objectives
b.  Delegation of authority and relationship among individuals.
c.  Coordination of activities and assignment of duties.
d.  Division of activities into different units or departments
3.  Staffing:- human resources management is a process consisting of the acquisition, development, motivation and maintenance of human resources. it consists of :-
a.  Manpower planning to determine the quality and quantity of employees required  for the jobs to b done
b.  Recruitment for attracting qualified persons
c.  Selection of best candidate
d.  Placement of the right man for the right job
e.  Training and development to increase new skills, knowledge and competency to do job
f.  Motivation of employees
g.  Evaluation performance of employees
h.  Employees welfare
4.  Directing:- direction embraces those activities which are related to guiding and supervising subordinates .it consists of :-
a.  Supervising the subordinates
b.  Communicating the information
c.  Providing effective leadership
d.  Motivating employees
5.  Controlling:- controlling is the process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations. It consists of :-
a.  Determination of standard performance
b.  Measurement of actual performance
c.  Compares the actual performance with the standard
d.  Analyzes deviations
e.  Take corrective actions if necessary.

Levels of Management
 1.  Top level management:- It includes board of directors, chief executive or general managers , senior strategist, decision making, directors . Corporate level goals, missions and objectives are determined. The major functions of this level are:-
A.  To formulate and determine the objectives and define the goals of the business
B.  To establish policies and prepare plans to attain the goals
C.  To set up an organizational structure to conduct the operations as per the plans
D.  To provide the overall direction in the organization
E.  To assemble the resources necessary for the attainment of the policy and execution of the paln
F.  To control effectively the business operations
G.  To judge and evaluate the results
  2. Middle level management:- It includes departmental managers, divisional heads and section officers. It acts as a bridge between top level management and lower level management. the major functions of this level are:-
A.  To implement the task set up by top management
B.  To implement the policies framed by the top management
C.  To run the organizations effectively and efficiently
D.  To cooperate for the smooth functioning of the organizations
E.  To coordinate between different departments
F.  To recruit , select and train the employees for the better functioning of the departments
G.  To issue the instructions to the lower level management
H.  To motivate the workers and staffs for higher productivity and to reward them.
I.  To lead the departments and build up an organizational spirit
J.  To report and make suitable recommendations to the top level management for the better execution of the plans and policies
  3. Lower level management:- It includes supervisors, foremen and workers. it is also known as supervisory level of management in which the supervisors or foreman like sales officers , account officers etc take responsibilities of the implementation and control of the operational plans developed by the middle level managers. The function of this level are: –
A.  To issue the orders and instruction to the workers to supervise and control the performance
B.  To plan the activities of the sections.
C.  To direct and guide the workers about the work procedures
D.  To provide job training to the workers
E.  To arrange the necessary tools, equipment , materials fro the workers and look after their proper maintenance
F.  To solve the problem of workers
G.  To develop sense of cooperation and high group spirit among the workers
H.  To advise the middle level about the work environment
I.  To inform the unsolved problems of the workers to the middle level management

Unit 2: Principles of Management

Meaning of principle of management:-
A principle is a rule or belief governing one’s personal behavior. It is a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.” Principle is a fundamental statement of truth that establishes a cause and effect relationship between two or more variables. Principles are a guide to thought and action. If any principles are applied results are expected. Descriptive principles describe the relationship between variables and prescriptive principles indicate what a person should do for the betterment of his interest to achieve prosperity.
Principle of management is concerned with managerial aspect of organization. It is believed that management is as old as mankind however systematic approaches to management are the outcome of efforts made in 20th century.


Nature of management principles
•  Management principles are flexible and change with change in environment thus cannot be regarded as final truth. Principles should be applied according to need, place time and social culture. Continuous research re to be carried out.


 •  Management principles are relative and are applied according to the needs of particular organization.
 •  Management involves the direction of human behavior in an organization which are directed towards regulating human for best result.
  •  Management principles establish cause and effect relationship. The effects are based on management principles which are based on predictions based upon division of labor which results efficiency. Here division of labor is cause and efficiency is result.
mportance of principles of management
he following are the main reasons which highlight the importance of the principles of Management:
•  Improving efficiency of managers: Management principles serve as a guideline for doing work with greater efficiency. These principles help managers to take a more realistic view of different managerial problems and to direct human behavior effectively. The conscious manager can become more effective by using the established management principles to solve problems.


•  Improving art of management:Management principles help in improving the art of management by suggesting how things should be done to get good results in an efficient manner. These principles provide a means of organizing knowledge and experience in management.


•  Useful for research and practical guidance: The network of management principles represents a key area for conducting research studies. These principles have expanded the horizons of knowledge and promoted further research. These principles have provided new ideas, imagination and vision to the organization.


•  Helpful in management training:Management principles are also needed to train managers. These principles provide a conceptual framework for systematic training and development of future managers. New techniques of management training make training programs more meaningful and efficiency.


•  Useful for spreading knowledge: Management principles are useful for spreading knowledge of management through teaching. The teaching of management principles continues to be an integral part of management education. These principles help to develop an organized body of knowledge by management practitioners, thinkers and philosophers.


•  Evaluating the behavior of managers:Management principles prescribe what one should do to improve things in some ways. These principles attempt to prescribe and evaluate the behavior of the managers of the organization.


•  Attaining social goals: Management principles have helped to attain the social goals by increasing efficiency and productivity in the use of scarce resources. The supply of quality goods at a reasonable price boosts social welfare.
Taylor’s scientific management concept and his contributions
Scientific management concept
Scientific management concept is one of the principles of management and is also known as classical theory. This principle is propounded by Fredrick Winslow Taylor (F.W Taylor) – the father of management. He was born in USA in 1856. He joined Midvale steel company where he worked as a machine shop worker for two years as gang boss for some years and as chief engineer at the age of 28.he also joined Bethlehem steel company where he served for a long time. Later he devoted his time to develop the concept of scientific management.
He noticed that there were much disorder and wastage of human as well as other resources at work place. The managers and staffs had no concept about systematic and efficient performance of task. And all were following traditional ways of doing work. So he tried to remove these problems through the development of new concept. Thus the scientific management concept was developed.
Contributions of F.W Taylor
While working in Midvale Company as a manager Taylor observed that employees were not performing as per their capacity of productivity. And he considered that this condition was occurring because of no care towards the waste. Taylor worked towards the experiments at his work place to increase the worker’s efficiency so that maximum output could be achieved by utilizing effort at maximum level.
1.  Scientific task setting:- Taylor observed that the management does not know exactly the works – pieces of work- volume of works- which are to be performed by the workers during a fixed period of time- which is called working day. In a working day how much work is to be dome by a worker but be fixed by a manager and the task should be set everyday. The process of task setting requires scientific technique. To make a worker do a quantity of work in a working day is called scientific task setting
2.  Differential payment system:- under this system, a worker received the piece rate benefit which will attract the workers to work more for more amount of wages and more incentives would be created to raise the standardization of output to promote the workers to produce more and perform more task than before and utilize waste time to earn more wages.
3.  Reorganization of supervision:- concepts of separation of planning and doing and functional foremanship were developed. Taylor opines that the workers should only emphasize in planning or in doing. There should be 8 foreman in which 4 are for planning and 4for doing. For planning they were route clerk, instruction cord clerk, time and cost clerk and disciplinarian. And for doing they were speed boss, gang boss, repair boss and inspector.
4.  Scientific recruiting and training:-staffs and workers should be selected and employed on scientific basis. Management should develop and train every workers by providing proper knowledge and training to increase their skills and make them effective
5.  Economy:- efficient cost accounting system should be followed to control cost which can minimize the wastages and thoroughly reduced and thus eliminated.
6.  Mental revolution:- Taylor argued that both management and workers should try to understand each other instead of quarreling for profits and benefits which would increase production, profit and benefits.
Principles of scientific management
1.  Replacing the rule of thumb with science:-it requires scientific study and analysis of each element of job in order to replace the old rule of thumb approach. Only through scientific investigation and standardization better way of work can be developed. Scientific selection of employees requires that decisions to make on facts rather than on opinions and beliefs.
2.  Harmony in group activities:- in the past there was only discord. Taylor has emphasized harmony among employee and employer to attain common goals which could help to contribute to the maximum limit.
3.  Cooperation:- cooperation between management and labor is the major foundation of scientific management. It creates a sense of mutuality through which maximum prosperity can be guaranteed.
4.  Development of employees:- personnel management must be backed up by scientific selection of employees along with proper training to them. Efforts should be made to develop each employee to achieve efficiency and prosperity.
5. Division of responsibility:- introduction of functional foremanship made division of responsibility. Many foremen should be appointed out of which 4 for planning and 4 for doing. In planning they were route clerk, instruction cord clerk, time and cost clerk and disciplinarian. And for doing they were speed boss, gang boss, repair boss and inspector. This promoted division of work which promoted division of responsibility
6.  Maximum output:- Taylor was more concerned with continuous increase in production and productivity. It maximum output is derived from optimum utilization of resources than surely it will bring higher profits and better benefits to the employer and employees.

Advantages and Limitations of scientific management
Advantages of scientific management :-
To employees
a.  Better utilization of resources through scientific techniques
b.  Scientific selection and training of employees leads to better workforce which ensures increase in efficiency
c.  Harmonious relationship between the workers and the management
d.  Standardization of tools, materials, techniques , equipments for increasing efficiency
e.  Reduction of production cost
To workers
a.  Opportunity for scientific training and development to increase skills knowledge and competency
b.  Better working conditions
c.  Application of scientific methods and techniques in better working conditions to reduce fatigue
d.  Higher wages to the workers for higher productivity
To society
a.  People get better quality products at lower cost
b.  Increase productivity in the country by utilizing resources properly
c.  Improve standard of living of people through better products
d.  Scientific investigation promotes technological development
Limitations of scientific management: –
a.  It is based upon one best way and is applicable for simple organizations than that for today’s dynamic and complex organization
b.  It focuses on individual performance than group efforts and divides the workers into efficient and inefficient categories
c.  It is focused on specialization and repetition of jobs to increase the productivity which reduces innovation and creativity and promotes monotony
d.  It neglects human factor because it motivates workers to work for monetary benefits rather than human resource development and resources
e.  There is no scope for creativity of employees because they are developed by manager which promotes frustration.

Fayol’s administrative management theory
Henry Fayol was born in 1841 as French. He is the industrialist who developed the administrative theory. He is also known as father of general management. He got his engineering degree and joined a French company as an junior executive in 1860 and senior executive in  1888. He published his classic book on general and industrial administration in 1928, which explained the first complete theory of management. He emphasized on 14 principles of general management and attempted to provide guidance and direction to other management.
Fayol’s management principles
1)  Division of work: – This principle implies on dividing the total task into compact jobs and thus allocating them to different individuals which promotes specialization and efficiency in both technical and managerial level. It helps to acquire speed and accuracy in performance.
2)  Authority and responsibility: – Authority means to give order and power to exert obedience whereas responsibility means obligations to perform work in the manner directed and desired. Authority and responsibility are co existed and leads to responsive behavior and efficiency.
3)  Discipline :- Discipline implies obedience, respect and establishment and regulations which are essential for smooth running of all organizations for good supervision and built in system of reward an punishment
4)  Unity of command: – Subordinates should receive orders from single superior at a time and all subordinates should be accountable to that superior. More superior leads to confusion, delay and so on.
5)  Unity of direction: – One plan must be formulated for a group of activity and all the related activities should be put under one group show that efforts of managers of a single group can be directed towards achievement of common goal.
6)  eSpirit de corps : – This term comprises of two principles namely union is strength and team spirit is most essential. There should be cooperation and team work among members of the organization. The managers should always make effort to ensure harmony among the subordinates.
7)  Equity: – Subordinates should be treated with justice, equity and kindness so that there can not be nepotism and favoritism while selection of workers, treating the workers which helps to promote friendly environment between superior between superior and subordinates.
8)  Centralization: – It implies concentration of authority at the top level. No hard fast rules can be laid down regarding the extension of authority to be retained at the top level. Centralization and decentralization should be proportionately decided.
9)  Scalar chain: – It refers to chain of superior ranging from top to low ranks in a management. It determines the clear line of authority from top to bottom linking managers at all levels. All communication should flow the established chain of command.
10)  Order: – It refers to arrangement of resources in the organization. It implies right place for everything. It stresses upon proper utilization of physical, natural, capital and organizational resources.
11)  Stability of tenure: – It takes time to learn and get a job therefore a reasonable time should be provided to all employees for securing better results and guarantee of service. Stability of employees promotes team work, loyalty to the organization
12)  Initiative: – It means eagerness to initiate action in work related matters without being asked to do so .it is a powerful motivator of human behavior and is a source of strength for the organization.
13)  Remuneration of personnel:- The remuneration payable to employees should be fair and reasonable .management must ensure a fair reward for the work and decide the equitable method of calculating wages
14)  Superiority of organizational interest: – Personal interest must be discarded and general interest must be maintained. Organization is bigger than an individual .therefore the interest of the organization must prevail upon the interest of an individual.
Max Weber principle of bureaucratic theory
Max Weber a German sociologist propounded the theory called principle of bureaucracy – a theory related to authority structure and relations in the 19thcentury. According to him, bureaucracy is the formal system of organization and administration designed to ensure efficiency and effectiveness. He suggested an ideal model for management as bureaucratic approach. He, in the book the theory of social and economic organizations, explained the basic principles of bureaucracy. He gave emphasis on division of labor, hierarchy, detailed rules and impersonal relations.
Principles of  bureaucratic theory
1) Job specialization: – Jobs are divided into simple, routine and fixed category based on competence and functional specialization.

2)  Authority hierarchy: – Officers are organized in a n hierarchy in which higher officer controls lower position holders i.e. superior controls subordinates and their performance of subordinates and lower staff could be controlled.

3)  Formal selection: – All organizational members are to be selected on the basis of technical qualifications and competence demonstrated by training, education or formal examination.

4)  Formal rules and regulations: – To ensure uniformity and to regulate actions of employees, managers must depend heavily upon formal organizational rules and regulations. Thus, rules of law lead to impersonality in interpersonal relations.

5) Impersonality: – Rules and controls are applied uniformly, avoiding involvement with personalities and preferences of employees. Nepotism and favoritism are not preferred.

6) Career orientation: – Career building opportunity is offered highly. Life long employment and adequate protection of individuals against arbitrary dismissal is guaranteed. Here managers are professional officials rather than owners units they manage. They work for a fixed salaries and pursue their career within the organization.
Limitations of bureaucratic theory

1) Informal relationship is not considered: – It does not consider the informal relationships between individuals working in the organizations.

2) Outdated system: – Its system of control and authority are outdated which can’t work in such a changed environment.

3) Inadequate means: – Bureaucratic theory does not posses adequate means resolving differences and conflicts arising between functional groups.
Unit 3: Planning
Meaning of planning: –
Planning is the important and primary function of management. It sets all other functions into action. It is the beginning of process of management. A manager must plan before coming in action. It is concerned in deciding in advance what to do? How to do? When to do? Why to do? Where to do? And who to do? And answering all these questions depends upon intelligence. Planning is a fully mental work.
Planning is the conscious process selecting and developing the best course of action to accomplish an objective. It is the process of deciding in advance what is to be done .it also involves the selection of objectives, policies, procedures and programs from among alternatives. It also includes selecting purposes and objectives of the actions to achieve them.  Planning requires decision-making that is choosing from among alternative future course of action.
Planning is thus: –
® Planning is concerned with future and it helps the management to look ahead.
® It involves thinking about organization’s prosperity and helps analysis of information.
® It involves a predetermined course of action.
® It specifies the objectives to be attained in future.
® It is basically a problem of choosing from the alternative courses of action.
® It relates with thinking before doing.
® It involves both decision making and problem solving.
® Its objective is to achieve better results.

Unit 3: Planning

Meaning of planning: –

Planning is the important and primary function of management. It sets all other functions into action. It is the beginning of process of management. A manager must plan before coming in action. It is concerned in deciding in advance what to do? How to do? When to do? Why to do? Where to do? And who to do? And answering all these questions depends upon intelligence. Planning is a fully mental work.

Planning is the conscious process selecting and developing the best course of action to accomplish an objective. It is the process of deciding in advance what is to be done .it also involves the selection of objectives, policies, procedures and programs from among alternatives. It also includes selecting purposes and objectives of the actions to achieve them.  Planning requires decision-making that is choosing from among alternative future course of action.

Planning is thus: –

® Planning is concerned with future and it helps the management to look ahead.

® It involves thinking about organization’s prosperity and helps analysis of information.

® It involves a predetermined course of action.

® It specifies the objectives to be attained in future.

® It is basically a problem of choosing from the alternative courses of action.

® It relates with thinking before doing.

® It involves both decision making and problem solving.

® Its objective is to achieve better res

Nature and Characteristics of Planning
1.  Planning is a Primary Function of Management:- Planning is a Primary Function of Management. Setting of goals and lines of action precedes the organization, direction, supervision and control. Planning precedes other functions of management. It is primary requisite but all functions are inter-connected.
2.  Thinking and intellectual process: – Planning is intellectual process of predetermined thinking. It is a process of deciding about future actions. It includes the process where a number of steps are to be taken to decide the future course of action. Managers consider various courses of action which is necessary to achieve the desired goals and learn about the merits and demerits of every course of action and then finally decide what course of action may suit them best.
3.  Planning is a continuous process: – Planning is a continuous process of a manager upon some assumptions. Therefore, the manager has to revise and adjust plans in the changing circumstances. Planning is a continuous process It involves continuous collection, evaluation and selection of data, and scientific investigation and analysis of the possible alternative courses of action and the selection of the best alternative.
4.  Pervasiveness of planning: – Planning follows pervasiveness of planning. It is the function of every managerial personnel. The character, nature and scope of planning may change from personnel to personnel. It is universal activity. It is important to all managers in all levels as planning is required in all levels.
5.  Based on facts: – Planning is not guess work but highly based on facts, realities, objectives and forecasting.
6.  Goal oriented/ future oriented: – Planning is requires achieving objectives because any formulated objectives are meaningless without plans. It identifies actions that would lead to the desired objectives quickly and economically.
7.  Coordination: – Planning helps to coordinate various levels of activities .it provides guidelines to do work to all managers and staffs of all levels.
8.  Others:  – Planning is a selective process. It helps in increasing the efficiency.
Types of planning
Corporate or strategic plan Tactical or division plan Operational or unit plan
This plan is prepared by the top level management by considering the long term objectives of the
organization and strategies to achieve the defined objectives., the strategic plan may concern with product or service, market competition, social responsibility , introduction of technology, goodwill etc. it is based on analysis of future opportunities and threats. Tactical plan is prepared by the middle level management by considering short term objectives of the organization. It is the sub division of corporate plan. It is prepared to allocate divisional activities like production, finance, marketing, personnel and others. These plays a mediator between corporate or operational rule This plan is prepared by the lower level management by considering day to day function of the organization. It is consistent with tactical plan. It prepares schedule of each unit of work. It is concentrated in the best use of organizational resources consisting of manpower materials, money, methods and machine.
Importance of Planning
1.  Focus on objectives: –Planning is related to the organizational objectives. All the operations are planned to achieve the organizational objectives. Planning facilitates the achievement of objectives It requires the clear definition of objectives so that most appropriate alternative courses of action are chosen.
2.  Reduction of Uncertainties/ change: –Future is full of uncertainties. A business organization can operate successfully if it is able to predict the uncertainties. Some of the uncertainties can be predicted by undertaking systematic analysis and systematic forecasting.  Thus, planning helps in reduction of uncertainties which may be caused by changes in all micro and macro level of environment.
3.  Economical: – Planning assists in reducing the cost of performance by the selection of only one course of action amongst the different courses of. It removes hesitancy, avoids crises, eliminates false steps and protects against improper deviations.


4.  Utilization of Resources: –Planning makes effective and proper utilization of all available resources and makes optimum use of all these resources (men , money , machine and material )
5.  Effectiveness: –Planning promotes organizational effectiveness which ensures that the organization is in a position to achieve its objective due to increased efficiency.
6.  Co-ordination:  Plans unify the activities for development of various sub-plans. Various departments work in accordance with the overall plans of the organization. There is harmony in the organization and duplication of efforts are avoided.
7.   Innovation: –Planning helps innovative and creative thinking among the managers because many new ideas come to the mind of a manager when he is planning. It creates a forward-looking attitude among the managers.
Constraints/ limitations/problems of planning
1.  Costly process: planning involves too much expenditure. Money and effort both are required in planning. Planning includes collecting information, data forecasting and evaluation of alternatives. It requires salary and allowances to the experts in the process of providing services.
 So, planning has been accepted as costly process by small and medium size organization
2.  Time consuming: planning is the time consuming process. It delays the business activity to come in action. In the process of planning following the procedures of planning takes a lot of time which may create problem to the organization where immediate action has to be made. So in such situation planning is not suitable.
3.  Unsuitable in emergency situation: as planning is time consuming, it is not suitable in emergency situation because quick decisions is desirable in emergency situation buts planning delays the emergency demand in organization
4.  Lack of reliable data and problem of accurate premises: For planning assumptions have to be developed for future action but future is uncertain and unpredictable. To make reliable data and accurate premises is necessary., in the lack of reliable data and accurate premises, there is chance of business loss and failure
5.  Problem of rapid change: Planning is the game of prediction. Rapid changes may occur in macro and micro level environment of business. planning is to be made in a flexible way to compress the plans in the future
6.  Internal rigidity: internal rigidity may be related to organizational and human psychology policy, procedure and capital investment which create problem in the process of implementation. Staff may not like the changes that may occur frequently in the working procedure. So rigidity may create problem in planning.
7.  Encourage false sense of security: Planning encourages false sense of security against future risk and uncertainty. As future is uncertain, it is unpredictable. Therefore, planning cannot give accurate and reliable results.
Unit 4: Organizing
Concept and meaning of organization
There are so many materials and people in an enterprise. Enterprise uses the manpower and materials for achieving the goals. Materials can be collected, established and coordinated. Manpower must be hired, trained, motivated and put at right place. Managers and workers must be clear about their authority and responsibility.  Organization is defined as the determination of relationship between materials as well as human resources. It is most important and basic function of management. It includes division of work, coordination of people and appropriate establishment of materials and resources. Therefore we can say that organization is necessary function of management. Without it a business firm can’t move ahead. In short organization refers to a mechanism which enables man to live together and perform the activities collectively. It is the foundation on which the whole structure of management is built.
Principles of organization
1. Principle of unity of objectives: Organizational goals, departmental goals, and individual goals must be clearly defined. All goals and objectives must have uniformity. When there is contradiction among different level of goals desired goals can’t be achieved. Therefore, unity of objectives is necessary
2. Principle of specialization:  Sound and effective organization believes on organization. The term specialization is related to work and employees. When an employee takes special type of knowledge and skill in any area, it is known as specialization. Modern business organization needs the specialization, skill and knowledge by this desired sector of economy and thus, efficiency would be established.
3. Principle of coordination: In an organization many equipment, tools are used. Coordination can be obtained by group effort that emphasize on unity of action. Therefore, coordination facilitates in several management concepts
4. Principle of authority: Authority is the kind of right and power through which it guides and directs the actions of others so that the organizational goals can be achieved. It is also related with decision making. It is vested in particular position, not to the person because authority is given by an institution and therefore it is legal. It generally flows from higher level to lowest level of management. There should be unbroken line of authority.
5. Principle of responsibility: Authentic body of an organization is top level management, top level management direct the subordinates. Departmental managers and other personnel take the direction from top level management to perform the task. Authority is necessary to perform the work .only authority is not provided to the people but obligation is also provided. So the obligation to perform the duties and task is known as responsibility. Responsibility can’t be delegated. It can’t be avoided.
6. Principle of delegation: Process of transferring authority and creation of responsibility between superior and subordinates to accomplish a certain task is called delegation of authority. Authority is only delegated, not responsibilities in all levels of management. The authority delegated should be equal to responsibility
7. Principle of efficiency: In enterprise different resources are used. Therese resources must be used in effective manner. When the organization fulfill the objectives with minimum cost, it is effective. Organization must always concentrate on efficiency.

8. Principle of unity of command:  subordinates should receive orders from single superior at a time and all subordinates should be accountable to that superior. More superior leads to confusion, delay and so on.
9. Principle of span of control: unlimited subordinates cant be supervised by manager, this principle thus helps to determine numerical limit if subordinates to be supervised by a manager. This improves efficiency.
10. Principle of balance: the functional activities their establishment and other performances should be balanced properly. Authority, centralization, decentralization must be balance equally. This is very challenging job but efficient management must keep it.
11. Principle of communication:  Communication is the process of transformation of information from one person to another of different levels. It involves the systematic and continuous process of telling, listening and understanding opinions ideas, feelings, information, views etc, in flow of information. Effective communication is important
12. Principle of personal ability: for sound organization, human resources is important. Employees must be capable. Able employees can perform higher. Mainly training and development programs must be encouraged to develop the skill in the employees
13. Principle of flexibility:  organizational structure must be flexible considering the environmental dynamism. Sometimes, dramatically change may occur in the organization and in that condition, organization should be ready to accept the change
14. Principle of simplicity: this principles emphasizes the simplicity of organizational structure, the structure if organization should be simple with minimum number of levels do that its member an understand duties and authorities.
Importance of organization
1. Mechanism for management in action:- organization is not only a chart. It is a mechanism for management in action. So many management actions such as direction, motivation, coordination and control help ion organizing function. It also helps to manage the business firm with proper management actions
2. Facilitate in management and operation:- organization is directly or indirectly related to well defined work, authorities, responsibilities and account-abilities  Managers and other employees are benefited by appropriate functional activities. It helps in smooth and effective management operation giving effective functional activities.
3. Effective delegation:- all level of mgmt must make the decisions . Sufficient level of authority and responsibility must be delegated to make the decisions. When the delegation of authority and responsibility is affected all level of employees can make the decisions easy. Organization helps in effective delegation.
4. Growth and diversification:- organization clear division of work, delegation of authority and responsibility, the relationship among resources etc. these activities helps in growth and diversification function. On the other hand, sound org give the clear cut frame work to do work too
5. Optimum use of technological resources: org use machines, equipment and tools. With the help of org many sophisticated technologies and improved materials are used. Use of latest technologies help in efficiency improvement
6. Use of human resource:- human resource must be properly utilized. Org help in great utilization of manpower by placing right people and right place in the basis of their qualification, experience, skill and knowledge etc. Developing employees and motivating then are most important tools to use the human resources.
7. Flexibility:- org may be changed according to the needs of environment and changing circumstances. The org structure must be flexible that helps to adjust in external as well as internal environment.
8. Productivity increment: – when the authorities and responsibility are given to all employees they can make decision in their working level, appropriate adjustment of resources is most important management function which help to increase the productivity.
Organizing process
Determination of objectives: In the 1st step of organizing process, the objective of an enterprise is to be determined. Every business firm set the goals and they want to achieve these goals. Further existence of business firms depend on the goal achievement. In this process, strategy, planning and policies are made.
Determination of activities: After determination of objective, the activities must be determined. There may be various activities in an enterprise. According to the goals of the firm the activities must be determined. The activity may be divided into different functions like production, financing, sale, administration, recruitment etc. all these activities must be directed towards the goals of the enterprise.
Grouping activities: In organization different works of different nature have to be performed. When similar natures of work are grouped in unit, section, or department, then that is known as grouping of activities. It is a function of departmentation. For example the activities of production may be grouped separate in production department
Allocation of duties and responsibility: After grouping the activities, an individual is assigned to a specific job or post. According to position, duties, and responsibilities the ob must be specified. When duties are provided to the employee then he/she is responsible for doing the job. Therefore it is an important step of organizing process.
Delegation: Mainly authority is in top level management. And the authority must be delegated to worker through middle level and lower level management. Authorities, duties, and responsibilities come together. So without authorities, duties, and responsibilities there is no proper work done and balance.
Communication: After proper delegation of authority, effective communication system must be developed. It is the most important step that helps in liking so many department, position and other authority group. When communication system is not effective, the organizing function is not better.
Coordination: All employees, department, divisions and branches conduct many activities. Proper and effective coordination coordinates these activities. After communicating all essential information and messages all resources and factors must be coordinated in the enterprise. Without proper coordination, team work can’t be established and consequently the organizational goals can’t be achieved.
Line organization structure
It is the simplest and oldest form of organizational structure. The line of authority flows vertically from top most executive to the lowest subordinate throughout the organization. Where, managers have direct authority over their respective subordinates through the chain of command. Authority flows directly from top to bottom through various managerial positions. It is simple form of organization. Only one form of authority that is line authority exists in this form of organization. Line authority refers to the direct authority of a manager over his subordinates. The authority responsibility relationship is clearly established. All managers in line organization have full authority to decide things and act with respect to their related functions. in line organization department are created for basic activities and departmental heads are responsible for all activities performed in the department.
Merits of line organization:
1. It is very simple to establish.
2. It clearly defines the authority, responsibility and accountability of a job
3. It can be easily adapted to the requirement of the organization.
4. Managers have exclusive authority over their unit so they can easily make changes in the functioning of the unit when required
5. There is definite authority at every level so that everyone can take decisions quickly.
6. Every employee knows to whom he/she is responsible and from whom they receive their orders.
7. It confirms scalar principle of organization where one subordinate receives the orders from single superior.
8. All activities relating to single department are managed by one individual.
9. There is clear cut definition of authority and identification of responsibility, relationships and so on.

Demerits of line organization
1. The line executives are generalists and not specialists.
2. The top level managers are overloaded with work.
3. There is concentration of authority at top level only. If top level managers are not capable there may be failure.
4. All managers and supervisors handle their job on their own ways independently with grow the line organization my find it difficult to maintain effective coordination between different departments and units.
5. There is only one way communication i.e. from top to bottom
6. It is not suitable for large organization
7. There is possibility of nepotism and favoritism.
8. There is replacement problem during absenteeism of top authority
9. It can be autocratic.

Line and staff organization structure
In this type of organization structure two type of authority relationship exists. They are staff and line authority. Staff authorities’ means authority to advice, support and serve the line managers. All managerial functions are practiced by line authority with the help of specialized skill of staff authority. It is modification of line organization and is more complex than it. Staff managers and line managers are distinguished on the basis of their role. There is more specialization and division of work. However conflict may arise between line and staff authority.
Merits of line and staff organization structure:
1. The line executives are generalists and staff executives are specialists and they work together with coordination
2. The top level managers are not overloaded with work. Staff specialists give relief in critical matters.
3. There is no concentration of authority at top level only. Even if top level managers are not capable there is no failure because staff managers can help to overcome the problematic issues through proper decisions and specialization..
4. All problems are handled with care and are tries to solve with the help of staff specialists..
5. There is two way communications i.e. from top to bottom and bottom to top. There can be feedback and suggestion with orders too.
6. There is better decision taking and improvement in efficiency.
7. It is suitable for large organization
8. There is better utilization of personnel skills and knowledge.

Demerits of line and staff organization
1. It is difficult to establish and is costly too.
2. There is possibility of conflict between the line managers and staff managers. Line managers may ignore staff’s advice and complain that staff doesn’t give right type of advice. Staff managers can complain that their advice is not properly implemented.
3. The allocation of authority and responsibility between the line and staff official I generally not clearly defined.
4. Line managers may be too much dependant upon the staff authority. Staff authority however is not accountable for the result. Sometimes when staff authority do no perform well there may be failure
5. There is wide difference between the approach of line managers and staff managers.
6. There can be reduction of initiative power o line authority.

Functional organization
In functional organization all business activities of an enterprise are divided into number of fractions and each function is entrusted to a specialist, each specialist is known as functional specialist and authority delegated to him is known as functional authority. One of the main features of this organization is that a functional manager can exercise functional authority over his own sub-ordinate but also over all sub ordinates in all other functional departments. The principle of unity of command is not applied in his type of organizational structure. The sub-ordinate may be confused by the multiple command system. The functions are divided into units like marketing, production, research and development, human resource etc.

Merits of functional organization structure:
1. It provides benefits of specialist. Every manager is expert in his own field of knowledge. There is advantage of best managerial decisions
2. Here each department is given under supervision of specialist. All decisions about the departments are also taken with the help of specialists.
3. There is no concentration of authority at top level only. Even if top level managers are not capable there is no failure because functional managers can help to overcome the problematic issues through proper decisions and specialization.
4. Functional organization provides preference for growth and expansion of business activity.
5. There is separation of mental and manual work.
6. It is suitable for large organization

Demerits of functional organization
1. Subordinates are always in confusion to obey the orders due to multiple command system.
2. No formal relationship among the departmental specialist.
3. there is lack of mutual understanding and coordination of activities of different department
4. There is delay in decision making.
5. Narrow vision of departmental specialist creates problems in functional organizational.
6. There is weak discipline among the employees.
7. There is lack of fixed responsibility.
Departmentation
It is defined as a process of dividing small units of organizational activities. Departmentation may be called division sections branch etc. it helps to provide the specialization, develops the skill and knowledge of manpower and the efficiency of manpower of an enterprise will be increased. It specifies the area of the activities that facilitate the managerial task.
Methods of Departmentation
1. Departmentation by function: – grouping all similar activities of the business into department is called functional departmentation. It is the most simple and common method of departmentation. In other words, when the activities of an enterprise re proved on the basis of function, it is known as departmentation by function.

2. Departmentation by product or services: – when the departmentation are developed on the basis of product or services, it is known as departmentation by product or services. It creates division for each product or product line. This is suitable for each product and for those organizations with large and diversified product.

3. Departmentation by customer: – this type of organization is formed to give individual attention to the diverse customer. There can be so many customers in an organization. Such customer may be whole seller, retailer etc.  When the organizations group the department on the basis of customer, it is known as departmentation by customer.

4. Departmentation by time: – when the organization groups the activities on the basis of time, it is known as departmentation by time. Mainly manufacturing enterprise divide the time at different shift such as morning shift, day shift, and night shift.
5. Departmentation by location/ territory: – when the departmentation is done on the basis of location /territory, it is known as departmentation by location/ territory. It is useful when the organizational activities and business activities of an organization are widely spread all over the nation. Generally bank, insurance companies use this method. Global companies also use this same basis. For e.g.; Coca-Cola company

6. Departmentation by process: – this method is mainly used in product oriented industry. In the process of making goods there will be different stage or process. When one process is categorized in one department and next process is categorized in next department, it is known as departmentation by process.

7. Departmentation by number: – some organization may have large number of people. All people may not be in same department and in that condition; a certain number of people are grouped in one department and other certain number in other department. Thus, when department are developed on the basis of number is known as Departmentation by number. For e.g. army
Meaning of authority, responsibility and accountability
Meaning of authority
Authority is the kind of right and power through which it guides and directs the actions of others so that the organizational goals can be achieved. It is also related with decision making. It is vested in particular position, not to the person because authority is given by an institution and therefore it is legal.
Meaning of responsibility
Authentic body of an organization is top level management, top level management direct the subordinates. Departmental managers and other personnel take the direction from top level management to perform the task. Authority is necessary to perform the work .only authority is not provided to the people but obligation is also provided. So the obligation to perform the duties and task is known as responsibility.
Meaning of accountability
Subordinates receive the authority from top level of the organization and they also receive the command and direction to perform the work. In other words, they are authorized and responsible for a specific function. Sometimes the task may not be performed effectively the subordinates may not be performed effectively. The subordinates must report to boss about the assigned task. S/he must answer his/her performance which is known as accountability.
Meaning of delegation of authority
All activities are not performed by one person. Authority should be provided to the subordinates too. Process of transferring authority and creation of responsibility between superior and subordinates to accomplish a certain task is called delegation of authority. It can take place without decentralization. It can be withdrawn by delegator at any time. It minimizes the burden of managers of unit, departments or plant. Relationship is between superior and immediate subordinates are indicated. It is technique of management used to get the things done through others. It is confined to manager and subordinates. Authority is only delegated, not responsibilities. Very important to management process Control remains in hand of superior who supervise the activities of subordinates. It is an art of management science. When authority is not given to subordinates there is no performance. Delegation is the process of sharing power and work (deliver the power from one to another).
Principles of delegation of authority
1. Principle of parity of authority and responsibility– parity of authority and responsibility is one of the important principles of delegation of authority. There is equality in assigned task and power to do the work. Authority to the subordinates is given by the superior on the basis of assigned task. So Authority to the subordinates is given nether more or less than the task otherwise their can be improper utilization of authority and mismanagement of task.
2. Principle of absoluteness of responsibility– according to it, responsibility can’t be delegated. Only authority can be delegated. The person who delegates authority is himself responsible for his seniors.
3. Principle of unity of command– according to it, subordinates must be commanded by one superior, they should take their task from one superior and should be accountable fro their responsibility toward the superior level of operation
4. Principle of functional definition of authority and responsibility– as per this principle. Duties and task assigned by the superior and the authority given to fulfill the task should be clearly explained and decided. Bt this subordinates can know about the limit of one’s right, duties and responsibility.
5. The scalar chain– according to it, authority flows from top to bottom. So that scalar chain is the basis of relationship between the superior and subordinates. It emphasizes the relation between superior and subordinates by which delegation will be easier.
Barriers to effective delegation of authority
Even though delegation is vital for the efficient functioning of the organization, in practice there are several factors which prevent effective delegation. These problems in delegation may be classified into three categories.

Obstacles due to superiors
Managers are often reluctant to delegate authority due o the following reasons
1. Some managers are autocratic and they think that delegation will led to reduction of their influence in the organization.
2. Some managers think that no one can do the job as well as they can do. They think themselves as the most experienced ones.
3. An incompetent manager doesn’t want to delegate his authority for fear of being exposed.
4. Few mangers are inclined to accept the risk of wrong decisions which the subordinates might take. Therefore, they do not delegate authority and take all the decisions themselves. They are unwilling to calculate the risk.
5. Managers may not delegate authority because he feels that his subordinates are not capable and reliable. He lacks confidence in his subordinates.
6. A manager will hesitate to delegate authority if he has no proper means of control to ensure that the authority is being properly used by his subordinates

Obstacles due to subordinates
The subordinates may not like to accept the delegated authority due to the following reasons
1. Subordinate may be reluctant to accept delegation when they lack self confidence
2. Some subordinates may have the attitude of spoon feeding and depend excessively on the loss for all decisions
3. when the subordinates are already overburdened with duties , they do not like additional responsibility through delegation
4. They avoid delegation when adequate information, working facilities and resources are not available.
5. They reject delegation of authority if no incentives are available to them.

Obstacles due to organizing weakness:
Sometimes delegation may be hampered due to weakness in the organization structure. Some of the weaknesses are as follows
1. inadequate planning
2. splintered authority
3. lack of unity of command
4. absence of effective control techniques
5. non availability of competent managers
6. unclear authority relationship
7. Environment of internal distrust.
Meaning of decentralization of authority.
Decentralization is delegation of and dispersion of authority from top executive to the low level administrator or it may be geographical dispersion of authority from central to many branches. It is not possible without delegation of authority. It prepares the organizational participants of the organization. It is both philosophy and technique of management. Relationship is between top level, management, departments and units. It involves all managers at all level and relates relationship between departments, sections and units. Withdrawal of authority is not simple in this case. It is optional and situation as per the need of the organization. Control system is also delegated and decentralized to the departmental managers. Superior is relieved from responsibilities too.
Needs/ advantages of decentralization of authority


1. It provides relief to top executives from routine and time consuming work and helps them to devote greater attention to organizational level works
2. It ensures executive developmentof capable managers because subordinates get opportunity for exercising their own judgment, makes own decision, deal will difficult situations, handle the risk and be trained
3. It facilities growth and diversification of the organization because it helps to expand their production and diversifies production through conversion of centralized structure to decentralized structure.
4. It permits the managers, close to work and knowledgeable, to make quick and better decisions about circumstances of problems, details of work and so on.
5. It provides rights, power, and authority, prestige to middle and low level management which helps in getting opportunity for leadership and participation and higher motivation.
6. It leads to effective supervision and control by evaluating the performance of each unit.

Difference between delegation and decentralization of authority

Bases	Delegation of authority	Decentralization of authority
Nature	Process of transferring authority and creation of responsibility between superior and subordinates is called delegation. It can take place without decentralization	Decentralization is delegation of and dispersion of authority. It is not possible without delegation of authority
Purpose	It minimizes the burden of managers of unit, departments or plant	It prepares the organizational participants of the organization
Relationship	Relationship is between superior and immediate subordinates are indicated	Relationship is between top level, management, departments and units
Techniques	It is technique of management used to get the things done through others	It is both philosophy and technique of management
Parties	It is confined to manager and subordinates	It involves all managers at all level and relates relationship between departments, sections and units.
Responsibilities	Authority is only delegated, not responsibilities	Superior is relieved from responsibilities too
Necessity	Very important to management process	It is optional and situational as per the need
Control	Control remains in hand of superior who supervise the activities of subordinates	Control is delegated and decentralized to the departmental managers
Withdrawal       of authority	It can be withdrawn by delegator at any time	Withdrawal of authority is not simple.

Factors affecting decentralization of authority
1. Size– size of the organization, terms of sales number, plans, number of employees affects the decentralization of authority. It is observes that the speed and adequacy of decision making, flexibility and efficiency are enhanced through decentralization of authority in case of very large multi product, diverse and complex organization. Therefore in larger size of organization, there will be more dispersion of authority
2. History and age– the size of organization, the degree of decentralization depends upon history and ages of organization. If it is organized by an individual then in such kind of organization, there will be centralization of authority. But in case of business activities when there is merging being done there is decentralization of authority. In any organization, relatively high degree of centralized authority may be needed when new values and viewpoint are establishes by the executives
3. Philosophy of top management– decentralization of authority depends upon philosophy of top management. it is seen that in the owners managed enterprise there is delegation of authority but in professionally managed enterprise decentralization of authority is seen
4. Competent personnel– competent personnel affect decentralization of authority. more personnel at lower level more policy of decentralization of authority,
5. Strategy and organization environment– strategy and organization environment influences market, technological environment, competition. It is the basis of determining decentralization of authority and centralization of authority.
6. Nature and management function– the degree of decentralization of authority is influenced by nature and management functions. Generally functions like production and sales are more decentralized and finance, personnel, research and development are highly centralized.
7. Control techniques– decentralization of authority is more when control technique is good. When control system is reliable, there is better and higher decentralization of authority to the lower level.
8. Dispersion of organizational plans– decentralization of authority also depends upon dispersion of organizational plans of the organization. Organization has officer of different types located at different places. That’s why decentralization of authority becomes necessary.

Unit 5: Decision-Making
Meaning of decision making
Decision making is a process of selecting the best among the different alternatives. It is the act of making a choice. There are so many alternatives found in the organization and departments. Decision making is defined as the selection of choice of one best alternative. Before making decisions all alternatives should be evaluated from which advantages and disadvantages are known. It helps to make the best decisions. It is also one of the important functions of management. Without other management functions such as planning, Organizing, directing, controlling, staffing can’t be conducted because in this managerial function decision is very important. According to Stephen P. Robbins, “decision making is defines as the selection of a preferred course of action from two or more alternatives.”
Importance of decision making
1. Implementation of managerial function: Without decision making different managerial function such as planning, organizing, directing, controlling, staffing can’t be conducted. In other words, when an employee does, s/he does the work through decision making function. Therefore, we can say that decision is important element to implement the managerial function.

2. Pervasiveness of decision making: the decision is made in all managerial activities and in all functions of the organization. It must be taken by all staff. Without decision making any kinds of function is not possible. So it is pervasive.

3. Evaluation of managerial performance: Decisions can evaluate managerial performance. When decision is correct it is understood that the manager is qualified, able and efficient. When the decision is wrong, it is understood that the manager is disqualified. So decision making evaluate the managerial performance.

4. Helpful in planning and policies: Any policy or plan is established through decision making. Without decision making, no plans and policies are performed. In the process of making plans, appropriate decisions must be made from so many alternatives. Therefore decision making is an important process which is helpful in planning.

5. Selecting the best alternatives: Decision making is the process of selecting the best alternatives. It is necessary in every organization because there are many alternatives. So decision makers evaluate various advantages and disadvantages of every alternative and select the best alternative.

6. Successful; operation of business: Every individual, departments and organization make the decisions. In this competitive world; organization can exist when the correct and appropriate decisions are made. Therefore correct decisions help in successful operation of business.
Meaning of decision making
Decision making is a process of selecting the best among the different alternatives. It is the act of making a choice. There are so many alternatives found in the organization and departments. Decision making is defined as the selection of choice of one best alternative. Before making decisions all alternatives should be evaluated from which advantages and disadvantages are known. It helps to make the best decisions. It is also one of the important functions of management. Without other management functions such as planning, Organizing, directing, controlling, staffing can’t be conducted because in this managerial function decision is very important. According to Stephen P. Robbins, “decision making is defines as the selection of a preferred course of action from two or more alternatives.”
Importance of decision making
1. Implementation of managerial function: Without decision making different managerial function such as planning, organizing, directing, controlling, staffing can’t be conducted. In other words, when an employee does, s/he does the work through decision making function. Therefore, we can say that decision is important element to implement the managerial function.

2. Pervasiveness of decision making: the decision is made in all managerial activities and in all functions of the organization. It must be taken by all staff. Without decision making any kinds of function is not possible. So it is pervasive.

3. Evaluation of managerial performance: Decisions can evaluate managerial performance. When decision is correct it is understood that the manager is qualified, able and efficient. When the decision is wrong, it is understood that the manager is disqualified. So decision making evaluate the managerial performance.

4. Helpful in planning and policies: Any policy or plan is established through decision making. Without decision making, no plans and policies are performed. In the process of making plans, appropriate decisions must be made from so many alternatives. Therefore decision making is an important process which is helpful in planning.

5. Selecting the best alternatives: Decision making is the process of selecting the best alternatives. It is necessary in every organization because there are many alternatives. So decision makers evaluate various advantages and disadvantages of every alternative and select the best alternative.

6. Successful; operation of business: Every individual, departments and organization make the decisions. In this competitive world; organization can exist when the correct and appropriate decisions are made. Therefore correct decisions help in successful operation of business.
Meaning of decision making
Decision making is a process of selecting the best among the different alternatives. It is the act of making a choice. There are so many alternatives found in the organization and departments. Decision making is defined as the selection of choice of one best alternative. Before making decisions all alternatives should be evaluated from which advantages and disadvantages are known. It helps to make the best decisions. It is also one of the important functions of management. Without other management functions such as planning, Organizing, directing, controlling, staffing can’t be conducted because in this managerial function decision is very important. According to Stephen P. Robbins, “decision making is defines as the selection of a preferred course of action from two or more alternatives.”
Importance of decision making
1. Implementation of managerial function: Without decision making different managerial function such as planning, organizing, directing, controlling, staffing can’t be conducted. In other words, when an employee does, s/he does the work through decision making function. Therefore, we can say that decision is important element to implement the managerial function.

2. Pervasiveness of decision making: the decision is made in all managerial activities and in all functions of the organization. It must be taken by all staff. Without decision making any kinds of function is not possible. So it is pervasive.

3. Evaluation of managerial performance: Decisions can evaluate managerial performance. When decision is correct it is understood that the manager is qualified, able and efficient. When the decision is wrong, it is understood that the manager is disqualified. So decision making evaluate the managerial performance.

4. Helpful in planning and policies: Any policy or plan is established through decision making. Without decision making, no plans and policies are performed. In the process of making plans, appropriate decisions must be made from so many alternatives. Therefore decision making is an important process which is helpful in planning.

5. Selecting the best alternatives: Decision making is the process of selecting the best alternatives. It is necessary in every organization because there are many alternatives. So decision makers evaluate various advantages and disadvantages of every alternative and select the best alternative.

6. Successful; operation of business: Every individual, departments and organization make the decisions. In this competitive world; organization can exist when the correct and appropriate decisions are made. Therefore correct decisions help in successful operation of business.
Meaning of decision making
Decision making is a process of selecting the best among the different alternatives. It is the act of making a choice. There are so many alternatives found in the organization and departments. Decision making is defined as the selection of choice of one best alternative. Before making decisions all alternatives should be evaluated from which advantages and disadvantages are known. It helps to make the best decisions. It is also one of the important functions of management. Without other management functions such as planning, Organizing, directing, controlling, staffing can’t be conducted because in this managerial function decision is very important. According to Stephen P. Robbins, “decision making is defines as the selection of a preferred course of action from two or more alternatives.”
Importance of decision making
1. Implementation of managerial function: Without decision making different managerial function such as planning, organizing, directing, controlling, staffing can’t be conducted. In other words, when an employee does, s/he does the work through decision making function. Therefore, we can say that decision is important element to implement the managerial function.

2. Pervasiveness of decision making: the decision is made in all managerial activities and in all functions of the organization. It must be taken by all staff. Without decision making any kinds of function is not possible. So it is pervasive.

3. Evaluation of managerial performance: Decisions can evaluate managerial performance. When decision is correct it is understood that the manager is qualified, able and efficient. When the decision is wrong, it is understood that the manager is disqualified. So decision making evaluate the managerial performance.

4. Helpful in planning and policies: Any policy or plan is established through decision making. Without decision making, no plans and policies are performed. In the process of making plans, appropriate decisions must be made from so many alternatives. Therefore decision making is an important process which is helpful in planning.

5. Selecting the best alternatives: Decision making is the process of selecting the best alternatives. It is necessary in every organization because there are many alternatives. So decision makers evaluate various advantages and disadvantages of every alternative and select the best alternative.

Successful; operation of business: Every individual, departments and organization make the decisions. In this competitive world; organization can exist when the correct and appropriate decisions are made. Therefore correct decisions help in successful operation of business.

Steps in decision making


1. Identification of problems: the first step of decision making is identification of problems. First of all, managers must identify the problem. The problem has to be found and defined. Symptoms are identified and problems should be judged, symptoms are not problems. They are warning signs of problems. So, managers should search for symptoms for identification of problems. Such symptoms can be falling of sales, profit etc. It is said that problem identified is half solved is identification of problem should be effective.
2. Analysis of problem: after identification of problems, the problem should be analyzed by the decision maker. It is the assembly of fact and clarifying it. Relevant information must be collected and analyzed according to the complexity and nature of problems.
3. Developing the alternative solution: after identification and analysis of problems different probable solutions have to be developed which is known as developing the alternative solutions. there may be many alternative  past experience, expert opinion, discussions etc which may be helpful to develop the alternative
4. Evaluation of best alternative: after developing the alternative solution evaluation of best alternative is done. It is determined that which alternative has how much advantage and disadvantages. in other words, alternatives  are evaluated in so many factors like cost factors, risk , benefits, facilities etc. therefore it is very important
5. Selection of best alternative: after evaluating alternative, the best alternative is to be selected from various alternative. After developing alternative, the managers should taste each of them by imagining things that he has already put in effect. He should try to foresee the desirable consequences of adopting each alternative. It is done for best selection. therefore it is very important
6. Implementation of best alternative: after selection of finest alternative, it must be used in the organization effectively. Effectiveness of decisions in achieving the desired goals depends upon its implementation. It they are not implemented effectively then best results can’t be obtained. Therefore proper implementation of best alternative is necessary.
7. Review of implementation: it is the last step of decision making process. When the implementation of best alternative is reviewed, the process of decision making is finished. The result of implementation should be monitored and evaluated through which effectiveness can be measured.

ypes of decision making


1. Programmed and non programmed decisions: Programmed decisions are those which are normally repetitive in nature and are taken as a routine job and responsibilities. These types of decisions are made by middle level management in accordance with some policies, rules and procedures. They have short term impact. For example: – granting a leave to an employee, purchasing office materials etc. non programmed decisions are non repetitively taken by top executives. They need to collect data and analyze then and forecast the strategic plans
2. Major and minor decisions: among different decisions some decisions are considerably more important than others and are prioritized. They are called major decisions. For example, replacement of man by machine, diversification of product etc. contrary to that, some of the remaining decisions are considerably less important than others and are not so prioritized. They are minor decisions. For example, store of raw materials etc.
3. Routine and strategic decisions: Routine decisions are those decisions which are considered as tactical decisions. They are taken frequently to achieve high degree of efficiency in the organizational activities. For example, parking facilities, lighting and canteen etc. strategic decisions are those which are related to lowering the prices of products, changing the product etc. they take more fund and degree of partials.
4. Organizational and personal decision: Organizational decision is taken by top executives. For official purpose. They affect the organizational activities directly. Authority is also delegated. Personal decisions are concerned to an employee. The executives whenever takes the decisions personally that is known as personal decisions
5. Individual and group decisions: When a single employee is involved in decision making it is called individual decision. They are taken by ole proprietor when the problem is of routine nature. On the other hand when the decision is of group taken in a large organization where important and strategic decisions are taken the it is a group decision
6. Policy and operating decisions: Policy decisions are taken by top level management to change the rules, procedures, organizational structure etc and they have a long tern effect. Operational decisions are taken by low level management which have short term effect and which affect the day to day operation of the organization.