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Management concepts and Organisation Behaviour

Dr. D.H. Malini Srinivasarao MBA, Ph.D, FDP (IIMA) Assistant Professor Department of Management Pondicherry University Karaikal -609605

Management and organization behaviour

Management Nature of Management Scope of management Functions of management Role of managers

There is no precise definition for management, management has decision oriented, people oriented, function oriented, definition and production and or efficiency oriented.

Management is the process of involving planning, organizing, staffing, directing and controlling human efforts to achieve stated objectives in an organization.

According to Lawrence A Appley - "Management is the development of people and not the direction of things". According to Joseph Massie - "Management is defined as the process by which a cooperative group directs action towards common goals". In the words of George R Terry - "Management is a distinct process consisting of planning, organising, actuating and controlling performed to determine and accomplish the objectives by the use of people and resources". According to James L Lundy - "Management is principally the task of planning, coordinating, motivating and controlling the efforts of others towards a specific objective". In the words of Henry Fayol - "To manage is to forecast and to plan, to organise, to command, to co-ordinate and to control".

In the words of Koontz and O'Donnel - "Management is defined as the creation and maintenance of an internal environment in an enterprise where individuals working together in groups can perform efficiently and effectively towards the attainment of group goals".

According to Ordway Tead - "Management is the process and agency which directs and guides the operations of an organization in realizing of established aims".
According to Stanley Vance - "Management is simply the process of decision-making and control over the actions of human beings for the express purpose of attaining predetermined goals". F.W. Taylor -Art of knowing what you want to do and then seeing that it is done the best and cheapest way.

Peter F.Drucker Management is work and as such it has its own skills, its own tools and its own techniques. Management is the art of getting things done through and with people. WHAT IS MANAGEMENT? 1.Field of Study -Management principles, techniques, functions, etcProfession 2.Team or Class of people-Individual who performs managerial activities or may be a group of persons 3.Process-Managerial activities -planning, organizing, staffing, directing, controlling.

Nature of Management
The study and application of management techniques in managing the affairs of the organization have changed its nature over the period of time. Various contributions to the field of management have changed its nature. Therefore the nature of management is: Multidisciplinary Dynamic nature of principles Relative not absolute principles Management science or art Management as profession Universality of management

CHARACTERISTICS OF MANAGEMENT 1)Is a Process /a function. 2)Is a Social Process. 3)Involves Group Effort. 4)Aims at achieving predetermined objectives. 5)Required at all levels of management 6)Is a Profession 7)Is comprised of following functions: Planning Organizing Directing Controlling Co-ordination 8)Is an art and science.


Planning Look ahead and chart out future course of operation Formulation of Objectives, Policies, Procedure, Rules, Programmes and Budgets
Organizing Bringing people together and tying them together in the pursuit of common objectives. Enumeration of activities, classification of activities, fitting individuals into functions, assignment of authority for action.

Directing Act of guiding, overseeing and leading people. Motivation, leadership, decision making. Controlling Laying standards, comparing actual and correcting deviationachieve objectives according to plans. Co-ordination Synchronizing and unifying the actions of a group of people.

MANGEMENT IS AN ART AND SCIENCE Art Practical know how Technical skills Concrete results Creativity Personalized nature Science Empirically Derived Critically tested General principles Cause and effect relationship Universal applicability MANAGEMENT AS A SCIENCE PROVIDES PRINCIPLES AND AS AN ART HELPS IN TACKLING SITUATIONS.

Management As Science
As a systematic body of knowledge pertaining to an area of study and contains some general truths explaining past events or phenomena". 1. Management is a systematized body of knowledge and its principles have evolved 2. 2. The kind of experimentation (as in natural sciences) cannot be accompanied in the area of management since management deals with the human element. 3. In management, it is not possible to define, analyse and measure phenomena by repeating the same conditions over and over again to obtain a proof. Management like other social sciences can be called as "inexact science"

Management as an art
'Art' refers to "the way of doing specific things; it indicates how an objective is to be achieved. 1. Management while performing the activities of getting things done by others is required to apply the knowledge of certain underlying principles which are necessary for every art. 2. Management gets perfection in the art of managing only through continuous practice. 3. Management implies capacity to apply accurately the knowledge to solve the problems, to face the situation and to realize the objectives fully and timely. The above observation makes management an art and that to a fine art.

Management is both a Science as well as an Art

Management is both a science as well as an art. The science of management provides certain general principles which can guide the managers in their professional effort. The art of management consists in tackling every situation in an effective manner. the science and the art of management go together and are both mutually interdependent and complimentary. Management is thus a science as well as an art. It can be said that-"the art of management is as old as human history, but the science of management is an event of the recent past."


Differences Oliver Sheldon Administration Function of industry concerned-with determination of corporate policy-co-ordination of finance, production and distributionunder the control of the executive. Management: Function of industry concerned-in the execution of policywithin the limits setup by administration.

Florence & Tead A process of thinking more at higher levels A process of actual operation.
Spriegal & Lansburg More at higher levels Less at lower levels Less at higher levels More at lower levels

II. Management Includes Administration. Brech -Management is an all inclusive function. Top Management-Formulation of policy, co-ordination, motivation of personnel. Middle Management-Formulation of policies to a lesser extent, coordination, motivation and planning control. Lower Management-Supervision and control of day to day activities including administrative procedures. III . No Distinction Fayol-cannot distinguish which activities belong to Management and which to administration . Administration -Higher executive functions in government public utility etc. Management Used for the same function in the business sector.

WHAT A MANAGER DOES? ROLES OF A MANAGER -Achieve Objectives through and with people -Identity and Utilize Resources Optimum -Plan, Analyze, Interpret, Collaborate, educate, Problem solver, -Communicator, build team, Change agent, Chief executive. Interpersonal roles Figurehead Leader Liason

Information roles Monitoring Disseminator Spokesman Decisional roles Entrepreneur Disturbance handler Resource allocator Negotiator

Systems Approach to Management EXTERNAL ENVIRONMENT INPUTS: Human, Capital, Managerial, Technological, Goals Planning Organizing Staffing Leading Controlling OUTPUTS Products, Services, Satisfaction, Goal integration, Profits, etc Communication External environment Opportunities Threats

The term Levels of Management refers to a line of demarcation between various managerial positions in an organization. The number of levels in management increases when the size of the business and work force increases and vice versa. The level of management determines a chain of command, the amount of authority & status enjoyed by any managerial position. The levels of management can be classified in three broad categories: Top level / Administrative level Middle level / Executory Low level / Supervisory / Operative / First-line managers Managers at all these levels perform different functions. The role of managers at all the three levels is discussed below:

Top Level of Management It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions. The role of the top management can be summarized as follows Top management lays down the objectives and broad policies of the enterprise. It issues necessary instructions for preparation of department budgets, procedures, schedules etc. It prepares strategic plans & policies for the enterprise. It appoints the executive for middle level i.e. departmental managers. It controls & coordinates the activities of all the departments. It is also responsible for maintaining a contact with the outside world. It provides guidance and direction. The top management is also responsible towards the shareholders for the performance of the enterprise.

Middle Level of Management The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as They execute the plans of the organization in accordance with the policies and directives of the top management. They make plans for the sub-units of the organization. They participate in employment & training of lower level management. They interpret and explain policies from top level management to lower level. They are responsible for coordinating the activities within the division or department. It also sends important reports and other important data to top level management. They evaluate performance of junior managers. They are also responsible for inspiring lower level managers towards better performance.

Lower Level of Management Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees. In other words, they are concerned with direction and controlling function of management. Their activities include Assigning of jobs and tasks to various workers. They guide and instruct workers for day to day activities. They are responsible for the quality as well as quantity of production. They are also entrusted with the responsibility of maintaining good relation in the organization. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers.

They help to solve the grievances of the workers. They supervise & guide the sub-ordinates. They are responsible for providing training to the workers. They arrange necessary materials, machines, tools etc for getting the things done. They prepare periodical reports about the performance of the workers. They ensure discipline in the enterprise. They motivate workers. They are the image builders of the enterprise because they are in direct contact with the workers.


Subject-matter of Management
Management is considered as a continuing activity made up of basic management functions like planning, organizing, staffing, directing and controlling. These components form the subject-matter of management. Functional Areas of Management: Management covers the following functional areas:l. Financial Management: Financial management includes forecasting, cost control, management accounting, budgetary control, statistical control, financial planning etc. l I. Human Resource Management: Personnel / Human Resource Management covers the various aspects relating to the employees of the organisation such as recruitment, training, transfers, promotions, retirement, terminations, remuneration, labour welfare and social security, industrial relations etc. l Marketing Management: Marketing management deals with marketing of goods, sales promotion, advertisement and publicity, channels of distribution, market research etc.

Production Management: Production Management includes production planning, quality control and inspection, production techniques etc. l Material Management: Material management includes purchase of materials, issue of materials, storage of materials, maintenance of records, materials control etc. l Purchasing Management: Purchasing management includes inviting tenders for raw materials, placing orders, entering into contracts etc. l Maintenance Management: Maintenance Management relates to the proper care and maintenance of the buildings, plant and machinery etc. l Office Management: Office management is concerned with office layout, office staffing and equipment of the office.

Management is an Inter-Disciplinary Approach Though management is regarded as a separate discipline, for the correct application of the management principles, study of commerce, economics, sociology, psychology, and mathematics is very essential. The science of management draws ideas and concepts from a number of disciplines making it a multi-disciplinary subject. Principles of Management The principles of management are of universal application. These principles are applicable to any group activity undertaken for the achievement of some common goals. Management is an Agent of Change The techniques of management can be improved by proper research and development. The Essentials of Management The essentials of management include scientific method, human relations and quantitative techniques.


The origin of management can be traced back to the days when man started living in groups. History reveals that strong men organized the masses into groups according to their intelligence, physical and mental capabilities. Evidence of the use of the wellrecognized principles of management is to be found in the organization of public life in ancient Greece, the organization of the Roman Catholic Church and the organization of military forces. Thus management in some form or the other has been practiced in the various parts of the world since the dawn of civilization. With the on set of Industrial Revolution, however, the position underwent a radical change. The structure of industry became extremely complex. At this stage, the development of a formal theory of management became absolutely necessary. It was against this background that the pioneers of modern management thought laid the foundations of modern management theory and practice.

Evolution of management thought may be divided into four stages 1. Pre-scientific management period. 2. Classical Theory (a) Scientific Management of Taylor (b) Administrative Management of Fayol (c) Bureaucratic Model of Max Weber 3. Neo-classical Theory or Behaviour Approach 4. Modern Theory or Systems Approach

Evolution of management thought

Pre scientific
management Period Contributions made by: * Roman catholic church * Military organisations Writers like charles babbage, James Wat..etc

CLASSICAL THEORY Scientific Management Administrative Management Theory Bureaucratic Model

NEOCLASSICAL THEORY Hawthrone Experiment

MODERN THEORY Systems Approach Contingency Approach

Planning is indispensable to modern organizations as they are operating in a state of uncertainty caused by volatile markets, changing tastes of consumers, increasing competition, advancing technology, dynamic policies of government and legal structure. All these changes are opportunities as well as risks. It is exactly the task of planner to minimize risk while taking advantages of opportunities. Definition Planning is defined as follows. It is the process of selection from among alternative courses of action for the enterprise as a whole and for every department within it to accomplish desired objectives.

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".

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.

It is deciding in advance what to do. Where to do, how to do when to do and by whom it is to be done. Planning involves forecasting and decision making. It is anticipating the future, deciding the objectives and actions of the firm to reach the future situation from the current situation.
Benefits Contributes to accomplishment of objectives-Planning helps to chart out the future course of action for the enterprise. It decides the objectives, policies, budgets and procedures for achieving the objectives. Creates certainty, stability and order-Planning helps management to think about the future which is uncertain. Information about the future is collected and analyzed, and a blue print of action with specific goals is prepared. Thereby it reduces uncertainty of the future and creates a sense of confidence.

Provides clarity and visibility- Plans will be guides to actions and decisions of employees in the organization. From the master plan the plans for managers of various divisions, departments and managerial positions are developed. There is hence, clarity about future actions. Facilitates coordination- Managers can supervise the work of others by specifying the objectives, policies, procedures and standards. They can work with their peers in other departments to achieve the goals. Thus there is common understanding and team work. Components of Plan: The components of plan are: Mission: The reason for existence stated with reference to technology, people and geographical area of operation. Policies: Policies are general statements which guide thinking and action in decision making.

Objectives: goals are the ends towards which activity is aimed. Strategies: A long range plan devised in the light of competition Tactics: Short range actions initiated to mitigate problems in implementing strategies. Procedures: A detailed description of the exact manner in which a certain activity must be accomplished. Rules: A rule specifies exactly what is to be done in a specific, single situation. A rule is restrictive by nature. Budgets: A budget as a plan is a statement of expected results expressed in numerical terms. It may be referred to as a numberised programme or numerical plan. It is also a projection of revenues and costs.

Programme: Programmes represent a set of activities a complex of goals, policies, procedures, rules, assignments, resources employed and other elements necessary to carry on the course of action. Premise: An assumption considered to be true that can be used as a reference point for decision making. Planning process and techniques The process of planning involves two major phases- forecasting and decision making , which can be subdivided into several steps. Forecasting is a process of developing estimates and assumptions about the future. It uses both past experiences and present assumptions about the future to predict what will occur in the environment.

The methods of forecasting are: (i) Survey methods like collecting opinions from consumers, sales force, and experts. (ii) Statistical methods which use past data and predict future data like regression, extrapolation, and time series analysis.
Decision making is a process of choosing from among alternatives a course of action based on selected criteria. The techniques of decision making involve mathematical tools like- sets, differentiation, integration, linear programming, goal programming and game theory.


Being aware of opportunity

Anticipating future situation using forecasting techniques. Knowing opportunities and threats. Developing assumptions about future situation. Determining the objectives for future situation. What the company can achieve based on it strengths and weaknesses. Identifying alternative strategies and tactics, to reach the goals. Examining the worth of the alternatives using criteria like, Return on investment, Risk levels, Time periods, Resource availability, and ethics. Choosing the right alternative for the firm, based on the firms mission, values and resources. Developing plans for division and departments. Overseeing how well the plans are put into action and results are obtained.

Premising Decision making Setting objective s

Designing alternative courses of action Evaluating the alternatives

Selecting appropriate one

Making derivative plans Implementation and follow up

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, socioeconomic 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. 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 organizational 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 forecasting is essential for planning. The management should have no stone unturned Functions of Management 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.

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.
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.

Problems Planning
Lack of commitment to planning- When top management has no belief in planning, the exercise of planning will not be there. Even if it is there, it will not be done well. Lack of goals- When clear mission and vision are not there, planning will be less effective. Planning requires a line of thinking a direction to start and contribute. Tendency to underestimate premising Some do not believe in predictions and estimates. They say estimates can go wrong and hence let us believe in the present and do things well. Failure to decide properly- When alternative courses of action are available, some cannot choose well. Failure to decide based on information ruins the effort of planning.

Lack of good techniques- Planning involves the use of techniques for forecasting and decision making. If right techniques are not chosen to process the information, planning will be ineffective.
Problem of rapid change- When environment changes rapidly, the predictions go wrong. Planning will be a failure in such cases. Therefore, it is better to prepare alternative plans to meet such unexpected changes. Such plans are called contingency plans.

Rigidities Inability change to as per the situation, is called rigidity. There may be psychological rigidities, policy rigidities, structure rigidities, that cause failure of planning.
Heavy expenses- Planning involves collection of information, processing and analyzing by a team of people. Top down planning may involve top management only where as bottom-up planning involves all the employees. Therefore it is time

Lack of time- Some times short run operations like tactical responses to price cuts by competitors or short supply of materials, sudden strike by employees, may not allow time for planning.
Measures The measures that make planning effective are described here. Planning must not be left to chance-Planning must be undertaken with a sense of commitment and carried out systematically. It should be assigned to a team of people with proper authority and resources. Should start at the top The commitment and involvement of top management is most important. The assignment of work, the delegation of authority and allocation of resources will be proper only when top management is interested in planning.

Must be organized It must be a team work. With proper assignment of roles and discussions, planning should be a systematic work of organization. Some organizations may have planning committees to initiate and finalize plans. They coordinate panning by other departments and divisions. Must be clear and definite Planning must be objective. The decisions like (i) time period (ii) the level and scope of plansdivisions or departments or corporate (iii) the resource allocations and constraints and (iv) contingency actions must be made. Must be clearly communicated- Planning cannot be successfully done and implemented with out involvement of people in the organization. So, information about plans and the expected involvement of employees should be made clear.

Must be by participation of concerned people. Planning is of no use if it plans are not accepted by employees. When employees participate in the planning process, they own the plans and try their best to make them successful. Advantages of Planning l All efforts are directed towards desired objectives or results. Unproductive work and waste of resources can be minimized. l Planning enables a company to remain competitive with other rivals in the industry. l 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. l 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 maximizes the utilization of available resources and ensures optimum productivity and profits. l Planning provides the ground work for laying down control standards. l Planning enables management to relate the whole enterprise to its complex environment profitably. Disadvantages of Planning l 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.

Decision Making
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". George R. Terry, "Decision-making is the selection based on some criteria from two or more possible alternatives". Felix M. Lopez says that "A decision represents a judgment; 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.

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. may not be completely rational but may be judgmental 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.

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 nonprogrammed 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 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.

Decision Making Process

Specific Objectives

Identification of problems

Search for alternatives

Evaluation of Alternatives

Choice of Alternatives



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.

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 find out the various alternatives available in order to get the most satisfactory result Functions of Management 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.

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. 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.

Organisation' connotes different things to different people. Many writers have attempted to state the nature, characteristics and principles of organisation in their own way. It can be used as a group of persons working together or as a structure of relationships or as a process of management. Now, let us analyse some of the important definition of organising or organisation, and understand the meaning of organisation. According to Sheldon, "Organisation is the process of so combining the work which individuals or groups have to perform with facilities necessary for its execution, that the duties so performed provide the best channels for efficient, systematic, positive and coordinated application of available effort. Chester I Bernard, "Organisation is a system of co-operative activities of two or more persons."

Mc Ferland has defined organisation as, "an identifiable group of people contributing their efforts towards the attainment of goals".
According to Louis A Allen, "Organisation is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives. ORGANISATION AS A PROCESS Louis A Allen, "Organizing involves identification and grouping the activities to be performed and dividing them among the individuals and creating authority and responsibility relationships among them for the accomplishment of organizational objectives." The various steps involved in this process are: 1. Determination of ObjectivesOrganisation structure is built on the basis of the objectives of the enterprise. That means, the structure of the organisation can be determined by the management only after knowing the objectives to be accomplished through the organisation.

This step helps the management not only in framing the organization structure but also in achieving the enterprise objectives with minimum cost and efforts. 2. Enumeration of Objectives: The first step in organizing group effort is the division of the total job into essential activities. Each job should be properly classified and grouped. This will enable the people to know what is expected of them as members of the group and will help in avoiding duplication of efforts. For example, the work of an industrial concern may be divided into the following major functions production, financing, personnel, sales, purchase, etc.
3. Classification of Activities: The next step will be to classify activities according to similarities and common purposes and functions and taking the human and material resources into account. Then, closely related and similar activities are grouped into divisions and departments and the departmental activities are further divided into sections.

4. Assignment of Duties: Organisation embraces the duties of designating the departments and the personnel that are to carry on the work, defining their functions and specifying the relations that are to exist between department and individuals. 5. Delegation of Authority: Everybody should clearly know to whom he is accountable; corresponding to the responsibility authority is delegated to the subordinates for enabling them to show work performance. This will help in the smooth working of the enterprise by facilitating delegation of responsibility and authority.
ORGANISATION STRUCTURE: Organization structure consists simply of those aspects of pattern of behaviour in the organization that are relatively stable and change only slowly."

Significance of Organisation Structure 1. Properly designed organisation can help improve teamwork and productivity by providing a framework within which the people can work together most effectively. 2. Organisation structure determines the location of decision-making in the organisation. 3. Sound organisation structure stimulates creative thinking and initiative among organisational members by providing well defined patterns of authority. 4. A sound organisation structure facilitates growth of enterprise by increasing its capacity to handle increased level of authority. 5. Organisation structure provides the pattern of communication and coordination. 6. The organisation structure helps a member to know what his role is and how it relates to other roles.

Formal Organisation Chester I Bernard defines formal organisation as -"a system of consciously coordinated activities or forces of two or more persons. It refers to the structure of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability." The essence of formal organisation is conscious common purpose and comes into being when persons (i) Are able to communicate with each other (ii) Are willing to act and (iii) Share a purpose. The formal organisation is built around four key pillars. They are: l Division of labour Il Scalar and functional processes III Structure and IV Span of control Thus, a formal organisation is one resulting from planning where the pattern of structure has already been determined by the top management.