Chapter 2

Management Science, Theory and Practice - Introduction

There is a long history behind the evolution of management thought. Management is

considered as the significant feature of economic life of mankind throughout ages.
Management thought is regarded as an evolutionary concept. It has developed along with it
and in line with social, cultural, economic and scientific institutions. Management thought
has its origin in ancient times. It is developed along with other socio-economic development.
The contributors to management theory include management philosophers, management
practitioners, and scholars. Modern management is based on the strong foundation laid down
by the management thinkers from the past events.

What Does Management Thought Means?

Management thought refers to the theory that guides management of people in the
organization. Initially management theories were developed out of the practical experience of
the managers in the industrial organization. Later on, managers borrowed ideas from several
other fields of study like science, sociology, anthropology, etc.

The Concept of Evolution of Management Thought

To understand the entire concept of evolution of the management thought, the topic is
divided into 4 major stages, which are as follows:

Pre-scientific management period

Classical theory

Neo-classical theory ( behaviour approach)

Bureaucratic Model of Max Weber

Pre-Scientific Management Period

As the industrial revolution occurred in the 18th century, there was a huge impact on
management. The scenario changed the method of raising capitals, organizing labor, and
goods’ production for the individuals and businesses. Entrepreneurs then had access to
production factors like land, labor, and capital. The final step was only to make some effort
to combine these factors to achieve the target successfully.

But, after the industrial revolution, the newer dimension taken by management is because of
the involvement of certain notable personalities who introduced some effective ideas and
approaches for giving management an acceptable and precise direction. Here is a brief on
some of the personalities and their theories:

Professor Charles Babbage of United Kingdom (1729 to 1871)

Prof. Babbage was a renowned Mathematics professor at Cambridge University. He

discovered that manufacturers rely on guessing and suggesting and advised them for utilizing
science and mathematics to be more productive and accurate.

Robert Owens of United Kingdom (1771 to 1858)

Sir Robert is often regarded as personnel management’s father as his approach focuses on
employee welfare. He also introduced cooperation and trade unions. He mainly believed that
employee welfare might determine the performance to a larger extent. Sir Robert also
encouraged the workers’ training, children’s education, ensuring canteens in the workplaces,
shorter working durations, and others.

The Classical Theory

Robert Owens, Charles Babbage, and other prominent personalities are regarded as
management’s pioneers. However, their contribution to the evolution of management is
lower. Further, by the last decade of the 19th century, the science of management began, and
with it, some professionals like H. L. Grant, F. W. Taylor, Emerson, and others entered for
the establishment of scientific management.

Further, during the classical period, management thought focused on standardization, job
content, labor division, and scientific approaches for the organization. It also related closely
to the industrial revolution and the rise of large-scale enterprises.

The Neo-Classical Theory

This duration of the evolution of management thought is a better version of classical theory.
It is a modified version of classical theory with several improvements. The classical theory
focused mainly on the areas of job including physical resources and their management, but
Neoclassical theory focuses on employee relationships in the work ecosystem.

The Bureaucratic Model

Max Weber, a German sociologist, proposed the bureaucratic model. This includes a system
of labour division, rules, authority hierarchy, and employees’ placement based on their
technical capabilities.

Evolution of Management Theories

Organizations were shaped effectively and the writings of some prominent writers consisted
of the management and governance of various kingdoms. These descriptions formed the
literature that helped develop the management theories. Several heads of religions, political
affairs, and military also gave the management models. For example, the books like Sun
Tzu’s “The Art of War” and Chanakya’s Arthashastra used some managerial purposes and
the governance of the kingdom concerning the policy formulations respectively.

Functions of Management

Management is defined as the procedure of organising, directing, planning and controlling

the efforts of organisational members and of managing organisational sources to accomplish
particular goals.

Planning is the purpose of ascertaining in advance what is supposed to be done and who has
to do it. This signifies establishing goals in advance and promoting a way of delivering them
effectively and efficiently. In an establishment, the aim is the obtainment and sale of
conventional Indian handloom and workmanship articles. They trade furnishings,
readymades, household items and fabrics made out of classical Indian textiles.

Organising is the administrative operation of specifying grouping tasks, duties, authorising

power and designating resources needed to carry out a particular system. Once a definite plan
has been set for the completion of an organisational intent, the organising party reviews the
actions and resources expected to execute the program. It ascertains what actions and
resources are needed. It determines who will do a distinct job, where and when it will be
done.

Staffing is obtaining the best resources for the right job. A significant perspective of
management is to make certain that the appropriate people with the apt skills are obtainable
in the proper places and times to achieve the goals of the company. This is also called the
human resource operations and it includes activities such as selection, placement, recruitment
and coaching of employees.

Directing involves directing, leading and encouraging the employees to complete the tasks
allocated to them. This entails building an environment that inspires employees to do their
best. Motivation and leadership are 2 chief elements of direction. Directing also includes
communicating efficiently as well as managing employees at the workplace. Motivating
workers means simply building an atmosphere that urges them to want to work. Leadership is
inspiring others to do what the manager wants them to do.

Controlling is the management operation of controlling organisational achievement towards

the accomplishment of organisational intentions. The job of controlling comprises
ascertaining criteria of performance, computing the current performance, comparing this with
organised rules and taking remedial action where any divergence is observed. Here
management should ascertain what activities and outputs are important to progress, how and
where they can be regulated and who should have the power to take remedial response.

Nature of Management:

Universal Process: Wherever there exists human pursuit, there exists management. Without
effective management, the intentions of the organisation cannot be accomplished.

The factor of Production: Equipped and experienced managers are necessary for the
utilisation of funds and labour.

Goal-Oriented: The most significant aim of all management pursuit is to achieve the
purposes of a firm. The aims must be practical and reachable.

Supreme in Thought and Action: Managers set achievable goals and then direct execution
on all aspects to achieve them. For this, they need complete assistance from middle and
lower degrees of management.

The system of authority: Well-defined principles of regulation, the regulation of proper

power and efficiency at all degrees of decision-making. This is important so that each self
must perform what is required from him or her and to whom he must report.

Profession: Managers require to control managerial expertise and education, and have to
adhere to a verified law of demeanour and stay informed of their human and social
responsibilities.

Process: The management method incorporates a range of activities or services directed

towards an object.

Significance of Management:

Achieving Group Goals: Management encourages collaboration and coordination amongst

workers. A general control must be provided to the organisational and personal objectives in
order to favourably accomplish the aims.

Increases Efficiency: Management improves productivity by managing resources in a reliable

conceivable way in order to decrease cost upscale potency.

Creates Dynamic organisation: Management undertakes the conditions by assuring that these
variations are well accepted privately and that objection to change is controlled.

Achieving personal objectives: Management promotes leadership and furnishes motivation to

the employees to operate effectively in order to accomplish their personal aims while
working towards the organisational goals.

Development of Society: Management helps in the enhancement of community by

manufacturing reliable quality commodities, establishing employment chances and fostering
innovative technologies.
Features of Management

• Management is a goal-oriented method

The Spastics Society of India is to allow education to children with specific requirements.
Management strengthens the energies of different individuals in the company towards
accomplishing these goals.

Management is all common: The activities associated with managing a firm are familiar to all
companies whether financial, cultural or civic. A petrol pump must be regulated as much as a
school or a hospital. What managers do in India, Japan, Germany, or the USA is identical.
How they achieve it may be considerably diverse. This variation is due to the distinctions in
tradition, history and culture.

Management is a perpetual process: The method of management is a set of consecutive,

composite, but distinct purposes (organising, planning, staffing, controlling and directing).
These operations are concurrently executed by all managers. The responsibility of a manager
comprises a continuous series of duties.

Management is intangible energy: It is an intangible strength that can’t be seen but its
proximity can be felt in the form of the business operations. The outcome of management is
remarkable in an industry where targets are reached according to procedures, employees are
comfortable and content and there is arrangements rather than confusion.

Management is a group activity: It implies that it is not a single person who completes all the
actions of the industry but it is always a group of people. Therefore, management is a group
endeavour.

Management’s Challenges

1. Communicating with Employees:-One of the biggest challenges for managers is

bridging the distance with effective and timely communication skills. Good managers need to
develop advanced listening and speaking skills as they play a huge role in the success of their
team. Ineffective communication has been found to be one of the biggest challenges.

2. Performance Challenges:-Performance problems are always going to be a concern for

any manager. But in today’s fierce business environment, if your teams aren’t performing to
a high standard, a competitor could easily come in and take your customer’s business.

3. Tracking Productivity:-Tracking and improving team productivity remains one of the

top challenges facing managers today. Unfortunately, it has become even more challenging
due to our continuously evolving workplace.

Tracking productivity gets even trickier for managers looking after a team with different
work setups, work habits and time zones.

4. Shaping Organization Culture:-Company culture is a key driver of employee

engagement and productivity. As such, it’s important to address this challenge. It is necessary
to create a workplace culture that marches to the beat of organisational goals. With more
companies adapting to hybrid working arrangements, this has resulted in more dispersed
teams. Ensuring diversity and inclusion in the workplace has become one of the biggest
challenges facing today’s modern organizations. Diversity in the workplace focuses on
respecting and appreciating all employees for their differences Inclusion, on the other hand,
focuses on ensuring that all employees feel valued and supported as individuals, irrespective
of their physical or cultural differences.

5. Technology:-As technologies change practically at the speed of light, companies need

to innovate or be left behind, but many CEOs started their careers and businesses before
many of these technologies even existed! Consultants can be vital for integrating new
technologies, in particular mobile, app development, and cloud computing. There is
increased pressure for today’s managers to keep up as technology continues to evolve. They
also face the challenge of finding the right software solutions to invest in on the behalf of
their organisations.

6. Hiring Right Employee:-Hiring right kind of a person for right job and then retaining
them for longer has become a challenge today. The job enrichment and efficiency is
continuously growing and with such a thing matching the potentialities of employees has
become quite difficult. On top of this every now and then employees keep shifting from one
company to another, in such a situation generation return on cost is another big challenge.

7. Continuous Improvement:-With the technology changing every now and then and the
globalization puts a huge demands for continuous improvement. Coping with changing
trends and adapting to the change has become a necessity to be a part of race.

Planning

Definition: Planning is the fundamental management function, which involves deciding

beforehand, what is to be done, when is it to be done, how it is to be done and who is going
to do it. It is an intellectual process which lays down an organisation’s objectives and
develops various courses of action, by which the organisation can achieve those objectives.
It chalks out exactly, how to attain a specific goal.

Planning is nothing but thinking before the action takes place. It helps us to take a peep
into the future and decide in advance the way to deal with the situations, which we are
going to encounter in future. It involves logical thinking and rational decision making.

Characteristics of Planning

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

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

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

Continuous Process: Plans are made for a specific term, say for a month, quarter, year and
so on. Once that period is over, new plans are drawn, considering the organisation’s present
and future requirements and conditions. Therefore, it is an ongoing process, as the plans are
framed, executed and followed by another plan.
Intellectual Process: It is a mental exercise at it involves the application of mind, to think,
forecast, imagine intelligently and innovate etc.

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

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

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

Importance of Planning

It helps managers to improve future performance, by establishing objectives and selecting

a course of action, for the benefit of the organisation.

It minimises risk and uncertainty, by looking ahead into the future.

It facilitates the coordination of activities. Thus, reduces overlapping among activities and
eliminates unproductive work.

It states in advance, what should be done in future, so it provides direction for action.

It uncovers and identifies future opportunities and threats.

It sets out standards for controlling. It compares actual performance with the standard
performance and efforts are made to correct the same.

Planning is present in all types of organisations, households, sectors, economies, etc. We

need to plan because the future is highly uncertain and no one can predict the future with
100% accuracy, as the conditions can change anytime. Hence, planning is the basic
requirement of any organization for the survival, growth and success.

Steps involved in Planning

Objectives of Planning

By planning process, an organisation not only gets the insights of the future, but it also helps
the organisation to shape its future. Effective planning involves simplicity of the plan, i.e.
the plan should be clearly stated and easy to understand because if the plan is too much
complicated it will create chaos among the members of the organisation. Further, the plan
should fulfil all the requirements of the organisation.

In today’s ever-changing world, for the success of any business or industrial

unit Management and Administration should lay a strong foundation, and this is achieved by
Planning.

Planning initiates the intellectual process as deciding the objectives, drafting the plans and
programmes, defining the policies for optimum utilization of the accessible human and
material resources. So that pre defined objectives may be achieved in any organization.

Planning facilitates Managers and Administrators of any business or industrial unit to make
progress as per the needs of the desired objectives. Below given are some of the

Objectives of Planning:-

Forecast’s the Course:

The most important ingredient of planning is forecasting. This is basically plan development
as per policies and requirement of the organization.

Forward Bearing:

Planning provides specific forward momentum to all the activities in the organization by
chalking out the future working procedure.

Assured Activities:

Planning drafts the policies, working procedure and decides controlling process for the
activities in an organization so that confidence level increases in employees & management
regarding the accomplishment of predefined goals.

Forecast’s the Risk:

Planning forecasts the future threats, therefore technical strategies are most often planned and
decided in advance to overcome the inconsistency or tackle the problems successfully.

Helps in Establishing Co-ordination:

Planning is the forefront initiator in any organization regarding coordination. This

coordinates all the departments and also policies, procedures, objectives, etc. in business or
industrial unit.

Develops in Facing Competition:

Assists and develops the organization to face competitions of all sorts and in all aspects. This
strategic process is part of the objectives of planning.

Managing Budgetary Targets:

Budgetary Targets are executed & achieved as per the planning. It is a helping hand in
planned budget utilization.

Present Important Information’s:

Planning makes available adequate information and communicates it to the employees in the
organization as well as presents a positive picture of organization, its policies,
functioning and results to the outside world.

Economy in Management:
Having better coordination in an organization between employees & management the pre
decided goals proceed as per the requirement, all types of wastage's is brought to the
minimum. This helps in achieving the efficiency in the overall economy of management.

Supports in Maintaining Healthy Competition:

The employees in an organization are in continuous competition among the fellow employees
of any specific department because actual job performance & achievement is the base criteria
for any future incentive or promotion. This may bring jealousy or utilization of unfair job
hindering techniques in performing different activities to the fellow employees, which
ultimately slows the overall goals of any business or industrial unit. Hence, an ethical attitude
with unbiased planning is maintained for the actual growth of the unit.

2.1.1 Elements of Planning:

1. Objectives:

The important task of planning is to determine the objectives of the enterprise. Objectives are
the goals towards which all managerial activities are aimed at. All planning work must spell
out in clear terms the objectives to be realised from the proposed business activities.

2. Forecasting:
It is the analysis and interpretation of future in relation to the activities and working of an
enterprise. Business forecasting refers to analysing the statistical data and other economic,
political and market information for the purpose of reducing the risks involved in making
business decisions and long range plans. Forecasting provides a logical basis for anticipating
the shape of the future business transactions and their requirements as to man and material.

3. Policies:
Planning also requires laying down of policies for the easy realisation of the -objectives of
business. Policies are statements or principles that guide and direct different managers at
various levels in making decisions. Policies provide the necessary basis for executive
operation. They set forth overall boundaries within which the decision-makers are expected
to operate while making decisions. Policies act as guidelines for taking administrative
decisions.

4. Procedures:
The manner in which each work has to be done is indicated by the procedures laid down.
Procedures outline a series of tasks for a specified course of action. There may be some
confusion between policies and procedures. Policies provide guidelines to thinking and
action, but procedures are definite and specific steps to thinking and action. For example, the
policy may be the recruitment of personnel from all parts of the country; but procedures may
be to advertise and invite applications, to take interviews and offer appointment to the
selected personnel.

5. Rules:
A rule specifies necessary course of action in a particular situation. It acts as a guide and is
essentially in the nature of a decision made by the management authority. This decision
signifies that a definite action must be taken in respect of a specific situation. The rules
prescribe a definite and rigid course of action to be followed in different business activities
without any scope for deviation or discretion.

6. Programmes:
Programmes are precise plans of action followed in proper sequence in accordance with the
objectives, policies and procedures. Programmes, thus, lead to a concrete course of inter-
related actions for the accomplishment of a purpose.

7. Budgets:
Budget means an estimate of men, money, materials and equipment in numerical terms
required for implementation of plans and programmes. Thus, planning and budgeting are
inter-linked. Budget indicates the size of the programme and involves income and outgo,
input and output.

8. Projects:
A project is a single-use plan which is a part of a general programme. It is part of the job that
needs to be done in connection with the general programme. So a single step in a programme
is set up as a project. Generally, in planning a project, a special task force is also envisaged.

9. Strategies:
Strategies are the devices formulated and adopted from the competitive standpoint as well as
from the point of view of the employees, customers, suppliers and government. Strategies
thus may be internal and external. Whether internal or external, the success of the plans
demands that it should be strategy-oriented.

What is Strategic Planning?

Strategic planning is the art of creating specific business strategies, implementing them, and
evaluating the results of executing the plan, in regard to a company’s overall long-term goals
or desires. It is a concept that focuses on integrating various departments (such
as accounting and finance, marketing, and human resources) within a company to accomplish
its strategic goals. The term strategic planning is essentially synonymous with strategic
management.

The concept of strategic planning originally became popular in the 1950s and 1960s, and
enjoyed favor in the corporate world up until the 1980s, when it somewhat fell out of favor.
However, enthusiasm for strategic business planning was revived in the 1990s and strategic
planning remains relevant in modern business.

Strategic Planning Process

The strategic planning process requires considerable thought and planning on the part of a
company’s upper-level management. Before settling on a plan of action and then determining
how to strategically implement it, executives may consider many possible options. In the end,
a company’s management will, hopefully, settle on a strategy that is most likely to produce
positive results (usually defined as improving the company’s bottom line) and that can be
executed in a cost-efficient manner with a high likelihood of success, while avoiding undue
financial risk.

The development and execution of strategic planning are typically viewed as consisting of
being performed in three critical steps:

1. Strategy Formulation

In the process of formulating a strategy, a company will first assess its current situation by
performing an internal and external audit. The purpose of this is to help identify the
organization’s strengths and weaknesses, as well as opportunities and threats (SWOT
Analysis). As a result of the analysis, managers decide on which plans or markets they
should focus on or abandon, how to best allocate the company’s resources, and whether to
take actions such as expanding operations through a joint venture or merger.

Business strategies have long-term effects on organizational success. Only upper

management executives are usually authorized to assign the resources necessary for their
implementation.

2. Strategy Implementation

After a strategy is formulated, the company needs to establish specific targets or goals related
to putting the strategy into action, and allocate resources for the strategy’s execution. The
success of the implementation stage is often determined by how good a job upper
management does in regard to clearly communicating the chosen strategy throughout the
company and getting all of its employees to “buy into” the desire to put the strategy into
action.

Effective strategy implementation involves developing a solid structure, or framework,

for implementing the strategy, maximizing the utilization of relevant resources, and
redirecting marketing efforts in line with the strategy’s goals and objectives.

3. Strategy Evaluation

Any savvy business person knows that success today does not guarantee success
tomorrow. As such, it is important for managers to evaluate the performance of a chosen
strategy after the implementation phase.

Strategy evaluation involves three crucial activities: reviewing the internal and external
factors affecting the implementation of the strategy, measuring performance, and taking
corrective steps to make the strategy more effective. For example, after implementing a
strategy to improve customer service, a company may discover that it needs to adopt a
new customer relationship management (CRM) software program in order to attain the
desired improvements in customer relations.

All three steps in strategic planning occur within three hierarchical levels: upper
management, middle management, and operational levels. Thus, it is imperative to foster
communication and interaction among employees and managers at all levels, so as to
help the firm to operate as a more functional and effective team.

Benefits of Strategic Planning

The volatility of the business environment causes many firms to adopt reactive strategies
rather than proactive ones. However, reactive strategies are typically only viable for the
short-term, even though they may require spending a significant amount of resources
and time to execute. Strategic planning helps firms prepare proactively and address
issues with a more long-term view. They enable a company to initiate influence instead
of just responding to situations.

Among the primary benefits derived from strategic planning are the following:

1. Helps formulate better strategies using a logical, systematic approach

This is often the most important benefit. Some studies show that the strategic planning
process itself makes a significant contribution to improving a company’s overall
performance, regardless of the success of a specific strategy.

2. Enhanced communication between employers and employees

Communication is crucial to the success of the strategic planning process. It is initiated

through participation and dialogue among the managers and employees, which shows
their commitment to achieving organizational goals.

Strategic planning also helps managers and employees show commitment to the
organization’s goals. This is because they know what the company is doing and the
reasons behind it. Strategic planning makes organizational goals and objectives real, and
employees can more readily understand the relationship between their performance, the
company’s success, and compensation. As a result, both employees and managers tend
to become more innovative and creative, which fosters further growth of the company.

3. Empowers individuals working in the organization

The increased dialogue and communication across all stages of the process strengthens
employees’ sense of effectiveness and importance in the company’s overall success. For
this reason, it is important for companies to decentralize the strategic planning process
by involving lower-level managers and employees throughout the organization. A good
example is that of the Walt Disney Co., which dissolved its separate strategic planning
department, in favor of assigning the planning roles to individual Disney business
divisions.

Types of Planning Premises

Planning premises in management are vital in making important decisions that are based
on certain predictions about the future. Managers build the superstructure of planning
based on their ability to identify the crucial, strategic, or limiting factors that allow them
to select the proper planning premises. Planning premises in business management can
be classified based on many factors, as described below:

Internal and External Premises

The premises which exist within the boundaries of the business are internal premises.
Some of the internal premises are men, money, material, and methods. Your planning
would be based on how competent is your workforce and how much money you have at
your disposal.

External premises are derived from the environment that surrounds the business. They
are centred around the market like money market, product market, government policies,
growth in population, etc.

Tangible and Intangible Premises

Any premise which can be quantitatively measured is a tangible premise. These

premises can be quantified in terms of time, money, and units of production.

On the other hand, intangible premises cannot be quantified. Some of the intangible
premises are public relations, business reputation, the morale of employees, etc.

Controllable, Semi-Controllable, and Uncontrollable Premises

Those premises which can be controlled by the management to a large extent come
under controllable premises. Management has a lot of control over their future
commitments when it comes to material, machines, and money.

The business can partially control some premises or assumptions about the future. These
fall under semi-controllable premises. Few examples of such planning premises are trade
union relations, product demand, etc.

Those premises which can not be controlled by the management of an organisation come
under uncontrollable planning premises. Some examples are weather conditions, natural
disasters, etc.

Constant and Variable Premises

These premises which do not change irrespective of actions taken are constant premises
like men, money, etc. These premises behave similarly under all circumstances.

Based on the course of action taken, some premises change which is termed as Variable
premises. These premises cannot be controlled or predicted, for example, the sales
volume of a firm, union and management relations, etc.

Process of Planning Premises

Developing Planning Premises needs the planners to do realistic forecasting.

Determining planning premises involves
Calculating the probability of events.

Analysing changes in consumer behaviour, technology, government policies, etc.

Implementing systematic investigation to develop the basis for planning.

Predicting future events is a complex process; hence, premises must consider limited
assumptions that are most critical for the plant.

A typical process of developing premises in planning is:

Selecting the Premise - Not all the factors in the environment affect the operations of the
business. The management must list down those premises which directly influence the
development of organisational plans.

Reviewing Limitations - Several practical factors limit the abilities of an organisation to

achieve its goals. Such limitations should be anticipated and provided for. A few
examples of such limitations are power, labour, money, and material.

Developing Alternative Premises - Since it is not possible to predict all the factors that
can affect organisational planning, managers must develop a set of alternative premises.
These premises are established based on separate assumptions of future events. The
alternative plans are developed since premises keep changing, some change slowly and
some fast.

Verifying Premises - In an organisation, there are different departments and planning

happens at different levels as per the judgement of people in that department. All these
premises are sent to the top management for their approval. The premises developed by
line managers and staff are more consistent with each other than those of the top
executives.

Communicating Premises - The premises developed through this process are then
supported by budget and various programs. Then the premises are communicated to all
those who are part of the planning process at different levels of business. Documents
like ETOP (environmental threat and opportunity profile) contain planning premises.

Meaning of Global Planning

Global strategic planning is the processes of examining a multinational organization's

internal and external environments to develop its strategic plan. By looking at the
internal environment, the business is able to leverage its strengths and overcome its
weaknesses

The Importance of Global Planning

Every successful business has a plan and knows where it is heading in the future.
Setting a plan with goals, target dates, and a purpose should be finalized before
embarking on a business. Taking the time on an ongoing basis to review the company's
past performance, and predict its future performance, gives it a road map to follow.

Without strategic planning, which is knowing the current state of your business and
where you want it to go, most businesses will fail. A strategic plan allows you to see
what is important, how to get there, the pitfalls to avoid, and the noise to ignore. Below
we discuss some of the reasons why strategic planning is important and how to
implement it.

Strategic planning is crucial for a business as it creates a map for a business to follow
and course correct when need be.

The first part of a strategic plan is the business plan, which outlines the purpose of the
business, budgets, goals, and the mission statement.
Communicating your strategic plan to your employees is critical so that everyone is on
the same page and working towards the same goals.

Reviewing and following up on your business will highlight strengths and weaknesses
in your business so that you can continue with what works well and eliminate what is
hindering the growth of your business.

Importance of Global Planning

Making a Business Plan

The very first strategic planning most businesses do is a business plan. When you first
start your business, you will likely have prepared a mission statement, a budget, and a
marketing and promotion plan. The business plan is a good first step, but it needs to be
reviewed and updated as the business continues and grows. If you shove it in a drawer
and let dust gather on it, it won't serve as the foundation of your business, as it was
meant to.

Using Goal-Based Planning

How you go about conducting strategic planning will depend on many variables,
including the size of your business, the time frame included, and your personal
preferences. The most common style of plan is goals-based. In this type of plan, you set
goals for the business (financial and non-financial) and map out the steps needed to
meet those goals.

For example, if your goal is to have $100,000 in revenues next year, the steps to

get there might include bringing in five new clients a month and attending three trade
shows. Whatever the goals you set for your business, they should be concrete and
measurable so that you know when you reach them.

Another method of strategic planning is mission-based.

When you first started your business, you likely developed a mission or values
statement, outlining the purpose of your company and its overall reason for being. A
mission-based strategic plan ties each part of the plan into the mission, to ensure that
the company is always operating in the service of that mission.

For example, if your mission statement is to be recognized as a leader in the financial

services sector and to help families become financially independent, your strategic
plans should address how you will meet those goals.

Making Time

It can be difficult to find the time to plan your business. Other, more pressing priorities,
like trying to bring in revenue, may grab your attention; however, carving out time
regularly will help you keep on top of your business.

Blocking off a few hours a day or week to focus on your plan should be part of your
business operations. During that time, you can examine the prior week's financial
performance and update any marketing initiatives to make sure that your business is on
track with your initial plan. If it's not, then you'll need to make adjustments to get back
on track.

Regardless of how often you plan, make sure that you set it in stone in your day
planner. Block off the time and don't let anything else get in the way. Turn off your cell
phone and, if at all possible, go somewhere away from your office to plan in order to
minimize distractions.
Promoting Communication

As a business owner, you will most likely have employees. It is critical to inform them
of your strategic plan so that they are on the same page and working towards the same
goal as you.

Including your staff in your strategic plan will instill a feeling of responsibility in their
jobs that will help ensure productivity.

For example, if you have a sales team and your strategic.

plan involves bringing in five new clients a month, your sales team needs to be aware of this
so that they know the goal to achieve. If they don't, perhaps they would be under the
assumption that bringing in two new clients a month is excellent, when in actuality, it is
only 40% of your goal. Without clear communication to your employees, your business will
be a boat set adrift without any course to follow.

Following Up

A critical part of the planning process is reviewing your previous plan and comparing it to
your actual results. Were you able to bring in five new clients last month? If not, why not?
Tweak the plan going forward to account for changes in your business or the general
economic climate. The more experience you get with the planning process and with the
operational side of your business, the more accurately you will be able to plan.

Once you have had your business running for a while and block out time to follow up on
your strategic plan, you will be able to determine where the strengths and weaknesses in
your business lie. This would allow you to correct course, perhaps changing your business
plan and goals slightly to focus on your strengths, while allowing you to eliminate your
weakness, making your business stronger and increasing the likelihood of achieving your
goals.

The Bottom Line

Planning out the future of your business is the best way to ensure success. Creating an initial
plan and communicating that plan to your employees will ensure that everyone is working
towards the same goal.

Taking out time to review your business's results and comparing them to your plan will help
ensure that the right policies and procedures continue whereas those that are not benefiting
the company will be removed. It may seem awkward and difficult at first to create a
strategic plan, but with practice, you will be able to move your business in the right
direction.

Challenges of Global planning

Resistance to change - There are always employees who will refuse to accept the fact that
the social and cultural makeup of their workplace is changing. If the company doesn't handle
opposition properly, workplace diversity initiatives may not provide the intended benefits to
the company.
Increased Tension: People from different cultural or ethnic backgrounds can have very
different views concerning lifestyle, religion, and politics that can lead to tension and conflict
when these concepts are introduced into a work environment.
Learning Curve: Businesses that have difficulty adapting to a more diverse culture may
require diversity training.
Implementation of diversity in the workplace policies - This can be the overriding
challenge to all diversity advocates. Armed with the results of employee assessments and
research data, they must build and implement a customized strategy to maximize the effects
of diversity in the workplace for their particular organization.
Fairness: One of the key challenges in dealing with diversity is ensuring each worker is
treated fairly. This does not mean we can treat everyone the same, as different individuals
have different needs.
Inclusion: Inclusion of all employees is often a challenging part of diversity management.
People often segregate themselves into groups in which they are comfortable. It is the job of
the manager to help workers integrate so that the company and its individuals profit through
associations.

Definition of Decision-Making:

Most writers on management think that management is basically a decision-making process.

They argue that it is only through making decisions that an organisation can accomplish its
short-term and long-term goals.

A decision is an act of selection or choice of one action from several alternatives.

Decision-making can be defined as the process of selecting a right and effective course of
action from two or more alternatives for the purpose of achieving a desired result. Decision-
making is the essence of management.

According to P. F. Drucker – “Whatever a manager does he does through making

decisions.” All matters relating to planning, organising, direction, co-ordination and control
are settled by the managers through decisions which are executed into practice by the
operators of the enterprise. Objectives, goals, strategies, policies and organisational designs
are all to be decided upon in order to regulate the performance of the business.

The entire managerial process is based on decisions. Decisions are needed both for tackling
the problems as well as for taking maximum advantages of the opportunities available.
Correct decisions reduce complexities, uncertainties and diversities of the organisational
environments.

In the words of D. E. Mcfarland:

“A decision is an act of choice wherein an executive forms a conclusion about what must be
done in a given situation. A decision represents behaviour chosen from a number of
alternatives.”

The definition of decision-making has three different but inter-related implications.

These are as follows:

1. When the managers make decisions, they exercise choice. They decide what to do on the
basis of some conscious and deliberate logic or judgement.

2. When making a decision the managers are faced with alternatives. An organisation does
not take a wise manager to reach a decision when there are no other possible choices. It does
require wisdom and experience to evaluate several alternatives and select the best one.

3. When taking a decision, the managers have a purpose. They propose and analyse the
alternative courses of action and finally make a choice that is likely to move the organisation
in the direction of its goals.
Importance of Decision-Making:

Management is essentially a bundle of decision-making process. The managers of an

enterprise are responsible for making decisions and ascertaining that the decisions made are
carried out in accordance with defined objectives or goals.

Decision-making plays a vital role in management. Decision-making is perhaps the most

important component of a manager’s activities. It plays the most important role in the
planning process. When the managers plan, they decide on many matters as what goals their
organisation will pursue, what resources they will use, and who will perform each required
task.

When plans go wrong or out of track, the managers have to decide what to do to correct the
deviation.

In fact, the whole planning process involves the managers constantly in a series of decision-
making situations. The quality of managerial decisions largely affects the effectiveness of the
plans made by them. In organising process, the manager is to decide upon the structure,
division of work, nature of responsibility and relationships, the procedure of establishing
such responsibility and relationship and so on.

In co-ordination, decision-making is essential for providing unity of action. In control, it will

have to decide how the standard is to be laid down, how the deviations from the standard are
to be rectified, how the principles are to be established how instructions are to be issued, and
so on.

The ability to make good decisions is the key to successful managerial performance. The
managers of most profit-seeking firms are always required to take a wide range of important
decision in the areas of pricing, product choice, cost control, advertising, capital investments,
dividend policy, personnel matters, etc. Similarly, the managers of non-profit seeking
concerns and public enterprises also face the challenge of taking vital decisions on many
important matters.

Decision-making is also a criterion to determine whether a person is in management or not. If

he participates in decision-making, he is regarded as belonging to management staff. In the
words of George Terry: “If there is one universal mark of a manager, it is decision-making.”

According to P. F. Drucker:

“Whatever a manager does, he does through making decisions.”

In any business, whether large or small, the conditions are never static, they are perceptively
dynamic. The old order is always yielding place to new either in personnel or in unforeseen
contingencies. Changes in conditions are the usual rule. Such a situation calls for actions that
involve decision-making.

So, decision-making is deeply related with management functions and both are bound up
together inseparably. When a manager plans or organises, orders or advises, approves or
disapproves anything, he will have to move with the process of decision-making. In all
managerial functions, decision-making is an indispensable accompaniment.
Principles of Decision Making:

Effective decision involves two important aspects—the purpose for which it is intended, and
the environmental situation in which it is taken. Even the best and correct decision may
become ineffective if these aspects are ignored; because in decision-making there are so
many inside and outside chains of unavoidable reactions.

If certain principles are followed for decision-making, such multidimensional reactions can
mostly be overcome.

These principles are stated as follows:

1. Subject-matter of Decision-making:

Decisional matters or problems may be divided into groups consisting of programmed and
non-programmed problems. Programmed problems, being of routine nature, repetitive and
well-founded, are easily definable and, as such, require simple and easy solution. Decision
arrived in such programmed problems has, thus, a continuing effect. But in non-programmed
problems, there is no continuing effect because they are non-repetitive, non-routine, and
novel. Every event in such problems requires individual attention and analysis and its
decision is to be arrived at according to its special features and circumstances.

2. Organisational Structure:

The organisational structure, having an important bearing on decision-making, should be

readily understood. If the organisational structure is rigid and highly centralised, decision-
making authority will remain confined to the top management level. This may result in
delayed and confused decision and create suspicion among the employees.

On the contrary, if the organisational structure provides scope for adequate delegation and
decentralisation of authority, decision-making will be flexible and the decision-making
authority will be close to the operating centres. In such a situation, decision-making will be
prompt and expected to be more effective and acceptable.

3. Analysis of the Objectives and Policies:

Proper analysis of the objectives and policies is needed for decision-making. The clear
definition of objectives and policies is the basis that guides the direction of decision-making.
Without this basis, decision-making will be aimless and unproductive.
4. Analytical Study of the Alternatives:

For decision-making, analytical study of all possible alternatives of a problem with their
merits and demerits is essential. This is necessary to make out a correct selection of decision
from among the alternatives.

5. Proper Communication System:

Effective decision-making demands a machinery for proper communication of information to

all responsibility centres in the organisation. Unless this structure is built up, ignorance of
decision or ill-informed decision will result in misunderstanding and loose co-ordination.

6. Sufficient Time:

Effective decision-making requires sufficient time. It is a matter of common experience that

it is usually helpful to think over various ideas and possibilities of a problem for the purpose
of identifying and evaluating it properly. But in no case a decision can be delayed for an
indefinite period, rather it should be completed well in advance of the scheduled dates.

7. Study of the Impact of a Decision:

Decision is intended to be carried out for the realisation of the objectives of the organisation.
A decision in any particular area may react adversely in other areas of the organisation. As
all business activities are inter-related and require co-ordination, it is necessary that a study
and analysis of the impact of any decision should precede its application.

8. Participation of the Decision-maker:

The decision-maker should not only be an observer while others will perform as per his
decision. He should also participate in completing the work for which decision was taken by
him. This experience will help him in decision-making in future. The principle of
participation in work of the decision-maker will enable him to understand whether the
decision taken is practical and also guide him in forthcoming decisional matters.

9. Flexibility of Mind:

This is essential in decision-making, because decisions cannot satisfy everybody. Rigid

mental set-up of the decision-maker may upset the decisions. The flexible mental disposition
of the decision-maker enables him to change the decision and win over the co-operation of
all the diverse groups.

10. Consideration of the Chain of Actions:

There is a chain relationship in all the activities of any organisation. Different activities are
tied up in a chain sequence. Any decision to change a particular work brings change in other
related works also. Similarly, decision-making also proceeds following the chain of action in
different activities. Therefore, before taking a decision one should consider the chain
relationship among different activities.
Importance of decision‐making

Implementation of managerial function:

.1.
Taking different managerial function such as planning, organizing, directing, controlling, staf
fing can’t be conducted. In other words, when an employee does, s/he does the work through
decisionmaking function. Therefore, we can say that decision is important element to implem
ent the managerial function.

2. Pervasiveness of decision‐Making:

The decision is made in all managerial activities and in all functions of the organization. It m
ust be taken by all staff. Without decisionmaking any kinds 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 tha
t the manager is qualified, able and efficient. When the decision is wrong, it is understood tha
t 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 pla
ns 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 orga
nization because there are many alternatives. So, decision makers evaluate various advantage
s 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, corr
ect decisions help in successful operation of business.

Decision making is the process/Steps

of making choices by identifying a decision, gathering information, and assessing alternative
resolutions. Using a step‐by‐step decision‐

making process can help you make more deliberate,

thoughtful decisions by organizing relevant information and defining alternatives. This appro
ach increases the chances that you will choose the most satisfying alternative possible.

Step1:

Identifythedecision.You realize that you need to makea decision. Try to clearly define the nat
ure of the decision you must make.
This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what information is need
ed, the best sources of information, and how to get it. This step involves both internal and ext
ernal “work.” Some information is internal: you’ll seek it through a process of self‐
assessment. Other information is external: you’ll find it online, in books, from other people,
and from other sources.

Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths of action, or alte
rnatives. You can also use your imagination and additional information to construct new alter
natives. In this step, you will list all possible and desirable alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you carried out e
ach of the alternatives to the end. Evaluate whether the need identified in Step 1 would be me
t or resolved through the use of each alternative. As you go through this difficult internal pro
cess, you’ll begin to favor certain alternatives: those that seem to have a higher potential for r
eaching your goal. Finally, place the alternatives in a priority order, based upon your own val
ue system.

Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the alternative that seems to
be best one for you. You may even choose a combination of alternatives. Your choice in Step
5 may very likely be the same or similar to the alternative you placed at the top of your list a
t the end of Step 4.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the alternative

Step 7: Review your decision & its consequences

In this final step, consider the results of your decision and evaluate whether or not it has resol
ved the need you identified in Step 1. If the decision has
not met the identified need,you may want to repeat certain steps of the process to make a new
decision.

For example,
you might want to gather more detailed or somewhat different information or explore additio
nal alternatives.