Unit II – Planning, Organising & Control

I. Planning

• Definition & Core Idea

  • Deciding in advance what, how, when and by whom work will be done → bridges the gap between “where we are” and “where we want to be”.

  • Involves establishing goals, arranging them logically, choosing among alternatives; linked to creativity & discovery.

Nature / Characteristics of Planning

• Intellectual & logical process – not guess-work.

• Goal-oriented – purposeful activity to reach objectives.

• Pervasive – undertaken at all managerial levels; scope differs (top = corporate, middle = department, lower = operational).

• Primary (first) management function – lays foundation for organising, staffing, directing, controlling.

• Futuristic – forward-looking, based on forecasting.

• Decision-making activity – selection among alternatives.

• Continuous – new plans replace old as conditions change.

Importance / Advantages

• Provides clear direction & coordinates efforts.

• Reduces risk through anticipation & preparation.

• Minimises overlapping/wasteful activities → clarity avoids chaos.

• Encourages innovation – first step where new ideas become concrete plans.

• Aids systematic decision-making.

Types of Plans (4 key categories)

1. Strategic Planning

   • Long-range, big-picture “road-map” set by top executives; defines vision, mission, major strategies.

   • Example: Toy firm aims to be leader in eco-friendly toys in 5 yrs.

2. Operational Planning

   • Day-to-day “to-do list”; managers & supervisors translate strategy into tasks, resources, deadlines.

   • Example:Restaurant’s daily menu planning, equipment maintenance.

3. Tactical Planning

   • Medium-term, detailed “playbook”; middle managers craft specific actions/targets to execute strategy.

   • Example: Tech company sets download targets, allocates dev team budgets.

4. Contingency Planning

   • “Backup plan” for unexpected events (risks, crises); developed by risk-management experts.

   • Example: Manufacturing firm’s procedures for equipment breakdowns or natural disasters.

Levels of Planning & Time Horizon

• Top-level / Strategic → “What?” (long-range, corporate-wide).

• Middle-level / Tactical → “How?” (dept resources, medium term).

• Lower-level / Operational → Activity plans, short term, frequently revised.

Generic Planning Process (6 steps)

1. Set organisational objectives (analyse resources & environment).

2. List alternative courses of action.

3. Evaluate & choose best alternative.

4. Formulate supporting/derivative plans (materials, HR, etc.).

5. Implement – put plans into action.

6. Follow-up – monitor, compare progress, make adjustments.

II. Management by Objectives (MBO)

• Concept: Joint setting of specific, measurable goals by manager & employee; alignment of individual objectives with organisational goals.

• Steps

  1. Define organisational goals (multi-level participation).

  2. Translate to employee goals via one-on-one discussions.

  3. Continuous monitoring of performance.

  4. Periodic performance evaluation (participative).

  5. Provide ongoing feedback & formal review meetings.

  6. Performance appraisal & rewards.

• Benefits

  • Clarifies roles/KRAs, enhances participation, teamwork, commitment, loyalty; ensures linkage of individual goals to corporate objectives.

• Limitations

  • May ignore culture, over-emphasise targets, neglect context/resources, risk of bureaucratic pressure, overdependence on system, possible gaming of short-term goals.

III. Management by Exception (MBE)

• Definition: Philosophy that management should focus attention only on significant deviations from planned results; routine matters handled by subordinates.

• Key Components: Measurement, Projection, Selection of standards, Observation, Comparison, Decision-making.

• Process

  • Identify KRAs → set standards & allowable deviation → compare actual vs standard → detect variance → analyse cause → take corrective action.

• Importance

  • Saves managers’ time, highlights crises early, improves delegation, resource use & communication.

IV. Organising

• Definition: Creating structure & allocating human/other resources to accomplish plans; involves task assignment, departmentalisation, delegation, coordination.

Nature / Features

• Division of work → specialisation.

• Coordination of interdependent tasks.

• Plurality of persons, common objectives.

• Defined authority–responsibility relationships (chain of command).

• “Structure of relationships” – who reports to whom.

• Machine of management – supports all other functions.

• Universal & dynamic process – adapts to changes.

Principles / Requisites of Sound Organisation

1. Unity of objectives

2. Specialisation

3. Coordination

4. Parity of authority & responsibility

5. Delegation (with responsibility retention)

6. Scalar principle (clear chain)

7. Unity of command

8. Optimum span of control

9. Flexibility

10. Simplicity

V. Delegation

• Process: Assigning tasks & decision authority to subordinates while retaining ultimate responsibility.

• Importance & Benefits

  • Enhanced productivity, skill development, empowerment, better time management, improved decision-making.

• Guidelines

  • Define tasks clearly, match skills, provide support; avoid overload; maintain trust & communication.

• Challenges

  • Balancing control vs autonomy, clear expectations, preventing burnout.

VI. Centralisation vs Decentralisation

• Centralisation: Concentration of decision power at the top.

  • Types: Management, Departmental, Geographic.

  • Advantages: Fast, consistent decisions; resource optimisation, economies of scale, easier control.

  • Disadvantages: Bureaucracy, slow local response, employee disenfranchisement, single-point failure.

• Decentralisation: Systematic dispersal of authority to lower levels.

  • Definitions (Allen, Strong) emphasise autonomy of units.

  • Importance/Advantages: Rapid decisions, managerial development, executive skill growth, promotes competition & growth, better control through local accountability.

  • Disadvantages: Uniform policy difficulty, coordination issues, possible duplication.

  • Example: Global hotel/supermarket chains empower local managers.

VII. Organisational Structures (Concept & Types)

1. Hierarchical (classical pyramid) – clear authority but risk of silos.

2. Functional – departments by expertise; specialisation but silo risk.

3. Flat / Horizontal – few layers; agility & empowerment but role ambiguity.

4. Divisional – semi-autonomous units; by market/product/geography.

5. Matrix – dual reporting (function + project); flexibility vs conflict.

6. Team-based – cross-functional squads (Scrum/tiger teams); high collaboration.

7. Network – core firm + external partners/offsites; agility but complexity.

8. Process-based – organised around workflow stages; speed but inter-dept barriers.

9. Circular – leaders at centre radiating information; promotes collaboration yet can confuse hierarchy.

10. Line structure – simplest top-down chain; stable but inflexible.

VIII. Controlling

• Definition: Measuring actual performance, comparing with standards, correcting deviations to ensure objectives are achieved.

• Nature

  • Goal-oriented, continuous, pervasive, forward- & backward-looking.

• Importance

  1. Ensures goal accomplishment.

  2. Judges accuracy of planning standards.

  3. Promotes resource efficiency.

  4. Boosts employee motivation (clear metrics).

  5. Maintains order & discipline (curbs fraud, theft).

  6. Facilitates coordination via unified direction.

• Limitations

  • Hard to set quantitative standards (e.g., behaviour).

  • Little control over external factors (tech changes, policy).

  • Employee resistance.

  • Costly (only worthwhile if benefits > costs).

Essentials of an Effective Control System

• Future-oriented, multi-dimensional, economical, timely, flexible, critical-point focus, operational (action-oriented), suited to climate, objective standards, exception principle, positive environment.

Techniques of Managerial Control

Traditional

1. Personal observation (first-hand, psychological pressure).

2. Statistical reports (averages, percentages, ratios, charts).

3. Break-even analysis

   • Identifies no-profit/no-loss point.

   • Formula: $\text{BEP}=\dfrac{\text{Fixed\ Costs}}{\text{Selling price per unit}-\text{Variable cost per unit}}$

4. Budgetary control – numerical expression of plans; compare actual vs budget (sales, production, cash, etc.).

5. Standard costing – compares actual costs with standard costs for variance analysis.

Modern

1. Return on Investment (ROI)

   • $\text{ROI}=\dfrac{\text{Net Profit}}{\text{Capital Employed}}$ → measures profitability & asset utilisation.

2. Ratio analysis – liquidity, solvency, profitability ratios from financial statements.

3. Responsibility accounting – cost, revenue, profit, investment centres with accountable heads.

4. Management audit – systematic appraisal of managerial performance beyond finances.

5. PERT & CPM – network techniques for scheduling complex projects; critical path focuses on time, PERT adds probabilistic times.

6. Management Information System (MIS) – computer-based, timely relevant info for decision-making & control.

IX. Ethical, Philosophical & Practical Connections

• Planning & control embody the ethical duty of due diligence—foreseeing risks and safeguarding stakeholder interests.

• Delegation & decentralisation foster empowerment and respect for human potential (Theory Y perspective).

• MBE aligns with utilitarian efficiency—maximising managerial focus where it yields greatest benefit.

• Choice of organisational structure must balance agency issues (control) with innovation freedom.

X. Inter-Topic Linkages & Real-World Relevance

• Strategic → Tactical → Operational plans underpin structure: e.g., eco-toy strategy may adopt a matrix structure (R&D × markets).

• Robust planning feeds effective MBO goal-setting; MBO data becomes performance input for controlling.

• Decentralisation requires strong controlling & MIS to maintain coherence across dispersed decisions.

• In volatile environments, contingency planning + flat/team structures + real-time MIS improve resilience.