PLANNING

UNIT-II
 PLANNING
 MEANING

 DEFINITION

 NATURE OF PLANNING

 OBJECTIVE OF PLANNING

 IMPORTANCE OF PLANNING

 ADVANTAGES OF PLANNING

 LIMITATIONS OF PLANNING

 PROCESS OF PLANNING

 METHODS OF PLANNING

 PLANNING PROMISES

 DECISION MAKING
 INTRODUCTION
What is Planning – Introduction
It is often remarked that ‘Planning is a mere ritual in a fast

changing environment’. This statement implies that in a

highly turbulent and competitive environment planning
becomes an empty academic exercise. Rapid changes in
the economic and non-economic environment of business
reduce the effectiveness of plans.
 MEANING
Planning is the first of essential managerial functions.
Planning is important as by nature it enquirers about
organizational goals and involves decision making about
desired ways and means to achieve goals.

Planning is the process by which managers establish goals

and define the methods by which these goals are to be
attained. Planning involves selecting missions and
objectives and the actions to achieve them; it requires
decision making, which is choosing from among
alternative future courses of action.
 DEFINITION
Koontz and O’Donnell – “Planning is deciding in advance

what to do, when to do, how to do and who is to do it. It is

bridging the gap from where we are to where we want to go.”
Alford and Beatt – “Planning is the thinking process, the

organised foresight, the vision based on fact and experience

that is required for intelligent action.”
Louis A. Allen – “Management planning involves the

development of forecasts, objectives, policies, programmes,

procedures, schedules and budgets.”
NATURE OF PLANNING
1. Primary of Planning
2. Planning Contributes to Objectives
3. Planning an Intellectual Activity
4. Planning Results in Higher Efficiency
5. Planning is a Continuous Process
6. Planning is Flexible
7. Unity and Consistency
8. Planning is Common to All
9. Basis for All Managerial Functions
10. Getting Co-Ordination
11. Considering Limiting Factors
1. Primary of Planning:

The functions of management include planning, organising, staffing, directing and controlling. Eminent

writers may add other new ones to these functions or those which have not been included in these
functions. Anyway, writers unanimously accept that planning is the primary function of all the other
functions. The reason is that the manager wants to achieve the pre-determined objectives in a better way.

2. Planning Contributes to Objectives:

There is a close connection between objectives and planning. Planning is based on the objectives. If

there is no link between planning and objectives, the former will only be a mental exercise and of no
use. Planning contributes to the attainment of objectives.

3. Planning an Intellectual Activity:

Planning includes the selection of the best alternative available and thinking before selection of the best

alternative. It involves the ability to foresee mishaps in future which might affect the smooth
functioning of an organisation. So, planning is an intellectual activity.
 4. Planning Results in Higher Efficiency:

 Planning efficiency is measured in terms of input and output ratios. Planning leads to maximum

output with minimum expenditure. This input and output relationship is not only determined by
money, labour hours and production units but also by the degree of satisfaction available to the
individual as well as the group. The high degree of human satisfaction motivates the workers to
produce more within the specified time.
 5. Planning is a Continuous Process:

 Planning does not come to an end with the establishment of a business concern. Planning in other

functions is also required. After the establishment of a business concern, certain decisions are taken.
Planning is necessary to implement the decisions. A number of decisions are taken during the life time
of the business concern. So, planning is necessary throughout the running of the business concern as a
continuous process.
 6. Planning is Flexible:

 While planning, any one of the available alternatives is selected. Planning selects the best alternative

based on certain assumptions. If the assumptions are proved wrong, the selected alternative tends to
be an incorrect one. There is a possibility of a dead log in the functions of the management. Planning
has one more alternative to suit future situations.
 7. Unity and Consistency:

 Every department manager resorts to planning at different times. The planning is related to the

achievement of objectives. In other words, managerial actions of different managers are

unified in order to achieve the objectives. Policies and procedures of the organisation provide
a basis for the consistency of executive behaviour and action in matters of planning.
 8. Planning is Common to All:

 Planning work is done by every person who is working in a business unit. He may be a

managing director or a foreman.

 Being of a higher place, the planning for a managing director is to frame the policies and

procedures to be adopted. Being at a lower place, planning for a foreman is to allocate the
work to his subordinates. So, planning is common to all.
 9. Basis for All Managerial Functions:

 Planning is found at all levels of management. Top management looks after strategic planning.

Middle management looks after administrative planning and the lower level management
looks after operational planning.
10. Getting Co-Ordination:
Planning co-ordinates various business activities. Without

planning, nothing can be co-ordinated.

11. Considering Limiting Factors:

Every plan is formulated after considering the limiting

factors. The limiting factors may be money, skilled labour,

quality materials, plant and machinery.
OBJECTIVES OF PLANNING

Harold Koontz, says that planning has the following

four important objectives:

To offset uncertainty and change,

To focus attention of objectives

To gain economical operation, and

To facilitate control.

IMPORTANCE OF PLANNING
What is Planning – Importance

Planning is the first and foremost essential activity in all

organisation. It helps in determining and achieving the
objectives of the organisation. The sound planning is
important condition for effective management.
1. Making Objectives Clear:
It makes objectives clean, clear, and specific, it also serves as guide for

deciding what action should be taken in present and future conditions.

2. Planning Provides Direction:
Planning helps the organisation to keep on the right path. It provides

definite direction to manager to decide what to do and when to do it.

3. It Reduces Risk and Uncertainty:
It helps organisation to predict future events and prepare to take

necessary actions against unexpected events. It is helpful in assessing

and meeting future challenges. As per view of Peter F. Drucker,
“Planning enables a manager to affect rather than accept the future”.
4. Planning is Economical:
 As per views of Koontz and O’ Donnell,” Planning substitutes jointly directed

effort against uncoordinated, piecemeal activity, an even flow of work for an

uneven flow, and deliberate decisions for snap judgments”. The effective plans
coordinate organisational work and economical.

5. Planning Provides the Basis for Control:

 Planning provides the standard against which the actual performance can be

measured and evaluated. There is nothing to control without planning and

without proper control. Plans serve as yardsticks for measuring performance.

6. Planning Facilitates Decision Making:

 Planned targets serve as the criteria for the evaluation of different alternatives

so that the best one may be chosen with the help of planning hasty decisions
and random actions can be avoided.
7. Planning Improve Efficiency of Operations:
It is rational activity that leads to efficient and economical operations,
planned action is always better than unplanned. Planning makes the
task of managing more efficient and effective manner. It helps to
minimize the cost of operations and improves the competitive strength
of an organisation.
8. Planning Improves Morale:
If the role of employee is cleared and well defines goals, then the
employee feels highly motivated and contribute his full potential
towards accomplishment of objectives. Planning improves the
behavioural climate in the organisation and reduces the friction
between departments.
9. Effective Co-Ordination:
According to Koontz and O’ Donnell “Plans are selected courses along
with the management desires to coordinate group action.” The
effective coordination integrates the physical and human resources
between departments.
10. Planning Encourages Innovation and Creativity:
Planning compels the managers to be creative and

innovative all the time. It forces managers to find out new

and improved ways of doing things in order to remain
competitive and avoid the threats in the environment.
FEATURES OF PLANNING
1. Main Focus on Objectives:

While goals are the broad, long-term accomplishments an organisation wishes to

attain, objectives are specific, short-term statements detailing how to achieve the
organisation’s goals. Planning specifies the objectives to be attained by an
organisation in the future. It also lays down the steps to be followed to achieve the
objectives.
2. Basic (Key) Function:
Planning is typically the starting point in the management process. To be

successful, organisations need a great deal of planning. People in organisations

need goals and the plans to achieve them. Planning lays the foundation for the
whole management process. It makes an organisation efficient.
3. Universal (Pervasive) Function:
 Planning is the basic function of managers at various levels of an organisation. The

exercise is carried out by all three levels of managersthe upper, middle and lower.
However, the nature, type and scope of planning is not the same at each managerial
level. In most organisations upper- level and some middle level managers spend
more time developing strategic, broad/directional, long-range and single-use plans
for the organisation.
 Other middle-level and all low-level managers, in contrast, spend more time

specifying how the strategic plans will be accomplished by developing operational,

narrow/ specific, short-range plans and implementing standing plans (i.e., policies,
procedures and rules).
4. Continuous (On-Going) Process:
 Planning is a continuous process. A plan which worked yesterday may not be

successful in today’s market. Most planning also follows a pattern. Old plans are to
be revised and modified and new ones to be introduced as demanded by the needs of
5. Forward-Looking Nature:
Any planning exercise at the business level is a forward- looking-

one. It is carried out to achieve certain objectives in the future. It

involves forecasts of future demand, market competition and
government policies. And business managers try to cope with future
uncertainty effectively through proper planning.
6. Decision-Making Aspect:
Decision-making is essentially a choice of an appropriate course of

action from among alternatives. The process of planning involves

searching for alternatives and choice of the best alternative from
those which are available for achieving certain specified and pre-
determined organisational objectives.
7. Mental Exercise:
 Planning involves some sort of intellectual (brain storming) exercise. It requires a lot of

thinking in advance, foresight and proper judgment on the part of management.

8. Flexibility:
 In today’s era of rapid changes in technology, market conditions and government policies,

the planning process has to be flexible enough in order to enable managers to face and meet
newer and newer challenges. Due to rapidly changing environment, some companies are
making shorter-term plans which allow for quick responses to customer needs and requests.
The goal is to be flexible and responsive to the market.

9. Shared Responsibility:
 Planning means that a manager must involve his subordinates actively in order to determine

resource requirement, fix goals and identify and exploit opportunities. During the process,
the manager may need to go outside the work unit for information about products,
competitors, markets, and the like.
10. Choice:
Planning involves choice. Planning is essentially an act of choosing from

alternative courses of action. And choice involves decision-making. In

truth, in order to make a rational choice, it is necessary to evaluate and
compare the possible alternatives.
11. Efficiency:
Planning seeks to promote efficiency. By helping to economise the use of

scarce resources, sound planning leads to accomplishment of desired

objectives in the best possible may, i.e., at the minimum possible cost. And
this implies efficient operation which is the primary objective of a business.
 ADVANTAGES OF PLANNING
Planning helps the organisation achieve its objectives early. In this way, planning helps the organisation in

many ways.

Some of the advantages of planning are briefly explained below:

1. Better utilisation of resources – Planning decides what to produce and how to produce. Then, there is

the possibility of utilising the resources effectively.

2. Helps in achieving objectives – Planning sets goals or objectives of an organisation. This gives

effective direction to the control of employees of the organisation. In this way, planning helps the

organisation accomplish the pre-determined goals or objectives.

3. Economy in operation – Unnecessary production, ineffective utilisation of resources and unnecessary

activities of an organisation are eliminated through planning. This results in the economy of operations.

4. Minimises future uncertainties – The uncertain future increases the importance of planning. Planning

foresees the changes and uncertainties taking shape in future and devices methods to face them. Some

future uncertainties are thus, minimised through planning.

 5. Improves competitive strength – Competitive strength is improved by adding

new line of products, changes in quality and size of the product, expansion of plant
capacity and changes in methods of work. These are achieved through planning.
 6. Effective control – Control without planning is an impossible one. Control is

used only when there is a well-chalked out plan. So, planning provides a basis for
controlling.
 7. Motivation – A well-prepared plan encourages the employees of an organisation

and gives them a sense of effective participation. Planning motivates the employees
as to what the organisation wants to achieve and defines it to the employees.
 8. Co-operation – Planning helps the management pulls the individual to achieve

common objectives or goals. Planning provides well-defined objectives, unity of

direction, well-published policies, procedures and programmes. All these facilitate
to get co-ordination, which consequently avoids duplication of work and
interdepartmental conflicts.
9.Development of efficient methods – Planning helps the
management develop efficient methods and procedures of action.

10.Delegation of authority facilitated – A well-prepared plan will

always facilitate the delegation of authority.
11.Anticipation of crisis – Careful planning will avoid the crisis
which is likely to occur. In this way, management can reduce the
internal organisational disturbances.
12.Prevents hasty judgement – We can analyse a problem
through a plan and consider the alternatives before taking a sound
decision. It is possible to plan in advance as to what will be done
and how it will be done. This process avoids hasty judgment.
LIMITATIONS OF PLANNING
1. Lack of Flexibility:

Plans lay down a specified course of action regarding the future, which cannot be changed even if situations so

demand. This often proves to be costly for the organisation, particularly when there is need for a change in the

actual course of action. And this is why some progressive firms now rely on contingency planning. The object is to

overcome crisis situations as and when they arise.

2. Lack of Creativity and Initiative:

Due to inherent rigidity of the plans managers lack the initiative to do new things or to venture out in new directions

to cope with changes in the environment. So even advance thinking by managers does not lead to the generation of

new ideas. And creative thinking or creativity is out of question.

3. Environmental Uncertainty:

At times planning loses its practical relevance due to various uncertainties surrounding the environment. So

managers cannot fully rely on existing plans. They have to revise or modify existing plans or change their strategies

to get the desired results even in adverse situations. For instance, a company might be required to revise its

advertisement budget to maintain competitive parity, i.e., to match the efforts of its major and nearest rivals.
 4. Time Lag:

 Planning which involves several steps such as – defining objectives, collecting and

analysing data and choosing from alternatives is a time-consuming and lengthy exercise. It
loses effectiveness due to delay in taking necessary action. In other words, planning loses
its relevance in situations which demand quick decision(s) and immediate action(s).
 5. Costly Process:

 Planning is also a costly exercise. Since management is a valuable resource, the cost of

planning varies directly and proportionately with the time managers devote to planning. If
managers do not devote sufficient time to planning, their decisions may prove to be
impractical or wrong.
 6. No Guarantee for Action:

 A plan is just a programme of action regarding the future, not a guarantee for action. The

success of planning depends on its effective implementation. The effectiveness of planning

depends on the outlook and the actual behaviour of the planners. Planning makes
managers feel secured.
 7. Inaccurate Forecast:

 Planning is based on the timely availability of reliable and complete information and

accuracy of forecasts of demand, price and technology. If forecasts are based on incomplete
information or if the forecasting method is not reliable, then plans are bound to be ineffective
or likely to fail.
 8. Time Constraint:

 Planning requires a manager to set aside necessary time to do it. Managers who have very

busy schedules may react adversely when superiors order them to prepare a 5-year plan for
their work unit. The reason is that they are expected to do this and still find time to meet the
current year’s target..
 9. Internal and External Constraints:

 In spite of Internet connections and speedy access to computer databases, every manager

cannot use available information to make an intelligent decision.

Planning Process:

The planning function of management is one of the most

crucial ones. It involves setting the goals of the company

and then managing the resources to achieve such goals. As
you can imagine it is a systematic process involving eight
well thought out steps. Let us take a look at the planning
process.
PLANNING PROCESS
(1) Setting Objectives
This is the primary step in the process of planning which specifies the

objective of organisation i.e. what an organisation wants to achieve.

The planning process begins with the setting of objectives.

Objectives are end results which the management wants to achieve by

its operations.
Objectives are specific and are measurable in terms of units.

Objectives are set for the organisation as a whole for all departments

and then departments set their own objectives within the framework of
organisational objectives.
(2) Developing Planning Premises
Planning is essentially focused on the future and there are certain

events which are expected to affect the policy formation.

Such events are external in nature and affect the planning

adversely if ignored.
Their understanding and fair assessment are necessary for

effective planning.
Such events are the assumptions on the basis of which plans are

drawn and are known as planning premises.

(3) Identifying Alternative Courses of Action
Once objectives are set, assumptions are made.

Then the next step is to act upon them.

There may be many ways to act and achieve objectives.

All the alternative courses of action should be identified.

(4) Evaluating Alternative Course of Action

In this step, the positive and negative aspects of each alternative

need to be evaluated in the light of objectives to be achieved.

Every alternative is evaluated in terms of lower cost, lower risks,

and higher returns, within the planning premises and within the
availability of capital.
(5) Selecting One Best Alternative
The best plan which is the most profitable plan and with minimum negative

effects is adopted and implemented.

In such cases, the manager’s experience and judgement play an important role

in selecting the best alternative.

(6) Implementing the Plan

This is the step where other managerial functions come into the picture.

This step is concerned with “DOING WHAT IS REQUIRED”

In this step, managers communicate the plan to the employees clearly to

convert the plans into action.

This step involves allocating the resources, organising for labour and purchase

of machinery.
7) Follow Up Action

Monitoring the plan constantly and taking feedback at

regular intervals is called follow-up.

Monitoring of plans is very important to ensure that the

plans are being implemented according to the schedule.

Regular checks and comparisons of the results with set

standards are done to ensure that objectives are achieved.

TYPES OF PLAN
 Planning is a pervasive function of management, it is extensive in its

scope. So all managers across all levels participate in planning. However,

the plans made by the top level manager will differ from the ones that
lower managers make.

 Objectives

 Strategy

 Policy

 Procedure

 Rules

 Program

 Methods

 budget
Meaning of Planning Premises:
Planning is made for the future. Future is uncertain the

management makes certain assumptions about the

future. The assumptions are not to be based on hunch or
guess work. It should be developed through scientific
forecasting of future events.
The assumptions derived from forecasting and used in

planning are called as planning premises. According to

Koontz O’Donnell.
Types of Planning Premises:
Planning premises may be classified as:
(a) Internal and external
(b) Tangible and Intangible
(c) Controllable, semi-controllable and uncontrollable
(d) Constant and variable
(e) Foreseeable and unforeseeable
(a) Internal and External Premises:

Internal premises are those which exist within the business enterprise. This may include men,

material, money and methods. Competence of managerial personnel and skill of labour force are

some of the important internal premises.

External premises centre round the markets and derived from the external environment

surrounding the business. Examples: Product market, money market, population growth,

government policies, business cycles technological changes.

(b) Tangible and Intangible Premises:

Tangible premises are those which can be measured quantitatively. They may be quantified in

terms of money, time and units of production. Intangible premises are those which cannot be

measured quantitatively. Examples are: Reputation of the business, Public relations, employee

morale, motivation etc. Planning is to consider both tangible and intangible premises.
(c) Controllable, Semi-Controllable and Uncontrollable Premises:

There are certain factors which are well within the control of the management to a

great extent. Factors like materials, money and machines are areas where

management has maximum control over their future commitments. The management

can decide what policies, procedures, rules and strategies are to be followed in the

organisation for achieving the objectives. Semi-controllable premises are those

assumptions about future which are under the partial control of a business. Examples

of such premises are demand for the product, Trade union relations.

Non-controllable premises are entirety beyond the scope of business like government

policy, international trade agreements, wars, natural calamities new discoveries and

inventions etc. Such events cannot be predicted or controlled. These factors disturb

all well thought-out calculations. All intangible premises also fall in this category as

human behaviour also cannot be predicted accurately.

(d) Constant and Variable Premises:

Constant premises are those which behave in similar fashion irrespective of action

taken. They are definite, well known and well-understood. The behaviour of
constant premises is not subject to changes these are ignored in planning. Such
factors are men, machine and money.
Variable premises are those which vary in relation to the course of action.

The management is to consider these factors in formulating plans as their variations

are dependent on the action taken by the management. These cannot be controlled
and predicted. For example, sales volume of the enterprise can be partly controlled
by the management. There are certain other factors which affect the sales volume of
the enterprise but are quite uncontrollable.

(e) Forecasting gives the manager an idea of knowledge of their variations.

Planning Methods
Planning consists of several individual plans. Depending on their nature and scope,

plans can be broadly classified as follows:

I. Standing or repeated-use plans

1. Objectives.

2. Policies.

3. Procedures.

4. Methods.

5. Rules.

6. Strategies.

II. Single-use plans

1. Programmes.

2. Budgets.
 DECISION MAKING

 DEFINITION

 CHARACTERISTICS AND

 IMPORTANCE

PROCESS

VARIOUS TYPESOF DECISIONS

 DECISION MAKING
INTRODUCTION :
Decision Making is the essence of the management process.

Decisions are made to solve problems, tackling the situations,

handling crises and resolving conflicts that are inevitable. Decision
Making is at the core of planning. The Concept of decision making
involves defining the problem, finding, comparing and choosing a
course of action. It is a process or activity of choosing an appropriate
course of action from several alternative courses. The term “decision
making” has been defined as a process of judging various available
options and narrowing down choices to a situation one.
 Definition of Decision Making:
Managers have to take decision all the times. They spend a

great time in making decisions.

Managers are evaluated and rewarded on the number and

importance of their decisions.

According to Philip kotler ,”a decision may be defined as a

conscious choice among alternative courses of action”.

“Decision making is the focal creative psychic event where

knowledge, thoughts, feelings and imaginations are fixed

into action.” —G.L.S. Shackle
Characteristics of Decision Making:
Followings are the characteristics of decision making.
1. Decision making is based on rational thinking. The
manager tries to force various possible effects of a decision
on before deciding a particular one.
2. It involves the evaluation of various alternatives
available. The selection of best alternative will be made
only when pros and cons of all of them are discussed and
evaluated.
3. It is a process of selecting the best from among
alternatives available.
4. It involves certain commitment. Management is
committed to every decision it takes.
5. Decision making is the end product because it is

preceded by discussions and deliberations.

6. Decision making is aimed to achieve organizational

goals.
 IMPORTANCE OF DECISION MAKING:

he importance of decision making cannot be over emphasized. According to

Melvin T. Copland, “Administration essentially is a decision making process

and authority and responsibility for making decisions and for ascertaining
that the decisions made are carried out. In business, whether the enterprise be
large or small, changes in conditions occur, shifts in personnel take place,
unforeseen contingencies arise. Moreover, just to get wheels started and to
keep them turning, decisions must be made.”
At the heart of planning is decision-making—the selection of a suitable

course of action. It is an important function of management. Management

without decisions is like a man without back bone. Nothing can be
performed without taking decisions.
Every aspect of management functions, such as planning,

organisation, motivation and control is determined by

decisions, the result of which is the performance in the
organisation.
The days of ‘hit and miss’ methods in management are over,

and have been replaced by new concepts and scientific

techniques. Decision making is therefore, vital to all
management activities. It helps set definite objectives,
prepare plans of action, determine organisational structure,
motivate personnel and introduce innovations.
DECISION-MAKING PROCESS
Identify the decision.

Gather relevant info.

Identify the alternatives.

Weigh the evidence.

Choose among the alternatives.

Take action.

Review your decision

1. Identify the decision
To make a decision, you must first identify the problem

you need to solve or the question you need to answer.

Clearly define your decision. If you misidentify the
problem to solve, or if the problem you’ve chosen is too
broad, you’ll knock the decision train off the track before
it even leaves the station.
2. Gather relevant information
Once you have identified your decision, it’s time to

gather the information relevant to that choice. Do an

internal assessment, seeing where your organization
has succeeded and failed in areas related to your
decision. Also, seek information from external sources,
including studies, market research, and, in some cases,
evaluation from paid consultants.
3. Identify the alternatives
With relevant information now at your fingertips, identify

possible solutions to your problem. There is usually more

than one option to consider when trying to meet a goal—
for example, if your company is trying to gain more
engagement on social media, your alternatives could
include paid social advertisements, a change in your
organic social media strategy, or a combination of the two.
4. Weigh the evidence
Once you have identified multiple alternatives, weigh the

evidence for or against said alternatives. See what

companies have done in the past to succeed in these areas,
and take a good hard look at your own organization’s wins
and losses. Identify potential pitfalls for each of your
alternatives, and weigh those against the possible rewards.
5. Choose among alternatives
Here is the part of the decision-making process where

you, you know, make the decision. Hopefully, you’ve

identified and clarified what decision needs to be made,
gathered all relevant information, and developed and
considered the potential paths to take. You are perfectly
prepared to choose.
6. Take action
Once you’ve made your decision, act on it! Develop a plan to make

your decision tangible and achievable. Develop a project plan

 related to your decision, and then set the team loose on their tasks
once the plan is in place.
7. Review your decision
After a predetermined amount of time—which you defined in step

one of the decision-making process—take an honest look back at

your decision. Did you solve the problem? Did you answer the
question? Did you meet your goals?
If so, take note of what worked for future reference. If not, learn

from your mistakes as you begin the decision-making process again.

VARIOUS TYPES OF MANAGERIAL
DECISIONS
INTRODUCTION:-
Decision making is the heart of modern administration. According to M.T. Copeland,
administration essentially is a decision making process. Whatever, an administrator does he
does through decision making. An administrators life is filled with a constant series of
decisions. Everyday hundreds of decisions are made by the administrator consciously or
unconsciously. Decisions which are relatively minor are taken almost subconsciously
following rules and patterns of behavior established over many previous encounters with the
problem. All major decisions however are taken very carefully and consciously. Such
decisions usually involve the application of considerable human judgment and experience
before a solution is obtained.
Types of Managerial Decisions
1. ORGANISATIONAL AND PERSONAL DECISIONS

2. INDIVIDUAL AND GROUP DECISIONS

3. ROUTINE AND STRATEGIC DECISIONS

4. PROGRAMME AND NON-PROGRAMME

DECISIONS
5. POLICY AND CREATIVE DECISIONS
1. ORGANISATIONAL AND PERSONAL DECISIONS:-

Organizational decisions are made to advance the interest of

the organization. When an executive acts formally in his
expected role in an organization he makes
organizational decisions making become organizations
official decisions making power is delegated to others also
and calls for decisions at subordinate levels supporting it.
They thus touch off chain of behavior throughout the
organization. Personal decisions are made by an executive
as an individual and not as a part of an organization. 
2. INDIVIDUAL AND GROUP DECISIONS:-
When a decision is taken by an individual in the organization, it is
known as individual decision. These are concerned mainly with routine
problems for which broad policies are available. Such decisions are
generally taken in small organizations and in those organizations where
autocratic style of management prevails. Group decisions are those
taken by a group of persons constituted for the purpose.
 Decisions taken by the board of directors or a committee are, examples

of group decisions. Group decision making generally results in more

realistic and well balanced decisions and encourages participative
decision making.
3. ROUTINE AND STRATEGIC DECISIONS:-
Routine decisions are made repetitively following
certain established rules, procedures and policies.
They do not require collection of new data and can be
taken without much deliberations. Such decisions are
taken generally by the executives at the middle and
lower management levels. Strategic or basic.
decisions, on the other hand, are more important and
are generally taken by the top management of
organizations.
They relate to policy matters and so require a thorough
fact finding and analysis of the possible alternatives.
Launching a new programme, location of a new plant,
installation of a computer system are examples of
strategic decisions.
4. PROGRAMME AND NON-PROGRAMME DECISIONS :-
Programmed decisions are concerned with relatively routine and repetitive
problems. Information on these problems is already available and can be processed
in a pre-planned manner. Such decisions have short-term impact and are relatively
simply. They are, made at lower levels of management. These decisions require little
thought and judgment. The decision maker identifies
the problem and applies the predetermined solution. For example, if an employee is
habitually late comer he can easily be dealt with under the established procedure.
Non-programmed decisions deal with unique or unusual problems. Such novel or

non-repetitive problems cannot be tackled in a predetermined manner. There are no

cut-and-dried of executive judgment and deliberation is required to solve them. To
order firing on a rioting mob, to impose curfew in the city, opening of a new branch
are examples of such decisions.
5. POLICY AND CREATIVE DECISIONS:-

Policy decisions are of vital importance and are taken by the

top management.

They effect the entire organization. But operating decisions are

taken by the lower management in order to put into action the
policy decisions. For instance, the bonus issue is a policy
matter which is to be decided by the top management and
calculation of bonus is an operating decision which is taken at
the lower levels.
THANK YOU