Unit 2: Planning & Organizing
PLANNING & ORGANIZING
Planning is the process of deciding in advance what to do, how to do, when to do, and who will do it.
It is the first function of management.
Simple meaning: Planning is thinking before doing.
Need for Planning
Planning is needed because it:
- Provides direction to employees
- Reduces risks and uncertainties
- Helps in effective decision-making
- Ensures optimum use of resources
- Improves coordination
- Facilitates control
- Helps to face competition
- Encourages creativity and innovation
Scope of Planning
Planning covers:
| Area | Description |
|---|---|
| Corporate planning | Long-term organizational goals |
| Marketing planning | Product, price, promotion, place |
| Financial planning | Budgeting, investment decisions |
| Operational planning | Daily operations |
| Human resource planning | Recruitment, training, development |
| Strategic planning | Business strategy & competitive advantage |
| Contingency planning | Backup plans for emergencies |
Importance of Planning
- Sets clear goals
- Reduces uncertainty
- Minimizes wastage of resources
- Improves efficiency
- Helps anticipate problems
- Promotes team coordination
- Essential for control (no control without prior plan)
- Provides competitive advantage
Steps in Planning (Planning Process)
The planning process follows systematic steps:
- Identify objectives - What the organization wants to achieve
- Collect information / Environmental scanning - Internal and external analysis
- Develop planning premises - Assumptions about future conditions
- Identify alternatives- Various possible ways to achieve goals
- Evaluate alternatives - Compare cost, benefit, risk
- Select the best alternative- Decision-making
- Implement the plan- Executing the chosen plan
- Review and control- Monitor and make corrections
Decision-Making Model
Decision-making is choosing the best option among alternatives.
Classical Decision-Making Model (Steps):
- Define the problem
- Identify alternatives
- Collect information
- Evaluate alternatives
- Select the best alternative
- Implement the decision
- Review the result
Modern Models:
- Rational model
- Bounded rationality model (Herbert Simon)
- Intuitive decision-making model
Meaning of Organizing
Organizing means arranging and grouping work, people, and resources to achieve goals.
It creates a structure of roles and responsibilities.
Simple meaning: Organizing is dividing work and assigning it to the right people.
Need and Importance of Organizing
- Clear roles and responsibility
- Avoids confusion and duplication of work
- Ensures optimum resource use
- Improves coordination
- Facilitates specialization
- Helps in growth and expansion
- Improves efficiency
- Provides clarity in reporting relationships
Organizational Design
Organizational design is the process of shaping the structure of an organization.
It includes:
- Division of labor
- Departmentation
- Span of control
- Authority & responsibility
- Coordination mechanisms
Types of Organizational Design
- Simple design (small businesses)
- Functional design (departments based on skill—HR, Finance, Marketing)
- Divisional design (product, region, customer-based divisions)
- Matrix design (dual reporting: functional + project manager)
- Team-based design
- Network design
Organizational Structure
Organizational structure defines:
- How tasks are divided
- Who reports to whom
- How information flows
Types of Organizational Structure
| Type | Meaning |
|---|---|
| Functional | Based on functions (HR, Finance, Marketing) |
| Divisional | Based on product, region, customer |
| Matrix | Combined structure—dual authority |
| Flat | Fewer levels; wide span of control |
| Tall | Many levels; narrow span of control |
Centralization & Decentralization
Centralization
- Maximum authority is at the top level
- Decisions made by senior management
Advantages
- Uniform decisions
- Good control
- Less confusion
Disadvantages
- Slow decision-making
- Low employee motivation
Decentralization
- Authority is distributed to middle and lower levels
- Local managers can make decisions
Advantages
- Fast decision-making
- Motivated employees
- Better local solutions
Disadvantages
- Risk of inconsistent decisions
- Requires skilled managers
Delegation
Delegation means assigning authority and responsibility to subordinates while still retaining accountability.
Elements of Delegation
- Authority – power to make decisions
- Responsibility – duty to perform assigned tasks
- Accountability – subordinate is answerable to superior
Importance of Delegation
- Reduces workload of manager
- Develops employee skills
- Improves efficiency
- Helps organization grow
- Builds trust and confidence
Quick Revision
Planning
- Meaning: Thinking before doing
- Steps: Objectives → Premises → Alternatives → Evaluation → Selection → Implementation → Review
- Decision Model: Define → Evaluate → Select → Implement → Review
- Importance: Reduces uncertainty, improves coordination
Organizing
- Meaning: Assigning tasks & responsibilities
- Structure: Functional, Divisional, Matrix, Flat, Tall
- Centralization = top authority
- Decentralization = distributed authority
- Delegation = assigning authority & responsibility