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who is in charge at each level. Tactics are the means needed to activate a strategy and
make it work.

3. Strategic Plan: It is an outline of steps designed with the goals of the entire organization
in mind, rather than with the goals of specific divisions. It look ahead over the four, five
or even more years to move the organization from where it currently to where it wants to
be. Top managements strategic plan for the entire organization becomes the frame work
and sets dimension for the lower level planning.

4. Contingency plans: Intelligent and successful management depends upon a constant

pursuit of adaptation, flexibility, and mastery of changing conditions. Strong management
requires a “keeping all options open” approach at all times — that's where contingency
planning comes in.
Contingency planning involves identifying alternative courses of action that can be
implemented if and when the original plan proves inadequate because of changing
circumstances.

Planning Process:

 Setting objectives: Objectives may be set for the entire organisation and each
department or unit within the organisation.
 Developing premises: Planning is concerned with the future which is uncertain
and every planner is using conjucture about what might happen in future.
 Identifying alternative courses of action: Once objectives are set, assumptions
are made. Then the next step would be to act upon them. Evaluating alternative
courses: The next step is to weigh the pros and cons of each alternative.
 Selecting an alternative: This is the real point of decision making. The best plan
has to be adopted and implemented.
 Implement the plan: This is concerned with putting the plan into action.
 Follow-up action: Monitoring the plans are equally important to ensure that
objectives are achieved.

Decision-making:

Decision-making is defined as the process by which different possible solutions or

alternatives are identified and the most feasible solution or course of action is finalized. It
is an integral part of planning. Decision-making results in selecting the right action among
different available options.

It is also one of the important management functions and effective decision-making leads
to fulfilling expected goals by sorting out different problems related to such decisions.
Decision-making is also a time-bound process and eliminates confusions to reach a
conclusion.

A lot of time is consumed while decisions are taken. In a management setting, decision
cannot be taken abruptly. It should follow the steps such as

1. Defining the problem

2. Gathering information and collecting data

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3. Developing and weighing the options

4. Choosing best possible option

5. Plan and execute

6. Take follow up action

Relation Between Planning And Decision-Making: Both planning and decision-making

are connected to each other. These are the most important aspects of management
functions. Planning requires a series of decisions to be incorporated in advance. The
foundation of planning is decision-making. The role of a planner demands good decision-
making abilities also as the planner has to take a lot of decisions simultaneously. So,
decision-making is an important task in planning. Simultaneous and a number of
decisions make a plan. In the absence of decision-making, it’s not possible to answer what,
how, when, and who is planning. To execute planned activities, decision-making is
compulsory.

Simon’s Model of Decision-making:

Recognizing the deficiencies of the rational model, Herbert Simon suggested that there are
limits upon how rational a decision-maker can actually be. His decision theory, the
bounded rationality model, earned him a Nobel Prize in 1978.

The Simon Decision Making Theory is a framework that provides a more realistic view of
the world, where decisions affect prices and outputs. The theorist argued that making a
decision is making a choice between alternative courses of action. It can even mean
choosing between action and non-action.

Simon suggests that there is never one best course of action or decision. It’s because one
can’t have complete information about something, therefore, there will always be a better
course of action or decision.

The Decision Making Theory by Simon also considers psychological aspects that classical
economists overlooked or ignored. Internal factors such as stress and motivations, among
others, limit an individual’s capacity to solve complex problems.

In short, decisions are based on bounded rationality—humans behave differently when

there are risks and uncertainty involved. At the core of the theory lies ‘satisficing’, which
is a combination of satisfying and sufficing. It suggests that one should pursue objectives
or make decisions that involve minimum risks and complications as opposed to focusing
on maximizing profits.

Simon's model – also referred to as the "Administrative Man" theory – rests on the idea
that there are constraints that force a decision-maker to be less than completely rational.
The bounded rationality model has four assumptions:

1. Managers select the first alternative that is satisfactory.

2. Managers recognize that their conception of the world is simple.

3. Managers are comfortable making decisions without determining all the alternatives.
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4. Managers make decisions by rules of thumb or heuristics.

Three Phase in decision making process:

Intelligence Phase - This is the first step in the decision making process. In this stage
the decision maker identifies the problem or opportunity.

In the managerial context, a problem is finding something that is not according to plan,
rule, or standard.

Design Phase - Design is the process of designing a solution to a problem. Alternative

solutions have been devised to solve the same problem. After collecting data about the
solution, each alternative solution is evaluated.

Choice Phase - This is the stage. In which the probabilities are compared against each
other to find the most suitable solution. The best solution can be identified using
quantitative tools such as decision tree analysis, force analysis, etc

Group decision making techniques:

1. Brainstorming Technique

Brainstorming was developed by Alex Faickney Osborn, who is also called “The Father of
Brainstorming.” This technique aims to improve problem-solving by finding new or
creative solutions.

In a brainstorming session, five to ten persons sit together. A group leader introduces the
problem, and ideas are sought from everyone to solve the problem. These ideas are
discussed and analysed, and the best idea is selected.

Let us take an example of Google’s “Note-and-Vote” on how they adopt brainstorming.

Everyone present in the room is given a paper, pen, and 5 to 10 minutes to scribble down
as many ideas as they possibly can.

This approach is effective because each attendee gets an opportunity to think as an

individual and as part of the group.

2. Delphi Technique: This technique is method of forecasting by collecting information

from physically dispersed persons by means of a written questionnaire. The Delphi method
relies on experts who are knowledgeable about a certain topic so they can forecast the
outcome of future scenarios, predict the likelihood of an event, or reach consensus about
a particular topic.

This technique permits collection of ideas from experts placed in different locations. The
members are not influenced by one another, as there is no face-to-face interaction.

3. Nominal Group Technique: In the Nominal Group Technique, group members think
independently and each person comes up with their own ideas. This technique does not
allow interactions among group members initially.

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Members interact only after ideas are presented by every member of the group.

4. Quality Circles: Quality Circles was started in Japan in the early 1960s. It is a small
group of employees from the same department who volunteer to meet regularly to identify,
analyse, and solve problems about their work.

5. Heuristic Technique: In the Heuristic Technique, decisions are made based on

experience, rule of thumb, common sense, etc. Heuristics are problem-solving techniques
that result in a quick and practical solution. In contrast to business decisions that involve
extensive analysis, heuristics are used in situations where a short-term solution is
required.

For example, companies sell their products on an instalment basis because they assume
that people can pay the product’s price more easily and regularly through instalments
rather than in one lump sum amount.

6. Fishbowling: Fishbowling is another variation of the brainstorming but is more

structured and is to the point. In this technique, the decision-making group of experts is
seated around a circle with a single chair in the center of the circle. One member of the
group or the group leader is invited to sit in the center chair and give his view about the
problem and his proposition of a solution. The other group members can ask him
questions but there is no irrelevant discussion or cross talk. Once the member in the
center chair has finished talking and his viewpoint is fully understood, he leaves the center
and joins the group in the circle. Then the second member is called upon to sit in the
center chair and give his views in the light of the views expressed earlier.

7. Didactic interaction: Didactic interaction is applicable only in certain situations, but

is an excellent method when such a situation. For example, the decision may be to buy or
not to buy, to situation requires an extensive and exhaustive discussion and investigation
since a wrong decision can have serious consequences of either of the two alternatives,
the group required to make the decision is split into two subgroups, one favoring the ‘go’
decision and other favoring the ‘no go’ decision. The first group lists all the ‘pros’ of the
problem solution and the second group lists all the ‘cons’. These two groups meet and
discuss their findings and their reason. After the exhaustive discussions, the group switch
ideas and try to find weakness in their own original viewpoints. This interchange of ideas
and tolerance and understanding of opposite viewpoint results in mutual acceptance of
facts as facts as they exist so that a solution can be built around these facts and thus a
final decision is reached.

Individual decision making techniques:

1. Linear Programming

Linear programming is a quantitative technique used to decide how to distribute limited

resources for achieving objectives. Linear refers to the relationship between variables, and
programming refers to taking decisions systematically.

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Linear programming is used when two or more activities compete for limited resources.
Linear programming is used for agriculture, industry, contract bidding, and evaluation of
tenders.

2. Decision Tree

A decision tree is a diagram that shows all possible decision alternatives. All this
information can be seen at one glance in a manner that is easy to understand. A decision
tree is like a horizontal tree.

The base of the tree is called a decision point. From the base, different alternatives and
sub-alternatives are indicated as branches and sub-branches, respectively. The manager
must study all alternatives very carefully and select the best one

3. Game Theory

A game is a situation involving at least two people. Each person’s decision is based on
what he expects the other person to do. Game theory is used for deciding competitive
pricing. A company may increase the price of its product if it feels that a competitor may
also increase the

For example, Pepsi will increase its price if it feels that Coca Cola will increase its price.
Here, both decision-makers adapt to each other’s decisions.

4. Simulation: A simulation is used to make decisions about complex problems. The effect
of a decision is observed in a simulated situation and not a real situation. Simulation
typically uses statistical and computer modelling to investigate the performance
of a business process either for a new situation or to improve an existing set of
processes.

For example, a company can understand the effectiveness of its new advertisement by first
showing it to a few people before telecasting it on TV.

5. Queueing Theory

This technique is used to find solutions to the waiting list problems in the case of airline
reservations, railway reservations, college admissions, etc. Queueing theory helps to find
the optimum number of service facilities required and their cost.

For example, a transport company may introduce more vehicles to carry passengers on
the waiting list, thus preventing them from going to a competitor.

6. Network Techniques

Managers use network techniques such as PERT (Program Evaluation Review

Technique) and CPM (Critical Path Method) for complex projects, in which many
activities have to be completed. By using these techniques, complex projects can be
completed on schedule. Network techniques help to save time and cost.

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1. CPM: It is popularly known as Critical Path Method. Critical path method is a project
management tool used to formulate a time frame for a project in order to determine where
potential delays are most likely to take place.

2. PERT: The Programme Evaluation and Review Technique is basically a scheduling

technique. It helps project manager in planning, scheduling, monitoring, evaluating, and
controlling large and complex projects. It is a probabilistic model and introduces
uncertainties in project network.

3. GERT: The Graphical Evaluation and Review Technique is a new technique and superior
over the above mentioned techniques. In this analysis only simulation can be used.

ORGANISING: The process of organizing involves establishing an intentional structure of

roles for the staff at all levels of hierarchy in the organization. It is the function of
identifying the required activities, grouping them into jobs, assigning jobs to various
position holders, and creating a network of relationship, so that the required functions are
performed in a co-ordinated manner, leading to the accomplishment of desired goals.

According to Koonts O Donnel ―Organizing involves the grouping of activities necessary

to accomplish goals and plans, the assignment of these activities to appropriate
departments, and the provision of authority delegation and Co-ordination.

Steps in Organizing: The logical sequence of steps in organizing is mentioned

below:-
1. Establishing objectives
2. Designing Plans and Policies
3. Identifying specific activities
4. Grouping activities according to available resources
5. Delegating the authority necessary to perform the activities.
6. Tying the groups together through authority relationship and communication.

Classification of Organization:
1. Formal Organisation: It is an organizational structure which clearly defines the duties,
responsibilities, authority and relationship as prescribed by the top management. It
represents the classification of activities within the enterprise, indicate who reports to
whom and explains the vertical flow of communications which connects the chief executive
to the ordinary workers.

2. Informal Organisation: It is an organizational structure which establishes the

relationship on the basis of the likes and dislikes of officers without considering the rules,
regulations and procedures. The friendship, mutual understanding and confidence are
some of the reasons for existing informal organization.

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