Your guess is correct, just add the folder containing android.bat(tools folder) to the PATH. Otherwise the system will not be able to find the program.
Other possibility is change directory (using cd) to the tools folder, and execute the command from there. Since the current directory (whatever it is) is usually in the PATH, the system will find it. But this is not handy, because you frequently want to execute this command being in a different directory.
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