UNIT II Planning Learning Objectives After studying the
UNIT II Planning
Learning Objectives After studying the chapter, you should be able to: • Identify the three main steps of the planning process and the relationship between planning and strategy. • Describe some techniques managers can use to improve the planning process so they can better predict the future and mobilize organizational resources to meet future contingencies.
Planning and Strategy • Planning ▫ Identifying and selecting appropriate goals and courses of action for an organization. �The organizational plan that results from the planning process, details the goals and specifies how managers will attain those goals.
Planning • Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. • More formally, planning includes all the activities that lead to the definition of objectives and to the determination of appropriate courses of action to achieve those objectives
Planning i. Planning is a predetermined course of action. This term is defined in two ways: ii. Based on Futurity: Planning is informed anticipation of future where deciding in advance what is to be done in future. iii. As a thinking function: Planning is a thinking process, an organized foresight, a vision based on facts and experiences that are required for intelligent action.
Features of Planning • Planning has number of characteristics. i. Planning is Goal-oriented: Planning has no meaning unless it contributes in some positive manner to the achievement of predetermined goals. ii. Planning is a primary function: Without planning there is nothing to organize, no one to motivate and no need to control. iii. Planning is all pervasive: Planning is a function of all managers and all functions. iv. Planning is a mental exercise: Planning is a mental process involving foresight and sound judgment in a logical and systematic manner.
Features of Planning v. Planning is a continuous process vi. Planning involves choice: It essentially involves choice among various alternative courses of action. vii. Planning is flexible: Effective planning requires continual checking on events and forecasts and the redrawing of plans to maintain a course towards a designed goal. viii. Planning includes efficiency and effectiveness dimensions: Plans aim at deploying resources economically and efficiently.
Benefits of Planning • Four major benefits of planning 1. Planning forces managers to think ahead 2. It leads to the development of performance standards that enables more effective management control 3. Having to formulate plans forces management to articulate clear objectives 4. Planning enables an organization to be better prepared for sudden development
Planning and Strategy • Strategy ▫ The cluster of decisions and actions that managers take to help an organization reach its goals.
Strategy and Policy • Strategy is the determination of the mission (or the fundamental purpose) and the basic long-term objectives of an enterprise, and the adoption of courses of action and allocation of resources necessary to achieve these aims. • Policies are general statements or understandings that guide managers' thinking in decision making.
Planning and Strategy • Mission Statement ▫A broad declaration of an organization’s overriding purpose ▫ Identifies what is unique or important about its products ▫ Seeks to distinguish or differentiate the organization from its competitors
Types of Planning 1. 2. 3. 4. 5. 6. 7. 8. Purpose / mission task of an enterprise Objectives Strategies –Future action or plan Policies Procedures Rules Programs Budgets
The Nature of the Planning Process To perform the planning task, managers: 1. Establish where an organization is at the present time 2. Determine its desired future state 3. Decide how to move it forward to reach that future state
Why Planning is Important 1. Planning provides direction : Necessary to give the organization a sense of direction and purpose 2. Planning provides a unifying framework 3. Reduces the risk of uncertainty 4. Facilitates decision making: Useful way of getting managers to participate in decision making 5. Helps coordinate managers of the different functions and divisions of an organization 6. Can be used as a device for controlling activities.
Why Planning is Important • Unity - at any one time only one central, guiding plan is put into operation • Continuity – planning is an ongoing process in which managers build and refine previous plans and continually modify plans at all levels • Accuracy – managers need to make every attempt to collect and utilize all available information at their disposal • Flexibility – plans can be altered and changed if the situation changes
Steps in Planning Being aware of opportunity In the light of : §The Market §Competition §What customers want §Our strength §Our weakness Setting objectives of Goals. Where we want to be & what we want to accomplish & when Considering Planning Premises In what environment- internal or external –will our plans operate Identifying alternatives What are most promising alternatives to accomplishing our objectives Comparing Alternatives in Light of Goals Sought Which alternatives will give us the best chances of meeting our goals at the lowest cost & highest profit ? Choosing an Alternatives Selecting the course of action we will pursue Formulating Supportive Plans Such as plans to : Buy equipment , Buy materials Hire & train employees Develop a new product Numbering plans by making Budgets Develop such budgets as: Volume & price of sales , operating expenses necessary
Three Steps in Planning
Planning Process Stages • Determining the Organization’s Mission and Goals ▫ Defining the organization’s overriding purpose and its goals. • Formulating strategy ▫ Managers analyze current situation and develop the strategies needed to achieve the mission. • Implementing strategy ▫ Managers must decide how to allocate resources between groups to ensure the strategy is achieved.
Steps in Planning Process 1. Establishing Objectives ▫ The first step in the planning process is to identify the goals of the organization. The objectives are derived clearly indicating what is to be achieved, where action should take place, who is to perform it, how is to be undertaken and when is it to be accomplished. 2. Developing Premises ▫ Outline planning premises. Premises are assumptions about the environment in which plans are made and implemented. 3. Evaluating alternatives and selection
Steps in Planning Process 4. Formulating Derivative Plans ▫ Management has to formulate the secondary plans to support the basic plan. The plans derived for various departments, units, activities etc. , in a detailed manner are known as ‘derivative plans’. 5. Securing Cooperation and Participation ▫ “Plans have to be set in an atmosphere of close participation and a high degree of concurrence. ” 6. Providing Follow-up ▫ Plans have to be reviewed continually to ensure their relevance and effectiveness.
STEPS IN PLANNING 1. Being Aware of opportunities Setting objectives of Goals: § Objectives for entire enterprise and then for each subordinate work unit § This is for long term as well for short term § Objectives indicate- what is to be done § Where the primary emphasis is to be placed , § What is to be accomplished by the network of strategies, policies, procedures, rules, budget and programs
STEPS IN PLANNING 2. Developing Premises: Premises are assumptions about the environment in which plans are made and implemented. § What kinds of Market will there be ? § What volume of sales ? § What prices? What product ? § What Technical developments ? § What cost ? What wage rates ? § What tax rates and Policies ? § What new Plans ? § What Policies with respect to dividends ? § What political or Social environment ? § How will expansion be financed ? § What are the long term goals
STEPS IN PLANNING 3. Identification Alternatives : • Examine alternatives courses of action • Sometimes may be required mathematical techniques and the computer • There must be a limit to theses number of alternatives • It is required thoroughly examined • The planner must make a preliminary examination to discover the most fruitful possibilities
STEPS IN PLANNING 4. Evaluating alternatives : § § § § Every alternatives must examine and check its strong and weak points To evaluate the alternatives by weighting them in the premises and goals One course may be most profitable and other may not be Sometimes required risk Some alternates may be suitable for the organization for long-term goals There may be so many alternatives, so many variables and so many limitations Some times new methodologies, new techniques and new analyze is required
Levels of Planning at General Electric
Levels and Types of Planning
Levels of Planning • Division – business unit that has its own set of managers and departments and competes in a distinct industry • Divisional managers – Managers who control the various divisions of an organization
Levels of Planning • Corporate-Level Plan ▫ Top management’s decisions pertaining to the organization’s mission, overall strategy, and structure. ▫ Provides a framework for all other planning. • Corporate-Level Strategy ▫ A plan that indicates in which industries and national markets an organization intends to compete.
Levels of Planning • Business-Level Plan: ▫ Long-term divisional goals that will allow the division to meet corporate goals ▫ Division’s business-level and structure to achieve divisional goals • Business-Level Strategy ▫ Outlines the specific methods a division, business unit, or organization will use to compete effectively against its rivals in an industry
Levels of Planning • Functional-Level Plan ▫ Goals that the managers of each function will pursue to help their division attain its businesslevel goals • Functional Strategy ▫ A plan of action that managers of individual functions can take to add value to an organization’s goods and services
Time Horizons of Plans Time Horizon ▫ Period of time over which they are intended to apply or endure. �Long-term plans are usually 5 years or more. �Intermediate-term plans are 1 to 5 years. �Short-term plans are less than 1 year.
Types of Plans • Standing Plans ▫ Use in programmed decision situations �Policies are general guides to action. �Rules are formal written specific guides to action. �Standard operating procedures (SOP) specify an exact series of actions to follow.
Types of Plans • Single-Use Plans ▫ Developed for a one-time, nonprogrammed issue. �Programs: integrated plans achieving specific goals. �Project: specific action plans to complete programs.
Forms of Planning 1. 2. 3. 4. 5. Short range vs. long rang planning Operational vs. strategic planning Formal and informal planning Functional and corporate planning Proactive and reactive planning
Scenario Planning • Scenario Planning (Contingency Planning) ▫ The generation of multiple forecasts of future conditions followed by an analysis of how to effectively respond to those conditions.
Management by Objectives (MBO) • MBO is a comprehensive managerial system that integrates many key managerial activities in a systematic manner that is consciously directed towards the effective and efficient achievement of organizational and individual objectives. • Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization.
Management by Objectives (MBO) • The essence of MBO is participative goal setting, choosing course of actions and decision making. • An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. • Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.
MBO Process Individual motivation and ability Goal acceptance Goal difficulty Organization Strategy Jointly set goals Performance Periodic review and evaluation Goal specificity Explicit time period Top management support and involvement Feedback
Some of the important features and advantages of MBO are: • Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment. • Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period. • Clarity of goals • Subordinates have a higher commitment to objectives that they set themselves than those imposed on them by their managers. • Managers can ensure that objectives of the subordinates are linked to the organization 's objectives.
REFERENCES • Gareth R. Jones. Contemporary Management, Tata Mc. Graw hill publication. • VSP Rao. Management, Excel Publication.
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