Fundamentals of Planning

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Rey Lugtu

www.reylugtu.com

Organizational Objectives

Organizational objectives are the targets

toward which the open management system

is directed. They flow from the organization’s

purpose or mission.

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How an Open Management System Operates

to Reach Organizational Objectives

Government

Suppliers

Customers

Competitors

Input

Process

Output

ENVIRONMENT

Organizational Objectives

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Goal Integration Model

B

AC

Individual ObjectivesOrganizational Objectives

Extent of Goal Integration

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In general, an organization should set

three types of objectives:

1. Short-term objectives: targets to be achieved in

one year or less.

2. Intermediate-term objectives: targets to be achieved

in one to five years.

3. Long-term objectives: targets to be achieved in five

to seven years.

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Management by Objectives

Management by objectives (MBO) is a manage-

ment approach that uses organizational

objectives as the primary means of managing

organizations.

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Organizational

objectives reviewed

Worker

objective setMBO for next normal

operating period begins

Performance

evaluated

Rewards

givenProgress

monitored

The MBO

Process

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Planning and PlansPlanning is the process of determining how

the management system will achieve its

objectives. In other words, it determines how

the organization can get where it wants to go.

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A plan is a specific action proposed to help

the organization achieve its objectives.

A planner is a one that oversees the planning

process, evaluate developed plans, and solve

planning problems.

Planning

• Strategic Planning is long-range planning that focuses on the organization as a whole

• Tactical or Operational Planning is short-range planning that emphasizes the current operations of various parts of the organization e.g. marketing, production, finance, personnel

Planning is a particular kind of decision-making

that addresses the specific future that managers

desire for their organizations.

Mission Statements

Strategic Plans

Operational/Tactical Plans

Planning as the Foundation for Organizing,

Influencing, and Controlling

Planning

Org

an

izin

g

Infl

uen

cin

g

Co

ntr

oll

ing

Achieving Objectives

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Stating organizational

objectives

Listing alternative ways

of reaching objectives

Developing premises upon

which each alternative is based

Developing plans to

pursue chosen alternative

Choosing best alternative

for reaching objectives

Putting plans into action

STEP 1

STEP 3

STEP 4

STEP 6

STEP 5

STEP 2

Elements of

the Planning

Process

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Levels and Types of Planning

Figure 8.2

Strategic Management Process

Environmental Analysis

Goal Setting

(Establishment of Organizational Direction)

Strategic Plan Formulation

Administration

Strategic Control

Strategic Planning

Strategy

Implementation

ORGANIZATIONAL GOALS

PLANNING

CONTROLLING

LEADING, MOTIVATING

ORGANIZING

Symptoms of Planning Problem

• Not meeting production objectives

• Weakness in dealing with competition

• Declining sales volume

• Too low or too high inventory levels

• High operating expenses

• Too much capital investment in equipment

Relationships Among Symptoms, Problems,

and Opportunities That Face the Planner

Symptoms Problems OpportunitiesCreate Suggest

Traditional Problem Solving

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Why Plans Fail

1. Corporate planning is not integrated into the

total management system.

2. There is a lack of understanding of the different

steps of the planning process.

3. Management at different levels in the organization

has not properly engaged in or contributed to

planning activities.

4. Responsibility for planning is wrongly vested

solely in the planning department.

A study by K. A. Ringbakk determined that plans fail when:

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Success of

Organizational

Planning

Effort

Effective and Efficient

Planning Org

Inclusion ofRight People

Implementation-Focused Planning

Top ManagementSupport

Maximizing the Effectiveness of

the Planning Process

Ensuring Success of an Organizational

Planning Effort

• Top Management support

• Effective and Efficient Planning Organization:

the planning organization should have three-

built-in characteristics:

– Should be designed to use established management

systems within the company

– Complex enough to ensure coordination; all facets of

the planning should be clear to all members

– Should be flexible and adaptable

Ensuring Success of an Organizational

Planning Effort (cont’d)

• Implementation-focused planning

– Should attain organizational objectives

– Ease of implementation

• Inclusion of right people

– Should involve managers of other functional areas in

planning and implementation

– Input from organization members who will be directly

affected by the plans

Four Major Dimensions to Consider When

Developing a Plan

ORGANIZATIONAL

PLAN

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Standing Plan Program

Policies

ProceduresRules

•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.

•A successful standing

plan program with

mutually supportive

policies, procedures,

and rules

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Human Resource Planning

Human resource planning is input planning

that involves obtaining the human resources

necessary for the organization to achieve its

objectives.

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The Human Resource Planning

ProcessOrganizational Objectives

and Plans

Human Resource

Requirements

Human Resource

Inventory

Net Human Resource

Requirements

Human Resource

Programs

Expansion AdjustmentContraction

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Forecasting

Forecasting is a planning tool used to

predict future environmental happenings

that will influence the operation of the

organization.

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Scheduling

Scheduling is the process of formulating

a detailed listing of activities that must be

accomplished to attain an objective,

allocating the resources necessary to

attain the objective, and setting up and

following timetables for completing the

objective.

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End