P RINCIPALS AND PRACTICES OF MANAGEMENT Presentation on- PLANNING I NTRODUCTION Planning (also called forethought ) is the process of thinking about and organizing the activities required to achieve a desired goal.thinking Planning involves the creation and maintenance of a plan. As such, planning is a fundamental property of intelligent behavior. This thought process is essential to the creation and refinement of a plan, or integration of it with other plans; that is, it combines forecasting of developments with the preparation of scenarios of how to react to them.planintelligent behaviorplanforecasting 1.Topic- Introduction and nature of planning N ATURE O R C HARACTERISTICS O F P LANNING Primacy of Planning:- Planning is the first and foremost activity of Managerial function. Management starts with planning. Planning gives base for other functions like organizing, staffing, directing controlling etc. It is equally important like all other managerial functions. Planning a Process: Planning is a process of management which starts with identification of mission and goals of the organization and ends with making arrangements for fulfilling the goal. Ubiquity/pervasiveness of Planning:- Planning is an function which exists in all levels of managerial hierarchy. Starting from the CEO to down to the last line worker. But the content and quality of planning differ in different levels. Planning of top level executives considerably affect the function of organization. Middle and lower level managerial planning will not affect much of the function of the organization. Some examples of planning are: Production planning, Material requirement planning, financial planning, project planning etc. Future orientation:- Planning are always future oriented. It is a process which look ahead or think ahead and making provision to tackle future event. While planning for the future managers would consider the situations and events of present and past within and outside the organization. Information base:- Information is the basis of planning. Without information planning is not possible. Information about present, future and past are needed for the good planning. It will help the managers to evaluate the present and future situations and plan accordingly for the future. Rationality:- Planning is done based on reasons rather than emotions. That is why planning is said to be a purposeful and conscious managerial function and is backed by necessary information, understanding and knowledge. Planning decisions are made with the awareness of their consequences. Managers are unemotional in their approach to planning. Formal and informal Nature:- Normally planning is of formal and informal nature. Formal planning is done through investigation and analysis of various factors. It will be a step by step process to achieve the goal. Various jobs are allocated and communicated to managers of different levels and are recorded for future reference/control and accountability. Informal planning is done by the managers and communicated them to others through the word of mouth which are flexible. Informal planning is considered as a trial and error process. Intellectual Process:- Planning is a process which needs the ability to think in a logical way and understanding things. It needs the ability or skill to view the future opportunity and threats. The person who does the planning should have the ability to see the problems and analyze it and find an alternate way to solve these problems. Choosing the right course of action is the most important skill needed by the person who does the planning Pragmatic, action-orientation:- Even if it is an intellectual process, it needs practical, flexible and sensible way of action rather than a fixed ideas or theories. Think before acting and decide before doing are part of the culture of planning. Actions should be practical and implementable. Planning follows action and these actions should be discussed and confirmed in advance. Decision making:- Planning involves decision making and problem solving. It also involves identification of the issues which needs to be addressed, collection of relevant information/facts, finding out the most appropriate alternative course of action or choice. Decisions are made based on organizational policies, programs, strategies, objectives, other plans and procedures. It also involve allocation, mobilization and commitment of resources. Dynamism:- Planning is a dynamic process and it is based on the external and internal changes of environment. Delay in planning may cause huge losses. Market changes and current fashion trends are to be taken in to consideration while planning. The trend is changing every day. If the organization is not changing as per the current trend, the organization will fail to continue its existence. It is a continuous process of assessment and reassessment of goals, resources, directions opportunities and problems of the organization T HE S IX P S O F P LANNING Purpose :- The first need of planning is the purpose. An effective planning requires a clear understanding of the purpose of planning. The reasons for the existence of the organization must be stated. The purpose of an organization may be to increase profits or increase market share or introduce more products etc. The purpose should be clear and elaborate. Philosophy:- It states the beliefs as to how the organization's purpose is to be achieved. The philosophy of an organization may be based on profitability through quality or increasing turnover through consumer satisfaction etc. for a long term survival and growth the philosophy must adopt ethical conduct. promise:- it is an assessment of the strength and weakness of the organization based on the knowledge and assumption of the environment with the help of business forecasting and other methods some conclusions are made for the future environment trends. By knowing the strength and weakness of the organization management can deal with changing environment in more effective way. Polices:- polices are the general statements for the personnel. They are the guidelines and constraint which aid in management thinking and action. An organization may have production polices, financial polices, marketing polices, accounting polices, personnel polices, etc. these polices form a basis for management actions. Plans:- these are the objectives and action statements. Objectives are the goals of an organization an action statements are the means of achieving them. Plans guide us for reaching the goals and helping in knowing the progress at different stages. Priorities:- an organization must fix goals priorities. The resources of finance, materials, personnel, etc. are limited and these are to be allocated as per the priorities set. The high priority goal will have preference for allocation of resources. The priorities of goals must be based on the philosophy and premises of the organization as well as on economic, political, and social environment. MEANING Planning is the gap between where we are today and where we want to reach. Planning is the fundamental function of management. Planning is decision in advance what to do, how to do, when to do and by whom to do a particular task. 2. Topic- Planning premises, reasons and principles of planning PLANNING The determination in advance of a line of action by which certain results are to be achieved. HART Planning is the function that determines in advance what should be done. It consists of selecting the enterprise objectives, policies, programmes, procedures and other means of achieving these objectives. HAIMAN R EASONS FOR PLANNING Essential for Modern Business Related to Performance Focus of Objectives Proper Allocation of Resources Facilitates Control Helpful in Decision Making Avoiding Business Failures PLANNING PREMISES. Planning Premises are those basic assumptions upon which the process of planning proceeds. Planning involves making of those basic assumptions of what is likely to happen in future which is totally uncertain. These assumptions are the postulates C LASSIFICATION OF P LANNING P REMISES CLASSIFICATION OF PLANNING PREMISES INTERNAL AND EXTERNAL CONTROLLABLE AND UNCONTROLLABLE TANGIBLE AND INTANGIBALE I NTERNAL AND E XTERNAL P REMISES Internal Premises are those factors which exist within the firm or belongs to firms own climate. For example raw material, sales forecasts etc. External premises are those pertain to the outside environment of the firm. For example education, trends in population growth etc. C ONTROLLABLE AND U NCONTROLLABLE P REMISES Controllable premises are those factors which are within the control of management. For example policies, rules etc. Uncontrollable premises are those factors which are beyond the control of management. For e.g. strikes, wars. There are some factors over which management have some control, these are called Semi-Controllable premises. For example efficiency of workers etc. Corporate plan A multi-tiered approach that represents a company's goals, objectives and future work activities. The plan expresses the strategies, milestones and desired outcomes for the company, along with progress review practices and change management policies.represents company'sgoalsobjectives workactivitiesplan strategiesmilestones progressreviewpracticeschange managementpolicies 3. Topic- Focus of planning Strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. It may also extend to control mechanisms for guiding the implementation of the strategy. Strategic planning became prominent in corporations during the 1960s and remains an important aspect of strategic management. It is executed by strategic planners or strategists, who involve many parties and research sources in their analysis of the organization and its relationship to the environment in which it competes.organizationprocessstrategy decisions strategic managementstrategists A great strategic plan should: Cover an appropriate time frame Be informed by the past but focused on the future Incorporate external factors, including market trends and competitive landscape Consider multiple scenarios to evaluate alternatives Commit to a single target growth plan by key products, markets or segments Articulate what you wont do Maintain consistent altitude Be executable by defining tangible next steps Establish how progress will be measured and who is accountable Be revisited multiple times over the planning horizon Operational planning Operational planning is the process of planning strategic goals and objectives to tactical goals and objectives. It describes milestones, conditions for success and explains how, or what portion of, a strategic plan will be put into operation during a given operational period, in the case of commercial application, a fiscal year or another given budgetary term. An operational plan is the basis for, and justification of an annual operating budget request. Therefore, a five-year strategic plan would typically require five operational plans funded by five operating budgets. strategic goals What Is the Difference Between Strategic Planning and Operational Planning? In business, management establishes short-, medium- and long-term objectives. Long-term objectives are addressed in the business plan, which defines the company's vision, mission and objectives. Operations management sets the goals (ends) and tactical (means) strategies to be used in achieving milestones and objectives. The milestones provide a measurement to ensure that the strategies used are effectively moving toward achieving the objectives. A company's planning process begins with defining the vision of the company, setting forth the mission, identifying objectives and then designing a tactical strategy to achieve the mission. ACTITVITY COVERED Corporat e Functional PERIOD Long term Short term APPROA CH PROACTIV E REACTIVE FORMULAT ION FORMA L INFORMAL IMPORTA NCE STRATEGIC OPERATIO NAL PLANNING TYPES OF PLANNING 4. Topic- Time dimension, relationship with controlling ACTIVITY COVERED Corporate Planning : Determines long-term objectives of an organisation as whole Generates plans to achieve these objectives Future orientated Integrated Functional planning : Undertaken for sub functions witin each major functions Derived from corporate planning. Segmental TIME-PERIOD Depends on the type of the buisness and structure of the organisation. LONG TERM : Strategic in nature. Involves generally 3-5 years. It relates to matters like new product,product diversification. SHORT TERM : Short term planning typically covers time frames of less than one year in order to assist their company in moving gradually toward its longer term. Examples are the skills of the employees and their attitudes. The condition of production equipment or product quality problems are also short-term concerns. APPROACH PROACTIVE PLANNING : Designing suitable course of action in anticipation of likely changes in relevant environment. To take decision in advance. Eg : Emergency organisations REACTIVE PLANNING : Reactive planning is the process whereby future action is dictated as a response to whatever has already, or is now occurring. Eg. Hotel Manager. DEGREE OF FORMALISATION FORMAL PLANNING : It is a structured plan. It has some procedure to follow. Written record is followed in formal plan. Eg. Five year plan of a country. INFORMAL PLANNING It is unstructured plan. It does not have any procedure to follow. No record is maintained for future purpose. IMPORTANCE OF CONTENTS STRATEGIC : It sets future directions of the organization in which it wants to proceed in future. It involves a time horizon of more than one year and for most of the organization it ranges between 3 and 5 years. Strategic plans are generally developed by top level management. Eg. diversification of business into new lines, planned grown rate in sales. OPERATIONAL Operational plans are developed to determine the steps necessary for achieving tactical goals.. They are used as a guide for day to day operation by department managers. These plans may cover a time frame of few months, weeks or even a few days. ADVANTAGES Planning facilitates management by objectives Planning minimizes uncertainties Planning facilitates co-ordination Planning improves employees moral Planning helps in achieving economies Planning facilitates controlling Planning provides competitive edge Planning encourages innovations 1.Planning is the basic function of every enterprise as in planning we decide what is to be done, how it is to be done, when it is to be done and by whom it must be done. Planning bridges the gap between where we are standing today and where we want to reach. Controlling means keeping a check that everything is in accordance with plan and if there is any deviation, taking preventive measures to stop that deviation. The meaning of controlling makes it clear that controlling function is undertaken for right and timely implementation of plans. 2. Planning and controlling are interdependent and interlinked: Planning and controlling functions always co-exist or have to exist together as one function depends on the other. The controlling function compares actual performance with the planned performance and if there is no planned performance then controlling manager will not be able to know whether the actual performance is O.K. or not. The controlling function makes sure that everyone follows the plan strictly. Continuous monitoring and check in controlling function make it possible that everyone follows the plan. So both the functions are interlinked and interdependent as for successful execution of both the functions planning and controlling must support each other. For example, if the workers have produced 800 units the manager can know whether it is adequate or not only when there is a standard production set up by planners. So base of comparison comes from planning only. On the other hand, if the standard target is 1,000 units then controlling managers make sure that there is improvement in the performance and the employees achieve the s 3. Planning and controlling are both backward looking as well as forward looking : Controlling is backward looking because like a postmortem of past activities the manager looks back to previous years performance to find out its deviation from standard planning is also backward looking because planning is guided by past experiences and feedback report of controlling function. Planning is forward looking because plans are prepared for future. It involves looking in advance and making policy for maximum utilisation of resources in future. Controlling is also forward looking because controlling does not end only by comparing past performance with standard. It involves finding the reasons for deviations and suggests the measures so that these deviations do not occur in future. So, this statement that planning is forward looking and controlling is backward looking is only partially correct as planning and controlling are both forward looking as well as backward looking. 5. Topic- Approaches,advantages and limitations PLANNING PROCESS 6. Topic- Planning process and making planning effective 1. R ECOGNISING N EED FOR A CTION. 2. G ATHERING N ECESSARY I NFORMATION. 3. L AYING D OWN O BJECTIVES. 4. D ETERMINING P LANNING P REMISES. 5. E XAMINING A LTERNATIVE C OURSE OF A CTION. 6. E VALUATION OF A CTION P ATTERNS. 7. D ETERMINING S ECONDARY P LAN. 8. I MPLEMENTATION OF P LAN. FACTORS ESSENTIAL FOR EFFECTIVE PLANNING 1. C ONSCIOUSNESS FOR P LANNING. 2. I NITIATIVE AT TOP L EVEL. 3. P ROPER C OMMUNICATION. 4. P ARTICIPATION IN P LANNING. 5. E MPHASIS ON L ONG - TERM AND S HORT - TERM P LANNING. Types of plans What is a plan ? A plan is a commitment to a particular course of action for achieving specific results. There are a number of plans for achieving different goals. Types of plans: Standing plan Single use plan 7. Topic- Types of plan-mission,objective STANDING PLANS These are made to be used time and again. These provide ready guidelines for tackling situations of recurring nature. It includes objectives, polices, procedures, methods, rules, and strategies. These are also called repeated use plans BENEFITS OF STANDING PLANS CO-ORDINATION DELEGATION OF WORK TO SUBORDINATES READY FRAMES OF REFERENCES PROVIDE RATIONAL BASIS SINGLE-USE PLANS These are made for handling non- recurring problems. These are meant to solve a particular problem. These become obsolete after achieving their purpose. DISTINCTION SPECIFIC IN NATURE PROGRAMMES, PROJECTS, BUDJETS MEANT TO TACKLE A PARTICULAR SITUATION REPITITIVE NATURE POLICIES, PROCEDURES, RULES, METHODS MEANT TO MEET A RECURRING SITUATION STANDING PLANS SINGLE-USE PLANS MISSION OBJECTIVESPOLICIESSTRATEGIESRULESPROCEDURESPROGRAMMESBUDJETS MISSIO N Mission identifies the basic function or task of an enterprise. It is a standing plan which defines the basic purpose of enterprise according to which other actions are designed. It is the reason why an enterprise exist. The organizations mission indicates exactly what activities the organization intends to engage in now and in future. OBJECTIVE S These are the ends towards which every activity is aimed- they are the results to be achieved. A department may have its own objectives. Though departmental objectives will contribute to the attainment of enterprise objectives but the two sets of goals may entirely be different. Enterprise objectives influence the management philosophy and practice. The general statements which guide thinking and channelize energy towards a particular direction are called policies. According to Koontz and Weihrich, Policy is a means of encouraging discretion and initiative, but within limits. 8. Topic- Policies A standing plan Derived from objectives Framed by all managers Avoids repeated analysis of situation Purpose Ensures no deviation from planned course of action Scope for interpretation Helpful for future planning Consistency of act ion Defining policy area Identifying policy alternatives Evaluating alternatives Selection of a policy Trial run of a policy Implementing the policy FACTORS INFLUENCING POLICIES Objectives and strategies of the organization Organizational structure Available resources Managerial values Social factors Political factors Major policies Supportive policies Minor policies Composite policies BASIS Objectives Policies 1. Meaning Goals to be achievedBroadways of achieving objectives 2. Need Foundations of a business Means of reaching goals 3. Scope Path settersGuidelines 4. Determination Top level of management All levels of management Limitations of Policies No universal solutions No instant solutions Dampen human initiative No substitute for human judgement Strategy is the pattern of objectives, purposes, or goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or it is to be. Present Position Future Position 9. Topic- strategies 1) Strategies consist of general program of action to be persued for achieving organisational goals. 2) Strategy involves choice that determine the nature and direction of the organisations activities towards the attainment of goals. 3) Strategies include tactics used bye the opponents. They are meant not only to achieve goals but also to counter certain steps taken by competitors. 4) Strategy is the combination of internal and external factors. 5) Strategies are never static. 6) Strategies consist of general programme of action to be persued for achieving organisational goals. Features of Strategies T YPES OF S TRATEGIES Stability strategy Growth strategy Retreat and Retrenchment strategy Combination strategy S TABILITY S TRATEGY GROWTH STRATEGY Growth strategy are means by which an organization plans to achieve the increase level of objectives that is much higher than its past achievement level. Two major routes : 1.Intensification 2.diversification SURVIVAL Government Policies Self-sufficiency Prestige and Power Latest Technology Expansion of the Market Economies of Scale C OMBINATION S TRATEGY IS NOT AN INDEPENDENT CLASSIFICATION BUT IT IS A COMBINATION OF DIFFERENT STRATEGIES STABILITY GROWTH RETRENCHMENT - IN VARIOUS FORMS. E VALUATION O F S TRATEGIES 1. Consistency in Organisation. 2. Suitable in Environment. 3. Suitable for the resources 4. Degree of Risk 5. Workability 1. P ROPER COMMUNICATION OF S TRATEGIES. 2. D EVELOPING AND C OMMUNICATING P LANNING S TRATEGIES. 3. R EVIEWING S TRATEGIES REGULARLY. Successful Implementation of Strategies 4.Developing Contingency Strategies. 5.Organization Structures be Suitable to Planning Needs. 6.Emphasis on Strategy Implementation. D EFINATION . Procedures are details of action or the guidelines for the achievements of business objectives. It gives details of how things are to be done. According to terry, A procedure is a series of related tasks that make up the chronological sequence and established way of performing the work to be accomplished. PROCEDURES 10. Topic-Procedure, rule, programmes A DVANTAGES i. Basis of control ii. Consistency iii. Standardisation iv. Co-ordination L IMITATIONS Rigidity Constant review. D EFINATION .. Rule is a plan that lays down a required course of action regard to a situation. Rule is a nature of a decision made by management regarding what is to be done or what is not to be done in a particular situation. Rule is definite and rigid and allows no deviation to the subordinates. RULES A DVANTAGES . o Enable manager to predict behaviour of their subordinates. o Channel the behaviour of workers in a desired action. PROGRAMM ES DEFINATION According to George Terry, a programme can be defined as a comprehensive plan that includes future use of different resources in an integrated pattern and established a sequence of required actions and time schedule for each in order to achieve the standard objectives. C HARACTERISTICS 1. Single use 2. Prepared to formulate a programme 3. Prepare to achieve organisational goals 4. Time limit 5. Ensure co-ordination A DVANTAGES . Lay down a course of action Better co-ordination Action oriented L IMITATIONS . Danger of being failing Risk of inadequate co-ordination Have a number of sub programmes. PoliciesProcedure Guide to thinkingGuide to action Guidelines for taking actions Consist of various methods to accomplish work Offer scope for interpretation Tailor made and dont offer scope for interpretation D IFFERENCE B / W POLICIES AND PROCEDURES DEFINATION A budget is a financial statement and / or quantitative statement prepared prior to a defined period of time,of the policy to be pursued during that period for the purpose of attaining a given objective. BUDGET 11. Topic- budgets CHARACTERISTICS OF BUDGET A budget should be based on past figure. The possibilities in future should also be taken in to account. A budget be flexible so that it is modified according to the requirement of the situation. Rigidity in budget sometime create difficulties. The person at various level should be involved in preparing a budget.This will help in getting willing co-operation of everybody while implementing budget. A budget should be specific statement. The quantities or monetary information should be clearly mention in a budget. There should be active involvement of top management while preparing a budget. NEEDS FOR PREPARING BUDGETS Budgets are required for formulating future policies. They are needed for ensuring co-ordination among various department or segment of enterprise. Budget act as a tool of control in the hands of management.Budgets fixed for various person will be the criterion fixed for assessing performance. Budgets act as a motivation for various employees.when targets for performance are fixed than persons try o achieve them at the earliest. CLASSIFICATION AND TYPES OF BUDGETS ON THE BASIS OF TIME Long-term budgets. Short-term budgets. Current budgets. ON THE BASIS OF FUNCTION Functional budget. Master budget. ON THE BASIS OF FLEXIBILITY o Fixed budget. o Flexible budget. ADVANTAGES OF BUDGETING 1.Improves efficiency. 2.Co-ordination. 3.Economy. 4.Consciousness among employees. 5.Time bound.