Unit-2: Planning

Nature, importance and purpose of planning process Objectives, Types of plans (Meaning only), Decision making, Importance of planning, steps in planning, Planning premises, Hierarchy of plans

Planning is the process of analyzing the situation, determining the objectives that will be influence in the future and deciding in advance, the actions that will be taken to achieve.

Where we are Where we want to

be

Planning

Planning is deciding in advance what to do, how to do it, when to do it and who to do it.

It involves anticipating the future and consciously choosing the future course of action.

Planning is most basic function of management.

Planning referred as “deciding in advance”.

“Planning is the function that determines in advance what should be done.”

• Planning is purposeful : it is objective oriented. It is directed towards efficiency.

• Planning is a primary function : It is the basic level of management process.

• Universal process : Many people believe in planning. It is the job of all the managers in all types of organizations.

• Intellectual process : A process involving imagination, foresight and knowledge but not guesswork.

• Continuous process : An on-going/dynamic exercise as old assumptions change, old plans are revised or new ones are prepared.

• Forward process : No plan can be prepared without knowledge of future.

• Involves choice : Decision making is core of planning

Focuses attention on objectives and result Reduces uncertainty and risk Provides sense of direction Encourages innovation and creativity Guides decision-making Provide efficiency in operation Provide economy in operation Effective Control Bridge between present and future

Analyzing opportunities

Reviewing theplans

Establishingobjectives

Determining Planning premises

Identification of alternatives

Evaluation of alternatives

Choice of Alternative plans

Formulating of Supporting plans

Not a step of Planning, It is pre-step of planning.

Essential to make a successful plan.

SWOT analysis

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Strengths

Weaknesses

Opportunities

Threats

2. SWOT Analysis

SWOT stands for:

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Strengths - the positive internal attributes of the organisation

Weaknesses - the negative internal attributes of the organisation

2. SWOT Analysis

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Opportunities - external factors which could improve the organisation’s prospects

Threats - external factors which could undermine the organisation’s prospects

2. SWOT Analysis

Example: Vehicle Company M

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High oil price High material price Foreign exchange Other competitive companiesPolitical interference

Huge market in China/IndiaMore global cooperation

Poor reputation among customers Slow decision making Old fashioned style Weaker brand images

Accumulated high technology Motivated young staff Global network to distributeCost efficiency manufacture

Threat Opportunity

WeaknessStrength

• First and real starting point of planning.First and real starting point of planning.

• Management has to define objectives in clear manner by Management has to define objectives in clear manner by considering organizational resources and opportunities because considering organizational resources and opportunities because aa minor mistake in setting objectives might affect in minor mistake in setting objectives might affect in implementation of plan.implementation of plan.

• Objectives must be specific, clear and practical.Objectives must be specific, clear and practical.

• Objectives should be time boundObjectives should be time bound

Premises are the assumptions about the future in which the planning is implemented.

They provide environment and boundaries for the implementation of plan in practical operation.

There are 3 types of planning premises Internal and external premises Tangible and intangible Controllable and uncontrollable

Internal premises with in the organization ( Policies, investment, availability of equipments, funds etc)

External premises means out side the organization (Govt policies, Economic conditions, population , demand)

Tangible premises are the measurable premises like population, investment, demand etc.

Intangible premises are those which cannot be measured like business environment, economic conditions etc

Controllable premises like technical man power , input technology, financial investment etc

Uncontrollable premises like strikes, change of govt policies, wars etc.

It is essential to identify all the possible hidden alternatives.

There must be search for the best alternative. The management must develop alternatives through the support of experienced and intellectual experts in management sectors.

Evaluate the alternatives from their expected cost and benefits. This is the logical step to evaluate each alternative from its plus and minus points.

Each alternative is studied and evaluated in terms of some common factors such as risk, responsibility, planning premises, resources, technology etc.

Selecting a course of actionSelecting a course of action

It is essential to formulate action of supportive plan for each step of work and to all departments of the organization.

These action plans involve formulation of policies, rules, schedule and budget to complete defined objectives. Thus, formulation of supportive plans is an essential step in planning process.

It is difficult to implement main plan without formulation of derivative plan.

Without this step, other this procedure of plan will remain as paper work.

This step brings all the procedure of plan into action. For implementation plan, management has to take some steps

such as to communicate with subordinates who initiate to plan into action; provide necessary instruction and guidance; make arrangement of all resources like materials, machines, money, equipments etc; make timely supervision and control over subordinates.

Reviewing the planning processReviewing the planning process

Establish objectives Develop Strategies

Determination of premises

Determination of alternatives

Evaluation of alternatives

Selecting a course of action

Formulation of derivative plans

Implantation of plans

Reviewing the planning process

How does a manager Plan?Planning Process:

Resource: what can be used to meet the scope.

Time: what tasks are to be undertaken and when.

Quality: the spread or deviation allowed from a desired standard.

Risk: defines in advance what may happen to drive the plan off course, and what will be done to recover the situation.

Managers engage in planning to:

Set the standards to facilitate control

Provide direction

Minimize uncertainty

Reduce the impact of change

Strategic plan Tactical plan Single use plan Standing plan Long Range plan Short Range plan Proactive Plan Reactive Plan

It consists of major task and policies of an organization resources and facilities to accomplish the objectives

Used by community groups, government departments, organizations and businesses to develop blueprint for action and change

Benefits of Strategic Planning

• Defines mission, vision & values

• Establishes realistic objectives

• Ensures effective use of resources

• Provides base to measure progress

• Develops future direction• Solves major problems

◦ Mission

Core purpose of your organization

Presented in a clear, short statement that focuses on attention in one clear direction by stating purpose of the group’s uniqueness.

Vision

◦ What is your organization’s vision of excellence

◦ Has to be realistic and not something impractical

Values

◦ What are the principles, standards, and actions considered worthwhile in the organization

◦ Includes how people treat each other, how groups conduct business and what is most important to the organization

Its a short time planning

Tactical plan are immediate decisions based on the executive’s judgment and experience in facing an actual situation

It consists of use of facilities and resources

It is day-to-day operation and activities of the organization

At lower level management

Standing Plans◦ Developed for activities

that occur regularly over a period of time

Ex: ◦ Objectives, Policies,

Procedures, Rules

Single Use plans◦ Developed to carry out a

course of action that is not likely to be repeated in future

Ex: ◦ Schedules, Projects,

Budgets

Long range plan Point of distinction

Short range plan

Covers many years & affects many departments of an organization

Meaning Covers less than one year and is more specific & detail

5 yrs or more Time 2 to 5 Years

Organizations linkage with external factors

Primary focus Linkage with various parts of an organization

Mission ,long term objectives and strategies

Deals with Current operations of organization

Top management Prepared by Lower level executives

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Proactive Planning:◦ Managers challenge the future, anticipating future and get

ready with alternative routes for unseen circumstances

Reactive Planning:◦ Organizations react to events as and when they arise

Objectives Budgets Policies Rules

End results to be achieved

They give direction to activities

Require creative thinking

Used as both- planning and control device

May be expressed in units of finance etc

It provides the framework with in which decisions must be made by the management in different area’s of organization.

Policy is general guideline for decision making

Policies are often made with out any study or analysis.

Rules are related to policies as they guide action. Rules are detailed and recorded instruction that a

specific action must or must not be done under the given instance.

Rule is different from policy, since it does not give guide to thinking

Eg: Procedure for handling mail may require a rule “all letters received should be replied to on the same day”

Access to network resource will be granted

through a unique user ID and password

Passwords should include one numeric

and one special char

Passwords will be 8

characters long

It must contribute to accomplish purpose and objectives

It must be considered as parent exercise in all processes

It must spread through all management functions

It must be efficient in such a manner to achieve the designed objectives at the least cost.

Decision making is the process of choosing among alternatives

Decision making is part of all the functions of the management

1. Individual and collective decision2. Minor and major decision3. Strategic and routine decision4. Simple and complex decision5. Temporary and permanent decision

If the decisions are taken by a single person they are called individual decisions.

If the decisions are taken by a committee or group of people they are called collective decisions

Individual decisions are taken where the problem is of routine nature

Interdepartmental decisions are generally taken by a group

Minor decisions are those decisions relate to day to day and periodical occurrences like purchase of stationery, permission etc.

Major decisions are those decisions generally taken by top management like purchasing of new machinery, employing new technology, hiring new people.

Strategic is similar to major decision like price increase, discounts etc.

Routine is similar to minor decision like day-to-day operations of an organization

Simple decision is one that is related to a problem with few number of variables

When there are many variables the decision making will be complex

Temporary decisions are to be taken depending on situation till the solution is found , generally taken by shop managers

Permanent decisions are taken as on permanent basis

Decisions in the Management Functions

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Identifying the Problem

Selecting the Best Alternatives

Analyzing the Alternatives

Following UpDetermining Alternative

Courses of Action

Implementingthe Decision

The Decision-Making Process

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ProblemIdentification

“My salespeople

need new computers”

Identification of Decision Criteria

PriceWeightWarrantyScreen typeReliabilityScreen size

Allocation ofWeights to

Criteria

Reliability 10Screen size 8Warranty 5Weight 5Price 4Screen type 3

Development of Alternatives

AcerCompaqGatewayHPMicromediaNECSonyToshiba

Implementationof an Alternative

GatewayEvaluationof Decision

Effectiveness

Analysis ofAlternatives

R S W W P SAcer 4 3 4 3 2 6Compaq 3 4 5 2 6 7Gateway 9 6 7 7 8 2HP 3 5 6 7 6 5Micromedia 2 2 3 4 5 4NEC 3 4 5 6 7 2Sony 7 5 6 4 2 8Toshiba 3 4 5 6 7 3

Selection of anAlternative

AcerCompaqGateway HPMicromediaNECSonyToshiba

1. Incomplete information2. Opposition by subordinates3. Improper communication4. Wrong timing5. Government policies6. External influence7. Lack of support

Purpose or Mission

Procedures

Strategies

Policies: Major or Minor

Rules

Objectives

Programs: Major or minor and supporting

Budgets: numberized programs

Example

Planning for ”Going to Goa this Cristmas”Major Steps :

Hotel Booking Ticket Booking Reaching Goa Staying and enjoying there Coming Back

Minor Steps : Take a taxi to reach station / airport Have dinner on beach Take photos