IIT – 202-2 – Principle of Management

Lesson 04: Planning

Planning and Decision Making

Planning and decision making comprise the managerial function that organization adopt. Decision making is
the cornerstone of planning. The planning process itself is a most important function & all organizations
engage in planning activities, but they are not same fashion.

Organizational Planning

This section identifies,

• Kind of plans
• Time frame for planning
• Who is responsible for planning
• Contingency planning and
• Management by objectives

Refer the Picture

Kinds of Planning

There are three types of plans

1. Strategic Plans
Those are plans developed to achieve future goals. That means it is a general plan outlining decisions
of resources allocation, priorities and action steps necessary to reach strategic goals. Normally these
plans are set by the board of directors and top management.

2. Tactical Plans
Tactical plans aimed at achieving tactical goals and are developed to implement parts of a strategic
plan. In tactical planning typically involve upper and middle management : have a somewhat shorter
time horizon, and a more specific and concrete focus. Therefore tactical plans are concerned more
with actually getting things done than with deciding what to do.

3. Operational Plans
Those plans focus on achieving operational goals and developed by middle and lower level managers.
Operational plans are short term in nature and narrow in scope.

Time frames for Planning

If we consider time frames, there are three types can be seen.

1. Long range plans

These plans cover many years, perhaps even decades. The time span for long range planning varies
from one organization to another. Generally long-range plans are for five years or more.

2. Intermediate plans

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L.D.C.S. Subhashini
 IIT – 202-2 – Principle of Management

These plans cover from one to five years of period. They are specially important for middle and first
line managers, because intermediate planning has become the central focus of planning activities.
Therefore although long range planning guided organization’s actions, intermediate plans actually
defined those actions.

3. Short-Range plans

These are plans generally cover a span of one year or less. Short-range plans generally provide
guidelines for managers for their day to day activities. There are two basic kind of short-rang Plans.
They are,

• Action Plans
A plan used to operationalized any other kind of plan.

• Reaction Plans

A plan developed to react to unforeseen situations. Generally organizations always are to

sreacting to a condition created by its environment. Therefore to meet such kind of an
environmental turbulence plan should be there.

Responsibilities for Planning

All managers engage in planning to some degree. Marketing/sales Managers develop plans for target market &
sales increases. Operations managers plan cost-cutting programs and better inventory control methods. As a
general rule, however the larger an organization becomes, the more the primary planning activities become
associated with groups of managers rather than with individual managers. The following persons are really
involving with the planning. They are,

• Planning staff
• Board of directors
• Chief Executive Officer
• Executive Committee

Contingency Planning

Another important type of planning is contingency planning. That means the determination of alternative
courses of action to be taken if an intended plan of action is unexpectedly disrupted or rendered
inappropriate. The contingency planning is becoming increasingly important for most organizations and
especially for those operating in particularly complex or dynamic environments. Therefore the technique of
doing contingency planning helps for those managers who really dealing with uncertainty and change.

Managing Goal Setting and Planning Process

Due to some barriers, sometimes managers cannot do effective planning. Such kinds of barriers are,

• Inappropriate goals
• Improper Reward System
• Dynamic and Complex Environment
• Reluctance to establish goals
• Resistance to change
• Constraints

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L.D.C.S. Subhashini
 IIT – 202-2 – Principle of Management

To overcome those Barriers,

• Understand the purpose of goal setting and planning

• Communicate and Participation
• Consistency, Revision and updating
• Effective Reward system

Implementation of plans by Management By Objectives (MBO)

A Widely used method for managing the goal setting and planning process concurrently to ensure that both
are done effectively is management by objectives or MBO. The purpose of MBO is to give subordinates a voice
in the goal setting and planning Process and to clarify for the exactly what they are expected to accomplish in a
given time period.

MBO Process

Refer the Picture

Most Managers believe that if a MBO program is to be successful, it most start at the tp of the organization.
Top Managers must communicate why they have adopted MBO, what they think it will do and that they have
accepted and are committed to MBO. Employees must also be educated about what MBO is and what their
role in it will be. Having committed to MBO, managers must implement it in a way that is consistent with
overall organizational goals and plans. The idea is that goals established at the top will systematically go down
throughout the organization.

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L.D.C.S. Subhashini