Chapter III

Planning

Failing to plan is planning to fail

--Effie Jones

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What is Planning
 "The plan of action is, at one and the same time, the
result envisaged, the line of action to be followed,
the stages to go through, and the methods to use. It
is a kind of future picture wherein proximate events
are outlined with some distinctness....“ Fayol

 Planning is deciding in advance what is to be done.

It involves the selection of objectives, policies,
procedures and programs from among alternatives.

 "Planning is an intellectual process, the conscious

determination of courses of action, the basing of
decisions on purpose, acts and considered
estimates". Koontz and O’Donnell

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Purpose of Planning

 Protective: to minimize the risk

by reducing the uncertainties
surrounding business conditions
and clarifying the consequences
of related management actions
 Affirmative: to increase the
degree of organizational
success

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Nature of planning
 The primacy of Planning:
Planning precedes all other functions
of management.
 The pervasiveness of planning
Although the character and breadth
of planning vary, it is the function of
all managers.
 Planning is a continuous process
 Planning commits the organization in
to the future
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Importance of Planning

 To offset uncertainty / to
prepare for change.
 To Focus Attention on
Objectives
 To Gain Economical
Operation.
 To facilitate Control

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Planning Process: Strategic Planning

 Strategic planning is the

process of developing and
analyzing the organization's
mission, overall goals, general
strategies, and allocating
resources.
 Strategic planning sets the
stage for the rest of the
organization's planning.
Planning Process: Strategic Planning

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Define Mission
 A mission is the purpose of the
organization :Why the organization
exists?
 “Mission is the essential purpose of
the organization, concerning
particularly why it is in existence, the
nature of the business (es) it is in
and the customers it seeks to serve
and satisfy.” Thompson (1997),
 is broad, yet clear and concise,
summarizing what the organization
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SWOT Analysis

 Assessing Strengths and Weaknesses

and identifying Opportunities and
Threats
 Assumptions and facts on which a plan will
be based
 SW- Internal Assessment
 Strengths (What makes the organization
distinctive? How efficient is our
manufacturing? How skilled is our
workforce? What is our market share?
What financing is available? Do we have a
superior reputation?)
 Weaknesses (What are the vulnerable
areas of the organization that could be
exploited? (Are our facilities outdated? Is
research and development adequate? Are
our technologies obsolete?)
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 OT- External Assessment
 Opportunities: (In which areas is the
competition not meeting customer needs?
What are the possible new markets? What
is the strength of the economy? Are our
rivals weak? What are the emerging
technologies? Is there a possibility of
growth of existing market?)
 Threats: In which areas does the
competition meet customer needs more
effectively? (Are there new competitors? Is
there a shortage of resources? Are market
tastes changing? What are the new
regulations? What substitute products
exist?)
 The best strategy is one that fits the
organization's strengths to opportunities in
the environment.
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Set goals and objectives
 developed to bridge the gap
between current capability and
the mission
 aligned with the mission and
form the basis for the action
plans.
 are expressed in a manner that
allows a future assessment of
whether an objective has been
achieved

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Develop related strategies
 Tactical and Operational plan
 Tactical plans: developed by middle
managers to interpret long term plans
 Tactical planning is the process of making
detailed decisions about what to do, who
will do it, and how to do it.
 Operational plans: short-term and deal with
the day-to-day work of their team
 Operational plans support tactical plans.
They are the supervisor's tools for
executing daily, weekly, and monthly
activities. E.g. budget

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Monitor the plan
 Short-term standards for key
variables that will tend to validate the
long-range estimates must be
established
 Although favorable long-range
values have been estimated, short-
term guidelines are needed to
indicate if the plan is unfolding as
hoped
 Feedback is encouraged and
incorporated to determine if goals
and objectives are feasible.

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Operating guidelines
Beliefs Image Purpose

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Operating guidelines
 Values, mission, and vision form the
foundation for the execution of the
functions of management
 They are an organization's
guidelines that affect how it will
operate
 Values: organization’s beliefs or
those qualities that have intrinsic
worth and will not be compromised
 traits or qualities having intrinsic
worth, such as courage, respect,
responsibility, caring, truthfulness,
self-discipline, and fairness.

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 Mission: a broad definition of a
business that differentiates it from all
other organizations.
 The mission statement is the
"touchstone" by which all offerings
are judged.
 The most effective mission
statements are easily recalled and
provide direction and motivation for
the organization.
 It allows the individual employee to
say; "I know how I should do my job
differently."
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“A vision without a plan is just a dream. A plan without
a vision is just drudgery. But a vision with a plan
can change the world.” — Proverb
“the best way to predict your future is to create it.”
Erich Fromm
 A vision might be a picture, image, or
description of the preferred future.
 A visionary has the ability to foresee
something and sees the need for change
first, challenges the status quo, forces
honest assessments of where the industry
is headed and how the company can best
get there.
 Leaders have the ability to make their
vision real by engaging the minds, as well
as the hearts of others.
 Managers require more vision than ever
because change is coming faster than
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ever.
Objective Setting
“Life consists in what a man is thinking of all day”.– Ralp
Waldo Emerson
 An objective is the object or aim of an
action.
 It implies an explicit direction for the action
to take and a specific quality of work to be
accomplished within a given period of time.
 MBO: (Management By Objective): a
collaborative process whereby the
manager and each subordinate jointly
determine objectives for that subordinate.
 To be successful MBO programs should
include commitment and participation in the
MBO process at all levels of management
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Steps in MBO Process

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 A mnemonic aid to write objectives is
SMART (Specific, Measurable,
Attainable, Result-oriented, Time-
limited).
 Specific: An objective must be
specific with a single key result.
 Measurable: Only an objective that
affects behavior in a measurable
way can be optimally effective.
 Avoid: to know, to understand, to
enjoy, and to believe
 Use: to write, to apply, to recite, to
revise, to contrast, to install, to
select, to assemble, to compare, to
investigate, and to develop.
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 Attainable: an objective must be
attainable with the resources that are
available. It must be realistic.
 Result oriented: the objective should
be central to the goals of the
organization. The successful
completion of the objective should
make a difference.
 Time-bound: the objective should be
traceable. Specific objectives enable
time priorities to be set and time to
be used on objectives that really
matter.
 OBJECTIVE: To (action verb +
single key result + target date)
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Benefits of MBO
 Improves Management
 Classifies organization
 Encourages commitment
 Develops effective control

Limitations of MBO
 Failure to explain philosophy
 Failure to give guideline for objective
setting
 Difficulty of setting objectives
 Emphasis on short term objectives
 Danger of inflexibility

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Types of Plans
 Single-Use Plans: Single use plans are
designed to accomplish a specific objective
usually in a relatively shorter period of time
and developed for non-repetitive situations.
 Include Programs, Projects, and Budgets
 Programs: A single use plan for a large set
of activities
 Projects: similar to a program but is
generally of less scope and complexity.
 Budget: is a plan that shows how money
will be spent over a certain period of time.

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 Standing-Use Plans: They are plans which
are formulated to be used again and again
for the day-to-day operation of the
organization. They are plans which are
used for repetitive activities and relatively
for longer periods.
 Include Policies, SOPs, and Rules
 Policies: specifies the organization’s
general responses to a designed problem
or situation
 SOP is more specific than a policy in that it
outlines the steps to be followed in
particular circumstances.
 Rules and Regulations: describe exactly
how specific activities are to be carried out.
Take the place of decision making in
various situations.
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Decision Making
 A decision is a solution chosen from
among alternatives. Decisions must
be made when the manager is faced
with a problem.
 A problem exists whenever there is
a difference between what actually
happens and what the supervisor
wants to have happen.
 Decision-making is the process of
selecting an alternative course of
action that will solve a problem.

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Reading Assignment
 Steps in Decision Making
 Types of Decisions: Programmed and Non-
Programmed Decisions.
 Articles on Strategic Planning

1. Rethinking Strategic Planning Part I by H. Mintzberg

2. Rethinking Strategic Planning Part II by H. Mintzberg
3. Comment on H. Mintzberg’s Rethinking Strategic
Planning by Igor Ansoff

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