CHAPTER 3

PLANNING
OUTLINE..
◦ Definition

◦ Importance and drawbacks of planning

◦ The types of planning and goals

◦ Strategic planning
◦ Vision and Mission statement
◦ SWOT analysis

◦ Operational planning
◦ Standing & single- use plan
◦ Tactical planning

◦ Obstacles to effective planning

◦ Contemporary issues in planning

DEFINITION OF PLANNING
◦ Planning is defining organizational
goals, establishing a strategy to reach
those goals, and developing a
comprehensive hierarchy of plans to
integrate and coordinate activities
(Stoner)

◦ Planning is the most basic managerial

function. When done properly, it sets
the direction for the organizing,
leading, and controlling functions.
PLANNING PROCESS

◦ Choosing the organization’s vision, missions, and

overall goals for both the short run and long run;
◦ Devising divisional, departmental, and even
individual goals based on organizational goals,
◦ Choosing strategies and tactics to achieve those
goals; and
◦ Allocating resources (people, money, equipment
and facilities) to achieve the various goals,
strategies, and tactics (Hellriegel,Jackson & Slocum
IMPORTANCE OF PLANNING
1. Planning sets standards and major
objectives for the organization.
2. Planning coordinates effort (establishing
direction and clarifying path)
3. Planning reduces uncertainty (emergency,
nonroutine events)
4. Planning reduces redundancy
5. Planning helps to determine what
opportunities to exploit (SWOT)
BENEFITS OF PLANNING
◦ Managers and employees put forth
greater effort when following a plan
◦ Planning leads to persistence
◦ Planning is direction
◦ Encourages the development of
task strategies
◦ Has been proven to work for both
companies and individuals
PLANNING PITFALLS
◦ Planning may create rigidity – unsuitable for volatile environment.
◦ Formal plans can’t replace intuition and creativity.
◦ Planning focuses managers’ attention on today’s competition, not on
tomorrow’s survival.
◦ Formal planning reinforces success, which may lead to
complacency.
◦ Impede change and prevent or slow needed adaptation
◦ Create a false sense of certainty
◦ Detachment (separated) of planners
ELEMENTS OF PLANNING
Goals (also Objectives)
◦ Desired outcomes for
individuals, groups, or entire
organizations
◦ Provide direction and
evaluation performance
criteria
Plans
◦ Documents that outline how
goals are to be accomplished
◦ Describe how resources are to
be allocated and establish
activity schedules
 TYPES OF GOALS
◦ Financial Goals
◦ Are related to the expected
internal financial performance of
the organization.
◦ Strategic Goals
◦ Are related to the performance of
the firm relative to factors in its
external environment (e.g.,
competitors).
◦ Stated Goals versus Real Goals
◦ Broadly-worded official
statements of the organization
(intended for public consumption)
that may be irrelevant to its real
goals (what actually goes on in
the organization).
EXAMPLES OF STATED GOALS OF
LARGE ORGANIZATIONS
POS MALAYSIA

source : https://www.slideshare.net/adlinazainuri/mgt162-assignment-pos-malaysia
TYPES OF PLANNING
STRATEGIC MANAGEMENT
◦ The set of managerial decisions and
actions that determines the long-run
performance of an organization.
WHY STRATEGIC MANAGEMENT
IS IMPORTANT
1. It results in higher organizational performance.
2. It requires that managers examine and adapt
to business environment changes.
3. It coordinates diverse organizational units,
helping them focus on organizational goals.
4. Today – government agencies, education
institution also have strategic planning.-e.g
high cost and competition force many
university to find a niche and prosper.
STRATEGIC MANAGEMENT
PROCESS
Identifying vision, mission, goals

SWOT Analysis

Formulate strategies

Implement strategies

Evaluate results
STRATEGIC MANAGEMENT
PROCESS
◦ Organizational vision
A mental picture that you have and want to turn into a reality in
the future.

◦ Organizational mission:
A broad declaration of the overriding purpose. The mission
statement identifies product, customers and how the firm differs
from competitors
SWOT ANALYSIS
STRATEGIC PLANNING
◦ Strategic planning is a process by which an organization
makes decision and takes actions to enhance its long term
performance.
◦ Strategic plan includes evaluation and development of the
organization’s purpose, mission, and overall objectives and
policies for current and future years. It also defines what
business the company is in, or wants to be in. It may take 5
to 10 years to complete.
◦ There are three (3) levels of strategic planning which are
corporate strategy, business strategies and functional
strategies.
TACTICAL PLAN
◦ Tactical planning is micro-oriented and focused
your short term S.M.A.R.T. goals, which usually
have 1 to 18 month time frames.
◦ This type of short term planning is all about the
How (i.e., process) of getting things doing.
◦ The focus is on operations, which includes
creating and executing effective, efficient action
plans.
Management by objectives
(MBO)
◦ It is a management technique
◦ Used by managers and subordinates at all levels of an
organization to develop and execute tactical plan.
◦ MBO is based on goals, participation and feedback.
◦ These organizational members come together to jointly;
◦ Discuss and participative set goals
◦ Share information and discuss strategies that will lead to goal
attainment
◦ Regularly meet to review performance or progress
OPERATIONAL PLANNING
◦ Operational planning is a process of determining
the day-to-day activities that are necessary to
achieve the long term goals of the organization.
◦ There are two main types of operational plans
◦ Single -use Plan
◦ Standing Plans
SINGLE -USE PLAN
It is a plan that addresses specific organizational situations that
typically do not occur.
Three types of single use plans:
◦ Program- single use plan that governs a comprehensive set of
activities to accomplish a specific set of goals
◦ Project- single use plan that directs the efforts of individuals or
work groups toward the achievement of a goal
◦ Budgets- single use plans that specify how financial resources
should be allocated for a given period
STANDING PLANS
Standing plans are plans that deal with organizational
issues and problems that recur frequently. It assists
managers in solving problems or processes.
The major types of standing plans are:
◦ Policies- general guidelines for decision making within the
organization
◦ Procedures- instructions or detailed guidelines for handling
organizational action that occur regularly.
◦ Rules- statements or directives that must be adhered to in
a given situation. They are detailed and specific guides to
action
*Additional reading: http://i-learn.uitm.edu.my/main/default-frame.php?
PLANNING FROM TOP TO
BOTTOM
Top level Vision &
managers mission

Middle level Tactical plan

Management
managers by objectives

Low level Operational

Standing Plan
Single-use
managers plan plan
BARRIERS TO EFFECTIVE PLANNING

◦ Demands on the manager's time

◦ Some managers may simply be too busy "putting out fires" to take time
to plan properly.
◦ Ambiguous and uncertain operating environments
◦ Environments complexity and vitality are commonly cited reasons for
not planning.
◦ Resistance to change
◦ Manager may hesitate to plan because they are resistant to change.
OVERCOMING TO BARRIERS

◦ Involve employees in decision making

◦ Employee involvement in the planning process is essential for its
success.
◦ It makes employees feel appreciated and valued, thus boosting their
morale and increase work productivity at the workplace.
◦ Tolerate a diversity o f views
◦ Managers who are intolerant of a diversity of views within their units
eliminate one of the primary benefits associated with planning
◦ Encourage strategic thinking
◦ Developing an organizational culture that encourages strategic and
results-oriented thinking will lead to more effective planning.
CONTEMPORARY ISSUES IN
MANAGEMENT
 Uncertainty
 Flexible
 Planning as an ongoing process
 Responsive
 Environmental scanning
 Collecting information (clients, competitors,
governmental ruling)
 Make decision (developing strategies)
 Keep information (publications, reports)
 Information tracks (newspapers, medias,
governments circulars, acts, procedure)
TUTORIAL QUESTIONS
◦ Contemporary issues in planning.
◦ Define the concept of organizational mission and explain the
purpose of a mission statement.
◦ Explain the six steps in the Management by Objectives(MBO)
process.
◦ Explain the types of standing and single use plans.
◦ Define several problems with goal setting.
◦ Differentiate between Strategic and Operational plans. (9 marks)
◦ Explain how Strategic and Tactical plans differ. (10 MARKS)
◦ “The planning function forces managers to think ahead and
consider resource needs and potential opportunities or treats that
the organization may face in the future”. Explain the barriers to
effective planning in organizations and sugest ways to overcame
these barriers. (25 MARKS)
◦ “Discuss any FOUR (4) advantages of planning.” (10 MARKS)
◦ “Define standing plan and describe any THREE (3) types of
standing plan.” (10MARKS)
◦ “Discuss any 3 drawbacks of formal planning” (9MARKS)
◦ Explain the FOUR (4) characteristics of single-use plan (10 marks)
◦ Describe any TWO (2) types of Standing plan (10 marks)
Organizational Planning Exercise

It’s possible that you got your own first exposure to business
management tools with the SWOT framework (strengths,
weaknesses, opportunities and threats), a two-by-two grid where
strengths, weaknesses, opportunities and threats are put under
the microscope.

In order to not miss vital details, you should conduct a SWOT

analysis for each department. For instance, a SWOT analysis,
seen through the lens of the finance department will differ greatly
than that of the IT group. As you can imagine, the opportunities
available to your sales department vary from those being
explored by your customer service people.

By engaging the entire executive team, you'll create a venue for a

healthy dialogue about every individual department.
 END OF CHAPTER 3

PLEASE READ CHAPTER 4:

DECISION MAKING