BRITISH COLUMBIA INSTITUTE OF TECHNOLOGY

SCHOOL OF BUSINESS

BUSA 7250

MANAGEMENT SKILLS AND APPLICATIONS

MODULE 3

Planning

PREPARED BY: Toula Spencer-Johnson

DATE: May, 1999

REVISED BY: Leila Rahemtulla

DATE: June, 2007

REVISED BY : Christopher J Gadsby

DATE: May 2015

BUSA 7250 MODULE 3.DOC 04/15

 © 2015 by

British Columbia Institute of Technology

Burnaby, British Columbia

All rights reserved. No part of this module may be reproduced

in any form, without permission in writing from BCIT.

BUSA 7250 MODULE 3.DOC 04/15

 Planning

Table of Contents
Learning Outcome ....................................................... 3-1

Learning Tasks ............................................................ 3-1

The Planning Process .................................................. 3-1

Definition................................................................ 3-1
Importance............................................................. 3-2
Types of Plans ....................................................... 3-2
Contingency Factors in Planning ........................... 3-4
Goals and Objectives ............................................ 3-5

Strategic Planning ........................................................ 3-6

Introduction ............................................................ 3-6
Strategic Levels ..................................................... 3-7
The Strategic Planning Process ............................ 3-8
Corporate-Level Strategies .................................. 3-11
Business-Level Strategies ................................... 3-13
Entrepreneurship and Strategy ............................ 3-15
Strategic Planning and Change ........................... 3-15

Planning Tools and Techniques ................................. 3-16

Budgets ............................................................... 3-17
Operational Planning Tools ................................. 3-19
Contemporary Issues in Planning ........................ 3-21
Time-Management Strategies ............................. 3-22
Delegation ........................................................... 3-28
Planning and Conducting Effective Meetings ...... 3-30

Conclusions ............................................................... 3-32

References................................................................. 3-33

BUSA 7250 MODULE 3.DOC 04/15 i

 MODULE 3
Planning

T his module describes the entire planning process. It begins

with the strategic planning of the corporate and business
levels at the top of the organization, then proceeds to the
lower operational level, and finishes at the individual level
with organizing one’s time and conducting effective meetings.

Learning
Outcome Use planning skills to manage the work of self and others in the
organization.

Learning
Tasks • Recognize the importance of planning.

• Describe the strategic planning process.

• Describe the major corporate and business-level strategies.

• Use planning tools to implement organizational plans.

• Apply time-management strategies.

• Plan and conduct effective meetings.

The Planning
Process Definition
Planning is the process of defining organizational goals and
developing the means for achieving them.

As shown in the definition, there are two aspects to planning: goal

setting and developing or selecting the means of achieving these
goals. When analyzed in greater detail, planning is, in fact,
composed of four steps:

1. Establish a goal or goals.

Example: You set a personal goal to become president of your

organization within 5 years!

BUSA 7250 MODULE 3.DOC 04/15 3-1

BUSA 7250

2. Analyze the current situation.

Example: At present you hold an entry-level position with your

organization, which employs 1,800 people. Most
employees have post-graduate training and several
years of business experience, while you are a high-
school graduate with only two years of business
experience.

3. Identify the aids and barriers to achieving the goal.

Example: The barriers are your limited business experience,

no post-graduate education and great competition.
The aids are confidence in your abilities and your
enthusiasm.

At this point you could discard this plan as being unrealistic, but
you decide to proceed.

4. Develop the means of achieving the goal.

Example: Suggestions might include submitting a brilliant idea

through the company suggestion box.

Importance
The importance of planning cannot be overstated. Without plans,
there is no direction and the ship flounders. At all organizational
levels, planning is essential and crucial. Imagine, for example, an
airport operating without flight schedules, BCIT without budgets, a
busy salesperson without personal time management.

Some people see planning as a waste of time. They may be action-

oriented or impatient individuals for whom planning is too passive
and slow and lacks the excitement of actually doing something.
Another objection is that planning usually involves a considerable
amount of thinking and people don’t look busy when they think!

Types of Plans
One method of classifying plans is by the organizational level that
makes them and the time frame that they address.

3-2 BUSA 7250 MODULE 3.DOC 04/15

 Planning

Strategic Plans
Strategic plans are made at the top level of the organization. They are
overall organizational plans with a broad scope and they deal with
the long term, such as one to five years.

Example: A Canadian store chain decides to expand into the

United States in the next five years.

Operational Plans
Middle and lower organizational levels make operational plans. They
are based on strategic plans, but they are more specific and short
term (e.g., daily, weekly, monthly). Operational plans are expressed
in terms of the means of achieving objectives.

Example: You meet the increased demand for production by

assigning a Saturday shift during the next three months.

Another method of classifying plans is by the clarity of the means

used to achieve them.

Specific Plans
Plans are specific when the means of achieving them are clearly
identified.

Example: A store expansion into the United States will be achieved

by opening a number of stores in certain malls.

Directional Plans
When the means are unknown or must remain flexible to
accommodate contingencies, the plans are said to be directional.

Example: You plan to reduce the rate of rejects in your lab by 10%
in the next year. At this point you are not certain of, or
have not decided on, the best method of achieving the
reduction.

Operational plans can be further classified according to the situation

they are designed for.

BUSA 7250 MODULE 3.DOC 04/15 3-3

BUSA 7250

Single-Use Plans
A single-use plan is normally designed to be used once in a unique
and non-recurring situation.

Examples: Implementing new software.

Specialized one-time training programs

Standing Plans
Standing plans are developed for repetitive and recurring situations.

Examples: Policies, procedures and rules.

Contingency Factors in Planning

The types of plans that are made depend on several factors. Strategic
plans, as mentioned, are made at higher organizational levels, and
operational plans are made lower down the organization. Affecting
both types are the following contingency factors.

Degree of Environmental Uncertainty

The greater the environmental uncertainty, the more the plans should
remain flexible by being directional and short-term.

Example: The commercial fisherman facing reduced catches,

fishing closures and an uncertain future should not
assume a long-term loan to refurbish his boat or hire
deckhands beyond a single season.

Length of Future Commitments

Many managerial decisions have an effect that lasts well into the
future.

Example: At the strategic level, Toyota decided to build auto

plants in Canada. The major costs involved in that
decision and the relative permanence of the plants
necessitated that Toyota develop strategic plans that
extended beyond five or ten years.

3-4 BUSA 7250 MODULE 3.DOC 04/15

 Planning

Goals and Objectives

In most organizational environments the terms goals and objectives
are used interchangeably. There is, however, a distinction between
the two.

Goals are broad expressions of purpose.

Example: The goal is to improve patient care.

The goal is to increase sales.
The goal is to build the tallest office tower in Canada.

Objectives are more specific than goals. They provide quantitative

information and define time frames. They also outline the means of
achieving a goal.

Example: You want to reduce the rate of absenteeism in your

organization to 5% by year’s end. To achieve this you
offer incentives for good attendance.

From the above, it is obvious that you start with a goal and translate
that goal into one or more objectives.

Goals and objectives serve several functions: they provide direction

(what is to be achieved) and focus (concentrate resources), they
guide the planning process and they assist in evaluation, such as
setting performance standards.

As organizations have several goals and objectives of varying

importance, a hierarchy is normally established. That hierarchy may
be rearranged from time to time. Traditionally, overall organizational
goals are set by top management and communicated lower down. If
such communication is unclear or fails completely, confusion and
sometimes chaos result as different departments work at cross
purposes or go off in different directions.

Occasionally powerful figures in an organization differ on what the

organization’s goals should be or which goals are important.
Sometimes such disagreements result in dysfunctional conflict and
power struggles.

Management by objectives (MBO) is a cooperative method of

formulating objectives that involves all levels of the organization.
Objectives are set jointly and their accomplishment is monitored and
reviewed periodically. For MBO to be effective, all levels of the
organization must be totally committed to the program. MBO is
believed to improve organizational performance by establishing
realistic and attainable goals, since there is input from all
organizational levels.

BUSA 7250 MODULE 3.DOC 04/15 3-5

BUSA 7250

Strategic
Planning Introduction
Goal setting, as demonstrated, is the essence of planning. A strategy
is the way an organization relates to its environment. When top
managers set overall organizational goals and objectives and position
the organization in relation to its environment, they engage in
strategic planning.

Strategies are sometimes based on intuition or an overriding goal

(such as the desire to be the biggest and best in the country). At other
times strategies may be based on management principles, and at still
other times they are reactive according to environmental changes.

Example: Microsoft’s strategy of buying up smaller innovative

software companies allowed it to continue to dominate
the computer market.

One may wonder how organizations can plan strategically today,

given the environmental uncertainty they face. It is indeed more
difficult to plan today than ever before. However, strategic planning
is also more important to organizational competitiveness and
survival. The following example underlines why a strategy is more
important today than ever before.

Example: Two boats, caught in a serious storm, are in trouble.

Boat A, knowing the direction of the nearest safe harbor,
is making a valiant effort to reach it. Boat B has no clue
which way the shore is and is going about in circles.
Would you agree that boat A stands a better chance of
surviving the storm?

Most large organizations provide related products or services.

Integrated companies offer a complete set of related products or
services such as a financial institution that also has insurance, real
estate, trust and brokerage services.

Diversified companies own businesses that are not necessarily

related.

Example: A steel manufacturer may own a shoe retail chain and a

string of bakeries.

Each product or service offered and each field or industry requires its
own strategic plan.

Example: While declining tobacco sales call for increased

lobbying in Ottawa, booming sales of pharmaceuticals
make it possible to reduce the advertising budget for
that area.

3-6 BUSA 7250 MODULE 3.DOC 04/15

 Planning

Strategic Levels
Strategies are formulated at three organizational levels:

Corporate-level strategy, which is formulated at the top levels of

the organization, responds to the question of what business the
organization should be in.

Example: A decision to divest a real estate subsidiary will be made

at the corporate level.

Business-level strategy applies to the large diversified and

integrated organization. It seeks to determine how the corporation
should compete in each area. Smaller organizations, or those with
only one line of business, use their overall corporate strategy. A
strategic business unit is composed of one or more related areas
that can develop their own strategy.

Functional-level strategy is formulated at the middle organizational

level. It seeks to determine how to support the business-level
strategy. The functional-level strategy is more specific and detailed
than the corporate strategy. Various functional levels within the
organization such as finance, human resources and manufacturing
must coordinate their strategies.

BUSA 7250 MODULE 3.DOC 04/15 3-7

BUSA 7250

The Strategic Planning Process

The strategic planning process consists of seven steps.

1. Identify the current organizational mission,

objectives and strategies.
The organization’s mission statement should answer the
question of what business it is in and its purpose.

Example: The main mission of a municipal government is to

provide services to the general public by collecting
taxes. The mission of a long-term care facility is to
provide care to the elderly, etc.

2. Analyze the organizational environment and

identify opportunities and threats.
For example, who is the competitor? What are the economic
conditions? Bear in mind that an opportunity to one
organization may be a threat to another.

Example: Deregulation in telephone communications brought

about many opportunities for new, long-distance
companies, but at the same time it created a serious
threat for existing telephone companies.

3. Analyze the organization’s resources and identify

strengths and weaknesses.
For example, the strength of the Canadian banks is their
excellent reputation for solvency, their weakness is their
relatively small size compared to foreign banks.

Note: Collectively Steps 2 and 3 are called a SWOT analysis

(Strengths, Weaknesses, Opportunities and Threats). This
analysis is an important part of evaluating the current
environment both external and internal.

4. Reassess the organizational mission and

objectives.
The relevance and appropriateness of the organization’s mission
and objectives needs to be evaluated after the SWOT analysis
has been completed. It may need to be altered to adjust to
shifting environmental conditions.

5. Formulate new strategies.

3-8 BUSA 7250 MODULE 3.DOC 04/15

 Planning

Given a shift in mission and objectives, there may need to be

adjustments in strategies at corporate, business and/or functional
levels.

6. Implement new strategies.

This requires effective leadership, motivation and
communication. It may also require staffing and structural
changes.

7. Evaluate results.
Are the new strategies achieving the stated goals?

Here is an actual example of the SWOT application:

This sample SWOT analysis is based on the relatively new concept of SWOT. The definition
of SWOT analysis is to evaluate the qualitative (non-number) aspects of strengths,
weaknesses, opportunities and threats of a company or organization. The purpose is to
determine if your organization is capable of taking advantage of an opportunity that has
presented itself. The answer is only yes if you decide that your strengths are greater than your
weaknesses and the opportunity is greater than the threats. The SWOT analysis sample
shown here goes a step farther than the traditional SWOT analysis. It requires that you put
numbers to these very nebulous concepts.

Let's assume that you are a small janitorial firm with 6 employees. Your company has been
servicing 20-25 small business buildings in a suburban area. You have recently found out
that a large office building nearby is looking for a new janitorial service. It would be a very
lucrative contract, but you would have to triple the size of your company overnight to handle
it. You don't want to jeopardize what you already have. Here is your SWOT analysis of the
situation:
Strengths
1. What are your organization's core
Know how to do janitorial work well
strengths?
Have close relations with another janitorial
2. What unique resources are available?
company.
Could contract with other janitorial
3. What strengths can be acquired?
companies to meet the load.
Weaknesses
1. What are the perceived weaknesses? Not experienced servicing large facilities.
2. What resources are inadequate? Not enough manpower.
3. What weaknesses cannot be overcome? Time conflicts with current contracts.
Opportunities

BUSA 7250 MODULE 3.DOC 04/15 3-9

BUSA 7250

1. What is the value of the present

opportunity?
2. Is value enhanced by evolving market-
technology conditions?
3. Is value enhance by your organization's
core strengths?
Threats
1. Are there market-technology conditions
that reduce the value?
2. What is the level of competition?
3. Will your weaknesses limit your success?
The contract would be very lucrative.
There are many new office buildings being
constructed.
There are a limited number of available
workers.
Competion is moderate.
Must be able to find additional workers.

SWOT ANALYSIS
Fill in the boxes below to perform analysis
STRENGTHS WEAKNESSES
1. What is the value of the present opportunity? 1. What are the perceive weaknesses?

2. What unique resources are available? 2. What resources are inadequate?

3. What strengths can be acquired? 3. What weaknesses cannot be overcome?

Score(1-10) Score(1-10)
1. 1.
2. 2.
3. 3.
Total Total
SW Total
OPPORTUNITIES THREATS
1. Are there market-technology conditions that reduce t
1. What is the value of the present opportunity?
value?

2. Is value enhanced by evolving market-technology

2. What is the level of competition?
conditions?

3. Is value enhance by your organization's core

3. Will your weaknesses limit your success?
strengths?

Score(1-10) Score(1-10)

3-10 BUSA 7250 MODULE 3.DOC 04/15

 Planning

1. 1.
2. 2.
3. 3.
Total Total
OT Total
Project Score

NOTE : Project Score = Strengths - Weaknesses + Opportunities - Threats

Corporate-Level Strategies
Organizations pursue a variety of corporate strategies. Some preserve
the status quo, with the same products or services they offered in the
past. For example, Canadian Tire, a Canadian retailer has been
providing products and services since 1922 and although locations
and markets have expanded, its core business has not changed. This
strategy is called a stability strategy. Small specialty stores usually
fall into this category. Yet only a few organizations follow the
stability strategy. Change is affecting almost every organization
today and, as a result, those that do not adapt to change or make poor
adjustments are usually doomed to failure. The demise of several
major retailers in Canada in the 80s and 90s was partially due to this
factor.

Other organizations follow a growth strategy. The North American

concept of “bigger is better” has brainwashed people into believing
that big means success in corporate terms. Although trends have
changed to a large extent, there remains a tendency to measure the
success of an organization by its size.

Example: McDonald’s boasts about the billion or trillion

hamburgers served.

Recent trends towards growth through combining with other

organizations have been vetoed by watch dog organizations such as
the European Commission and in Canada the Canada Competition
Bureau in order to prevent a decrease in the amount of competition
in the industry.

Example: The Canada Competition Bureau has prevented banks

such as the Bank of Montreal and the Royal Bank from
combining their operations.

Yet for some organizations, growth is not an option; they are

preoccupied with survival.

Retrenchment strategy is the opposite of growth strategy. The size

of the organization shrinks as it sells assets, divests itself of

BUSA 7250 MODULE 3.DOC 04/15 3-11

BUSA 7250

subsidiaries, closes down offices and plants, and lays off staff. In the
last two decades countless North American organizations pursued
this corporate strategy. Yet many managers still see retrenchment as
the equivalent of a demotion and as a stigma. On the other hand,
retrenchment is a necessity for many of today’s organizations if they
hope to survive, remain competitive and become profitable. It is
important at this point to mention that some large or diversified
organizations may be pursuing a growth strategy in one area and a
retrenchment strategy in another.

Example: A forestry company could be planning for growth in

lumber and retrenchment in pulp and paper.

Some organizations design a corporate strategy on the basis of a

corporate portfolio analysis, or a BCG Matrix as it is known
(Perspective on Experience, 1970; Haspeslagh, 1982). They analyze
their individual business units in terms of three factors: market share,
growth and positive or negative cash flow. With this information as
the basis, business units are classified as cash cows, dogs, stars or
question marks (see Figure 3.1). On the basis of this analysis, some
business units (the dogs) may be sold off, some funds may be
diverted from the cash cows to the stars to help them develop into
cash cows, and some funds may be dedicated to the question marks,
which are speculative and risky.

Figure 3.1
The BCG Matrix

3-12 BUSA 7250 MODULE 3.DOC 04/15

 Planning

Some organizations form strategic alliances with related

organizations and sometimes even with their competitors, in order to
allow them to use each other’s resources and expertise or to pool
their resources. The obvious reason for strategic alliances is that
these organizations cannot achieve their goals separately and thus
need one another.

Example: Many airlines partner up to provide customers with

“seamless” worldwide service even though individually
they may offer only specific routes and touch certain
markets.

Business-Level Strategies
At the business level there are several strategic options.

Adaptive Strategies
According to Miles and Snow (1978), some organizations are
defenders, that is, they focus on a few products and a narrow niche
and they fiercely defend their territory against competitors.
McDonald’s is the best example of a defender.

Other organizations are prospectors, that is, they seek innovation

through new products and opportunities. Apple and most computer
software companies are excellent examples of prospectors.

Organizations that successfully copy the ideas of their competitors

are called analyzers. Burger King is an example of an analyzer.

Organizations that have no specific strategy, or that pursue a strategy

inappropriately or constantly change it are called reactors. Reactors
are not usually successful and many have disappeared from the
business scene. Some major Canadian retailers that failed in recent
years were considered to be in that category.

Competitive Strategies
Selecting and sustaining a competitive advantage means not only
finding a particular strategy that will make the organization
successful, but also maintaining that advantage by constantly
adapting it to meet different situations. Michael Porter (1980)
developed a process for performing an industry analysis (see Figure
3.2).

BUSA 7250 MODULE 3.DOC 04/15 3-13

BUSA 7250

Figure 3.2
Forces in the Industry Analysis

First, examine the organization’s resources. Some industries have a

high-profit potential; others produce mediocre returns on investment.

Example: The grocery industry has a low-profit margin and

therefore riles on sales volume, while the cosmetics
industry can offer very high returns given the margins
on individual products.

Second, we use the model in Figure 3.2 to analyze the environmental

forces. Third, on the basis of this analysis, select a competitive
advantage. You may decide, for example, to pursue a cost
leadership strategy that establishes a cost leader for a product or
service. Or you may choose a differentiation strategy that makes
your product or service unique in its field, or develop a focus
strategy that concentrates your effort in a narrow area. Large,
warehouse, discount stores such as Costco, follow a cost leadership
strategy; Starbucks and The Body Shop set out with a differentiation
strategy; and small specialty stores such as Toys ‘R Us, use the focus
strategy.

3-14 BUSA 7250 MODULE 3.DOC 04/15

 Planning

With increased pressures on companies to maintain a competitive

advantage, the importance of ethics in strategic planning and
maintaining competitive advantage is even more paramount.

Example: The 2004 accusations against WestJet Airlines Ltd.

vice president of strategic planning and co-founder
Mark Hill, lead to his resignation amid allegations that
he masterminded an elaborate corporate espionage
scheme against Air Canada. In spite of the obvious
contributions he had made to the successful strategic
planning of WestJet, it was recognized that whether
founded or not, the allegations of unethical behavior
could result in negative impacts for the organization
unless he resigned.

Entrepreneurship and Strategy

Entrepreneurship has been defined as a process by which individuals
pursue opportunities, fulfilling needs and wants through innovation,
without regard for the resources they currently control (Robbins,
2003, p. 235). Research into the entrepreneurial personality reveals
that entrepreneurs tend to be hardworking, self-confident, optimistic
and determined. They have a high-energy level and a great need for
achievement. They are independent, they dislike being controlled by
others and they are moderate risk takers. Considering the personality
profile of entrepreneurs, it is not surprising that they are not normally
found in large, bureaucratic organizations. They usually head small
organizations of their own, and they often sell off their successful
ventures when they reach a certain size, in order to repeat the
challenge with a new venture.

Organizational strategies imply structure and controls, frameworks

that restrict the true entrepreneurs. Large organizations usually have
major resources; therefore, the challenge of overcoming difficulties
is reduced. Moreover, the risks are not borne by the entrepreneur, but
by the parent organization.

Intrapreneurship, the attempt to transplant entrepreneurship into a

large organization, has met with questionable success. Incorporating
this kind of strategy may require a large shift in an organization’s
culture and therefore may require more time than first considered. It
may also meet with resistance as managers and leaders are required
to release power to their employees.

Strategic Planning and Change

In the Strategic Planning process we described how the
organization’s corporate level develops an overall, long-term course
that must be followed by the organization. It is clear that since many
strategic decisions involve long-term investments and commitments
by the organization (i.e., opening a new mine) the strategic planning
BUSA 7250 MODULE 3.DOC 04/15 3-15
BUSA 7250

process must span several years. However, ongoing changes in the

organizational environment, such as supply and demand, competition
or economic factors often scuttle even the best plans.

Example: A severe economic recession causes the shut down of a

new copper mine. The strategic plan for that mine was
made several years ago, when the economy was
booming and copper prices were high.

One method of dealing with the unknown factors in planning is to

create a variety of scenarios and possible outcomes and consider
and analyze the potential risks. In the previous example, the strategic
planning process should include the possibility of an economic
recession and an assessment of how the organization could cope with
such an eventuality. In other words, can the organization afford to
open the mine and risk shutting it down until the economy recovers?
(Also refer to Module 2, Step 5 in the Rational Decision Making
Process).

Planning Tools
and Techniques Managers, wanting to form a corporate strategy, have several tools at
their disposal for analyzing the organizational environment. Useful
planning tools and techniques include the following:

Environmental scanning is the collection and analysis of pertinent

information that helps to detect trends in the environment and create
future scenarios.

Example: Because it known that the population is aging (trend),

more health care facilities will be required (scenario).

Forecasting involves predictions of future outcomes.

Examples: 50% of the white-collar workforce will be able to

telecommute in some form by the year 2010 in Canada.

Sales of wheelchairs will increase by 25% in the next 10

years.

Benchmarking describes the search for the best practices among

competitors or unrelated companies that lead to excellent
performance. In other words, an organization tries to identify
particular processes or practices that make other organizations
successful and then tries to copy them. Benchmarking entails
analyzing one’s own organizational situation first and then doing an
accurate analysis of the environment. Much of the information
obtained in benchmarking is widely accessible and does not involve

3-16 BUSA 7250 MODULE 3.DOC 04/15

 Planning

confidential information or patents. Benchmarking is not

synonymous with industrial espionage; however, sometimes there
are fine lines dividing the two.

Budgets
Budgets are numerical plans for allocating resources to specific
activities. Budgets are used for planning, controlling and
coordinating activities at every organizational level and they provide
clear performance standards, usually for a one-year period.

The Budgeting Process

In many organizations, budget direction comes from the top.
Financial resources are allocated to various departments to meet their
expenses and expectations are set regarding the revenues that they
must generate. Non-profit organizations and government
departments obviously do not rely on departmental revenues but are
still financially accountable so funding will continue.

Other organizations use the “bottom-up” approach to budgeting.

Various departments submit their initial budgets for approval by
higher management. After a budget committee has analyzed all
budget submissions, they are approved or returned for adjustment.

Profit-driven organizations tend to be very budget-conscious,

especially during tough economic times. If they have a budget
deficit, that is, if their expenses exceed their revenues, they must use
up cash reserves, divest assets or take on debt in order to balance
their budgets. Raising the price of their goods or services may not be
a viable option if they wish to remain competitive. Governments and
organizations that are subsidized by taxes, on the other hand, may
rely on raising taxes to balance their budgets.

Budgets are usually prepared on the basis of actual expenses and

revenues from the previous year. Adjustments are usually made for
cost of living and any other anticipated contingency factor.

Example: A hockey team that has just purchased a star player may
adjust projected revenues for next year because of the
star’s ability to attract crowds.

Zero-Base Budgeting
As noted, budget preparation normally begins by consulting the
previous year’s budget and making necessary adjustments. With
zero-base budgeting, each item in the budget has to be justified on its
own merit.

BUSA 7250 MODULE 3.DOC 04/15 3-17

BUSA 7250

Example: Hiring two part-timers to assist with production during

last year’s summer holiday period is not sufficient
justification for hiring them again this year. It must be
proven that they are again needed and that hiring them
will produce specific benefits for the organization.

Zero-base budgeting is time-consuming and labor-intensive, and

many managers dislike its application. However, many cost-
conscious organizations are committed to it. It may be appropriate
for a small organization running on tight profit margins.

Types of Budgets
The organization’s overall budget plans are reflected in the financial
budgets, which are complete statements of overall revenues and
expenditures. At the departmental level, you are most likely to
encounter the following types of budgets:

Revenue Budgets
Revenue budgets list projected revenues such as money from the sale
of the organization’s products or services. These projections are
based on forecasts and they are only as accurate as the quality of
these forecasts and the absence of any unforeseen contingency
factor.

Example: On the basis of one year’s banner sales of recreational

vehicle insurance, you forecast that revenues will
increase by 15% this year. If you did not factor in rising
fuel prices and concern for the environment, your
prediction of consumer behavior may be skewed.

Expense Budgets
Expense budgets are used at every organizational level in every
organization. They are the ones that you are most likely familiar
with. Items typically listed in a departmental expense budget are
salaries, office supplies, photocopying and the like.

Cash Budgets
Cash budgets reveal cash flow, that is, the amount of cash available
during a given time. Small organizations are often caught in a “cash
flow crisis” because they have only limited resources.

Capital Expenditure Budgets

At the corporate level, capital expenditure budgets forecast major
expenditures such as building a new plant or purchasing heavy

3-18 BUSA 7250 MODULE 3.DOC 04/15

 Planning

equipment. At the departmental level, they may represent purchasing

new computer hardware, office furniture or a small delivery truck.

Fixed and Variable Budgets

Fixed budgets assume fixed levels of revenues or expenditures;
variable budgets are flexible, changing to suit different scenarios.

Operational Planning Tools

Scheduling
Scheduling is a list of all activities in chronological order of
accomplishment, with designation of responsibilities and
establishment of time frames for completion. The Gantt Chart
(developed by Henry Gantt) and PERT are common devices for
scheduling. See Figures 3.3 and 3.4.

Figure 3.3
Gantt Chart

As the above graph shows, the computer system installation is

behind schedule.

BUSA 7250 MODULE 3.DOC 04/15 3-19

BUSA 7250

A simplified version of PERT is demonstrated in the following

example of renovating an existing store space to make it into a
restaurant. First, all the activities involved are listed; next, a time
frame is assigned to each; and finally, they are ranked in order of
completion. It is possible that some activities can be performed
concurrently, as is the case here with plumbing and wiring.

Weeks it Takes Preceding

Activity
to Complete Activity
A. Design and permits 4 none
B. Strip current interior 1 A
C. Plumbing 1 B
D. Wiring 1 B
E. Dry walls 1 C and D
F. Flooring 1 E
G. Install kitchen equipment 1 F
H. Painting 2 G
I. Lights, trim, etc. 2 H
J. Move furniture in 1 I

Figure 3.4
PERT Network Diagram

As shown in the above graph, the total time for completion of this
project is 14 weeks.

Break-even Analysis
A break-even analysis determines the point at which total revenue
covers total costs.

Example: A small company may have many customers and a large

volume of sales, but it may not be profitable. On the
basis of the results of break-even analysis, its owner
realizes that by raising prices only marginally it can
become profitable.

3-20 BUSA 7250 MODULE 3.DOC 04/15

 Planning

Linear Programming
Linear programming is a mathematical technique designed to solve
resource allocation problems, such as what proportion of an
advertising budget should be allocated to each of a number of
products, and what is the best way to assign a limited number of
part-time helpers to different areas.

Queuing Theory
The queuing theory is a technique that balances the cost of having a
waiting line against the cost of maintaining that line. When
customers are waiting, queuing theory helps compare the cost of
adding another employee while comparing it to the risk of having a
dissatisfied customer or lost sale. With increased competition
between organizations and the increased ability for a customer to
switch loyalties, companies may be more interested in the merits of
queuing theory.

Example: Waiting in a bank line may have you consider another

financial institution or another form of banking.
A telephone or internet service provider may monitor
average wait times at its call center to ensure customers
are getting prompt service.

Marginal Analysis
Marginal analysis is calculating the additional costs and revenues of
each decision.

Example: A branch office is being considered for a suburb. On

examining projected revenues and expenses for the new
office, it is discovered that the expenses exceed the
revenues; therefore, proceeding with the proposal may
not be a good idea.

Simulation
Simulation is a realistic model containing variables that can be
manipulated, such as computer simulation.

Example: Prior to moving to a new location, a detailed plant

layout is computer-designed, feedback is sought from
various levels and adjustments are made as needed.

Contemporary Issues in Planning

Popular since the 1960s, recently, formal planning has received
criticism based on the following arguments:

BUSA 7250 MODULE 3.DOC 04/15 3-21

BUSA 7250

• Planning can lead to rigidity.

• Planning requires predictability and in times of constant change

and unpredictability plans can’t be developed.

• Intuition and creativity are not steps in the formal planning

process and yet are key to success.

• Planning focuses on today’s issues and doesn’t allow for

moving into new and uncharted waters as is required in the
global business environment.

Example: There are numerous examples within the ever-changing

fast pace of online business of the failure of traditional
formal planning. Instead companies are learning to plan
every quarter or even weekly. Vancouver-based
SUMmedia.com had plans to expand into the global
market, however it was out of business before this plan
realized.

Instead of throwing out formal planning, however, it is important

that managers integrate flexibility, creativity and innovation into
the planning process and be willing to adapt to the constant changes
required in today’s business environment (Robbins, 2003,
pp. 160−162).

Time-Management Strategies
Introduction and Definitions
Concern about time and time management is not new. Two thousand
years ago, the Roman poet Virgil observed that “tempus fugit,” that
is “time flies.” Some people believe they have so much time on their
hands that they don’t know what to do with it. Others complain that
they don’t have any time.

Time management is the efficient use of our resources, including

time, in such a way we become effective in achieving important
goals and objectives.

According to the above definition, time is just another resource. Each

person has personal resources of intelligence, appearance, athletic
ability, artistic ability and the like. The difference between time and
other personal resources, is that time is the only resource that is
equally available to everyone. Everyone has exactly the same
amount of time, 24 hours each day! When you say that you don’t
have time to study for this course, what you actually mean is that
your time is taken up by other activities, some of them by choice.

3-22 BUSA 7250 MODULE 3.DOC 04/15

 Planning

Importance of Time Management

• It increases productivity.
• It decreases stress levels.
• It increases job satisfaction.
• It is essential to goal achievement.
• It results in higher performance evaluations.

Efficiency and Effectiveness

Efficiency means doing things right. When you take on a project that
should normally be handled by one of your staff and you complete it
properly and on time, you are probably efficient. However, you are
not effective as a manager if the project could have been handled
equally well by a staff member and if you neglected other important
work to do it.

Personal Time Management, Step-by-Step

To apply effective time management at the personal level, try the
following steps:

1. Keep a daily time log for a minimum of one month (see sample
in Figure 3.5). This gives a realistic assessment of how you
really spend your time. You may want to design your own time
log to suit your particular work requirements.

2. Analyze your time log (see sample in Figure 3.6). Then you can
see how your time is spent over a period of one month and what
percentage of your time is dedicated to each activity. You may
be shocked, for example, to discover that you spend 20% of
your working time on personal phone calls.

3. Define your realistic goals and objectives. Start with goals; then
convert them to specific objectives. It is fine to have personal
goals and to separate work goals as long as they don’t contradict
or cancel each other. You may have long-term and short-term
goals and objectives.

4. Prioritize your objectives. You cannot set out to do everything

at once; therefore, you must decide which objectives are the
most important and focus on them. Start with your top priorities
and work your way through the activities in order.

BUSA 7250 MODULE 3.DOC 04/15 3-23

BUSA 7250

Time Frame Activity Priority What Was Achieved

9:00 – 9:10
9:10 – 9:20
9:20 – 9:30
9:30 – 9:40

9:50 – 10:00
10:00 – 10:10
10:10 – 10:20
10:20 – 10:30
10:30 – 10:40
10:40 – 10:50
10:50 – 11:00
11:10 – 11:20

11:20 – 11:30
11:30 – 11:40
11:40 – 11:50
11:50 – 12:00

12:00 – 12:10
12:10 – 12:20
12:20 – 12:30
12:30 – 12:40
12:40 – 12:50

12:50 – 1:00
1:00 – 1:10
1:10 – 1:20
1:20 – 1:30

1:30 – 1:40

Figure 3.5
Sample Time Log

3-24 BUSA 7250 MODULE 3.DOC 04/15

 Planning

Time Spent % of Total Work

Activities
Per Month Hours per Month
1. Attending meetings 40 hrs 25%
2. Working on own projects 15 hrs 9%
etc., etc.

Figure 3.6
Time Log Analysis

5. Translate objectives into activities, that is, into the means of

achieving the objectives.

Example: If a short-term objective is to learn to use a new

computer software program, one of the necessary
activities is to take a relevant course or research to
program on the internet.

6. Compare your current (from the Time Log) list of activities with
those required to achieve your most important objectives. Are
you currently spending most of your time engaging in these
activities?

Example: You say it is important to you to lose weight and get

fit, but after eight hours at a sedentary job you only
exercise your eyes by watching television or
“surfing the net” for four or five hours every
evening.

7. Identify and eliminate time wasters. Time wasters are activities

that do not contribute to the achievement of your important
objectives.

When you have completed the above process, you can proceed to
apply sound personal time management practices. The following
guidelines will help you achieve this goal.

1. With your overall goals and objectives in mind, make a daily

“to do” list.

Example: If you are in sales and your major objective is to

become the No. 1 in your field in sales volume, an
important activity that you should be engaging in is
selling. In addition you may learn more about your
product line and research changing customer needs.

2. Prioritize your activities. Which are the most important? If some

activities are urgent but not important, you could dedicate
minimum time to them or delegate them to someone else.

BUSA 7250 MODULE 3.DOC 04/15 3-25

BUSA 7250

3. Always ask yourself how best you can use your time right now.

Example: While you are waiting for information on one

project, you switch to another project.

4. Handle each piece of paper or read each email only once. Sort
out the paperwork by the A, B, C system. Cs are not important
and they don’t merit your time. Throw out your junk mail. Start
with As, not with Cs. With email, delete junk mail immediately
and empty your trash can daily.

5. Do it now! Stop procrastinating and proceed with your A task.

(adapted from Alan Lakein’s film Time of Your Life)

Common Time Wasters

• Daydreaming
• Procrastination
• Interruptions
• Paper-pushing
• Wrong priorities
• Lack of or poor planning
• Worrying

Probable Causes
• Boredom or fatigue
• Task too difficult, boring or tedious, or don’t know how to
handle it
• Other people’s different priorities
• A million reasons; investigate cause
• Personality characteristics, values, vested interests, lack of
training
• Lack of training, poor attitude towards planning
• Task too difficult or don’t know how to handle it

Dealing with Time Wasters

• Make jobs more interesting, challenging and stimulating.
• Match people and jobs better.
• Train people.
• Train people to be more assertive and to communicate their
needs better.
• For worrying, see the continuum in Figure 3.7.

3-26 BUSA 7250 MODULE 3.DOC 04/15

 Planning

GUILT WORRY

PAST PRESENT FUTURE

LEARN ACT PLAN

Figure 3.7
Guilt and Worry Continuum

Most people waste a lot of time thinking about the past and
regretting things they did or did not do.

Example: “If I had applied for the transfer then, I would have been
in her job now!”

People also waste a lot of time worrying about what may or may not
happen in the future.

Example: “I am worried that I will not be able to finish this report

by Monday!”

Of course, what did or did not happen in the past is now history and
regretting it cannot change it. The future has not happened yet;
therefore, it seems pointless wasting energy worrying about it. Both
regret and worry are paralyzing. What you can do about the past is
learn from it, so you don’t make the same mistake again. What you
can do about the future is plan for it so the scenario you dread will
not take place. This approach cures paralysis and frees up time to
enjoy living in the present.

Setting Priorities
Managers are often overwhelmed by multiple tasks and demands
made on their time. Setting appropriate priorities and being effective
require many skills such as good judgment, assertiveness and
effective communication.

To set priorities, assess each task on the basis of two factors:

1. Degree of importance
2. Degree of urgency

On the basis of the above, tasks range from very important and very
urgent, which of course are top priorities, to totally unimportant and
not urgent. Bear in mind that importance is determined by how much
each task contributes to important objectives. If a task is totally
unimportant, but urgent, consider delegating it to someone else, or
dedicate a minimum amount of time to it. Sometimes personal work
priorities may be overridden by those of someone in power, such as
your manager. Unless you effectively communicate your needs to

BUSA 7250 MODULE 3.DOC 04/15 3-27

BUSA 7250

that person, you may as well proceed with the task. In other
instances, persons in positions of power may force several competing
priorities on you. In those situations, either use your communication
skills or make intelligent choices.

Delegation
Introduction and Definitions
Delegation is assigning authority and responsibility to others within
certain parameters.

Example: You delegate the preparation of a report to a staff

member and you specify the format and the time frame
for completion. The staff member is now responsible for
completing the report.

Some managers are effective delegators, and some are not. In the
eyes of others, some managers may delegate too much or too little,
or they may delegate inappropriately. While ineffective delegation
makes a less effective manager, damaging the relationship between
the manager and staff and decreasing team performance, effective
delegation builds a strong relationship of mutual trust and respect
and motivates the team.

Why Delegate?
• To ensure the most efficient and effective completion of the task
• To avoid overwork and burnout
• To develop team members

All of the above reasons are very important in deciding to delegate;

however, managers often overlook the last reason. Staff development
through delegation can be a very important motivational tool: it
builds confidence and self-esteem and helps build a stronger
relationship between the manager and staff.

When to Delegate
• When you lack the ability to perform the task yourself
• When other team members can perform the task more
efficiently and effectively
• When you are overworked and team members are available
• When time is available to train others to perform the task
• When team members must be developed

3-28 BUSA 7250 MODULE 3.DOC 04/15

 Planning

When not to Delegate

• When the task is restricted to your job description and/or is
confidential
• When the task is not sufficiently important or is too time-
consuming to warrant the time spent on training others
• When your staff is even more overworked than you
• When your staff lacks the ability to perform the task

How to Delegate
• Provide training and clear direction.
• Ensure competency and cooperation.
• Provide a challenge.
• Clarify who, what, when, why, how and where.
• Request and receive feedback.
• Be available for later consultation if necessary.
• Be prepared to forgive errors.
• Give credit and positive reinforcement.

As you can see, communication is an essential prerequisite of

effective delegation, but you must also possess some interpersonal
skills, such as tolerance for errors and sharing the credit when things
go well.

Problems with Delegation

Delegation of tedium
Obviously not all tasks or projects can be challenging. However, if
all you delegate is tedium, don’t expect to be greeted with
enthusiasm. Another consideration is that the degree of challenge is
assessed by the perceptions of the recipient, not by those of the
delegator.

Delegator is not available, leaves staff to “sink or

swim.”
After delegating, make yourself available for further guidance, if
required. If you are going to be unavailable (such as in the case of
going on holidays), appoint another person to fill this role.

Delegator too controlling, does not allow initiative.

If you have sufficient confidence in the abilities of a person to
complete a task and meet set objectives, you should also be prepared
to be less rigid in your approach. Initiative and innovation may lead
to better methods and improved performance.

BUSA 7250 MODULE 3.DOC 04/15 3-29

BUSA 7250

Delegator does not communicate expectations

clearly.
Remember the five Ws and the How in “how to delegate.”

Delegator pounces on mistakes and does not give

credit.
Either of these approaches almost guarantees lack of cooperation in
future delegating. Also, intolerance of errors stifles creativity and
freethinking, the very same things encouraged in organizations
today.

Planning and Conducting Effective

Meetings
The reality of business is that managers are expected to attend
meetings. Some managers find that their work demands that they
attend an extraordinary number of meetings, and unfortunately,
many of them totally useless. Meetings can range from effective
conversations to a time-honored excuse for a two-hour lunch!

Attending useless or time-wasting meetings is frustrating, but well-

planned and well-conducted meetings make a manager more
effective. The following ten commandments of meetings should help
make you more effective.

1. Establish a valid reason for the meeting.

It is not justifiable to have a “regular” Monday morning meeting
just because you’ve always had one. A meeting should be
handled the same as zero-base budgeting; always have an
important reason for calling it.

2. Prepare objectives and an agenda.

The preparation of the objectives and the agenda is done prior to
the meeting. The agenda items should be expressed in terms of
the objectives.
Example: “Decide how much will be spent on training this
year.”

3. Inform everyone in advance.

Inform participants of the agenda so that they can prepare for
the meeting and advise you of other items they would like to
have included.

4. Prioritize and time items the agenda.

Make certain that the most important items are at the top so that
they are certain to be discussed. Specific amounts of time

3-30 BUSA 7250 MODULE 3.DOC 04/15

 Planning

should be allocated for the group to make a decision on each

agenda ietm. Any urgent, but not so important item can be
allocated a minimum amount of time on the agenda, so that it
won’t dominate the meeting.

5. Ensure that all concerned are able to attend.

If someone has vital information for the meeting, make sure that
person is able to attend.

6. Ensure that all information is supplied on time.

If certain information is essential to your discussion and
decision making, make sure it is available on time.

7. Refrain from small talk.

A lot of small talk is a blatant waste of people’s time. Casual
comments and light remarks, however, are often refreshing.

8. Adhere to the agenda.

Since you had an important reason for calling a meeting, and the
items were important enough to be included in the agenda, don’t
digress. If someone wishes to discuss something else, it should
be included in the agenda of another meeting, unless it is a
crisis. Remember that you have given all others a chance to
submit their own items for discussion. A “parking lot” can be
used to capture extraneous comments or issues so that can be
addressed later and not detract from the topic at hand.

9. End the meeting when the objectives have been met.

Some meetings drag on until the official coffee break or
lunchtime. Don’t waste people’s time.

10. Summarize, record and distribute the minutes.

Make certain there is a record of what was said and what was
decided. It is very important that everyone is informed, in
writing, in advance of the next meeting so that they can make
the necessary corrections. Minutes should be summarized,
otherwise not many people will take the time to read them.

Types of Meetings
Meetings can be informational, or decision making and problem
solving, or a combination of the two.

On the basis of scheduling urgency they can be classified as regular

(remember that you must have a valid reason), unscheduled, when
something important and unexpected comes up and emergency,
when there is a crisis.

BUSA 7250 MODULE 3.DOC 04/15 3-31

BUSA 7250

Technical Points on Meetings

• Always have a chair or a moderator. This person should ensure
that all attendants get a chance to participate and that the
objectives of the meeting are fulfilled.

• Make sure the meeting is free of interruptions. They should be

held in a room with a door that can be closed. Let it be known
that you do not wish to be interrupted. Request that phones,
pages, etc. be turned off is possible. It may be helpful to develop
a ground rule that interruptions should be allowed only if there
is a real emergency.

• Hold meetings in neutral territory so that no one in particular

can dominate. If any persons try to dominate the meeting or
they intimidate less powerful participants, it is the role of the
chairperson to encourage the weak to participate and to keep the
strong under control.

Substitutes for Meetings

Conference calls, electronic mail and videoconferences offer
attractive substitutes for meetings, especially when out-of-town
travel is involved. The benefits to the organization are both time and
money. Some managers, however, feel that today’s technology
dehumanizes meetings and they prefer to continue with the
traditional format.

Conclusion This module has described how planning permeates all

organizational levels and is an integral part of all managerial
functions. It is important to emphasize that all plans must coordinate
if the organization is to function effectively. Also, effective
communication and leadership are necessary if the plans are to be
accepted and implemented effectively. The examination of planning
started at the top organizational levels, descended to the lower levels,
and moved to a discussion of planning at the departmental and
personal levels. This module also examined the planning tools,
methods, strategies and techniques applied at different levels. A
manager needs to consider his/her own time management in the
planning process as well as strategies such as delegation and
effective meeting management.

3-32 BUSA 7250 MODULE 3.DOC 04/15

 Planning

References Haspeslagh, P. (1982, January–February). Portfolio planning: Uses

and limits. Harvard Business Review, 58–73.

Miles, R.E., & Snow, C.C. (1978). Organizational strategy:

Structure and process. New York: McGraw-Hill.

Perspective on Experience. (1982, January–February). Boston:

Boston Consulting Group. Harvard Business Review, 58–73.

Porter, M. (1980). Competitive strategy: Techniques for analyzing

industries and competitors. New York: Free Press.

Robbins, S.P., et al. (2003). Management (Canadian 7th Ed.).

Toronto: Prentice Hall, pp. 160–161.

BUSA 7250 MODULE 3.DOC 04/15 3-33