SINHGAD COLLEGE

OF
ENGINEERING,
DEPARTMENT OF
MANAGEMENT STUDIES.

DIVISION - MBA 1
MANAGEMENT FUNDAMENTALS
CO-ORDINATOR – PROF . ARCHANA BORDE

UNIT – 2
PLANNING
 TABLE OF CONTENTS
• MEANING • ADVANTAGES OF MBO

• DEFINITIONS • DISADVANTAGES OF MBO

• GOAL SETTING
• NATURE / CHARACTERISTICS
• STEPS FOR GOAL SETTING
• PLANNING PROCESS
• DIFFERENCE BETWEEN GOALS AND PLANS
• TYPES OF PLANS
• MANAGEMENT BY OBJECTIVES
• MANAGEMENT BY OBJECTIVES PROCESS
 MEANING
. PLANNING IS THE FUNDAMENTAL
• PLANNING BRIDGES THE GAP FROM WHERE
MANAGEMENT FUNCTION, WHICH
WE ARE TO WHERE WE WANT TO GO.
INVOLVES DECIDING BEFOREHAND, WHAT IS
• IT INCLUDES THE SELECTION OF OBJECTIVES, TO BE DONE, WHEN IS IT TO BE DONE, HOW
POLICIES, PROCEDURES AND PROGRAMMES
IT IS TO BE DONE AND WHO IS GOING TO
FROM AMONG ALTERNATIVES.
DO IT.
• A PLAN IS A PREDETERMINED COURSE OF
• IT CHALKS OUT EXACTLY, HOW TO ATTAIN A
ACTION TO ACHIEVE A SPECIFIED GOAL.
SPECIFIC GOAL.
• IT IS AN ATTEMPT ON THE PART OF MANAGER
TO ANTICIPATE THE FUTURE IN ORDER TO
ACHIEVE BETTER PERFORMANCE.
 DEFINITIONS
• ALFORD AND BEATT , “PLANNING IS THE • KOONTZ AND O’ DONNELL , “PLANNING IS
THINKING PROCESS, THE ORGANIZED AN INTELLECTUAL PROCESS, CONSCIOUS
FORESIGHT, THE VISION BASED ON FACT DETERMINATION OF COURSE OF ACTION,
AND EXPERIENCE THAT IS REQUIRED FOR THE BASING OF DECISION ON PURPOSE,
INTELLIGENT ACTION.” FACTS AND CONSIDERED ESTIMATES.”
• THEO HAIMANN , “PLANNING IS DECIDING • ALLEN , “A PLAN IS A TRAP LAID TO
IN ADVANCE WHAT IS TO BE DONE. WHEN CAPTURE THE FUTURE.”
A MANAGER PLANS, HE PROJECTS A
COURSE OF ACTION FOR FURTHER
ATTEMPTING TO ACHIEVE A CONSISTENT
CO-ORDINATE STRUCTURE OF OPERATIONS
AIMED AT THE DESIRED RESULTS.
 NATURE / CHARACTERISTICS
• PLANNING IS AN INTELLECTUAL PROCESS
• PLANNING IS AN INTELLECTUAL PROCESS OF THINKING
IN ADVANCE. IT IS A PROCESS OF DECIDING THE
FUTURE ON THE SERIES OF EVENTS TO FOLLOW.
• PLANNING CONTRIBUTES TO THE OBJECTIVES
• PLANNING CONTRIBUTES POSITIVELY IN ATTAINING THE
OBJECTIVES OF THE BUSINESS ENTERPRISE. A
PURPOSEFUL, SOUND AND EFFECTIVE PLANNING
PROCESS KNOWS HOW AND WHEN TO TACKLE A
PROBLEM.
• PRIMARY FUNCTION OF MANAGEMENT
• SETTING OF GOALS TO BE ACHIEVED AND LINES OF
ACTION TO BE FOLLOWED PRECEDES THE ORGANIZATION,
DIRECTION, SUPERVISION AND CONTROL. NO DOUBT,
PLANNING PRECEDES OTHER FUNCTIONS OF
MANAGEMENT
• A CONTINUOUS PROCESS
• PLANNING IS A CONTINUOUS PROCESS AND THERE IS
NO END TO IT. IT INVOLVES CONTINUOUS
COLLECTION, EVALUATION AND SELECTION OF DATA,
AND SCIENTIFIC INVESTIGATION AND ANALYSIS OF THE
POSSIBLE ALTERNATIVE COURSES OF ACTION.
• PERVADES MANAGERIAL ACTIVITIES
• FROM PRIMARY OF PLANNING FOLLOWS
PERVASIVENESS (THE QUALITY OF SPREADING
WIDELY OR BEING PRESENT THROUGHOUT AN AREA
OR A GROUP OF PEOPLE) OF PLANNING.
• THE CHARACTER, NATURE AND SCOPE OF
PLANNING MAY CHANGE FROM PERSONNEL TO
PERSONNEL BUT THE PLANNING AS AN ACTION
REMAINS INTACT.
PLANNING PROCESS
• PERCEPTION OF OPPORTUNITIES
• AWARENESS OF OPPORTUNITIES IN THE
EXTERNAL ENVIRONMENT AS WELL AS WITHIN
THE ORGANISATION IS THE REAL STARTING
POINT FOR PLANNING.

• SETTING OBJECTIVES DEPENDS ON THE

AWARENESS. PLANNING REQUIRES REALISTIC
DIAGNOSIS OF THE OPPORTUNITY SITUATION.

• ESTABLISHING OBJECTIVES
• OBJECTIVE SPECIFY THE EXPECTED RESULTS AND
INDICATE THE END POINTS OF WHAT IS TO BE
DONE, WHERE THE PRIMARY EMPHASIS IS TO BE
PLACED AND WHAT IS TO BE ACCOMPLISHED BY
THE VARIOUS TYPES OF PLANS.
• PLANNING PREMISES
• THE NEXT STEP IS ESTABLISHING PLANNING PREMISES THAT • EVALUATION OF ALTERNATIVES
IS THE CONDITIONS UNDER WHICH PLANNING ACTIVITIES
WILL BE UNDERTAKEN. PLANNING PREMISES ARE
• THE EVALUATION IS TO BE DONE IN THE LIGHT OF
PLANNING ASSUMPTIONS THE EXPECTED ENVIRONMENTAL VARIOUS FACTORS. EXAMPLE, CASH INFLOW AND
AND INTERNAL CONDITIONS. OUTFLOW, RISKS, LIMITED RESOURCES, EXPECTED PAY
BACK ETC., THE ALTERNATIVES SHOULD GIVE US THE
• THE NATURE OF PLANNING PREMISES DIFFERS AT DIFFERENT
BEST CHANCE OF MEETING OUR GOALS AT THE
LEVELS OF PLANNING. AT THE TOP LEVEL, IT IS MOSTLY
LOWEST COST AND HIGHEST PROFIT.
EXTERNALLY FOCUSED. AS ONE MOVES DOWN THE
ORGANISATIONAL HIERARCHY THE COMPOSITION OF • CHOICE OF ALTERNATIVE PLANS
PLANNING PREMISES CHANGES FROM EXTERNAL TO
INTERNAL. • THIS IS THE REAL POINT OF DECISION-MAKING. AN
ANALYSIS AND EVALUATION OF ALTERNATIVE COURSES
• IDENTIFICATION OF ALTERNATIVES WILL DISCLOSE THAT TWO OR MORE ADVISABLE AND
• VARIOUS ALTERNATIVES CAN BE IDENTIFIED BASED ON BENEFICIAL. THE FIT ONE IS SELECTED.
THE ORGANISATIONAL OBJECTIVES AND PLANNING
PREMISES. THE CONCEPT OF VARIOUS ALTERNATIVES
SUGGESTS THAT A PARTICULAR OBJECTIVE CAN BE
ACHIEVED THROUGH VARIOUS ACTIONS.
• FORMULATION OF SUPPORTING PLAN
• AFTER FORMULATING THE BASIC PLAN, VARIOUS
PLAN ARE DERIVED SO AS TO SUPPORT THE MAIN
PLAN. IN AN ORGANISATION THERE CAN BE
VARIOUS DERIVATIVE PLANS LIKE PLANNING FOR
BUYING EQUIPMENT, BUYING RAW MATERIALS,
RECRUITING AND TRAINING PERSONAL,
DEVELOPING NEW PRODUCT ETC. THESE
DERIVATIVE PLANS ARE FORMULATED OUT OF THE
BASIC OR MAIN PLAN AND ALMOST INVARIABLY
REQUIRED TO SUPPORT THE BASIC PLAN.
• ESTABLISHING SEQUENCE OF ACTIVITIES
• AFTER FORMULATING BASIC AND DERIVATIVE
PLANS, THE SEQUENCE OF ACTIVITIES IS
DETERMINED SO THOSE PLANS ARE PUT INTO
ACTION. AFTER DECISIONS ARE MADE AND
PLANS ARE SET, BUDGETS FOR VARIOUS PERIODS
AND DIVISIONS CAN BE PREPARED TO GIVE
PLANS MORE CONCRETE MEANING FOR
IMPLEMENTATION.
 TYPES OF PLANS
• HIERARCHICAL PLANS
• STRATEGIC PLANS (INSTITUTIONAL)
• THE ORGANIZATION’S LONG-TERM VISION;
ARTICULATE THE ORGANIZATION’S MISSION AND VALUE
STATEMENTS; DEFINE WHAT BUSINESS THE
ORGANIZATION IS IN OR HOPES TO BE IN; ARTICULATE
HOW THE ORGANIZATION WILL INTEGRATE ITSELF INTO
ITS GENERAL AND TASK ENVIRONMENTS.
• OPERATING PLANS (TECHNICAL CORE)
• COVER THE DAY-TO-DAY OPERATIONS OF THE
ORGANIZATION.
• ADMINISTRATIVE PLANS
• SPECIFY THE ALLOCATION OF ORGANIZATIONAL
RESOURCES TO INTERNAL UNITS OF THE
ORGANIZATION; ADDRESS THE INTEGRATION OF
THE INSTITUTIONAL LEVEL OF THE
ORGANIZATION (FOR EXAMPLE, VISION
FORMULATION) WITH THE TECHNICAL CORE
(VISION IMPLEMENTATION); ADDRESS THE
INTEGRATION OF THE DIVERSE UNITS OF THE
ORGANIZATION.
• FREQUENCY-OF-USE PLANS
• STANDING PLANS
• POLICIES—GENERAL STATEMENTS OF
UNDERSTANDING OR INTENT; GUIDE DECISION-
MAKING, PERMITTING THE EXERCISE OF SOME
DISCRETION; GUIDE BEHAVIOR
• RULES—GUIDES TO ACTION THAT DO NOT
PERMIT DISCRETION IN INTERPRETATION; SPECIFY
WHAT IS PERMISSIBLE AND WHAT IS NOT
PERMISSIBLE.
• PROCEDURES—LIKE RULES, THEY GUIDE ACTION;
SPECIFY A SERIES OF STEPS THAT MUST BE TAKEN
IN THE PERFORMANCE OF A PARTICULAR TASK.
• SINGLE-USE PLANS
• PROGRAMS—A COMPLEX SET OF POLICIES,
RULES, AND PROCEDURES NECESSARY TO CARRY
OUT A COURSE OF ACTION.
• PROJECTS—SPECIFIC ACTION PLANS OFTEN
CREATED TO COMPLETE VARIOUS ASPECTS OF A
PROGRAM.
• BUDGETS—PLANS EXPRESSED IN NUMERICAL
TERMS.
• TIME - FRAME PLANS • ORGANIZATIONAL SCOPE PLANS
SHORT-RANGE • BUSINESS/DIVISIONAL-LEVEL PLANS
• SEVERAL HOURS TO A YEAR • FOCUS ON ONE OF THE ORGANIZATION’S BUSINESSES
(OR DIVISIONS) AND ITS COMPETITIVE POSITION.
• UNIT/FUNCTIONAL-LEVEL PLANS
• MEDIUM-RANGE • FOCUS ON THE DAY-TO-DAY OPERATIONS OF LOWER-
LEVEL ORGANIZATION UNITS; MARKETING, HUMAN
• ONE TO FIVE YEARS RESOURCES, ACCOUNTING, AND OPERATIONS PLANS
(PRODUCTION).
• TACTICAL PLANS
• LONG-RANGE
• DIVISION-LEVEL OR UNIT-LEVEL PLANS DESIGNED TO
• MORE THAN FIVE YEARS HELP AN ORGANIZATION ACCOMPLISH ITS STRATEGIC
PLANS.
 MANAGEMENT BY OBJECTIVES

• MANAGEMENT BY OBJECTIVES (MBO), ALSO KNOWN AS MANAGEMENT BY PLANNING (MBP), WAS

FIRST POPULARIZED BY PETER DRUCKER IN HIS 1954 BOOK THE PRACTICE OF MANAGEMENT.

• MANAGEMENT BY OBJECTIVES IS THE PROCESS OF DEFINING SPECIFIC OBJECTIVES WITHIN AN

ORGANIZATION THAT MANAGEMENT CAN CONVEY TO ORGANIZATION MEMBERS, THEN DECIDING
HOW TO ACHIEVE EACH OBJECTIVE IN SEQUENCE.
• THIS PROCESS ALLOWS MANAGERS TO TAKE WORK THAT NEEDS TO BE DONE ONE STEP AT A TIME TO
ALLOW FOR A CALM, YET PRODUCTIVE WORK ENVIRONMENT. IN THIS SYSTEM OF MANAGEMENT,
INDIVIDUAL GOALS ARE SYNCHRONIZED WITH THE GOALS OF THE ORGANIZATION.
• AN IMPORTANT PART OF MBO IS THE MEASUREMENT AND COMPARISON OF AN EMPLOYEE'S
ACTUAL PERFORMANCE WITH THE STANDARDS SET. IDEALLY, WHEN EMPLOYEES THEMSELVES HAVE BEEN
INVOLVED WITH THE GOAL-SETTING AND CHOOSING THE COURSE OF ACTION TO BE FOLLOWED BY
THEM, THEY ARE MORE LIKELY TO FULFILL THEIR RESPONSIBILITIES.
MANAGEMENT BY OBJECTIVES PROCESS

1. DETERMINING ORGANIZATIONAL GOALS

2. DETERMINING EMPLOYEES’ OBJECTIVES

3. CONSTANT MONITORING PROGRESS AND

PERFORMANCE

4. PERFORMANCE EVALUATION

5. PROVIDING FEEDBACK

6. THE PERFORMANCE APPRAISAL

ADVANTAGES OF MBO
• PERSONALIZED OBJECTIVES: MBO ALLOWS
EMPLOYEES TO SET THEIR PERSONAL OBJECTIVES
ACCORDING TO THEIR COMPETENCIES, SKILLSET, AND
STRENGTHS. THIS ALLOWS SELF-GROWTH AND SKILL
DEVELOPMENT.

• EFFICIENCY: AS THE MBO OBJECTIVES ARE CLEAR AND

TIME-BOUND, IT HELPS IMPROVE PRODUCTIVITY AND
THE EFFICIENCY OF THE OPERATIONAL UNITS

• SENSE OF IMPORTANCE: THROUGH PROPER APPRAISAL

AND REWARD PROCESS, MBO GIVES THE EMPLOYEES A
SENSE OF IMPORTANCE AND REALIZES THEM THAT THE
ORGANIZATION VALUES THEIR WORK AND THEY ARE
AN IMPORTANT ASSET TO THE FIRM.
DISADVANTAGES OF MBO
• TIME CONSUMING: THE WHOLE PROCESS OF GOAL
SETTINGS, APPRAISAL, REVIEWS, MONITORING, AND
EVALUATION TAKES A LOT OF TIME AND PAPERWORK.
• FAULTY EVALUATION PROCESS: SOMETIMES
MANAGERS TRY TO EVALUATE EMPLOYEES FROM THEIR
PERSPECTIVE AND COMPETENCIES RATHER THAN THE
EMPLOYEES’ SKILLSET. IT MEANS THERE ARE CHANCES
THAT AN INCOMPETENT MANAGER MAY INVOLVE IN
THE EVALUATION PROCESS.
• LIMITED GROWTH: AS THE EMPLOYEES PLAY A PART TO
SET GOALS AS PER THEIR SKILL SET. IT LEAVES LITTLE
ROOM FOR SELF-GROWTH BECAUSE THE EMPLOYEES,
SOMETIMES, ARE NOT WILLING TO TRY OUT NEW AND
CREATIVE IDEAS RATHER THEY STICK TO OLD
METHODOLOGIES.
 GOAL SETTING

• GOAL SETTING IS A PURPOSEFUL AND EXPLICIT PROCESS THAT STARTS WITH IDENTIFYING A
NEW OBJECTIVE, SKILL, OR PROJECT YOU WANT TO ACHIEVE. THEN, YOU MAKE A PLAN FOR
ACHIEVING IT, AND YOU WORK TO COMPLETE IT.
• PROPOSED BY INDUSTRIAL-ORGANIZATIONAL PSYCHOLOGIST EDWIN LOCKE, GOAL-SETTING
THEORY RECOMMENDS HOW TO SET THE MOST EFFECTIVE KINDS OF GOALS. LOCKE FOUND
THAT EMPLOYEES PERFORM BETTER AND ARE MORE MOTIVATED TO COMPLETE GOALS IF
THOSE GOALS ARE DIFFICULT.
• IN OTHER WORDS, YOU CAN’T CHEAT. THE EASIER THE GOAL, THE LESS YOU’LL WORK TO
ACHIEVE IT. IF YOU SET HARD (BUT NOT IMPOSSIBLE) GOALS, YOU’LL ACTUALLY PUT IN THE
HIGHEST LEVEL OF EFFORT.
 STEPS FOR GOAL SETTING
• THINK ABOUT THE RESULTS YOU WANT TO SEE • CREATE AN ACTION PLAN
• BEFORE YOU SET A GOAL, TAKE A CLOSER LOOK AT • YOUR ACTION PLAN SHOULD INCLUDE THE OVERALL
WHAT YOU’RE TRYING TO ACHIEVE GOAL YOU’RE TRYING TO MEET AND ALL THE STEPS
• CREATE SMART GOALS YOU NEED TO TAKE TO GET THERE.

 SPECIFIC • CREATE A TIMELINE

 MEASURABLE • A TIMELINE CREATES A SENSE OF URGENCY, WHICH IN
TURN MOTIVATES YOU TO STAY ON SCHEDULE AND
 ATTAINABLE
FINISH YOUR GOAL.
 REALISTIC
• TAKE ACTION
 TIME-BOUND
• NOW THAT YOU’VE PLANNED EVERYTHING OUT, IT’S
 WRITE YOUR GOALS DOWN TIME TO TAKE ACTION.

 WHEN YOU WRITE YOUR GOALS DOWN, THEY

BECOME REAL AND TANGIBLE
 DIFFERENCE BETWEEN GOALS AND PLANS

 EXAMPLES
GOAL: INCREASE MY INCOME BY GETTING FOUR
• PLAN 

NEW CLIENTS THIS QUARTER & PLAN: MAKE THREE

• A DETAILED PROPOSAL FOR DOING OR ACHIEVING SALES CALLS EVERY DAY.
SOMETHING  GOAL: GET A NEW JOB & PLAN: APPLY TO THREE
NEW JOBS EVERY WEEK

GOAL: LOSE 12 POUNDS IN 12 WEEKS & PLAN:

• GOAL


RUN FOR 30 MINUTES THREE TIMES A WEEK.

• THE OBJECT OF A PERSON’S AMBITION OR EFFORT;  GOAL: GET A SIX-PACK & PLAN: USE A WORKOUT
AN AIM OR DESIRED RESULT. APP TO DO CORE EXERCISES FOUR TIMES A WEEK.