Planning & Decision Making

A plan is a blueprint of future courses of actions. Planning is

a process of making a plan.
“Planning is a process of preparing for change and coping
with uncertainty by formulating future courses of action”.
Robert Kritner
Types of Planning
1. On the basis of time
2. On the basis of durability
3. On the basis of significance
1. On the basis of time
o Long range planning: A plan which covers one year and
above time in advance, we call it long range planning.
o Short range planning: A plan that covers less than one year
in advance, we call it short range planning.
Long range plan is sometimes divided into intermediate and
long term. Intermediate range is subject to change
according to organization policy.
 2. On the basis of durability
o Single use plan & Standing plan
o Single use plan: Single use plan is done for a particular purpose.
Example: a plan to construct a building, a bridge, a road.

Single use plan can be divided into three categories

i. Budget: Budget is for single year. It is quantitative expression of plan.
ii. Project: Project is a temporary endeavor. It has time bound to produce
a single unit of product. Example: to build a building.
iii. Program: Program is done for particular purpose. Example: family
planning program. It has a large set of activities. It requires identifying
principal steps, fixing responsibilities, and setting the timeframe for
each step.
o Standing plan: Standing plan is a kind of plan that can be used
again and again. This type of plan does not lose its effectiveness
because of its repetitive use. Example: procurement of raw
materials, a plan to promote, demote, and transfer employees, a
plan to admit students by the university in a particular program,
salary of employee.

i. Policy: it is a general guideline for doing an action. Policy is a

boundary within which managers work. Example: selection
policy.
ii. Process/ Procedure: A procedure is a series of related steps
expressed in chronological order to achieve an objective.
Example: selection procedure of BCS.
iii. Rule: rule is specific. Policy is general. An explicit statement
that tells managers what they can or cannot do.
iv. Method: It is the part of procedure. Specific way of doing thing
is called method.
v. Regulation: details description of taking an action. It
exemplifies the rule.
3. On the basis of significance
I. Corporate plan, II. Operating plan.
I. Corporate plan: The plan which has got implication on overall
organization.
• Vision: It is the dream of the entrepreneurs that shows the
fundamental aspiration and purpose of the organization. It is a
desire and unspecific.
• Mission: It is a statement for getting social legitimacy in favor of
business. A mission is an organization’s purpose or reason for
existence. It is given to the public not the employees so that
society permits the organization to do business.
• Goal: Destiny of an organization which is essentially a long term.
A plan expressed in terms of result to be achieved is known as
goal.
• Strategy: Strategy is a comprehensive, integrated and united plan
to achieve goals of an organization. The determination of the
mission or purpose and basic long term objective of an enterprise,
followed by the adoption of courses of action and allocation of
resources necessary to achieve these aims.
Operating plan: It is the tactical plan that is carried out to
achieve operational goals. It is developed by middle and
lower level managers. It has short time focus and relatively
narrow in scope.
Example: Marketing plan, production plan, Human resource
Planning, Purchasing plan etc.

Decision Making: Decision making is a process of choosing

best alternative from among a set of alternatives. Decision
may be of two types. One is called programmed or routine
decision and another is called unprogrammed or unfamiliar
decision.
Decision making process
Defining problem

Develop
premises(situation/conditions)

Identify alternative solutions

Evaluate alternatives

Choose the best alternatives

Factors for evaluating and choosing alternative
solutions
• Feasibility
• Quality
• Acceptability
• Cost
• Reversibility
• risk
• ethics
Definition of Management By Objective and its Process
Management by objective(MBO) is a process through which specific
goals are set collaboratively for the organization as a whole and every
unit and individual within it and that goals are used as a basis for
planning, managing organizational activities and assessing and
rewarding contributions.
Bartol and
Martin
That means converting overall organizational objectives into specific
objectives for organizational units and individual members.
Steps in MBO process : Start MBO process( Chief executive, Board of
directors make decision)
1. Establishing organizational goals and plans
2. Collaborative goal setting and planning( for units, dept, individual)
3. Communicating goals and plans to execute( meeting, counseling,
resourcing)
4. Periodical review
5. Evaluation & 6. Giving feedback to top authority
 Elements/characteristic of MBO
o Top level commitment to MBO
o Participation of all(divisional heads, and all units)
o Top and individual level goal setting
o Autonomy of implementing units( direction but no
interference)
o Systems approach(assuming that organization is a set of
interdependent and interrelated subsystems functioning as
a whole).
o Periodical performance review.