PLANNING

Lesson Outline
0 Definitions of Planning
0 Importance and Purpose of
Planning
0 Levels and Types of Planning
0 The Planning Process
0 Planning Tools
0 Role of Technology in Planning
 Introduction
0 We have looked at what managers do in terms of
skills, roles and functions
0 There are 4 functions that managers engage in:
1. Planning
2. Organising
3. Leading
4.Controlling
(P-O-L-C)
 Definitions of Planning
0 “Planning is deciding in advance what to do, how
to do, when to do and who is to do it. Planning
bridges a gap between from where we are to
where we want to go” - Harold, Koontz and
O’Donnel
0 “Planning is that function of a manager in which
he decides in advance what he will do. It is a
decision making process of a special kind, its
essence is futurity.” - Hayness and Massie
 Planning
0 Planning is the primary function of
management.
0 The other 3 functions are dependent on
planning
0 Planning involves:
Defining the organization’s goals
Establishing an overall strategy for achieving those
goals
Developing plans for organizational work activities.
 Goals / Objectives

0 Goals and objectives are desired outcomes or

targets.
0 Mostly strategic and financial
0 Stated vs Real goals
0 Well-written goals are SMART (Specific,
Measurable, Attainable, Relevant, Timely)
 Individual Exercises
0 What are your goals/objectives in 5 years time?
0 Set personal and academic goals you want to achieve by
end of the semester.

Identify SMART goals / objectives:

1. To pass Technopreneurship
2. To get a first class pass in Technopreneurship
3. To attain a first class pass in Technopreneurship III by end
of semester
4. To receive prize for best student in Technopreneurship in
my department when I graduate in 2024
 Traditional Goal Setting
0 Broad objectives are set at the top of the
organization.
0 Goals are then broken into sub-goals for
each organizational level.
0 Assumes that top management knows best
because they can see the “big picture.”
0 Goals are intended to direct and guide.
0 Goals lose clarity and focus as lower-level
managers attempt to interpret and define the goals
for their areas of responsibility.
Downside of Traditional Goal
Setting
 Goal Setting : MBO
0 Management By Objectives (MBO) is based on the
belief that joint participation of supervisor and
subordinate in translating organisational goals leads
to higher enthusiasm in achieving those goals.
0 MBO has four elements:
goal specificity,
participative decision making
explicit time period, and
performance feedback
 Steps in MBO
1. The organization’s overall objectives and strategies are formulated.
2. Major objectives are allocated among divisional and departmental units.
3. Unit managers collaboratively set specific objectives for their units with
their managers.
4. Specific objectives are collaboratively set with all department members.
5. Action plans, defining how objectives are to be achieved, are specified
and agreed upon by managers and employees.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and feedback is
provided.
8. Successful achievement of objectives is reinforced by performance-
based rewards.
 Purpose of Planning
0 Planning facilitates decision making
• What are the organization’s long-term objectives?
• What strategies will best achieve those objectives?
• What should the organization’s short-term objectives be?
• How difficult should individual goals be?

0 Planning reduces the risk of uncertainty

0 Planning reduces overlapping and wasteful
activities
0 Planning provides direction
0 Planning establishes standards for controlling
 Benefits of Planning
0 Planning leads to success.“Failure to plan is
planning to fail”
0 It acts as a bridge between where we are and
where we want to be.
0 It helps in saving resources, money and time.
0 Jobs are well coordinated thus duplication of effort
is avoided & skills & potential are fully utilised.
 Limitations to Planning
0 Effectiveness depends upon correctness
of assumptions
0 Planning delays actions and can be time
consuming
0 Planning encourages a false sense of security
0 Planning may involve huge costs.
0 Planning does not guarantee success.
 Myths to Planning
0 Planning may create rigidity.
0 Plans cannot be developed for dynamic
environments.
0 Formal plans cannot replace intuition and creativity.
0 Planning focuses managers’ attention on
today’s competition not tomorrow’s survival.
0 Formal planning reinforces today’s success,
which may lead to tomorrow’s failure.
Types of
Plans
 Breadth of Plans
Strategic Plans
0 Strategic plans apply broadly to the
entire organization
0 Establish the organisation’s overall objectives
0 Seek to position the organization in terms of
its environment
0 Provide direction to drive an organization’s efforts
to achieve its goals.
0 Serve as the basis for the tactical plans.
0 Strategic plans are usually long term, directional,
and single-use.
 Tactical Plans
0 Tactical plans are intermediate-range (one to three
years)
0 designed to develop relatively concrete and specific
means to implement the strategic plan.
0 Middle-level managers often engage in tactical
planning.
 Operational Plans
0 Apply to specific parts of the organization.
0 Are derived from strategic and tactical objectives
0 Operational plans are usually short-term, specific,
and ongoing. e.g:
0 Production plans, Financial plans
0 Marketing plans, Human resources plans
0 Facilities plans
0 Must be updated continuously to meet
current challenges
Planning and Organizational Levels
 Timeframe of Plans
0 Long-Term Plans (Strategic)
Plans with time frames extending beyond three years
Used to be a period of seven years or more.
0 Medium term plans (Tactical)
Plans with more than one year but less than three
years
0 Short-Term Plans (Operational)
Plans with time frames of one year or less
 Specificity of Plans
0 Specific Plans
Plans that are clearly defined and leave no room
for interpretation
0 Directional Plans
Flexible plans that set out general guidelines,
provide focus, yet allow discretion in
implementation.
 Frequency of Use of Plans
0 Single-Use Plan
A one-time plan specifically designed to meet the
need of a unique situation.

0 Standing Plans
On-going plans that provide guidance for activities
performed repeatedly.
PLANNING
PROCESS
 8. Review
Planning 1. Set Goals /
Process Objectives

2. Determine
7. Implement Premises/Assumptions
Plans

Planning
Process
6. Formulate Derivative
Plans 3. Determine Alternatives

5. Select Course of 4. Evaluate

Action Alternatives
 SWOT Analysis
0 This is the starting point in planning
0 Must also look at the trends and changes in
the environment.
0 Managers must look at possible opportunities in
the light of their organization's strengths &
weaknesses.
0 Setting realistic objectives depends on this
awareness.
 1. Set Goals/Objectives
0 Management has to define objectives in clear
manner by considering organizational resources
and opportunities because a mistake in setting
objectives might affect implementation of plan.
0 Objectives must be SMART.
2. Determine Assumptions
0 Assumptions are premises about the future in
which the planning is implemented.
0 They provide environment and boundaries for the
implementation of plan in practical operation.
0 These premises may be tangible or intangible, and internal or
external.

(a)Tangible and Intangible: Tangible premises/assumptions

involve capital investment, unit of production, units sold, cost per
unit & time. Intangible premises involve employees moral,
goodwill, motivation, managerial attitude, etc.

(b)Internal and External: Internal premises/assumptions involve

money, materials, machines and management. External factors
involve competitors strategy, technological change, government
policy, social and cultural beliefs etc.
 3. Determine Alternatives
0 Identify all the possible alternatives.
0 Search for the best alternative.
0 Develop alternatives through the support of
experienced and intellectual experts in
management sectors.
0 Common problem is not finding alternatives
but reducing their numbers.
 4. Evaluate Alternatives
0 Cost Benefit Analysis of alternatives.
0 Each alternative is studied and evaluated in terms
of some common factors such as risk,
responsibility, planning premises, resources,
technology etc.
0 Complex options can be evaluated with the help
of operational research, mathematical and
computing techniques.
 5. Select Course of Action
0 Selecting the best course is the real point of
decision making.
0 By establishing criteria, e.g.
Achieving objectives at least cost
Requiring least changes
Ensuring maximum Return On Investment (ROI)
 6. Formulate Derivative Plans
0 It is essential to formulate action or derivative
plans for each step of work and to all departments
of the organization.
0 These action plans involve formulation of
policies, rules, schedule and budget to
complete defined objectives.
0 It is difficult to implement main plan
without formulation of derivative plan.
 7. Implement Plans
0 This step brings the plan into action.
0 Management has to:
communicate plan with subordinates who initiate the
plan into action;
provide necessary instruction and guidance;
make arrangement of all resources like
materials, machines, money, equipment etc;
make timely supervision and control over subordinates.
 8. Review the Planning Process
0 Continually monitor actual performance against
the unit’s goals and plans.
0 Develop control systems to measure performance
0 Take corrective action when the plans are
implemented improperly, or when the
situation changes
 Planning Tools
0 Forecasting
0 Scenario Planning
 Forecasting
0 Predicting future events involves:
Taking historical data
Using a model to make projections
Adjusting the numbers using sound judgement
0 Forecasts are rarely perfect
0 They are costly
0 Time consuming to prepare
0 Forecasts for group items are more accurate
0 Forecasts for individual items are less accurate
0 Forecast accuracy corresponds to time horizon of
forecast
 Forecasting (cont.)
0 Forecasts can fall into three categories:
Short-range forecast – a time span of three months
to a year.
Medium-range forecast – a period of four
months to three years.
Long-range forecast – generally more than three
years.
 Forecasting (cont.)
Three major types of forecasts exist:
1. Economic forecasts:
0 addresses business cycles by predicting inflation
rates, money supply, economic indicators etc.
2. Technological forecasts:
0 concerned with rates of technological progress
3. Demand forecasts (sales forecasts):
0 projections of demand for a company’s products
or services.
 Scenario Planning
0 Also called contingency planning
0 Is the generation of multiple forecasts of future
conditions followed by an analysis of how to
respond effectively to each of the conditions.
0 Best case, Base case, Worst case
 Discussion Questions
0 Using practical examples, explain how technology can
enhance the process of planning.

0 How Can Managers Plan Effectively in Dynamic

Environments?