PMG1123 – FUNDAMENTALS OF MANAGEMENT CHAPTER 3

3.0 Foundations of Planning

3.1 Definition of Planning

Planning can be describes as;

1. Managerial process includes;

o Defining and setting goals
o Establishing strategy
o Developing plans to coordinate activities
2. Planning is a process of forming goals and taking suitable action to achieve the
goals.
3. Planning is a basic process of selecting and determining suitable actions to
achieve goals.
4. Planning involves activities such as determining the goals to be achieved by the
organization and the suitable application methods.

3.2 Formal Vs Informal Planning

Planning can be further defined in terms of whether its formal or informal. All managers
plan, even if it’s only informally.

1. Informal:
 Nothing is written down (goal).
 It’s short-term focus.
 It’s specific to an organizational unit.
 There is little or no sharing of goals with others in the organization.
 Usually common in a small business.

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2. Formal:
 This goal is written down.
 It’s long-term focus.
 It’s apply to entire an organization @ involves all unit.
 It’s involves shared goals with the entire of organization.
 Usually common in a larger organization.

3.3 Purpose of Planning

We can answer this question by looking at the purpose of planning/ benefit of planning/
advantages of planning or importance of planning

1. Provides direction
 It gives direction to managers and non-managers alike.
 When the employees know where the organization is going and what they
must contribute to reach those goals, they will coordinate their activities ad
cooperate with each other to achieve those goals.
 Without planning, departments and individuals might work at cross-purpose
and prevent the organization from efficiently achieving its goals.

2. Reduces uncertainty
 Planning will reduce uncertainty by forcing the manager to look ahead
 Manager will anticipated changes and consider the impact of changes with an
appropriate responses.
 Although planning won’t eliminate uncertainty, managers plan so they can
respond effectively.

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3. Minimizes waste and redundancy

 When work activities are coordinated around plan, inefficiencies become
obvious and can be corrected or eliminated.
 Planning will reduce overlapping or redundancy.
 Waste time and resources also can be reduced.

4. Sets the standards for controlling

 Goals and plans help manager to implement controlling.
 Through controlling manager can make a comparison between the actual
performances against the stated goals.
 Then manager can identify deficiencies and took necessary corrections
actions.
 Without planning there are no way manager can control.

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3.4 Two elements of planning – Goals and Plans

Planning is often called the primary management function because it establishes the
basic for all the other things managers do as they organize, lead and control.

Planning involves two important elements;

 Plans
 Goals

As managers plan, they develop both goals and plans.

3.4.1 Definition of Goals

Goals can be describes as; desire outcome or target.

 They guide management decision and form the criteria against which work
results are measured.
 That’s why they’re often described as the essential elements of planning.

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3.4.2 Types of Goals

Although it might seem that organization have a single goals – for business, to make a
profit, and for not-for-profit organization, to meet the needs of some constituent group(s)
– an organization’s success can’t be determined by a single goal. In reality, all
organizations have multiple goals.

Financial goals

 Are related to the financial performance of the organization. (Related to; Higher
dividend, rising stock price)
 Example: Discount retailer Dollar General announced its plan to
demonstrate sales growth of 7% to 10% in year 2023.
 Example: McDonald’s financial target include 3 to 5 % average annual
sales and revenue growth.

Strategic goals

 Are related to all other areas of an organization’s performance.

 Example: Nissan’s CEO’s request for the company’s GT-R super sport-
car: match or beat the performance of Porsche’s 911 turbo.
 Example: United Nations World Food Programs: to ensure that no child
goes to bed hungry.

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Stated goals

 Official statement of what an organization says, and what it wants its

stakeholders to believe, its goals are.
 Can be found in in an organization’s charter, annual report, public relations
announcements, or in public statements made by managers.
 Example: Nike – “Delivering inspiration and innovation to every athlete.”
 Example: EnCana – “Be the world’s high performance benchmark
independent oil and Gas Company.”
 Example: The Chipotle – “Serve food with integrity”

Real goals

 Those goals an organization actually pursues – observe what an organizational

members are doing.
 Actions define priorities.
 Example: Universities may say their goal is limiting class sizes, facilitating
close student-faculty relations, and actively involving students in learning
process, but then they put students into 300+ students’ lecturer classes.

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3.4.3 Characteristics of well-designed goals

1. Written in terms of outcomes, not actions

Focuses on the ends, not the means.

2. Measurable and quantifiable

Specifically defines how the outcome is to be measured and how much is
expected.

3. Clear as to time frame

How long before measuring accomplishment.

4. Challenging yet attainable

Low goals do not motivate and high goals motivate if they can be achieved.

5. Written down
Focuses, defines, and makes goals visible.

6. Communicated to all necessary organizational members

Puts everybody “on the same page”.

3.4.4 Definition of Plans

Plans can be describes as; the document that outline how goals are going to be met.

 Describe how resources are to be allocated and schedules to accomplish the

goals.

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3.4.5 Types of plan

The most popular ways to describe plans are in term of their breadth (strategic versus
operational), time frame (long term versus short term), specificity (directional versus
specific), and frequency of use (single use versus standing).

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Strategic Plan

 Plans that will be apply to an entire organizational and establish the

organizational overall goals.
 It’s include the formulations of goals.
 Example: Egyptian Transport And Commercial Services Company
(Egytrans) is to “make integrated transport easy, safe and cost
effective,” by providing its business customers with world class
transport and logistics services.

Operational plan

 It is a plan that specifies the details of how the overall goals are to be achieved.
 Or sometimes referred to as tactical plans
 Its define way to achieve the overall goals.
 Example: Egytrans guides decisions about new product and
business units to support the strategic plan.

Long term plan

 It is a plan with a time frame beyond three years.

 Example: Increase the total income of your company by 10% over
the next two years.
 Example: Open three new office locations throughout the United
States over the next five years.

Short term plan

 It is a plan with a time frame cover one year or less.

 Example: Hire three new marketing employees over the next five
months.
 Example: Increase social media posting to three times a week.

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Directional plan

 It is a flexible plan that set out general guidelines.

 They provide focus but don’t lock managers into specific goals or courses of
action.
 Example: At Morning Star Company, professional employees self-
manage their relationship with colleagues, customers and suppliers
without specific direction from company executives.

Specific plan

 Plans that are clearly defined and leave no room for interpretation.
 States its objectives in a way that eliminates ambiguity and problem with
misunderstanding.
 Example: a manager who seeks to increase his or her unit’s work
output by 8 % over a given 12 month period.

Single use plan

 It is one time plan specifically designed to meet the needed of a unique situation.
 Example: When Walmart wanted to expend the number of its store
in China, top level executives formulated a single-use plan as a
guide.

Standing plan

 It is ongoing plans that provide guidance for activities performed repeatedly.

 Example: When you register for classes for the upcoming semester,
you’re using a standardize registration plan at your college or
university. The date change, but the process work the same way
semester after semester.

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