Planning [Updated March 21, 2017] – Compiled by J.

Langat
As planning becomes very critical in situations where the results of decisions will occur long
after the
decisions actually are made, managers must attempt to consider what could happen that might
affect
the desired outcome. Effective planning requires large commitments of time and money, but the
management must seek every way possible to minimize uncertainty and its consequences.
Planning is
the only tool managers have to help them cope with change.
2. Increasing Organisation Complexity. As organisations become larger and more complex, the
manager’s job becomes bigger and more complex due to the interdependence among the
organisation’s various parts. It is virtually impossible to find an organisation in which the
decisions of
the various functions can be made independently of one another. The more products an
organization
offers and the more markets it competes in, the greater is the volume of its decisions. Under
these
circumstances, planning becomes even more important for survival. It enables each unit in the
organisation to define the job that needs to be done and the way to go about doing it. There is
less
likelihood of changing direction, costly improvising, or making mistakes with such a blueprint of
objectives.
3. Increased External Change. A manager is a change initiator, an innovator and doer; someone
in
constant search of new markets, businesses, and expanded missions. Rapid rates of change in the
external environment force managers at all levels to focus on larger issues rather than solely on
solving internal problems. The faster the pace of change, the greater the necessity for organised
Planning [Updated March 21, 2017] – Compiled by J. Langat
all business
organizations, the importance of economic objectives cannot be undermined such as profit,
growth,
market share, etc.
Tactics: Tactics are the actions required to implement strategies. They are detailed marching
orders
with specific instructions and coordinated movement by unit level team members. Business
leaders
must be aware of the strengths and weaknesses of their managers and employees to carry out
tactics.
The wise leader makes a critical evaluation of the talent on his or her team and uses that
information
as a foundation for the strategic planning process.
Strategies: Strategies are grand plans. The term is picked from military parlance to denote the
grand
plan drawn up to reflect the results the unit would like to achieve in dealing with its adversaries.
In
business organization the term maintains its original competitive implication. It is a general
program
of action. It is defined as “the determination of the basic long-term objectives of an enterprise
and the
adoption of courses of action and allocation of resources necessary to achieve these goals”
(Weihrich
and Koontz, 2005). Strategic planning is the process by which the organization’s strategies are
determined. In the process, three basic questions are answered:
1. Where are we now?
2. Where do we want to be?
3. How do we get there?
Types of Plan
There are different types of plan. Some of the important types are given and discussed below.
1. Strategic Plans
Strategic plans are detailed action steps mapped out to reach strategic goals. These plans apply to
the
entire organization and position the organization in term of its environment. Strategic plans
address
the broad issues such as changing conditions, allocation of resources, international competition,
etc.
Generally such goals are developed by top management after consulting board of director and
middle
management. The time horizon of strategic goals exceeds 3 to 5 years.
2. Tactical Plans
Tactical plans are developed to support the implementation of the strategic plans. These are
important
to the success of strategic plans and cover intermediate time horizon usually encompassing 1 to 3
years. Such plans are developed by middle managers after consulting lower-level managers.
Tactical
plans are more specific and concrete than strategic plans.
3. Operational Plans
Plans aimed at supporting the implementation of tactical plans and achievement of operational
goals.
Such plans clearly specify the things needed to be done in the short run, in order to achieve the
operational goals. These plans are developed by lower-level managers after consulting the
middle
managers. The time period of operational plans is less than one year, such as few months, weeks
or
even days. The success of strategic and tactical plans depends upon the achievement of
operational
goals.
. Specific Plans
Those plans which are clearly defined and leave no room for interpretation are called specific
plans.
Such plans require specific stated objectives and do not contain ambiguity. Specific plans require
clarity and a sense of predictability that often do not exist, therefore they are not preferable.
5. Directional Plans
Directional plans refer to the flexible plans that set out general guidelines. Such plans are
preferable in
dynamic environment where management must be flexible in order to respond to unexpected
changes.
Managers use the directional plans to remain focused and not lock themselves into specific goals
or
course of action.
6. Single-use Plan
Single-use plan is one-time plan specifically designed to achieve particular goal that, once
achieved,
will most likely not recur in the future. Such plan is developed to meet the needs of a unique
situation.
There are two important types of single-use plans: programmes and projects.
a. Programme
Programmes are a complex of goals, policies, procedures, rules, resources, assignments and other
elements necessary to implement a given plan of action. They are typically supported by budgets.
A primary programme is often accompanied by a series of derivative programme. For example, a
programme of replacing old machinery with new and modem machinery may have many
derivative programmes of training, maintenance, and financing.
b. Project
A project is a plan that organizes a set of limited-scope activities that do not need to be divided
into several major parts in order to reach a significant nonrecurring goal.
7. Standing Plans
Standing plans are ongoing plans that are aimed at providing guidance for performing recurring
activities. There are three important types of standing plans which are: policies, procedures, and
rules.
a. Policy
Policies are guides to thought and action. They determine the limit within which a decision is
made and ensure that the decision is consistent with objectives. All policies need not be in the
form
of ‘statements’, they are often implied from the actions of managers. The CEO of a large
business
organization may follow the practice of promotion from within. This may be emulated by his
subordinates as they interpret the practice as a policy. However, due to the informal nature of
some
policies practised by organizations there is a danger of subordinates interpreting minor
managerial
decisions, as policies.
b. Procedures
Procedures like policies also guide actions. But they set forth a list of chronological steps for
employees to follow in handling a particular activity. Unlike policy, they leave no scope for
discretion. For example, when claiming your travelling expense after a business tour, the
procedure may necessitate that you
fill a form and attach all receipts and then send them to the appropriate personnel in the accounts
department through your sectional head. The form is checked by the accounts personnel and he
authorizes payment if everything is in order. This procedure cuts across all department lines.
This
implies that procedures are the same across all departments and levels. Procedures serve two
purposes. First, they provide a sequential system of handling specific situations. Second, they act
as controls to ensure that money, material or other assets are accounted for
Rules
Rules are inflexible plans that require specific, definite action. They are the simplest type of plan.
Like procedures, they guide action but they are also different from procedures because they do
not
specify a time sequence. In some sense, a procedure can be described as a sequence of rules. But
a
rule may or may not be part of a procedure. For example, “No Smoking” is a rule but is not
related
to a procedure. Rules must also be distinguished from policies. The purpose of a policy is only to
guide decision-making by delimiting areas of discretion. Though rules also serve as guides, there
is
no discretionary element in it.
The Planning Process
Leaders are proactive. They make change happen instead of reacting to change. The future
requires
corporate leadership with the skills to integrate many unexpected and seemingly diverse events
into its
planning. Every organization must plan for change in order to reach its ultimate goal. Effective
planning helps an organization adapt to change by identifying opportunities and avoiding
problems. It
sets the direction for the other functions of management and for teamwork. Planning improves
decision-making. All levels of management engage in planning.
Strategic Planning
Strategic planning produces fundamental decisions and actions that shape and guide what an
organization is, what it does, and why it does it. It requires broad-scale information gathering, an
exploration of alternatives, and an emphasis on the future implications of present decisions. Top
level
managers engage chiefly in strategic planning or long range planning. They answer such
questions as
“What is the purpose of this organization?” “What does this organization have to do in the future
to
remain competitive?” Top level managers clarify the
mission of the organization and set its goals. The output
needed by top management for long range planning is
summary reports about finances, operations, and the
external environment.
Strategic planning is the process of developing and
analyzing the organization’s mission, overall goals,
general strategies, and allocating resources. A strategy is
a course of action created to achieve a long-term goal.
The time length for strategies is arbitrary, but is probably
two, three, or perhaps as many as five years. It is
generally determined by how far in the future the
organization is committing its resources. Goals focus on
desired changes. They are the ends that the organization
strives to attain. Traditionally strategic planning has been
done annually. However, many companies are doing
away with annual business plans altogether and moving
to a system of continuous planning, to permit quicker
response to changing conditions. Thus, the strategic plan
involves adapting the organization to take advantage of
opportunities in its constantly changing environment.
The planning process is rational and amenable to the
scientific approach to problem solving. It consists of a
logical and orderly series of steps. Strategic planning sets
the stage for the rest of the organization’s planning. The tasks of the strategic planning process
include:
 Define the mission.
 Conduct a situation or SWOT analysis by assessing strengths and weaknesses and identifying
opportunities and threats.
 Set goals and objectives.
 Develop related strategies (tactical and operational)
 Monitor the plan.
1. Define the mission. A mission is the purpose of the organization. It is why the organization
exists.
Thus, planning begins with clearly defining the mission of the organization. The mission
statement is
broad, yet clear and concise, summarizing what the organization does. It directs the organization,
as
well as all of its major functions and operations, to its best opportunities. Then, it leads to
supporting
tactical and operational plans, which, in turn leads to supporting objectives. A mission statement
should be short – no more than a single sentence. It should be easily understood and every
employee
should be able to recite it from memory. An explicit mission guides employees to work
independently
and yet collectively toward the realization of the organization’s potential. The mission statement
may
be accompanied by an overarching statement of philosophy or strategic purpose intended to
convey a
vision for the future and an awareness of challenges from a top-level perspective
Conduct a situation or SWOT analysis by assessing strengths and weaknesses and identifying
opportunities and threats. A situation or SWOT (Strengths, Weaknesses, Opportunities, and
Threats)
analysis is critical to the creation of any strategic plan. The SWOT analysis begins with a scan of
the
external environment. Organizations must examine their situation in order to seek opportunities
and
monitor threats. Sources of information include customers (internal and external), suppliers,
governments (local, national, international), professional or trade associations (conventions and
exhibitions), journals and reports (scientific, professional, and trade).
SWOT analysis is the assumptions and
facts on which a plan will be based.
Analyzing strengths and weaknesses
comprises the internal assessment of the
organization
Conduct a situation or SWOT analysis by assessing strengths and weaknesses and identifying
opportunities and threats. A situation or SWOT (Strengths, Weaknesses, Opportunities, and
Threats)
analysis is critical to the creation of any strategic plan. The SWOT analysis begins with a scan of
the
external environment. Organizations must examine their situation in order to seek opportunities
and
monitor threats. Sources of information include customers (internal and external), suppliers,
governments (local, national, international), professional or trade associations (conventions and
exhibitions), journals and reports (scientific, professional, and trade).
SWOT analysis is the assumptions and
facts on which a plan will be based.
Analyzing strengths and weaknesses
comprises the internal assessment of the
organization