SCRIPT

Course: Management
Chapter 4: Planning
Topic 4.1: Fundamentals of Planning

Slide Contents
Hello and welcome to today's lecture on the planning function of management. I
will continue to be your instructor for this session.
As you know, planning is one of the fundamental functions of management, and
it plays a crucial role in the success of any organization. Without effective
planning, it's difficult for businesses and other types of organizations to achieve
2 their goals.
To gain a basic understanding of the planning function, this chapter will enable
you to achieve the following learning outcomes:
 Explain the fundamental concepts of planning.
 Describe the three main steps of the strategic planning process.
 Apply the SWOT analysis in practice.
To provide an overview of planning fundamentals and steps of planning in an
organization, this chapter will cover the following topics:
3
1. Fundamentals of planning
2. Strategic planning
Upon completion of the Fundamentals of Planning topic, learners will be able to
achieve the following learning outcomes:
4  Explain the nature of planning.
 Explain the importance of planning.
 Explore the different levels and types of planning.
5 To enhance learners' understanding of the nature of planning, we will
collectively explain its key aspects. Planning is a vital management function that
involves assessing an organization's current state, defining its desired future
 state, and identifying the optimal approach to achieve its goals. The
effectiveness of planning relies on managers' ability to accurately predict the
future and adapt to the unpredictable external environment.
To begin the planning process, managers must establish the organization's current
position by evaluating its internal strengths, weaknesses, as well as external
opportunities and threats. Next, managers define the organization's future state
and establish its goals. This involves considering the organization's mission,
vision, core values, competitive landscape, and market trends.
6 Once the desired future state is determined, managers must devise strategies to
propel the organization toward its goals. These strategies must leverage future
opportunities and address emerging competitive threats. Managers make decisions
based on incomplete information, technical data, and time constraints, relying on
their forecasting abilities. The accuracy of their predictions directly impacts the
effectiveness of their strategies.
However, the uncertain and complex external environment makes planning
challenging and risky. If managers' predictions are inaccurate, the formulated
strategies may fail, leading to poor organizational performance. Therefore,
planning requires ongoing monitoring and adjustments to adapt to changes in
the external environment.
7 In conclusion, planning is a critical function of management involving assessing
an organization's current state, defining its desired future state, and identifying the
best approach to achieve its goals. Effective planning necessitates accurate
predictions and adaptability to changes in the external environment. While
planning presents challenges and risks, implementing the right strategies can yield
significant rewards.
8 Similarly, the importance of planning is also discussed in this lecture. Planning
is a crucial process for organizational success as it entails setting objectives,
developing strategies, and identifying the necessary resources to achieve those
goals.
 One primary reason for the importance of planning is its role in helping
organizations achieve their goals. Planning provides a roadmap that guides
organizations toward their objectives once the goals are set.
Moreover, planning facilitates decision-making by reducing uncertainty and
ambiguity. By providing information for informed decision-making, planning
ensures the appropriate and efficient allocation of resources.
Another key benefit of planning is the effective utilization of resources such as
time, money, and manpower. Planning helps identify areas where resources are
most needed, enabling their allocation in a manner that maximizes impact.
Furthermore, planning enhances productivity by keeping organizations focused
on their goals. Systematic planning and execution increase the likelihood of
achieving desired results.
Planning also plays a crucial role in risk management. By identifying potential
risks and developing contingency plans, organizations can minimize risks and
respond effectively to unexpected events.
Lastly, planning promotes innovation by providing a platform for organizations to
think creatively and identify new opportunities for growth and development.
In conclusion, planning is an essential process that offers numerous benefits to
organizations. By helping to achieve goals, facilitating decision-making, ensuring
resource utilization, enhancing productivity, minimizing risks, and promoting
innovation, planning becomes a critical component of management success.
The final part of today's lecture is about the levels and types of planning in
9 organizations. There are three levels of planning: corporate, business or
division, and department or functional, each with unique goals and strategies.
10 At the highest level of an organization, top management develops the
corporate-level plan to guide the company's overall direction. This plan outlines
the organization's vision, mission, core values, goals, and overall strategy. Top
managers utilize various types of strategies to foster company growth and
competitiveness within the industry. For instance, a company can adopt a
concentration strategy by focusing on a single industry. Vertical integration
involves controlling the entire supply chain, from raw materials to finished
products. Diversification entails entering new markets or developing new
products. Additionally, companies can expand internationally to tap into new
markets and increase their global presence. The responsibility lies with top or
corporate managers to develop and implement these strategies for company
success.
The corporate-level plan serves as the foundation for divisional managers to
formulate their business-level plans. At this level, managers of each division
create plans that establish long-term goals and the necessary strategies and
structures to achieve them in alignment with corporate goals. One important
aspect of business-level strategy is determining how to increase the value of an
organization's products. This can be achieved through differentiation by adding
unique features to make the product more appealing, or through cost leadership by
reducing production costs. According to Michael Porter, managers must also
decide whether to serve the entire market or a specific segment, leading to four
business-level strategies: low cost, differentiation, focused low cost, or focused
differentiation. These strategies provide a framework for divisions or business
units to effectively compete in their industry.
Functional managers are responsible for creating plans that align with the
business-level plan. They develop functional-level plans that outline goals for
each function, contributing to the division's achievement of its business-level
goals. For example, the marketing function might aim to increase brand awareness
and attract new customers, while the production function might seek to improve
efficiency and reduce costs. Functional-level strategy is crucial for adding value to
an organization's goods and services and creating a competitive advantage. The
marketing function, for instance, might develop a strategy to differentiate the
company's products through advertising and promotions, while the production
function might employ a lean manufacturing strategy to reduce waste and improve
 efficiency. Aligning functional-level strategies with the overall business-level
strategy allows the organization to work cohesively and effectively toward its
goals.
Consistency in planning across the three different levels is crucial. Functional
goals and strategies should align with divisional goals and strategies, which, in
turn, should align with corporate goals and strategies. This ensures that the
entire company operates harmoniously, with activities at one level reinforcing and
strengthening those at the other levels, increasing efficiency and effectiveness.
Each function's plan is linked to its division's business-level plan, which, in turn,
is linked to the corporate plan.
For instance, let's consider a company that manufactures automobiles. At the
corporate level, the company might decide to expand into new markets, such as
electric cars, requiring a shift in strategy and structure. At the business level, the
division responsible for electric cars will create a plan outlining long-term goals,
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such as increasing market share, which may include partnering with other
companies for battery technology. Finally, at the functional level, the marketing
team would develop a plan to promote the new electric car models and increase
customer awareness.
In conclusion, planning is a critical process in organizations that helps achieve
goals and ensures efficient and effective collaboration across all levels. The three
levels of planning—corporate, business or division, and department or functional
—each play a vital role in achieving organizational goals. Consistency in planning
is crucial to operating harmoniously.
Thank you for attending this lecture, and we look forward to discussing "Strategic
Planning" in the next session.