Introduction

Planning is the first step of management process

concerned with the establishment of objectives
and analysis of present limitations for attaining
such goals.
Requires decisions on ..

What should be done?

How it should be done?

Who will be responsible?

Where the action is to be taken?

Why is it done?

 According to Haimann, Planning is the

function that determines in advance
what should be done.

IMPORTANCE OF PLANNING

Provides direction

Provides opportunity to analyze alternative

course of action

Resource allocation

Reduces uncertainty and risk

Helps in co-ordination

Guides decision-making
Increase efficiency

PLANNING PROCESS
ESTABLISHING OBJECTIVES
PLANNING PREMISES
IDENTIFICATION OF ALTERNATIVES
EVALUATION OF ALTERNATIVES
CHOICE OF ALTERNATIVES
FORMUALTION OF SUPPORTING
PLANS
ESTABLISHING SQUENCE OF
ACTIVITIES

Types of Plans
Strategic Plans
It sets the long-term direction of the organization in

which
it wants to proceed for future.
Apply to the entire organization.
Example : planned growth rate in sales, diversification
and expansion, etc

Operational Plans

Short term planning, usually covers one year or so.

Narrow/limited scope
Example: adjustment of production capacity,
distribution of current products etc.

Types of planning
Corporate plan: Denotes planning activities
at the top level, also known as corporate level,
which cover the entire organizational activities.
Functional plan: It is segmental and it is
undertaken for each major function of the
organization like production, marketing,
finance, human resource, etc.

Informal plan: not written down, short-term

focus; specific to an organizational unit.

Formal plan: written, specific, and long-term

focus, involves shared goals for the
organization.

Types of Plans
Long-Term Plans

Plans with time frames extending beyond three years

Short-Term Plans

Plans with time frames of one year or less

Proactive plan:

It involves designing suitable course of action in

anticipation of likely changes in the relevant
environment.

Reactive plan:

In reactive planning, organizations response come after

the environmental changes have taken place.

Models of Strategy
formulation
Environmental
analysis

Organsational
objectives

Alternatives

Choice of
alternative

Corporate
analysis
Personal
values and
expectations

Implementation

Review
and
control

Linking Structure with

Strategy

An organization's strategy is its plan for the

whole business that sets out how the
organization will use its major resources.

For the organization to deliver its goals,

the strategy and the structure must be
go together faultlessly.

Changes in strategy often lead to changes in

organizational structure

Ch 7 -10

Evolutionary Patterns of
Strategy and Organizational
Structure
Firms grow in predictable patterns:

First by volume

Then by geography

Then integration (vertical, horizontal)

And finally through product/business

diversification

A firms growth patterns determine its

structural form.

Evolutionary Patterns of
Strategy and Organizational
Structure (contd)
All organizations require some form of
organizational structure to implement
and manage their strategies
Firms frequently alter their structure as
they grow in size and complexity
Three basic structure types:

Simple structure
Functional structure
Multidivisional structure (M-form)
1112

Simple Structure

Strateg
y and
Structu
re
Growth
Pattern

Efficient
implementation of
formulated strategy

Sales Growth
Coordination and Control Problems

Functional Structure
Efficient
implementation of
formulated strategy

Sales Growth

Coordination and Control Problems

Multidivisional Structure
2007 Thomson/SouthWestern. All rights
reserved.

1113

Strategy and Structure:

Simple Structure
Owner-manager

Makes all major decisions directly.

Monitors all activities.

Staff :Serves as an extension of the managers

supervisor authority.

Strategy: Commonly compete by offering

a single product line in a single
geographic market
Growth creates:

Managerial and structural challenges

1114
Complexity

Strategy and Structure:

Functional Structure
Chief Executive Officer (CEO)

Limited corporate staff

Functional line managers in dominant

organizational areas of:

Production Marketing Engineering

Accounting R&D Human resources

Strategy :
Single or dominant business with low levels of
diversification

Functional Structure (contd)

Differences in orientation among
organizational structure can:

Obstruct communication and coordination.

Increase the need for CEO to integrate

decisions and actions of business functions.

Facilitate career paths and professional

development in specialized functional
areas.

Cause functional-area managers to focus on

functional versus overall company strategic
issues.
1116

Strategy and Structure:

Multidivisional Structure
Strategic Control

Operating divisions function as separate

businesses or profit centers

Top corporate officer delegates

responsibilities to division managers

For day-to-day operations

For business-unit strategy

Appropriate as firm grows through

diversification
1117

Multidivisional Structure
(contd)
Three Major Benefits
Corporate officers are able to more
accurately monitor the performance
of each business, which simplifies the
problem of control.
Facilitates comparisons between
divisions, which improves the
resource allocation process.
Stimulates managers of poorly
performing divisions to look for ways
of improving performance.
1118

Ch 7 -19