Unit 2 - Planning

Contents
 Planning
 Meaning
 Importance
 Elements
 Process
 Limitations
 Decision Making
 Meaning
 Importance
 Process
 Techniques
 Planning
 Planning is deciding in advance what to do, how to do it,
when to do it and who to do it.
 It involves anticipating the future and consciously
choosing the future course of action
 It is the first and foremost important function of
management
 According to Haimann, ‘Planning is the function that
determines in advance what should be done’
 Nature of Planning
 Planning is beginning of the process of management
 It’s a mental exercise
 Planning is goal-oriented
 Planning is all-pervasive
 Planning is a continuous process
 Planning is future oriented
 Planning involves choice/decision making
 Planning is directed toward efficiency
 Planning should be flexible
 Importance of Planning
 Minimizes risk and uncertainty
 Improves efficiency & effectiveness
 Facilitates decision making
 Motivates employees
 Leads to success through smooth working of other
functions
 Focuses attention on the Organization’s goals
 Facilitates control & co-ordination
 Trains executives
 Analyzing the environment – internal & external
Fixing the objectives
Making alternative plans
Evaluating each alternative based on available resources
Selecting the best
Preparing blueprint
Arranging sequence of activities
Implementation
Follow up
 Limitations of Planning
1. Time consuming
2. Costly
3. Rigidity
4. Unrealistic (SMART)
5. Resistance to change
6. Paper work
7. Dangers of Over / Under Targets
8. Lack of co-ordination
Essentials/Features of Sound Planning

1. Simplicity
2. Flexible
3. Suitable
4. Acceptable
5. Facilitates control and co-ordination
6. Provides direction
Types of Plans
Vision
Mission
Objectives
Strategies
Operational Plans
Single Use Plan
Standing Plans
 Types of Plans
 Vision: The dream an entrepreneur creates about the
direction that his business should pursue in future. It
describes aspirations and beliefs & values
 Mission: It is the unique aim of the organization which
sets it apart from other competitors
 Objectives: They are the goals or aims that management
wishes the organization to achieve in order to achieve its
mission
 Strategy: The plan of action designed to achieve a long-
term objectives
 Operational Plans: This plan is the way of implementing
strategies. This provides details of how strategies would
be accomplished
 Standing Plan: These plans are designed for situations
that are regular and need a standardized approach. E.g.
Policies, procedures, methods and rules
 Single Use Plan: These plans are developed a specific
purpose and would be dissolved post the objective is
achieved. E.g. Budget, Programmes, schedules
Decision Making
Meaning
 When managers make decisions they are choosing –
they are deciding what to do on the basis of some
conscious and deliberate logic or judgment
 Managers have alternatives available when they
make a decision
 Managers have purpose in mind when they take
decision
Decision Making Process
Recognizing Problems
Deciding Priorities
Diagnosing the problem
Developing alternative solutions
Measuring and comparing consequences
Decision implementation
Follow - up
 Decision Making Process
1. Recognizing the problem
 Deviation from past experience
 Deviation from plan
 Competitors outperform
 Internal data
2. Deciding priorities
 Prioritize decisions
 Delegating decision making to subordinates and superiors
3. Diagnosing problems
 Managers generally get to know the symptoms
 Research done to find out the root problem
 Decision Making Process
4. Developing alternative course of action
 Alternatives should be developed
 Organizational goals and resources should be considered
5. Measuring and comparing consequences
 Consequences of all the alternatives should be developed
6. Decision implementation
 Implementing decisions
7. Follow – up
 Advantages & Disadvantages
1. Time consuming
2. Compromised
1. Better use of resources
decisions
2. Growth
3. Biases
3. Achieve objectives
4. Limited analysis
4. Increase efficiency
5. Uncertain future
5. Facilitate innovation
6. Uncertain external
6. Motivation
factors
7. Subjective decisions
Types of Decisions
Programmed Non - Programmed

Major Minor

Routine Strategic

Individual Group

Simple Complex
Types of Decisions
Programmed Decision
 Decisions that are made in accordance with some policy,
rules or procedures
 Repetitive and routine decisions
 Decisions are guided by same set of rules
Non programmed decisions
 Problem has not arisen before
 Novel and non repetitive
 Personal values, attitudes and judgment comes into
picture
Decision Making Techniques - textbook
Programmed decisions Non-Programmed decisions
Linear programming Brain storming
Decision tree Delphi Technique
Stimulation Nominal group technique
Queuing theory Quality circle
Network technique Heuristic technique
Probability decision theory
Game theory
Payoff Matrix
 The numbers on the lines
indicate the distance
between the cities.
 To save on fuel and time the
delivery person wants to
take the shortest route.
 The delivery person will
calculate different routes for
going to all the 6
destinations and then come
up with the shortest route.
 This technique of choosing
the shortest route is called
linear programming.
 CPM highlights the Longest path for completing a
task/activity.
 PERT evaluated the time taken per route of task/activity.
 The nominal group technique is a variation of brainstorming where
individuals come up with ideas on their own rather than as a group.
 First, every member of the group gives their view of the solution, with a
short explanation.
 Then, duplicate solutions are eliminated from the list of all solutions, and
the members proceed to rank the solutions, 1st, 2nd, 3rd, 4th, and so on.
 The numbers each solution receives are totaled, and the solution with
the highest (i.e. most favored) total ranking is selected as the final
decision.
 Used best when:
 When some group members think better in silence.
 When there is concern about some members not participating.
 When the group does not easily generate quantities of ideas.
 When all or some group members are new to the team.
 When the issue is controversial or there is heated conflict.
 Heuristic, is any approach to problem solving, learning, or
discovery that employs a practical method not guaranteed to
be optimal or perfect, but sufficient for the immediate goals.
 Where finding an optimal solution is impossible or
impractical, heuristic methods can be used to speed up the
process of finding a satisfactory solution.
 Heuristics can be mental shortcuts that ease the cognitive
load of making a decision.
 Examples of this method include using a rule of thumb,
an educated guess, an intuitive judgment, guesstimate,
stereotyping, profiling, or common sense.