PRINCIPLES OF

MANAGEMENT

Chapter 4: Planning and Goal Setting; Fundamentals of

Planning
Objectives of the Session

To help build my management skill, when studying this

chapter, I will attempt to:

 Understand the definition of planning and the purposes of

planning
 Acquire insights into how the major steps of the planning
process are related
 Acquire an understanding of the relationship between
planning and organizational objectives
 Analyze the potential of a management-by-objectives
(MBO) program
 Acquire insights into why plans fail
Defining Planning

Planning is the process of determining how the

organization can get where it wants to go, and
what it will do to accomplish its objectives.
Points of importance:

Development of action programs

Reaching business objectives

Analyzing, evaluating and selecting opportunities

Purposes of Planning

 Protective
 Affirmative
Planning Process

 Step 1: State organizational objectives

 Step 2: List alternative ways of reaching
objectives
 Step 3: Develop premises upon which each
alternative is based
 Step 4: Choose best alternative for reaching
objectives
 Step 5: Develop plans to pursue chosen
alternative
 Step 6: Put the plans into action
Organizational Objectives: Planning’s
Foundation

Only after managers have a clear view of organizational

objectives can they appropriately carry out the planning
process. Organizational objectives serve as the foundation
on which all subsequent planning efforts are built.
Organizational Objectives

An organizational objective is a target toward which the open

management system is directed. Properly developed organizational
objectives reflect the purpose of the organization-that is, they flow
naturally from the organization’s mission.

 The organizational purpose is what the organization exists to do,

given a particular group of customer and customer needs.
Areas for Organizational Objectives

 Market standing
 Innovation
 Productivity
 Physical and financial resources
 Profitability
 Managerial performance and development
 Worker performance and attitudes
 Public responsibility
Examples of Organizational
Purpose/Mission
Management By Objectives (MBO)

 Management approach based exclusively on

organizational objectives

 Popularized by Peter Drucker in his 1954 book “The

Practice of Management”

 An equally valuable management tool for profit-

oriented as well as non-profit organizations
The MBO Process
Management By Objectives (MBO)

MBO: Advantageous or
Disadvantageous?
Why Plans Fail

A study determined that plans fail in case of:

 Non-integration of corporate planning
 Lack of understanding of planning steps
 Improper engagement or contribution by managers to

planning activities
 Responsibility of planning wrongly vested
 Expectations for little effort
 Over-ambitiousness
 Failure to operate by the plan
 Inadequate inputs
 Failure to grasp the process