Chapter Three

Planning and Plan

 1. Definition of Planning
• Planning
– conscious, systematic process of making
decisions about goals and activities that an
individual, group, work unit, or organization
will pursue in the future.
– a purposeful effort that is directed and
controlled by managers and often draws on
the knowledge and experience of employees
throughout the organization.
Cont’d
 Planning is the process of establishing
objectives and choosing the most suitable
means for achieving these objectives prior to
taking action.
 Planning is preparing for tomorrow today; it
is the activity that allows managers to
determine what they want and how to get it.
 2. Importance of Planning
It provides direction and sense of purpose
 It reduces uncertainties and preparing for change
 It provides basis for controlling
 It forces managers to see the organization as a
system
 It promotes efficiency
 It provides the base for cooperative and
coordinated efforts
It provides guideline for decision making
 3. Characteristics of Planning
1. Planning is goal-oriented
 Planning is made to achieve desired
objective of business
 Planning identifies the action that would
lead to desired goals quickly &
economically.
 It provides sense of direction to various
activities.
 Characteristics of Planning Cont’d
2. Primacy of Planning
 Planning lays foundation for other functions of
management.
 It serves as a guide for organizing, staffing,
directing and controlling.
 All the functions of management are performed
within the framework of plans laid out.
 Therefore planning is the basic or fundamental
function of management.
 Characteristics of Planning Cont’d
3. Planning is a Continuous Process
 Planning is a never ending function due to the
dynamic business environment.
 Plans are also prepared for specific period of
time and at the end of that period, plans are
subjected to evaluation and review in the light of
new requirements and changing conditions.
 Planning never comes into end till the enterprise
exists issues, problems may keep cropping up
and they have to be tackled by planning
effectively.
 Characteristics of Planning Cont’d
4. Planning is all Pervasive.
 It is required at all levels of management and
in all departments of enterprise.
 Of course, the scope of planning may differ
from one level to another.
 The top level may be more concerned about
planning the organization as a whole whereas
the middle level may be more specific in
departmental plans and the lower level plans
implementation of the same.
 Characteristics of Planning Cont’d

5. Planning is Flexible
 Planning is done for the future.
 Since future is unpredictable, planning
must provide enough room to cope with
the changes in customer’s demand,
competition, govt. policies etc.
 Under changed circumstances, the original
plan of action must be revised and
updated to make it more practical.
 Characteristics of Planning Cont’d
6. Planning is an intellectual process.
 Planning is a mental exercise involving
creative thinking, sound judgment and
imagination.
 It is not a mere guesswork but a rotational
thinking.
 A manager can prepare sound plans only if he
has sound judgment, foresight and imagination.
 Planning is always based on goals, facts and
considered estimates.
 Characteristics of Planning Cont’d
7. Planning involves choice & decision making.
Planning essentially involves choice among various
alternatives.
Therefore, if there is only one possible course of
action, there is no need of planning because there is
no choice.
Thus, decision making is an integral part of
planning.
A manager is surrounded by number of alternatives.
He has to pick the best depending upon
requirements & resources of the enterprises.
 Characteristics of Planning Cont’d
8. Planning is designed for efficiency.
Planning leads to accomplishment of objectives at
the minimum possible cost.
It avoids wastage of resources and ensures
adequate and optimum utilization of resources.
A plan is worthless or useless if it does not value
the cost incurred on it.
Planning leads to proper utilization of human
resources, money, materials, methods and
machines.
 4. Planning Tools and Techniques
Forecasting tries to predict the future.
 Qualitative forecasting relies on expert opinions
 Quantitative forecasting relies on mathematical models and statistical
analysis
Contingency planning Identifying alternative courses of action that can be
implemented to meet the needs of changing circumstances
Benchmarking identifies best practices used by others
Best practices are methods that provide superior performance
Staff planners provide special expertise.
Participatory planning improves implementation.
Promotes creativity in planning.
Increases available information.
Fosters understanding, acceptance, and commitment to the final plan.
 5. Types of Plan

Plans can be classified on different bases or

dimensions. These are:
Scope/Breadth Dimension,

Time Dimension, and

 Use/Repetitiveness
 Types of plan Cont’d

I. Scope/Breadth Dimension
 Scope refers to the comprehensiveness of the
plan, or it refers to the level of management
where plans are formulated.
This dimension creates hierarchy of plans.
 Based on scope/breadth we can classify plans
into: Strategic, Tactical and Operational.
 Types of plan Cont’d
A) Strategic plan
• Action Steps used to attain strategic goals
• Blueprint that defines the organizational activities and
resource allocations
• Tends to be long term
Strategy - A pattern of actions and resource allocations
designed to achieve the organization’s goals
Tactics are immediate decisions based on the executive’s
judgment and experience whilst facing an actual situation
B) Tactical plan
- Plans designed to help execute major strategic plans and to
accomplish a specific part of the organizations strategy
 Types of plan Cont’d
C) Operational plan
- Developed at the organization’s lower levels that
specify action steps toward achieving operational
goals and that support tactical planning activities.
- Tool for daily and weekly operations
- Schedules are an important component
- Schedules define precise time frames for the
completion of each operational goal required for
the organization’s tactical and strategic goals
 Types of plan Cont’d
II. Time Dimension
 Long-range (five years or more), medium-range
(between one and five years) and short-range plans (one
year or less).
 Time dimension and scope dimension are the same
except the former is about the length of time that the plan
covers and the later about the level of management
where the plan is formulated.
 Note!
 All strategic plans are long-range plans.
 All tactical plans are medium-range plans.
 All operational plans are short-range plans
 Types of plan Cont’d

III. Use/Repetitiveness
 standing plans
 single use plans

A) Standing Plans: are plans that provide an ongoing

guidance for performing recurring activities. They are
 policy
 rule
 procedure
 Types of plan Cont’d

Policies: Broad guidelines for making decisions

and taking action in specific circumstances.
Rules: spell out specific required action or non-
actions
- allowing no discretion in a given situation.
E.g. No smoking, cheating is prohibited.
Procedures: are statements that detail the exact
manner in which certain activities must be
accomplished
 Types of plan Cont’d
B) Single use plans:
aimed at achieving a specific goal and dissolved when
these have been accomplished
are detailed courses of action
The major types of single use plans are:
Programs: is a comprehensive plan that coordinates a
complex set of activities related to a major non-recurring
goal
Projects: One-time activities that have clear beginning and
end points
Budgets: commit resources to activities, projects, or
programs.
 6. Steps in Planning/Planning process
It encompasses the following steps:
1. Situational analysis
 gathering, interpreting, and summarizing all
information relevant to the planning issue under
consideration, within time and resource constraints
2. Determining Alternative Goals and Plans
Plan:
 A blue print specifying the resource allocations,
schedules, and other actions necessary for
attaining goals
 Planning process cont’d

Goal :
 a desired future state that the organization
attempts to realize.
Characteristics: Specific, measurable,
attainable, relevant, time-bound –
SMART/ER
 Setting goals starts with top managers.
 The overall planning process begins with a
mission statement and strategic goals for the
organization.
 Planning process cont’d
Organizational Mission
Mission- the organization’s reason for existence.
 mission is at the top of goal hierarchy
 mission describes the organization’s:
Values
 aspirations, and
 reason for being
 A well-defined mission is the basis for development of all
subsequent goals and plans.
 Mission statement is a broadly stated definition of basic
business scope and operations that distinguishes the
organization from others of a similar type.
 Planning process cont’d
the content of mission statement often:
 focuses on the market and customer and
 identifies desired fields of endeavor
 some mission statements describe organization
characteristics such as corporate value, product
quality, location of facilities, and attitude toward
employees.
 Mission statement often reveal the organization’s
philosophy as well as its purpose.
 Planning process cont’d
Types of Goal:
Strategic Goals
 broad statements describing where the organization wants to be in the future
 Pertain to the organization as a whole
 often called official goals, because they are the stated intentions of what the
organization want to achieve
Tactical Goals
- Goals that define the outcomes that major divisions and departments must achieve
Operational Goals
 Specific, measurable results Expected from:
 departments,
 work groups, and
 individuals
 Planning process cont’d
3. Goal and Plan Evaluation
 determination of advantages, disadvantages,
and potential effects of each alternative goal
and plan
 prioritizing those goals and even eliminate
some of them
4. Goal and Plan Selection
 Selection of the option that is most appropriate
and feasible
 Planning process cont’d
5. Implementation
• Managers and employees must understand the
plan, have the resources to implement it, and be
motivated to do so
• Successful implementation requires a plan to be
linked to other systems in the organization,
particularly the budget and reward systems
6. Evaluation
 Managers must continually monitor the actual
performance of their work units against the unit’s
goals and plans.
7. Management by Objective (MBO)
MBO is a method whereby mangers and
employees:
 define goals for every departments, project ,
and person and
 use them to monitor subsequent performance.
Process of MBO:
1. Set goal: the most difficult step in MBO
 involves employees at all levels and looks
beyond day-to day activities to answer the
question “what are we trying to accomplish?”
 Management by Objective (MBO)Cont’d
2. Develop action plans:
 action plan defines the course of action needed to achieve the stated
goals
 action plans are made for both individuals and departments
3. Review progress
 Important to ensure that action plans are working
 Allows managers and employees to see whether they are on target or
whether corrective action is necessary
4. Appraise overall performance:
Benefits of MBO
Focus efforts on activities that will lead to goal attainment
Performance can be improved at all organization level
Employees are motivated
Departmental and individual goals are aligned with organization goals.
Management by Objective (MBO)Cont’d
Limitations of MBO:
 Failure to teach the philosophies of MBO
 Difficulty in setting goals
 Emphasis on short-run goals
 Danger of inflexibility
 Frustration
Prerequisites for installing MBO Program
1. Purpose of MBO
2. Top - Management support
3. Training for MBO.
4. Participation
5. Feedback for self – direction and self – control
The End!!!