Planning

Planning
• Planning is ascertaining prior to what to do and how to do. It is one of
the primary managerial duties. Before doing something, the manager
must form an opinion on how to work on a specific job. Hence,
planning is firmly correlated with discovery and creativity. But the
manager would first have to set goals. Planning is an essential step
what managers at all levels take. It requires making decisions since it
includes selecting a choice from alternative ways of performance.
• Effective planning requires not only assessing the future, but also
making adequate provision to face the future. From this perspective,
planning is a rational approach to the future.
• Managers are, therefore, required to plan and initiate necessary
actions for successful implementation of their plans.
• It is also important to remember that planning is useful to every
hierarchical level of an organization. For example, a marketing
manager makes use of planning to decide the courses of action for
newmarket development. Similarly, a salesperson reporting to the
same marketing manager needs to plan to meet the sales target.
Importance of Planning
• Planning clarifies the objectives of the organization: In planning, the first stage is the
deliberate statement of organizational and departmental objectives. The statement of
objectives helps employees to visualize the organization in its entirety and see how their
actions contribute to its ultimate goals. Since objectives represent end points of planning,
management should be prepared to face the future and revise its plans in the light of
possible changes so that goals can be accomplished more effectively.
• Planning economizes operations: Planning is done considering the factors of economy and
efficiency in operations. As an all-pervasive function, planning improves the effectiveness of
all other functions of management and also helps to secure coordinated efforts throughout
the organization. Since it involves choosing, planning facilitates choice of the best method
and also helps to identify alternatives expected to produce the desired results with minimum
cost and risk.
• Planning precedes control: Control ensures that everything conforms to one’s plans.
Planning is, therefore, an important prerequisite for control. The management function of
control seeks to check performance against a predetermined standard of projected courses
of action established through the planning process, and in this process control ensures
conformance to plans.
• Planning provides for the future: Planning, by definition, means providing
for the future and deciding the course of action. Every plan, therefore,
requires adequate provisioning for future contingencies. During the planning
process itself, organizations need to look to the future and discover suitable
alternative courses of action. Depending on the quality of prediction (making
use of scientific forecasting tools), managers can have a relatively realistic
idea of the future and chalk out suitable programmes of action. As a rational
approach, planning provides for unexpected events and can, accordingly,
enable the management to prepare against any eventual and undesirable
change.
• Planning increases the efficiency of all managerial functions: Planning,
organizing, staffing, directing, and controlling together contribute to the
accomplishment of organizational, departmental, and group goals. Each
function of management has its respective importance. However, since
planning is the primary function and precedes all other managerial functions,
effective plans can increase the efficiency of all other managerial functions
Limitations of Planning
• Planning premises may be wrong: The premises of planning are the basis and
framework for any decision. Understanding the planning premises with
absolute accuracy is not possible. There always exists some margin of error
that may vitiate the plans.
• Rapidity of change: Every organization operates in the context of a certain
internal and external environment. The environment cannot always be stable.
Thus, the extent of change in the internal and external environment creates
various situations of instability, making the planning job extremely difficult.
• Time and cost constraints: Every organization has to plan within given time
and cost constraints. Such constraints stand against the efficiency of planning.
In a situation of crisis, organizations may even have to take decisions on war
footing, in which case planning itself becomes redundant. Nonavailability of
time and resources may compel the organization to settle for the most
convenient business plan.
• Planning may limit new ideas: New ideas or innovativeness in planning may not
be encouraged because of the traditional mindsets of people. If the vision and the
philosophy of the organization are not progressive, it may limit the planning
initiative of the management. Similarly, procedural and policy rigidities also come
in the way of planning. Procedures, rules, and policies once documented are
difficult to change. Such inflexibility obviously affects planning.
• Capital investment constraint: Capital invested in a business, in the form of both
equipment and employees (investment in training), often limits the planning
initiative. Managers are quite often compelled to set their planning premises
keeping in mind the capital investment, which cannot be foregone.
• Back of control over external factors: Some external factors may seriously impede
the process of planning, for example, a sudden change in government policies,
union pressure for a wage hike, war, and international policies (like WTO, EEC, or
ASEAN resolutions).
• Yet, despite such limitations, organizations cannot do away with planning. Every
manager has to systematically plan to achieve the desired results.
 Types of Planning
• Strategic planning establishes master plans that shape the destiny of the firm.
 Essentially, strategic plans dictate the important decisions made within a
business. Strategic plans can have scopes that range from three years to ten
years. These plans include the organization’s mission, values, and vision. A good
strategic plan always considers things in the long-term and remembers the big
picture.
• Tactical planning translates strategic plans into specific goals and plans that are
most relevant to a particular organizational unit. The tactical plans also provide
details of how the company or business unit will compete within its chosen
business area. Middle managers have the primary responsibility for formulating
and executing tactical plans. These plans are based on marketplace realities
when developed for a business. Conditions can change rapidly in competitive
fields such as a Korean company suddenly developing a substantially lower
priced sports bike. The scope of tactical plans is broader than operational plans
(described next), but not as broad as that of strategic plans.
• Operational planning identifies the specific procedures and actions
required at lower levels in the organization. Operational planning can be
ongoing or single-use. The latter is usually created for a specific event
that will only occur once, such as a unique marketing campaign.
Ongoing plans can include rules and regulations, procedures, and the
day to day running of the company.
• Contingency Planning Contingency planning is important for any
business because there is always the possibility of unforeseen changes.
A contingency plan is created for when the unexpected occurs or a
major change needs to be made in order to continue towards the goal.
Not every change can be anticipated which is why it’s imperative to
have a contingency plan in place. Every business leader should
understand the importance of having a contingency plan.
 Planning Process
• As planning is an activity, there are certain reasonable measures for every manager to
follow:
• (1) Setting Objectives
• This is the primary step in the process of planning which specifies the objective of an
organisation, i.e. what an organisation wants to achieve.
• The planning process begins with the setting of objectives.
• Objectives are end results which the management wants to achieve by its operations.
• Objectives are specific and are measurable in terms of units.
• Objectives are set for the organisation as a whole for all departments, and then
departments set their own objectives within the framework of organisational
objectives.
• Example:
• A mobile phone company sets the objective to sell 2,00,000 units next year, which is
double the current sales.
• 2. Developing Planning Premises
• Planning is essentially focused on the future, and there are certain events
which are expected to affect the policy formation.
• Such events are external in nature and affect the planning adversely if
ignored.
• Their understanding and fair assessment are necessary for effective
planning.
• Such events are the assumptions on the basis of which plans are drawn
and are known as planning premises.
• Example:
• The mobile phone company has set the objective of 2,00,000 units sale on
the basis of forecast done on the premises of favourable Government
policies towards digitisation of transactions.
• 3. identifying Alternative Courses of Action
• Once objectives are set, assumptions are made.
• Then the next step is to act upon them.
• There may be many ways to act and achieve objectives.
• All the alternative courses of action should be identified.
• Example:
• The mobile company has many alternatives like reducing price, increasing advertising
and promotion, after sale service etc.
• (4) Evaluating Alternative Course of Action
• In this step, the positive and negative aspects of each alternative need to be evaluated
in the light of objectives to be achieved.
• Every alternative is evaluated in terms of lower cost, lower risks, and higher returns,
within the planning premises and within the availability of capital.
• Example:
• The mobile phone company will evaluate all the alternatives and check its pros and cons.
• 5) Selecting One Best Alternative
• The best plan, which is the most profitable plan and with minimum negative effects, is
adopted and implemented.
• In such cases, the manager’s experience and judgement play an important role in selecting
the best alternative.
• Example:
• Mobile phone company selects more T.V advertisements and online marketing with great
after sales service.
• 6) Implementing the Plan
• This is the step where other managerial functions come into the picture.
• This step is concerned with “DOING WHAT IS REQUIRED”.
• In this step, managers communicate the plan to the employees clearly to help convert the
plans into action.
• This step involves allocating the resources, organising for labour and purchase of machinery.
• Example:
• Mobile phone company hires salesmen on a large scale, creates T.V advertisement, starts
online marketing activities and sets up service workshops
• (7) Follow Up Action
• Monitoring the plan constantly and taking feedback at regular intervals is called
follow-up.
• Monitoring of plans is very important to ensure that the plans are being
implemented according to the schedule.
• Regular checks and comparisons of the results with set standards are done to
ensure that objectives are achieved.
• Example:
• A proper feedback mechanism was developed by the mobile phone company
throughout its branches so that the actual customer response, revenue
collection, employee response, etc. could be known.
Objectives
• Objectives describe something that has to be accomplished.
Objectives or goals define what organizations, functions, departments
and individuals are expected to achieve over a period of time.
Objective setting those results in an agreement on what the role
holder has to achieve is an important part of the performance
management processes of defining and managing expectations and
forms the point of reference for performance reviews.
Objective setting
• How to set objectives
• “A usefully stated objective is useful to the extent that it conveys to others a picture of what the outcome will be like.”
Mager, 1975 The SMART framework for setting objectives forces managers to consider the following questions when
designing objectives.
• Specific: Does the objective state a defined outcome/ result?  Is it precise? (avoid ambiguous statements) Being
specific about an outcome leads the identification of what will be achieved.
• Measurable: Can the outcome be quantified – if so, how?  If the outcome can’t be quantified – what indicators will
show that the objective has been achieved? You will need to take into account, who will be measuring the achievement,
when it will be measured and how often. If the objective is going to be measured against an evaluation or assessment
carried out by others e.g. student feedback sheet, what is it that they are being asked to measure and how does this
match up to the intended outcome.
• Achievable: Is it within the reviewee’s capabilities? (this includes being challenging and offering an opportunity for
development?)  Is it in line with the reviewee’s job summary and expectations?  Is it set within available resources
(time and/or money)? Objectives need to take into account the resources necessary to achieve them and the external
factors which can either support or prevent their achievement. Some objectives are unachievable because they assume
actions on the part of others which do not happen, or skills which are not present, or funding which is unreliable. A
useful way of considering conditions and their potential impact is to identify them and then ‘sort’ them as follows. What
is in our control? What do we have influence over? What do we have to accept (and cannot change)? Recognising what
is possible and what is not possible and why is an important part of defining an acceptable level of contribution against
which a reviewee is prepared to be measured against.
• Relevant: Does it link to the objectives and priorities of the team/department/ University?  Is it appropriate to post?
• Time-framed: Has a date been set for the completion of each objective?  Identify whether the objectives are short,
medium or long-term?  If long-term objectives are agreed, ensure there is a series of phased dates for
review/achievement.
Management by objectives
• The term Management by Objectives was coined by Peter Drucker in 1954.
• An effective management goes a long way in extracting the best out of
employees and make them work as a single unit towards a common goal.
• The process of setting objectives in the organization to give a sense of
direction to the employees is called as Management by Objectives.
• It refers to the process of setting goals for the employees so that they
know what they are supposed to do at the workplace.
• Management by Objectives defines roles and responsibilities for the
employees and help them chalk out their future course of action in the
organization.
• Management by objectives guides the employees to deliver their level
best and achieve the targets within the stipulated time frame.
Need/Features for Management by Objectives (MBO)
• The Management by Objectives process helps the employees to understand their duties at the workplace.
• Works is given to each employee as per their interest, specialization and educational qualification.
• The employees are clear as to what is expected out of them.
• Management by Objectives process leads to satisfied employees. It avoids job mismatch and unnecessary
confusions later on.
• Employees in their own way contribute to the achievement of the goals and objectives of the organization.
Every employee has his own role at the workplace. Each one feels indispensable for the organization and
eventually develops a feeling of loyalty towards the organization. They tend to stick to the organization for a
longer span of time and contribute effectively. They enjoy at the workplace and do not treat work as a burden.
• Management by Objectives ensures effective communication amongst the employees. It leads to a positive
ambience at the workplace.
• Management by Objectives leads to well defined hierarchies at the workplace. It ensures transparency at all
levels. A supervisor of any organization would never directly interact with the Managing Director in case of
queries. He would first meet his reporting boss who would then pass on the message to his senior and so on.
Every one is clear about his position in the organization.
• The MBO Process leads to highly motivated and committed employees.
• The MBO Process sets a benchmark for every employee. The superiors set targets for each of the team
members. Each employee is given a list of specific tasks.
 Limitations of Management by objectives Process
• It sometimes ignores the prevailing culture and working conditions of the
organization.
• More emphasis is being laid on targets and objectives. It just expects the
employees to achieve their targets and meet the objectives of the
organization without bothering much about the existing circumstances at the
workplace. Employees are just expected to perform and meet the deadlines.
The MBO Process sometimes do treat individuals as mere machines.
• The MBO process increases comparisons between individuals at the
workplace. Employees tend to depend on nasty politics and other
unproductive tasks to outshine their fellow workers. Employees do only what
their superiors ask them to do. Their work lacks innovation, creativity and
sometimes also becomes monotonous.
 SWOT Analysis

• SWOT analysis, a method of considering the strengths, weaknesses,

opportunities, and threats in a given situation. The strengths and
weaknesses take into account internal resources and capabilities;
opportunities and threats refer to factors external to the organization.
• SWOT is considered the most applicable to the early stages of strategic
and marketing planning.
• Because of SWOT’s straightforward appeal, it has become a popular
framework for strategic planning.
 Preparing for the Analysis
• Four steps are recommended to bring about a successful SWOT analysis.
• First, it is important to be clear about what you are doing and why. The purpose might
be to fine-tune a present strategy or to point the business in a new direction.
• Second, it is important to select appropriate contributors. Select people with
appropriate experience, talent, and enthusiasm. Imaginative people are particularly
useful for a SWOT analysis. Usually six to ten people are enough, but involving more
people can be helpful to involve more people in the changes SWOT might trigger.
• Third, allocate research and information-gathering tasks. Several members of the team
might concentrate on analyzing the firm; others might concentrate on analyzing the
outside environment.
• Step four is to create a workshop environment by encouraging open communication
among participants. All present should feel free to criticize the status quo, even
questioning what most people think is a company strength. A SWOT team member of a
group at Starbucks might say, “Is having so many stores such a great strength? Could we
be losing out to the coffee lovers who want a more unique, intimate experience?
Conducting the Analysis
• To illustrate the use of the model, we turn to Ulysse Nardin, a Swiss
manufacturer of fine watches founded in 1846. The price range of Ulysse
Nardin watches is between $6,000 and $38,000. Assume that top executives at
Ulysse Nardin are thinking about finding another niche by manufacturing luxury
pens in the $200 to $500 range. Some of their thinking in regard to a SWOT
analysis might proceed as follows:
• Strengths. What are the good points about a particular alternative? Use your
judgment and intuition; ask knowledgeable people. Selling luxury pens appears
to be a reasonable fit with the watch line because a luxury pen is often worn as
jewelry. We are great at making small-size luxury items. People who just want a
writing instrument could settle for a Bic or competitive brand. The profit
margins on luxury pens are quite good and they are not likely to be deeply
discounted in department stores or discount stores. We can also maintain low
inventories until we assess the true demand. As our sales representatives and
distributors receive orders,we can manufacture pens quickly.
• Weaknesses. Consider the risks of pursuing a particular course of action, such as getting
into a business you do not understand. We are watchmakers, pure and simple. We would
need to train our skilled craftspeople to make pens or hire new workers. If only a handful of
companies manufacture luxury pens, it could be because it is a tough market to crack. We
are so well known for watches that our clientele might not perceive us to be a crafter of
fountain pens. (We will need to do some market research here.) Another risk is that we will
cheapen the Ulysse Nardin name. The average price of a Ulysse Nardin product is now
about $12,000. With a brand of luxury pens, a person could take home a Ulysse Nardin
brand product for about $400, which could result in a scaling down of our image. Another
problem is that we are not presently linked to office supply stores and the distribution
channels that sell luxury pens. We might have to rely on new distributors to get us into that
channel. We do not sell over the Internet, and sellingpens might move us in this direction.
• Opportunities. Think of the opportunities that welcome you if you choose a promising
strategic alternative. Use your imagination and visualize the opportunities.The
opportunities could be quite good in terms of snob appeal. Maybe large numbers of
consumers would welcome the opportunity to carry a Ulysse Nardin anything in a shirt
pocket, handbag, or attaché case. Many of the people who become Ulysse Nardin luxury
pen customers might want to step up to become a Ulysse Nardin watch owner
• Threats.Every alternative has its downside, so it is important to think ahead to
allow for contingency planning. Ask people who have tried in the past what
you are attempting now. But don’t be dissuaded by the naysayers, heel
draggers, and pessimists. Just take action.Several manufacturers of high-end
products in jewelry, clothing, and automobiles have cheapened their image
and lost market share when they spread their brand name too thin. Following
this approach, we could wind up having not only Ulysse Nardin pens but also
wallets and handbags. At that point the high prestige of the Ulysse Nardin
brand would be at risk.
• As a result of this SWOT analysis, Ulysse Nardin sticks to its knitting (or watch
making) and continues to make world-class watches. Do you think they are
making the right decision? Or do you think the brand equity (value of the
brand name) warrants putting the Ulysse Nardin label on another product?
• A caution about the SWOT analysis is needed. It is sometimes viewed as too
superficial because it relies on description instead of analysis and ignores
prioritizing the alternatives it generates.