CHAPTER –TWO

PLANNING

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 What Is Planning?
 Planning 2
 A primary functional managerial activity that involves:
 Defining the organization’s goals
 Establishing an overall strategy for achieving those goals
 Developing a comprehensive set of plans to integrate and
coordinate organizational work.
 Types of planning

 Informal: not written down, short-term focus; specific to an

organizational unit.
 Formal: written, specific, and long-term focus, involves
shared goals for the organization.

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 Cont`d…Definitions
3

Planning is deciding in advance what to do, how to do

it, when to do it, and who is to do it. It bridges the gap

from where we are and where we want to go.
/Koontl and O’Donnel/
Planning involves the selection of objectives, policies,

procedures and programmes from among alternatives.

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Planning answers 6 basic questions? (The 6 W’S)
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1. The What (what to do?): the short-term or long-term
goal we want to achieve
2. The When (when to do?): Time schedule
3. The Where (where to do?): the place where the plan is
executed.
4. The Who (who does it): individuals/units performing
activities.
5. The How (how it is done): The strategy/methods for
achieving the goal.
6. The How much (How much is required to do):
Expenditure of resources.
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 IMPORTANCE OF PLANNING
• Planning is important for the
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following reasons
Primacy of Planning: first and foremost function of
management
It reduces risk & uncertainty: planning helps to cop
up with & prepare for changing env’t.
To focus attention on objectives: planning focuses
on organizational objectives and how to achieve these
objectives.
Sets the standards for controlling : control can be
exercised if there are plans (standards or goals).

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 Cont`d
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 To increase organizational effectiveness:
achieving organizational objectives within the
given resources.

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TYPES/CLASSIFICATION OF PLANS
Plans can be classified
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on the bases of the
following dimensions

1.BREADTH (SCOPE)

2.TIME FRAME (DURATION OF THE PLAN)

3.FREQUENCY (REPETITIVENESS

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 Types of plans based on scope/breadth

1. Strategic Plans 8

– Apply to the entire organization.

– Establish the organization’s overall goals.
– Seek to position the organization in terms of its environment.
– It is developed by top level managers and cover extended
periods of time
– It answers three basic questions
1. Where are we now?
2. Where do we want to go?
3. How do we get there?

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 2. Tactical Plans
- Is concerned with what the 9 lower level units within each
division must do, how they must do it, and who will have the
responsibilities for doing it.
- Developed to implement specific parts of strategic plans
- Is a process of developing action plans to execute strategies.
- Mostly short-term in its time frame ( one year or less) and
narrower in scope than strategic plans
- It is mostly carried out by departmental managers (middle
level managers).
3. Operational Plans
 Specify the details of how the overall goals are to be achieved.
 Cover short time period

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 Cont`d
It can be a single use plan10like a program
Focuses on carrying out tactical plans to achieve
operational goals.
Mainly short range and more specific and detailed.
Concerned with day to day; week to week activities of the
organizations.
These plans are developed by Supervisory level
managers.

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 Contingency Planning
- Involves identifying alternative courses of action that
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can be implemented if and when the original plan
proves inadequate because of changing circumstances.
- Unexpected problems and events frequently occur.
When they do, managers may need to change their
plans.
- Anticipating change during the planning process is
best in case things don’t go as expected.
- Contingency planning is necessary at each level of
management and for strategic, tactical, and
operational planning.

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 Types of plans based on time frame
• Long-range Plans 12

– Plans with time frames extending beyond three years (5-10 years)
depending on the size & nature of the organization
• Intermediate - range Plans
– Ranges b/n long & short range plans
– Plans with time frame of 1-5 years depending on the size & nature of
the organization.
• Short – range Plans
– Are not developed separately
– Are operational plans derived from long-range or intermediate plans
– Plans with time frames of less than 1 year depending on the size &
nature of the organization.

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Types of plans based on frequency of use
 Single-Use Plan 13

– A one-time plan specifically designed to meet the need

of a unique situation.
- Single use plans are commonly three types.

1) Programs
- Are single use plans

- They are complex & encompasses goals, policies,

procedures, rules, task assignments, resources, and
budgets.
- Eg: purchasing new machines or introducing new
product
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2) Projects
- Are smaller portion of a program.
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- Are less comprehensive & narrower in focus than

programs.
- They have predetermined time schedule for completion.
3) Budgets
- Is the resources required in numerical terms
- It is a quantitative statement of the resources allotted
to specific programs or projects for a given period.
- It serves as a benchmark for controlling.

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 Standing Plans
– Ongoing plans that provide
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guidance for activities
performed repeatedly.
– Are plans that are used again & again; followed each
time; and designed to deal with organizational issues
or problems that recur frequently.
– Standing plans includes;

A) Purpose or Mission
- It identifies the basic function or task of an
enterprise.
- It describes what an organization stands for and its
reason for existence.

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B. Goals or Objectives
- Are single use plans that specifies the end towards
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which business activity is directed.
- According to Mc Farland, “Objectives are the
goals, aims or purposes that the organizations
wish to achieve over varying periods of time”.
Objectives have the following characteristics
 Objectives are multiple in numbers: Peter Drucker
has emphasized setting objectives in eight key areas namely
market standing, innovation, productivity, physical and
financial resources, profitability, manager performance and
development, worker performance and attitude, and public
responsibility.

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 Objectives can be tangible or intangible:
(objectives in the physical
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resources are tangible
whereas managerial performance and workers morale
can be intangible objectives)
 Objectives have a priority: (one objective can be
more important than the other)
 Objectives are hierarchical: (corporate,
departmental and sectional objectives at different
organizational levels)
 Objectives may clash with one another:
( objectives of different departments in the
organization may clash with one another.

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C. Strategies:
- Are complex plans for bringing organizations from a
given position to a desired 18
position in the future.
D. Policies:
- Is a standing plan that channels the decision making of
employees.
- It guides thinking and action rather than a specific course
of action.
E. Procedures-is a chronological sequence of steps to be
undertaken to enforce a policy and to attain an objective.
F. Methods- is a prescribed way in which one step of
procedure is to be performed.
G. Rules- are the simplest and strictest type of standing plan
found in organizations. They provide detail & specific
regulations for action, and reflect managerial decisions that
certain actions must or must not be done.

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 THE PLANNING PROCESS
There are 10 steps in planning
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Step 1: Understanding the existing situation

- Understanding both the internal as well as external
environment.
- Identifying external factors ; opportunities & threats
- Identifying internal factors; strengths & weaknesses
Step 2: Forecasting
- Assumptions about what the future looks like since
the future is full of uncertainties.

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Step 3: Establishing Objectives
- Objectives are end results established for the organization and
for each work units. 20
- Objectives give direction to the major plans.
Step 4: Determine alternative courses of action
- Searching for and examining alternative courses of action
(strategies).
- The number of alternative should be managed.
Step 5: Evaluation alternative course of action:
- Carefully assessing the alternatives by weighing them in light
of goals
- Examining the advantage and disadvantage of each
alternative courses of action.

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Step 6: Selecting a course of action
- is the point at which the plan is adopted.
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- It is the real point of decision making.
Step 7: Formulating derivative plans
- Derivative plans are those which support the main
plan.
Step 8: Numberizing plans by budgeting
Step 9: Implementing the plans
- Developing action plans to implement plans.
Step 10: Controlling & evaluating the results
- Evaluate reported results and make necessary
adjustments
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Thank you for your attention!!

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