SINHGAD COLLEGE

OF
ENGINEERING,
 DEPARTMENT OF
MANAGEMENT
STUDIES.

DIVISION - MBA 1

    
 MANAGEMENT
FUNDAMENTALS
  CO-ORDINATOR – PROF . ARCHANA BORDE

UNIT – 2
PLANNING
 TABLE OF CONTENTS
• MEANING • ADVANTAGES OF MBO
• DEFINITIONS • DISADVANTAGES OF MBO
• NATURE / CHARACTERISTICS • GOAL SETTING
• PLANNING PROCESS • STEPS FOR GOAL SETTING
• TYPES OF PLANS • DIFFERENCE BETWEEN GOALS AND
• MANAGEMENT BY OBJECTIVES PLANS
• MANAGEMENT BY OBJECTIVES PROCESS
 MEANING

• PLANNING BRIDGES THE GAP FROM WHERE . PLANNING IS THE FUNDAMENTAL

WE ARE TO WHERE WE WANT TO GO. MANAGEMENT FUNCTION, WHICH
• IT INCLUDES THE SELECTION OF INVOLVES DECIDING BEFOREHAND,
OBJECTIVES, POLICIES, PROCEDURES AND WHAT IS TO BE DONE, WHEN IS IT TO BE
PROGRAMMES FROM AMONG DONE, HOW IT IS TO BE DONE AND
ALTERNATIVES.
WHO IS GOING TO DO IT.
• A PLAN IS A PREDETERMINED COURSE OF
• IT CHALKS OUT EXACTLY, HOW TO
ACTION TO ACHIEVE A SPECIFIED GOAL.
ATTAIN A SPECIFIC GOAL.
• IT IS AN ATTEMPT ON THE PART OF
MANAGER TO ANTICIPATE THE FUTURE IN
ORDER TO ACHIEVE BETTER PERFORMANCE.
 DEFINITIONS
• ALFORD AND BEATT , “PLANNING IS THE • KOONTZ AND O’ DONNELL ,
THINKING PROCESS, THE ORGANIZED “PLANNING IS AN INTELLECTUAL
FORESIGHT, THE VISION BASED ON FACT PROCESS, CONSCIOUS
AND EXPERIENCE THAT IS REQUIRED DETERMINATION OF COURSE OF
FOR INTELLIGENT ACTION.”
ACTION, THE BASING OF DECISION ON
• THEO HAIMANN , “PLANNING IS PURPOSE, FACTS AND CONSIDERED
DECIDING IN ADVANCE WHAT IS TO BE ESTIMATES.”
DONE. WHEN A MANAGER PLANS, HE
• ALLEN , “A PLAN IS A TRAP LAID TO
PROJECTS A COURSE OF ACTION FOR
FURTHER ATTEMPTING TO ACHIEVE A CAPTURE THE FUTURE.”
CONSISTENT CO-ORDINATE STRUCTURE
OF OPERATIONS AIMED AT THE DESIRED
RESULTS.
 NATURE / CHARACTERISTICS
• PLANNING IS AN INTELLECTUAL PROCESS
• PLANNING IS AN INTELLECTUAL PROCESS OF
THINKING IN ADVANCE. IT IS A PROCESS OF DECIDING
THE FUTURE ON THE SERIES OF EVENTS TO FOLLOW.
• PLANNING CONTRIBUTES TO THE
OBJECTIVES
• PLANNING CONTRIBUTES POSITIVELY IN ATTAINING
THE OBJECTIVES OF THE BUSINESS ENTERPRISE. A
PURPOSEFUL, SOUND AND EFFECTIVE PLANNING
PROCESS KNOWS HOW AND WHEN TO TACKLE A
PROBLEM.
• PRIMARY FUNCTION OF MANAGEMENT
• SETTING OF GOALS TO BE ACHIEVED AND LINES OF
ACTION TO BE FOLLOWED PRECEDES THE
ORGANIZATION, DIRECTION, SUPERVISION AND
CONTROL. NO DOUBT, PLANNING PRECEDES OTHER
FUNCTIONS OF MANAGEMENT
• A CONTINUOUS PROCESS
• PLANNING IS A CONTINUOUS PROCESS AND THERE
IS NO END TO IT. IT INVOLVES CONTINUOUS
COLLECTION, EVALUATION AND SELECTION OF
DATA, AND SCIENTIFIC INVESTIGATION AND
ANALYSIS OF THE POSSIBLE ALTERNATIVE
COURSES OF ACTION.
• PERVADES MANAGERIAL ACTIVITIES
• FROM PRIMARY OF PLANNING FOLLOWS
PERVASIVENESS (THE QUALITY OF SPREADING
WIDELY OR BEING PRESENT THROUGHOUT AN
AREA OR A GROUP OF PEOPLE) OF PLANNING.
• THE CHARACTER, NATURE AND SCOPE OF
PLANNING MAY CHANGE FROM PERSONNEL TO
PERSONNEL BUT THE PLANNING AS AN ACTION
REMAINS INTACT.
PLANNING PROCESS
• PERCEPTION OF OPPORTUNITIES
• AWARENESS OF OPPORTUNITIES IN THE
EXTERNAL ENVIRONMENT AS WELL AS
WITHIN THE ORGANISATION IS THE REAL
STARTING POINT FOR PLANNING.
• SETTING OBJECTIVES DEPENDS ON THE
AWARENESS. PLANNING REQUIRES REALISTIC
DIAGNOSIS OF THE OPPORTUNITY SITUATION.

• ESTABLISHING OBJECTIVES
• OBJECTIVE SPECIFY THE EXPECTED RESULTS
AND INDICATE THE END POINTS OF WHAT IS
TO BE DONE, WHERE THE PRIMARY EMPHASIS
IS TO BE PLACED AND WHAT IS TO BE
ACCOMPLISHED BY THE VARIOUS TYPES OF
PLANS.
• PLANNING PREMISES
• THE NEXT STEP IS ESTABLISHING PLANNING PREMISES
THAT IS THE CONDITIONS UNDER WHICH PLANNING
ACTIVITIES WILL BE UNDERTAKEN. PLANNING
PREMISES ARE PLANNING ASSUMPTIONS THE
EXPECTED ENVIRONMENTAL AND INTERNAL
CONDITIONS.
• THE NATURE OF PLANNING PREMISES DIFFERS AT
DIFFERENT LEVELS OF PLANNING. AT THE TOP LEVEL,
IT IS MOSTLY EXTERNALLY FOCUSED. AS ONE MOVES
DOWN THE ORGANISATIONAL HIERARCHY THE
COMPOSITION OF PLANNING PREMISES CHANGES
FROM EXTERNAL TO INTERNAL.
• IDENTIFICATION OF ALTERNATIVES
• VARIOUS ALTERNATIVES CAN BE IDENTIFIED
BASED ON THE ORGANISATIONAL OBJECTIVES AND
PLANNING PREMISES. THE CONCEPT OF VARIOUS
ALTERNATIVES SUGGESTS THAT A PARTICULAR
OBJECTIVE CAN BE ACHIEVED THROUGH VARIOUS
ACTIONS.
• EVALUATION OF ALTERNATIVES
• THE EVALUATION IS TO BE DONE IN THE LIGHT
OF VARIOUS FACTORS. EXAMPLE, CASH INFLOW
AND OUTFLOW, RISKS, LIMITED RESOURCES,
EXPECTED PAY BACK ETC., THE ALTERNATIVES
SHOULD GIVE US THE BEST CHANCE OF
MEETING OUR GOALS AT THE LOWEST COST
AND HIGHEST PROFIT.
• CHOICE OF ALTERNATIVE PLANS
• THIS IS THE REAL POINT OF DECISION-MAKING.
AN ANALYSIS AND EVALUATION OF
ALTERNATIVE COURSES WILL DISCLOSE THAT
TWO OR MORE ADVISABLE AND BENEFICIAL.
THE FIT ONE IS SELECTED.
• FORMULATION OF SUPPORTING PLAN
• AFTER FORMULATING THE BASIC PLAN,
VARIOUS PLAN ARE DERIVED SO AS TO
• AFTER FORMULATING BASIC AND
SUPPORT THE MAIN PLAN. IN AN
ORGANISATION THERE CAN BE VARIOUS
DERIVATIVE PLANS LIKE PLANNING FOR
BUYING EQUIPMENT, BUYING RAW
MATERIALS, RECRUITING AND TRAINING
PERSONAL, DEVELOPING NEW PRODUCT ETC.
THESE DERIVATIVE PLANS ARE FORMULATED
OUT OF THE BASIC OR MAIN PLAN AND
ALMOST INVARIABLY REQUIRED TO SUPPORT
THE BASIC PLAN.
• ESTABLISHING SEQUENCE OF
ACTIVITIES
DERIVATIVE PLANS, THE SEQUENCE OF
ACTIVITIES IS DETERMINED SO THOSE
PLANS ARE PUT INTO ACTION. AFTER
DECISIONS ARE MADE AND PLANS ARE
SET, BUDGETS FOR VARIOUS PERIODS AND
DIVISIONS CAN BE PREPARED TO GIVE
PLANS MORE CONCRETE MEANING FOR
IMPLEMENTATION.
 TYPES OF PLANS
• HIERARCHICAL PLANS • ADMINISTRATIVE PLANS
• SPECIFY THE ALLOCATION OF
• STRATEGIC PLANS (INSTITUTIONAL)
ORGANIZATIONAL RESOURCES TO
•  THE ORGANIZATION’S LONG-TERM VISION; INTERNAL UNITS OF THE ORGANIZATION;
ARTICULATE THE ORGANIZATION’S MISSION ADDRESS THE INTEGRATION OF THE
AND VALUE STATEMENTS; DEFINE WHAT INSTITUTIONAL LEVEL OF THE
BUSINESS THE ORGANIZATION IS IN OR HOPES ORGANIZATION (FOR EXAMPLE, VISION
TO BE IN; ARTICULATE HOW THE
FORMULATION) WITH THE TECHNICAL
ORGANIZATION WILL INTEGRATE ITSELF INTO
CORE (VISION IMPLEMENTATION);
ITS GENERAL AND TASK ENVIRONMENTS.
ADDRESS THE INTEGRATION OF THE
• OPERATING PLANS (TECHNICAL DIVERSE UNITS OF THE ORGANIZATION.
CORE)
• COVER THE DAY-TO-DAY OPERATIONS OF THE
ORGANIZATION.
• FREQUENCY-OF-USE PLANS
• STANDING PLANS • SINGLE-USE PLANS
• POLICIES—GENERAL STATEMENTS OF • PROGRAMS—A COMPLEX SET OF
UNDERSTANDING OR INTENT; GUIDE POLICIES, RULES, AND PROCEDURES
DECISION-MAKING, PERMITTING THE NECESSARY TO CARRY OUT A COURSE OF
EXERCISE OF SOME DISCRETION; GUIDE ACTION.
BEHAVIOR  • PROJECTS—SPECIFIC ACTION PLANS
• RULES—GUIDES TO ACTION THAT DO NOT OFTEN CREATED TO COMPLETE VARIOUS
PERMIT DISCRETION IN INTERPRETATION; ASPECTS OF A PROGRAM.
SPECIFY WHAT IS PERMISSIBLE AND WHAT
• BUDGETS—PLANS EXPRESSED IN
IS NOT PERMISSIBLE.
NUMERICAL TERMS.
• PROCEDURES—LIKE RULES, THEY GUIDE
ACTION; SPECIFY A SERIES OF STEPS THAT
MUST BE TAKEN IN THE PERFORMANCE OF A
PARTICULAR TASK.
• TIME - FRAME PLANS • ORGANIZATIONAL SCOPE PLANS
SHORT-RANGE • BUSINESS/DIVISIONAL-LEVEL PLANS
• FOCUS ON ONE OF THE ORGANIZATION’S BUSINESSES
• SEVERAL HOURS TO A YEAR
(OR DIVISIONS) AND ITS COMPETITIVE POSITION.

• UNIT/FUNCTIONAL-LEVEL PLANS
• FOCUS ON THE DAY-TO-DAY OPERATIONS OF LOWER-
• MEDIUM-RANGE
LEVEL ORGANIZATION UNITS; MARKETING, HUMAN
• ONE TO FIVE YEARS RESOURCES, ACCOUNTING, AND OPERATIONS PLANS
(PRODUCTION).

• TACTICAL PLANS
• LONG-RANGE • DIVISION-LEVEL OR UNIT-LEVEL PLANS DESIGNED TO
HELP AN ORGANIZATION ACCOMPLISH ITS STRATEGIC
• MORE THAN FIVE YEARS
PLANS.
 MANAGEMENT BY OBJECTIVES

• MANAGEMENT BY OBJECTIVES (MBO), ALSO KNOWN AS MANAGEMENT BY PLANNING (MBP), WAS

FIRST POPULARIZED BY PETER DRUCKER IN HIS 1954 BOOK THE PRACTICE OF MANAGEMENT.
• MANAGEMENT BY OBJECTIVES IS THE PROCESS OF DEFINING SPECIFIC OBJECTIVES WITHIN AN
ORGANIZATION THAT MANAGEMENT CAN CONVEY TO ORGANIZATION MEMBERS, THEN DECIDING
HOW TO ACHIEVE EACH OBJECTIVE IN SEQUENCE.
• THIS PROCESS ALLOWS MANAGERS TO TAKE WORK THAT NEEDS TO BE DONE ONE STEP AT A TIME
TO ALLOW FOR A CALM, YET PRODUCTIVE WORK ENVIRONMENT. IN THIS SYSTEM OF
MANAGEMENT, INDIVIDUAL GOALS ARE SYNCHRONIZED WITH THE GOALS OF THE ORGANIZATION.
• AN IMPORTANT PART OF MBO IS THE MEASUREMENT AND COMPARISON OF AN EMPLOYEE'S
ACTUAL PERFORMANCE WITH THE STANDARDS SET. IDEALLY, WHEN EMPLOYEES THEMSELVES
HAVE BEEN INVOLVED WITH THE GOAL-SETTING AND CHOOSING THE COURSE OF ACTION TO BE
FOLLOWED BY THEM, THEY ARE MORE LIKELY TO FULFILL THEIR RESPONSIBILITIES.
MANAGEMENT BY OBJECTIVES PROCESS

1. DETERMINING ORGANIZATIONAL
GOALS

2. DETERMINING EMPLOYEES’
OBJECTIVES

3. CONSTANT MONITORING PROGRESS

AND PERFORMANCE

4. PERFORMANCE EVALUATION

5. PROVIDING FEEDBACK

6. THE PERFORMANCE APPRAISAL

ADVANTAGES OF MBO

• PERSONALIZED OBJECTIVES: MBO ALLOWS

EMPLOYEES TO SET THEIR PERSONAL
OBJECTIVES ACCORDING TO THEIR
COMPETENCIES, SKILLSET, AND STRENGTHS.
THIS ALLOWS SELF-GROWTH AND SKILL
DEVELOPMENT.

• EFFICIENCY: AS THE MBO OBJECTIVES ARE

CLEAR AND TIME-BOUND, IT HELPS IMPROVE
PRODUCTIVITY AND THE EFFICIENCY OF THE
OPERATIONAL UNITS

• SENSE OF IMPORTANCE: THROUGH PROPER

APPRAISAL AND REWARD PROCESS, MBO GIVES
THE EMPLOYEES A SENSE OF IMPORTANCE AND
REALIZES THEM THAT THE ORGANIZATION
VALUES THEIR WORK AND THEY ARE AN
IMPORTANT ASSET TO THE FIRM.
DISADVANTAGES OF MBO
• TIME CONSUMING: THE WHOLE PROCESS OF GOAL
SETTINGS, APPRAISAL, REVIEWS, MONITORING, AND
EVALUATION TAKES A LOT OF TIME AND
PAPERWORK.
• FAULTY EVALUATION PROCESS: SOMETIMES
MANAGERS TRY TO EVALUATE EMPLOYEES FROM
THEIR PERSPECTIVE AND COMPETENCIES RATHER
THAN THE EMPLOYEES’ SKILLSET. IT MEANS THERE
ARE CHANCES THAT AN INCOMPETENT MANAGER
MAY INVOLVE IN THE EVALUATION PROCESS.
• LIMITED GROWTH: AS THE EMPLOYEES PLAY A
PART TO SET GOALS AS PER THEIR SKILL SET. IT
LEAVES LITTLE ROOM FOR SELF-GROWTH BECAUSE
THE EMPLOYEES, SOMETIMES, ARE NOT WILLING TO
TRY OUT NEW AND CREATIVE IDEAS RATHER THEY
STICK TO OLD METHODOLOGIES.
 GOAL SETTING

• GOAL SETTING IS A PURPOSEFUL AND EXPLICIT PROCESS THAT STARTS WITH

IDENTIFYING A NEW OBJECTIVE, SKILL, OR PROJECT YOU WANT TO ACHIEVE.
THEN, YOU MAKE A PLAN FOR ACHIEVING IT, AND YOU WORK TO COMPLETE IT. 
• PROPOSED BY INDUSTRIAL-ORGANIZATIONAL PSYCHOLOGIST EDWIN LOCKE,
GOAL-SETTING THEORY RECOMMENDS HOW TO SET THE MOST EFFECTIVE KINDS
OF GOALS. LOCKE FOUND THAT EMPLOYEES PERFORM BETTER AND ARE MORE
MOTIVATED TO COMPLETE GOALS IF THOSE GOALS ARE DIFFICULT. 
• IN OTHER WORDS, YOU CAN’T CHEAT. THE EASIER THE GOAL, THE LESS YOU’LL
WORK TO ACHIEVE IT. IF YOU SET HARD (BUT NOT IMPOSSIBLE) GOALS, YOU’LL
ACTUALLY PUT IN THE HIGHEST LEVEL OF EFFORT.
 STEPS FOR GOAL SETTING

• THINK ABOUT THE RESULTS YOU WANT TO • CREATE AN ACTION PLAN

SEE
• YOUR ACTION PLAN SHOULD INCLUDE THE
• BEFORE YOU SET A GOAL, TAKE A CLOSER LOOK AT OVERALL GOAL YOU’RE TRYING TO MEET AND
WHAT YOU’RE TRYING TO ACHIEVE ALL THE STEPS YOU NEED TO TAKE TO GET
• CREATE SMART GOALS THERE.

 SPECIFIC • CREATE A TIMELINE

 MEASURABLE • A TIMELINE CREATES A SENSE OF URGENCY,
WHICH IN TURN MOTIVATES YOU TO STAY ON
 ATTAINABLE
SCHEDULE AND FINISH YOUR GOAL.
 REALISTIC
• TAKE ACTION
 TIME-BOUND
• NOW THAT YOU’VE PLANNED EVERYTHING
 WRITE YOUR GOALS DOWN OUT, IT’S TIME TO TAKE ACTION.

 WHEN YOU WRITE YOUR GOALS DOWN, THEY

BECOME REAL AND TANGIBLE
 DIFFERENCE BETWEEN GOALS AND PLANS

 EXAMPLES
• PLAN  GOAL: INCREASE MY INCOME BY GETTING
FOUR NEW CLIENTS THIS QUARTER & PLAN:
• A DETAILED PROPOSAL FOR DOING OR MAKE THREE SALES CALLS EVERY DAY.
ACHIEVING SOMETHING
 GOAL: GET A NEW JOB & PLAN: APPLY TO
THREE NEW JOBS EVERY WEEK

• GOAL  GOAL: LOSE 12 POUNDS IN 12 WEEKS

 & PLAN: RUN FOR 30 MINUTES THREE TIMES
• THE OBJECT OF A PERSON’S AMBITION OR A WEEK.
EFFORT; AN AIM OR DESIRED RESULT.
 GOAL: GET A SIX-PACK & PLAN: USE A
WORKOUT APP TO DO CORE EXERCISES FOUR
TIMES A WEEK.