PLANNING FUNCTION
Presented by Mr. Karua
Meaning of Planning
Planning is the process of setting goals and objectives and determining
the best means of achieving them.
It is an advance activity (i.e., it involves forecasting/anticipating the
future).
It is a decision-making process, hence involves choosing from among
alternatives.
A plan is a predetermined course of action for the realization of an
organization’s purpose.
Planning Process/Steps
Planning Process/Steps
i. Being aware of opportunity: the study & finding of
opportunities in the environment i.e. identifying
need for action.
ii. Setting objectives/goals: determination of what
the firm wants to accomplish during the planning
period.
Planning Process/Steps
iii. Developing Premises- Premises refer to making
assumptions regarding the future. It is the study of
external & internal environment. Premises are the basis on
which plans are made.
iv. Identification of alternatives: generation of alternative
courses of action through which the organization can
achieve its objectives.
Planning Process/Steps
v. Analyzing alternatives: assessing the pros & cons of each
alternative.
vi. Choice of alternative: the best alternative is selected.
vii. Formulation of derivative plans: various supporting plans are
prepared.
viii. Numerating/Implementation: converting the plans into
budgets.
Importance of planning
Provides direction
Provides focus
Reduces uncertainty
Promotes creativity and innovation
Importance of planning
Provides information for decision making
Co-ordination
Performance evaluation
Optimal resource utilization
Types of plans
Plans are classified on three bases:
a. Basis of time
Defined by the duration/period covered by the plan. They include:
i. Long term plans
ii. Medium term plans
iii.Short term plans
Types of plans
b. Basis of level
Are defined by the scope of activities covered by the plan.
i. Strategic/corporate plans
ii.Tactical plans
iii.Operational plans
Types of plans
c. Basis Frequency-of-Use
Some plans are used repeatedly; others are used for a single
purpose.
i. Standing/multi-use plans
ii. Single use plans
Approaches To planning
There are two main approaches to planning:
i. Strategic planning
ii. Management by objectives (MBO)
a. Strategic planning
A systematic process of envisioning a desired
future and translating this vision into broadly
defined goals/objectives and then putting in place
the appropriate strategies to achieve them.
b. MBO (Management by objectives)
A management model that aims to improve the performance of an
organization by clearly defining objectives that are agreed to by both
management and employees.
A collaborative and participative approach to planning where all
organizational members at every level are actively involved in the
planning process.
Logic: having a say in goal setting and formulation of action plans
encourages participation and commitment among employees as well
as aligns objectives across the organization.
MBO PROCESS/STEPS
I. Defining overall organization’s goals
2. Defining specific goals
3. Formulation of action plans
4. Implementation and maintenance
5. Periodic performance review
6. Final evaluation and feedback
Merits/Advantages of MBO
1.Clear goals.
2.Stimulates employee motivation
3.Employee training & development
4.Efficient allocation of resources
5.Basis for employee performance
evaluation
6.Improves communication
Demerits/Drawbacks of MBO
1.Lack of management support
2.Lack of skills & training
3.Costly
4.Time consuming
5.Increases paperwork
6.Emphasis on short-term goals
7.High interpersonal skills
Barriers to planning
1.Resource limitations
2.Lack of skills
3.Dynamic and Complex Environment
4.Inferior information
5.Poor organizational culture
6.Resistance to Change
7.Political/personal interests
The End………
