PLANNING

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Programme Educational Objectives
 Our program will create graduates who:

 1. Will be recognized as a creative and an

enterprising team leader.
 2. Will be a flexible, adaptable and an ethical
individual.
 3. Will have a holistic approach to problem
solving in the dynamic business environment.
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 Principles of Management Course Outcomes
• CO1-Student manager will be able to identify application of
various management theories in the organization / establishment
under study.

• CO2-For a given profile, student manager will be able to map

the desired skill set with available skills through interaction with
the employees of the organization / establishment under study

• CO3-Given the task / event, student manager will be able to

formulate plan, design the team structure with authority and
responsibility, and devise a control mechanism for effective
management.
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• CO4- In the organization/establishment under study, student
manager will be able to calculate Span of Control and analyze
Scalar Chain.

• CO5- Student manager will be able compare the motivational

practices and its suitability in the organization/establishment
under study.

• CO6- Student manager will be able determine sources of

recruitment and comment on its suitability in the
organization/establishment under study.

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 What is planning?
 Planning is deciding in advance what to do, how to do it,
when to do it and who will do it. It involves anticipating the
future and consciously choosing the future course of action.
 Planning
 A primary managerial activity that involves:
 Defining the organization’s goals

 Establishing an overall strategy for achieving those

goals
 Developing plans for organizational work activities.

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 Definitions
 “Generally speaking, planning is deciding in advance what is to be
done”
-W H Newman
 “Planning is deciding in advance what to do, how to do, when to do
and who is to do it. Planning bridges a gap between from where we are
to where we want to go”
-Harold, Koontz and O’Donnel

 “Planning is that function of manner in which he decides in advance

what he will do. It is a decision making process of a special kind, its
essence is futurity.”
-Hayness and Massie
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 Planning for the Future
 Most organizations are facing turbulence and
growing uncertainty
● Economic, political, & social turmoil = managers wonder
how to cope
● Renewed interest in organizational planning

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 Elements of Planning
 Elements of Planning
 Goals (also Objectives)
 A desired future state that the organization attempts to
realize.
 Desired outcomes for individuals, groups, or entire
organizations
 Provide direction and evaluation performance criteria

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 Plans
 A blueprint specifying the resource allocations, schedules,
and other actions necessary for attaining goals
 Documents that outline how goals are to be accomplished
 Describe how resources are to be allocated and establish
activity schedules
 Planning
 Determining the organization’s goals and the means for
achieving them

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 Why Do Managers Plan?

 Purposes of Planning
 Provides direction
 Reduces uncertainty
 Minimizes waste and redundancy
 Sets the standards for controlling

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Set the standards to Provide direction
facilitate control

Managers
engage in
planning
to:

Minimize waste and Reduce the impact

redundancy of change

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 Nature of Planning

 Planning is a primary function

 Planning is goal-oriented
 Planning is all-pervasive
 Planning is a continuous process
 Planning is forward-looking/flexible
 Planning involves choice
 Planning is directed toward efficiency
 Basis for all the managerial functions
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 Importance of Planning
 Planning helps in effective utilization of resources
 Provides direction and a sense of purpose.
 Reduces the risk of uncertainty
 Planning reduces overlapping and wasteful activities
 Planning promotes innovative ideas
 Planning facilitates decision making
 Helps identify threats and opportunities and reduces risks.
 Facilitates managerial control through the setting of standards
for monitoring and measuring performance.
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Characteristics Of Planning

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 Advantages
 Increases the organization’s efficiency and competitive
strength
 Helps crystallize objectives
 Economy in the operations
 Minimize future uncertainties
 Reduces hasty judgment- reduce mistakes and oversights
 Ensures a more productive use of resources
 Makes control easier
 Increases effectiveness of a manager
 Promote growth and improvement by setting standards
 Increase motivation and coordination
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The Planning Subsystem

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The Planning Subsystem

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Process of Planning

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 Establishment of objectives
 Planning starts with the setting of goals and objectives to be
achieved.
 Objectives provide a rationale for undertaking various
activities as well as indicate direction of efforts.
 Moreover objectives focus the attention of managers on the
end results to be achieved.
 Objectives should be stated in a clear, precise and
unambiguous language. Otherwise the activities undertaken
are bound to be ineffective.
 Goals should be specified in qualitative terms.
 Objective should be SMART
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 Types of Goals
 Financial Goals
 Are related to the expected internal financial
performance of the organization.
 Strategic Goals
Are related to the performance of the firm relative to
factors in its external environment (e.g., competitors).
 Where the organization wants to be in the future

 Pertain to the organization as a whole

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 Tactical Goals
 Apply to middle management
 Goals that define the outcomes that major divisions
and departments must achieve
 Operational Goals
 Specific, measurable results
 Expected from departments, work groups, and
individuals

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Hierarchy of Goals

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Environment Analysis
Planning Premises

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Developing or Planning Premises
 These are the conditions under which planning
activity is carried out.
 Planning external premises- Consider external
environment; Political, social, technological,
competitor’s plans and actions, government policies
etc.
 Planning internal premises- organization policies,
resources of various types, ability of the organization
to withstand the environmental pressure.
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 Internal Environment
 Human Resource
 Technology, functions of business
 Capital
 Managerial Abilities and competence, business
policies
 Available resources
 Organization culture image, management
structure
 Analyze- Strength And Weaknesses
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 Market
 Customer
 Supplier
 Competitor
 Society
 Industry regulations
 strategies

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 External Environment-
 Customer
 Competitors
 Technology
 Political and legal Factors
 Society
 Environment
 Ethics
 Economic
 Analyze- Opportunities And Threats
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 Identification of Alternatives
 Base- organization objectives and planning
premises
 E.g. growth in future
 Expanding business or product line
 Diversifying in other area
 Joint ventures
 takeover etc.

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 Evaluation of Alternatives
 Contribution of each alternatives to the
organization objectives in the light of
resources and constraints
 Pros and cons should be identified
 Uncertainty in the outcome

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 Choice of Alternative
 Choose the best fit alternative
 Formulation of supporting plans-
Developing new product, buying raw material,
buying equipments, recruiting and training
 Establishing the sequence of activities
 Numberizing into the Budget

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Types of Plans

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 Types of Plans

 Strategic Plans
 Apply to the entire organization.
 Establish the organization’s overall goals.
 Seek to position the organization in terms of its environment.
 Cover extended periods of time.
 Operational Plans
 Specify the details of how the overall goals are to be achieved.
 Cover short time period.

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 Classification of Plans

 Long-Term Plans
 Plans with time frames extending beyond three years
 Short-Term Plans
 Plans with time frames on one year or less
 Specific Plans
 Plans that are clearly defined and leave no room for
interpretation
 Directional Plans
 Flexible plans that set out general guidelines, provide
focus, yet allow discretion in implementation.
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Exhibit 7–3 Specific Versus Directional Plans

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Single-Use Plans
For Goals Not Likely To Be Repeated

 A program is a complex set of objectives

and plans to achieve an important, one-
time organizational goal
 A project is similar to a program, but
generally smaller in scope and complexity

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Standing Plans
For Tasks Performed Repeatedly
 A policy is a general guide to action and
provides direction for people within the
organization
 Rules describe how a specific action is to be
performed
 Procedures define a precise series of steps to be
used in achieving a specific job

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Contingency Plans
Specific Situations - unexpected conditions

 Identify Uncontrollable Factors

 Economic turndowns
 Declining markets
 Increases in costs of supplies
 Technological developments
 Safety accidents
 Minimize Impact of Uncontrollable Factors
 Forecast a range of alternative responses to most-likely
high-impact contingencies

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 Purpose of Strategy
 The plan of action that prescribes resource allocation and other
activities for dealing with the environment, achieving a
competitive advantage, that help the organization attain its goals

Strategies focus on:

● Core competencies
● Developing synergy
● Creating value for customers
 Three Levels of Strategy in Organizations
Corporate-Level Strategy:
What business are we in?
Corporation

Business-Level Strategy:
How do we compete?

Textiles Unit Chemicals Unit Auto Parts Unit

Functional-Level Strategy:
How do we support the business-level
strategy?

Finance R&D Manufacturing Marketing

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 Strategic Management Process
Scan External Identify Strategic
Environment – Factors –
National, Global Opportunities,
Threats
Implement
Strategy via
Changes in:
Evaluate Current Formulate Leadership
Mission, Goals, Strategy – culture,
Define new Structure, HR,
Strategies SWOT Mission Goals,
Corporate,
Business, Information &
Grand Strategy control systems
Functional

Scan Internal
Environment – Core Identify Strategic
Competence, Synergy, Factors – Strengths,
Value Creation Weaknesses

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 Criticisms of Planning
 Planning may create rigidity.
 Plans cannot be developed for dynamic
environments.
 Planning involves huge Cost and time
 Planning focuses managers’ attention on today’s
competition not tomorrow’s survival.
 Formal planning reinforces today’s success, which
may lead to tomorrow’s failure.
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External Limitations of Planning
 Natural calamity
 Change in competitors’ policies
 Change in taste/fashion and trend in the market
 Change in technologies
 Change in government/economic policy

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 WHAT IS MBO ?
Peter Drucker, (1954, “The Practice of Management”)
 Is a systematic and organized approach that allows
management to focus on achievable goals and attain
the best possible results from available resources
 Aims to increase individual and organizational
effectiveness by
 Aligning organizational goals and subordinate
objectives
 Clarifies and quantifies objectives to allow for
 Monitoring, evaluation, and feedback throughout the
hierarchy of objectives
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 MBO
 Short and long-term planning
 Optimalization of organization structure
 Better work and collaboration quality

Appraisal based on objective results

BONUSES
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 Objectives

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MBO; CROSS SECTION

Vision
Top
Managers
Mission

Middle Tactical Management

by
Managers Plans Objectives

First-Level Operational Standing Single-Use

Managers Plans Plans Plans
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Management by Objectives (MBO)
 The MBO strategy:
 All individuals are assigned a specialized set of objectives
 Performance reviews are conducted periodically
 Rewards are given to individuals
 The MBO process:
 Review organizational objectives
 Set worker objectives
 Monitor progress
 Evaluate performance
 Give rewards For Internal Circulation and Academic Purpose
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 Model of the MBO Process
Step 1: Set Goals Step 2: Develop Action Plans
Corporate Strategic Goals
Departmental goals
Action Plans
Individual goals

Review Progress

Step 3:
Review Progress

Take Corrective Action

Appraise Performance
Step 4: Appraise Overall
Performance
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 Management by Objectives (MBO)
 Factors Necessary for a Successful MBO
Program
 Top management must be committed and set appropriate objectives

 Managers and subordinates must develop and agree on individual’s

goals

 Employee performance should be evaluated against established

objectives

 Management must follow through on employee performance

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Figure 8.6 Management by objectives as an
integrated planning and control framework.

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 Common organizational controls

 MBO involves a formal agreement specifying …

 Workers’ performance objectives for a specific time
period.
 Plans through which performance objectives will be
accomplished.
 Standards for measuring accomplishment of performance
objectives .
 Procedures for reviewing performance results.

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 ADVANTAGES OF MBO
 Manager and employee efforts are focused on activities
that will lead to goal attainment
 Performance can be improved at all company levels
 Employees are motivated
 Departmental and individual goals are aligned with
company goals
 Secures employee commitment to attaining goals
 Highlights training needs required to achieve objectives
 Attainment of goals can lead to the satisfaction of
Maslow’s higher order needs
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 DISADVANTAGES OF MBO
 Development of objectives can be time consuming
 Constant change prevents MBO from taking hold
 An environment of poor employer-employee relations
reduces MBO effectiveness
 Strategic goals may be displaced by operational goals
 Mechanistic organizations and values that discourage
participation can harm the MBO process
 Too much paperwork saps MBO energy
 May demotivate staff if targets are too high and unrealistic,
also if imposed rather than agreed
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 Reference
 Vasishth N, Vasishth. V. Principles of Management,
Text and Cases, Taxman Publication (P) Ltd. July
2014
 Robbins. S. Judge. T, Sanghi. S. Organizational
Behaviour, Pearson Prentice Hall, Second
Impression 2009
 Chhabra . T. N. Principles and Practices of
Management Dhanpat Rai &CO.(P) Ltd. 10th
Revised Edition 2017
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