INTRODUCTION

 Planning means looking ahead and chalking out future courses of action to be
followed. It is a preparatory step. It is a systematic activity which determines
when, how and who is going to perform a specific job. Planning is a detailed
programme regarding future courses of action. It is rightly said “Well plan is
half done”. Therefore planning takes into consideration available &
prospective human and physical resources of the organization so as to get
effective co-ordination, contribution & perfect adjustment. It is the basic
management function which includes formulation of one or more detailed
plans to achieve optimum balance of needs or demands with the available
resources.
 According to Urwick, “Planning is a mental predisposition to do things in
orderly way, to think before acting and to act in the light of facts rather than
guesses”. Planning is deciding best alternative among others to perform
different managerial functions in order to achieve predetermined goals.
DEFINITION
 According to Koontz & O’Donell, “Planning is deciding in advance what to do,
how to do and who is to do it. Planning bridges the gap between where we are
to, where we want to go. It makes possible things to occur which would not
otherwise occur”.

 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 the selecting and relating of facts and the making and using of
assumption regarding the future in the visualization and formulation of
proposed activities believed necessary to achieve desired results”
George R Terry



Procedure of Planning
 1.Analyze Opportunities: Generally, this is not a step of planning. It is
known as pre-step of planning. It is essential to make a successful plan. The
management has to analyze strengths; weakness, opportunities and threats
(SWOT) of changing environment of the business. Here, strengths and
weaknesses are internal environment of the enterprise like availability of
materials, machines, manpower, organizational structural technology etc.
 In the similar manner, opportunities and threats are external environment
and affected by many factors like government rules, economic condition,
competitors strategy customers taste, social and cultural believes etc. it is essential to
make detail study about the above factors and should be pointed clearly.

 2.Setting objectives: This is the first and real starting point of planning. The
objectives must be specific, clear and practical. They should be time bound and
expressed in numerical terms. They should not be idealistic or over ambitious. A minor
mistake in setting objectives might affect in implementation of plan. Thus, management
has to define objectives in clear manner by considering organizational resources and
opportunities. After clarification of specific objective, it should be broken down into
different departments, branches, sections and individuals.
 . Determination of premises: After setting objectives, another
step of planning is to determine premises. Premises are the
assumptions about the future in which the planning is implemented. They
provide environment and boundaries for the implementation of plan in
practical operation. The future environment will be established through
forecasting. They provide present trend and future possibilities. These
premises may be tangible and intangible and external.
 (a) Tangible and intangible: Tangible premises involve capital
investment, unit of production, units sold, cost per unit, time available etc.
Similarly, intangible premises involve employees moral, goodwill, motivation,
managerial attitude, etc.
 (b) Internal and external: Internal premises involve money,
materials, Machines and managements. In the similar manner, external factors
involve competitors strategy, technological change, government policy, social
and cultural beliefs etc.
 4. Determination of alternatives: The next step, after establishment of
objective and premises of the planning is to discover the various alternative courses of
action for the achievement of organizational objectives. For this purpose, it is essential to
identify all the possible hidden alternatives. The information about alternative courses of
action may be obtained from primary and secondary sources. There must be search for
the best alternative. The management must develop alternatives through the support of
experienced and intellectual experts in management sectors. The determination of
alternative courses of action is the basis of development, and therefore, they must be up-
to-date and reliable for the organization.

 5 Evaluation of alternatives: This is another step after
determination of alternative courses of action to evaluate them from their expected cost
and benefits. This is the logical step to evaluate each alternative from its plus and minus
points. Each alternative is studied and evaluated in terms of some common factors such
as risk, responsibility, planning premises, resources, technology etc. Thus, management
must implement a broad basis of requirement; it may borrow techniques of analysis from
many disciplines such as mathematic, sociology, economics, psychology etc. In
conclusion, evaluation techniques must be scientific and practical so that one of the best
courses can be selected.
 6 Selecting a course of action: Next step of the planning after
evaluation of alternative courses of action is to select a best course of action. At
that time of selection of one course of action, management has to consider past
experience, present situation and future contingencies of such decision. In
practical sense, this is the first step in the real point of decision. Thus, it is
essential to consider about the various premises and environments of an
organization and their impact on future course of action. Besides, it is needed
to forecast about the comparative costs and benefits factors. The evaluation of
these factors will provide guidelines and suggestions in practical
implementation of plan.

 7 Formulation of derivative plans: This is the next logical
step after the selection of a course of action. After the selection of course of
action, it is essential to formulate action plans for each step of work and to all
departments of the organization. These action plans involve formulation of
policies, rules, schedule and budget to complete defined objectives. Thus,
formulation of derivative plans is an essential step in planning process. It is
difficult to implement main plan without formulation of derivative plan
without formulation plan. For example, management has decided introduce a
new product in the line, for this purpose it has to prepare plans for product
design, plan and equipment, staffs, production process, market strategy,
budget etc. This is helpful to implement in practical field.
 8.Implantation of plans: This is one of the significant steps of
planning. Without this step, other this procedure of plan will remain as
paper work. This step brings all the procedure of plan into action. For
implementation plan, management has to take some steps such as to
communicate with subordinates who initiate to plan into action;
provide necessary instruction and guidance; make arrangement of all
resources like materials, machines, money, equipments etc; make
timely supervision and control over subordinates.

 9.Reviewing the planning process: The planning procedure is
continuous function up to the attainment of defined objectives. For
this purpose, evaluation of achievement of work, according to the time,
is necessary to know about actual performance. The manager can take
corrective action in proper time only after evaluation of actual
performance. The right decision at the right time is necessary to
achieve objectives according to the plan. It is also essential to adjust
with changing environment of the business.
NATURE OF PLANNING
 1. Planning is an intellectual process :- Planning as an intellectual process,
the conscious determination of course of action. Thus, it is an intellectual
stimulation. It possesses an element of day-dreaming. In the initial stage it may
involve what might be called vision. It involves foreseeing future
developement, making forecasts or predictions and then taking decisions.
Thus, it becomes an important mental exercise.
2. Planning contributes to the objective :- A plan starts with the setting of
objectives and in order to realize it develops policies, procedures, and
strategies, etc. Obviously, without setting the goals to be reached and lines of
action to be followed, there is a continuous and never-ending activity of a
manager to keep the enterprise going.
3. Planning is a selecting process :- Planning is a selective process. It involves
the study and a careful analysis of various alternatives and then selecting the
best one. It not only pertains to defining a problem which immediately
confronts the manager, but often it mentally searches the possibilities for
problems that might appear in the future.
 4. Planning forms the premises for the decision of the future :- Plans
become premises, for the decisions of the future. Detailed planning may
include several plans, which are mutually exclusive. It provides series or sets of
decision that can be made under various possible circumstances. Thus,
planning aids in making specific decisions, since it includes all of the
important alternatives, which
5. Planning pervades all managerial activities :- Planning is a pervasive
activity convering the entire enterprise with all its segments and its every level
of management. It is not the exclusive responsibility of top management but it
extends to middle and lower management as well. It is a primary function of
the management and its level and extent, etc. Will depend upon the level of
management.
6. Planning is directed towards efficiency :- The main purpose of planning
is to increase the efficiency of the enterprise. It is an attempt on the part of a
manager to anticipate the future in order to achieve better performance. It has
become an important function due to uncertain and ever changing
environmental of business.
7. Planning is a continuous and flexible process :- Because of uncertainties
of the future the planner must be ever alert and should form his plans in such a
way as to adopt them to changing circumstances without inconvenience and
undue costs.
 Planning is all pervasive -Planning is an function which exists in all levels of
managerial hierarchy. Starting from the the CEO to down to the last line worker. But the
content and quality of planning differ in different levels. Planning of top level executives
considerably affect the function of organization. Middle and lower level managerial
planning will not affect much of the function of the organization. Some examples of
planning are: Production planning, Material requirement planning, financial planning,
project planning etc.

 Planning is the primary function of management -Planning is the first and foremost
activity of Managerial function. Management starts with planning. Planing gives base for
other functions like organizing, staffing, directing controlling etc. It is equally important
like all other managerial functions.
 Planning is goal oriented –

 Planning leads to efficiency and economy- Planning leads to accomplishment of

objectives at the minimum possible cost.
 It avoids wastage of resources and ensures adequate and optimum utilization of
resources.
 A plan is worthless or useless if it does not value the cost incurred on it.
 Therefore planning must lead to saving of time, effort and money.
 Planning leads to proper utilization of men, money, materials, methods and machines.
 Internal Limitations
 There are several limitations of planning. Some of them are inherit in the process of
planning like rigidity and other arise due to shortcoming of the techniques of planning
and in the planners themselves.
 Rigidity
 Planning has tendency to make administration inflexible.
 Planning implies prior determination of policies, procedures and programmes and a
strict adherence to them in all circumstances.
 There is no scope for individual freedom.
 The development of employees is highly doubted because of which management
might have faced lot of difficulties in future.
 Planning therefore introduces inelasticity and discourages individual initiative and
experimentation.
 Misdirected Planning
 Planning may be used to serve individual interests rather than the interest of the
enterprise.
 Attempts can be made to influence setting of objectives, formulation of plans and
programmes to suit ones own requirement rather than that of whole organization.
 Machinery of planning can never be freed of bias. Every planner has his own likes,
dislikes, preferences, attitudes and interests which is reflected in planning.
 Time consuming
 Planning is a time consuming process because it involves collection of information,
it’s analysis and interpretation thereof. This entire process takes a lot of time
specially where there are a number of alternatives available.
 Therefore planning is not suitable during emergency or crisis when quick decisions
are required.
 Probability in planning
 Planning is based on forecasts which are mere estimates about future.
 These estimates may prove to be inexact due to the uncertainty of future.
 Any change in the anticipated situation may render plans ineffective.
 Plans do not always reflect real situations inspite of the sophisticated techniques of
forecasting because future is unpredictable.
 Thus, excessive reliance on plans may prove to be fatal.
 False sense of security
 Elaborate planning may create a false sense of security to the effect that everything is
taken for granted.
 Managers assume that as long as they work as per plans, it is satisfactory.
 Therefore they fail to take up timely actions and an opportunity is lost.
 Employees are more concerned about fulfillment of plan performance rather than
any kind of change.
 Expensive
 Collection, analysis and evaluation of different information, facts and
alternatives involves a lot of expense in terms of time, effort and money
 According to Koontz and O’Donell, ’ Expenses on planning should never
exceed the estimated benefits from planning
 External Limitations of Planning
 Political Climate- Change of government from Congress to some other political
party, etc.
 Labour Union- Strikes, lockouts, agitations.
 Technological changes- Modern techniques and equipments, computerization.
 Policies of competitors- Eg. Policies of Coca Cola and Pepsi.
 Natural Calamities- Earthquakes and floods.
 Changes in demand and prices- Change in fashion, change in tastes, change in
income level, demand falls, price falls, etc.
Types of planning
• According to time period
• Long term planning: For the long term goals. It covers a time period of 5 yr or more.
• Medium term planning: Such planning covers a time horizon between 2 to 5 yrs.
• Short term planning: The time horizon of short term planning usually extended up to
one year.

• According to the levels of formulation planning may be classified into 3 categories:

• Corporate planning: Planning for the total enterprise. It lay down the basic goals,
strategies and policies for the enterprise as a whole.
• Divisional Planning: It specifies the goals, policies and procedures for a particular
division of the enterprise.
• Functional Planning: This is the lowest level of the planning. These plans are used to
implement the divisional plans. The concern is for short- range actions and adherence to
planned schedules and budget.
 According to the Focus
 Strategic planning: SP refers to comprehensive and integrated
planning. It is based on long term forecasts and is usually done at
higher levels of management. it encompasses all the functional areas of
business.
 This plan is prepared by the top level management by taking the long
term objectives of the organization into consideration. It clearly defines
the objectives of the organization and strategies to achive the defined
objective. Here goal focuses on the result that an organization wants to
achieve. It is the end point of planning. In the similar manner,
strategies involve the clear explanation about how to achieve the
defined objectives. They consist of programs, policies and schedules to
utilize properly the available resources of the service, market,
competition, social responsibility, introduction of technology, public
image etc. As strategies are for the long term future course of action,
they are based on analysis of future opportunities and threats. Hence,
there is a high degree of uncertainty in strategic plans. A minor
negative impact of an environment may inverse impact on
organizational performance. Thus the top level management has to
modify strategic plan on the basis of time, situation and requirement
 Operational Planning: OP or tactical planning involves the conversion
of strategic plans into detailed and specific action plans. An
operational plan is the blue print for current action and it supports the
strategic plans.
 Operational or Unit Plan: This plan is prepared by the lower level
management. It is consistent with tactical plant. In simple sense, it is
the action plan of each and every activity of the department. It prepares
the schedule of each and every department. It prepares schedule of
each unit of work and implement tactical plan in practical field. It is
concentrated in the best use of available resources. For this purpose,
operating level of management prepares plan and schedule of each
stage of work of a unit or department. For instance, it prepares regular
production schedule of a production department so that priority
should be given to regular production process. In the similar manner,
short term operational plan are also prepared for other units like
marketing, finance, personal etc. In conclusion, this plan concentrates
in best utilization of resources under the control of concerned unit.
 Tactical - Tactical plan is prepared by the middle level
management It is consistent with corporate plan. In simple
words, it is the sub-division of corporate plan to implement
in practical field. Here, divisional managers identify the
priorities of the works. They focus to allocate work and
resources on the basis of programs. It is prepared to
allocate divisional activities like production, finance,
marketing, personal and others. It focuses to get the things
done complete. Basically divisional plan is based on
divisional strength and threats. This plays a mediator role
between corporate and operational plans.
Advantages (Benefits/Importance) of
Planning
 Goal Focus
 Minimize Uncertainty
 Improve efficiency
 Facilitates to Control
 Innovation and Creativity
 Better Coordination
 Ensures Commitment
 Aid to Business Success
 Brings Systematization
TYPES OF PLANS
 Plans are classified into two ways:
 A) Multi-Use plans or repeated use plans or standing plans.- are used again and
again. these are used for indefinite time. They facilitate decision-making and
save time and effort.
 B) Single Use plans- Deals with unique and non- repetitive situation.
  Multi-Use plans or repeated use plans or Standing.
 Objectives
 Policies
 Strategies
 Procedures
 Rules
 Single Use plans
 Programmes
 Budgets
 Schedules
 Projects
 Methods
Multi-Use plans or repeated use plans or Standing.
 Objectives: Every org’ exists to achieve some purposes which are
called its objectives. Objectives are the aim or purpose for which an
organization is set up and operates .The planning process begins with
the setting up of the objectives. according to ALLEN “ objectives are
goals established to guide the efforts of the company and each of its
components”.
 Goals
 Targets
 Standards
 Quota
 Deadlines
 Policies: A policy is a general statement that guides decision making.
Policies define the boundaries within which decisions can be made and
they direct decision towards the accomplishment of the objectives.
Polices are generally formulated by the top management and provides
scope for executive judgment.
 Type of policies:
 A)Originated policy-Guide decision making at lower level.
 B) Appealed policy-Formulated on the appeal/request of the
subordinates.
 C) Imposed policy- Compelled to adopt a policy due to the outside
forces like trade unions, trade associations, govt etc.
 Strategies: Strategy is the course of action through which an
organization relates itself with environment so as to achieve its
objectives. It is the right combination of factors both external and
internal. It relates the organisation with its environment.
 Strategy is forward looking.
 It has orientation towards the future.
 Procedure: A procedure describes what action is to be
taken in a specific situation. It spells out a series of steps
agganged in some predetermined order.
 Procedures are designed to execute policies and achieve
objectives.
 A procedure is narrower in scope and less flexible than a
policy.
 Rule: Rules are specific statement of what should or should
not be done in a specific situation. Rules indicates limits of
acceptable behavior to the members of an organisation.
 Rules permit comparison of behaviour of people and
group.
 Rules are helpful in maintaining discipline.
 A rule may or may not be the part of the procedure.
Single Use plans
 Methods: Methods are formalized and standardized way of accomplishing
repetitive and routine jobs. Methods provide detailed and specific
guidance for day-to-day action.
 Methods are helpful in standardization, simplification and systematized
work.
 A method prescribe the manner of performing a task. Therefore, it is
helpful in the use of a procedure with minimum expenditure of time,
money and efforts.
 A method is more limited in scope than a procedure. It is one step of the
procedure.
 Budget: A budget is the plan for the allocation of resources. It expresses
the objectives and resources in a quantitative term.
 A budget is a plan which states expected results of a given future period in
a numerical term.
 A budget may reflect capital outlay, cash flows, production, sales targets.
 Budget serve as standards of performance.
 Project: A project is a complex scheme for the investment of resources
which can be analyzed and evaluated as an independent unit.
 Project is non- recurring plan.
 It has a specific mission or objective.
 It involves time bound plan with a long time
 It involves considerable investment of resources and its significant for
the future of the organisation.
 Project is helpful in precise allocation of duties, effective control, easy
implementation of the plans and fixation of responsibility.
 Programme: A programme is a comprehensive plan designed to
implement the policies and accomplishing the objectives.
 It is the combination of goals, policies, task assignment, resource flows
etc.
 It spell out clearly the steps to be taken, resource to be used, and the
time period with in which the task is to be completed .
 Schedule: A schedule is the time table of the work. It
specifies the date when a task is to be begin and the time
needed to complete each task.
 The starting and completion dates for each part of the
programme are specified in the time schedule.
 It is necessary in all the org’ to provide for an even flow of
operations and ensure completion of each task at the right
time.
 Main elements involved in planning schedule:
 Identify activities or tasks
 determine their sequence
 Specify starting and finishing dates for each activity as well
as for the sequence as a whole.
 Scheduling is the process of establishing a time sequence
for the work to be done.
OBJECTIVES
Objectives : Every org’ exists to achieve some purposes which
are called its objectives. Objectives are the aim or purpose for
which an organisation is set up and operates .
 Mission or purpose: Mission and Purpose are often used
interchangeably. A mission statement helps the org’ to link its activities
to the needs of the society and legitimate its existence.
 ”mission/purpose of an organisation is a general enduring statement of
the org’ the extent of which embodies the decision maker’s philosophy;
it implies the image which the org’ seeks to project”
 Example: Hindustan lever’s commitment to national priorities:
employment generation, development of backward areas, agriculture
linkages, exports etc
 Thus, mission of the company says what it can do for the country
(society in general)
Meaning of Objectives
 Objectives are more precise as compared to the
mission and used to specify the end results which an
organisation wants to achieve.
 According to terry and franklin” a managerial objective
is the intended goal that prescribe definite scope and
suggests directions to the planning efforts of a
manager”.
Features of Objectives
 Each org’ or groups has objectives. In fact org and groups are created
for the certain objectives. members in the org’ try to achieve those
objectives.
 Objectives can be broad or they may be specifically mentioned. They
may be set either for the long term or for the short term.
 Objectives may be clearly defined or these may not be clear and have to
be interpreted by the behavior of organisational members, particularly
those at top level.
 Objectives have hierarchy.
 Objectives have social sanctions, that is they are created within the
social norms. various restrictions on org’ objectives are put by the social
norms, rules or customs.
 An organization may have multiple objectives.
 Organisational objectives can be changed old objectives can be
replaced by the new ones.
Hierarchy of objectives
 Social- economic purpose
 Visionary long term concepts of organization
 Organizational mission
 Organizational objectives
 Objectives in key results areas
 Departmental objectives
 Sectional objectives
 Individual level objectives
OBJECTIVE SETTING
 All organizations have a formal, explicitly recognized,
legally specified organs for setting the initial objectives.
 Generally the top management of the organization
determines the overall objectives which the members of
the org’ unite to achieve.
 In some of the org’ the objectives may be set by the votes of
the shareholders, in other by the votes of the members, by
small no. of trustees or by few individuals who own and run
the organization.
 In large enterprises such bodies as board of director,
governing boards, executive committee may set the
objectives.
Guidelines for objective
settings
 Objectives must be clearly specified
 Objective must be set taking into account the various factors affecting
their achievements .
 Objectives must be consistent with organizational mission.
 Objectives should be rational and realistic rather than idealistic.
 Objectives should be achievable but must provide challenge to those
responsible for achievement.
 Objectives should be yield specific results when achieved.
 Objectives should be desirable for those who are responsible for the
achievement.
 Objectives should be consistent over the period of time.
 Objectives should be periodically reviewed.
Area Of objective setting
 Marketing standards
 Innovation
 Productivity
 Physical and financial resources
 Profitability
 Manager performance and development
 Work performance and attitude
 Public responsibility
MBO (Management by
objectives)
 MBO is a process whereby the superiors and the subordinate managers
of an enterprise jointly identify its common goals, define each
individual’s major areas of responsibility in terms of the results
expected of him, and use these measures as guide for operating the
unit and assessing the contribution of each of its members.
 MBO is a comprehensive managerial system that integrates many key
managerial activities in a systematic manner, consciously directed
towards the effective and efficient achievement of organizational
objectives.
 MBO is a result-centered, non-specialist, operational managerial
process for the effective utilization of the material, physical and human
resource of the organization. By integrating the individual with the
organization and the organization with the environment.
Characteristics

of MBO
Mutual goal oriented. Fundamentals to the MBO process in the
mutual setting of objectives b/w each position holder ad their
superiors, and the use of these objectives as standards for evaluating
the employees performance. There is active participation of lower level
people.
 Compatibility: MBO is a process of setting compatible objectives at all
level of the organisation.The process starts with the setting of overall
organizational objectives at the top. objectives for each position are
designed to complement each other vertically in the hierarchy and
horizontally and laterally across the organisational span .
 Measurable objectives: MBO involves the setting of specific
measurable objectives for the future time period. The idea is to assign
each employee a specific target which is time bound.
 Systematic: MBO is a formal process that begins with the goals setting
and continue through performance review. managers and subordinates
act together not only to set common goals but to review the
performance in the light of these goals.
 Continuity: Under MBO performance appraisal are conducted jointly
on a continuous basis with provision for regular periodic review. MBO
is an dynamic approach that’s attempt to integrate the individual with
the organization.
 KRA: The emphasis of the MBO is on performance improvement in
the areas which are of a critical importance to the organization as a
whole. by identifying key result areas(KRA), MBO ensures that due
attention is given to the priority areas which have significant impact on
performance and the growth of the organisation.
Objectives of MBO
 To measure and judge the performance.
 To relate individual performance with org. performance.
 To clarify both the job is to be done and expectations of
accomplishment.
 To foster the increasing competences and growth of the
subordinates.
 To enhance the communication b/w superior and
supervisors.
 To serve as the basis for judgments about salary and
promotions .
 Motivation
 To serve as a device for organizational control and
integration.
Steps in MBO
 Diagnosis: Preliminary activities directed toward an
understanding of important employee needs, jobs, technology
and external influences.
 1) understanding the organisation
 2) obtaining commitment.
 3) define jobs
 4) training people
 Goal setting: Goal setting is a multilevel process in MBO.
 1) Organisational goals and strategies
 2) unit and individual goals
 3) review by superiors.
 4) Joint agreement.


 Action planning: Goals reflects the ends of managerial
performance. action plans provides means for their
attainment.
 Steps in action planning: a) specify the major task and
activities for the attainment of the objectives.
 B) construct a schedule for performing the activates in a
proper sequence.
 C) Clarify the roles and relation by delegating the authority
for each activity.
 D) estimate time requirement.
 E) determine the source required.
 F) Clarify the deadlines and modify the action plans
 Interim Review: After regular time interval the
subordinates and superiors get together to review the
progress towards the attainment of goals.
 1) Environmental changes
 2) Revise goals and action plans.
 Final Review: At the end of the goals setting period
superiors and subordinates formally meet and review the
results. Emphasis is placed on analysis, discussion and
feedback to the next MBO cycle.
 1) Discussion
 2) analysis
 3) motivation
 4) rewards
 5) Control
Advantage of MBO
 Improved planning
 Team work
 Effective self control
 Objective appraisals
 Motivation and morale.
 Basis for orgnisational changes
 Clarity in orgnisational actions.
 Time and cost
Limitations of MBO
 Failure to teach MBO philosohy
 Problem in objective settings
 Emphasis on short term goals
 Inflexibility
 Frustration
 Undermining leadership
 Participation problem.
 Increased paperwork.

Prerequisites for installing MBO
programme
 Purpose of MBO
 Top management support
 Training for MBO
 Participation
 Feedback for self direction and self control
 Adequate time and resources
 Decentralization
 politics
 STRATEGY / Strategies
 Strategy is the pattern of objectives, purpose or goal and
major policies and plans for achieving these goals, stated in
such a way so as to define what business the company is in
or is to be and the kind of company it is to be.
 Strategy is the course of action through which an org’
relates itself with environment so as to achieve its
objectives.
 Strategy is the determination of the basic long term goals
and objectives of an enterprise and the adoption of the
course of action and the allocation of resources necessary
for carrying out these goals.
Levels of strategies
 1) corporate level strategy-
 2) business level strategy
 3) functional level strategy

1) Corporate level-
 It occupies the highest level of strategic decision making.
 It covers actions dealing with the objectives of the firm,
 Acquisition and allocation of resources
 Coordination of strategies of various SBUs for optimal
performance.
 Strategy decisions tends to be value oriented, conceptual
and less concrete than decision in business and
functional level.
 Business level strategy-
 It is applicable in those orgnaisation which have
different businesses and each business is treated as
strategic business unit.
 The fundamental concept of SBUs is to identify
independent products/ market segments served by an
organisation.
 The corporate strategy set the long term objectives of
the firm and the broad constraints and policies with in
which a SBU operates.
 C.S is not the sumtotal of B.S of the corporation but it
deals with different subject matters.
 Functional Strategies –
 It relates to a single functional operations and
activates involved therein.
 F.S deals with relatively restricted plan providing
objectives for specific functions, allocation of
resources among different function/ operations with in
that functional area and coordination b/w them for
the optimal contribution to the achievement of the
SBUs and corporate – level strategies .
 Example: marketing strategies: sales, distribution,
promotion
Polices
 Policies are general statement or understanding which
guide or channel thinking in decision making (-kotler)
 Policies define the boundaries within which decisions can
be made and they direct decision towards the
accomplishment of the objectives.
 Polices are generally formulated by the top management
and provides scope for executive judgment.
 Type of policies:
 A)Originated policy-Guide decision making at lower level.
 B) Appealed policy-Formulated on the appeal/request of
the subordinates.
 C) Imposed policy- Compelled to adopt a policy due to the
outside forces like trade unions, trade associations, govt
etc.
Process of Policy Formulation
 Definition of policy area :The area in which policy is
needed should be specified. proper planning horizon is
decided.
 Identification of policy alternatives : in order to
identify the alternative policies that may be adopted for
achieving objectives, analysis of environment is necessary.
Analysis of E.environment reveals O and T. Analysis of
I.environment reveals S and W and values of the org’.
 Evaluation of alternatives: alternative is evaluated in
terms of its contribution to the objectives. costs benefits
and resource requirement of each alternative are
considered.
 Choice of policy: After evaluation most appropriate
alternative is selected. This is the point of policy making as
it results in long-term commitment.
 Testing of policy : The tentative policy may be tested
to judge its impact on the organization. Ideas and
suggestions received during the test may be used to
modify and improve policies.
 Communication of policies: the final policy is
communicated and explained to those responsible for
its application.it is necessary to educated people in the
proper application of policy.
 Policy application: The chosen policy is put into
practice by covering it into operational plans.
 Policy review and appraisal: A periodic review of
policy is necessary to ensure that it is useful under
changing conditions.
Programme
 A programme is a precise plan which lays down the
different operations to be carried out to achieve a given
work.
 A programme involves planning for future events and
establishing sequence of required actions.
 A programme is a comprehensive plan designed to
implement the policies and accomplishing the objectives.
 It is the combination of goals, policies, task assignment,
resource flows etc.
 It spell out clearly the steps to be taken, resource to be
used, and the time period with in which the task is to be
completed .
Features of programme
 Prog. Prescribe the fixed time table for each step.
 Prog. Indicates the various steps in form of small
plans.
 Prog. Is designed for achieving the objects of business
enterprise.
 It is simple use plan once the objectives or goals of the
prog. Is achieved it will not be used again.
 It is action based and result oriented
 It helps in motivating employees
 There is great risk of failure of the prog. Due to the
change in the environment.
Prog. Process model
FEEDBACK To fix a define date for each part
Identify the of the prog.
activities

Estimation of time
Divide the for each activity
activities into steps

Making a specific Allocation of

person responsible resources steps wise
for a specific
activity or step