Unit-2

Planning and decision making concept, purpose and process of planning, kinds of plans, strategic planning, tactical planning and operational planning, goal setting, MBO; Decision making nature and process, behavioral aspects of decision making, forms of group decision making in organizations

Planning:

Planning is deciding in advance what to do, how to do it , when to do it and who is to do it. It involves anticipating the future and consciously choosing the future course of action. Planning is the process and a plan is the outcome of this process. Hence, a plan is a blueprint for the future course of action. At all levels of management as all levels are involved with future course Flexible as it is future oriented which is dynamic

Definitions :
According to Haimann, It is the function that determines in advance what should be done. It consists of selecting the enterprise objectives, policies, programmes, procedures and other means of achieving these objectives. According to killenplanning is the process of deciding in advance what is to be done , who is to do it, how is to be done and when it is to be done According to koonz , ODonnel and Weihrich planning is an intellectually demanding process ;it requires the conscious determination of course of action and the basing of decision on purpose, knowledge and considered estimates.

Nature of planning :

A Rational Approach: For defining where one stands, where one wants to go in the future and how to reach there. The concept denotes the choice of appropriate means of achieving objectives.

Nature of Planning

Planning An Open System Approach: Takes inputs from the environment, processes these and exports outputs to environment The approach indicates the identification of gap between current status and the desired status Decides the action the bridge the gap. Actions are influenced by a variety of environment factors.

Nature of Planning

Pervasiveness of Planning: Planning exist at all level of management.

Nature of planning
Planning is : Goal oriented A primary function An intellectual process A continuous process Involves choices An integrated process Directed toward efficiency

Importance of planning (If you fail to plan, you plan to fail!)

Importance of planning (If you fail to plan, you plan to fail!)

Importance of planning (If you fail to plan, you plan to fail!)

Process of Planning

Explanation
Perception of Opportunities: Preliminary look at possible opportunities. Understands SWOT By studying the internal environment for strength and weakness and external environment for opportunities and strength. Establishing Objectives: Organizational & Department Objectives are set considering the internal and external environment. Identification of key results area and setting of objectives setting of departmental and unit level objectives based on organization objectives Objectives provides direction to the organization

Explanation
Planning Premises: planning Premises are assumptions on which the plans are based Assumption of the external and internal environment External Environment: PESTEL Internal Environment: policies, Practices, organization Forecasting plays a major role in planning Nature of Planning premises: Different focus at different levels Top Level: externally focused

Explanation
Identification of alternatives: Case: The Objective of the organization is to grow The various alternative to achieve this objectives are expansion in the same field of business Diversification Merger & Acquisition etc. Overall analysis of all the alternative objectives needs to be done in order to drop non feasible alternatives Preliminary criteria can be defined in several ways: Minimum investment required Matching with the present business objectives Control by the government

Explanation
Evaluation of alternatives: Feasible alternatives are taken for detailed study Evaluation of the alternatives to understand its contribution to organizational objectives in terms of resources and constraints. Choice of alternative plans: The best plan in terms of contribution to the business objectives in the light of the resources and constraints is chosen The planner needs to select more than one plan in event of changes. Such plans are contingence plans

Explanation
Formulating of Supporting Plans: Plan supporting the main plan Derivative plans like Planning for buying equipments Buying raw materials Recruitment plans Training plans Establishing sequences of activities: The sequence of the plan is decided so as to put the plan in action Based on the plans the responsibility of implementation and its control is decided Budget preparation and allocation is done

Barriers to effective Planning

Making Planning Effective

Linked to long-term objectives Direction for action Consistent Feasible Simplicity Flexible

Strategic planning

Decisions of senior executives about the organizations long-term goals and strategies Has an external orientation Covers major portions of the organization strategic goals - major targets that relate to the long-term survival, value, and growth of the organization strategy - pattern of actions and resource allocations designed to achieve the goals of the organization

matches the skills and resources of the organization to the opportunities found in the external environment

Tactical planning & Operational planning

Tactical planning

translates broad strategic goals and plans into specific goals and plans that are relevant to a definite portion of the organization focuses on the major actions that a unit must take to fulfill its part of the strategic plan
identifies the specific procedures and processes required at lower levels of the organization plans intended for short periods of time and focus on routine tasks

Operational planning

LONG-TERM PLANNING & SHORT-TERM PLANNING

LONG-TERM PLANNING Long term plans usually cover all the functional areas of the business and are affected within the existing and long-term framework of economic, social, and technological factors. Analysis of environmental factors, particularly with respect to how the organization relates to its competition and environment. SHORT-TERM PLANNING These plan are aimed at sustaining organization in its production and distribution of current products or services to the existing markets

PROACTIVE PLANNING: Proactive planning involves designing suitable courses of action in hope of likely changes in the relevant environment. REACTIVE PLANNING: Organizations responses come after the environmental changes have taken place. FORMAL PLANNING: Formal planning is in the form of wellstructured process involving different steps.

INFORMAL PLANNING: This planning process is based on managers memory of events, perception and gut-feelings rather than based on systematic evaluation of environmental happenings.

Types of plan
Standing plans Objective Strategies Policies Procedures Rules Single use plans Programmes Budgets Schedules Projects methods

The Strategic Management Process

Management by Objective (M.B.O)

Definition: A process whereby the superior and the subordinate managers of an enterprise jointly identify its common goals, define each individuals major areas of responsibility in terms of the result expected of him, and use the measures as guides for operating the unit and assessing the contribution of each of its members.

MBO process

Benefits of M.B.O:Better managing Clarity in Organizational action Personal satisfaction Basic for organizational change. Encouragement of personal commitment. Development of effective control.

Limitations of M.B.O:Failure to teach M.B.O Philosophy. Failures to give guideline to goal setters. Difficulty in goal setting. Emphasis on short-term goal. Inflexibility. Time and cost