TOPIC 2 - PLANNING

Lecturer: Mdm Hjh

Mazlina Suhaimi
MGT400
 Lesson outcomes

 Definition and the importance of planning

and goals
 Types of planning (Strategic planning &
Operational planning)
 Barriers to effective planning
 Ways to overcome barriers to planning

2 Planning
 Planning

 Planning Defined
– The process of outlining the activities that
are necessary to achieve the goals of the
organization.
 A Plan
– A blueprint for action that prescribes the
activities necessary for an organization to
realize their goals.
3 Planning
 Purpose of Planning

 The purpose of planning is simple—to ensure that

the organization is both effective and efficient in its
activities.
 Help determine opportunity
 Identify course of actions
 Avoid risk, utilise resources
 Achieve goals and reduce overlapping
 Attain confidence & identify future changes

4 Planning
 Why Plan?

 As “Road map”
 Better Coordination
 Focus on Forward Thinking
 Participatory work environment
 More Effective Control System

5 Planning
 The Benefits of Planning

 A “Road map”
– Planning provides a guide and direction
 Better Coordination
– Planning provides a foundation for the
coordination of a broad range of organizational
activities.
– A plan helps to define the responsibilities of
individuals and work groups and helps coordinate
their activities.
6 Planning
 The Benefits of Planning (cont’d)
 Focus on Forward Thinking
– The planning function forces managers to think ahead and
consider resource needs and potential opportunities or threats
that the organization may face in the future.
 Participatory Work Environment
– Successful planning requires the participation of a wide range
of organizational members.
 More access to a broad base of experience and knowledge
in the planning process.
 More “buy in”—organizational members are more likely to
accept a plan that they have helped develop.

7 Planning
 The Benefits of Planning (cont’d)

 More Effective Control Systems

– An organization’s plan provides a foundation for control of
the processes and progress of the company.
– The implementation of the plan can be evaluated and
progress toward the achievement of performance objectives
can be monitored.
– Controls provide mechanism for ensuring that the
organization is moving in the right direction and making
progress toward achieve its goals.

8 Planning
 Planning as a Linking Mechanism

Goals

Provide a clear,
engaging sense
of direction and
specify what is to
be accomplished.
9 Planning
 Planning as a Linking Mechanism

Goals Control

Provide a clear, Monitor the extent

engaging sense to which goals have
of direction and been achieved and
specify what is to ensure the organ-
be accomplished. ization is moving in
the right direction
10 Planning
 Planning as a Linking Mechanism

Goals Plans Control

Relationship among goals,

plans, and controls.
11 Planning
 Cost of planning

 Management time
 Delayed decision making

12 Planning
 Where Should Planning Begin?

↓Top-Down Planning↓
Planning efforts begin with the board of
directors and top executives of the firm

↑Bottom-Up Planning↑
Planning is initiated at the lowest level
in the organization

13 Planning
 Advantages of Each Planning
Approach

 Top-Down Planning
– Top managers, who are the most knowledgeable
about the firm as a whole, drive the development
of the plan.
 Bottom-Up Planning
– The people closest to the operating system,
customers, and suppliers drive the development
of the plan.

14 Planning
 Goals

 Goals
– Target which activity is aimed
– Are very broad statements of the results that an
organization wishes to achieve in the long run.
– Relate to the mission and vision of the
organization and specify the level of performance
that the organization wants to achieve.

15 Planning
 Goals (cont’d)

 SMART goals are:

– Specific…
– Measurable…
– Achievable…
– Realistic/ Results-oriented…
– Timeline

16 Planning
 MISSION

 The reasons for which the organization exists

 Reflects its fundamental reason existence
 Expressed in a statement that provides
strategic directions to the members of an
organization

17 Planning
 MISSION STATEMENT

Should have 3 primary aspects:-

 Its target markets (WHO)
 Its primary products & services (WHAT)
 An outline of overall strategy for delivering
these products & services to satisfy
customers in the target market (HOW)

18 Planning
 MISSION STATEMENT
UiTM
To enhance the knowledge and
expertise of Bumiputeras in all fields
of study through professional
programmes, research work and
community service based on moral
values and professional ethics.
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PETRONAS
• We are a business entity
• Oil and gas is our core business
• We add value to this resource
• We contribute to the wellbeing of
the society
Planning
 IMPORTANCE OF MISSION
STATEMENT

 Promotes unity
 Helps allocate scarce resources
 Helps move from ideas to action
 Establishes culture

20 Planning
 Type of planning

 Strategic Plans
 Operational Plans

21 Planning
 Strategic Plan

 Long term planning

done by top
management to
determine the overall
organizational purpose
and objectives and
how they are achieved

22 Planning
 Levels of Strategic Planning
PLANNING FOCUS

Corporate “What business should we be in?”

“How do we compete in our existing

Business
lines of business?”

“How do we implement our

Functional
corporate and business strategies?”

23 Planning
 Operational Planning
 Operational Planning
– Focuses on the day-to-day activities that are
necessary to achieve the long-term goals of the
organization.
 Operational Plans
– Are more specific, address shorter-term issues, and
are formulated by mid- and lower-level managers who
are responsible for the work groups in the
organization.
– Can be categorized as either standing or single-use
plans.
24 Planning
 Single-Use Plans

 Single-Use Plans
– Are developed to address a specific
organizational situation. They include:
 Programs: govern a relatively comprehensive set of
activities that are designed to accomplish a particular set
of goals.
 Projects: direct the efforts of individuals or work groups
toward the achievement of specific, well-defined
objectives.
 Budgets: specify how financial resources should be
25 allocated. Planning
 Standing Plans

 Standing Plans
– Designed to deal with organizational issues or
problems that recur frequently. They include:
 Policies: general guidelines that govern how certain
organizational situations will be addressed.
 Procedures: more specific and are designed to give
explicit instructions on how to complete a recurring task.
 Rules: provide detailed and specific guidelines and limits
for action.

26 Planning
 Individual Plans

 Increasingly, organizations are looking for

ways to translate boarder organizational
plans to the level of individual employees.
 Two approaches for doing so include:
– Management by Objectives
– The Balanced Scorecard

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 Management by Objectives (MBO)

 A method for developing individualized plans

which guide the activities of individual
members of an organization.

28 Planning
 MBO Benefits

 Provides a foundation for a more integrated

and system-oriented approach to planning.
 Requires communication between employees
and their managers since they must agree on
the performance goals outlined in the plan.
 Creates a participatory work environment
where employees have a voice in how their
jobs are designed and what their performance
targets should be.

29 Planning
 MBO Disadvantages

 Requires time and commitment of top

management.
 May require excessive paperwork.
 May create a tendency to focus on short-term
vs. long-term planning.
 Can be difficult to establish and
operationalize.

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 MBO
Program
Steps

31 Planning
 The Balanced Scorecard (BSC)

 A system-wide performance measurement

process that aligns individual goals with the
strategic goals of the organization.
– Allows an organization to translate strategy
into operational actions at every level.
– Ensures employees that their individual
action plans and goals are consistent with
the overall strategic direction of the
organization.
32 Planning
 Measuring Performance with the
BSC
Measurement Implications for
Key Principles
Criteria Leaders

Align to the Understand the “big

Customers
strategy picture”
Translate strategy
Internal BSC measures
to operational
Processes performance at all levels
terms

View strategy as a Execute strategy into

Innovation
continual process action

Make strategy Empower frontline

Growth
everyone’s job employees

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 Barriers to Effective Planning

 Demands on the manager’s time

 Ambiguous and uncertain operating
environments
 Resistance to change
 Lack of meaningful objectives of goals &
commitment

34 Planning
 Barriers to Effective Planning
(cont’d)

 Failure to see scope of plans

 Rely too much on experiences
 Lack of top management support & clear
delegation of authority
 Lack of adequate control technique &
information

35 Planning
 Overcoming the Barriers to
Planning
 Apply Management Functions
– Priority, use of plan, delegate, communicate & coach
employees

 Involve Employees in Decision Making

– Input from all levels of a firm is essential for successful
planning

36 Planning
 Overcoming the Barriers to
Planning
 Take Advantage of a Diversity of Views
– Diverse views lead to a broader assessment of
organizational problems and opportunities.
 Encourage Strategic Thinking
– Effective strategic thinking can be developed through
training and practice.

37 Planning
  Ifyou are failed to plan, then you
are planning to fail.

38 Planning