Planning

Planning
“ bridges gap from where we are to where we want to go”
“ Planning and controlling are inseparable ”
Planning – controlling relationship
New plans

Controlling:
Implementation comparing No undesirable
Planning plans with deviations from
of Plans results plans

Undesirable
deviation
Corrective
action
Planning: defined:
Planning is the most basic function of management is defined as:
◦ Intellectual process / continuous process
◦ Thinking in advance / looking ahead
◦ Deciding what is to be done , when, how and who to do it.
◦ Involves decision making- choosing among alternative future courses of action.
◦ Involves selecting missions and objectives and action to achive them
◦ Thinking before action
◦ Furnishes standard for control.
 Planning: defined:
Planning has been defined by management expert Peter Drucker as “the
management function that includes decisions and actions to insure future results."

Perspective:
 forecasting and budgeting
 long range planning
Strategic planning
Strategic management
-
Planning
•Planning bridge the gap between where we are and
where we want to go.
•Planning provide target, they allocate resources in a
coordinate manner.
•Planning also solve as standard for control.
•Planning is mental exercise and intellectual process.
•Planning may be long term and short term.
•Planning may be strategic, tactical and operational.

•
Planning
Importance of Planning:
Minimizes risk & uncertainty
Provides rational, fact based procedure for Decision making
Leads to better chances of Success.
Focuses attention on organization’s goals
Facilitates control
Helps to cope with changing environment
Deals with futurity of present decisions.
Goals and plans become standard against which Performance can be measured.
Characteristics of Planning
Intellectual process: - Planning is mental exercise and intellectual process.
Future oriented: - Planning is always future oriented.
Goal focused: - Planning aims to achieve goal in future.
Pervasiveness of plan: - Planning is needed at all level of management.
Increase efficiency: -Planning increase efficiency. Planning aims to achieve
goal at low cost.
Decision making: - Planning and decision making are interrelated. Planning
is selecting right course of action to reach the goal.
Elements or Components ofPurpose
Planning
or mission ( Forms of Plans)
n

n Objectives / goals

n Strategies / Tactics

n Policies

n Procedures

n Rules

n Programs

n Budgets
Elements or Components of Planning(
Forms of Plans)..
Mission or purpose:
Identifies the basic purpose or function or tasks of an enterprise or agency or any part of it.
Primary role of organization defined by society- broad aim eg. Production, Service, Education,
Health care.
Special purpose, unique aim eg. Production of automobiles, providing education, treating
heart patients etc.

Objectives and Goals:

Objectives are specific targets to be achieved, in short term, end result of activities.
Goals: General, descriptive statement of long term results to be achieved.
 Elements or Components of Planning( Forms of Plans)
Strategies:
The determination of the basic long term objectives of an enterprise and the adoption of courses of
action and allocation of resources necessary to achieve these goals.
- Grand designs that describe how a firm should operate to achieve its objectives.
- Tell managers what to do and how to react to competitors.
- consists of programs of action and deployment of resources to achieve it.
Tactics are more detailed operational plans for specific allocation.
Policies:
- are also plans
- general statements or understandings that guide or channelize thinking in decision making.
Elements or Components of Planning( Forms of Plans)
Policies: contd..
◦ Policies could be verbal, written or implied
◦ Provide limits and direction for decisions
◦ Help to decide issues before they become problems
◦ Enables managers to delegate authority and still maintain control over subordinates.
Procedures:
Are plans that establish a required method of handling future activities.
◦ Guidelines for action rather than thinking
◦ Detailed guidelines for carrying out the policies
◦ Details of activities to be accomplished
◦ Prescribed manner by which work has to be performed
◦ Instructions for sequence of action.
Elements or Components of Planning( Forms of Plans)
Rules:
Rules spell out specific required actions or non-actions, allowing no discretion.
-detailed, recorded instructions that specify Actions that must be or must not
be performed in a given situation.
Programs:
Complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to
be employed etc to carry out a given course of action.
Programs tell what is to be done and procedures tell how.
Programs could be primary and supporting.
Budgets: A statement of expected results expressed In numerical terms.
Steps in Planning
1
• Setting Organizational Objective

2
• Analyzing and evaluating the environments

3 • Identifying alternative ways of achieving the objectives

4
• Developing
based planning premises upon which each alternative is

5 • Deciding the planning horizon

6
• Evaluating the alternatives and choosing the best alternative

7
• Developing plans to pursue chosen alternatives

8
• Controlling and evaluating the results
Planning Through Management by Objectives (MBO) – Peter
Drucker-1954
MBO: The Philosophy of management that emphasizes the setting of agreed on
objectives by managers and their subordinates and the use of these objectives as the
primary base of motivation, evaluation and control efforts.
MBO represents a way of thinking that concentrates on achieving results. It forces
management to plan explicitly, provides a systematic and rational approach to
management and helps prevent “ Management by crisis”.
MBO emphasizes measurable achievements and results (Management for results) and
active participation in objective setting at all levels of management.

Today MBO is used in Linking Goals/objectives and plans.

Also used in assessing performance of individuals and for rewarding contributions of
individuals as a means of motivation.
MBO process

Step 1: Top management’s support and commitment.

Step 2: Establishing long-range objectives and plans ( Developing over-all
organizational goals or objectives)
Step 3:Establishing Specific Shorter-term Organizational Objectives
Step 4: Establishing Individual performance objectives and standards of
performance for Individuals (formulating action plans)
Step 5: Appraising Results
Advantages and Disadvantages of MBO
Advantages:
◦ Aids coordination of goals/objectives and plans
◦ Helps clarify priorities and expectations
◦ Fosters employee motivation
◦ Enables managers to think about planning for results rather that merely planning for
work.
◦ Motivates managers to accept goals and achieve them
◦ Provides clear standards of control
Disadvantages:
◦ Tends to fail if strong commitment from top management does not exist.
◦ Necessitates considerable training of managers
◦ Can be misused as a punitive device.
◦ Over emphasis on quantitative goals/objectives.
◦ Difficulty in applying goal-oriented planning in a very dynamic and complex
environment.
◦ Difficulty in converting broad overall objectives into detailed unit objectives.
Planning premises
The feasibility of using any one alternative to achieve organizational objective is
determined by the planning premises or assumptions on which the alternative is based.
Types:
◦ Internal premises: Sales forecasts, Capital investment. Competence of mgmt etc
◦ External premises: General business/economic environment, technological changes, Govt
policies and regulations.
◦ Tangible premises: Quantitative measurement such as population growth, industry demand
etc.
◦ Intangible Premises: Qualitatively measure, for ex: political stability. Business and economic
environment, attitudes etc.
Hierarchy of plans
What are the types of plans?
Strategic Plans
To best understand the relationship between the different
types of plans, let's start at the top. Strategic plans are designed
with the entire organization in mind and begin with an
organization's mission. Top-level managers, such as CEOs or
presidents, will design and execute strategic plans to paint a
picture of the desired future and long-term goals of the
organization. Essentially, strategic plans look ahead to where the
organization wants to be in three, five, even ten years. Strategic
plans, provided by top-level managers, serve as the framework for
lower-level planning.
 Strategic Planning
“… the continuous process of making present entrepreneurial (risk-taking) decisions systematically
and with the greatest knowledge of their futurity; organizing systematically the efforts needed to
carry out these decisions; and measuring the results of these decisions against the expectations
through organized, systematic feedback”.
-Peter Drucker
-In short, strategic planning is a disciplined effort to produce fundamental decisions and actions
that shape and guide what an organization is, what it does, and why it does it, with a focus on the
future.
 Steps in Strategic Planning
1.Analyze the organization’s internal and external environment (SWOT analysis)
2.Conduct a stakeholder assessment
3.Define the purpose of the organization
4.Clarify values important to the organization
5.Set the goals and objectives
6.Communicate the goals and objectives to the constituents
7.Identify strategies – set time lines and tasks
8.Estimate and allocate resources
9.Develop and communicate a marketing or business plan
10.Establish a system for the implementation and monitoring of policies, procedures, and rules
11.Establish a system for exchanging information and building consensus
12.Provide a mechanism for evaluation
 Tactical Plans
Tactical plans support strategic plans by translating them into
specific plans relevant to a distinct area of the organization.
Tactical plans are concerned with the responsibility and
functionality of lower-level departments to fulfill their parts of the
strategic plan.
Operational Plans
Operational plans sit at the bottom of the totem pole; they are the
plans that are made by frontline, or low-level, managers. All
operational plans are focused on the specific procedures and
processes that occur within the lowest levels of the organization.
Managers must plan the routine tasks of the department using a high
level of detail.
Operational Plans
Operational plans can be either single-use or ongoing plans. Single-use
plans are those plans that are intended to be used only once. They
include activities that would not be repeated and often have an
expiration.

Creating a monthly budget and developing a promotional advertisement

for the quarter to increase the sales of a certain product are examples of
how Frank would utilize single-use planning.
Operational plans are made by low-level managers.

Ongoing plans are those plans that are built to withstand the test of
time. They are created with the intent to be used several times and
undergo changes when necessary.
Operational Planning
short-range planning that deals with day-to-day maintenance activities
performed at a unit or departmental level
done as part of the overall strategic planning
 Steps in operational plans

1.Set your objectives

2.Set your priorities
3.State your assumptions
4.Review any and all limitations
5.Develop your primary and back-up plans
6.Implement the plan
7.Set up a control system and follow up
Operational Plan Vs. strategic plan

Base Strategic plan Operational plan

Time Several years / decades 1 year or 3 yrs

Degree of details General and non specific Fine details of day-to-day work

Scope Extensive Constricted

JOUBERTDIAS
Mgmt level Top level Middle or lower level

implementation Top level Lower level

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Contingency Plans
Even the best plans can fail, especially in today's fast-paced,
chaotic business environment, and as such, it is important for
managers at all levels to engage in contingency planning.

Contingency plans allow a manager to be flexible and change-

savvy by providing an alternative course of action, which can be
implemented if and when an original plan fails to produce the
anticipated result. Having a contingency plan might seem like
extra work, but much like a reserve parachute when skydiving,
it's better to have it and not need it than to need it and not have
it.
Planning Principles By: John C. Maxwell
1) The Principle of Passion
When we're passion less, we procrastinate on the plan or burnout trying to execute it.
With passion, we approach our plans with excitement and a sense of urgency. Passion
gives planning energy. Passion also gives planning focus. As Tim Redmond says, "There
are many things that will catch my eye, but there are only a few things that will catch
my heart. It is those I consider to pursue." Passion narrows our vision so that the plan
dominates our attention and distractions fade into the background.

2) The Principle of Creativity

Of the seven planning principles, we violate the principle of creativity the most. By
gravitating to concreteness, we sacrifice creativity. We settle for what's easy to wrap
our minds around, and we neglect to wrestle with harder, more difficult dilemmas.
Leaders are too busy doing to think and provide ideas. Even the rare leaders who think
creatively often neglect to encourage the people around them to do the same.
Consequently, a majority of teams rely on one person for creative thought and end up
starved with good ideas.
Planning Principles By: John C. Maxwell
3) The Principle of Influence
When you prepare your plans, ask yourself the question, "Am I able to influence the
resources needed to fulfill my planning and mission?" To accomplish your plan, you'll need
influence over people, finances, and you schedule. The support of people, especially other
influencers, can make or break your plan. Make a priority to build relationships with them.
In particular, find the key to their lives by learning what matters most to them. If you
continually add value to the influencers around you in meaningful ways, then you'll be
more likely to receive their assistance when you need it.
4) The Principle of Priorities
Giving importance to the things you have to do or deal with, or must be done or dealt with
before everything else you have to do. You have no right, nor any reason, to start planning
your life until you know what you're living for and what you're willing to die for. It's
important to find your purpose so that you run, not on the fast track, but on your track. The
key to a prioritized life is concentration followed by elimination. As Peter Drucker observed,
"Concentration is the key to economic results. No other principle is violated as constantly
today as the basic principle of concentration. Our motto seems to be, let's do a little bit of
everything." We must cease to dabble in everything before we can become excellent at
anything”.
Planning Principles By: John C. Maxwell
5) The Principle of Flexibility
In leadership, be mentally prepared that not everything will go according to your
plans. Then, when plans unfold unexpectedly, you'll be prepared to see new
opportunities. Some of the best things we received in life have been surprises that we
could never have planned in advance. When plans go awry, don't just stand there. By
staying in motion, you create
movement. Be resourceful enough to improvise when circumstances push you off
course.
6) The Principle of Timing
Most of the time, our decisions are based on our emotional environment rather than
reality. When we're in the valleys of life, we don't see clearly. Our perspective is
limited, and all we see are the problems around us. In the valleys we make decisions,
not to better ourselves, but to escape our problems. Never make a major decision in
the valleys. Wait until you get to the peak where you can see clearer and farther. By
reserving big choices for the peaks, you'll avoid making rash decisions that you’ll regret
later.
Planning Principles By: John C. Maxwell
7) The Principle of Teamwork
A worthwhile plan ought to be bigger than your abilities. You shouldn't be able to
accomplish it alone. Each of us has areas of weakness, blind spots, and
shortcomings. Unless we rely on a team to help us, our plans succumb to our
personal limitations. A sign in Coach Bill Parcells' office stated his philosophy
plainly, "Individuals play the game but teams win championships." What we can
do alone pales in comparison to the potential we have when we work together.
Barriers or Limitations of Planning
Planning is an expensive and time consuming process.
-It involves significant amount of money, energy and also risk, without any assurance
of the fulfillment of the organization’s objectives.
Planning sometimes restricts the organization to the most rational and risk free
opportunities
.- It curbs the initiative of the manager and forces him to operate within the limits set
by it.
The scope of planning is said to be limited in the case of organizations with rapidly
changing situations
.- For example, it is claimed that for industries producing fashionable articles or for
industries engage in the publication of textbooks, working on a day-to-day basis is
more economical than plan basis.
Flexibility of planning cannot be maintained when there are unforeseen changes in the
environment.
- such as business recession, change in the government policy, crop failure etc. When
such events take place, the original plan loses its value and there is a need to draw up
a fresh plan.
Barriers or Limitations of Planning
Another limiting factor in planning is the difficulty of formulating accurate premises.
- Since these premises are the background against which a set of plan is made, they
necessarily deal with the future. Since the future cannot be known with accuracy,
premising must be subject to a margin of error.
Planning may sometimes face people’s resistance to it.
- In old, established organizations, managers are often frustrated in instituting
a new plan simply by the unwillingness or inability of people to accept it.
Benefits And Limitations of Planning

Limitations
Benefits
1. Uncertain future
1. Establishes direction
2. Sets priorities and focuses action 2. Time investment
3. Facilitates resource allocation 3. Inflexible
4. Increases motivation 4. Corporate inertia
5. Reduces cost & risk 5. Centrally focused
6. Improves communication 6. Implementation
“Thinking well is wise; planning well, wiser; but
doing well is the wisest and best of all.” - unknown