1. FOUNDATION OF PLANNING
Chapter No. 07

2. TOPICS TO BE COVERED….
 What is Planning?
 What are types of Planning?
 Purpose of Planning
 Planning Performance Relationship
 Elements of Planning
 Types of Goals
 Level/Nature of Goals
 Types of Plans

3. TOPICS TO BE COVERED….
 What are SMART Goals?
 Goal Setting Process
 Concept of MBO

4. WHAT IS PLANNING
 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.

5. WHAT ARE TYPES OF PLANNING?
 Informal: not written down, short-term focus;
specific to an organizational unit.
 Formal: written, specific, and long-term
focus, involves shared goals for the
organization

6. PURPOSE OF PLANNING
 Provides direction
 Reduces uncertainty
 Minimizes waste and redundancy
 Sets the standards for controlling

7. PLANNING PERFORMANCE RELATIONSHIP
 The Relationship Between Planning And
Performance
 Formal planning is associated with:
 Higher profits and returns on assets.
 Positive financial results.
 The quality of planning and implementation affects
performance more than the extent of planning.
 The external environment can reduce the impact of
planning on performance,
 Formal planning must be used for several years before
planning begins to affect performance.

8. ELEMENTS OF PLANNING
 Goals (also Objectives)
 Desired outcomes for individuals, groups, or entire
organizations
 Provide direction and evaluation performance criteria
 We may say that objectives are present part of long term
goals
 Plans
 Way or mean to do certain action.
 Predefined course of action to achieve organizational goals.
 Documents that outline how goals are to be accomplished
 Describe how resources are to be allocated and establish activity schedules

9. TYPES OF GOALS
 Stated Goals versus Real Goals
 Broadly-worded official statements of the
organization (intended for public consumption)
that may be irrelevant to its real goals (what
actually goes on in the organization).

10. (McDonald’s Corporation)
Execute strategic roadmap—“Plan to Win.”
Grow the business profitably.
Identify and develop diverse talent.
Promote balanced, active lifestyles.

11. LEVEL/NATURE OF GOALS
1. Strategic Goals - 'What?'
Strategic decisions deal with the big picture of your business. The focus of
strategic decisions is typically external to the business and usually future
oriented. Strategic decision-making creates the forward thrust in the business.
It includes decisions about:
 What business are you in?
 What is your vision for the business?
 What's your business' identity?
 What do you stand for?
 Which direction is the business headed?
 How will the business compete?
 Corporations often capture their overall business strategy in a "Statement of Intent"
and it's an excellent term for describing what strategic decision-making is. Too
often people confuse strategic decisions with tactical decisions and fail to really
examine the big picture. It can lead to stagnation in the business and an inability to
move forward.

12. 2. Tactical Goals - 'How?'
Tactical decisions involve the establishment of key initiatives to achieve
the overall strategy. For example, if you have decided to be the Number
1 provider in your market (a strategic decision) then you will develop
tactics (e.g. implement a marketing system, increase number of
therapists) to achieve that outcome. In a small business you may have 4
or 5 key tactics that you are going to use to achieve your overall
strategy.
 Again this layer of decision-making can sometimes be overlooked yet it is
the glue that creates a strong connection between your long-term vision
and your day-to-day activities. Tactical decision-making is the domain of
'mission' statements.
 Think in terms of the battlefields from which the term has emerged. The
overall strategy, that is, what the army is there to do, is to win the war. Then
you have a number of 'missions' you send troops on, preferably diplomatic
ones, the cumulative effect of which is intended to win the war.

13. 3. Operational Goals - 'How will we deploy resources?‘
Operational decisions determine how activities actually get done. They
are the 'grass roots' decisions about who is going to do what and
when. It includes:
 How will we spend our money this month?
 How will we service that client?
 What is our procedure for delivering an order?
 Who will be doing quality control?
 SOPs
 If you are making decisions involving processes and procedures they
are usually operational decisions. Operational decisions are often
made in 'real time' and are the result of needing to make quick
adjustments or change to achieve the desired outcome.

14. TYPES OF PLANS

15.  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.

17.  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.

19.  Single-Use Plan
 A one-time plan specifically designed to meet the
need of a unique situation.
 Standing Plans
 Ongoing plans that provide guidance for activities
performed repeatedly.

20. WHAT ARE SMART GOALS?
 The acronym SMART stands for
specific, measurable, attainable, relevant and
timely. Using SMART creates a clear-cut path to
preset goals. With a defined timeline to achieve
the SMART standards, businesses are able to
plan their future by examining the past.
Through planning and organization.

21. S Specific Smart goals are specific
enough to suggest action.
Save enough money to get
a refrigerator, not just
save money.
M Measurable You need to know when
you’ve achieved your goal,
or how close you are.
Goals which aren't
measurable, like "I'd like
to have more money," are
much harder to achieve -
and you don't even know
when you get there.
A refrigerator costs $600,
and you have $300
already saved.
A Attainable The steps toward
reaching your goal need
to be reasonable and
possible.
I know I can save enough
money each week to
arrive at my goal within
one year.
R Relevant The goal needs to make
common sense. You don't
want to struggle or work
toward a goal that doesn't
fit your need.
You don't need to save
money for 18 pairs of
shoes.
T Time Bound Set a definite target date. The repairman says my
refrigerator won't last
another year. I need a
new fridge in the next six
months.

22. GOAL SETTING PROCESS
1. REVIEW the organization’s mission statement.
Do goals reflect the mission?
2. Evaluate available resources.
Are resources sufficient to accomplish the mission?
3. Determine goals individually or with others.
Are goals specific, measurable, and timely?
4. Write down the goals and communicate them.
Is everybody on the same page?
5. Review results and whether goals are being met.
What changes are needed in mission, resources, or goals?

23. CONCEPT OF MBO
Management By Objectives (MBO)
 Specific performance goals are jointly determined
by employees and managers.
 Progress toward accomplishing goals is
periodically reviewed.
 Rewards are allocated on the basis of progress
towards the goals.
 Key elements of MBO:
 Goal specificity, participative decision making, an
explicit performance/evaluation period, feedback

24. STEPS IN A TYPICAL MBO PROGRAM
1. The organization’s overall objectives and strategies are formulated.
2. Major objectives are allocated among divisional and departmental
units.
3. Unit managers collaboratively set specific objectives for their units
with their managers.
4. Specific objectives are collaboratively set with all department
members.
5. Action plans, defining how objectives are to be achieved, are specified
and agreed upon by managers and employees.
6. The action plans are implemented.
7. Progress toward objectives is periodically reviewed, and feedback is
provided.
8. Successful achievement of objectives is reinforced by performance-
based rewards.