MGT Lecture-3.pptx

Management Theory And
Practice
Lecture-3

Planning
• Unit No. 3
• Planning
• Table of Contents
• Introduction
• Objectives
•
• 3.1 Organizational Objectives
• 3.1.1 Importance of Organizational Objectives
• 3.1.2 Types of Objectives
• 3.1.3 Management by Objectives
• 3.2 Planning
• 3.2.1 Characteristics and Purposes of Planning
• 3.2.2 Advantages and Limitations of Planning

Planning
• 3.2.3 Types of Planning
• 3.2.4 Steps in Planning Process
• 3.2.5 Approaches to Planning
• Plans and Planning Tools
• Dimensions and Types of Plans
• Planning Tools
• 3.3.3 Forecasting
• 3.3.4 Scheduling
• 3.4 Implementing the Plans
• 3.5 Planning and Strategic Management

Planning
• Introduction
• Planning is the first and foremost step to be taken before undertaking any
activity in the field of management. It helps in setting the direction for the
achievement of goals. In this unit we will study characteristics and purposes of
planning, steps in the planning process and different approaches to planning.
We will also discuss about types of plans, planning tools and implementation
of plans. Finally, we will discuss about planning and strategic management.
• Objectives
• The study of this unit will enable the student to:
• Define the nature and purpose of planning.
• Describe the steps in the planning process.
• Classify the types of goals organizations might have and the plans they
use.
• Compare and contrast the approaches to goal setting and planning.
• Discuss contemporary issues in planning.

Organizational Objectives
• Organizational Objectives
• Organizational objectives are short-term and medium term goals that an organization seeks to
accomplish. An organization's objectives will play a large part in developing organizational policies
and determining the allocation of organizational resources.
• Achievement of objectives helps an organization reach its overall strategic goals.
Importance of Organizational Objectives
• If you don't know where you're going, how will you get there? The first question a small business
owner should ask himself is: "What is my vision for the company?" How many employees will it
have? How much profit should the business make? How much does it need to sell to make those
profits?

Organizational Objectives
Visualize the Goals
• The answers to all of these questions become the goals of a business. These goals are the pillars
of what a business owner wants his company to look like. They are his long-terms visions. The
challenge is how to convert these dream-like visions into realities. That's where the objectives
come in.
• Types of Objectives
Companies, large or small, can identify problems and establish overall goals for their business, but
they need specific plans to make progress. The planning stage includes courses of action and
identifies the results that the company wants to see. These results translate into objectives at the
different levels of the organization. A department manager may have the objective to increase sales
by 10 percent. This becomes an objective of selling 15 more systems this month for one of his
employees. To maintain planning clarity, the type of objective must remain the same throughout
this translation down the organization.

Management by Objectives
Management by Objectives
MBO or management by objectives is defined as a comprehensive managerial system that
integrates many key managerial activities in a systematic process and that is consciously directed
toward the effective and efficient achievement of organizational and individual objectives.
• The practical importance of objectives in management can best be seen by summarizing how
successful managing by objectives works in practice.
• Management By Objectives (MBO) is also known as Management By Results(MBR).
• The six steps of MBO process are shown below graphically.

Planning
Planning
Characteristics and Purposes of Planning
Definitions of Planning
• Different authors have given different definitions of planning from time to time.
The main definitions of planning are as follows:
• According to Alford and Beatt, “Planning is the thinking process, the organized
foresight, the vision based on fact and experience that is required for intelligent
action.”
• According to Theo Haimann, “Planning is deciding in advance what is to be done.
When a manager plans, he projects a course of action for further attempting to
achieve a consistent co-ordinate structure of operations aimed at the desired
results.

Planning
Definitions
• According to Billy E. Goetz, “Planning is fundamentally choosing and a planning problem arises
when an alternative course of action is discovered.”
• According to Koontz and O’ Donnell, “Planning is an intellectual process, conscious determination
of course of action, the basing of decision on purpose, facts and considered estimates.”
• According to Allen, “A plan is a trap laid to capture the future.”
• The following are the essential characteristics of planning which describe the nature of planning:

Characteristics of Planning
• 1. Primary Function of Management:
• Planning is the primary function of management. The first work of any department in an
organization is to plan the process and short terms goals to achieve the main organizational
objectives.
• The foremost reason for the success of an organization is planning because planning helps to
achieve short and long term goals effectively and efficiently.
• All the other functions are surrounded around planning, so the planning is the leader of the
function of management. All functions of management are interconnected.
• Planning develops according to the purpose of the organization which guides the whole
organization.

• 2. Thinking and Intellectual Process:
• Planning is an intellectual process of scheduled thinking. It is the function of what kind of
actions taken in near future. It has a number of steps to decide the future course of action.
• Managers will suggest various courses of action which is necessary to fulfill the organizational
objectives. Learn about the pros and cons of every course of action and then finally decide what
course of action suits best to accomplish organizational goals timely and smoothly.
• All other functions draw their intellectual backing or logical backing from the formulated.
• Hence, the other functions are the logic of planning and their requirement is only the application
of the logic behind the plan.

• 3. Continuous Process:
• Planning is a continuous or never ended process of a manager upon some
assumptions. Therefore, the manager has to rethink and dispose of plans and actions in the
changing situation.
• It involves never cease collection, evaluation, selection of facts, and scientific investigation and
resolution or selects the practical alternative action.
• 4. Pervasiveness:
• Planning is mainly a process of top-level management, for this, it is a pervasive function. Top-level
managers display plans for the overall organization, whereas the other entire department
makes plans for their whole department.
• It is done at every level of an organization to make it pervasive. The nature and scope of planning
may change from person to person.
• It is basically a universal activity.

• 5. Dynamic Function:
• World adapts necessary elements in changing times, planning is not far from it.
• Plans are formulated to create change in the real-world and may require the business to change in
course of action.
• If any planed marketing tactics not work, then you have to change plans and tried new ones.
• So, planning is always a dynamic function.

• 6. Forecasting:
• Planning is a huge spectrum in managerial function which involves the process of forecasting. It
is good to say, planning includes forecasting but not vice versa.
• The renowned management author, George. R. Terry gives a definition of planning, it is –
“Planning is the selecting and relating of facts and the making and using of assumptions
regarding the future in the visualization and formulation of proposed activities believed
necessary to achieve desired results”.
• According to George. R. Terry, planning makes and uses of assumptions regarding the future in
the visualization.

• 7. Coordination:
• Planning helps to coordinate the levels of management and course of action in various
departments of an organization.
• It provides guidelines to do work to all managers and staffs to achieve organizational objectives.
• Conclusion:
• These are 7 vital characteristics of planning which helps to understand overall planning.
• What did you think of this? Do I miss something? Come on! Let us know if you want to add
something to the list.

• Advantages and Limitations of Planning
• Human being and the nature of human being is unpredictable because whether human beings do
not know what will happen in next minute they always tend to make plans for future. In the case
of the corporate world also companies tend to make plans about the future so that all interested
parties whether its owners, creditors, employees, shareholders and so on can have an idea about
where the company is headed in the future. In order to understand the concept of planning
better let’s look at some of the advantages and disadvantages of planning.

Types of Plans
• A plan is a specific action proposed to help the organization achieve its
objectives.
• It is a document that outlines how goals are going to be met.
• The importance of developing plans is evident from the fact that there may
be more than one means of reaching a particular goal.
• So with the help of logical plans, objectives of an organization could be
achieved easily.

Steps in the Planning Process
• Steps in the Planning Process
• As planning is one of great importance to an organization, the entire process of planning should
be carried out in a systematic manner. Planning is an intellectual process which an executive
carries out before he does any job with the help of other people. It involves the following steps :

As planning is an activity, there are certain reasonable measures for every manager to follow:
• (1) Setting Objectives
• This is the primary step in the process of planning which specifies the objective of an
organization, i.e. what an organization wants to achieve.
• The planning process begins with the setting of objectives.
• Objectives are end results which the management wants to achieve by its operations.
• Objectives are specific and are measurable in terms of units.
• Objectives are set for the organization as a whole for all departments, and then departments set
their own objectives within the framework of organizational objectives.
• Example:
• A mobile phone company sets the objective to sell 2,00,000 units next year, which is double the
current sales.

• (2) Developing Planning Premises
• Planning is essentially focused on the future, and there are certain events which are expected to
affect the policy formation.
• Such events are external in nature and affect the planning adversely if ignored.
• Their understanding and fair assessment are necessary for effective planning.
• Such events are the assumptions on the basis of which plans are drawn and are known as
planning premises.
• Example:
• The mobile phone company has set the objective of 2,00,000 units sale on the basis of forecast
done on the premises of favorable Government policy towards digitization of transactions.

• 3) Identifying Alternative Courses of Action
• Once objectives are set, assumptions are made.
• Then the next step is to act upon them.
• There may be many ways to act and achieve objectives.
• All the alternative courses of action should be identified.
• Example:
• The Mobile company has many alternatives like reducing price, increasing advertising and
promotion, after sale service etc.

• (4) Evaluating Alternative Course of Action
• In this step, the positive and negative aspects of each alternative need to be evaluated in the light
of objectives to be achieved.
• Every alternative is evaluated in terms of lower cost, lower risks, and higher returns, within the
planning premises and within the availability of capital.
• Example:
• The mobile phone company will evaluate all the alternatives and check its pros and cons.

• (5) Selecting One Best Alternative
• The best plan, which is the most profitable plan and with minimum negative effects, is adopted
and implemented.
• In such cases, the manager’s experience and judge ment play an important role in selecting the
best alternative.
• Example:
• Mobile phone company selects more T.V advertisements and online marketing with great after
sales service.

• (6) Implementing the Plan
• This is the step where other managerial functions come into the picture.
• This step is concerned with “DOING WHAT IS REQUIRED”
• In this step, managers communicate the plan to the employees clearly to convert the plans into
action.
• This step involves allocating the resources, organizing for labor and purchase of machinery.
• Example:
• Mobile phone company hires salesman on a large scale, creates T.V advertisement, and starts
online marketing activities and set up service workshops

• (7) Follow Up Action
• Monitoring the plan constantly and taking feedback at regular intervals is called follow-up.
• Monitoring of plans is very important to ensure that the plans are being implemented according
to the schedule.
• Regular checks and comparisons of the results with set standards are done to ensure that
objectives are achieved.
• Example:
• A proper feedback mechanism was developed by the mobile phone company throughout its
branches so that the actual customer response, revenue collection, employee response, etc. could
be known.

Approaches to Planning
• Approaches to Planning
• Is your strategy planning top-down or bottom-up?
• Business planning is one of the most significant aspects of a successful enterprise.
• Two of the most common planning approaches are top-down planning and bottom-up planning
methods. Although these two models represent two contrasting operational strategies, they both
share similarities in how a company identifies its principal goals. On a very basic level, the top-
down approach seeks to go from the general to the specifics, while the bottom-up approach
works its way from the specifics to the general.

• Let’s explore both approaches to gain an understanding of how different they are from each other
and how suitable they are to specific business areas.
• Top-down planning traditionally involves defining organizational goals on a high level and
breaking them down into specific objectives which are then addressed in phases. As the name
indicates, top-down planning is an approach that aims at moving gradually from the top to the
lower levels of a given hierarchy.

Quite the opposite, bottom-up planning works toward setting a plan at the most detailed level of
classification. A bottom-up analysis focuses specifically on the product or service you are trying to
sell and gathers details around it such as production capacity, department-specific expenses, and
finally the market trends, in order to make an accurate sales projection. In this method, where
planning is done at a store level rather than from a market perspective, it is easier to determine
store replenishment requirements based on future customer demand, region specific geographic
sales and demographics. Additionally, it also seeks to provide more flexibility to manage off-season
and promotional demand patterns appropriately.

• Determining the right fit
• Top-down planning seems to be best suited for startups that are looking to gain some quick
insights for long term results. This approach gives a broader picture of revenue potential for
companies. It can help identify accurate sales patterns and evaluate markets in terms of their size
and potential right, thereby allowing companies to create more usable theories for strategizing
business models.
• The bottom-up planning approach can prove useful in industries where projects tend to involve
new challenges that require innovative solutions. Since it provides higher visibility due to its focus
on specific details, this approach creates product awareness among users as well as business
owners very early on. More realistic financial projections are also possible with this approach.
This essentially translates into better allocation of resources to specific items rather than whole.

• What’s right for your business?
• Top-down and bottom-up planning techniques each have their own pros and cons. Determining
the best model will ultimately depend on the nature of the specific business and available
resources. To make the best use of both approaches, it would be ideal to use both analytic
processes in combination with one another to suit specific needs. As a business owner, you must
decide how much control you want to have over the implementation of strategies to meet your
most important goals.

Dimensions and Types of Plans
Plans and Planning Tools
The plan’s four major dimensions are:
· Repetitiveness
· Time
· Scope
· Level

• Where;
• a) Repetitiveness dimension of a plan refers to the extent to which the plan is used over and
over again. Some plans are specially designed for one situation that is relatively short-term in
nature. Other plans are designed to be used time after time for long-term recurring situations.
• b) The time dimension refers to the length of time the plan covers. Strategic planning was
defined as long- term in nature, while tactical planning was defined as short- termed.
• c) The scope dimension refers to the proportion of the total management system at which the
plan is aimed. Some plans are designed to cover the entire open management system. This plan
is often referred to as a master plan. Other plans are developed to cover only a portion of
management system.
• d) The level dimension refers to the level of the organization at which the plan is aimed. Top
level plans are those designed for the organization’s top management, whereas middle and
lower level plans are designed for middle and lower management.

• Types of Plans
• The eight important types of plans are:
• 1. Objectives 2. Policies 3. Rules 4. Procedure
• 5. Program 6. Schedules 7. Budget 8. Forecasting.

Forecasting
• Forecasting
• What is Forecasting
• Forecasting is a decision-making tool used by many businesses to help in budgeting, planning, and
estimating future growth. In the simplest terms, forecasting is the attempt to predict future
outcomes based on past events and management insight.
• There are two forecast types: judgment-based (e.g. “gut feel”) and quantitative (e.g. statistics).
The most trustworthy forecasts combine both methods to support their strengths and mitigate
their weaknesses.
• Judgment Forecasting
Judgment forecasting uses only our intuition and experience. Our minds are able to make
connections and understand context in a way that no computer can. However, we’re also prone to
certain biases that make analyzing large amounts of data difficult. Judgment forecasting is best
where there is little to no historical data- such as new product launches, competitor actions, or
new growth plans.

Forecasting
Quantitative Forecasting
Quantitative forecasting uses analytics to analyze large amounts of historical data in order to
discern trends and patterns. Quantitative forecasting is excellent at churning through large amounts
of data and is less prone to bias. However, it is weakest when there is little to no historical data that
can be analyzed. Quantitative forecasting relies, more or less, on identifying repeated patterns in
your data so it may take a while to see the same pattern repeat more than once. Combining
judgment and quantitative forecasting gets the best results.

Scheduling
• Scheduling
• Scheduling is the process of arranging, controlling and optimizing work and workloads in a
production process or manufacturing process. Scheduling is used to allocate plant and machinery
resources, plan human resources, plan production processes and purchase materials.
• It is an important tool for manufacturing and engineering, where it can have a major impact on
the productivity of a process. In manufacturing, the purpose of scheduling is to minimize the
production time and costs, by telling a production facility when to make, with which staff, and on
which equipment. Production scheduling aims to maximize the efficiency of the operation and
reduce costs.

Scheduling Methods/Techniques
• The Five Types of Planning in Production
• The five types of production planning include the following:
• Job Method
• This method includes the task of manufacturing a product that is handled either by a single
worker or by a group. The type of jobs that may utilize this method may be either small scale or
complex. This method is usually incorporated when customer specifications are essential in the
production. Small scale jobs are those for which production is considered easy, as the worker has
the required skill-set for the job. It is also important to note that very little specialized equipment
is needed in these tasks/jobs. Considering these components, the customer’s specifications and
requirements can be included at anytime during progression of the job without altering the
process.

• Flow Method
• Very similar to the batch method (which is also included in this blog), the aim is to improve
material and work flow, reduce labor cost, and ultimately complete the work much quicker.
Differing from the batch method, work progresses as a flow, hence the name the flow method.
Assembly lines that make televisions tend to utilize this method. The product is manufactured by
a number of collective operations in which materials move from multiple stages without time lags
and interruptions.
• Mass Production Method
• Within this method, goods are usually produced utilizing standard techniques such as balance
production and product-wise layout.

• Batch Method
• As mentioned before, this is similar to the flow method. This method usually falls under
businesses that are growing that also have growing production volumes as well. It requires a
division of work into parts. For a part of work to process, it is essential that the previous parts get
completed. An example of a business that uses this would be electronic parts manufacturing,
because it requires specialization of labor for each division.

• Process Method
• This method includes the product being produced utilizing a uniform and standardized sequence.
Very specific and sophisticated machinery is utilized here and production is continuous.
• Understanding these types of planning in production are essential before implementing a
method. A software that can aid in production planning is Planet Together’s Advanced Planning
and Scheduling Software (APS), which is a software that can provide thorough insight into your
manufacturing operation. APS software has become a must for manufacturers that are seeking to
take their production up a notch through efficiency optimization and waste reduction. APS has
become a necessity for manufacturers around the globe.

Implementing the Plans
Implementing the Plans
Implementation is the carrying out, execution, or practice of a plan, a method, or any design, idea,
model, specification, standard or policy for doing something. As such, implementation is the action
that must follow any preliminary thinking in order for something to actually happen.

Planning and Strategic Management
• Planning and Strategic Management
• What is Strategic Planning?
• Strategic planning is an organizational management activity that is used to set priorities, focus
energy and resources, strengthen operations, ensure that employees and other stakeholders are
working toward common goals, establish agreement around intended outcomes/results, and
assess and adjust the organization's direction in response to a changing environment. It is a
disciplined effort that produces fundamental decisions and actions that shape and guide what an
organization is, who it serves, what it does, and why it does it, with a focus on the future.
Effective strategic planning articulates not only where an organization is going and the actions
needed to make progress, but also how it will know if it is successful.

• What is a Strategic Plan?
• A strategic plan is a document used to communicate with the organization the organizations
goals, the actions needed to achieve those goals and all of the other critical elements developed
during the planning exercise.
• What is Strategic Management? What is Strategy Execution?
• Strategic management is the comprehensive collection of ongoing activities and processes that
organizations use to systematically coordinate and align resources and actions with mission,
vision and strategy throughout an organization. Strategic management activities transform
the static plan into a system that provides strategic performance feedback to decision making and
enables the plan to evolve and grow as requirements and other circumstances change. Strategy
Execution is basically synonymous with Strategy Management and amounts to the systematic
implementation of a strategy.
• Comparison chart is shown on the next slide.

BASIS FOR COMPARISON STRATEGIC PLANNING STRATEGIC MANAGEMENT
Meaning Strategic Planning is a future oriented
activity which tends to determine the
organizational strategy and used to set
priorities.
Strategic Management implies a bundle
of decisions or moves taken in relation
to the formulation and execution of
strategies to achieve organizational
goals.
Stresses on It stresses on making optimal strategic
decisions.
It stresses on producing strategic
results, new markets, new products,
new technologies etc.
Management Strategic planning is a management by
plans.
Strategic management is a
management by results.
Process Analytical process Action-oriented process
Function Identifying actions to be taken. Identifying actions to be taken, the
individuals who will perform the
actions, the right time to perform the
action, the way to perform the action.

The Strategic Management Process
• Strategic management is construed in the context of a process. Strategic management process 6
steps is an identifiable flow of information through interrelated stages of analysis directed toward
the achievement of an aim. In the strategic management process 6 steps, the strategists primarily
determine objectives and make strategic directions and actions. It is involved with the
development of an effective strategy to help achieve organizational objectives. Our operational
definition of strategic management process 6 steps are:

MGT Lecture-3.pptx

Recomendados

Recomendados

Más contenido relacionado

Similar a MGT Lecture-3.pptx

Similar a MGT Lecture-3.pptx (20)

Último

Último (20)

MGT Lecture-3.pptx