3. Reduce the
Impact of
Change
Reduce the
Impact of
Change
Provide
Direction
Provide
Direction
Minimize
Waste /
Redundancy
Minimize
Waste /
Redundancy
Set Control
Standards
Set Control
Standards
Reasons
for Planning
Reasons
for Planning
Growing
complexities
Growing
complexities
Growth of
trade union
Growth of
trade union
Rapid socio-
Economic
changes
Rapid socio-
Economic
changes
Need for
R&D activity
Need for
R&D activity
4. What Planning
Accomplishes /Benefits of
Planning
• Allows decisions to be made ahead of time.
• Permits anticipation of consequences.
• Provides direction and a sense of purpose.
• Provides a unifying framework; avoiding piecemeal decision
making.
• Improves competitive strength
• Achieves better coordination
• Helps identify threats and opportunities and reduces risks.
• Facilitates managerial control through the setting of standards for
monitoring and measuring performance.
• Encourages innovation & creativity
6. Does Planning Improve Performance?
• Financial results
• Environmental concerns
• Quality and implementation
7. Why Do Managers Plan?
/ Importance of planning
• Purposes of Planning
– Planning is the primary management function that
establishes the basis for all other management functions
– Planning establishes coordinated effort
– Planning reduces uncertainty
– Planning reduces overlapping and wasteful activities
– Manage complexities & competition
– Planning establishes goals and
standards used in controlling
– To increase org effectiveness
8. Why Do Managers Plan?
(cont.)
• Planning and Performance
– Generally speaking, formal planning is associated with:
• Higher return on assets
• Higher profits
– Quality of the planning process and the appropriate
implementation of the plans probably contribute more to
high performance than does the extent of planning
– External environment may undermine the effects of
formal planning
– Planning/performance relationship is influenced by the
planning time frame
9. Definition of Planning
• Weihrich & Koontz “Planning involves selecting missions and
objectives and the actions to achieve them; it requires decision
making, that is, choosing from among alternative future courses
of action”.
• McFarland “Planning may be broadly defined as a concept of
executive action that embodies the skills of anticipating,
influencing & controlling the nature &direction of change”.
• Terry “Planning is the selection & relating of fact & making &
using of assumption regarding the future in the visualisation &
formation of proposed activities believed necessary to achieve
desired result.”
10. Features/ nature of planning
• Planning is an intellectual process
• Planning determines the future course of action
• Primarily concerned with looking into future
• Involves selection of suitable course of action, means there are
several alternatives for achieving objectives
• All levels are concerned with the determination of future course of
action.
• Planning is the most basic to all mgmt functions
• Planning is pervasive function of mgmt
• Planning is flexible because future is always dynamic
• Planning is a pervasive & continuous managerial function involving
complex processes of perception, analysis, conceptual thought,
communication, decision,& action
11. Benefits of planning
• Reduces uncertainty
• Encourage innovation & creativity
• Improves motivation
• Achieve better coordination
• Facilitates control
• Planning leads to success
• Focuses attention
12. Mission
or Purposes,
(2) Objectives or goals,
(3) Strategies,
(4) Policies,
(5) Procedures,
(6) Rules,
(7) Programs, and
(8) Budgets
(1)
Hierarchy Of Plans
13. Hierarchy of Plans (cont..)
Plans can be classified as
(1) mission or purposes,
(2) objectives or goals,
(3) strategies,
(4) policies,
(5) procedures,
(6) rules,
(7) programs, and
(8) budgets
14. Hierarchy of Plans
(cont..)
• The mission, or purpose, identifies the basic purpose or
function or tasks of an enterprise or agency or any part of it
• Objectives, or goals, are the ends toward which activity is aimed
• Strategy is 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
• Policies are general statements or understandings that guide or
channel thinking in decision making
• Procedures are plans that establish a required method of
handling future activities
15. Hierarchy of Plans –
cont.
• Rules spell out specific required actions or
non actions, allowing no discretion
• Programs are a complex of goals, policies, procedures, rules, task
assignments, steps to be taken, resources to be employed, and other
elements necessary to carry out a given course of action
• A budget is a statement of expected results expressed in numerical
terms
16. Steps in Planning
1. Being Aware of Opportunities
2. Establishing Objectives or Goals
3. Developing Premises
4: Identify / Determining Alternative Courses
5. Evaluating Alternative Courses
6. Selecting a Course
7. Formulating Derivative Plans
8. Quantifying Plans by Budgeting
17. STEPS IN PLANNING
• Being aware of opportunity :In light of Market, Competition Customer
desire, Our strengths Our weaknesses
• Setting objectives or goals: Where we want to be& what we want to
accomplish & when
• Considering planning premises: In what environment will our plans
operate
• Identifying alternatives: What are the most promising alternatives to
accomplishing our objectives
• Comparing alternatives in light of goals sought Which alternative meets
our goals at lowest cost &at highest profit
• Choosing an alternative Selecting the course of action
• Formulating derivative plans such plans as to :- Buy equipment Buy
materials, Hire& train workers,
• Budgets: Develop such budgets as Volume & price of sales, operating
expenses necessary for plans, Capital expenditure
26. Principles of planning based on
Purpose
and Nature Of Planning
. Principle of contribution to objectives: Purpose of every plan
& all supporting plans is to promote accomplishment of enterprise
objectives
. Principle of objectives: If objectives have to be meaningful to
people, they must be clear, attainable, & verifiable
. Principle of primacy of planning.:... Planning logically
precedes all other managerial functions
. Principle of efficiency of plans: Efficiency of a plan is
measured by the amount it contributes to purpose & objectives as
27. Principles--the Structure Of Plans
. Principle of planning Premises: The more thoroughly
the individuals who are charged with planning, understand
and agree to utilize consistent planning premises, the more
coordinated enterprise planning will be
. Principle of the strategy and policy frame work: The
more strategies and policies are clearly understood and
implemented in practice, the more consistent and effective
will be the frame work of enterprise plans
28. Principles--the Process Of Planning
. Principle of limiting factor: In choosing among
alternatives, the more accurately individuals can recognize and
solve for those factors which are limiting or. critical to attainment of
desired goals, the more easily and accurately they can select the
most favorable alternative
. The commitment principle: Logical planning should cover a
period of time in the future necessary to foresee as well as possible,
through a series of actions, the fulfillment of commitments involved
in a decision made today
29. Principles--the Process Of Planning
(Cont..)
. Principle of flexibility...:. Building flexibility into plans will
lessen danger of losses incurred through unexpected events, but
cost of flexibility should be weighed against its advantages
. Principle of navigational change: The more that planning
decisions commit individuals to a future path, the more
important it is to check on events and expectations periodically
and redraw plans as necessary to maintain a course toward a
desired goal
35. Barriers to effective planning
• Difficulty of accurate premising
• Problems of rapid change
• Internal inflexibilities
policy & procedural inflexibility
capital investment
• External inflexibility
political climate
trade unions
technology changes
• Time & cost factors
• Failure of people in planning
36. How Do Managers Plan?
• The Role of Goals and Plans in Planning
– goals - desired outcomes
• provide direction for all management decisions
• represent the criteria against which actual work accomplishments can
be measured
– plans - outline how goals are going to be met
– Types of Goals
• all organizations have multiple objectives
• no single measure can evaluate whether an organization is successful
• financial goals - relate to financial performance
• strategic goals - relate to other areas of performance 7-7-3636
47. Principles of Goal-Setting
Set SMART goals—make them specific,
measurable, attainable, relevant, and timely.
Choose areas (sales revenue, costs, and so forth)
that are relevant and complete.
Assign specific goals.
Assign measurable goals.
Assign doable but challenging goals.
Encourage participation.
Use executive assignment action plans, or
management by objectives.
Editor's Notes
Planning is defining organizational goals, establishing a strategy for reaching those goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities. It can be either formal or informal, depending on the time frame and amount of documentation. Managers should plan for four reasons. First, planning coordinates effort by giving direction to managers and non-managers. Second, planning reduces uncertainty by forcing managers to look ahead, anticipate change, and develop appropriate responses. Third, planning reduces redundancy. Fourth, planning sets standards or objectives that facilitate control over the process of achieving goals.
Formal planning has been popular in business since the 1960s, but critics have observed the following:
•Planning may create rigidity. Assuming that conditions will remain relatively stable, formal plans lock organizational units into specific goals and time frames.
•Plans can’t be developed for a dynamic environment. Managing chaos and turning disasters into opportunities requires flexibility, not rigid, formal plans.
•Formal plans can’t replace intuition and creativity. Developing strategy depends as much on intuition and creativity as it does on formal analysis. Because most successful strategies are visions, not plans, merely following a systematic framework will not yield incisive thinking.
•Planning focuses a manager’s attention on today’s competition, not on tomorrow’s survival. Formal planning stresses capitalizing on existing opportunities, not reinventing or creating an industry.
•Formal planning reinforces success, which may lead to failure. Success can breed failure. Since change is motivated by problems, success may not motivate managers to challenge the status quo.
The evidence is mostly positive and suggests several conclusions.
1. Formal planning in an organization is frequently associated with positive financial results.
2.In those organizations in which formal planning did not lead to higher performance, the environment was typically the culprit.
3.The quality of the planning process and the implementation of the plans affect performance more than does the extent of the plans.