PLANNING

concept of executive action that embodies the skills of anticipating, influencing and controlling the nature and direction of change

 Planning

- Top Level Management Long term 6 months to 5 years & above. Formulation of plans. Allocation of resources.
- Lower level management short term daily, weekly or monthly. Execution of plans. Utilization of resources.

Planning

NATURE OF PLANNING
Intellectual

Activity Forward-looking Pervasive Continuous Mental Exercise Flexible Goal-oriented Integrative and inter-related

NATURE OF PLANNING

Planning: A Rational approach

Desired status

status

planning required
current status

T1 Time

T2

IMPORTANCE OF PLANNING
Primacy

of planning Economical Facilitates decision-making Promotes coordination and control Reduces risk and uncertainty Forecasting Increase organisational effectiveness

PLANNING
BENEFITS Focus on objectives Economical Operation Innovation Coordination and Control Reduces uncertainty

LIMITATIONS Time consuming and expensive Heavy cost and risk involved Probable results Internal Inflexibilities External Inflexibilities Problems of rapid change

PRINCIPLES OF PLANNING
Principle of Principle of Principle of Principle of premising Principle of Principle of Principle of Principle of Principle of Principle of

co-ordinate planning efficiency flexibility sound and consistent contribution to objectives acceptance commitment limiting factors navigational change timing

STEPS IN PLANNING
Perception of opportunities Establishing Objectives Planning Premises Identification of Alternatives Evaluation of alternatives Choice of alternative plans Formulation of supportive plans Establishing sequence of activities

CLASSIFICATION OF PLANS
ON THE BASIS OF TIME Long-Term plans Medium-Term plans Short-Term plans

ON THE BASIS OF FUNCTIONAL AREA Production plans Marketing plans Financial plans

Occurs at all levels. Vary from organization to organization depending upon size and complexity.

ON THE BASISI OF LEVELS IN THE ORGANISATION

Strategic planning Done at higher levels of management. Decides major goals & policies of allocation of resources to achieve the goals. Long term goals are decided. Less detailed because not involved in dayto day operations.

Tactical Planning :Lower levels of management. Decides the detailed use of resources for achieving each goal. Short term goals. More detailed because it is involved with day to days operations of the organization.

No clear cut distinction because at times divisional plans may be considered as tactical plans.

Operational Plans

Means to support tactical plans. Highly specific. Different single use and standing plans are made in operational planning to achieve the overall organisational goals.

ON THE BASIS OF USE

STANDING PLANS: Policies Procedures Methods Rules SINGLE-USE PLANS: Programmes Projects Budgets Strategies

 Single

use plans specific, developed to achieve particular end. Are dissolved after the goal is achieved. Major types of single use plans programs & budgets. Standing Plans designed for situations that recur often enough to justify a standardized approach. Major types procedures, policies, methods & rules.

OBJECTIVES

Goals or aims which the management wishes the organization to achieve. End points of pole-star towards which all other business activities like organizing, staffing, directing and controlling are directed. Differ from purpose & mission. Mission unique aim that sets apart from others of its type. Specific targets to be achieved by organization. Translation of organizations mission into concrete terms against which results can be measured.

Characteristics of Objectives
1. Multiple in nos.:Peter Drucker 8 key areas objectives of performance & result have to be set. - market standing, innovation, productivity, physical & financial resources, profitability, managerial performance & development, work performance & attitude and public responsibility. 2. Tangible or intangible. 3. Objectives have a priority. 4. Objectives are generally arranged in hierarchy. 5. Sometimes clash with each other.

Requirements of Sound objectives:1. Clear & Acceptable. 2. Support one another. 3. Precise & measurable. 4. Always remain valid. Advantages: Provides basis for planning and developing other types of plans such as policies, budgets & procedures. Act as motivators for individuals & departments. Eliminates haphazard actions which may result in undesirable consequences. Facilitates coordinated behaviour of various groups which otherwise may pull in different directions. Function as a basis for managerial control by serving as standards against which actual performance can be measured.

Strategies
Plan

which takes into account the factors like environmental threats & opportunities and organizational strengths & weakness and provides optimal match between the firm & environment. Essence being to capitalize on ones strengths while overcoming weaknesses & then attempting to match these appropriately with opportunities.

STRATEGY FORMULATION & IMPLEMENTATION

Env. analysis Org. Mission & Objectives Review & Control

Alternatives

Choice of alternative

Implemen -tation

Corporate analysis

Personal Values

Standing Plans
Policies: Guidelines for decision-making. Setting up boundaries around decisions. Channelizes the thinking of organizational members. Deal with how to do the work. Provides only framework within which the decisions must be made.

Advantages:Ensure uniformity of action Speed up decisions at lower level management. Easier for superior to delegate more authority to subordinates.

TYPES OF POLICIES
Organisational

& Functional Policies Written & Implied Policies Originated, Appealed and Imposed Policies

Types of Policies
Classification on the basis of sources:Originated established formally & deliberately by top managers to guide the decisions taken in the organization. Usually written & embodied in manual. Appealed Appeal made by subordinates to his superior regarding the way of handling a given situation. Implied neither stated in writing nor verbal instruction given. mere observation of behaviour. Externally imposed policies are sometime imposed by external factors such as government, trade association &

FACTORS INFLUENCING POLICY DETERMINATION

INTERNAL FACTORS

EXTERNAL FACTORS

Org. goals & strategies Org. resources Org. structure Managerial values

Product market factors Resource market factors Socio-political Factors

PROCESS OF MBO
Org.purposes Planning premises

Key Result Areas Superior objectives

Superior recommendation for subordinate objective

Matching resources Subordinate agreed objective Subordinate performance Performance review & appraisal

Subordinate statement for his objective

FEATURES OF MBO
Operational

Technique Participative Management Result oriented Systems approach Concentration on Key Result Areas

& Comprehensive

MBO
BENEFITS Better morale Self-control Clear goals Motivational Force Improve Performance Appraisal Facilitates better planning & control

LIMITATIONS Pressure-oriented Time consuming Increases paper work Problems in goalsetting Org. problems Resistance to change Lack of training Lack of follow-up Limited application Failure to teach MBO philosophy

ESSENTIALS FOR EFFECTIVE MBO

Purpose of MBO Top management support Training for MBO Participation Feedback for self-direction & self-control Implementing at lower levels MBO & salary decisions Decentralisation of authority

NATURE OF DECISION-MAKING
Goal-oriented Alternatives Intellectual Continuous & Dynamic activity Pervasive Human & social process Integral part of planning

DECISION-MAKING PROCESS
Identification Of problems Search For alternatives Evaluation Of alternatives

Specific objectives

Feedback

Results

Action

Choice Of alternative

TYPES OF DECISIONS

Routine

& Strategic Policy & operational Individual & group Programmed & unprogrammed Org. & personal

TECHNIQUES OF DECISIONMAKING
Marginal-cost

analysis Cost-benefit analysis Operation research Linear Programming Network analysis