Professional Documents
Culture Documents
Nature of Planning
Most basic function of Management.
Planning sets all other functions into action.
Its an intellectual process which requires manager to think before
acting.
Thinking in Advance
Manager think, what is do be done?, when?, how?, and whom to do
it?.
Decision making is integral part of planning.
Decision making is defines as a process of choosing among
Nature of Planning
Planning is a continuous process
A manager should be like Navigator.
He must constantly monitor the conditions, both within and outside
cost)
Sometimes it may be so expensive that its benefit may not be worth
the cost.
Nature of Planning
Resistance to change (in planning)
Irretrievable costs (fixed assets, training, advertising etc)
may block flexibility.
Planning is an all-pervasive function (planning is important
to all managers regardless of their level in the orgn).
However some differences are there in the involvement by
managers at different levels. (time period covered)
Top management planning for longer duration
Lower level managers day / week / monthly plan.
Top mgmt develop plan, lower level mgmt execute plan.
Importance of Planning
Minimizes Risk and Uncertainty:
By providing a more rational , fact based procedure
for making decisions, planning allow managers and
organizations to minimize risk and uncertainty.
Planning help the manager to cope with and
prepare for the changing environment.
Manager has being in control if he has anticipated
some of the possible changes and has planned for
them. (eg: Umbrella)
Importance of Planning
Leads to success:
Planning does not guarantee success. But
often planned companies not only out
perform the unplanned companies but also
out perform their own past results.
Eg: Military attack.
Planning proacts.
Importance of Planning
Focuses attention on the Orgn Goal:
Planning makes it easier to apply and coordinate the
resources of the organisation more effectively.
It also helps the manager to prepare sequence of
steps in achieving goals without overlapping.
Facilitates control:
The manager sets goals/plans which are the
benchmarks against which the goals are measured.
Control can be exercised only if there are plan.
Forms of Planning
Simple to complex form
Planning can be done by using experts with sophisticated
forecasting technique or seat of the pants manner.
Planning: Top-down approach and bottom up approach.
Planning can be done using participative or elitist method.
Thus there are many forms and types of planning and it vary
from organisation to organisation.
Usual way of classification is strategic and tactical planning.
Forms of Planning
Strategic planning: deciding the major
goals of the entire organisation and
policies to attain the goals.
It deals with the question such as
What business should the organisation be in a
decade from now?
What should the organisation look like in the
five years?
Forms of Planning
Tactical planning: deciding how the resources
of the orgn are used to attain the strategic goal.
It deals with the question such as
What should the levels of our operations be a year
from now?
How should we adjust our marketing strategy?
What are our short term financial and personnel
goals?
Strategic Planning
Tactical Planning
Long term
Short-term
Types of Plans
Objectives
strategies
For Non
Repetitive
Activities
Single Use
plans
(Programmes
and Budgets)
For repetitive
activities
Standing Plans
(Policies,
Procedures,
Methods and
Rules)
Objectives
Goals or aims or specific targets for organisation to achieve.
It is the end point or pole-star towards which all management functions
are directed.
Objectives are distinguished from 2 other words Purpose and Mission.
Purpose primary role defined by society in which it operates.
Purpose is a broad aim applies to all organisations of the industry (eg;
Universities, hospitals etc.,)
Mission unique aim for the organisation alone. It is the organisation
specialization in some area. (service, product or client)
Objectives are the translation of organisational mission which results
can be measured. Eg: (no. of. Women students admitted in university)
Characteristics of Objectives
Market Share
Innovation
Productivity
Profitability
Social Responsibility
KRA
s
Characteristics of Objectives
Objectives are either tangible or
intangible:
Objectives have a Priority
Objectives are generally arranged in
Advantages of Objectives
Basis for planning and for developing other plan
such as policies, budgets and procedures.
Motivators for individuals and departments.
Eliminate haphazard actions.
Facilitate coordinated behavior
Basis for managerial control
Facilitates better management
Lessen misunderstanding and conflicts.
Strategies
Goals should be logical by considering the
environmental opportunities and treats, strengths
and weakness of the organisation.
A corporate strategy is a plan which takes these
factors into account and provides an optimal match
between the firm and the enviroinment.
2 important activities in strategies formulation are
Environmental appraisal
Corporate Appraisal
Environmental Appraisal
Political and Legal Factors:
Stability of the government and its political philosophy
Taxation and industrial licensing laws
Monetary and Fiscal Policy
Restrictions on capital investment, repatriation of capital, trading
etc.
Economic Factors:
Level of economic development and distribution of personal
income
Trends in prices, exchange rates, balance of payments etc.
Supply of labour, raw material, capital etc.
Environmental Appraisal
Competitive Factors:
Identification of principle competitors
Analysis of their performance and programmes
Anti-monopoly laws and rules of competition
Protection of patents, trade marks, brand names and other
industrial property rights.
Corporate Appraisal
Strengths and weakness of the company
Strengths:
Outstanding leadership, excellent product design, low-cost
manufacturing skills etc.,
Thus formulating a strategy is like a beauty contest.
Standing Plans
Policies: guidelines for decision making.
As per George R. Terry, policy is a verbal, written or
implied overall guide, setting up boundaries that supply
the general limits and direction in which managerial
action will take place
Policies deal with how to do.
Eg: recruitment policy, advertisement policy, distribution
policy etc.,
Objectives are end points of planning (destiny)
Policy channelizing decisions towards these ends (route).
Advantages of Policies
Policy ensures uniformity and predictable actions
Speed up decisions at lower level because
subordinates need not consult their supervisors
frequently
Helps supervisor to delegate more authority to
his subordinates (because whatever decisions
subordinates make will be within the policy)
It gives practical shape to objectives.
Types of Policies
Policies are classified on the basis of sources, functions and
organisational strucure
Classification on the basis of sources
Originated appealed
implied
externally imposed
Originated policies:
Policies established formally and deliberately by top managers
Set down in print and embodied in a manual
Appealed policies:
Developed based on the appeal made by the subordinate to his
superior regarding manner of handling a given situation. Eg:
discounts.
Types of Policies
Implied policies:
Policies neither in writing nor verbal. Only by
Types of Policies
Classification on the basis of Functions
Production
Sales
Finance
Personnel Policy
Procedures
Policies are carried out by means of more detailed guidelines called
procedures.
A procedure set of instructions for performing a sequence of actions
involved in doing a certain piece of work.
Eg: procedure for recruitment.
Difference between policy and procedure:
Policies guides for people at higher level, procedures guides for people at
lower level.
Policies for fulfilling the objectives, procedures for implementing policies
Policies broad, procedures specific with definite acts.
Policies no work study analysis, procedures through work study analysis.
Advantages of Procedures
Standard way of performing a job.
Work simplification, elimination of unnecessary steps and
overlapping.
Control over performance.
Providing knowledge to employee about the entire range
of work.
Limitations:
Prevents innovation and improvement or work
performance this can be eliminated by periodical
improvement in procedure.
Methods
Rules:
Detailed and recorded instructions that a specific action must or must not
be performed an a given situation.
It also said as, all the activities necessary for achieving a given objective
a) time phasing
b)
budgeting
Budgets:
Steps in Planning
1 ) Establishing verifiable goals or set of goals to be achieved:
Certain assumptions about the future on the basis of which the plan will be
ultimately formulated
Steps in Planning
Technological changes
Population growth
Political stability
Sociological factors
Steps in Planning
Tangible and Intangible resources:
Steps in Planning
4) Finding alternative course of action:
5) Evaluating and selecting a course of action:
Limitations of Planning
Its an expensive and time consuming
process.
Sometimes restricts the organization to the
most rational and risk free opportunities.
It may cause delay in decision making.
The scope of planning is limited in the case
of organisations with rapidly changing
situation