UNIT II

PLANNING

DEFINITION
 According to KILLEN, Planning is the

process of deciding in advance what is to be done, who is to do it, how is to be done and when it is to be done.  KOONTZ, O DONNEL and WEIHRICH, Planning is an intellectually demanding process, it requires the conscious determination of courses of action and the basing of decisions on purpose, knowledge and considered estimates.

Cont
 G.R.TERRY, Planning is the selecting and

relating of facts and the making and using of assumptions regarding the future in the visualisation and formulation of proposed activities believed necessary to achieve desired results.


NATURE OF PLANNING
 Planning is an intellectual activity  Planning involves selection among    

alternatives Planning is forward-looking Planning is related to objectives Planning is the most basic of all management functions Planning is a pervasive function of management.

IMPORTANCE OF PLANNING
 Minimises Risk and Uncertainty  Leads to Success  Focuses Attention on the Organisation s

Goals  Facilitates Control

LIMITATIONS OF PLANNING
 Lack of reliable data  Lack of initiative  Costly process  Rigidity in organisational working  Non-acceptability of change  External factors

PROCESS OF PLANNING-Steps in Planning Process

Establishment of Objectives Collection and forecasting of information Planning Premises

Appraisal of Plans

Developing Alternatives

Development of Derivative Plans

Selection of Best Alternatives

Evaluation of Alternatives

1. Establishing Objectives
 What is the objective of doing that job?  First step in Planning is the determination of

objectives.  Objectives provide direction to various activities in the enterprise.

2. Collection and Forecasting of Information

 Necessary information includes the critical

assessment of the current status of the organisation together with a forward look at the environment that is anticipated.  Forecasting of information- external and internal environment.

3.Development of Planning Premises

 Planning premises refer to the conditions

under which planning activities will be done.  Making assumptions concerning the behaviour of internal and external factors.  Helps in making realistic assumptions about sales, costs, prices, products, technological developments etc in the future.

4.Search of Alternatives
 There are several alternatives for any plan.

5.Evaluation of Alternatives
 Alternative plan must be evaluated with

reference to considerations like cost, longrange objectives, limited resources, expected payback, risk etc.

6.Selection of Plan and development of Derivative Plans

 Select the most feasible plan and develop its

derivative plans.

KINDS OF PLANNING- BASED ON VARIOUS DIMENSIONS

 1. On the basis of Time Long range Planning  Medium range Planning  Short range Planning  2. On the basis of Organisational Level Corporate Planning  Divisional Planning  Functional Planning

Cont
 3. On the basis of Focus Strategic Planning  Operational Planning  Tactical Planning

TYPES OF PLANS
 A plan is commitment to a particular course

of action necessary to achieve specific results.  STANDING PLANS:- Policies, Procedure, Methods, Rules & Regulations.  SINGLE USE PLANS:- Programmes, Projects, Budgets.

Kinds Of Plans- Hierarchy

     

Purpose or Mission Objectives Strategies Policies Rules & Procedures Programmes, Projects, Budgets

MAKING THE PLANS EFFECTIVEPrinciples of Effective Planning

 Establishing climate for Planning  Initiative at the Top Level  Participation in Planning Process  Communication of Planning Elements  Integration of Long- term and short - term Plans  An Open Systems Approach  Be Objective  Decide in advance the criteria for abandoning a

project  Revise your 5- year plan every year.

STRATEGIC PLANNING
 CORPORATE PLANNING Strategic

Planning, Long range Planning, Strategic Management.  Is to identify new areas of investment and marketing and develop appropriate plans.  3 components- Strategic Planning, Operational Planning and Project Planning.

Formulation Of Strategy
 1. Determination of Mission or Purpose  2. Environmental Scanning  3. Organisational Analysis  4. Developing Strategic Alternatives  5. Evaluation of Strategic Alternatives  6. Formulation of Strategy  7. Execution of Strategic Plan

SWOT Analysis
 Strengths  Weaknesses  Opportunities  Threats.

MANAGEMENT BY OBJECTIVES (MBO)

 MBO- Peter Drucker 1954- practice of

management.  appraisal by results, Planning by objectives, goal management.  It is a system for integrating managerial activities.

 According to Koontz, MBO is a

comprehensive managerial system that integrates many key managerial activities in a systematic manner , consciously directed towards the effective and efficient achievement of organisational objectives .

Features or Characteristics of MBO: Operational Technique.  Comprehensive Technique.  Participative Management  Result Oriented  Systems Approach  Concentration on key result Areas.

MBO PROCESS(STEPS IN MBO)

Organizational purpose & objectives Planning Premises

Key Result Areas Superiors Objectives Superior s recommendation for subordinates objectives Matching Resources Subordinate s statement of his objectives

Subordinate s agreed objectives

Subordinates performance Performance review and appraisal

 Setting of Organisational Purpose and

Objectives.  Key Result Areas  Setting Subordinates Objectives  Matching Resources with Objectives  Appraisal  Recycling

BENEFITS OR ADVANTAGES OF MBO

 Better Managing  Clarity in Organisational Action  Personnel Satisfaction  Basis for Organisational Change

LIMITATIONS OF MBO
 Time and Cost  Failure to teach MBO Philosophy  Problems in Objective Setting  Emphasis on Short-term Objectives  Inflexibility  Frustration

How to implement MBO Effective

 Purpose of MBO (Education about MBO)  Top Management Support  Training for MBO  Participation  Feedback for self direction and self control  Decentralization  Integrated programme

MBO VS MANAGEMENT BY EXCEPTION

 MBO philosophy of decentralization and

participative management.  Management by Exception a principle of organisational control which provides only significant deviations from standards should be reported to the superior.  Management by Exception is an effort to conserve managerial time, effort and talent.