CH 4 Planning

7/30/2019 CH 4 Planning

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Planning

Planning is defined as selecting missions andobjectives as well as the actions to achievethem, which requires decision making, i.e.

choosing a course of action amongst allalternatives.

Plans provide a rational approach in achievingpreselected objectives.

Planning bridges the gap from where we areto where we want to go.


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Types of plans

Missions or Purposes

The basic purpose of function or tasks of an enterpriseor agency or any part of it.

Objectives or goals Goals are the ends toward which the activity is aimed.

Strategies

Is defined as the determination of basic long term

objectives of an enterprise and the adoption ofcourses of action and allocation of resourcesnecessary to achieve these goals.


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Policies

Policies are general statements or understandings

that guide or channelize the thinking in decisionmaking.

Policies define an area within which a decision isto be made and ensure that decision will be

consistent with, and contribute to, an objective.

Procedures

Are plans that establish a required method of

handling future activities. They are chronological sequences of required

actions.


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Rules

Specific required actions or non-actions, allowing no

discretion. Ex.: no smoking is a rule that allows no

deviation from a stated course of action.

Programs

Are complex of goals, policies, procedures, rules, taskassignment, steps to be taken, resources to be

employed, and other elements necessary to carry out

a given course of action, supported by budgets.

Budget Is a statement of expected results expressed in

numerical terms


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Steps in Planning

Being aware of opportunities.

Awareness of opportunities is the real starting

point of planning, opportunities may be in

external environment or within theorganization.Slide 8

Establishing objectives

Establish objectives for entire organization andthen for each subordinate work unit.

To be done for long term as well as short

term.Slide 8


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Developing premises

To establish, circulate and obtain agreement to utilize

critical planning premises such as forecasts, applicablebasic policies and existing company plans

Premises are assumptions about the environment in which

the plan is to carried out. Slide 8

Identifying alternative courses Finding what are the most promising alternatives in

accomplishing our objectives. Slide 8

Evaluating alternative courses

After seeking out alternative courses and examining their

strong and weak points, next step is to evaluate the

alternatives by weighing them in light of premises and

goals. Slide 8


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Selecting a course/alternative

At this point the plan is adopted Slide 8

Formulating derivative plans Derivative plans are required to support the basic plans

Slide 8

Quantifying plans by budgeting

Plans to be quantified by converting them into budgets.

The overall budget of an enterprise represents the sum

total of income and expenses, with resultant profit or

surplus, and the budgets of major balance sheet items

such as cash and capital expenditures. Slide 8


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Steps in

Planning

Slide 6

Slide 7


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Objectives of planning

Objectives are defined as important endstowards which organizational and individual

activities are directed.

Objectives are verifiable i.e. at the end of theperiod, one can determine whether or not it

has been achieved.

Nature of objective Objectives state end results, and overall objectives

need to be supported by sub-objectives.

Objectives form a hierarchy as well as a network.


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Setting objectives

Managers at different levels in the hierarchy are

concerned with different kind of objectives.

BOD and top level mgrs. are involved in determining the

purpose, mission and the overall objectives of the firm. Middle-level mgrs. are involved in setting KRA objectives,

division objectives and departmental objectives

Lower-level mgrs. set the objectives of performance and

development goals.


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There are different views about whether the

organization should use the top-down or

bottom-up approach in setting objectives.

In top-down approach, upper level mgrs.

determine objectives for their subordinates

In bottom-up approach, subordinates set theobjectives for their positions and present them to

their superior.


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How to set objectives

Quantitative and Qualitative objectives

Objectives should be verifiable (which can be

quantified)

At the end of period, one should know, whether the

objective has been achieved or not?

Many a times, it is difficult to state results in

verifiable terms.

Ex: Facilities department taking care of all services in

the office.


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Guidelines for setting objectives

List of objectives should not be too long

Objective should cover the main features of

the job

Objective should be verifiable

Should state what is to be accomplished and

when

Desired quality and the projected cost of

achieving the objectives should be

incorporated.


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Management by Objectives

A comprehensive managerial system thatintegrates many key managerial activities in a

systematic manner and is consciously directed

toward the effective and efficientachievement of organizational and individual

objectives.

It is an instrument for motivating individualsalong with a tool used for performance

appraisal.

Also used in strategic planning.


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Benefits of MBO

Improvement of managing through results-oriented planning

Clarification of organizational roles and

structures as well as delegation of authorityaccording to the results expected by the

people occupying the roles.

Encourages commitment to personal andorganizational goal

Develops effective controls used to measure

results and lead to corrective actions.

CH 4 Planning

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