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Planning

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Planning

We must plan for thefuture,

because people who stay in the

present will remain in thepast

Abraham Lincoln

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What is Planning?Henry Mintzberg :

Planning is future thinking;

Planning is controlling the future;

Planning is decision making;

Common definitions:

Planning is the process by which an individual ororganization decides in advance on some future course

of action (Omran, 2002).

The process of setting objectives and determining how33

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Look at the statements onplanning

A good plan today is better than a perfect

plan tomorrow.

George S. Patton

The best way to prepare for the future is to

create it.

PETER Drucker

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What Is Planning?A primary functional managerial

activity involving:

Defining the organizations goals

Establishing an overall strategy for

achieving those goals

Developing a comprehensive set of plans55

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Why Do ManagersPlan?

Purposes of Planning

1. Provides direction

2. Reduces uncertainty

3. Minimizes waste and redundancy

4. Sets the standards for controlling

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Reduces theImpact of Change

Provides

Direction

Minimizes Wasteand Redundancy

Sets Standards to

Facilitate

Control

Reasons

for Planning

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Plans - foundation ofManagement

Plans -How to achievethem

What kind

Of organizationalStructure to have

Which helps us know

What kind of peopleWe need and

whyWhich affects the kind ofLeadership we have anddirection

How effectivelylead people

In order to ensuresuccess of plan

StandardsOf control

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The relationship between Planning andperformance

Formal planning is associated with:

Higher profits and returns ofassets.

Positive financial results.The quality of planning and

implementation affects performance.

The external environment can reducethe impact of planning onperformance,

Formal planning must be used for99

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How Do Managers Plan?

Elements of Planning

Goals (also objectives)

Desired outcomes for individuals, groups, or entire

organizations

Provide direction and performance evaluation criteria

Plans

Documents that outline how goals are to be

accomplished

Describe how resources are to be allocated and

establish activity schedules 1010

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Types of goals

Financial goals

Are related to the expected internalfinancial performance of theorganisation.

Strategic goals

Are related to the performance of the

firm relative to factors in its externalenvironment (e.g., competitors).

Stated goals versus real goals

Broadly-worded official statements of1111

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Approaches to EstablishingGoals

Traditional Goal Setting Broad goals are set at the top of the

organization

Goals are broken into sub-goals for eachlevel

Goals are intended to direct, guide, and

constrain from above Goals lose clarity and focus as lower-

level managers attempt to interpret anddefine the goals for their areas of

responsibility. 1212

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Traditional ObjectiveSetting

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Top

Management

sObjectiveDivisionManag

er s

ObjectiveDepartme

ntManager sObjectiveIndivid

ualEmployee

sObjective

We need to improvethecompa

ny s

performance.

Increaseprofitsregardless of the

means.

I want to

see asignificantimprovementin thisdivision

sprofits.

Do

n

t worryaboutquality; just work

fast.

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Characteristics of Well-DesignedGoals

Outcomes rather than actions Measurable and quantifiable

Clear time frame

Challenging yet attainable

Written down

Communicated to all organizational

members 1414

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Steps in planning1. Being Aware of Opportunity

2. Establishing Objectives

3. Considering the Planning Premises

4. Determining & Identifying theAlternative Courses

5. Evaluating these Alternative Courses

6. Selecting the Appropriate Course ofAction

7. Developing Plans to Pursue theChosen Alternative 1515

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PLANNING PROCESS/STEPS INPLANNING

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Types of Plans

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Types of Plans

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Types of plans..

Strategic plans Apply to the entire organisation.

Establish the organisations overall

goals. Seek to position the organisation in

terms of its environment.

Cover extended periods of time.

Operational plans

Specify the details of how the overall1919

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Types of plans.

Long-term plans Plans with time frames extending

beyond three Years

Short-term plans Plans with time frames on one year

or less

Specific plans

Plans that are clearly defined andleave no room for interpretation

2020

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Types of plans

Single-use plan

A one-time plan specifically designed

to meet

the need of a unique situation.

Standing plans

Ongoing plans that provide guidance

for activities performed repeatedly.2121

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Types of Planning

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Levels and Types of Planning

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Levels of Planning at GeneralElectric

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Wh Sh ld Pl i

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Where Should PlanningBegin?

Top-Down PlanningPlanning efforts begin with the

board of directors and topexecutives of the firm

Bottom-Up PlanningPlanning is initiated at the lowest

level in the organization

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Advantages of Each PlanningApproach

Top-Down PlanningTop managers, who are the most

knowledgeable about the firm as a

whole, drive the development of theplan.

Bottom-Up Planning

The people closest to the operatingsystem, customers, and suppliers drivethe development of the plan.

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Table 5.1 Top-Down and Bottom-Up Planning

Top-Down Bottom-Up

Organizational CEO, Board of DirectorsPeople/department closest to product,level service, customer.

Role of As the plan moves down the Units develop goals and plans. Asplansorganizational hierarchy, units determine actionsmove up the hierarchy, they are evaluatedunit needed to support the plan. and adjusted for accuracy andfeasibility.

Specificity Begins broad, becomes more Begins specific and probablyfragmented;of plan specific as it moves down the becomes cohesive and integrated as it

hierarchy. moves up the hierarchy.

Potential Plans are driven by top-level Those closest to customers, suppliers,andadvantages managers who are most operating systems provide focus ofplans.

knowledgeable about all factorsaffecting the organization.

Potential Top-level managers may be Lower-level managers may lack under-2727

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Major dimensions ofplans

C t I i

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Contemporary Issues inPlanning

Criticisms of Planning Planning may create rigidity

Plans cannot be developed for dynamicenvironments

Formal plans cannot replace intuitionand creativity

Planning focuses managers attention on

todays competition, not tomorrowssurvival

Formal planning reinforces todayssuccess, which may lead to tomorrows

failure 2929

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Contemporary Issues inPlanning

Effective Planning in DynamicEnvironments

Develop plans that are specific but

flexible

Understand that planning is an ongoing

process

Change plans when conditions warrant

Persistence in planning eventually pays3030