Unit II

Planning

PLANNING

How To Best Meet Your Mission

We must plan for the future, because people who stay in the present will remain in the past.

Abraham Lincoln

What is Planning?

Planning is a search problem that requires to find an efficient sequence of actions that transform a system from a given starting state to the goal state

Planning is the starting point of the management process

Predetermines what the business proposes to accomplish and how it intends realizing its goals

What Is Planning?What Is Planning?

– A primary managerial activity that involves:A primary managerial activity that involves:

• Defining the organization’s goalsDefining the organization’s goals

• Establishing an overall strategy for achieving those Establishing an overall strategy for achieving those goalsgoals

• Developing plans for organizational work activities.Developing plans for organizational work activities.

– Types of planningTypes of planning

• Informal:Informal: not written down, short-term focus; specific to not written down, short-term focus; specific to an organizational unit.an organizational unit.

• Formal:Formal: written, specific, and long-term focus, involves written, specific, and long-term focus, involves shared goals for the organization.shared goals for the organization.

Definition of Planning• Planning is an intellectual process, the conscious

determination of course of action, the base of decisions on purpose, facts and considered estimates

- Koontz and O’Donnel

• Planning is continuous process of making present entrepreneurial decisions (risk taking) systematically and with best possible knowledge of their futurity, organising systematically the efforts needed to carry out these decisions and measuring the results of these decisions against the expectations through an organised systematic feedback

- Peter Drucker

Planning and PerformancePlanning and Performance

• The Relationship Between Planning And The Relationship Between Planning And PerformancePerformance

– Formal planning is associated with:Formal planning is associated with:

• Higher profits and returns on assets.Higher profits and returns on assets.

• Positive financial results.Positive financial results.

– The quality of planning and implementation affects The quality of planning and implementation affects performance more than the extent of planning.performance more than the extent of planning.

– The external environment can reduce the impact of The external environment can reduce the impact of planning on performance,planning on performance,

– Formal planning must be used for several years Formal planning must be used for several years before planning begins to affect performance.before planning begins to affect performance.

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The Nature of Planning• Planning: looking ahead to chart the best

courses of future action.

• Strategic planning: Long range planning to set organizational goals, objectives, and policies to determine strategies, tactics, and programs for achieving them.

– Top management makes strategic plans.

– Middle Management makes annual plans (to implement the above).

– For supervisors the planning period is usually a week, day, or shift ( to deal with daily work).

Purpose of Planning

Managers engage in planning

to:

Set the standards to facilitate control

Provide direction

Minimize waste and redundancy

Reduce the impact of change

Elements Of Planning

• Plan

– A method for doing or making something, consisting of at least one goal and a predefined course of action for achieving that goal.

• Goal

– A specific result to be achieved; the end result of a plan.

• Objectives

– Specific results toward which effort is directed.

Elements Of Planning (cont’d)

• Planning– The process of setting goals and courses of action,

developing rules and procedures, and forecasting future outcomes.

• What Planning Entails– Choosing goals and courses of action and deciding

now what to do in the future to achieve those goals.

– Assessing today the consequences of various future courses of action.

What Planning Accomplishes

• Allows decisions to be made ahead of time.

• Permits anticipation of consequences.

• Provides direction and a sense of purpose.

• Provides a unifying framework; avoiding piecemeal decision making.

• Helps identify threats and opportunities and reduces risks.

• Facilitates managerial control through the setting of standards for monitoring and measuring performance.

Hierarchy of Goals

Who Does the Planning?

• Small businesses:– Entrepreneurs do most of the planning.

• Large firms:– Traditional:

• A central corporate planning group works with top management and each division to challenge, and refine the company’s plan.

– Current:• Planning is decentralized and includes the firms’

product and divisional managers, aided by small headquarters advisory groups.

Organizational Mission

– A clear, formally written, and publicized statement that guides the organization by

• defining the organization for key stakeholders.

• creating an inspiring vision of the organization.

• outlining how the vision will be accomplished.

• establishing key priorities.

• stating a common goal and foster togetherness.

• creating a philosophical anchor for the organization.

• generating enthusiasm and a “can do” attitude.

• empowering organization members.

Qualities of a Good Plan

• Provides a workable solution and meets the stated objectives.

• Is comprehensive; it raises all relevant questions and answers them.

• Minimizes the degree of risks.

• Is specific as to time, place, supplies, tools, etc.

• Is flexible (can be adapted to a change in the situation).

Types of Planning

– Strategic planning: determining how to pursue long-term goals with available resources.

– Intermediate planning: determining subunits’ contribution with allocated resources.

– Operational planning: determining how to accomplish specific tasks with available resources.

Missions or Purposes• Essential purpose of the organization,

concerning particularly why is it in existence , the nature of the businesses it is in and the customers it seeks to serve and satisfy

• MCDONALD’S MISSION – “TO OFFER THE FAST FOOD PREPARED IN THE SAME QUALITY WORLD WIDE WITHIN REASONABLE PERIOD”

•

• RANBAXY LABORATORIES “ TO BECOME RESEARCH BASED INTERNATIONAL PHARMACEUTICAL COMPANY”

Strategies

• Determination of basic long term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals

Policies

• They are general statements or understanding that guide or channel thinking in decision making

They define an area within which a decision is to be made and ensure that the decision will be consistent with and contribute to an objective

• Recruitment Policy of TCS is an equal-opportunity employer

• Personnel policy of ABB India – states that each employee would understand his role, take responsibility, and develop him according to the changing needs of job profile and organization.

Procedures

It is chronological sequence of steps to be undertaken to achieve an objective.

They are guides to action that specify in details the manner in which activities are to be performed

Rules

Spell out specific action or non action leaving no discretion

They regulate the day to day conduct of affairs by providing detailed instructions

Eg – No smoking zone in aircrafts or offices, restaurants

Budgets

A statement of expected results of given future period expressed in numerical terms

It indicates the financial resources necessary for supporting the various activities included in the program

Goals

• Goals denote what an organization hopes to accomplish in future period of time. A broad category of financial and non financial issues are addressed by goals that firm sets for itself

• Objectives are the ends that state specifically how goals shall be achieved.

Goals and objectives-setting at Canara Bank

• “ OUR MISSION IS TO BE THE MOST COMPETITIVE AND PROGRESSIVE INSTITUTION IN OUR INDUSTRY” The bank stated goals were “ growth, innovativeness , high profit as a barometer of efficiency, high involved employees distinctively charged with pride.

Goals and objectives-setting at Canara Bank• Growth has been achieved in terms of customers ( --million)

, reserves (Rs ) Average business per employee ( ) deposit per branch

• Innovations were reflected in terms of new schemes like mutual funds and setting up financial services as merchant banking and portfolio management

• A high profit of … more than the industry leader

• Employees involvement has been sought through delegation of authority and devolution of power at grassroot level through change in administrative structure.