Management

Process

Lecturer : H.P. Rasika Priyankara

Unit Title : BM311
Stage of Course: Year III Semester I
Planning
We will plan to plan.
 Content
♦ Planning Defined.
♦ Planning as a Management Function.
♦ Planning Horizons.
♦ The Planning Process.
♦ Types of Plans.
♦ Barriers to Planning and how to overcome barriers.
Basic Principles in Planning
♦ “If you do not know where you are going
you can never get lost”

♦ “If you do not know where you are, it is

not possible to determine how you can
get to where you want to be”.

♦ “If you know where you are and if you

know where you want to go , the task is
to find the best route to go there”.
 Planning Defined

♦ Planning is going from known to

unknown.

♦ Planning is deciding in advance what

to do, how to do it, when to do it and
who is to do it. (Knoots and O
donnell)
 Planning Defined Contd…

♦ Planning is the process of establishing

goals and suitable courses of action for
achieving those goals.
(Stoner and Freeman. 1995)

♦ Planning is the process of deciding the

objectives or goals of the organization and
preparing how to meet them.
(G.A Cole,1993)
 Planning Defined Contd…

♦Accordingly, planning can

generally be defined as the
process of establishing suitable
objectives and strategies for an
organization.
 Planning
♦ Planning defines where the organization
wants to be in the future and how to get
there
Where we want
to be?
How to get there?

Where we are?
 Planning as a Management
Function
♦ If management process is a train,
Planning is the locomotive which
carries the apartments of
Organizing, Leading and
Controlling.

♦ Planning precedes the execution of

all the managerial functions.
(Dr Anil Chandrakumara)
Planning as a Management
Function Contd…
Organizing
Arranging work,
Authority &
Resources

Planning
Leading

Setting Influencing subordinates

Goals in achieving objectives
Strategies
&
Objectives
Controlling
Assuring and taking
corrective actions

Source: Chandrakumara. A, Management Principles,Concepts and Functions

 Planning Horizons
♦ Planning horizons explains length of
time of the plan.
♦ There are three categories of plans on
the basis of time.
Long Range Intermediate Short Range

Beyond 3 Years 1 to 3 Years Less than 01 year

 Planning Horizons Contd…

♦ For effective implementation of plans

managers have to integrate and balance
these three types of plans properly.

♦ Short range plans for instance, should

be supportive of intermediate plans and
intermediate plans should be supportive
of long range plans.
 The Planning Process
In broader sense, the planning process
involves three major activities.

♦ Deciding the goals and objectives of the entity

subject to planning.

♦ Deciding ways and means (strategies) best

suited to achieve those goals and objectives.

♦ Getting those decisions into “plans”.

(Documentation)
 The Planning Process Contd…

The above mentioned 3 activities can be subdivided into

several activities.

1. Goal formulation.
2. Identification of current objectives and strategy.
3. External environmental analysis.
4. Internal environmental analysis.
5. Identification of SWOT.
6. Gap analysis
7. Strategic decision making.
8. Strategy implementation.
9. Measurement and control of progress.
Goal Formulation
♦ Our focus is on four aspects

1. Vision
2. Mission
3. Goals
4. Objectives
 Goal Formulation Contd…

•What can be worse than being

blind?

Having eyes to see, but no

vision.
(Hellen Keller)

•Vision, is it a dream?
 Goal Formulation
Vision

“An image of the future we seek to

create”.

Vision defines the envisioned

societal purpose and Core Values of
the buiness in the envisioned future.

•A vision motivates individuals and facilitate

coordination of activities.
 Goal Formulation Contd…

Vision = Core Ideology

+Envisioned Future

Core Ideology = Core Values +

Core Purpose

Envisioned Future = BHAG +

Vivid Description
 Goal Formulation Contd…

Core Ideology = Core Values + Core

Purpose
Core ideology defines enduring character.
•Leaders die
•Product become obselete
•Market change
•New technology emerge
•Management fads come & go
But
Core ideology do not change, it guides and
inspires us.
 Core Values
What are values?
What we belive as What is good and Bad

Value System is enduring organization of belief

concerning preferable mode of conduct or end
state of existence along a continuum of relative
importance
- Milton Rokeach

•Core values are the essential and

enduring tenets of an organization.
Rokeach Value Survey (RVS)
Terminal Values Instrumental Values
A sense of Ambitious
accomplishment (lasting (hard working,
contribution) aspiring)
Happiness Honest (sincere,
truthful)
Pleasure (enjoyable) Independent (self
sufficient)
Salvation (saved, Loving (affectionate)
eternal life)
 Vision

Core Values

•Values that an organization will not

change according to environmental
changes.

•Core values do not stem from

market requirements but from the
inner beliefs of founders.
 Vision
How to arrive at Core Values ?

1. Prepare a priliminary list of values

2. Ask the question

If the circumstance changed and
peanalized us for holding this
value, would we still keep it?

What is your honest

 Core Values
If your answer is
YES
The concerned value is a core value

If your answer is
NO
The concern value is not a core value
•Who should involve in articulating
the core values?
MARS GROUP
 Vision
Core Values

•Can you find out core values from a

book ?

•Can we use core values to gain

competitive advantage?

•Are there universaly right set of core

values?
 Core Values
•Customer service – Sony doesn’t

•Respect for individual – Disney Doesn’t

•Quality – Walmart doesn’t

•Team work – Nordstrom doesn’t

There are no universaly right set of core

values. Core values are intrinsic.
 Core Values
HP’s Way –

1. Deep respect for individual,

2.A dedication to affordable

quantity and reliability,

3.A commitment to community

responsibility.
 Core Values Contd…

Sony – Core Values

1. Elevation of the Japanese

culture and national status.

2.Being pioneer not following

others; doing the impossible.

3.Encouraging individual
ability and creativity.
Core Purpose
♦ The organization’s reason for being.

♦ It doesn’t just describe the

organization’s output and target market.

♦ Core purpose is like a guiding star on

the horizon.
Core Purpose Contd…

♦How to get at core purpose?

Ask 5 Whys
♦ Core purpose inspires people at all levels
of an organization
Core Purpose Contd…

♦ 3M – To solve unsolved problems

innovatively.
♦ Sony - To experience the joy of
advancing and applying technology for
the benefit of the public.
♦ Walt Disney – To make people happy
♦ Cargill – To improve the standard of
living around the world.
♦ HP – To make technical contributions for
the advancement and welfare of
humanity.
 Vision Contd…

• Core Ideology have to be discovered or

articulated and it will provide the basis
for the organization.

•Core ideology is to guide and inspire,

not to differentiate.

•It should be exciting to people inside

and not to the outsiders.

•It helps in attracting suitable people.

Envisioned Future
♦ Envisioned future consists of two parts

1. 10-30 year Big, Hairy, Audacious

Goal

2. Vivid Description
Envisioned Future Contd…

Vision Level BHAG

♦ In establishing organizational level

BHAG, required to look at future first.

♦ Thinking beyond current capabilities

and current environment is essential.
Envisioned Future
Vision Level BHAG

♦ BHAGs categories

1. Target BHAGs
2. Common Enemy BHAGs
3. Role Model BHAGs
4. Internal Transformation BHAGs
Envisioned Future
1. Target BHAGs

♦ Become the company known for

changing the worldwide poor quality
image of Japanese products. (Sony 1950)

♦ Become $125 billion company by the

year 2000. (Walmart 1990)
Envisioned Future
2. Common Enemy BHAGs

♦ Crush Addidas (Nike 1960s)

♦ We will destroy Yamaha (Honda

1970s )
Envisioned Future
3. Role Model BHAGs

♦ Become the Harvard of the West (Stanford University

1940s)

4. Internal Transformation BHAGs

♦ Transform this company from defense

contractor in to the best diversified high –
technology company in the world. (Rockwell 1995s)
Vivid Description
♦ A vibrant, engaging and specific
description of what it will be like to
achieve the BHAG.

♦ It is a question of painting your future

picture with your words.
Vivid Description
Sony
We will create products that become pervasive
around the world. We will be the first Japanese
company to go into US market and distribute
directly. We will succeed with innovations that U.S
companies have failed at such as transistor radio.
Fifty years from now, our brand name will be as
well known as any in the world and will signify
innovation and quality that rival the most
innovative companies anywhere. “Made in Japan”
will mean something fine, not something shoddy.
Vision Contd…
♦ Identifying core ideology is a discovery
process

♦ Setting the envisioned future is a creative

process.

♦ It makes no sense to analyze whether an

envisioned future is the right one.
 Goal Formulation Contd…

Mission

•Mission derives from the vision of the

organization.

•Mission defines the scope and the philosophy of

a business

•The fundamental, unique purpose that sets a

business apart from other firms of its types and
identifies the scope of its operations in product
and market terms.
 Goal Formulation Contd…

Examples of Mission Statements

•Sampath Bank

“ To be the most innovative, trusted and

best process quality provider of financial
services in the region”.

Newport News Shipbuilding

“We shall build good ships here – at a
profit if we can- at a lost if we must- but
always good ships.”
 Goal Formulation Contd…

Examples of Mission Statements

•Maytag Corporations

“To improve the quality of home life by

designing, building,marketing and servicing the
best appliances in the world ”.

Commercial Bank (Sri Lanka)

“To deliver optimum value to our
customers, employees, shareholders and the
nation.”
 Goal Formulation Contd…

Goals
A goal is a desired state of affairs of a
person or of a system.

•Goal is an open ended statement of what

one wants to accomplish with no
quantification of what is to be achieved and
no time criteria for completion. When
compare with an Objective, a goal has
lesser SMART features.

S – Specific
M – Measurable
A – Achievable
R – Rational
T - Time bound
 Goal Formulation Contd…

Long term Goals

Honda (1970)

“We will destroy Yamaha”

Nike (1960s)

“ Crush Adidas”

Rockwell (1995)

“Transform this company from a defense contractor

in to the best diversified high technology company in
 Goal Formulation Contd…

Objective

•An objective is a specific short term target

for which measuarable results can be
obtained.

•What is intended to achieve within a given

time period.

•Objectives should present SMART Features.

Example

“ Reduce cutomer complaints by 20 % within

 2) Identification of Current
Objectives and Strategies
• This is identifying where we are.

What our objectives?

What is our current strategy?

Who are our customers?

What major competitive advantages do

we enjoy?

In what product do we excell?

•BCG Matrix, General Electric Model
 External Environment
Analysis
• All the external factors which are affecting
the organization can be identified as
external business environment.
External Environment

Micro Macro

Competitors Political and Legal

Customers Economic
Suppliers Social and Cultural
Local Authorities Technological
Distributors Natural (Ecological)
NGOs etc..
 Internal Environment
Analysis
• All the internal factors which are affecting
the organization can be identified as internal
business environment.

Analysis about

•Organizational Structure

•Organizational Culture

•Resources

•Share Holders
 Identification of SWOT
• After anlysing the internal and external
environment we are able to identify
Strengths,Weaknesses, Opportunities and
Threats which are exist in the environment.

•SWOT analysis will support in establishing

appropriate strategies.

S O
W T
 GAP Analysis
• The performance gap is the difference
between the objectives established in the
goal formulation and the results likely to be
achieved if the existing strategy is
continued.
Gap Analysis

Continue with Revise the strategies and

the current strategy craft new strategies
Ansof’s Strategies
♦ Intensive Strategies
– Market Penetration
– Market Development
– Product Development
♦ Integrative Strategies
– Horizontal Integration
– Vertical Integration
♦ Diversification Strategies
– Concentric
– Horizontal
– Conglomerate
 Strategic Decision Making
• If there is a performance gap it is
necessary to change the strategy.

•Then the need arises to identify, evaluate

and select alternative strategic approaches.

•Porter’s 3 Generic Strategies are available.

•Overall cost leadership strategy.

•Diferentiation strategy.

•Focus strategy.
 Strategic Implementation
• Once the strategy has been determined, it
must be implemented or incorporate into the
daily operations of the organization.

•Even the most sophisticated and creative

strategy will not benefit the organization
unless it is carried out effectively.

•implementation tools.

Programs,

procedures, and

budgets
Measurements and Controls
• Two main questions to be answered.

1. Is the strategy being implemented

as planned?

2. Is the strategy achieving the

intended results?
Types of Plans
Strategic Plans/
Corporate Plans

Business Plans /Divisional Plans

Functional Plans

Operational Plans
 Strategic / Corporate Plans
• Corporate plans ensure a viable fit
between the external environmental
conditions and internal strategic factors
so that the organization will achieve its
vision and mission by winning a
sustainable competitive advantage.

• Elements of Corporate plans

Corporate vision
Corporate mission
Corporate goals and objectives
Corporate policies
Corporate strategies
Divisional or Business Plans
• This plan is applicable when the corporate
entity is multi business one.

• In such case, the corporate plan will spell

out the strategic goals for each Strategic
Business Unit (SBU).

• The divisional or business plans should

specify the strategies that can be adopted
to achieve strategic goals assigned to
each SBU.

• Example
Heyleys Group
Consumer Agro Plantation Tourism
 Functional Plans
♦ To implement strategic or business plans, it is
important to have tactical or functional plans.

♦ These plans are prepared within the scope of

functional management areas such as
Marketing, Finance, HR, Operations, IT, R& D.

Business Plan

Finance Marketing HR Operations

 Operational Plans
♦ Operational plans concentrates to implement
functional plans.
♦ Operational plans are done by middle and
lower level managers.
♦ These are short range plans. Having time
frame of one year or less or may be day to
day activities.
Operational Plans

Single Use Plans Standing Plans

 Operational Plans Contd…

♦ Single Use Plans

Apply to activities that do not repeat and
recur once the activity is completed. The
plan is no longer needed. (Programs, Projects, and
Budgets)

♦ Standing Plans
Standing plans are made once and
retain their value over a period of
years with revisions and updates.
(Procedures, rules and regulations)
 Benefits of Planning
♦ Prerequisite to successful growth

♦ Plans set up the organizational framework.

♦ Plans help delegation.

♦ Plans help motivate people.

♦ Plans serves as a communication media.

♦ Plans lay the basis for control.

 Barriers to the Planning
Process
♦ Constantly changing environment.
♦ Reluctance of managers to establish
goals.
– Unwillingness to give up alternative
goals
– Fear of failure
– Lack of organizational knowledge
– Lack of confidence.
– Lack of knowledge about planning
techniques.
 Barriers to the Planning
Process Contd…

♦ Inadequate reward systems.

♦ Resistance to change.

♦ Time and expenses.

♦ Lack of interest of the top management.

♦ Cultural and behavioral patterns of

managers.
How to overcome Barriers to
the Planning Process?
♦ Planning should be creative, proactive
and more attention should be paid on
environmental changes.
♦ Enhance the knowledge of planning
techniques and systems.
♦ Get the support of the top management.
♦ Change attitudes of managers and
employees.
♦ Get the employee participation in
planning.
How to overcome Barriers to
the Planning Process?
♦ Communicate with subordinates about the
reasons, why specific actions are being
implemented.

♦ Be a good change agent.

♦ Plans should be simple and flexible.

(Contingency planning is required)

♦ Plans should be monitored and it should be a

continuous activity.
 Summary
♦ Planning Defined.
♦ Planning as a Management Function.
♦ Planning Horizons.
♦ The Planning Process.
♦ Types of Plans.
♦ Barriers to Planning and overcoming barriers.
Thank You !