Management and Entrepreneurship

Subject Code:07HSS51

Chapter 2 PLANNING
Successful managers deal with foreseen problems and unsuccessful managers struggle with unforeseen problems.Terry
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SYSTEM APPROACH TO MANAGEMENT

EXTERNAL ENVIRONMENT Managerial Knowledge, Goals of claimants and use of inputs(Part1 The Basis of Management Theory and Science)

Inputs
1.Human 2.Capital 3.Managerial 4.Technological

Goal inputs of claimants

1. Employees 2. Consumers 3. Suppliers 4. Stock holders 5. Governments 6. Community 7. Other

PLANNING (Part 2)

EXTERNAL ENVIRONMENT

Organizing (Part 3)

Reenergizing the system

Staffing (Part 4)

Leading (Part 5)

Facilitated by communication that also link the organization with the external environment (Part 1 & 7. Domestic and internal environment)

EXTERNAL ENVIRONMENT

External variables & information

1. Opportunities 2. Constraints 3. Other

Controlling (Part 6)

Outputs
To produce outputs EXTERNAL ENVIRONMENT 1. Products 2. Services 3. Profits 4. Satisfaction 5.Goal Integration 6. Other

Agenda
Nature of Planning (Importance & Purpose of Planning). Types of Plans. Forecasting. Strategies for manufacturing technology.

What is Planning?
Deciding in advance what to do, how to do it , when to do it and who has to do it. A forecast for accomplishment. Predetermined course of action. To produce a scheme for future action and to bring about specified results at a specified cost in a specified period of time.

Definition
Defined in to directions by management thinkers.
Based on futurity As an intellectual function

Based on futurity:
Planning is a trap laid down to capture the future (Allen) Deciding in advance what is to be done in future (Koontz) Informed anticipation of future( Haimann) Anticipatory decision making (R L Ackoff)

Definition
As an intelligence function:
Planning is a thinking process, an organized foresight, a vision based on fact and experience that is required for intelligent action( Alford & Beatty) Deciding in advance what to do, how to do it, when to do it and who has to do it ( Koontz & O Donnell)

Planning focuses on future and it involves all the activities that determine objectives for the future and the appropriate means for achieving those objectives. Outcome of planning is a plan, which is a document that specifies the course of action the organization will take.

Nature of Planning
Provides basic foundation from which all future management functions arise. Goal oriented All pervasive Intellectual exercise Continuous process Futuristic Integrated Process
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Planning- A bridge

Where we are

Planning

Where we want to be

Importance of Planning
Provides direction Creates a unifying frame work Leads to economical utilization of resources Reduces the risks of uncertainty Facilitates decision making Encourages Innovation & Creativity Improves morale Facilitates control
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Planning & Control Siamese Twins

Controlling: comparing plans with results No undesirable deviations from plans

Planning

Implementation of Plans

Undesirable deviations

Corrective action

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Types of Plans
Long range Vs Short range
Strategic Vs Operational

Corporate Vs Functional
Proactive Vs Reactive

Standing Vs Single Use

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Long range Vs Short range

Long range plan Point of distinction Short range plan

Covers many years & Meaning affects many departments of an organization 5 yrs or more Time Organizations linkage with external factors Mission ,long term goals and strategies Top management Primary focus

Covers less than one year and is more specific & detail Up to one year Linkage with various parts of an organization

Deals with Current operations of organization Prepared by Lower level executives

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Strategic Vs Operational
Strategic Plan 5 years or more Adapt to external environment based on internal strengths
Point of distinction Time horizon Purpose

Operational Plan Under one year Implement internal goals

Total institutional performance Top management

Primarily judgmental

Activity controlled Level involved

Basis for planning

Internal tasks & Operations Middle & lower level

Exact data & Standards used
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Corporate Vs Functional
Corporate Plan:
A comprehensive plan that outlines the broad objectives of a company as a whole and develops plans to achieve those objectives Holistic and Unified focus Focus on organizational performance

Functional Plan:
Is unit planning and deals with different departments in an isolated manner. Focus on departmental performance
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Proactive Vs Reactive
Proactive Planning: Managers challenge the future, anticipating future contingencies and get ready with alternative routes for unforeseen circumstances Reactive Planning: Organizations react to events as and when they arise

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Standing Vs Single Use

Standing Plans Developed for activities that recur regularly over a period of time Ex:
Objectives, Policies, Procedures, Methods, Rules

Single Use plans Developed to carry out a course of action that is not likely to be repeated in future Ex:
Programmes, Schedules, Projects, Budgets
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Hierarchy of Plans
Purpose or Mission Objectives Strategies

Policies: Major or Minor

Procedures Rules Programs: Major or minor and supporting Budgets: numberized programs

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Relationship of objectives and the organizational Hierarchy

1. Socioeconomic purpose
2. Mission 3. Overall objectives of the organization (long-rage, strategic) 4. More specific overall objectives (e.g, in key result areas 5. Division objectives Board of directors

Top-level management

(Some) (Some)
Middle level managers

6. Department and Unit objectives

7. Individual objectives Performance Personal development objectives

Lower-level managers

Hierarchy objectives

organizational Hierarchy

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Steps in Planning
Being Aware of Opportunity Setting objectives or Goals

Considering planning premises

Identifying Alternatives

Comparing alternatives in light of goals sought

Choosing an Alternative

Formulating supporting plans

Numerizing plans by Marking Budgets

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Steps in Planning
Being Aware of Opportunity In light of: The Market Competition What customer want Our strengths Our weaknesses Comparing alternatives in light of goals sought Which alternative will give us the best chance of meeting our goals at the lowest cost and highest profit?

Setting objectives or Goals Where we want to be and what we want to accomplish and when

Choosing an Alternative Selecting the course of action we will pursue

Considering planning premises In what environment internal or external will our plans operator?

Formulating supporting plans Such as plan to Buy equipment Buy materials Hire and train workers Develop a new product

Identifying Alternatives What are the most promising alternatives to accomplishing our objectives?

Numerizing plans by Marking Budgets Develop such budgets as: Volume and price of sales Operating expenses Necessary for plans Expenditures for capital Equipment

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Forecasting
It involves careful study of past data & present scenario. Purpose: To estimate the occurrence, timing or magnitude of future events. Types of forecasting: 1. Long Range Forecasting 2. Medium Range Forecasting 3. Short Range Forecasting
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Methods of forecasting
1. Break Through 2. Market survey 3. Economic studies 1. Time Series Analysis 2. Regression Analysis 3. Correlation Analysis 1. Exponential smoothing 2. Graphical Projections 3. Part explosion in to Product family Long Range Forecasting

Medium Range Forecasting

Short Range Forecasting

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Qualitative Method
Human judgments Expert opinion Management intuition Market research Approaches Delphi method Market research Sales forecast Historical analogies
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Quantitative Methods
Past few values Next value extrapolated on graph Approaches Time Series Analysis
Simple moving average Weighted moving average Exponential smoothing Double Exponential smoothing
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Strategies
General programs of action and deployment of resources to attain comprehensive objectives Determination of long term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve the goals. Dont attempt to outline how to accomplish objectives, but provides a framework for guiding thinking and action Includes major policies Ex: GMs Strategy: Marketing directly rather than through
distributors, Concentrating on proprietary products, or having full line of autos.
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References
Principles of Management-P C Tripathi, P N Reddy; 3rd Edn.,TMH Management-Stephen Robbins; 8th Edn.,PHI Management-VSP Rao, V H Krishna; Excel Essentials of Management-Koontz,Weihrich;5th Edn.,TMH Management James A F Stoner, R Edward Freeman, Daniel R Gilbert;6th Edn., PHI Principles of management: a modern approach-Henry Albers, 4th Edn,,John Wiley & sons Fundamentals of management-Donnelly, Gibson,Ivancevich ,10th Edn,.Irwin Mc Graw
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Web References
www.12manage.com www.cliffsnotes.com www.swlearning.com www.gutenburg.org www.cheathouse.com www.business.com www.businessmanagement.suite101.com www.greatmanagement.org www.harehall.co.uk
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Thank You

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