Topic 3: Planning

What is Planning?

Planning involves setting goals and

deciding how to achieve them.
 Planning helps you check on your
progress, coordinate activities, think
ahead and cope with uncertainty.

 Planning is coping with uncertainty by

formulating future courses of action to
achieve specified results.
Why Is It Important To Have A Strategy
Planning

Organizations need to know where they are going and how

they will get there

A large scale action plan that sets the direction for an

organization is a strategy - it is an educated guess about
what the organization has to do to survive

The process that involves managers from all parts of the

organization in the formulation and the implementation of
strategies and strategic goals is strategic management

Strategicplanning determines the organization’s long

term goals and how the organization should achieve them
 Strategy, Strategic Management,
Strategic Planning
 Strategy: is a large scale action plan that sets the
direction for the organization.

 Strategic Management: is a process that involves

managers from all parts of the organization in the
formulation and the implementation of strategies and
strategic goals. (Middle managers)

 Strategic Planning: determines not only the

organization’s long-term goals for the next 1-5 year
regarding growth and profits, but also the ways the
organization should achieve them
 Why Strategic Management and
Strategic Planning are Important
1) Providing direction & momentum
 Focuses on most critical problems, choices, & opportunities
 Creates teamwork, promotes learning, & builds
commitment
2) Encouraging new ideas
 Stresses importance of innovation
3) Developing a sustainable competitive advantage
 Ability to produce goods and services more effectively than
competitors
 Sustainable competitive advantage is staying ahead in:
1) Being responsive to customers
2) Innovating
3) Quality
4) Effectiveness
WHAT IS AN EFFECTIVE STRATEGY?

Michael Porter argues strategic

positioning attempts to achieve
sustainable competitive advantage by
preserving what is distinctive about a
company
The Dynamics Of Strategic Planning

There are three key principles of strategic positioning:

1. An organization’s strategic position comes from serving few

needs to many customers, serving broad needs of a few
customers, or serving broad needs of many customers

2. Companies have to choose what strategy to follow and also

what strategy not to follow – they have to make trade-offs

3. Creating a “fit” among activities is important - a company’s

activities should interact and reinforce one another
 Planning and Strategic Management
The Five Steps of the Strategic Management
Process
1. Establish
the mission 2. Establish 3. 4. Carry 5.
the grand Formulate out the Maintain
and vision
strategy the strategic strategic
(using strategic plan control
SWOT and plans
forecasting)

Feedback: Revise actions, if necessary, based on

feedback
The benefits of Planning
 Planning helps you check on your
progress

 Planning helps you coordinate activities

 Planning helps you think ahead

 Planning helps you cope with uncertainty

Fundamental of Planning
 Planning consists of translating an
organisation’s mission into objectives

 The organisation’s purpose is expressed

as a mission statement, and what it
becomes is expressed as a vision
statement. From these are derived
strategic planning, then tactical planning,
then operational planning.
 Figure 2: The Planning Approach

Mission Vision Strategic Tactical Operational

statement: Statement: planning: planning: Planning:
What is our What do we Done by top Done by Done by
reason for want to managers for middle first-line
being? become? the next 1-5 managers for managers for
years the next 6-24 the next 1-52
months weeks

Goals
Goals Goals

Action plans Action plans Action plans

Three types of Planning for three levels of Management:
Strategic, Tactical & Operational
Long term decisions about
overall direction of
organization.
managers need to pay attention
to environment outside the
organization, be future-
Top Management: Strategic oriented, deal with uncertain &
chief executive officer, Planning highly competitive conditions
president, vice 1-5 years
president, general
managers, division Implement policies & plans of
heads top management, supervisors
Tactical
& coordinate activities of first
Planning
line managers below, make
6-24 months
Middle management: decisions often without base of
Functional managers, clearly defined information
product line managers, procedures.
department managers
Operational Direct daily tasks of non-
Planning managerial personnel;
1-52 weeks decisions often predictable,
following well-defined set of
routine procedures
First-line management:
unit managers, team
leaders, first-line
supervisors
Goals, Action Plans & Operating
Plans

Whatever it’s type –strategic, tactical or

operational – the purpose of planning is to
set a goal and then formulate an
action plan.
What is goals?
 A goal is known as an objectives – it is a
specific commitment to achieve a
measureable result within a stated period of
time.
 Strategic goals are set by the top
management and focus on objectives for the
organisation as a whole
 Tactical goals are set by and for the middle
managers and focus on the actions needed to
achieve strategic goals
 Operational goals are set by and for first-
line managers and are concerned with short-
term matters associated with realising
tactical goals
 What is action plan

Action plan defines the course of

action needed to achieve the stated
goal.
 Types of Plans: Standing Plans & Single-use
Plans
Plan Description

Standing Plan For activities that occur repeatedly over a period of

time
Policy Outlines general response to a designed problem or
situation
Procedure Outlines response to particular problems or
circumstances
Rule Designates specific required action

Single use plan For activities not likely to be repeated in the future

Program Encompases a range of projects or activities

Project Has less scope and complexity than a program

What is an Operating Plan?
The operating plan (typically designed for a
1-year period) defines how you will
conduct your business based on
the action plan; it identifies clear targets
such as revenues, cash flow and market
share.
Setting SMART Goals

Specific,
A SMART goal is one that is
Measurable, Attainable, Result-
oriented and has Target dates.
The Planning/Control Cycle

The four step planning/control cycle helps

you keep in control, to make sure that
you’re headed in the right
direction
 Figure 3: The planning/control cycle

The two
Planning 2) Carry out the
1) Make the plan plan
Steps

The two 4) Control the 3) Control the

direction in two
Control direction by
ways:
Steps comparing the
a)by correcting
deviations in the results with the
plan being plan
carried out
(return to Step 2)
, or
b)by improving future
plans (go to step 1 to
start over)
 Promoting goal setting:
Management by Objectives
((MBO)
MBO is a four step process in which;
1) Managers and employees jointly set
objectives for the employees
2) Managers develop action plans
3) Managers and employees periodically review
the employee’s performance,
4) The manager makes a performance
appraisal and rewards the employee
according to results.
The purpose of MBO is to motivate rather
than control subordinates
 Three types of Objectives used in
MBO
Improvement objectives Purpose: Express performance to be accomplished in a
specific way for a specific area
Example:
Increase rental collection by 10%
Reduce electricity bill by 15%

Personal development objectives Purpose: Express personal goals to be realized

Example:
Attend five days leadership training
Learn basic property management software by August 1

Maintenance objectives Purpose: Express the intention to maintain performance at

previously established levels
Example:
Continue to meet the increased sales goals specified last
quarter
Produce another 100 cases of valuation report this month.
 Project Planning

Project planning designed to prepare single-

use plans called projects, consists of a
four stage project life cycle; definition,
planning, execution and closing
 The Project Life Cycle

Stage 1 Definition Stage 2 Planning Stage 3 Execution Stage

Closin

3. 4. Carry
Formulate out the
the strategic
strategic plan
plans
(using e.g.
Porter)
 The importance of project
Deadlines
 Deadlines provide a mechanism for giving
overselves feedback

 Deadlines are essential to project planning

because they become great motivators
both for the manager and for
subordinates.