PLANNING 9

Nature and purpose of planning – planning process –

types of planning – objectives – setting objectives –
policies – Planning premises – Strategic Management
– Planning Tools and Techniques – Decision making
steps and process.
Planning
Planning
 Planning bridges the gap from where we are and where
we want to go.
 It makes the things possible to occur which could not
otherwise happen.
 The following observations suggest about planning:
1. Planning is outlining a future course of action in
order to achieve an objective
2. Planning is looking a head
2. Planning is getting ready to do something tomorrow.
 MEANING OF PLANNING
Planning is deciding in advance what to do,
how to do it, when to do it and who to do it.
It involves anticipating the future and
consciously Choosing the future course of
action.

“According to Haimann, Planning is the

function that determines in advance
what should be done.”
1. Planning – a primary function.
2. Planning – a dynamic process- usually planning
needs modification.
3. Planning- based on objectives and policies.
4. Planning- a selective process- for achieving a
particular objective, there are number of alternatives
available, so it is only threw proper planning we can
select the best alternatives to achieve the objectives.
 5 Pervasiveness of planning- it is available throughout
the organization.
 6.Planning – an intellectual process- it is mental
exercise involves creative thinking.
 7.Planning is directed towards efficiency- towards
quality.
 8. Planning- focus with future activities.
 9.Flexibility of planning.
 10. Planning is based on facts.
Purpose of planning
To manage by objectives
To offset uncertainty and change
To secure economy in operation
To help in co-ordination
To make control effective
To increase organizational effectiveness
Importance of Planning
1.Planning is a primary function
2.To achieve objectives: Planning is directed towards the
attainment of organization objectives. While planning
we should be clear about few questions:
 Why am I making this plan?
 what am I trying to accomplish?
 what resources do I need to execute the plan?
 3. To cope with uncertainty and change- there is a
continuous change in the environment and change is
permanent.
 4. To facilitate control- it involves the measurement of
accomplishment of events against plans and correction
of deviations to assure the achievement.
 5. To help in coordination- coordinating the various
activities of the department.
 6. To increase organizational effectiveness- the term
effectiveness means that the organization is able to
achieve its objectives within the given resources.
PROCESS OF PLANNING
1.Identification of 2. Establishment
opportunity of objectives

8. Establishing 3. Developing
sequence of Planning premises
activities

7. Formulation 4. Identification
of derivative of alternative
plans

6. Selecting an 5. Evaluation of
alternative alternative
1. Identification of opportunities
 Identification of the opportunities is the starting point
of planning.
 First of all, we should identify the possible future
opportunities and analyze them clearly and
completely.
 Where do we stand?
 What are our strength and weakness?
 What problem we wish to solve and why? And
 What do we except to gain?
2. Establishment of objective of
goal
 The next step in planning is to establish objectives for
the entire organization and then for each subordinate
unit.
 What is to be done?
 Where is the primary emphasis to be placed?
 What is to be accomplished by various types of plans?
3. Developing planning premises
 Planning premises are the assumptions which we
should make about the various elements of
environment.
 It provides the basic framework in which plan operate.
 These premises may be internal or external.
 Internal- includes organizational polices resources of
various types, sales forecast and ability of the
organization to withstand the environmental pressure.
 External premises- includes political, social ,
technological, competitors etc.
4. Identification of alternatives
 The next step in planning is to search for and design
the alternative course of action.
 Based on organizational objectives and planning
premises, various alternatives of plans can be
identified.
 Some alternative's can be rejected at its preliminary
stage if it is possible to achieve.
 The selected alternative should math with your criteria
such as investment required, matching with the
present business market conditions.
Types of Plans

Specify actions to
Operational achieve tactical plans
Plans` (very short-term)

Tactical Plans Designed to implement

strategic objectives
(usually one year or
less)

Establish long-range
Strategic Plans objectives
Operational Plans
 Is the one that a manger uses to accomplish his or her job
responsibilities.
 Supervisors, team leaders and facilitators develop OP to
support tactical plans.
 OP can be a single use plan or an ongoing plan.

Standing Plans Single-use plans

•Mission or purpose •Programmes

•Objectives •Budgets
•Strategies •Schedules
•Policies •Methods
•Procedures •Projects
•Rules
 Is concerned with what the lower level units within each
division must do, how they must do it and who is in-charge
at each level.
 One year or less because they are considered short term
goals.

• Is an outline of steps designed with the goals of the entire

org.
• SP begins with an org. mission.
• SP look ahead over the next two, three, five or even more
years to move the org.
Advantages
 Achieving objectives
 Reduces uncertainty and risk
 Provides sense of direction
 Encourages innovation and creativity
 Helps in co-ordination
 Guides decision-making
 Provide efficiency in operation
 Encourages motivation
Limitation of planning
 Lack of accurate information
 Time and cost
 Inflexibility
 Delay during emergency period
 False sense of security
Objectives

 Objectives may be defined as the goals which an organisation tries to

achieve Objectives are described as the end- points of planning .

 According to Koontz and O'Donnell, An objective is a term commonly

used to indicate the end point of a management programme .
Nature of objectives
1. Objectives have a hierarchy.
2. Objectives form a network
3. Multiplicity of objectives- several objectives of an
organization may be profits, survival, growth,
service to society etc.
4. Objectives have a time span- short term, long term
objectives
5. Objectives may be tangible or intangible- tangible
objectives includes achievement of materially
quantifiable targets or goals. Intangible objectives
includes factors like brand or company image.
6.Objectives must have social sanction- since
organizations are social units their objectives must
confirm the general needs of the society.
Significance or role or advantage
1. Unified planning- clear definition of objectives leads
to unified planning.
2. Defining an organization- every organization works
for some objectives as what kind of company it is or
what kind of business it is in. It related the
organization with its environment.
3. Direction- objectives give a meaning to the
activities of an organsiation. They provide the
direction to think and bring into action.
4. Individual motivation- the objectives of an
organization specify the purpose of each job and fix the
individual goals along with the overall organizations
goals.
5.Baisis of decentralization- in large scale organization,
department wise or section- wise objectives are fixed in
order to achieve the common objectives
 6. Basis of control- objectives help to keep the
activities on the right track. They serve as a
benchmark for the success.
 7. Co-ordination- clearly defined and mutually agreed
objectives help in achieving the voluntary co-
ordination.
Setting Objectives
 The primary role of organisation is setting of objectives for its business
activities. The overall objectives of firm set by the top level
management with consent of all the board members. Objectives
should be verified and should state what is to be accomplished and
when.
Guidelines for Objective Setting
 To cover main feature of job

 Clearly written

 Should not be too long

 Should be verifiable

 Should indicate organisation mission

 Related to some result

 Long term and short term objectives

 Periodically reviewed

 Objectives should start with the word ‘to’ and be followed by an

action.
Areas of Objectives Setting
 Market standing

 Innovation

 Productivity

 Resource utilisation

 Profitability

 Manager and worker performance

 Public responsibility
SMART Objectives
 S- SPECIFIC
 M- MEASURABLE
 A- ACHIEVABLE
 R- RELEVANT
 T- TIME BOUND.
Policies
 A set of policies are principles, rules and guidelines formulated or
adopted by an organization to reach its long term goals and typically
published in a booklet or other form that is widely accessible .

 According to Knootz “Policies are general statements or

understandings which guide or channel thinking in decision making”.
Examples of policy
 Here are some examples of common workplace
policies that could assist your workplace:
 code of conduct.
 recruitment policy.
 internet and email policy.
 mobile phone policy.
 non-smoking policy.
 drug and alcohol policy.
 health and safety policy.
 anti-discrimination and harassment policy.
Nature of policy

1. Relationship to organizational objectives

2. Clarity of policy- it should be clear, definite and explicit leaving no

room or misrepresentation.

3. A policy is a guide to thinking in decision –making- a policy must

prescribe the criterial for current and future action. It should lay down
limits and yardsticks for the action.

4. Policies should be written- a written policy is easier to communicate

through an organisational manual.
5. Communication of policies- all policies should be
communicated to the people who are going to implement them
and they should be formulated in consultation with them.
6.Consistency of policies.
7. Balance of policy- policies should maintain the balance between
stability and flexibility.
8. Planned formulation- a policy must be planned development
rather than opportunity or spur of the moment decision.
.
Characteristic of policies:
1. Policies must be known and understood by all who
are affected by them. Written policies are most effective
because they are spell out what organization members
should or should not do under a given situation.
2. Policies must be goal based. Focus on outcome
delivered without unnecessary emphasis on the method by
which it is to be achieved.
3. Policies should be stable. If policies are to serve as guides to
actions, they should not be changed frequently. Careful study
should therefore taken in formulating policies.
4. Policies must be consistent within the company at all levels
and departments of the organization.
5. Policies must be sincere. Policies are public pronouncement of
the philosophy and beliefs of the company. The wording of policies
should include real intention, otherwise, they become mere
writings on paper and meaningless in practice.
6. Policies must be realistic. Present situations or conditions must
be considered if policy statements are to be implemented. They
should not be a mere statement of ideals and commitments which
cannot be implemented if conditions were different.
7. Policies should be future proofed. Reflects identified prospective
trends and not only on past performance. As is commonly stated:
the past is not a guarantee of the future.
Importance/Purpose
 To save time and effort
 To facilitate delegation of authority
 To speed up decision making
 To control administration
Policy formulation process
Definition of policy area

Definition of policy alternatives

Evaluation of policy alternatives

Choice of policy

Communication of policy

Implementation of policy

Review of policy
PLANNING PREMISES
 Generally plans are prepared for future, but the future is
uncertain.
 Therefore, the mgt makes certain assumptions for future.
 These assumptions should be derived from scientific
forecasting of future events.
 According to Koontz and Weihrich have defined planning
premises as, “ Planning premises are the anticipated
environment in which plans are expected to operate”.
 Internal Premises come from the business itself. It includes
skills of the workers, capital investment policies, philosophy
of management, sales forecasts, etc.
 External Premises come from the external environment. That
is, economic, social, political, cultural and technological
environment. External premises cannot be controlled by the
business.

 Controllable Premises are those which are fully controlled by the

management. They include factors like materials, machines
and money.
 Semi-controllable Premises are partly controllable. They
include marketing strategy.
 Uncontrollable Premises are those over which the management
has absolutely no control. They include weather conditions,
consumers' behaviour, government policy, natural calamities, wars,
etc.
  Tangible Premises can be measured in quantitative terms. They
include units of production and sale, money, time, hours of work,
etc.
 Intangible Premises cannot be measured in quantitative terms.
They include goodwill of the business, employee's morale,
employee's attitude and public relations.

 Constant Premises do not change. They remain the same, even if

there is a change in the course of action. They include men, money
and machines.
 Variable Premises are subject to change. They change according
to the course of action. They include union-management relations.
STRATEGIC MANAGEMENT
 Acc’ to Alfred D. Chandler, “ Strategy is the determination of basic
long term objectives and adoption of course of action and allocation
of resources to achieve these goals”.

Nature of strategy:
 Strategy is the right combination of both internal and external
factors.
 Strategy is a contingent plan as it is designed to meet the demands of
a particular situation.
 Strategy is forward looking.
 Strategy is flexible and dynamic.
 Strategy is generally formulated by top level management.
PURPOSE OR IMPORTANCE OF STRATEGIES.
 Strategy is more helpful for facing environmental
challenges.
 Strategy provides a long-term guide towards the
achievement of objectives.
 Strategy ensures more efficient and effective
utilization of org. resources such as time, money,
manpower, machine etc.
 It integrates different department and groups of the
organization.
 It helps in maintaining or increasing the firm’s market
share in the face of competition.
Strategic Planning Process
Mission and objectives

Environmental analysis

Corporate analysis

Identification of
alternatives
Strategic decision-
making
Implementations, review
and control.
1.Mission and objectives
 Strategic planning process starts with the
determination of organizational mission and
objectives.
 The basic purpose for which the organization has been
started should be clearly indicated, this process is
known has mission.
 Objectives are the end results which an organization
tires to achieve.
2. Environmental analysis
 The next step of the process is environment analysis.
 Any organization must know the kind of environment
in which it has to work.
 It can be known has environmental analysis.
 The basic objective of strategies is to integrate the
organization with its environment.
 These factors are analyzed to identify opportunities
and threats.
3.Corporate analysis
 Corporate analysis into account of internal factors.
 The strength and weakness of the organization are
analyzed I corporate analysis such as a resource
analysis.
 It enables the organization to improve on its strengths
and to minimize its weakness.
4. Identification of alternatives
 Strategic alternatives are developed on the basis of an
analysis of both external and internal environment.
 Usually this process will bring large number of
alternatives, however all the alternatives cannot be
selected.
 The alternatives are evaluated on the basis of some
criteria.
 There criteria are based on organizational mission
and objectives.
5.Strategic decision -making
 This stage has to decide the acceptable alternative
among several alternatives which fits with the
organsiational objectives.
 Here personal values and expectation of decision
maker play an important role in strategy because he
will decide the course of action depending on his own
liking and disliking.
 The choice of strategy also depends upon several
factors such as management, external environment
management attitude towards risk etc.
6. Implementations, reviews and
control
 Once the strategy has been chosen, it is put into action
by translating it into tactical and operational plans.
The following factors are necessary for implementation
of strategy:
 Designing a suitable organization structure
 Developing and motivating people to take up work
 Designing effective control and information system.
 Allocation of resources etc.
Effective implementation of
strategies
 The chosen strategy must be implemented effectively
in order to achieve the strategic objectives.
 A good strategy without effective implementation is of
no use.
 For successful implementation of strategies, the
following eight recommendation should be
considered:
1. Communication of strategies
2. Developing and communicating planning premises
3. Developing appropriate operational plans- action plans
4. Periodic review of strategy
5. Developing contingency strategies and programmes-
A contingency plan is a plan devised for an outcome
other than in the usual (expected) plan.
6. Developing appropriate organization structure
7. Continuing to emphasize planning and implementing
strategy
8. Setting proper organizational climate.
Decision Making
 Decision making is defined as the process of choosing
a course of action from among alternatives to achieve a
desired goal.
 It is one of the functions of management and also a
core process of planning.
Definition
 According to Koontz and Weihrich, “ Decision making
is defined as the selection of a course of action from
among alternatives”
 According to George R.Terry decision making as “The
selection based on some criterial from two or more
possible alternatives”.
Feature of Decision Making
 Decision making is a selection process- the best
alternative is selected among available alternatives.
 Decision making is a goal oriented process. Decision
are made to achieve some goals or objectives.
 Decision making is the end process. It is preceded by a
detailed discussion and selection of alternatives.
 Decision making is a human and rational process
involving the application of intellectual process.
 Decision making is a dynamic process- an indvidiual
takes a number of decisions each day.
 Decision making is a situational
 Decision making is a continuous or ongoing process.
 Decision may be positive or negative.
Decision making process
 Decision making is not as easy as it involves many
steps to follow.
 It requires a lot of skill.
 Every decision is the outcome of a dynamic process
which is influenced by multiple forces.
Process
1.Identification of problem
 A well defined problem is half solved.
 There may be multiple causes for an organizational
problem and the manager has to identify that
problem, which is really not an easy task.
 In order to take decision the manager has to
continuously monitor the environment, check
progress against budgets , compare the results, etc.
2. Diagnosis and analysis of the
problem
 Here it is to find out the real cause or source of the
problem.
 Diagnosing the real problem implies in knowing the
real cause of gap between what is and what should be
and understanding the problem in relation to the
objectives of the organsiation.
 After analyzing the problem we have to gather the
information.
3.Search for alternatives
 The next step of decision making process is to search
for several alternatives.
 A problem can be solved in many ways.
 All possible ways cannot be equally satisfied.
 If there is only one way of solving a problem, there is
no problem of decision –making.
 A manager should not jump on the first feasible
alternative to solve problem quickly.
 A wide range of alternative increases the managers
freedom of choice.
4.Evaluation of alternatives
 Positive and negative aspects should be evaluated.
 Peter F.Drucker has suggested the following criterial to
weigh the alternative course of action;
 Risk- degree of risk involved in each alternative
 Economy of efforts- cost, time and efforts
 Timing or situation- whether the problem is urgent
 Limitation of resources- physical, financial and human
resources.
5.Selecting alternatives
 In this stage, the decision maker can select the best
alternative.
 Optimum alternative is one which maximizes the
results under given conditions.
 The outcome of each alternative is compared with the
light of organizational objectives
6.Implementation
 Decision should be communicated
 Acceptance should be obtained from them
 Procedure and time sequence should be established
 Require resources should be allocated and
responsibility for specific task should be assigned to
individuals.
Types of Decisions
1.Programmed Decisions- it is also called has routine
decisions, because these types of decisions are taken
frequently ad they are repetitive in nature.
Such a decisions are taken by the middle or lower level
management.
2. Non-Programmed Decisions- it is also called has
strategic decisions or basic decisions or policy decisions.
These decisions is taken by top management people
whenever the need arises.
It involves much thought and judgement.
3. Organizational and personal
Decisions
 This are the decisions taken by an individual in his
official capacity for the interest of the organsiation
known as organizational decisions. For example
introducing a new incentive system, or transferring an
employee.
Decision tree analysis
 A decision tree is a graph that uses a branching
method to illustrate every possible outcome of a
decision.
 It shows all the possible course of action, states of
nature, and the probabilities associated with the states
of nature.
 This decision diagram looks very much like a drawing
of a tree, and hence it is also called as decision tree.
Example