Chapter 2 : Planning

Prepared by:
Mohd Shah Hj Yunus
Jabatan Perdagangan
Politeknik Kuching Sarawak
 2.1 Planning
1. Discuss planning in organization.
- Define planning
- Explain the purposes of planning
- Explain the types of planning
- Identify the steps in planning process

2. Discuss Strategic Management

- Define strategic management
- Explain types of strategic used by managers
 2.1.1 Define Planning

Planning is a process of managing all the

individuals involved in the organization and
the variables from the internal and external
environment of the organization in order to
achieve the set goals.
 2.1.2 Purpose of planning
- Identifying business or investment opportunities
- Identifying suitable alternative actions
- Reducing risks
- Saving costs
- Facilitating the achievement of goals
- Provide guidance
- Providing direction
- Facilitating coordination
- Understanding the environment
- Ensuring organizations do not stray from original goals
 Planning Objectives

- Provide direction
- Focuses on effort
- Drives organizational planning and
decision making
- Evaluates the organization’s
achievements
 Characteristics of Planning
1. Planning is goal-oriented: All plans arise from objectives. Objectives provide the
basic guidelines for planning activities. Planning has no meaning unless it
contributes in some positive manner to the achievement of predetermined goals.

2. Planning is a primary function: Planning is the foundation of management. It is a

parent exercise in management process. It is a preface to business activities.

3. Planning is all-pervasive: Planning is a function of all managers. It is needed and

practised at all managerial levels. Planning is inherent in everything a manager
does. Managers have to plan before launching a new business.

4. Planning is a mental exercise: Planning is a mental process involving

imagination, foresight and sound judgment. Planning compels managers to
abandon guesswork and wishful thinking.

5. Planning is a continuous process: Planning is continuous. It is a never-ending

activity. Once plans for a specific period are prepared, they are translated into
action.
 Characteristics of Planning
6. Planning involves choice: Planning essentially involves choice among various
alternative courses of action.

7. Planning is forward looking: Planning means looking ahead and preparing for
the future. It means peeping into the future, analysing it and preparing for it.

8. Planning is flexible: Planning is based on a forecast of future events. Since future

is uncertain, plans should be reasonably flexible.

9. Planning is an integrated process: Plans are structured in a logical way wherein

every lower-level plan serves as a means to accomplish higher level plans. They are
highly interdependent and mutually supportive.

10. Planning includes efficiency and effectiveness dimensions: Plans aim at

deploying resources economically and efficiently. They also try to accomplish what
has been actually targeted. The effectiveness of plans is usually dependent on how
much it can contribute to the predetermined objectives.
 2.1.3 Types of Planning

1.Strategic planning
2.Tactical planning
3.Operational planning
Types of planning
 Strategic Planning
Strategic plans: A strategic plan is an outline of steps designed with the goals
of the entire organisation as a whole in mind, rather than with the goals of
specific divisions or departments.

Strategic planning begins with an organisation’s mission. Strategic plans look

ahead over the next two, three, five, or even more years to move the
organisation from where it currently is to where it wants to be. Requiring
multilevel involvement, these plans demand harmony among all levels of
management within the organisation.

Top-level management develops the directional objectives for the entire

organisation, while lower levels of management develop compatible
objectives and plans to achieve them. Top management’s strategic plan for
the entire organisation becomes the framework and sets dimensions for the
lower level planning.
 Tactical Planning
Tactical plans: A tactical plan 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. Tactics are the means needed to activate a strategy and make it
work.

Tactical plans are concerned with shorter time frames and narrower scopes
than are strategic plans. These plans usually span one year or less because
they are considered short-term goals. Long-term goals, on the other hand,
can take several years or more to accomplish.

Normally, it is the middle manager’s responsibility to take the broad strategic

plan and identify specific tactical actions.
 Operational Planning
Operational plans: The specific results expected from departments, work groups, and
individuals are the operational goals. These goals are precise and measurable.

Examples: (a) Process 150 sales applications each week

(b) Publish 20 books this quarter

Thus an operational plan is one that a manager uses to accomplish his or her job
responsibilities. Supervisors, team leaders, and facilitators develop operational plans
to support tactical plans. Operational plans can be:-

a) single-use plan - programs, project, & budget

b) Standing (ongoing) plan. – policies, procedure, & rule.
 Operational Planning
Single-use plans: These plans apply to activities that do not recur
or repeat. A onetime occurrence, such as a special sales
program, is a single-use plan because it deals with the who,
what, where, how, and how much of an activity.

Example:

A budget: Because it predicts sources and amounts of income

and how much they are used for a specific project.
 Operational Planning
Continuing or ongoing plans: These are usually made once
and retain their value over a period of years while
undergoing periodic revisions and updates.

Examples:
(i) A policy: Because it provides a broad guideline for
managers to follow when dealing with important areas of
decision making. Policies are general statements that
explain how a manager should attempt to handle routine
management responsibilities.

Typical human resources policies, for an instance, address

such matters as employee hiring, terminations, performance
appraisals, pay increases, and discipline.
.
 Operational Planning
(ii) A procedure: Because it explains how activities or tasks are to be
carried out. Most organisations have procedures for purchasing
supplies and equipment, for example. This procedure usually begins
with a supervisor completing a purchasing requisition.

The requisition is then sent to the next level of management for

approval. The approved requisition is forwarded to the purchasing
department. Depending on the amount of the request, the purchasing
department may place an order, or they may need to secure quotations
and/or bids for several vendors before placing the order.

By defining the steps to be taken and the order in which they are to be
done, procedures provide a standardized way of responding to a
repetitive problem.
.
 Operational Planning
(iii) A rule: Because it tells an employee what he or she can
and cannot do. Rules are “do” and “don’t” statements put
into place to promote the safety of employees and the
uniform treatment and behavior of employees.

For example, rules about tardiness and absenteeism

permit supervisors to make discipline decisions rapidly and
with a high degree of fairness.
 Scenario Planning
Contingency plans: Intelligent and successful
management depends upon a constant pursuit Notes
of adaptation, flexibility, and mastery of changing
conditions. Strong management requires
a “keeping all options open” approach at all times -
that’s where contingency planning comes in.

Contingency planning involves identifying alternative

courses of action that can be implemented if and when
the original plan proves inadequate because of
changing circumstances.
 2.1.4 Steps in Planning

1.Setting the goals

2.Identifying current situation
3.Identifying assistance and resistance
4.Developing a new set of goals and
action
5.Re-evaluating goals
 2.2.1 Strategic Management
According to Robert Lamb, “Strategic management is an ongoing
process that evaluates and controls the business and the
industries in which the company is involved; assesses its
competitors and sets goals and strategies to meet all existing and
potential competitors; and then reassesses each strategy
annually or quarterly (i.e. regularly) to determine how it has
been implemented and whether it has succeeded or needs
replacement by a new strategy to meet changed circumstances,
new technology, new competitors, a new economic
environment, or a new social, financial, or political
environment.”
 Strategic Management
We can say that strategic management is the process of drafting,
implementing and evaluating cross-functional decisions that
enable an organisation to achieve its long-term objectives.

It is the process of specifying the organisation’s mission, vision,

objectives, and goals; developing policies and plans, often in
terms of projects and programs, which are designed to achieve
these objectives, and then allocating resources to implement the
policies and plans, projects and programs.

Strategic management is a level of managerial activity under

setting goals and over tactics. Strategic management provides
overall direction to a business organisation.
 Strategic Management Process
1. Identifying the Organization’s Current Mission, Objectives, and Strategies:
Every organization needs a mission, which is a statement of the purpose of an organization. The mission
statement addresses the question: What is the organization’s reason for being in business? The organization must
identify its current objectives and strategies, as well.
2. External Analysis: Managers in every organization need to conduct an external analysis. Influential factors such
as competition, pending legislation, and labor supply are included in the external environment. After analyzing
the external environment, managers must assess what they have learned in terms of opportunities and threats.
Opportunities are positive trends in external environmental factors; threats are negative trends in environmental
factors. Because of different resources and capabilities, the same external environment can present opportunities
to one organization and pose threats to another
3. Internal Analysis: Internal analysis should lead to a clear assessment of the organization’s resources and
capabilities. Any activities the organization does well or any unique resources that it has are called strengths.
Weaknesses are activities the organization does not do well or resources it needs but does not possess. The
organization’s major value-creating skills and capabilities that determine its competitive weapons are the
organization’s core competencies. Organizational culture is important in internal analysis; the company’s culture
can promote or hinder its strategic actions. SWOT analysis is an analysis of the organization’s strengths,
weaknesses, opportunities, and threats.
4. Formulating Strategies: After the SWOT, managers develop and evaluate strategic alternatives and select
strategies that are appropriate. Strategies need to be established for corporate, business, and functional levels.
5. Implementing Strategies
6. Evaluating Results to know how effective the strategies have been and if any adjustments are necessary.
Strategic Management Process
 2.2.2 Types of strategic

Corporate strategy: Corporate strategy

refers to the overarching strategy of the
diversified firm. Such a corporate strategy
answers the questions of “in which
businesses should we be in?” and “how
does being in these business create
synergy and/or add to the competitive
advantage of the corporation as a whole?”
 Types of strategic

2. Business strategy: Business strategy refers to

the aggregated strategies of single business firm
or a Strategic Business Unit (SBU) in a diversified
corporation. According to Michael Porter, a firm
must formulate a business strategy that
incorporates either cost leadership,
differentiation or focus in order to achieve a
sustainable competitive advantage and long
term success in its chosen arenas or industries.
 Types of strategic

3. Functional strategies: Functional strategies include

marketing strategies, new product development
strategies, human resource strategies, financial
strategies, legal strategies, supply-chain strategies, and
information technology management strategies. The
emphasis is on short and medium term plans and is
limited to the domain of each department’s functional
responsibility. Each functional department attempts to
do its part in meeting overall corporate objectives, and
hence to some extent their strategies are derived from
broader corporate strategies.
Thank you !!!
From:
Mohd Shah Hj Yunus
Jabatan Perdagangan
Politeknik Kuching Sarawak