Transcript What Is Planning? Planning – involves defining the organization’s goals, establishing an overall strategy, and developing a comprehensive set of plans to integrate and.

What Is Planning?
Planning
– involves defining the organization’s goals, establishing
an overall strategy, and developing a comprehensive set
of plans to integrate and coordinate organizational work
– informal planning - nothing is written down
• little or no sharing of goals
• general and lacking in continuity
– formal planning - written
• defines specific goals
• specific action programs exist to achieve goals
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Planning is the function that answers four basic
questions:
Where are we now?
Where do we want to be?
Gap?
How can we get there from here?
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How Do Managers Plan?
The Role of Goals and Plans in Planning
– goals - desired outcomes
• provide direction for all management decisions
• represent the criteria against which actual work
accomplishments can be measured
– plans - outline how goals are going to be met
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– Types of Plans
• strategic plans - apply to the entire
organization
–establish organization’s overall goals
–seek to position the organization in terms
of its environment
• operational plans - specify the details of
how the overall goals are to be achieved
–tend to cover short time periods
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Types Of Plans
Breadth
Time Frame
Specificity
Frequency
of Use
Strategic
Operational
Long term
Short term
Directional
Specific
Single use
Standing
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• directional plans - flexible plans that set out
general guidelines
–provide focus without limiting courses of
action
• standing plans - ongoing plans that provide
guidance for activities performed repeatedly
–include policies, procedures, and rules
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Purpose
or mission
Objectives
Strategies
Policies
Procedures
Rules
Programs
Budgets
HIERARCHY OF PLANS
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
Purposes or Mission
• Basic function or task
• Reflects overall philosophy of management
• Indicates the line of business of an org. & its
long term commitment

Ex. Business-production & distribution of goods
& services
 State highway department-design, building &
operation of a system of state highways

University-Teaching & research
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A mission is the very reason and justification
for the existence of a firm. It is usually
expressed in terms of the benefits the firm
provides to its customers. An organisation's
mission statement states what it is, why it
exists and the unique contribution it can make.
Mission statements are characterised by the
following:
1. Customer-oriented
2. Future-oriented
3. Dynamic
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Mission statements
The Tata Group - Our purpose is to improve
the quality of the communities we serve.
The Tata name is a unique asset representing
leadership with trust.
Aditya Birla Group
Our vision-to be a premium conglomerate with
a focus at every business level
Our mission-To pursue the creation of value.
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 Objectives
•
•
or goals
Ends towards which activity is aimed
Are not only end point of planning but the
end towards which organizing, staffing,
leading & controlling are aimed
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
•
Strategies
Have a competitive implication--is a special plan
prepared for meeting the challenge posed by the
activities of competitors & other environmental
forces.
• Reflect broad area of org,s. operations
• links the resources of the organization with the
risks & challenges posed by the outside world.
• Provides answers to the following questions





What business are we in?
What should be our business?
Who are our customers?
What do they buy & why?
Why should society accept us?
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Policies
A policy is a basic statement that guides
decision-making. It tells people what
they may or may not do. It directs the
way in which activities are to be
achieved.
Ex. promotions to be based on merit
only
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Policies set behavioral limits.
They are restrictive in the sense that they define
the boundaries within which decisions ought to
be made. At the same time, they give enough
room for subordinates to use their discretion.
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Procedures
A procedure is a well thought out course of action.
It prescribes the specific way in which a piece of work
is to be done.
Procedures are called 'action guidelines'. They are
generally derived from policies.
The basic purpose of a procedure is to spell out
clearly, the way one is to go about doing something.
Procedures are used in all major functional areas.15
Rules
A rule is a very specific and detailed guide to
action.
It is established to direct or restrict action in a
fairly narrow manner.
There is no scope for discretion or judgment.
Rules must be followed precisely and
observed strictly.
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One important advantage with rules is that they
permit managers to simplify the decisionmaking process.
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Programmes
A programme is a comprehensive plan
that includes a complex set of goals,
procedures, rules, work assignments
resource flow and generally covers a
large 'territory'.
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Budgets
Budget is a numerised programme designed
primarily to allocate the resources of an
organization.
• It is a statement in terms of money or
quantity or both,
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•It is prepared for a definite future period,
•It is prepared in advance, and
•It aims at achieving a given objective.
•The use of a budget to monitor and regulate
the operational work of an organization in a
systematic way is called 'budgetary control'.
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Planning In The Hierarchy Of Organizations
Strategic
Planning
Top
Executives
Middle-Level
Managers
Operational
Planning
First-Level
Managers
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Steps in the Planning Process
BEING AWARE OF OPPURTUNITY
In Light of
The market
What customers want
Our strengths
Our weaknesses
SETTING OBJECTIVES OR GOALS
Where we want to be
What we what to accomplish & when
CONSIDERING PLANNING
PREMISES
In what environment –internal or
external –will our plans operate
IDENTIFYING
ALTERNATIVES
What are the most
promising alternatives to
accomplish our
objectives
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COMPARING ALTERNATIVES IN LIGHT OF GOALS SOUGHT
Which alternative will give us the best chance to meet our goals at the lowest cost &
highest profit
CHOOSING AN ALTERNATE
Selecting the course of action we will pursue
FORMULATING SUPPORTING PLANS
Such as plans to
Buy equipment
Buy materials
Hire & train workers
Develop a new product
NUMERIZING PLANS BY
MAKING BUDGETS
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Objectives and Goals
– - desired outcomes
• provide direction for all management decisions
• represent the criteria against which actual work
accomplishments can be measured
• Objectives give meaning and purpose to the
organization. Without objectives, without something
to achieve, organization would be purposeless and
chaotic.
– plans - outline how goals are going to be met
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The terms 'objective' and 'goal' indicate an end
result to be sought and accomplished. Three
widely quoted definitions of objectives are given
below:
 Objectives are goals established to guide the
efforts of the
company and each of its
components.
 An organizational goal is a desired state of
affairs which the organization
attempts
to
realize.
 Objectives indicate the 'end point of a
management programme'.
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Characteristics of Objectives
Objectives have the following features:
 Objectives form a hierarchy
 Objectives form a network
 Multiplicity of objectives
 Long and short-range objectives
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Objectives form a hierarchy
Socioeconomic
purpose
Mission
Board
of
directors
Top level
managers
Overall objectives
of the organization
More specific overall objectives
(e.g. in key result areas)
Middle level
managers
Division objectives
Department & unit objectives
Individual objectives
•Performance
•Personal development objectives
Hierarchy of objectives
Lower level
managers
Organizational hierarchy
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Areas that need objective:
(1)market standing,
(2)productivity,
(3)physical and financial resources,
(4)profitability,
(5)innovation,
(6)managerial performance and
development,
(7)worker performance and attitudes, and
(8)public and social responsibility.
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Establishing Goals
– Approaches to Establishing Goals
• traditional goal setting - overall goals established at
the top of the organization
– overall goals broken down into sub goals for each
level of the organization
» higher-level goals must be made more specific
at lower levels
» network of goals creates a means-ends chain
– sub goals constrain subordinates’ behavior
» assumes that top managers know what is best
for the organization
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• management by objectives (MBO) -MBO provides a
systematic and rational approach to management
MBO is based on the assumption that people perform
better when they know what is expected of them and
can relate their personal goals to the organizational
objectives.
• specific performance goals are jointly determined by
employees and their managers
MBO emphasizes participation in setting goals that
are tangible, verifiable and measurable.
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
MBO focuses attention on what must be
accomplished (goals)
rather than how it is
to be accomplished (methods).
 MBO, by concentrating on key result areas
translates the abstract philosophy of
management into concrete results.



progress toward accomplishing these goals is
periodically reviewed
rewards are allocated on the basis of this progress
MBO consists of four elements
o goal specificity
o participative decision making
o explicit time period
o performance feedback
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