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

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?

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

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

Types Of Plans Frequency of Use Single use Standing Breadth Strategic Operational Time Frame Long term Short term Specificity Directional Specific

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

Objectives Strategies Procedures Rules Budgets HIERARCHY OF PLANS

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

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: Customer-oriented Future-oriented Dynamic

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.

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

Reflect broad area of org,s. operations 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?

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

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.

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.

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.

One important advantage with rules is that they permit managers to simplify the decision-making process.

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'.

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,

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'.

Planning In The Hierarchy Of Organizations Strategic Planning Operational Top Executives Middle-Level Managers First-Level Managers

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

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

provide direction for all management decisions 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

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'.

Characteristics of Objectives Objectives have the following features: Objectives form a hierarchy Objectives form a network Multiplicity of objectives Long and short-range objectives

Objectives form a hierarchy Board of directors Socio-economic purpose Mission Top level managers Top down approach Bottom up approach Overall objectives of the organization More specific overall objectives (e.g. in key result areas) Middle level managers Division objectives Department & unit objectives Lower level managers Individual objectives Performance Personal development objectives Hierarchy of objectives Organizational hierarchy

Areas that need objective: market standing, productivity, physical and financial resources, profitability, innovation, managerial performance and development, worker performance and attitudes, and public and social responsibility.

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

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.

MBO focuses attention on what must be accomplished (goals) 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 goal specificity participative decision making explicit time period performance feedback