MG 2351 PRINCIPLES OF MANAGEMENT UNIT- II- PLANNING R.HARIHARAN, AP/ EEE

INTRODUCTION Planning is outlining a future course of action in order to achieve an objective. Nature – primary function, a dynamic process, based on objectives and policies, a selective process, pervasiveness of planning, an intellectual process, planning is directed towards efficiently, focus with future activities, flexibility of planning, planning is based on facts.

PURPOSE OF PLANNING Primary of planning To achieve objectives To cope with uncertainty and change To facilitate control To help in coordination To increase organizational effectiveness To guide decision- making

STEPS INVOLVED IN PLANNING IDENTIFICATION OF OPPORTUNITIES ESTABLISHMENT OF OBJECTIVES DEVELOPING PLANNING PREMISES IDENTIFICATION OF ALTERNATIVES EVALUATION OF ALTERNATIVES SELECTION OF ALTERNATIVE FORMULATING DERIVATIVE PLANS ESTABLISHING SEQUENCE OF ACTIVITIES

ADVANTAGES AND LIMITATIONS Helps in achieving objectives Better utilization of resources Economy in operation Reduces uncertainty and risk Improves competitive strength Effective control Coordination Encourages motivation Guides in decision making Provides decentralization Improves efficiency Anticipation of crisis

Contd… Lack of accurate information Time and cost Inflexibility Delay during emergency period False sense of security

OBJECTIVES Objectives are the aims, purpose or goals that an organization wants to achieve over varying periods of time. Characteristics Objectives have an hierarchy Objectives form a network Multiplicity of objectives Objective have a time span Objectives may be tangible or intangible It must have social sanction

SETTING OBJECTIVE Guidelines for setting objectives Cover the main feature of the job Must be clearly specified in writing It should be verifiable It should clearly indicate the organizational mission It should be challenging and reasonable It should yield specific results when achieved It should be coordinated with other units and managers It should be periodically reviewed It should clearly indicate the resources and authority

MANAGING BY OBJECTIVES (MBO) It is a process whereby the superior and subordinate managers of an enterprise jointly identify its common goals, define each individuals major areas of responsibility in terms of result expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members.

Features of MBO Focuses attention on what must be accomplished and not how to accomplish the objectives. It is goal oriented rather than work-oriented approach. To integrate the goals of an organization and individuals. It tries to combine long and short range goals of organization. It involves participation of subordinate managers in the goal setting process.

Contd… A high degree of motivation and satisfaction is available to employees through MBO. Periodic review of performance is an important feature of MBO. It increases the capability of achieving goals at all levels. MBO’s emphasis is not only on goals but also on effective performance. It provides better guidelines for appropriate systems and procedure to achieve the objective.

Contd… It has an evaluative mechanism by which the contribution of each individual can be measured. It is not a set of rules, procedures or techniques; it is a particular way of thinking about management.

PROCESS OF MBO Setting preliminary objectives It starts from top level management. It states why the business is started and exists. Short term objectives are framed taking into account the feasibility of achieving the long term objectives. These are formed by viewing the internal and external environment of an organization. It is subjected to modification.

Contd… Fixing key result areas Identified based on objectives and planning premises. Reference to measure the organizational health. Arranged on priority basis. Some KRA’s are profitability, market standing, innovation, productivity, market performance, public responsibility.

Contd… Setting subordinate objectives Recycling objectives Objectives are achieved through individuals. While setting objectives we should consider organizational goals, ability and resources available Recycling objectives Goal setting is a two way process. It should be an interactive one. Matching resources with objectives Objectives should be carefully matched with available resources. Allocation and movement of resources should be done in consultation with subordinates.

Contd… Periodic performance reviews Appraisal Superior and subordinates should hold meetings to discuss the progress towards objectives. Feedback from these reviews is provided to each individuals to facilitate self regulation and control. Appraisal Try to measure the performance of employees. Purpose is to find the shortcomings to reach objectives and the way to rectify them.

BENEFITS OF MBO Improvement of managing Clarification of organization Personnel satisfaction Team work Development of effective control Fast decision making

WEAKNESS OF MBO Failure to teach the philosophy of MBO Failure to give guidelines to goal setters Difficulty of setting goals Emphasis on short term goals Danger of inflexibility Time consuming Increased paper work

STRATEGY It is the determination of basic long term objectives and the adoption of the course of action and allocation of resources to achieve these goals. Nature – SWOT, working towards goal, contingent plan, forward looking, flexible and dynamic, calculation of risk, formulated by top level management.

NEED AND IMPORTANCE Facing environmental challenges. Long term guide to reach goal. Effective utilization of resources. Better coordination Helps in maintaining the market share.

STRATEGIC PLANNING PROCESS MISSION AND OBJECTIVES ALTERNATIVES ENVIRONMENTAL ANALYSIS CORPORATE ANALYSIS STRATEGIC DECISION MAKING IMPLEMENTATION REVIEW AND CONTROL

KINDS OF STRATEGIES Growth Finance Organizational Personnel Products / services market

OPERATIONAL PLANNING Communication of strategies Strategies should be communicated to all employees It should be make sure that everyone involved in implementing strategies. Developing and communicating planning premises Managers must develop the planning premises critical to plans and decisions. If managers do not select the premises and it has been implemented on personal assumptions then it lead to improper plans.

Contd… Developing appropriate operational plan Action plans, operational programmes and decision that take place in various parts of an organization. Managers should be clear in implementing the program and reviewing it. Periodic review of strategy Strategy should be reviewed periodically to find out whether the given strategy is relevant. Major strategies should be reviewed at least once in a year

Contd… Developing contingency strategies and programmes Uncertainty can occur at any time. The formulated strategies should be flexible to make changes. It provide a degree of preparation for future. Developing appropriate organization structure For proper function a defined structure is needed. It provides facilities for implementing strategy.

Contd… Continuing to emphasis planning and implementing strategy Responsible person continue to stress the nature and importance of these elements. It can be achieved by teaching the managers about the aim. Setting proper organizational climate It refers to the characteristics if internal environment such as the condition of cooperation, dedication of people to work

POLICY It is a broad statement formulated to provide guidance in decision making. Characteristics Relationship to organizational objectives Clarity of policy To guide in decision making It should be written Communication of policies Balance of policy

Contd… Need / importance To operationalise objectives To save time and effort To facilitate delegation of authority To speed up decision making To control administration

POLICY FORMULAITION 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

DECISION MAKING It is a process of choosing a course of action from among alternatives to achieve a desired goal. Features Selection process Goal-oriented process End process Human and rational process Dynamic process Situational Ongoing process

DECISION MAKING PROCESS IDENTIFICATION OF PROBLEM DIAGNOSIS AND ANALYSIS THE PROBLEM SEARCH FOR ALTERNATIVES EVALUATION OF ALTERNATIVES SELECTING AN ALTERNATIVES IMPLEMENTATION AND FOLLOW UP