1. UNIT II
Planning

2. Learning Objectives After studying the chapter, you should be able to:
Identify the three main steps of the planning process and the relationship between planning and strategy.
Describe some techniques managers can use to improve the planning process so they can better predict the future and mobilize organizational resources to meet future contingencies.

3. Planning and Strategy Planning
Identifying and selecting appropriate goals and courses of action for an organization.
The organizational plan that results from the planning process, details the goals and specifies how managers will attain those goals.

4. Planning
Planning is deciding in advance what to do, how to do it, when to do it and who is to do it.
More formally, planning includes all the activities that lead to the definition of objectives and to the determination of appropriate courses of action to achieve those objectives

5. Planning
Planning is a predetermined course of action. This term is defined in two ways:
Based on Futurity: Planning is informed anticipation of future where deciding in advance what is to be done in future.
As a thinking function: Planning is a thinking process, an organized foresight, a vision based on facts and experiences that are required for intelligent action.

6. Features of Planning Planning has number of characteristics.
Planning is Goal-oriented: Planning has no meaning unless it contributes in some positive manner to the achievement of predetermined goals.
Planning is a primary function: Without planning there is nothing to organize, no one to motivate and no need to control.
Planning is all pervasive: Planning is a function of all managers and all functions.
Planning is a mental exercise: Planning is a mental process involving foresight and sound judgment in a logical and systematic manner.

7. Features of Planning Planning is a continuous process
Planning involves choice: It essentially involves choice among various alternative courses of action.
Planning is flexible: Effective planning requires continual checking on events and forecasts and the redrawing of plans to maintain a course towards a designed goal.
Planning includes efficiency and effectiveness dimensions: Plans aim at deploying resources economically and efficiently.

8. Benefits of Planning Four major benefits of planning-
Planning forces managers to think ahead
It leads to the development of performance standards that enables more effective management control
Having to formulate plans forces management to articulate clear objectives
Planning enables an organization to be better prepared for sudden development

9. Planning and Strategy Strategy
The cluster of decisions and actions that managers take to help an organization reach its goals.

10. Strategy and Policy
Strategy is the determination of the mission (or the fundamental purpose) and the basic long-term objectives of an enterprise, and the adoption of courses of action and allocation of resources necessary to achieve these aims.
Policies are general statements or understandings that guide managers' thinking in decision making.

11. Planning and Strategy
Mission Statement
A broad declaration of an organization’s overriding purpose
Identifies what is unique or important about its products
Seeks to distinguish or differentiate the organization from its competitors

12. Types of Planning Purpose / mission task of an enterprise Objectives
Strategies –Future action or plan
Policies
Procedures
Rules
Programs
Budgets

13. The Nature of the Planning Process
To perform the planning task, managers:
Establish where an organization is at the present time
Determine its desired future state
Decide how to move it forward to reach that future state

14. Why Planning is Important
Planning provides direction :Necessary to give the organization a sense of direction and purpose
Planning provides a unifying framework
Reduces the risk of uncertainty
Facilitates decision making: Useful way of getting managers to participate in decision making
Helps coordinate managers of the different functions and divisions of an organization
Can be used as a device for controlling activities.

15. Why Planning is Important
Unity - at any one time only one central, guiding plan is put into operation
Continuity – planning is an ongoing process in which managers build and refine previous plans and continually modify plans at all levels
Accuracy – managers need to make every attempt to collect and utilize all available information at their disposal
Flexibility – plans can be altered and changed if the situation changes

16. Steps in Planning Comparing Alternatives in Light of Goals Sought
Which alternatives will give us the best chances of meeting our goals at the lowest cost & highest profit ?
Being aware of opportunity
In the light of :
The Market
Competition
What customers want
Our strength
Our weakness
Choosing an Alternatives
Selecting the course of action we will pursue
Setting objectives of Goals-
Where we want to be & what we want to accomplish & when
Formulating Supportive Plans
Such as plans to :
Buy equipment , Buy materials
Hire & train employees
Develop a new product
Considering Planning Premises
In what environment- internal or external –will our plans operate
Numbering plans by making Budgets
Develop such budgets as:
Volume & price of sales , operating expenses necessary for plans
Identifying alternatives
What are most promising alternatives to accomplishing our objectives

17. Three Steps in Planning

18. Planning Process Stages
Determining the Organization’s Mission and Goals
Defining the organization’s overriding purpose and its goals.
Formulating strategy
Managers analyze current situation and develop the strategies needed to achieve the mission.
Implementing strategy
Managers must decide how to allocate resources between groups to ensure the strategy is achieved.

19. Steps in Planning Process
Establishing Objectives
The first step in the planning process is to identify the goals of the organization. The objectives are derived clearly indicating what is to be achieved, where action should take place, who is to perform it, how is to be undertaken and when is it to be accomplished.
Developing Premises
Outline planning premises. Premises are assumptions about the environment in which plans are made and implemented.
Evaluating alternatives and selection

20. Steps in Planning Process
4. Formulating Derivative Plans
Management has to formulate the secondary plans to support the basic plan. The plans derived for various departments, units, activities etc., in a detailed manner are known as ‘derivative plans’.
5. Securing Cooperation and Participation
“Plans have to be set in an atmosphere of close participation and a high degree of concurrence.”
6. Providing Follow-up
Plans have to be reviewed continually to ensure their relevance and effectiveness.

21. STEPS IN PLANNING Being Aware of opportunities
Setting objectives of Goals:
Objectives for entire enterprise and then for each subordinate work unit
This is for long term as well for short term
Objectives indicate- what is to be done
Where the primary emphasis is to be placed ,
What is to be accomplished by the network of strategies, policies, procedures, rules, budget and programs
There is no one best answer. Students should discuss instances when one part would be more important than another.

22. STEPS IN PLANNING
2. Developing Premises: Premises are assumptions about the environment in which plans are made and implemented.
What kinds of Market will there be ?
What volume of sales ?
What prices? What product ?
What Technical developments ?
What cost ? What wage rates ?
What tax rates and Policies ?
What new Plans ?
What Policies with respect to dividends ?
What political or Social environment ?
How will expansion be financed ?
What are the long term goals
There is no one best answer. Students should discuss instances when one part would be more important than another.

23. STEPS IN PLANNING 3. Identification Alternatives :
Examine alternatives courses of action
Sometimes may be required mathematical techniques and the computer
There must be a limit to theses number of alternatives
It is required thoroughly examined
The planner must make a preliminary examination to discover the most fruitful possibilities
There is no one best answer. Students should discuss instances when one part would be more important than another.

24. STEPS IN PLANNING 4. Evaluating alternatives :
Every alternatives must examine and check its strong and weak points
To evaluate the alternatives by weighting them in the premises and goals
One course may be most profitable and other may not be
Sometimes required risk
Some alternates may be suitable for the organization for long-term goals
There may be so many alternatives, so many variables and so many limitations
Some times new methodologies, new techniques and new analyze is required
There is no one best answer. Students should discuss instances when one part would be more important than another.

25. Levels of Planning at General Electric

26. Levels and Types of Planning

27. Levels of Planning
Division – business unit that has its own set of managers and departments and competes in a distinct industry
Divisional managers – Managers who control the various divisions of an organization

28. Levels of Planning Corporate-Level Plan Corporate-Level Strategy
Top management’s decisions pertaining to the organization’s mission, overall strategy, and structure.
Provides a framework for all other planning.
Corporate-Level Strategy
A plan that indicates in which industries and national markets an organization intends to compete.

29. Levels of Planning Business-Level Plan:
Long-term divisional goals that will allow the division to meet corporate goals
Division’s business-level and structure to achieve divisional goals
Business-Level Strategy
Outlines the specific methods a division, business unit, or organization will use to compete effectively against its rivals in an industry

30. Levels of Planning Functional-Level Plan Functional Strategy
Goals that the managers of each function will pursue to help their division attain its business- level goals
Functional Strategy
A plan of action that managers of individual functions can take to add value to an organization’s goods and services

31. Time Horizons of Plans Time Horizon
Period of time over which they are intended to apply or endure.
Long-term plans are usually 5 years or more.
Intermediate-term plans are 1 to 5 years.
Short-term plans are less than 1 year.
Corporate and business-level goals and strategies require long- and intermediate-term plans.
Functional plans focus on short-to intermediate-term plans
Most organizations have a rolling planning cycle to amend plans constantly.

32. Types of Plans Standing Plans Use in programmed decision situations
Policies are general guides to action.
Rules are formal written specific guides to action.
Standard operating procedures (SOP) specify an exact series of actions to follow.

33. Types of Plans Single-Use Plans
Developed for a one-time, nonprogrammed issue.
Programs: integrated plans achieving specific goals.
Project: specific action plans to complete programs.

34. Forms of Planning Short range vs. long rang planning
Operational vs. strategic planning
Formal and informal planning
Functional and corporate planning
Proactive and reactive planning

35. Scenario Planning Scenario Planning (Contingency Planning)
The generation of multiple forecasts of future conditions followed by an analysis of how to effectively respond to those conditions.
Planning seeks predict the future, but the future is unpredictable.
By generating multiple possible “futures,” a firm can see how its plans might work in each and prepare for the possible outcomes.
Scenario planning is a learning tool to improve strategic planning results.

36. Management by Objectives (MBO)
MBO is a comprehensive managerial system that integrates many key managerial activities in a systematic manner that is consciously directed towards the effective and efficient achievement of organizational and individual objectives.
Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization.

37. Management by Objectives (MBO)
The essence of MBO is participative goal setting, choosing course of actions and decision making.
An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set.
Ideally, when employees themselves have been involved with the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.

38. MBO Process Individual motivation and ability Goal acceptance
Goal difficulty
Organization Strategy
Performance
Periodic review and evaluation
Feedback
Jointly set goals
MBO, a goal setting process, is illustrated in this exhibit, found in the text on page 291. The slide is animated to present point-by-point discussion if you wish. You should play this slide before class if you are presenting in the “View Show” mode.
Goal specificity
Top management support and involvement
Explicit time period

39. Some of the important features and advantages of MBO are:
Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment.
Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.
Clarity of goals
Subordinates have a higher commitment to objectives that they set themselves than those imposed on them by their managers.
Managers can ensure that objectives of the subordinates are linked to the organization 's objectives.

40. REFERENCES
Gareth R. Jones. Contemporary Management, Tata McGraw hill publication.
VSP Rao. Management, Excel Publication.