By Mohammad Nasir Khan Assistant Professor,MED PLANNING • Decision making is the cornerstone of planning • Planning is a tool in the hands of a manager who wants to face problems created by change. • Planning means looking ahead. It is deciding in advance what is to be done. • Planning is a process which involves 'thinking before doing. PLANNING According to: Geogre Terry. "Planning is the selecting and relating of facts and the making and using of assumptions regarding the future in the visualization and formulation of proposed activities believed necessary to achieve desired results.''
Louis A. Allen. "Management planning involves the
development of forecasts, objectives, policies, programmes, procedures, schedules and budgets." PLANNING
Planning is concerned with
• Ends (what is to be done) • Means of doing it (how is it to be done)
It involves • Defining the organization’s objectives or goals • Establishing an overall strategy for achieving those goals • Developing a comprehensive hierarchy of plans to integrate and coordinate activities IMPORTANCE OF PLANNING To manage by objectives planning makes the objectives more concrete by focusing attention on them. To offset uncertainty and change: Planning foresees the future and makes the necessary provisions for it. To secure economy in operation. To help in co-ordination: Co-ordination is, indeed, the essence of management, and planning is the base of it. To make control effective. To increase organizational effectiveness. REASONS FOR PLANNING TYPES OF PLANNING
THERE ARE THREE TYPES OF PLANNING
On the basis of coverage of activities (i) Corporate planning (ii) Functional planning 2. On the basis of Importance of Contents. (i) Strategic Planning. (ii) Operational Planning 3. On the basis of time period involved. (i) Long term planning. (ii) Short-term Planning TYPES OF PLANNING On the basis of coverage of activities (i) Corporate planning Corporate planning is undertaken at the top level, also known as corporate level, and covers the entire organizational activities. (ii) Functional planning Functional planning is of segmental nature and is undertaken for each major function of the organization like production/operations, marketing, finance, human resource, etc. At the second level, functional planning is undertaken for subfunctions within each major function TYPES OF PLANNING On the basis of Importance of Contents. (i) Strategic Planning. Strategic planning involves setting long-term direction of the organization in which it wants to proceed in future (ii) Operational Planning: Operational planning, also known as tactical planning, is the process of deciding the most effective use of the resources already allocated through strategic planning and to develop a control mechanism to ensure effective implementation of the actions so that organizational objectives are achieved. TYPES OF PLANNING
On the basis of time period involved.
(i) Long term planning: Planning is concerned with future course of action. (3-5Y or upto 15y) (ii) Short-term Planning : Short-term planning usually covers one year. This aims at making effective use of organizational resources — financial, physical, and human resources. (for one year) PLANNING AND PERFORMANCE • Advantages • Formal planning results in positive financial output like higher profits, higher return on assets • Quality of planning process and its implementation is more important than the extent of planning
• Disadvantages • May create rigidity • Not suitable for dynamic environments • Formal plans can’t replace intuition and creativity • Planning focuses managers’ attention on today’s competition, not on tomorrow’s survival ORGANIZATIONAL GOALS
• Goal: A target that management desires to
reach • Are critical to organizational effectiveness • Vary by level, area, and time frame • Purposes of goals: • Provide guidance & unified direction • Promote good planning • Serve as sources of motivation. • Mechanism for evaluation and control ORGANIZATIONAL GOALS
• Goals must be SMART
• Specific • Measurable • Attainable • Relevant • Time-bound TYPES OF GOALS
• Mission: A statement of an organization’s fundamental purpose. • Strategic goal: Set by and for top management • Tactical goal: Set by and for middle managers • Operational goal: Goals set by and for lower managers
1–15 Starbucks’ Mission: a statement of an organization’s fundamental purpose. For instance, Starbucks’ mission statement is to be “the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.”
Strategic goal: a goal set by and for top management of the organization.
For example, Starbucks has a strategic goal of
increasing the profitability of each of its coffee stores by 25 percent over the next five years
Tactical goal: set by and for middle managers of the organization.
To achieve Starbucks’ goal of increasing its per-store
profitability, managers are working on tactical goals related to company-owned versus licensed stores and the global distribution of stores in different countries Operational goal: set by and for lower managers of the organization. An operational goal for Starbucks might be to boost the profitability of a certain number of stores in each of the next five years Example: Organizational Goals for a Regional Fast-Food Chain MANAGING MULTIPLE GOALS
• Organizations may have conflicting/contradictory goals
• Optimizing involves balancing and reconciling possible conflict of goals • Examples • Nike was producing high-quality shoes (manufacturing goal) which were not particularly stylish (a marketing goal). The company lost substantial market share to Reebok and Adidas. Finally, Nike enlisted fashion designers to regain its industry standing. • Uber’s focus on expansion at all costs ultimately led to significant financial losses and investor skepticism KINDS OF ORGANIZATIONAL PLANS Strategic plan: •Outlines decisions of allocation priorities, and steps necessary to reach strategic goals •Set by the board of directors and top management •Generally have an extended time horizon •Address questions of scope, resource deployment, competitive advantage, and synergy 1–19 KINDS OF ORGANIZATIONAL PLANS Tactical Plans: • Aims at achieving tactical goals implement specific parts of a strategic plan • Involve upper and middle management • Have a shorter time horizon and a more specific and concrete focus • Focus more with actually getting things done than with deciding what to do 1–20 KINDS OF ORGANIZATIONAL PLANS Operational plan: •Focuses on carrying out tactical plans to achieve operational goals. •Developed by middle and lower-level managers •Have a short-term focus and are relatively narrow in scope •Each one deals with a fairly small set of activities 1–21 TIME FRAMES FOR PLANS
• Long-range plan: Covers many years, perhaps even
decades; common long-range plans are for five years or more • Intermediate plan: Usually covers periods from one to five years • Short-range plan: generally covers a span of one year or less. They may be classified as: • Action plan • Used to put into operation any other kind of plans • Reaction plan • Allow companies to react to unforeseen circumstances RESPONSIBILITIES FOR PLANNING • All managers plan for their level and area • Board of directors: Establish the corporate mission and strategy, and in some companies take part in the planning process • Planning task force: Comprised of line managers with special interest in a particular area of planning • Planning staff: Large organizations may develop a professional planning staff HIERARCHY OF GOALS AND PLANS BARRIERS TO GOAL SETTING AND PLANNING
Major Barriers Overcoming Barriers
•Inappropriate goals •Understanding the •Improper reward system purposes of goals and •Dynamic & complex planning environment •Communication and •Reluctance to establish participation goals •Consistency, revision, and •Resistance to change updating •Constraints •Effective reward system CLASS TEST 2
Develop a clear organizational plan along with a
set of goals for an entrepreneurial venture of your choice. (Approximately 200 words)
